Wakeling v Qantas Airways Limited [2010] NTCA 2

PARTIES:	WAKELING, PAUL

	v

	QANTAS AIRWAYS LIMITED

TITLE OF COURT:	COURT OF APPEAL OF THE NORTHERN TERRITORY

JURISDICTION:	CIVIL APPEAL FROM THE SUPREME COURT EXERCISING TERRITORY JURISDICTION

FILE NO:	LA 12 of 2008 (20808628)

DELIVERED:	1 April 2010

HEARING DATE:	12 February 2010

JUDGMENT OF:	MARTIN (BR) CJ, SOUTHWOOD and MANSFIELD JJ

APPEALED FROM:	THOMAS J

CATCHWORDS:

WORKERS COMPENSATION – Calculation of normal weekly earnings – non-cash benefits – concessional airline travel not part of average gross weekly remuneration or normal weekly earnings 

Fair Work Act 2009 (Cth) Pt 2.7
Workers Rehabilitation and Compensation Act (NT) s 49(1)(d)(ii)

Australasian Meat Industry Employees Union v Meat and Allied Trades Federation of Australia (Equal Pay Case) (1969) 127 CAR 1142
Chalmers v The Commonwealth of Australia (1946) 73 CLR 19
Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297
G.H. Michell & Sons (Australia) Pty Ltd v Bockman (1994) 176 LSJS 377
Great Western Railway Company v Helps [1918] AC 141
Hastings Deering (Australia) Ltd v Smith (2004) 18 NTLR 1
Murwangi Community Aboriginal Corporation v Carroll (2002) 12 NTLR 121
National Wage & Equal Pay Case 1972 (1972) 147 CAR 172
NT Drilling Pty Ltd v McFarland [2004] NTSC 23
Public Transport Commission of New South Wales v Murray Moore (NSW) Pty Ltd (1975) 132 CLR 336
R v Postmaster General [1876] 1 QBD 658
Rofin Australia Pty Ltd v Newton (1997) 78 IR 78
Wilson v Lowery (1994) 4 NTLR 79

REPRESENTATION:

Counsel:
	Appellant:	A Wyvill SC
		T Liveris
	Respondent:	S Walsh QC

Solicitors:
	Appellant:	Ward Keller
	Respondent:	Hunt and Hunt

Judgment category classification:	C
Judgment ID Number:	Sou1001
Number of pages:	19

IN THE COURT OF APPEAL
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

Wakeling v Qantas Airways Limited [2010] NTCA 2
No. LA 12 of 2008 (20808628)

	BETWEEN:

	PAUL WAKELING
	Appellant

	AND:

	QANTAS AIRWAYS LIMITED
	Respondent

CORAM:	MARTIN (BR) CJ, SOUTHWOOD and MANSFIELD JJ

REASONS FOR JUDGMENT

(Delivered 1 April 2010)

