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Merit review WC021/18

Our Reference: 021/18
Date of review:

Findings on review

  1. The following finding is made by the State Insurance Regulatory Authority (“the Authority”) on review and is to be the basis for the Insurer’s review decision.
  2. The amount of the worker’s pre-injury average weekly earnings (“PIAWE”) is:
  • $1,730.00 per week (first 52 weeks)
  • $1,230.00 per week (after 52 weeks)

Recommendation based on findings

  1. The following recommendation made by the Authority is binding on the Insurer and must be given effect to by the Insurer in accordance with section 44(3)(g) of the Workers Compensation Act 1987 (“the 1987 Act”).
  2. The Insurer is to determine the worker’s entitlement to weekly payments of compensation and pay the difference to what they have been paid and what they are entitled to be paid in accordance with the finding of their PIAWE above.

Background

  1. The worker sustained a foot injury while working for their pre-injury employer.  The accepted date of injury is in January 2017.
  2. In March 2017, the Insurer made a work capacity decision which determined the worker’s PIAWE to be $1,410.40 per week.
  3. The worker applied for a review of the calculation of their PIAWE. The Insurer conducted the review in May 2018 and determined the worker’s PIAWE to be $1,640.00 per week.
  4. The Authority received the application for merit review in May 2018.  I am satisfied the application was made within 30 days, as is required under section 44BB(3)(a) of the 1987 Act.

Legislation

  1. The legislative framework governing work capacity decisions and reviews is contained in the:
  2. Section 43 of the 1987 Act describes a “work capacity decision”.
  3. Section 44BB of the 1987 Act provides for merit review of a work capacity decision of the Insurer, by the Authority.

Information considered

  1. The information that I have considered in making this decision is the information attached to the application for merit review and the Insurer’s reply and any other information that has been supplied by the parties, which I am satisfied has been exchanged between them.

Submissions

  1. In the application for merit review, the worker, through their representative, submits:
    • “The ‘relevant period’ for PIAWE is such that the total earnings are divided by the number of weeks worked in the 52 weeks prior to the date of injury. The worker did not work from 23/6/16 to 19/10/16. The worker did not receive pay and did not receive leave. Therefore, it cannot be included when calculating PIAWE.
  2. In reply, the Insurer submits:
    • The worker’s PIAWE was determined under sections 44C(1)(a) and 44C(1)(b) of the 1987 Act.
    • The worker’s PIAWE is $1,587.13 for the first 52 weeks ($1,640.00 following indexation) and $1,103.50 after 52 weeks ($1,150.00 following indexation) as outlined in paragraphs 36 and 50 of the internal review decision.
    • The period 23/6/16 to 19/10/16 was excluded from the PIAWE calculation.

Reasons

Nature of merit review

  1. This matter involves a merit review of the work capacity decision/s of the Insurer in accordance with section 44BB(1)(b) of the 1987 Act.
  2. The review is not a review of the Insurer’s procedures in making the work capacity decision and/or internal review decision.  The review requires that I consider all of the information before me substantively on its merits and make findings that, in light of the information before me, are most correct and preferable.

Pre-injury average weekly earnings (PIAWE)

  1. There are a number of issues raised by the parties that should be addressed before I proceed to calculate the worker’s PIAWE.
  2. From the payslips provided, I agree with the worker’s submission that they did not work from 23/6/16 to 19/10/16 and accordingly this period should be excluded from the relevant period.  I note from the Insurer’s submissions that this is not in dispute.
  3. In their letter to the Insurer dated May 2018, the worker has calculated their total gross earnings which appear to include all amounts detailed in the payslips provided.  In my view, there are some weeks and amounts which should not be included in the PIAWE calculation.
  4. There is a pay period 22/6/16 to 22/6/16 where the worker received a gross payment of $4,940.08.  This payment does not cover any particular “week” and appears to be annual leave that was cashed out.  The same applies for the pay period 20/12/16 to 20/12/16.  To include these amounts in the calculation of the worker’s PIAWE would require additional weeks to be added to the relevant period.  As I do not know how many weeks these payments represent, I have excluded these amounts from the below calculations.
  5. There are also a number of loadings and monetary allowances that, by operation of the definition of base rate of pay in section 44G of the 1987 Act, should be excluded from the worker’s PIAWE.  These include productivity allowance, tool allowance, site allowance and fares for weekend work.
  6. I note that the Insurer has not factored in RDOs (rostered day off) and public holidays which in my view form part of the worker’s ordinary earnings.
  7. The legislation surrounding the calculation of a worker’s PIAWE are set out and discussed below.
  8. “Pre-injury average weekly earnings” is defined by section 44C(1) of the 1987 Act as:

    (1) In this Division, pre-injury average weekly earnings, in respect of a relevant period in relation to a worker, means the sum of:

    (a) the average of the worker’s ordinary earnings during the relevant period (excluding any week during which the worker did not actually work and was not on paid leave) expressed as a weekly sum, and

    (b) any overtime and shift allowance payment that is permitted to be included under this section (but only for the purposes of the calculation of weekly payments payable in the first 52 weeks for which weekly payments are payable).

