A majority of the High Court (4:2) has handed down a significant decision in Comcare v PVYW [2013] HCA 41, which has clarified the meaning of a "work-related injury" and closely examined what was said in Hatzminanolis v ANI Corporation Ltd (1992) 173 CLR 473 (Hatzimanolis).

Overturning decisions of the lower courts, the High Court has confirmed that Comcare was not liable to pay compensation to a Commonwealth employee who sustained injuries while having sexual intercourse at a motel room (booked and paid for by her employer) on a work trip to a regional town.

The Facts

A Comcare employee who had been required to visit a regional office in New South Wales on a two day trip, stayed overnight at a nearby motel booked by her employer. During the course of the evening at the motel, and whilst engaging in sexual intercourse with an acquaintance, the glass light fitting above the bed was pulled from its mount by either the employee or her acquaintance, striking the employee on her nose and mouth.

Following the incident, the employee claimed compensation under the Safety Rehabilitation and Compensation Act 1998 Cth (SR&C Act) for physical and subsequent psychological injury. An injury under the SR&C Act for which compensation is payable includes a physical or mental injury "suffered by an employee… arising out of, or in the course of, the employee's employment". [i]

Following rejection of the employee's workers' compensation claim by Comcare, the employee commenced proceedings in the Administrative Appeals Tribunal (AAT). The AAT concluded that the injuries suffered by the employee were unrelated to her employment and that she was therefore not entitled to compensation under the SR&C Act.

The employee appealed to the Federal Court which ruled in her favour, as did a subsequent Full Court of the Federal Court.

The Issue on Appeal

The question for the High Court, and the courts below it, was whether the employee's injuries were suffered "in the course of" her employment.

Applying the Hatzimanolis Principle

In making its decision, the High Court considered and applied the legal reasoning and principle stated in Hatzimanolis.

The principle in Hatzimanolis is centered on what the employer might have induced or encouraged the employee to do. It is that inducement or encouragement which creates an association or connection with the employee's employment.

In that case, Mr. Hatzimanolis was employed to work on a mine for six days each week and possibly on some Sundays. His employer provided him accommodation and supplied vehicles and transport to and from the mine. One Sunday, when not working, Mr Hatzimanolis participated in an employer-organised social trip. On the return journey, the work vehicle he was travelling in overturned, causing Mr Hatzimanolis serious injury.

The Court in Hatzimanolis identified two circumstances in which an injury may be regarded as sustained "in the course of" the employee's employment:

• where an injury was suffered by an employee whilst engaged in an 'activity' in which the employer had induced or encouraged the employee to engage; or
• where an injury was suffered at and by reference to a 'place' where the employer had induced or encouraged the employee to be.

Connection Between the Injury and the Employer's "Inducement or Encouragement"

The decision of Hatzimanolis has stood for over 20 years. It is a decision which has long provided a legal justification for making an injury, which occurred between periods of actual work, compensable by classifying the period between actual work as being "during the course of employment" and characterising the interval by reference to the employer's inducement or encouragement.

Injury and activity

Applying the reasoning in Hatzimanolis, the High Court held that where the circumstances of the injury involves the employee engaging in an activity (as they did here, the activity being sexual intercourse), the question will be whether the employer induced or encouraged the employee to engage in that activity, not whether the employer induced or encouraged the employee to be present at a place.

The majority held that clearly, the answer to the above question was "no" – her employer did not induce or encourage her to engage in sexual intercourse.

Injury and activity

The High Court further held that an injury occurring to an employee by reference to, or associated with, a place may involve something occurring to the premises or some defect in the premises.

The High Court gave the example that, if the light fitting, in this case, had been insecurely fastened into place and simply fell upon the employee, her injury would have arisen by reference to the motel and her employer would be responsible for her injury because it had put her in a position where the injury occurred.

It follows that liability in the above example, would be justifiable, but liability for everything that occurs while an employee is present at a place, is not.

Significance for Employers

The High Court's decision has clarified the principle in Hatzimanolis that, for an injury occurring in an interval during a period of work to be "in the course of employment", the circumstance in which an employee is injured must be connected to the inducement or encouragement of the employer.

As the majority held:

"An inducement or encouragement to be at a particular place does not provide the necessary connection to employment merely because an employee is injured whilst engaged in an activity at that place"[ii]

While the principles derived from Hatzimanolis remain, this recent decision narrows its application. The decision, which has implications broader than its impact on the Commonwealth insurance scheme, will be welcomed by employers across all jurisdictions, as it places a limit on an employer's liability where an employee may claim compensation for injuries sustained in an overall period of work where an employee participates in work related activities, such as travel, outside the confines of the usual work environment, and partakes in activities which are not 'induced or encouraged' by their employer.

Further information

Comcare v PVYW [2013] HCA 41 (30 October 2013)