The SRC Report: In the Course of Employment Examining Intervals and Interludes

Welcome everybody to the SRC Report. My name is Yas Tiry. I'm a senior associate at McInnes Wilson in our Melbourne office, and I'm joined here by Chloe Callus, an associate in our Sydney office. Welcome, Chloe.

Thank you. Thank you for having me.

So today we're going to be talking about the aged-old issue of whether an injury arises out of or in the course of employment. We'll be discussing two important cases which set out the principles for intervals and interludes. That's Hatzimanolis and PVYW. We'll put the citations in the notes in this podcast so you can refer to it there directly if you like.

We'll also briefly be touching on the legislation that's applicable here, being Sections 5A, which sets out what an injury is, and then also Section 6, which sets out the circumstances where an injury is taken to arisen out of or in the course of employment. I'll first touch on here Section 5A of the legislation.

So in Section 5A, we know that for an employee to be entitled to compensation under the SRC Act, they've got to be entitled to Section 14 compensation. So that's the gateway. But before we get there, they have to have suffered an injury. And Section 5A sets out that an injury means a disease suffered by an employee or an injury other than a disease suffered by an employee that is a physical or mental injury arising out of or in the course of employment.

As you can see there, there's two separate types of injury. So there's the disease, being an ailment, but then there's a separate causation or test which needs to be satisfied for a disease. And that's in Section 5B. And that employment needs to be a significant contributing factor to the development of that ailment. But we're not touching on that today. We're more focused here on Section 5A(1)(b), where an injury other than a disease suffered by an employee which has arisen out of or in the course of the employee's employment. And that last phrase there is the causation test as to considering whether the injury happened at work or was due to work.

I'll pass on to Chloe now to go over the Section 6 circumstances. Thanks, Chloe.

Thanks, Yas. So if a connection can't be established in Section 5A, you look at Section 6 of the SRC Act, which gives you a list of circumstances which deems an injury to have a arisen out of or in the course of employment. You start at Section 5A, and if it doesn't fit, you go onto Section 6.

Now, the authority for that procedure is Linfox Australia and O'Loughlin. We'll put the citation to this in the notes of this podcast. Now in O'Loughlin, Section 6 of the SRC Act was found to be useful when a connection between an injury and employment cannot be established under Section 5A(1) of the SRC Act. It extends and clarifies the circumstances in which an injury may have a arisen out of or in the course of employment. And if you look at Section 6, the circumstances, which at least includes when an employee is temporarily absent from a place during an ordinary recess, when an employee is temporarily absent from their place of work, or when they are absent from their place of work undertaking an activity at the direction or request of the commonwealth or licensee.

Thanks, Chloe. I think that's a good segue now into this next case of Hatzimanolis and ANI Corporation, because it'll look at this person he was away from the workplace, but it also brings into other issues of where work started and where work ended, particularly being weekend work as well, which was allowed. And this gentleman was not working at the time.

So I'll go through the facts here. So Mr. Hatzimanolis was contracted for three months for electrical work at the Mount Whaleback mine in Mount Newman. The contract required him to work 10 hours a day, six days a week with the possibility of having to work some Sundays. Accommodation, living expenses, tools, vehicles, they were all paid for by his employer. The employee informed the group that there was a possibility that they might have to do some work on a Sunday. The employer also said if they've got a chance, they could also visit the areas and sightsee around Mount Newman and the Pilbara region of Western Australia.

So Mr. Hatzimanolis sustained his injury on the third Sunday after his arrival at Mount Newman. He wasn't required to work on that Sunday, and he had not been required to work on the first two Sundays. After he got there on the first Sunday, his employer gave him or made two of the vehicles available for use. They went sightseeing around the area. On the second Sunday, they went to the Newman show, but then they were driven back in the same work cars as well. And then the following week, the employer said, as they weren't going to be working that Sunday again, that they might take a trip to the Wittenoom Gorge, which was about 400 kilometers away.

Mr. Pope, the supervisor of the employer said, and these are his words, "I'm organizing a trip to Wittenoom this weekend for anybody who cares to come along." So everyone but one employee decided to go along. And on the Sunday after this conversation, they all went out on this journey in the two work cars. They took with them food that was provided from work as well. And on their return journey back from that sightseeing trip, they were in a car accident and Mr. Hatzimanolis injured himself in the vehicle when it overturned.

