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
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
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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