Insurance & Reinsurance

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Focus: Are you on the job while 'on the job'?

24 April 2012

In brief: A recent decision that has confirmed that compensation is available to an employee (injured while having sex in a hotel room during a work trip) highlights the broad scope under the current law as to when injuries will be regarded as having taken place during the course of employment. Partner John Edmond , Senior Associate Jonathan Light and Lawyer Stephen Lloyd report on the decision that has particular implications for employers and worker's compensation insurers.

How does it affect you?

  • Injuries suffered by employees outside normal working hours will ordinarily be compensable if they occur:
    • during an 'interval' in the overall work period; and
    • at a place where the employer has encouraged or induced the employee to be.
  • The employee does not have to show that the particular activity was expressly or impliedly induced or encouraged by the employer.
  • Engaging in sexual activity (or other private activity) in a hotel room during a work trip will not, without more, break the connection with employment.
  • Not all injuries will be covered merely because they occur at a place the employer has encouraged or induced the employee to be.

Facts and background

An employee was sent to a regional town to assist in a budgeting project and stayed at a hotel booked by her employer. Between 10 and 11 pm, the employee suffered injuries to her nose and mouth after a glass light fitting fell on her while having sex with a friend in her hotel room.

At first instance, Comcare rejected the employee's claim for compensation.1 The employee's appeal to the Administrative Appeals Tribunal (AAT) was rejected, with the AAT holding that the activity she was engaged in at the time the injury occurred was not sufficiently connected to her employment.

The law

Section 14 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (the Act) provides that Comcare will pay compensation for injuries suffered by employees in certain circumstances. 'Injury' is defined as an injury 'arising out of, or in the course of, the employee's employment.' The Act includes examples of activities arising in the course of employment, including off-site work.

The decision

Justice Nicholas in the Federal Court overturned the AAT's decision and made a declaration that the employee's injuries were suffered in the course of her employment.

Justice Nicholas set out the law in relation to injuries suffered by employees in between periods of actual work. His Honour drew a distinction between injuries occurring during an 'interval' in an overall period of work (such as a tea break) and injuries suffered in the gap between two discrete periods of work (such as at home after leaving work for the day). If the injury occurs in an 'interval' in an overall period of work, it may still be an injury sustained in the course of employment: 'an employee who is at a particular place at which he or she is induced or encouraged to be by his or her employer during an interval or interlude in an overall period or episode of work will ordinarily be in the course of employment.'

Justice Nicholas said that it may not be sufficient that the injury occurs at a particular place if the activities in an 'interval' were not expressly or impliedly encouraged or induced by the employer2 or were 'unrelated to the employment and not positively supported by the employer'.3 Justice Nicholas gave the example of employees being taken to a particular place solely for the purpose of engaging in a specific activity. In this case, the terms of the Act would also exclude self-inflicted injury or injuries arising out of serious and wilful misconduct.

The question then became whether, by engaging in sexual activity, the employee had broken the 'interval' and was no longer engaged in activities in the course of employment. Justice Nicholas said that the agreed facts in the case contained no evidence that the employer approved or disapproved of employees engaging in sexual activity in motel rooms, or that such activity was incompatible with the nature or terms of her employment.

The fact that the activity was a 'private' one did not interrupt the 'interval', because many activities taking place in a motel room are private, but would still maintain their connection to employment (such as showering or sleeping). Justice Nicholas also rejected the AAT's reliance on the fact that the employer had not approved the activity and did not know or reasonably expect that the employee would engage in that activity because it was not an ordinary incident of an overnight stay. He said that the relevant question was 'whether there was a relevant connection or nexus' between the injuries suffered and the employee's employment: 'the relevant connection or nexus to employment continued while the applicant was in the motel room in which her employer had induced or encouraged her to stay'.

Implications for employers and insurers

Although this case involved the Safety, Rehabilitation and Compensation Act, the concept of when an injury will be taken as 'arising out of or in the course of' employment is relevant to workers' compensation legislation and insurance generally.

The case demonstrates the broad scope of potential liability of employers and insurers for injuries suffered by employees during off-site work trips.

Although it is not dealt with expressly in the case, it leaves open the possibility that the employee may not have been entitled to recover if the employer had a policy in place setting out permitted activities that may be undertaken in hotel rooms on overnight stays. Because 'regard must always be had to the general nature, terms and circumstances of the employment', such a policy may limit the potential exposure of employers and insurers to claims arising from essentially personal activities taking place on work trips.

  1. The Safety, Rehabilitation and Compensation Act 1988 (Cth) establishes Comcare as the body responsible for assessing and paying workplace compensation claims by Commonwealth employees.
  2. Hatzimanolis v ANI Corporation Limited (1992) 173 CLR 473.
  3. Watson v Qantas Airways Limited (2009) 75 NSWLR 539 at [94].

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