In a decision that has significant implications for employer liability under workers compensation legislation, the High Court ruled on 30 October 2013 in the case of Comcare v PVYW that an employee's injury sustained whilst having sex in a motel during a work trip did not occur "in the course of" her employment. This meant that the employer's insurer, Comcare, was not liable to pay workers compensation to the injured employee.
The decision clarifies the approach to be adopted in interpreting "in the course of" employment for injuries occurring:
- where the employee is temporarily on location away from their normal place of work, at the request of the employer; and
- the injury occurs during an "interval" from work (usually outside of business hours).
The employee in question was employed by a Commonwealth Government entity. In 2007, she was required to make a two day business trip to a regional location in NSW, during which she stayed in a motel booked by her employer.
Whilst staying at the motel, the employee was engaging in sexual intercourse with an acquaintance, when one of them pulled a light fitting from its mount on the wall above the bed, causing lacerations to the employee's nose and mouth. In addition to the physical injuries, the employee also suffered a subsequent psychological reaction.
The employee lodged a dispute with the Administrative Appeals Tribunal ("AAT") after her claim for compensation under the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("Act") was rejected. The decision whether to accept or reject the employee's claim focused on whether her injuries were sustained "in the course of" her employment.
The AAT concluded that the employee's injuries were not sustained "in the course of" her employment, finding there was no circumstantial connection between the injuries and her employment. The Federal Court upheld the employee's appeal and the Full Court of the Federal Court ("Full Court") agreed, based on its view of the principles set out by the High Court in 1992 in Hatzimanolis v ANI Corporation Ltd ("Hatzimanolis").
In Hatzimanolis, an employee, who was stationed at a remote mining location for work for three months, suffered serious injuries after the vehicle he was in overturned. At the time of the accident, the employee was on his day off, participating in an optional day trip organised and encouraged by the employer, as a way of providing remote workers with an opportunity to explore the surrounding area. The vehicle the employee was travelling in had been provided by the employer for the excursion.
The High Court, in finding in Hatzimanolis that the employer was liable for the employee's injuries, held that "in the course of" employment would extend to an interval occurring within an overall episode of work if the employer had induced or encouraged the employee to spend the interval at a particular location or in a particular way. The exception to the employer's liability was gross misconduct on the part of the employee at the time the injury was sustained.
The employer's encouragement of the employee to go on the day trip gave rise to a temporal relationship (a relationship involving time) between the injury and the employment relationship, meaning the injury was sustained "in the course of" employment.
FULL COURT'S REASONING
In Comcare v PVYW the Federal Court and the Full Court interpreted the Hatzimanolis principles as focusing on a temporal relationship between the injury and the employment. They were satisfied that, because the injury had occurred when the employee was at a place her employer had encouraged or induced her to attend, the temporal relationship existed and therefore the injury was compensable.
The Full Court considered that as long as the injury is in the course of employment then it will be compensable even if it arises from unauthorised conduct, provided it is not conduct taking it outside the course of employment, such as serious and wilful misconduct. There was no such conduct here.
The Full Court found that the views of the employer about the employee's activities and engaging in sexual intercourse were irrelevant, whether or not those views (if sought) may have reflected disapproval or indifference. The employee was not engaged in a wrongful act, but in a lawful activity. No approval, expressed or implied, of her conduct was required by the employer. The employer's views were irrelevant.
A majority of the High Court disagreed.
HIGH COURT'S REJECTION OF FULL COURT'S REASONING
The majority judgment of French, CJ, Hayne, J, Crennan, J and Kiefel, J ("Majority") considered that the Full Court was adopting too literal an interpretation of the principle in Hatzimanolis without further consideration of the reasoning behind the principle and the limits placed by the Act on an employer's liability for compensation.
The Majority stated that the Full Court's approach would mean that an employer who requires an employee to be present at a particular place away from their usual place of work will be liable for any injury which the employee suffers whilst present there. The employer would become the insurer for the employee during the time that the employee is at the required place, during an interval from work, even if the injury was suffered during an activity which was clearly unrelated to the employment. This would lead to an "odd result", that the Majority considered undesirable.
Instead, the Majority found that an employer's liability depends on what the employer "induced or encouraged the employee to do."
HIGH COURT DECISION
The High Court held that, beyond a temporal relationship, there must also be a connection between the employee's injury and their employment, arising from the employer's inducement or encouragement, for an injury to occur "in the course of" employment.
For liability to arise, the employee "must be doing the very thing that the employer encouraged the employee to do", when they were injured. Different questions needed to be asked, depending on whether the injury was attributable merely to the place the employee was at or whether it was attributable to the activity the employee was engaged in.
The High Court considered that the relevant questions to be asked are:
- if the injury occurs by reference to any activity the employee was engaging in at the time - "did the employer induce or encourage the employee to engage in that activity?"; and
- if the injury occurs at or by reference to a place - "did the employer induce or encourage the employee to be there?"
If the answer is yes to either 1 or 2 above, then the injury occurred in the course of employment and is compensable.
In this case, the injury was sustained by reference to the activity the employee was engaged in at the time (sexual intercourse). This was not an activity which the employer had induced or encouraged. Accordingly, there was no connection between the injury and the employment. The High Court found that it was irrelevant that the injury merely occurred at a place which the employer had encouraged or induced the employee to attend.
However, the Majority noted that if the injury had resulted from the light fitting in the motel room falling on the employee as a result of a defect in its wall mounting (not as a result of being pulled off by the employee or her acquaintance), then her injuries would be compensable. This is because the injury would have been sustained by reference to the place the employee had been encouraged to attend, creating the sufficient circumstantial nexus between the injury, the location and employer's inducement, to give rise to the employer's liability.
LESSONS FOR EMPLOYERS
This decision is significant for workers compensation claims for an injury that occurs during an "interval" on a temporary assignment away from the employee's normal work location. The circumstances in which the injury occurs must have a connection with the encouragement or inducement of the employer, for liability to arise. A temporal connection is not enough.
This is particularly relevant to employers who have employees travelling for business purposes.
The High Court's decision means that employers will not be liable for all injuries sustained while the employee is at a different work location for a temporary assignment.
The decision will exclude employers from liability for a wide range of injuries that had previously been regarded as compensable. There are numerous claims for which liability has been accepted in the past that would now be rejected based on the High Court's judgment.
Employers should always be aware that if they encourage staff to be involved in a particular activity outside of work, then an injury sustained whilst engaging in the activity may well be compensable under the employer's workers compensation policy. This should not deter employers for encouraging such activities. A common sense approach should be adopted however.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.