‘Arising out of or in the course of employment’ revisited

Legal Directions

Pioneer Studios Pty Ltd v Hills [2015] NSWCA 222 (4 August 2015)

The recent NSW Court of Appeal decision of Pioneer Studios Pty Ltd v Hills considered the concept of ‘in the course of employment’ in the context of an injury sustained between two discrete periods of employment, with an alleged connection to work.

The appellant employer is in the business of providing studios and equipment for photographic purposes. The respondent worker, Kathryn Hills, was employed by the appellant as a photographer.

On 13 March 2004, the premises of the employer were used to host a joint farewell and birthday party for an employee and two of his friends. The employer gave approval for the party but had no involvement in its organisation. When the respondent worker went to leave the party in the early hours of the morning, she fell over a balustrade in the stairwell onto the level below, suffering significant injuries to her shoulder and head.

The worker argued that her injury arose out of or in the course of her employment for the purposes of section 4 of the Workers’ Compensation Act 1987 (NSW), on the basis she was encouraged by the employer to attend the party and it had been suggested as a good opportunity to meet clients.

The employer denied the respondent was specifically encouraged to attend and argued it had no control over the party, including who attended.

The workers compensation claim was initially rejected and the worker filed an application in the Workers Compensation Commission. In January 2011, a Senior Arbitrator rejected her claim. That decision was successfully appealed; however, the award was then set aside by the New South Wales Court of Appeal in September 2012. The matter was referred back to the Workers Compensation Commission.

In October 2012, the worker was refused leave by the High Court of Australia to appeal the Court of Appeal’s decision and the matter then considered by the Workers Compensation Commission according to law. In July 2014, the Deputy President held that the worker’s injury did arise ‘out of or in the course of her employment’.

On appeal, the New South Wales Court of Appeal set aside the Deputy President’s 2014 decision and upheld the Senior Arbitrator’s 2011 determination that compensation was not payable. Basten JA, with McColl JA agreeing, found the Deputy President had erred in his approach to fact finding and made an error of law with reference to the test for when an injury is considered ‘in the course of employment’.

The Court of Appeal held that the finding that the worker was encouraged, or even induced, by the employer to attend the party was not reasonably open on the evidence, nor was it sufficient to render it part of her employment.

In addressing the legal test, Basten JA held that whether an injury occurred in the course of employment was to be determined by an objective characterisation of the employer’s requirements and expectations, though with no precise limitation to the contract of employment. It was held to be insufficient that the worker held a particular view about an obligation to attend which, on the evidence, was not shared by any other employee.

Basten JA referred to the High Court decisions of Hatzimanolis v ANI Corporation Limited (1992) 137CLR 473 and Comcare v PVYW [2013] HCA 41. A distinction was drawn between:

  • Injuries sustained in an overall period of work, such as when working away from home; and
  • Injuries that occur after ordinary working hours, to an employee who performs his or her work at a permanent location or in a permanent locality.

The first of those categories of injury – that is an injury sustained while away for work – would more likely be found to be arising out of or in the course of employment. Even so, the factual circumstances giving rise to the injury would need to be supported by an inducement or encouragement by the employer.

Key determinative factors included the nature and scope of employment and work-related activities. Employers ought to review the scope of employment and related activities in order to make conscious decisions about what is and what is not an employment-related event and ensure the employer’s actions reflect those decisions, including directives to employees and the commitment of time and resources.

In citing Hatzimanolis and PVYW, Basten JA confirmed not every activity an employer encourages or induces an employee to undertake will result in the employee acting in the course of his or her employment. An example provided by the High Court was that if an employer was to encourage a worker to see a doctor after working hours, an injury that occurred while the worker was visiting the doctor would not be an injury in the course of employment. Work Christmas parties and client functions, where employees are expected or compelled to attend, are examples of circumstances which may be considered ‘in the course of employment’. In that regard, employers should take care to identify foreseeable risks when deciding on details such as venues, times and food to drink ratios.

Authored by Emma Reilly, Partner and Bronti Ness, Lawyer, Canberra.

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