Skip to Content, Skip to Navigation

Safeguard OSH Solutions - Thomson Reuters

Safeguard OSH Solutions - Thomson Reuters

Accident Compensation Cases

Verma v Accident Compensation Corporation (DC, 28/07/04)

Judgment Text

Judge M J Beattie
The issue in this appeal arises from the respondent's decision of 18 March 2003 whereby it declined the appellant's request for weekly compensation on the grounds that she was not an earner immediately prior to the commencement of her incapacity. 
The facts which are relevant to the determination of the issue arising in this appeal are not in dispute and I find them to be as follows: 
The appellant and her husband migrated to New Zealand from India in February 2000. 
The appellant was qualified as a teacher in India but could not find work as such in New Zealand, she only being able to obtain employment in childcare at childcare centres. 
In or about January 2002 the appellant commenced employment at a child care centre operated by a company named Bear Park Limited. 
The appellant worked up to 24 hours per week and between 21 January 2002 and 24 January 2003 she earned a gross sum of $8,949.00 from that employment. 
The appellant's husband obtained better employment at Morrinsville near Hamilton and was scheduled to commence this employment on or about 28 January 2003 with the appellant and her husband relocating to live in Hamilton for that reason. 
The appellant had her last day at work at Bear Park Ltd on 22 January 2003 and then she and her husband travelled to Hamilton over the Auckland holiday weekend to take up their residence there preparatory to her husband commencing his new job. 
On 28 January 2003 the appellant fell whilst out walking near the lake at Hamilton and injured her right knee and hip. The appellant sought medical treatment for her injuries and she was certified as being unfit for work from the date of her injury for a period of 31 days. 
The appellant sought cover under the Act for her injury and also sought payment of weekly compensation during the period of her incapacity. 
The respondent made certain enquiries regarding the appellant's employment at Bear Park Ltd and also sought further particulars from the appellant as to any intended employment in Hamilton. 
The information obtained by the respondent was that the appellant had not obtained any employment at Hamilton as of the date of her accident but that she had made contact with the YMCA, which had a childcare division, and that organisation had given her an expectation that she might obtain some childcare employment on a casual basis and that she would be placed on a list of people similarly so inclined for such work if and when it became available. 
By decision dated 18 March 2003 the respondent declined the appellant's claim for weekly compensation on the basis that she was not an earner at the time of her injury. The letter also advised that the appellant's earner status could not be extended past the date that she ceased employment with Bear Park Ltd as she had not received any holiday pay on termination of her employment and had not made any formal arrangement to take up employment in Hamilton. 
The appellant sought a review of that decision and a Review hearing took place on 30 July 2003 at which the appellant and her husband gave evidence. 
In her decision dated 14 August 2003 the Reviewer found that the appellant was not an earner at the date of her incapacity, that she had ceased her employment at Bear Park Ltd and that whilst she intended to take up employment in Hamilton no arrangements had been made to do so by the date of her accident. The Reviewer therefore confirmed the respondent's decision. 
At the conclusion of hearing submissions from the parties, I determined to adjourn the appeal to enable further enquiries to be made of Bear Park Ltd to ascertain the nature of the appellant's employment there and, in particular, whether at the cessation of her employment on 22 January 2002 there was a holiday pay content involved which may well have brought the appellant within Clause 43 of Schedule 1 to the Act. The Court has now received further particulars of the employment and also has received further submissions from the parties in relation thereto. 
The circumstances of the appellant's remuneration, and in particular holiday pay, have been stated by a Director of Bear Park Ltd as being that the appellant was paid an hourly rate of $11.28 for the hours she worked, together with a further 72 cents per hour being the assessed holiday entitlement. Thus the appellant received remuneration for her hours worked at the rate of $12.00 per hour made up of $11.28 ordinary pay and 72 cents holiday pay. No additional payment was made to the appellant at the time she ceased her employment. 
It is on the basis of that evidence that Ms Scott, Counsel for the Respondent, in written submissions, contended that as the appellant did not receive and was not entitled to receive holiday pay on the cessation of her employment, her employment could not be said to have continued past 22 January 2003. 
Counsel referred to the Court of Appeal decision of Drake Personnel (NZ) Ltd v Taylor [1996] 2NZLR 644. That decision concerned a consideration of Section 21 of the Holidays Act 1981 and of an employee's entitlement to receive holiday pay at the end of a contract of service. The Headnote of that decision sufficiently identifies the findings made by the Court of Appeal and that Headnote stated as follows: 
“Held: 1 While the payment required by s 21 of the Holidays Act 1981 did not become due and payable until the employment was terminated, the obligation was created as soon as the qualifying period of employment started to run. At any stage during that period, the employee would have an entitlement to be paid, on termination, an amount which could be calculated. The amount was not immediately payable, but it was an amount which must inevitably become payable either on termination or as payment for the taking of an actual holiday (see p 649 line 3). 
2 The Act did not prevent the employer from paying and the worker from accepting advance payments of holiday pay in anticipation for the holiday pay to become due under s 21. Where such anticipatory payments had been made and accepted, the worker did not on the termination of the employment become entitled to be paid a second time (see p 651 line1). ”
Ms Scott submitted that as the appellant had received her holiday pay as part of her hourly rate she was not eligible to be paid any holiday pay a second time and therefore there is no holiday entitlement which could bring her within Clause 43(2)(b) of the Act and thereby extend her employment past the date when it had in fact ceased. 