  9. The “relevant period” is defined by section 44D(1) of the 1987 Act:
  10. (1) Subject to this section, a reference to the relevant period in relation to pre-injury average weekly earnings of a worker is a reference to:

    (a) in the case of a worker who has been continuously employed by the same employer for the period of 52 weeks immediately before the injury, that period of 52 weeks, or

    (b)  in the case of a worker who has been continuously employed by the same employer for less than 52 weeks immediately before the injury, the period of continuous employment by that employer.

  11. “Ordinary earnings” are defined by section 44E of the 1987 Act as:
  12. (1) Subject to this section, in relation to pre-injury average weekly earnings, the ordinary earnings of a worker in relation to a week during the relevant period are:

    (a) if the worker’s base rate of pay is calculated on the basis of ordinary hours worked, the sum of the following amounts:

    (i) the worker’s earnings calculated at that rate for ordinary hours in that week during which the worker worked or was on paid leave,

    (b) in any other case, the sum of the following amounts:

    (i) the actual earnings paid or payable to the worker in respect of that week,

    (2) A reference to ordinary earnings does not include a reference to any employer superannuation contribution.

  13. “Base rate of pay” is defined by section 44G of the 1987 Act as:
  14. (1) In relation to pre-injury average weekly earnings and current weekly earnings, a reference to a base rate of pay is a reference to the rate of pay payable to a worker for his or her ordinary hours of work but does not include any of the following amounts (referred to in this Division as base rate of pay exclusions ):

    (a) incentive based payments or bonuses,

    (b) loadings,

    (c) monetary allowances,

    (d) piece rates or commissions,

    (e) overtime or shift allowances,

    (f) any separately identifiable amount not referred to in paragraphs (a) to (e).

  15. The worker has provided 52 weeks of payslips for the period 52 weeks before the injury dating from 14/1/16 to 25/1/17.  I have excluded the first payslip (14/1/16 to 20/1/16) as this is outside the relevant period.  Other weeks were excluded on the basis that the worker did not work and for other reasons discussed above.
  16. Table 1 sets out the amounts that I consider to be the worker’s ordinary earnings on a week by week basis for the relevant period.

Table 1

Week # Week periodHoursRateTotal
1 21/01/16 – 27/01/16 21.6 + 7.2 + 7.2 = 36 33.03 $1,189.08
2 28/01/16 – 3/02/16 36 33.03 $1,189.08
3 4/02/16 – 10/02/16 36 33.03 $1,189.08
4 11/02/16 – 17/02/16 36 33.03 $1,189.08
5 18/02/16 – 24/02/16 36 33.03 $1,189.08
6 25/02/16 – 2/03/16 28.8 33.85 $974.88
7 3/03/16 – 9/03/16 36 33.85 $1,218.60
8 10/03/16 – 16/03/16 36 33.85 $1,218.60
9 17/03/16 – 23/03/16 36 33.85 $1,218.60
10 24/03/16 – 30/03/16 7.2 + 14.4 + 7.2 + 7.2 = 36 33.85 $1,218.60
11 31/03/16 – 6/04/16 36 33.85 $1,218.60
  7/04/16 – 13/04/16 Did not work Did not work  
  14/04/16 – 20/04/16 Did not work Did not work  
  21/04/16 – 27/04/16 Did not work Did not work  
12 28/04/16 – 4/05/16 21.6 33.85 $731.16
13 5/05/16 – 11/05/16 36 33.85 $1,218.60
14 12/05/16 – 18/05/16 36 33.85 $1,218.60
15 19/05/16 – 25/05/16 36 33.85 $1,218.60
16 26/05/16 – 1/06/16 36 33.85 $1,218.60
17 2/06/16 – 8/06/16 36 33.85 $1,218.60
18 9/06/16 – 15/06/16 21.6 + 7.2 + 7.2 = 36 33.85 $1,218.60
19 16/06/16 – 22/06/16 36 33.85 $1,218.60
20 20/10/16 – 26/10/16 21.6 34.70 $749.52
21 27/10/16 – 2/11/16 34 34.70 $1,179.80
22 3/11/16 – 9/11/16 36 34.70 $1,249.20
23 10/11/16 – 16/11/16 36 34.70 $1,249.20
24 17/11/16 – 23/11/16 36 34.70 $1,249.20
25 24/11/16 – 30/11/16 36 34.70 $1,249.20
26 1/12/16 – 7/12/16 36 34.70 $1,249.20
27 8/12/16 – 14/12/16 36 34.70 $1,249.20
28 15/12/16 – 21/12/16 36 34.70 $1,249.20
  22/12/16 – 28/12/16 Did not work Did not work  
  29/12/16 – 4/01/17 Did not work Did not work  
29 5/01/17 – 11/01/17 28.8 34.70 $999.36
30 12/01/17 – 18/01/17 36 34.70 $1,249.20
31 19/01/17 – 25/01/17 36 34.70 $1,249.20
TOTAL 1070.80 $36,446.12
AVERAGE 34.54 $1,175.68
  1. Table 2 sets out the amounts that I consider to be the worker’s shift allowance payments on a week by week basis for the relevant period.