MARTIN CJ
[1]	I agree with the reasons for decision contained in the joint judgment of Southwood and Mansfield JJ.
SOUTHWOOD AND MANSFIELD JJ:
[2]	On 12 February 2010 the Court informed the parties that the Court would dismiss the appeal.  Following are our reasons for decision as to why the appeal should be dismissed.
The issue
[3]	The principal issue in this appeal is: does the value of the difference between the price of the reduced airfares the appellant received from the respondent during the 12 months immediately preceding his work injuries and the market price of the airfares form part of his average gross weekly remuneration within the meaning of the definition of “normal weekly earnings” in s 49(1) of the Workers Rehabilitation and Compensation Act (NT) and, in particular, within subparagraph (d)(ii) of that definition?  In our opinion it does not.  The appellant’s access to concessional airline travel was merely an incidental benefit or perquisite of his employment.
The appellant’s claim
[4]	The appellant suffered two compensable injuries during the course of his employment with the respondent.  For the purpose of calculating his entitlement to compensation for his loss of earning capacity under s 64 and s 65 of the Act, he claims his “normal weekly earnings” should be calculated under subparagraph (d)(ii) of the definition of “normal weekly earnings” in s 49(1) of the Act because he was remunerated in part other than by reference to the number of hours he worked.  In addition to his wages the respondent granted the appellant and his nominated beneficiaries, access to concessional airline travel.  The appellant argues this non-cash benefit formed part of his remuneration and should be taken into account when calculating his average gross weekly remuneration and “normal weekly earnings”.  
[5]	The appellant claims the total value of the concessional airline travel he received during the 12 months immediately preceding his second work injury was $52,278.40 and the total value of the concessional airline travel received by his nominated beneficiaries during the same period was $44,090.80.  If these amounts are taken into account his normal weekly earnings are $2,780.60 made up of $1,853.25 non-cash remuneration and $927.35 weekly wages.
The factual background
[6]	At all material times the appellant was employed by the respondent as an airline services operator in Darwin.  He started his employment in Darwin on 23 July 1994.  It was terminated on 5 December 2007 due to his incapacity for work.
[7]	During the course of his employment with the respondent, the appellant took advantage of concessional airline travel benefits which the respondent made available to its workers and their nominated eligible beneficiaries.  The concessional airline travel was provided in accordance with the respondent’s document entitled Qantas Policy Manual Volume 2 Human Resources Policies – Concessional Travel.
[8]	On 20 April 2002, the appellant injured his right knee and on 1 October 2006, he injured his left knee.  Both injuries occurred during the course of his employment.  He made claims for workers compensation for each injury which were accepted by the respondent.
[9]	 The appellant has continued to have access to reduced price airfares provided by the respondent after he became incapacitated for work after his second injury and also after his employment was terminated by the respondent and from time to time he has availed himself of this benefit.  Under the Qantas Policy Manual he will continue to have access to these benefits for the next 12 years due to the length of his service with the respondent.
[10]	A dispute arose between the appellant and the respondent as to the quantum of weekly benefits of compensation payable to the appellant under the Act in respect of the injury he sustained on 1 October 2006.  For the purpose of calculating the quantum of payments of weekly benefits, the respondent assessed the appellant’s normal weekly earnings as at the date of his second injury to be $927.35 which was the appellant’s weekly wage.  
[11]	The dispute was heard by the Work Health Court.  The presiding magistrate determined the dispute over normal weekly earnings in favour of the respondent.  His Honour held the appellant’s access to concessional airline travel for himself and for his nominated eligible beneficiaries did not form part of his “normal weekly earnings”.
[12]	The respondent acknowledges that, as a result of the work injury the appellant sustained on 1 October 2006, the appellant was and remains totally incapacitated for work.  In the Work Health Court the appellant also claimed that his total incapacity was the result of his earlier work injury, but neither the presiding magistrate nor Thomas J addressed that issue.  It is not relevant for the purposes of this appeal 
The presiding magistrate’s reasons for decision
[13]	Before considering the facts in this case the presiding magistrate considered the law.  His statements about the law may be summarised as follows.