I won't go through the decision in too much detail because I'll bore you with reading some of the judgment, but what I'll do is I'll give you the decision. The high court found that Mr. Hatzimanolis sustained his injury in the course of his employment on the basis that his injury was sustained during an interval which occurred within an overall period of episode of work when he was engaged to work with his employer and during an activity that his employer had organized.

There's one little part here from the decision which I will point out, that in an extract here the court stated that, "It should now be accepted that an interval or interlude within an overall period or episode of work occurs within the course of employment if expressly or impliedly the employer has induced or encouraged the employee to spend that interval or interlude at a particular place or a particular way."

Now, you'll see here in the next case of PVYW that Chloe mentions where they take some of these tests here from Hatzimanolis, like the words that I've used of interval and interlude, expressly or impliedly induced or encouraged, and to spend that time in a particular place or in a particular way. And you'll see how now it evolves from Hatzimanolis now into PVYW. Over to you, Chloe. This is a quite interesting case that you'll pat on here....

It is.

... and I'm delighted to hear.

The infamous PVYW. I think almost everybody knows about Ms. PVYW and her work trip. So she was sent on a work trip by her employer to a regional town away from her ordinary place of residence. For the purpose of her trip, she was required to stay overnight at a motel and this was booked and paid for by her employer.

When Ms. PVYW finished work for the day, she met up with her friend who lived in town. She had dinner with this friend. And after dinner, they went back to the motel room where they engaged in sexual intercourse. In that process, a light fixture was pulled from above the bed, which struck her in the nose and mouth. And she made a claim for workers' compensation under the SRC Act in respect of those injuries.

She argued before the tribunal that because she was at the motel at the instigation of her employer, her injuries were suffered in the course of her employment and therefore were compensable. Now, this matter went to the tribunal, the federal court, full court ultimately Comcare appealed this decision to the high court.

Now, the majority held that in order for an injury sustained in an interval or interlude during an overall period of work, to be in the course of employment, the circumstances which the injury occurred must be connected to an inducement by the employer. The high court found that Ms. PVYW's injury was not referable to the hotel and her injury arose out of the activity that she was engaged in. The high court found that Ms. PVYW's employer did not induce or encourage her to engage in sexual intercourse and therefore her injury did not arise out of or in the course of her employment.

I think one of the important takeaways from PVYW that the high court found was when an activity was engaged in at the time of the injury, the question is did the employer induce or encourage the employee to engage in that activity? Again, when an injury occurs at or by reference to a place, the question is did the employer induce or encourage the employee to be there? If the answer to any of those questions is yes, then ultimately the injury would have occurred in the course of employment.

Great. Thanks, Chloe. That's really good insight into PVYW. I can see there that they've really taken the words from Hatzimanolis to PVYW and just expanded that a little bit further and given a little bit more guidance to it.

So now what we're going to do is I've got a little bit of a hypothetical scenario for you all to have a listen to. And it's just taking some of the principles that we've learned from Hatzimanolis and PVYW and we'll try and put into a practical sense just so give a bit of insight into the real circumstances that we come across. And as a HR manager, you'll see this come up a lot in traveling and Christmas parties and functions and events and things like that. So Chloe, can you take us through the scenario? And I hear Dwayne's got himself into a bit of trouble.

Yes, Dwayne has got himself into a bit of trouble. So Dwayne attended a work Christmas party with his colleagues. The flyer that his employer provided for the Christmas party stated that it was a department- arranged event and was encouraged that all employees attend. The event was located at a nearby arcade center. The event started at 6:00 p.m. and concluded at 11:00 p.m. Dwayne and his colleagues consumed about three standard drinks each at the arcade.

When the event concluded, Dwayne's manager suggested they all go back to another colleague's hotel room to continue their celebration. Dwayne suggested they stop at a bottle shop on the way to the hotel to get some more alcohol. He purchased the alcohol with his own money. Dwayne and several of his colleagues, including his manager, arrive at the hotel at about 11:30 p.m. They go up to the colleague's room and continue drinking.