Table 2

Week # Week periodHoursRateTotal
1 21/01/16 – 27/01/16    
2 28/01/16 – 3/02/16 8
6
49.545
66.06
396.36
396.36
3 4/02/16 – 10/02/16 12
6
49.545
66.06
594.54
396.36
4 11/02/16 – 17/02/16 12
4
49.545
66.06
594.54
264.24
5 18/02/16 – 24/02/16 12
4
49.545
66.06
594.54
264.24
6 25/02/16 – 2/03/16 6
4
50.775
67.70
304.65
270.80
7 3/03/16 – 9/03/16 12
4
50.775
67.70
507.75
270.80
8 10/03/16 – 16/03/16 10
4
50.775
67.70
507.75
270.80
9 17/03/16 – 23/03/16 10
4
50.775
67.70
507.75
270.80
10 24/03/16 – 30/03/16    
11 31/03/16 – 6/04/16 2
4
50.775
67.70
101.55
270.80
  7/04/16 – 13/04/16 Did not work Did not work  
  14/04/16 – 20/04/16 Did not work Did not work  
  21/04/16 – 27/04/16 Did not work Did not work  
12 28/04/16 – 4/05/16 4 50.775 203.10
13 5/05/16 – 11/05/16 12
4
50.775
67.70
609.30
270.80
14 12/05/16 – 18/05/16 8
4
50.775
67.70
406.20
270.80
15 19/05/16 – 25/05/16 12
4
50.775
67.70
507.75
270.80
16 26/05/16 – 1/06/16 10
4
50.775
67.70
507.75
270.80
17 2/06/16 – 8/06/16 10
4
50.775
67.70
507.75
270.80
18 9/06/16 – 15/06/16    
19 16/06/16 – 22/06/16 4
4
50.775
67.70
203.10
270.80
20 20/10/16 – 26/10/16    
21 27/10/16 – 2/11/16 2
4
52.05
69.40
104.10
277.60
22 3/11/16 – 9/11/16 2
4
52.05
69.40
104.10
277.60
23 10/11/16 – 16/11/16 2
4
52.05
69.40
104.10
277.60
24 17/11/16 – 23/11/16 2
4
52.05
69.40
104.10
277.60
25 24/11/16 – 30/11/16 2
4
52.05
69.40
104.10
277.60
26 1/12/16 – 7/12/16 2
4
52.05
69.40
104.10
277.60
27 8/12/16 – 14/12/16 2
4
52.05
69.40
104.10
277.60
28 15/12/16 – 21/12/16 2
4
52.05
69.40
104.10
277.60
  22/12/16 – 28/12/16 Did not work Did not work  
  29/12/16 – 4/01/17 Did not work Did not work  
29 5/01/17 – 11/01/17    
30 12/01/17 – 18/01/17 2
4
52.05
69.40
104.10
277.60
31 19/01/17 – 25/01/17 2
4
52.05
69.40
104.10
277.60
TOTAL   $15,374.48
Average   $495.95096
  1. I therefore find that the average of the worker’s ordinary earnings during the relevant period is $36,446.12 / 31 = $1,175.68.
  2. Shift allowance payments for the worker’s overtime (1.5x and 2.0x) are allowed for the first 52 weeks for which weekly payments are payable - see section 44C(1)(b).
  3. The average of the worker’s shift allowance payments is $15,374.48 / 31 = $495.95.
  4. Therefore, the worker’s PIAWE is for the first 52 weeks is $1,175.68 + $495.95 = $1,671.63.
  5. The worker’s PIAWE after 52 weeks will revert to $1,175.68.

Indexation

  1. There is no dispute regarding the indexation provisions applied by the Insurer.  I will therefore apply indexation to the above PIAWE figures.

First 52 weeks

Review date A x B/CAWE Rounded Figure
April 2017 $1,671.63 x 1.0146 $1,696.04 $1,700.00
October 2017 $1,700.00 x 1.0072 $1,712.24 $1,710.00
April 2018 $1,710.00 x 1.0143 $1,734.45 $1,730.00
  1. The worker’s PIAWE for the first 52 weeks is $1,730.00 (after indexation).

After 52 weeks

Review date A x B/CAWE Rounded Figure
April 2017 $1,175.68 x 1.0146 $1,192.84 $1,200.00
October 2017 $1,200.00 x 1.0072 $1,208.64 $1,210.00
April 2018 $1,210.00 x 1.0143 $1,227.30 $1,230.00
  1. The worker’s PIAWE after 52 weeks is $1,230.00 (after indexation).

Merit Reviewer
Merit Review Service
Delegate of the State Insurance Regulatory Authority