[14]	Under s 64 and s 65 of the Act, the amount of compensation payable to an injured worker is based upon the workers loss of earning capacity.  A worker’s loss of earning capacity is the difference between his normal weekly earnings as defined in the Act and what he or she is reasonably capable of earning in a week in work he or she is capable of undertaking after he or she has been injured.  Accordingly, a worker’s loss of earning capacity is to be assessed on a week by week basis.  The Act establishes an income maintenance scheme.  It does not establish a scheme that provides for compensatory damages.
[15]	While the definition of normal weekly earnings in s 49(1) in the Act provides a number of formulae for calculating a worker’s normal weekly earnings the underlying principle is that a worker’s normal weekly earnings are to be calculated in accordance with a worker’s gross weekly remuneration.  A worker’s remuneration may include non-cash benefits.  It is the full sum for which the worker is engaged to do the work in question.  
[16]	Remuneration is pay for services rendered or work done.  It is something a worker receives for his labour.  Remuneration is properly defined as the reward payable by an employer to a worker for the work done by that employee in the course of his employment.  It is something the expense of which has to be born by the employer in order to procure a worker’s labour.  Remuneration involves precisely the same consideration as earnings.  If the service is not rendered a worker’s remuneration ceases.  The nexus between remuneration as a reward for services rendered is the fundamental cornerstone of the employment contract.
[17]	The concept of normal weekly earnings is focused upon what a worker receives in cash or benefits each week as a reward for the labour that he or she puts in during the week.  If a benefit is truly gratuitous, even if it is long standing, it does not become part of a person’s weekly remuneration.
[18]	The presiding magistrate found the appellant’s access to concessional travel benefits was not part of his remuneration.  It was a truly gratuitous benefit which had no real nexus to the appellant’s labour.  The access to concessional airline travel was subject to unilateral variation, change, suspension and even termination by the respondent.
[19]	The presiding magistrate found the appellant’s terms of employment with the respondent were covered by the Transport Worker’s Union (Qantas Airways Limited) Enterprise Bargaining Agreement VI.  The enterprise bargaining agreement is a comprehensive document which purports to cover all situations that may arise during a worker’s employment and makes provision for it.  It sets out: how the employment may be terminated; the entitlement to various types of leave; the types of employment and the conditions which attach to each; hours and days of work; shift work conditions; the applicable wages for various levels and types of workers; the frequency of paying wages; extra allowances payable; and penalty rates.  The enterprise bargaining agreement provided fair and reasonable remuneration to the appellant for the work he did for the respondent.
[20]	The enterprise bargaining agreement does contain some references to the concessional airline travel.  At par 18.5.16 it states that “Part time employees will receive equal concessional travel benefits as full timers”.  It can, therefore, be inferred that the enterprise bargaining agreement does refer to concessional airline travel benefits available to full time workers.  Further, under the heading “Other Entitlements” in the enterprise bargaining agreement par E is headed “Employee Travel” and states “See staff travel policy manual”.
[21]	Despite these references the presiding magistrate found the appellant’s access to concessional airline travel formed no part of the enterprise bargaining agreement.  It stood alone from the appellant’s terms of employment and was not part of the worker’s contract of service.  
[22]	The appellant’s access to concessional airline travel arose under the respondent’s policy of granting concessional airline travel to its employees.  The terms of the policy are contained in the Qantas Policy Manual. 
[23]	On page 1 of the Qantas Policy Manual there is an “overview” in which beside the heading “policy” the following is stated:
Rebate travel benefits are a privilege extended by the Company and where applicable, by the Company’s wholly owned Subsidiary Companies.  This policy may be altered, suspended or withdrawn at the discretion of the Company at any time.  References to travel polices for current and retired staff covered under ‘previous’ Qantas Airlines polices are not contained in this policy.  Information and copies of these policies may be obtained from the Staff Travel Policy Manager.
[24]	Next to the heading “who is eligible” the “overview” then goes on to state:
Subject to overriding commercial considerations, travel at rebated rates on the Company’s services may be available to employees, retirees, and their nominated eligible beneficiaries.  This policy also relates to former employees who have terminated under various retrenchment packages.  Travel by the nominated eligible beneficiaries is at the discretion of the relevant employee, retiree or other eligible former employee.