Dwayne estimated he drank about six standard drinks at the hotel. At 3:00 a.m., Dwayne decided to go home. And as he stepped out of the elevator and entered the foyer, his foot caught under the edge of a rug causing him to fall forward onto his right wrist. He was taken to the emergency room and scans showed a comminuted fracture of his distal radius. Dwayne told the attending nurse he injured himself whilst at a work function that carried on into the night. He admitted that over the course of the night he had consumed about nine standard drinks.

So Yas, considering all of those facts, would you say Dwayne's injury was sustained out of or in the course of his employment?

Chloe, I think that sounds like a good night out to me. In all things being serious, looking at, yeah, whether the injury arose out of, in the course of employment or not, there's a few factors here which I'd like to focus on is, so you've first of all got that Christmas party that he's attended with his colleagues. And taking from those principles from Hatzimanolis and PVYW, it looks like there's some clear inducement or encouragement from the department. There was a flyer that's gone out and encouraged all employees to attend. So I think that's a good starting point to see, that's most likely in as the continuation of employment thereafter an interlude or a break.

But the real question here is that that second outing, once the arcade events finished and they've gone on to the colleague's hotel room. And I think where it gets a bit gray here is where Dwayne's manager suggested that they all go back to the colleague's hotel room. Question is does that extend the employment to the other colleague's hotel room? Because arguably the manager is an agent that's acting on behalf of the employer that's induced or encouraged Dwayne to be at this second place. That's certainly an argument there that it could be raised that he might've felt he was directed to go there or gone afterwards and to continue to celebrate. But then he was also drinking. So then that might take it outside the scope of employment if he's gone beyond what's reasonable in the circumstances.

My thoughts are here that it's likely to be in the course of employment just because there's that manager that's induced and told him to go to that next hotel room. But there's certainly... I think it would really depend as well on the relationships between the people. Are they more friends? Are the manager and him friends? Do they hang out outside of work or is it strictly a managerial relationship between the two? If it's the latter, I would think that it's more leaning towards being in the course of employment because there's less personal relationships. It's strictly work between them two in the ordinary sense that that might bring it back in.

So the second question I've got for you, Chloe. So let's assume, and let's mix up the facts a bit. Let's assume Dwayne couldn't attend the Christmas party, however he heard from another colleague that some other colleagues, including his manager, were going back to the colleagues' hotel room to continue celebrating. So in this circumstance, Dwayne, he didn't go to the first one. He wasn't invited strictly by the manager here, but he's gone by Chinese whispers to this party. And what are your thoughts on whether or not the injuries arisen out of or in the course of employment?

I would think in these circumstances that Dwayne's injury has not arisen out of or in the course of his employment. In this circumstance, Dwayne's only heard of the continuing celebration from a colleague. There's no inducement or encouragement from his employer to attend the hotel room. It's a bit different from the first circumstance where Dwayne was encouraged and expressly encouraged by his manager who he was with at the Christmas party. Whereas this time his attendance is voluntary. There's no inducement or encouragement from his manager. Rather, this comes from a friend or an employee.

So what about question three now? So let's assume Dwayne lived interstate and traveled to Canberra for the sole purpose of attending this work Christmas party. His flight to Canberra and accommodation were paid by the department. Two hours after the celebration at his colleague's hotel room. So we're still assuming here that he's gone to the arcade with work for the work Christmas party and he's gone to continue the celebrations with his manager at the colleague's hotel room. But then after that, so two hours after the celebration at his colleague's hotel room, Dwayne decided to go to the infamous Mooseheads to continue the party. While Dwayne was dancing, he slipped on some ice on the floor and hit his head. Dwayne suffered a contusion, so a bruise to his forehead. Did Dwayne sustain his injury out of or in the course of employment aside from his headache that he's going to have the next day?

I think one of the issues here is whether he was in an overall period of employment because he was in Canberra for the sole purpose of the Christmas party and this was facilitated by his employer. We need to look at the activity and the place that Dwayne wasn't attending. In this respect, he wasn't undertaking an activity, he wasn't in a place that was encouraged by his employer, and I think that takes him or he breaks the nexus of employment.

