Pearson and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 634 (29 July 2010)

Administrative Appeals Tribunal

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Pearson and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 634 (29 July 2010)

Last Updated: 24 August 2010

Administrative Appeals Tribunal

ORAL DECISION AND WRITTEN REASONS FOR DECISION [2010] AATA 634

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2010/1036

GENERAL ADMINISTRATIVE DIVISION		)
	Re		JOSEPHINE PEARSON

Applicant

And

SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

ORAL DECISION

Tribunal

M J Carstairs, Senior Member

Date 29 July 2010

Place Toowoomba

Decision

For the reasons given orally at the hearing, the Tribunal affirms the decision under review.

....................[Sgd]..........................

Senior Member

CATCHWORDS

SOCIAL SECURITY – Youth allowance – Independent rate – Receipt of scholarship funds – Study at university – Meaning of “paid work” – Applicant has not supported herself through paid work – Applicant is not an employee – No entitlement to independent rate – Decision under review affirmed.

Social Security Act 1991 (Cth), s 1067A(10)

Re Bonnefin and Secretary, Department of Education, Science and Training [2006] AATA 471; (2006) 90 ALD 451

WRITTEN REASONS FOR ORAL DECISION

24 August 2010

M J Carstairs, Senior Member

1. Josephine Pearson is studying medicine on a scholarship from Queensland Health.
2. She seeks review of a Centrelink decision denying her the payment of her youth allowance at the (higher) “independent” rate.
3. At the hearing in Toowoomba on 29 July 2010, I gave oral reasons affirming the decision under review. Ms Pearson has requested these written reasons.
4. What the matter comes down to is whether Ms Pearson can be treated as “independent” on the basis that the payments she receives under her scholarship satisfy a requirement in the Social Security Act 1991 (“the Act”) that she “has supported herself through paid work”[1] during relevant times.
5. There is a presumption in the Act that a young person under 25 years of age will be dependant, and that the parents’ income then will be taken into account when assessing youth allowance. However, such a person can establish they are “independent” of their parents.
   
6. Section 1067A(10) of the Act states that:

(10) A person is independent if the person has supported himself or herself through paid work consisting of:

(a) full-time employment of on average 30 hours per week for at least 18 months during any period of 2 years; or

(b) part-time employment of at least 15 hours per week for at least 2 years since the person last left secondary school; or

(c) a period or periods of employment over an 18 month period since the person last left secondary school, earning the person at least the equivalent of 75% of:

(i) the maximum rate of pay under Wage Level A of a transitional Australian Pay and Classification Scale or modern award generally applicable to trainees; or

(ii) that maximum rate as varied or replaced from time to time by Fair Work Australia;

that applied at the start of the period of employment.

7. The parties agreed that Ms Pearson would only satisfy the test of independence if she came within the requirements of s 1067A(10)(c) of the Act. For that to occur, she needed to satisfy the precondition that she had supported herself through “paid work” consisting of one of the types of employment identified in the Act.
8. Mrs Barbara Pearson, Ms Pearson’s mother, has researched and presented increasingly detailed submissions at each level of review: to the authorised review officer, the Social Security Appeals Tribunal and to this Tribunal.[2] A good summary of the general thrust of these submissions is as follows:[3]

Under the definitions I clearly comply as an employee because I am:

1. under a Contract of Service to Qld. Health;
2. receiving a salary or wage by definition; I receive a salary or wage in exchange for work undertaken under Qld. Health control and direction as to the work performed and the way it is done;
3. subject to PAYG tax deductions.

Work is defined in the Concise Oxford Dictionary as: engage in bodily or mental work, carry on operations (at or on thing), make efforts (for or against cause) [Tribunal emphasis added].

9. Mrs Pearson said at the hearing that it is regrettable that the Act provides no definition of what is “work”. It was her submission that in the modern workplace, the concept of “work” is more flexible than in the past. These days, she submitted, volunteers can be working beside paid employees, and the old “industrial model” is a thing of the past. Not only was her daughter engaged mentally, but she was doing practical work in the course of her studies that was indistinguishable from others in medical settings, such as admitting patients, charting notes and carrying out basic procedures.
10. However in the context of the Act, the term “paid work” (although not defined) does not have the wide meaning that Mrs Pearson suggests. In the law, absent a specific definition provided for in an enactment, a word (particularly one in common usage) will ordinarily be given its common meaning. “Work” is such a word. However many words have multiple meanings and some have different shades of meaning when used as a verb when compared with their usage as a noun.
    
11. Much depends upon interpreting the word in its context in the Act. In the context here the word “work” is used as a noun, qualified by “paid”. In making the submissions referred to above, Mrs Pearson was examining the meaning of “work” when used as a verb. I do not agree with her submission that the word can be interpreted that way in the Act.
    
12. Mrs Pearson’s core submission however was that Ms Pearson, whilst studying and being paid under the scholarship, was, because of the particular terms of the contract, an employee receiving a wage.
13. The scholarship was referred to in a letter from the Acting Workforce Planning Officer at Queensland Health’s Office of Rural Health.[4] The letter stated that Ms Pearson commenced as a scholarship holder on 27 May 2009 and would receive “financial assistance” made up of :
    • (i) fortnightly living allowance;
    • (ii) a tertiary grant; and
    • (iii) annual travel and conference allowance.
      
14. The letter next stated that the total scholarship was $21,000 gross per year, and was “taxable income”. Mrs Pearson placed considerable weight on the scholarship being taxable income. However, that is an unexceptionable proposition under the Income Tax Assessment Act 1936 (“the Tax Act”), where the compass of the definition of income is wide. Social security payments, for example, are also “taxable income”. I would simply make the observation that coming within the definition of income under the Tax Act is not the same as meeting the qualifying requirement here of having to support oneself through “paid work”.
    