[25]	The presiding magistrate found the availability of the reduced price airfares to the respondent’s employees was at the respondent’s discretion, travel was subject to the availability of a seat and the appellant could be off-loaded.  Further, the ability to use “rebate travel benefits” was not an automatic entitlement.  It was dependent upon a minimum qualifying period of 12 months employment and the type of benefit available varied according to the duration of a worker’s employment.  For example, entitlement to travel business class on international flights only commenced (for some workers) after the person had worked for at least seven years.  The longer a worker remained with the respondent the more generous the potential benefits.  
[26]	The policy appeared to be a type of reward scheme which accrued over time.  It rewarded employees for their loyalty and encouraged them to remain in the respondent’s employ by providing better concessions in the future.  It was mutually beneficial otherwise it was unlikely the respondent would continue providing concessional airline travel to its workers.
The competency of the appeal
[27]	It is questionable whether the characterisation of the appellant’s access to concessional airline travel as a gratuitous payment which did not form part of his remuneration involved an error of law.  However, the respondent did not formally challenge the competency of the appeal either before Thomas J or on the appeal.  Nor did the respondent develop the assertion in its written outline of argument that the appeal involved only a question of fact.
[28]	The appellant says the error of law in this case is the presiding magistrate, at first instance, and subsequently Thomas J on appeal, misinterpreted or misconstrued the meaning of “average gross weekly remuneration” in subparagraph (d)(ii) of the definition of “normal weekly earnings” in s 49(1) of the Act when calculating the appellant’s normal weekly earnings.
[29]	As the respondent did not formally challenge the competency of the appeal, it was appropriate in this instance to hear the appeal.  It is sufficient to observe that the contention of the appellant on the competency of the appeal was not clearly incorrect.
Remuneration
[30]	Of relevance to this appeal, s 49 of the Act states:
normal weekly earnings, in relation to a worker, means: 
(a)	subject to paragraphs (b), (c) and (d), remuneration for the worker's normal weekly number of hours of work calculated at his or her ordinary time rate of pay; 
Subparagraph (d)(ii) states:
(d)	where: 
(ii)	subject to paragraph (b) or (c), the worker is remunerated in whole or in part other than by reference to the number of hours worked,
the average gross weekly remuneration which, during the 12 months immediately preceding the date of the relevant injury, was earned by the worker during the weeks that he or she was engaged in paid employment.
[31]	In the context of the above provisions of the Act remuneration is pay for services rendered.  It is whatever consideration a worker receives or earns in return for his service.  That such is the case is established by the decisions of this Court in Murwangi Community Aboriginal Corporation v Carroll and Hastings Deering (Australia) Ltd v Smith.
[32]	In Murwangi Community Aboriginal Corporation v Carroll the Court stated:
In our view there can be little doubt that the remuneration of the worker in this case is not limited to the wages paid to the worker but extends to include benefits of other kinds received by the worker in respect of services rendered for or behalf of the employer.  The identified non-monetary benefits form part of the reward for work done and services rendered and therefore comprise “remuneration … earned by the worker…”.
[33]	In the same case the Court went on to approve the following statement of the Australian Industrial Relations Commission in Rofin Australia Pty Ltd v Newton:
‘Remuneration’, in our view, is properly defined as the reward payable by an employer to an employee for the work done by the employee in the course of his or her employment with the employer.  It is a term that is confined neither to cash payments nor, necessarily payments actually made to the employee.
The reasons for decision of Thomas J
[34]	Consistent with the presiding magistrate’s findings of fact, Thomas J held there was nothing in the enterprise bargaining agreement to the effect that the concessional airline travel referred to therein comprised part of the appellant’s terms of employment or was contractually binding on the respondent.  The appellant’s access to the concessional airline travel was at the sole discretion of the respondent and not part of the contract of employment.
[35]	Her Honour agreed with the findings of the presiding magistrate that: 
95.	There is no evidence to suggest that Ex W1 [the enterprise bargaining agreement] by itself does anything other than provide a fair and reasonable remuneration to the worker for the work that he did with the employer.
96.	Accordingly Ex W2 [the Qantas Policy Manual], in my view, stands alone.  It is an additional benefit that the employer affords to its employees.  There was no evidence to suggest that Ex W2 was a negotiated document.  On its face it purports to be a unilateral reward system that the employer generously makes available to employees who have remained for over 12 months.  It is subject to unilateral variation, change, suspension or even termination by the employer (although some of these steps might be unpopular).  It is a reward for accumulated service, not a reward for work done in any particular week.