This sounds a bit familiar don't you think, Chloe? I think there's a case that you've been willing to talk about, you got hot and fired up that you want to mention to me.

A Ms. Dring.

That's the one. That's the one.

Yes.

What happened with Ms. Dring?

Ms. Dring was again a similar circumstance to PVYW. She was away for work. She was staying at a hotel which was organized and paid for by her employer. She was there for an overnight work trip. Now, she went out for a colleague and then after their night ended, she returned to the hotel that she was staying at. It was about 2:30 in the morning.

Yeah, that's right. Didn't they go out? I think they went out for dinner and they went out for some time afterwards. So it was two or three hours after they actually had the dinner and they went out drinking afterwards and she's come back.

That's right.

Late. Yeah.

Yeah. So when she returned to the hotel, she needed to go and use the bathroom. So she went and used one of the common bathrooms of the hotel instead of the bathroom in her room. And as she's entered the bathroom, she slipped on a wet floor and causing an injury to her hip.

Okay. Yep. Very similar here. It's an overall period of employment. She was only there for the sole purpose of work or the conference. Same here as Dwayne. He was here for the sole purpose of going to the Christmas party. Let's assume then that his managers induced him to go to the hotel room. But then the question is has he gone outside that employment after when he's decided to go out to Mooseheads? I think yes, he has. Similar to Ms. Dring. And so he's gone and he slipped on the ice on the floor. He'd of course have his own separate things that he might have to raise with Mooseheads, but that's not really relevant here. But yeah, I think it breaks that chain of causation.

Let's just say that for example, after the celebrations at the colleague's party, Dwayne's gone back to his hotel room and he's tripped on a rug. As he's just gone into his hotel room after that, you might think that it's likely that that'd be in the course of employment because he's gone back to the hotel room after being at two events that were induced or encouraged by his employer. So I think there's a tighter connection there with employment versus the one with the Mooseheads. He's gone outside the scope there just to take it a little bit too far.

Yeah.

So that's our hypothetical scenario. Hopefully, you all don't have too sore heads from hearing that as Dwayne would have from slipping on the ice. But there are a couple of key takeaways which we'd like to mention for HR managers in these circumstances because as you can see, there's quite often a lot of gray areas here where things can be taken to be induced or encouraged or suggested or facilitated by an employer when there are work functions, activities, Christmas parties, short-term stays, let's say traveling for work like Ms. Dring and Dwayne in our last example.

I think one of the key takeaways is that employers and HR managers really need to set out clear expectations on employees when attending events or traveling for work. And this could be done particularly by creating a policy or a procedure for employees that sets out the types of behaviors that are expected, the specific purpose for their traveling, so if it's for work purposes, and then anything that could be, I guess considered incidental to that. We know the necessities of going out for dinner or for lunch while I'm at work are likely to be in the course of employment. But what really...

That's within reason as well. Otherwise, you're going to have a Humphrey and Speechley situation on your hands.

Exactly, exactly. Yeah, Humphrey and Speechley went to a next town to go get some hot fish for lunch. Aside from that, I think yeah, there really needs to be clear correspondence from the HR or the employer that's facilitating or not facilitating these events. And I think that really needs to be straightly and expressly set out there that these aren't a work event or this is a work event. And then if it is a work event, certain things flow with that, whether there be policies and procedures as well. Do you have anything else to add, Chloe? Any other take-homes or suggestions?

No. I mean, I think you hit the nail on the head with that one. But I think this is especially important. We are coming into the silly season where we see a lot of Christmas parties and functions being organized, and I just think employers need to consider what they are expressly or impliedly encouraging their employee to engage in and, like you mentioned, ensuring that those policies and procedures are in place so that the employees know what is expected of them.

That's right. And I think it's all good and well to have these policies and procedures, but it'll definitely help with training, conveying it to the staff, the employees, they're undertaking this training or reading these policies and procedures so they're well aware of it. But thanks everyone for bearing with us and going through the journey of arising out of in the course of employment coupled with some intervals and interludes along the way. Thanks for Chloe for sharing some wisdom with us and we'll catch up with you soon on the SRC Report.

Thank you for having me.