The possible end to section 86(1)(b) terminations?

In this edition, we look at a recent decision where the Tribunal found that section 86(1)(b) terminations are not permanent and a decision delivered immediately after that which applied that legal principle.

SE v Crown Equipment Pty Limited [2025] TASCAT 195 (10 October 2025)

KC v Devonfield Enterprises Inc (No.2) [2025] TASCAT 196 (10 October 2025)

The law

Section 86 specifies circumstances in which an employer can terminate or reduce weekly payments.

Generally, suspension of weekly payments is different from termination or reduction of weekly payments. Prior to these decisions, it was commonly believed that section 86 scenarios allow permanent termination of weekly payments. Of course, injured workers had the right to challenge these permanent terminations and seek a reinstatement of weekly payments.

This article focuses on section 86(1)(a) and section 86(1)(b) only.

The first case, SE v Crown Equipment, examined the grammatical approach to statutory interpretation and the second case, KC v Devonfield, followed that reasoning.

What does section 86(1)(a) require?

This section concerns payments of weekly payments in respect of total incapacity and where a worker has ‘returned to work’.

Dianne Atkinson v Nipper Cleaning Services Pty Ltd, a 1993 decision from the Full Court of the Supreme Court of Tasmania is authority for the proposition that:

“a return to work occurs where, after the expiration of a period of incapacity, a worker returns as a settled or established member of the wage earning workforce with an employer by whom the worker was employed at the time of the commencement of the relevant period of incapacity whether or not that employer is the employer liable to make the payment of compensation referable to the injury.”

Simply put, section 86(1)(a) was believed to be applicable when an injured worker, after their incapacity expired, returned as an established member of the wage earning workforce. The situation may be nuanced if the worker returned to the workforce with a different employer (i.e., not the employer in whose employment the worker was injured). That is a topic of its own. Please contact Page Seager if you require advice on that topic.

What would be the approach to section 86(1)(a) now?

If a ‘grammatical’ approach to interpreting this section is the right approach, then for this section to apply, we will need three things to happen at the same time:

1. a worker must be receiving weekly payments;
2. a worker must be totally incapacitated; and
3. a worker must have returned to work.

It seems that it would be rare for all three things to happen at the same time, in the same week.

As such, it might be that section 86(1)(a) is virtually impossible to rely upon to terminate or reduce payments.

Further, while it is not explicitly stated, it is likely that the Tribunal may find that just like section 86(1)(b), the power to terminate or reduce weekly payments under section 86(1)(a) is not permanent.

What does section 86(1)(b) require?

For this section to apply, a worker must be in receipt of weekly payments for partial incapacity (as opposed to total incapacity) and the worker must be receiving weekly earnings in excess of the amount “upon which the amount of such weekly payment was determined”.

As noted above, the worker must be in receipt of weekly payments for partial incapacity and this section may not apply if the worker is certified as totally incapacitated. This might be obvious but the relevant provisions appear to be problematic.

The problematic situation

We accept that it is unlikely that in any given week, a worker is receiving weekly earnings while also certified as totally incapacitated. However, by the same token, a worker is unlikely to be “in receipt of weekly payments” and also be receiving earnings more than that weekly payment in any given week.

After all, if a worker is earning, their weekly payments are being topped up to the weekly payment rate set in the claim and if the worker is earning their pre-injury wage, then there would be nothing to top up by way of weekly payments.

However, as the law currently stands, this does not matter. This is because of the decision in SE v Crown Equipment.

What happened in SE v Crown Equipment?

In summary, in SE v Crown Equipment:

1. The worker was a field service technician but performed administrative duties at the relevant time.
2. The worker has only been able to earn more than his weekly payment rate when the employer has paid him overtime.
3. The Tribunal said because section 86(1)(a) and section 86(1)(b) do not require notice to be given to the worker, the termination cannot be intended to be permanent.
4. The Tribunal referred to scenarios such as when a worker with partial incapacity either receives an atypical or occasional increase in earnings or becomes incapacitated while undergoing treatment for their compensable injury. The Tribunal explained that, in those circumstances, permanently terminating weekly payments would be inconsistent with the ordinary meaning of the text of the section, the context of that part of the Act, and the beneficial nature of the Act.
5. The Tribunal found that the worker had experienced fluctuating levels of capacity, but that they constitute a single period of incapacity.

What happened in KC v Devonfield?

The facts in KC v Devonfield are substantially different to the facts in SE v Crown Equipment.

In SE v Crown Equipment, the Tribunal found that the worker’s earnings exceeded his weekly payment rate because the worker worked overtime. In KC v Devonfield, the worker returned to work eventually progressing to full pre-injury hours of 38 hours per week, or 76 hours per fortnight, but with restrictions.

In SE v Crown Equipment, the Tribunal found that the worker had experienced fluctuating levels of incapacity. The Tribunal said there were fluctuating levels of incapacity in KC v Devonfield but this might not be an intentional statement as the Tribunal noted earlier in the decision that the worker progressed to full pre-injury hours (with restrictions).

In SE v Crown Equipment, the Tribunal found that the termination of weekly payments was unlawful. There was no such finding in KC v Devonfield. Instead, following the decision in SE v Crown Equipment, the Tribunal said the employer was not entitled to permanently terminate the worker’s weekly payments.

There is a difference between an unlawful termination of weekly payments and not being entitled to permanently terminate weekly payments.

In SE v Crown Equipment, the question was whether the employer was entitled to permanently terminate weekly payments when the worker received overtime payments in excess of the weekly payment rate. However, other issues were also raised in KC v Devonfield which could be summarised as “whether payments should be reduced in any event”.

The Tribunal said, “The issues identified by the employer might with sufficient evidence be capable of establishing that the worker’s weekly payment should be reduced, perhaps to nil, but the evidence does not persuade me to make such a finding in the face of the medical certificates and the worker’s evidence.” The sufficiency of that evidence is another topic too but we conclude this article with the following observations and learning points.

Observations and learning points

Firstly, the exact meaning of section 86(1)(a) remains unclear especially if the strict literal and grammatic meaning is to be followed. As mentioned above, this section requires a worker to be receiving weekly payments for total incapacity (as opposed to partial incapacity) but also return to work.

Secondly, section 86(1)(b) is no different to section 69(1)(b) in its application. As such, does this section have any work to do at all?

Thirdly, as the law currently stands, section 86(1)(b) does not permit permanent terminations of weekly payments.