[36]	Thomas J held that the appellant’s access to the concessional airline travel was not a benefit that formed part of the appellant’s remuneration and therefore was not part of his normal weekly earnings.  
[37]	Counsel for the appellant submitted that Thomas J had erred by asking only whether the concessional travel benefits available to the appellant under the Qantas Policy Manual were part of the contract of employment between the appellant and the respondent.  We do not agree that her Honour approached the application of s 49(d)(ii) in such a confined way.  Her Honour’s reference to Hastings Deering (Australia) Ltd v Smith and her discussion of the various matters raised by counsel for the parties in the court below, reveal her decision was not confined to a consideration of whether those benefits were contractual in nature.
Consideration
[38]	In our opinion, her Honour’s judgment was correct.  A benefit the provision of which or access to which: (a) remains totally within the discretion and control of the employer and may be varied or cancelled by the employer without any redress by a worker; (b) is subject to overriding commercial considerations of the employer; (c) is subject to further qualification beyond the worker’s rendering of service on a weekly basis; (d) is subject to the payment of a fee by a worker – a worker must pay for the airline travel albeit at a significantly reduced rate; (e) varies according to the worker’s election to avail him or herself of the benefit and not according to the amount of work performed; (f) continues after the worker’s services have been terminated; (g) is not lost after an employee has become totally incapacitated for work; and (h) is something a worker may never receive – is not something which can be characterised as a return for services rendered.  It is not something that a worker receives for his labour.  Nor is it something the expense of which must be borne by an employer in order to procure the labour of a worker.  It is not payment under the contract of services.  Nor is it the reward for which the worker is engaged to do the work in question.  It is not part of a worker’s remuneration.  Those features are particular to the concessional travel benefits under the Qantas Policy Manual.  
[39]	It does not assist the appellant to say that the benefits are not casual, sporadic or trivial.  Cases such as Great Western Railway Company v Helps where employee benefits have not been regarded as part of the employee’s remuneration by such a characterisation merely illustrate that the decision as to whether particular benefits are part of the remuneration is one dependent on the particular facts of the case.
[40]	It was also argued by the appellant that, as fringe benefit tax was incurred by the respondent by reason of the provision of concessional airline travel and was included in the tax on the appellant’s group certificate, this indicates that the provision of concessional airline travel is a benefit to the appellant.  This also reflected the substantial and systematic nature of these benefits and their direct relationship to the employment of the worker.  Therefore, it was argued the benefit should be considered as part of his remuneration.  
[41]	Consistent with the presiding magistrate’s decision, Thomas J held that the payment of fringe benefit tax is not an indicator one way or the other of whether the benefits were remuneration.  We agree with that conclusion.
[42]	The presiding magistrate expressed the view that if the legislature had wished to include any items that attracted fringe benefits as part of a worker’s remuneration it would have done so.  For example, in the definition of worker in s 3(1)(x) of the Act, the legislature has expressly chosen to include “PAYG provisions of the Taxation Administration Act of the Commonwealth”.  The same has not been provided for in relation to the Fringe Benefits Tax Assessment Act 1986 (Cth).
[43]	Riley J in NT Drilling Pty Ltd v McFarland held that the fact fringe benefits tax was payable in relation to non-monetary benefits was not an indication that such benefits should be included in a worker’s remuneration.  His Honour referred to G.H. Michell & Sons (Australia) Pty Ltd v Bockman.  In that case Mulligan J, with whom King CJ and Bollen J agreed, said:
If the taxation laws provide that the liability for taxation falls upon the employer in some respect that does not affect the amount of the worker’s earnings.  Such is the case with the Fringe Benefits Tax Assessment Act.  If there is a change in circumstances so that the liability for taxation falls upon the worker, that also does not affect his earnings.  The liability for taxation arises independently of the Workers Rehabilitation and Compensation Act and is irrelevant in the level of income maintenance to which a disabled worker is entitled.
[44]	The Australian Industrial Relations Commission in Rofin Australia Pty Ltd v Newton also addressed this question and said at page 82:
