Compensation for injuries: when is the accident work related?

Is sex gross misconduct? I will bring finality to the Australian case that we discussed previously in the May/June 2012 edition of SHEQ MANAGEMENT; Comcare versus PVYW. Comcare was the workers’ compensation insurer and PVYW the injured employee.

In this case, an employee went away on a business trip requiring her to stay overnight at a motel – where she met up with an acquaintance and they had sex. While so doing, a lamp in the motel room became dislodged and smashed into her face causing her some injury.

She submitted a workers’ compensation claim, which was rejected. She took the matter to the Administrative Appeals Tribunal (AAT), where the rejection was upheld. She then took that decision on appeal to the Federal Court, where the ATT’s decision was set aside.

From there, it progressed to a full bench of the Federal Court, which upheld the previous judgment. The matter proceeded from there to the High Court of Australia where the decision of the Federal Court was overturned. Essentially, the High Court found in favour of the insurer against the employee. It is this decision that is discussed here.

I have previously argued that workers’ compensation is based on the personal accident insurance policy. It is a statutory enactment of an insurance policy. As a general rule, what a policy does is pay a sum of money when a peril brings about an insured event.

Take a fire policy, for example. It indemnifies the insured against a loss caused by fire. So the peril here is fire and the event is the loss caused by fire. In this case, the policy is referred to as a specified perils policy. In this type of policy, the perils are usually defined in the exception.

It can happen that the range of perils is broadened to the point where the policy can be referred to as an all-perils policy. In this case, all perils are covered except those listed. These would usually include wear and tear, suicide – and so on.

A personal accident policy is essentially an all-perils policy. The intention is to provide very broad cover with very few excluded perils.

So, as a rule, a person injured at work will be compensated. The exception is if the injury is as a consequence of wilful, gross misconduct by the injured employee. As a general rule, the exclusion will be strictly interpreted to ensure the injured person receives compensation – even more so with workers’ compensation claims, as this is regarded as social legislation passed to ensure the injured employee receives compensation.

There is a second factor, not normally encountered in personal accident polices, which is not related to the question of the insured peril. The second issue in workers’ compensation is intended to cover work-related injuries and not non-work-related injuries.

So, if a person goes shopping over a weekend, slips in a shopping mall and is injured, this will not be a workers’ compensation claim. In this case workers’ compensation will not pay compensation as the accident was not work related.

There are, thus, two closely related questions which must be investigated in any workers’ compensation claim:

• Was the injury caused by an insured peril?

• When the employee was injured was he or she, broadly speaking, involved in work-related matters?

These two are so closely related that they are often confused …

Let us re-examine the case. Assume, for a moment, that the young lady had supper and went to bed, alone. Assume further that, while sleeping, the lamp still became dislodged and fell onto her face. Would she have received compensation? There is very little doubt that she would have. Was she injured by an insured peril? Yes, indeed, the falling lamp caused her injury.

The personal accident policy is an all-perils policy. The question, thus, becomes what the peril excluded. Well, the only exclusion would be her own gross misconduct. Sleeping while away from work in a motel is not gross misconduct.

The second question is: was the injury work related? Again, the answer would be yes. She was away on business sleeping in the motel room. She would, therefore, have received compensation. In fact, it is difficult to imagine a situation where she would not get compensation.

Assume she took a client out for supper and, while at the restaurant, slipped out to draw money from an auto-teller to pay for the supper. While there, she is injured in a robbery. No doubt she would get compensation.

So, why did she not get compensation in this particular case where she was injured while having sex?

It is suggested the court confused the two questions. The question, which I formulated earlier, is: When the employee was injured, was he or she, broadly speaking, involved in work-related matters? This question exists simply to draw a line between events which are, or are not, work related.

The Australian legislation used the phrase, “in the course of employment”. It is, thus, very easy to confuse the two questions and conclude that having sex is not in the course of employment.

The court decided (by majority vote) that an employee can get compensation where the injury was suffered by an employee while engaged in an activity in which the employer had induced, or encouraged, the employee to engage; or where an injury was suffered at a place where the employer had induced, or encouraged, the employee to be.

An injury sustained in these circumstances may be regarded as being sustained in the course of the employee’s employment. Presumably, what the court decided, since the employer did not induce or encourage the employee to have sex, was that the employee was, therefore, not entitled to compensation. On the other hand, the employer did induce the employee to be at the motel.

There was a minority judgement which found that the full bench was correct to conclude that, based on the undisputed facts, the employee’s injuries were sustained in the course of her employment.

A second minority judgement, with respect, managed to correctly separate the two questions and concluded the employee was, indeed, entitled to compensation.

The judge wrote:

“The two consecutive days that the respondent was required, by her employer, to visit the country town were an overall period of work. The overnight stay, between working hours, was an interval within that overall period of work. The respondent was at a place (sufficiently identified for the purposes of the case as the motel) at which her employer had encouraged her to be.

“In the absence of any suggestion that she was engaged, at the time of injury, in misconduct, those facts were sufficient to conclude that the injury the respondent sustained during that interval, and when at that place, was sustained in the course of her employment. The particular activity, in which the respondent was engaged at the time she was injured, does not enter into the analysis.”

She should have been entitled to compensation, because she was injured while involved in her employer’s business, and not as a result of any gross misconduct on her part. What she was actually doing was irrelevant, because workers’ compensation is not a specified perils type of cover.

Legally Speaking is a regular column by Albert Mushai from the school of Economics and Business Sciences, University of the Witwatersrand. Mushai holds a master’s degree from the City University, London, and was the head of the insurance department at the National University of Science and Technology in Zimbabwe before joining the University of the Witwatersrand as a lecturer in insurance.