Australia: When Is ´Suitable Employment´ Not Suitable? - Smorgon Steel Tube Mills Pty Ltd v Majkic

Last Updated: 26 March 2009
Article by Ashley McDonald and Samantha Lew

On 25 November 2008, the Court of Appeal determined, in a decision of Smorgon Steel Tube Mills P/L v Majkic, that when considering whether a worker has lost 40% of his work capacity, when comparing without injury earnings with actual earnings or earning capacity, both actual earnings and earning capacity need to be in 'suitable employment'.

In this case, the plaintiff, a machine operator and forklift driver suffered injury on 2 March 2002. In mid 2003, he had returned to work in light duties which were essentially office duties which comprised filing, photocopying and data entry. He eventually returned to full time hours which he worked up until early 2007 when his hours were reduced to 30 per week.

Notwithstanding that he was actually working, the trial judge relied on a report from a vocational assessor that said because of the worker's age, education, limited English and literacy skills, his past work experience and qualifications and the physical limitations imposed on lifting, sitting, standing and walking, he had no capacity for suitable employment.

On appeal, the employer argued the worker was earning money from personal exertion and it was irrelevant that he could not find suitable employment in the open market. It was contended that the words 'suitable employment' qualified only income the worker was capable of earning, not income actually earned.

The Court of Appeal rejected this argument and held that the phrase 'in suitable employment' applies equally to income a worker is earning and is capable of earning. The Court considered that the legislature intended a worker's loss of capacity was to be determined with regard to work that is generally available in the employment market, rather than a position manufactured to meet the limitations of a worker.

It follows from this that it is not sufficient for the purposes of the loss of earning capacity test in s134AB(37) of the Act, to simply show, that a worker is being paid income for duties being undertaken. To have income being paid to an injured worker for duties performed taken into account, it will be necessary to show that the income being paid to the worker, is derived from real work generally available in the employment market. Income paid to a worker for duties undertaken that are essentially manufactured or contrived for an injured worker, will be disregarded.

The hard lesson to be learned from this case is that no evidence that might see a worker succeed can be ignored by a defendant. The negative report of the vocational assessor was not challenged or rebutted, for the obvious reason that the worker was actually performing work.

Whilst alternative duties undertaken by an injured worker for example pursuant to a return to work plan may be evidence of a worker's capacity in a general sense, if the duties being undertaken do not in reality reflect "a real job" available in the open market, despite income being paid for the work being undertaken, independent evidence of "with injury" capacity for work, outside of the duties being undertaken, must be obtained.

Whether alternative duties being undertaken by an injured worker are "real" as opposed to contrived or manufactured will be a matter of evidence. If the alternative duties are integral to an employer's operations and someone else would be paid to undertake those duties if the inured worker did not perform them, one would think this would be convincing evidence that the work being undertaken

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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