Fringe benefits tax is … a tax imposed upon an employer and is payable by an employer, not by the employee.  It is imposed upon a fringe benefit provided by an employer to an employee.  The employer is free to choose whether or not to provide a particular fringe benefit to an employee.  If it does so it incurs the tax liability. Such liability is to pay an amount other than to the employee. Generally, where an amount is paid by an employer other than to an employee and other than on behalf of or at the direction of the employee, such an amount would not fall within the ordinary meaning of the word ‘remuneration’.
[45]	The question now before the Court must be decided by reference to the wording of the Act.  Whether or not fringe benefits tax was or was not paid in relation to the concessional airline travel does not assist in that exercise.
[46]	The conclusion that the appellant’s access to concessional airline travel was not part of his remuneration is made even plainer by the fact he continues to have the same access to the concessional airline travel despite the termination of his employment.  The appellant’s continued access to concessional airline travel demonstrates that the benefits are truly gratuitous and are not a reward which is earned by the appellant or a return for work done by the appellant on a week by week basis.
[47]	There are other indications to support that conclusion.
[48]	Most obviously, the contention of the appellant, if accepted, would produce a capricious result.  It would be capricious because the appellant would have established an entitlement to compensation based on his remuneration including the value of his access to the concessional airline travel, at the same time as he continued to enjoy them.  His incapacity has not caused them to be lost.  In blunt terms, he would be ‘double dipping’.  The Court will generally avoid a construction of a word or words in a statute which is against commonsense or which appears to produce irrational consequences.  Those descriptions would apply if the appellant was receiving compensation on the basis that he had lost the capacity to earn the concessional airline travel while at the same time he remains eligible to and continues to receive them.
[49]	In addition, the comparison which s 64(1) and s 65(1) of the Act draw, for the purpose of quantifying the amount of weekly payments, is between a worker’s normal weekly earnings and what he or she actually earned for the first 26 weeks of incapacity or the amount he or she is capable or earning thereafter.  That is clearly intended to draw a comparison of like with like.  The value of access to the concessional airline travel does not readily fit the description of actual earnings or capacity to earn.  It remains available during total incapacity.  It remains available after retirement.  As counsel for the respondent submitted, it need not be availed of by a worker.  It is optional as a worker may choose not to seek the benefit either at all, or only rarely.  If, therefore, it is not part of a worker’s actual earnings or indicative of a worker’s reasonable ability to earn, it would not accord with the comparison which s 64 and s 65 of the Act require that it should be part of a worker’s normal weekly earnings.
[50]	The appellant’s contention, further, would result in employees of the respondent having potentially dramatically different “normal weekly earnings” as between themselves, or indeed from one year to the next.  An employee in a position similar to that of the appellant who in 2008/2009 was not disposed to, or was impeded from, taking the concessional travel benefits (perhaps for family or personal reasons) would have normal weekly earnings of only about one third of those of the appellant for much the same services.  That may persist over a period of years.  An employee who chose to take advantage of those benefits once only every few years would be in the same position, and in the year the benefits were availed of would have much greater normal weekly earnings than in other years.  The potential for such “earnings” imbalance between employees of the respondent for the same services itself provides a reason to regard the benefits as not part of the “normal weekly earnings” as defined in the Act.  An employee may be disinclined to, or impeded from, taking advantage of those benefits for personal reasons in a particular year.  One of the cornerstones of Australia’s industrial relations is the tenet: “Equal pay for equal work”.  It is now enshrined in Pt 2.7 of the Fair Work Act 2009 (Cth).  The principle extends back at least to the Equal Pay Case 1969: Australasian Meat Industry Employees Union v Meat and Allied Trades Federation of Australia and affirmed in the National Wage & Equal Pay Case 1972.  It is unlikely that, by the Act, the Northern Territory intended to undermine that tenet.
[51]	As we indicated at the outset, the decision on this appeal depends on the application of the particular facts to the definition of “normal weekly earnings” in the context of the Act as a whole.  The matters referred to provide a strong indication that, on these facts, the concessional travel benefits do not constitute part of the appellant’s normal weekly earnings.  
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