The statutory provisions applicable in this appeal are those of Clauses 32 and 43 of Schedule 1 to the Act. Clause 32 is the primary provision which requires the Corporation to pay weekly compensation for loss of earnings to a claimant who has incapacity resulting from personal injury and who was an earner immediately before his or her incapacity commenced. It is the respondent's assertion that the appellant was not an earner immediately before her incapacity commenced and it gave that as the reason for declining her request for weekly compensation. 
It is the case that this Court has construed the word “immediately” strictly and two oft cited decisions of this Court in Hardie (256/02) and Vasquez (146/96) confirm that interpretation. The practical effect of those decisions is that the claimant must have been in employment at the time of becoming incapacitated. This would mean that if a claimant was “between jobs” when he/she had the misfortune to become incapacitated then the fact that the claimant had every expectation of obtaining further employment would not assist in giving eligibility. This would be the situation, prima facie, which pertained to this appellant, as I find on the facts that she was “between jobs” when she suffered the incapacitating injury. 
Possibly as a balance to that strict interpretation of “immediately” the Act provides for some amelioration by reason of Clause 43 of Schedule 1. That Clause in its entirety states as follows: 
“43. Weekly earnings if employee's employment ended before commencement of incapacity 
Subclause (2) applies to a claimant who has ceased to be an employee before his or her incapacity commenced. 
The claimant is deemed to continue to be an employee for the purposes of this schedule for the longer of — 
14 days from the date he or she ceased to be an employee, if he or she — 
had been an employee within 14 days before his or her incapacity commenced; and 
would have been an employee within the period specified in subclause (3) after the date on which his or her incapacity commenced, but for the incapacity; or 
the period for which payments — 
that the claimant is entitled to receive on ceasing employment; and 
on which earner levy is payable — constitute earnings under subclause (4). 
For the purposes of subclause (2)(a)(ii) the period is — 
3 months unless paragraph (b) applies: 
12 months if — 
the employee was employed in seasonal employment with the same employer as he or she had been employed in the 2 seasons before the employee's incapacity commenced; and 
the employer confirms that the employee could reasonably have expected to be re-employed in the season after the employee's incapacity commenced. 
A claimant deemed by subclause (2)(b) to continue to be an employee is deemed to be deriving earnings at the same rate as he or she derived earnings while in employment immediately before he or she ceased to be an employee. 
For the purposes of calculating the claimant's weekly earnings, the date his or her incapacity commenced is deemed to be the last date of employment. 
Depending on the circumstances of the personal injury, payments under this clause come from the Earners' Account, the Motor Vehicle Account, or the Medical Misadventure Account. ”
Thus it is the case that if the appellant can bring her circumstances within either of the alternatives provided for in Clause 43(2)(a) or (b) then she would have an entitlement to weekly compensation. 
I have considered the facts of this case in relation to (2)(a) and find that whilst it is clear that the appellant had been an employee within 14 days of the commencement of her incapacity, there was no sufficient certainty of any employment after the date of the commencement of her incapacity. 
I find that the appellant's prospective employment as a casual childcare employee was one only where there was an expectation held out to her, but at best she was to be one of a number contained on a list which the YMCA might call upon if the need for her services arose. Whilst I accept that there was some prospect of employment in those terms, I do not find that the appellant could bring herself within the definition of being an employee, that is, being engaged in employment for pecuniary gain. The timing of her injury in that regard was most unfortunate for her as it had occurred before she was in a position to arrange any proper employer/employee relationship with the YMCA, and which I find was itself only one of the prospects which the appellant had intended to pursue. 
Accordingly, I find on the facts that the appellant cannot bring herself within the statutory requirements of Clause 43(2)(a)(ii). 
However, I find that the situation is quite different when one has regard to Clause 43(2)(b). The evidence makes it clear that in the 12 months of employment down to the cessation thereof on 22 January 2003, the appellant received 72 cents for each hour worked as holiday pay and whilst the Court has not been made aware of what that holiday pay content is in actual dollar terms, I find that it can be inferred that it would constitute a significant number of hours. 
The appellant ceased her employment on Wednesday, 22 January 2003, and there were the dates of 23 and 24 January when she could be regarded as being on holiday. I take it to be the case that the weekend would not come into calculation and Monday, 27 January, is Auckland Anniversary Day and is a statutory holiday. The appellant's accident occurred on 28 January and I find that in terms of Section 43(2)(b) her holiday pay would have more than covered the two days, or possibly three, if one takes into account 28 January, that had elapsed following the cessation of her employment. 
I note the decision of Drake Personnel (NZ) Ltd v Taylor relied on by the respondent, but that decision was wholly involved in an employee's entitlement to holiday pay and the circumstances in which that payment could be made or could be expected to be received. Whilst it is the case that the appellant could not expect a further payment of holiday pay at the cessation of her employment because she had already received payment, nevertheless I find that the holiday must be taken to be the period of days following cessation, and as I have found, the amount of holiday pay that this appellant received would have been more than sufficient to cover at most three days holiday at the end of 12 months employment. 
Accordingly, I find it is the case that this appellant can, by reason of the fact of receiving holiday pay and the close proximity of the commencement of her incapacity to the date of cessation of her employment, bring herself within the period for which payment of holiday pay was made and which constitutes earnings in terms of subclause (4). 
For the foregoing reasons, therefore, I find that the respondent was wrong to decline the appellant's request for weekly compensation and that decision is hereby quashed. I direct that the respondent now calculate and make payment to the appellant of the amount of weekly compensation to which she is entitled. 
I make no order for costs as the appellant was represented by her husband. 

From Accident Compensation Cases

Table of Contents