Regular overtime payments are included when calculating Amount Aa

20 November 2019

The decision considers whether overtime payments are part of a worker's compensable weekly earnings for the purposes of the Workers' Compensation and Injury Management Act 1981 (WA) (the Act).

In issue

  • The question of law raised by the appeal was whether the overtime payments provided for by an award were an 'allowance' for the purposes of the definition of 'Amount Aa'.

The background

The appellant employed the respondent as a truck driver pursuant to an award agreement. The respondent suffered an injury and was unable to return to work following that injury. The appellant accepted liability to make weekly payments of compensation under the Act.

A dispute arose as to whether overtime payments should be included in assessing the entitlement to weekly payments pursuant to Amount Aa.

The Act relevantly provides for compensable weekly earnings to be 'Amount A' for the first 13 weekly payments, and 'Amount Aa' thereafter. Overtime payments are expressly included as a component of 'Amount A'. Overtime payments will only be a component of 'Amount Aa' if they are '…any allowance paid on a regular basis as part of the worker’s earnings and related to the number or pattern of hours worked by the worker…'.

The parties agreed that, prior to his injury, the respondent was paid overtime on a regular basis as part of his earnings and that the payments related to the number or pattern of hours the respondent worked.

The Full Court of the Supreme Court in Thompson v Roche Bros Pty Ltd considered the Act before amendments in 2004. The Full Court held that the language of schedule 1 (at the time) made it plain that weekly payments of compensation after the fourth weekly payment must be calculated without regard to overtime or to any bonus or allowance payable at the time of incapacity. The Act was amended in 2004, and the appellant argued that the amendments did not alter the previously established position, recognised in Thompson, that overtime was not a component of 'Amount Aa' The appellant also argued that, on the Act's proper construction, 'overtime' is not an 'allowance' and is therefore not a component of the weekly earnings identified in the definition of 'Amount Aa'.

The Arbitrator's decision

An Arbitrator decided that the overtime payments were an 'allowance' for the purposes of paragraph (b) of the definition of 'Amount Aa' and, accordingly, the overtime payments were part of the 'weekly earnings' for the purposes of his entitlement to weekly payments.

The District Court's decision

The primary Judge, on appeal from the Arbitrator's decision, held that the definition of 'Amount Aa' includes overtime payments received regularly and relating to the number and pattern of hours the respondent worked. Her Honour therefore affirmed the arbitrator's decision.

The Court of Appeal's decision

The Court of Appeal held that the arbitrator and the primary judge correctly concluded that the overtime payments paid on a regular basis were an allowance of the kind described in paragraph (b) of the definition of 'Amount Aa'. The view was consistent with that adopted by Wheeler JA, with whom the other members of the court agreed, in EG Green & Sons Pty Ltd v Sabourne.

Therefore, overtime payments received in the 13 weeks prior to a worker's incapacity will ordinarily be taken into account after the initial 13 week payment period referred to in clause 11(3)(a) if the overtime payments were paid on a regular basis as part of the worker's earnings.

Implications for you

The decision confirms that regular overtime payments must be included when assessing an award worker's weekly payments after week 13.

BGC (Australia) Pty Ltd v Machali [2019] WASCA 121

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