Australia: Workers compensation: mobile workers and state of connection

Workers' compensation benefits are payable under the legislation applicable in the state or territory to which the particular worker's employment is connected, except where a worker is covered under the federal scheme. To promote consistency between different schemes, the cross-border provisions are substantially similar in each of the states and territories.

Given this, the decision of the Western Australian Court of Appeal in Ethnic Interpreters and Translators Pty Ltd v SabriMatanagh [2015] WASCA 186 is particularly important in setting out the approach to identifying which jurisdiction a mobile worker's claim falls under, and provides greater certainty for employers and their insurers on mobile workers' compensation entitlements under the relevant state or territory's legislation.

Where is an employee located?

Mr Sabri-Matanagh was injured in the course of his employment as an interpreter. At the time of his injury he was working on Christmas Island, but historically his time was equally spent between Christmas Island and Victoria. Further, he had no separate base of work.

In all states and territories, a series of sequential or cascading tests are used to determine the state of connection issue. In working his way through the first and second of these tests, the primary judge considered whether there was any one state or territory in which Mr Sabri-Matanagh usually worked

With increasing reliance on the third "principal place of business" test, the decision in Mr Sabri-Matanagh's case has brought clarity and a sense of predictability to the result.

or was usually based. He observed the well established principle that "usually" meant customary and did not require a measure of the time spent at a particular location.

He concluded on the evidence that there was no one such location where he usually worked or was based and the judge moved to the third, "principal place of business" test. He observed that the employer had offices in both New South Wales and Victoria and accepted there was no one state or territory in which the principal place of business was located.

He then applied the fourth and final test, finding that Mr Sabri-Matanagh's employment was connected with Christmas Island—being the Territory in which he was injured.

The employer appealed the decision, submitting that the judge ought to have found that the third, "principal place of business" test identified New South Wales as the state of connection. It was submitted on behalf of the employer that the third test required an assessment of the location from where the business activities of the employer were principally controlled and managed.

The appeal was unanimously upheld, with the Court accepting the interpretation advanced by the employer. In this case, the employer's sole director worked at an office in Parramatta and made all operational decisions from that location. Consequently, the Court concluded that Mr Sabri-Matanagh's employment was connected with New South Wales, as the head office was based there.

Why is this decision important?

This decision highlights that employers must take out a policy in the state or territory to which each mobile employee is connected.

This is easier said than done and, in a workplace environment increasingly characterised by remote access and national and international mobility, it is not surprising that the "usually works" and "usually based" tests are less helpful than they used to be.

With increasing reliance on the third "principal place of business" test, the decision in Mr Sabri-Matanagh's case has brought clarity and a sense of predictability to the result.

Now, in this context, an employer's principal place of business is the principal place from which the business activities are managed or controlled, colloquially known as the "head office".

How has this issue been decided in other jurisdictions?

The decision in Ethnic Interpreters is consistent with that of the ACT Court of Appeal decision in Avon Products Pty Ltd v Falls (2010) 5 ACTLR 34, where the location of the head office also dictated the result of the "principal place of business" test.

It is also consistent with the decision in Weir Services Australia Limited v Allianz Australia Insurance Limited [2013] NSWSC 26 where the NSW Supreme Court confirmed that the principal place of business in this context is not the same as the principal place of business registered with ASIC under the Corporations Act 2001. In Weir Services, it was held that the expression "principal place of business" means the chief, most important or main place of business from where the employer conducts most or the chief part of its business.

What are the implications of this decision

On the face of it, the decision in Ethnic Interpreters and Translators Pty Ltd v SabriMatanagh consolidates and clarifies the law in this area and provides employers and brokers with a measure of certainty regarding the compensation entitlements of a mobile workforce.

We say only a measure of certainty because it seems unlikely that the test, as it currently stands, will be readily applied to all possible commercial arrangements. For instance, it is possible to envisage a structure where senior management with strategic responsibilities are located in one state or territory and operational activities are managed, at an equally high level, from another.

No doubt the law in this area will continue to evolve, keeping pace albeit slightly behind the evolution of employment and commercial arrangements in Australia.

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.

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