On 4 December 2015, the Supreme Court of New South Wales delivered a decision concerning whether an employee may receive work injury damages and then successfully apply for reinstatement to employment with the employer they have sued.
The decision is a timely reminder to employers that the resolution of a claim for work injury damages does not, of itself, bring to an end all of an employee’s rights under the Workers Compensation Act 1987 (1987 Act).
Public Services Association and Professional Officers Association Amalgamated Union of New South Wales v Industrial Relations Secretary on behalf the Department of Justice  NSWCA 386 concerned an employee, Darren Rudd, who sustained an injury to his left knee and back in the course of his employment with the New South Wales Corrective Service on 6 April 2008.
Mr Rudd lodged a workers compensation claim and, after undergoing various surgical and other procedures, was unable to perform his pre-injury duties. On 25 October 2011, Mr Rudd was medically retired.
On 30 April 2012, Mr Rudd notified that he wished to pursue a claim for work injury damages, alleging negligence against his employer in relation to his injury on 6 April 2008. Damages were claimed for past and future economic loss.
At mediation on 4 June 2013 Mr Rudd’s claim for damages resolved in the amount of $220,000.00 inclusive of costs and clear of all workers compensation benefits paid to the settlement date. This resolution brought to an end Mr Rudd’s rights to compensation under the 1987 Act in relation to the injury sued upon.
On 23 September 2013, Mr Rudd applied to the Department of Corrective Services for reinstatement to his employment as a Correctional Officer. The application was rejected and following union intervention, proceedings were bought in the Industrial Relations Commission.
At first instance, a single Member of the Industrial Relations Commission found that Mr Rudd was able to apply for reinstatement. The Department appealed the finding and the Full Bench of the Industrial Relations Commission considered that they did not have jurisdiction to allow Mr Rudd’s reinstatement. The Union appealed to the Supreme Court of NSW.
The legal issue
The relevant legal issue in the proceedings hinged on the interpretation Section 240 of the 1987 Act in relation to the definition of an injured worker. Section 240(2) states:
For the purposes of this part, an injured worker is a worker who receives an injury for which the worker is entitled to receive compensation under this act or the Workers Compensation (Dust Diseases) Act 1942.
This definition was relevant as, to be entitled for an order of reinstatement under section 241 of the 1987 Act, an employee must be someone dismissed due to being not fit for employment.
If a person satisfies the definition of being an “injured worker” and can produce a medical certificate asserting fitness for employment, if the employer refuses the reinstatement the Industrial Relations Commission can make a reinstatement order. The Industrial Relations Commission can only make such an order in special circumstances if the application for reinstatement was made more than 2 years after the injured worker was dismissed.
The Industrial Relations Secretary argued that Mr Rudd was no longer an injured worker as he ceased to be entitled to compensation at the time of finalising his work injury damages claim. The Secretary also argued that allowing reinstatement would be an abuse of process, in circumstances in which Mr Rudd had successfully claimed damages for future economic loss, and then asserted he was fit to resume employment in a full time productive capacity.
These arguments were largely successful before the Full Bench of the Industrial Relations Commission, but were not accepted by the Supreme Court.
The Supreme Court decision
The Supreme Court found that Mr Rudd remained an injured worker and that the definition in section 240 of the 1987 Act did not have a temporal limitation, but was simply a description of the state of affairs which had arisen.
The Court discussed the issue of potential double recovery and did not agree that this was a relevant consideration. The Court noted that the purpose of damages is to compensate a worker based on an estimate, at the time of settlement, as to their likely level of incapacity into the future. The Court recognised that there could be over compensation or under compensation in some cases but considered this a part of the inherent uncertainty in trying to assess damages.
Despite any damages awarded or agreed, an injured worker is free to seek work or reinstatement at any point when medically able to do so. The Court considered that there was no clear policy reason why this should not be the case and thought that any restrictions in this area would not represent a sensible or desirable approach.
Relevance of decision
The prospect of workers who receive damages for future economic loss being able to exercise a right of reinstatement with the same employer clearly raises the spectre of an abuse of process. It also has the potential to place significant financial strain on an employer as well as ongoing risk management issues.
The Court of Appeal’s decision is a timely reminder that resolution of an employee’s claim for work injury damages does not bring to an end all rights under the 1987 Act. In many cases, consideration ought to be given to a settlement deed in relation to all actions, including reinstatement actions under Section 241 of the 1987 Act.
This article was written by Martin Rowney, Solicitor and Ivan Medak, Partner.