15. Other documentation from Queensland Health variously, and somewhat confusingly, referred to Ms Pearson sometimes as “scholarship holder” and sometimes as an “employee”.[5] When called upon to describe her status to the Tax Office in other documents,[6] Ms Pearson nominated “full-time employment” as the basis upon which she was being paid. Of course this is not determinative of the matter, but I can certainly understand the confusion that the various descriptions of her status have engendered.
    
16. I regard certain other matters as more telling in the determination of the case. The Letter of Offer[7] of the scholarship, for instance, nowhere suggested that Ms Pearson was to immediately become an employee of Queensland Health.
    
17. It seems to me that the terms of the Queensland Rural Scholarship Scheme Agreement (“the Agreement”) ultimately determine the true relationship between Ms Pearson and Queensland Health. That Agreement expressly identifies Ms Pearson as “the student” in its Schedule. [8] Ms Pearson signed the Agreement as such.[9]
    
18. The Agreement provides a contract under which Queensland Health will pay the Scholarship Funds during the Study Period, in return for which Ms Pearson will “complete a period of service at a rural location”.[10] The Agreement defines the “study period” during which scholarship funds are to be paid[11] and the “service period” during which Ms Pearson agrees to be employed by Queensland Health.[12] The Agreement makes explicit that employment is to commence only after Ms Pearson has completed the requirements for her Degree.[13]
    
19. Under the Agreement, Ms Pearson is not currently an employee of Queensland Health, but is studying during that period which the Agreement defines as being the “study period”. The Agreement’s wording makes plain the “future” nature of Ms Pearson’s proposed employment and the “present” nature of her student status. In that regard I would agree with the submission of Mr Letch, who appeared for the respondent, that the Agreement is not a contract of employment but is an agreement under which Queensland Health has undertaken to offer[14] (and Ms Pearson is obliged to accept)[15] full-time employment commencing after her studies are completed.
    
20. The scholarship is not a “wage” paid to Ms Pearson for the labour and effort she is currently expending in her studies. (Although Queensland Health may terminate the Agreement[16] if she fails to comply with her obligations, such as passing all subjects in which she enrols.[17]) Nor is the scholarship paid to her in return for the work she will later do during the “service period”. The scholarship funds are instead given in return for her agreement to complete the service period at a rural location.[18] It is at that future time that she will receive a wage in return for being so employed. Despite the receipt of scholarship funds as taxable income as detailed in the letter of the Acting Workforce Planning Officer, Ms Pearson is not undertaking “paid work”.
    
21. If there were any doubt about Ms Pearson’s current status, clause 9.3 of the Agreement removes it. That clause provides that the consequence of the Agreement being terminated due to Ms Pearson being in breach of her obligations is that she would have to repay all scholarship money paid to the date of breach. This has no equivalent in what would happen on termination of employment in an ordinary relationship of employer/employee.
    
22. I agree that some of the information in the Queensland Health Rural Scholarship Holder Handbook presents a rather confusing picture, including:

All scholarship holders are considered employees of Queensland Health when they sign their Scholarship contract. Therefore Scholarship Holders are indemnified by Queensland Health when performing duties as per their Queensland Health Rural Scholarship Scheme contract. [19]

23. But commentary of that kind in the supporting documentation does not alter the real nature of the agreement between Ms Pearson and Queensland Health. Understandably though, Ms Pearson has relied on such material to form a view of her employment status. She also points out that, like a wage earner, she is required to contribute to superannuation. She also accrues leave entitlements. However these are only indicators of certain entitlements, and they do not persuade me away from the conclusion that Ms Pearson is not undertaking paid work at present.
    
24. Both parties referred to an earlier Tribunal decision Re Bonnefin and Secretary, Department of Education, Science and Training [2006] AATA 471; (2006) 90 ALD 451. In deference to those submissions I would simply observe that I do not see the facts in Re Bonnefin as sufficiently on point to be of much assistance. The question at issue in that case was rather different. On first principles, I would agree with the Social Security Appeals Tribunal that the Agreement provides for a contract to study now, with offered employment coming later. That said, Ms Pearson at this time does not qualify for youth allowance at the independent rate as she does not satisfy s 1067A(10)(c) of the Act.
    
25. The Tribunal affirms the decision under review.
    

I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of M J Carstairs, Senior Member.

Signed: .........................[Sgd]...........................................

Mátyás Kochárdy, Associate

Date of Hearing 29 July 2010

Date of Oral Decision 29 July 2010

Date of request for Written Reasons 4 August 2010

Date of Written Reasons 24 August 2010

Advocate for the Applicant Mrs B Pearson

Solicitor for the Respondent Mr S Letch

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[1] Section 1067A(10) of the Act.
[2] Exhibit A1.
[3] T4 at p47.
[4] T4 at 39.
[5] See, for example, T4 at 40.
[6] T4 at 41.
[7] T6 at 84.
[8] See T6 at 89.
[9] T6 at 107.
[10] T6 at 89.
[11] Three years, ending 31 December 2012, as defined in Item 4 of the Agreement’s schedule: see T6 at 104.
[12] Three years: see clauses 8.1(b) (T6 at 96) and 1.1 (T6 at 90) of the Agreement.
[13] See the Agreement at clauses 8.6(a) and 7.1(a)(ii): T6 at 97 and 95, respectively.
[14] Clause 8.1(b) of the Agreement: T6 at 96.
[15] Clause 8.3(a) of the Agreement: T6 at 96.
[16] Clause 9.2(a) of the Agreement: T6 at 97.
[17] Clause 3.1(c) of the Agreement: T6 at 93.
[18] T6 at 89: Background, part C.
[19] T6 at 113.