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Merit review WC076/18

Findings on review

1. The following findings are made by the State Insurance Regulatory Authority (the Authority) on review and are to be the basis of the Insurer’s review decision.

2. The amount of the Worker’s pre-injury average weekly earnings (PIAWE) is $737.43.

Recommendation based on findings

3. The following recommendation is binding on the Insurer and must be given effect to by the Insurer under section 44BB(3)(g) of the Workers Compensation Act 1987 (the 1987 Act).

4. From July 2018, the Insurer is to determine and pay the Worker the difference of what they have been paid and is entitled to be paid in accordance with the finding above (subject to any notice period required under section 54 of the 1987 Act).

Background

5. The Worker sustained an injury in April 2015 while working at the pre-injury employer.

6. In July 2018, the Insurer decided that the amount of the Worker’s PIAWE was $661.

7. The Worker referred that decision for internal review by the Insurer. In August 2018, the Insurer found the amount of the Worker’s PIAWE to be $675.79.

8. The Worker made an application for merit review by the Authority, which was received in August 2018. I am satisfied the Worker made their application for merit review within 30 days as required under section 44BB(3)(a) of the 1987 Act. The application has been made in the form approved by the Authority.

Legislation

9. The legislative framework governing work capacity decisions and reviews is contained in the:

  • Workers Compensation Act 1987 (the 1987 Act)
  • Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act)
  • Workers Compensation Regulation 2016 (the Regulation)

10. Section 43 of the 1987 Act describes a “work capacity decision”.

11. Section 44BB of the 1987 Act provides for merit review of a work capacity decision of the Insurer, by the Authority.

Information considered

12. The documents I have considered for this review are the Worker’s application for merit review and the Insurer’s reply form, the documents listed in and attached to those forms, and any further information provided to the Authority and exchanged between the parties.

Submissions

13. The Worker makes the following submissions in the application for merit review:

“I was employed as a worker from December 2009 and was subject to bullying at work from May 2010 till February 2014, and went off work from about xx/2/2014 to about xx/4/2014. I was working full time. When I returned to work I gradually worked full time till xx/6/2014, then my work hours were reduced to when I suffered the injury on x/4/2015 my pre-injury earnings had been wrongfully reduced. Liability was denied for my bullying. I should have been allowed to work 33.25 hours per week not 21. I am currently unfit for work.”

14. In summary, the Insurer’s submissions are:

  • The pre-injury employer has provided information in an email dated December 2016 in relation to the wages the Worker has been paid from April 2014 to April 2015.
  • The Worker was employed on a temporary contract basis either on full-time or part-time during the relevant period. The Insurer sets out the periods when the Worker was full- time and part-time.
  • The Worker also worked as a casual for 1.5 hours in November 2014 and 6.25 hours in February 2016.
  • The Worker’s PIAWE is to be determined under section 44C(1) of the 1987 Act.
  • The periods or weeks where the Worker did not work and was not on paid leave are to be excluded in determining the Worker’s PIAWE. Accordingly, a total of 17 weeks has been excluded. The relevant period is 35 weeks.
  • The Worker’s total ordinary earnings equal $23,652.69. Therefore, the Worker’s PIAWE is $675.79 ($23,652.69 / 35 weeks).

Reasons

Nature of merit review

15. The Worker has indicated in the application for merit review that they are referring the Insurer’s original work capacity decision dated July 2018 for merit review, under section 44BB(1)(b) of the 1987 Act. The review requires that I consider all the information before me substantively on its merits and make findings and recommendations that, in light of the information before me, are most correct and preferable in respect of the weeks covered by the original work capacity decision. Therefore, any findings and recommendations on merit review will apply from July 2018.

16. Section 44C(1) of the 1987 Act defines PIAWE as:

Pre-injury average weekly earnings

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).

17. A worker’s PIAWE may also be calculated under section 44C(2), (3) or (4) of the 1987 Act. However, the information before me does not support a finding that those provisions apply to the Worker’s circumstances.

18. The Worker’s PIAWE under section 44C(1)(a) is the average of their “ordinary earnings” during the “relevant period” (excluding any week during which they did not actually work and was not on paid leave) expressed as a weekly sum.

19. Section 44C(1)(b) allows for overtime and shift allowance payments. However, a table showing the Worker’s earnings prior to the injury (the “payment summary”) does not support they received overtime or shift allowance payments. I consider all the amounts as shown in the payment summary are to be included in the calculation of the Worker’s PIAWE under section 44C(1)(a).

Relevant period

20.Section 44D of the 1987 Act defines the “relevant period” as:

(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.

(2) The relevant period, in relation to pre-injury average weekly earnings of a worker who, during the 52 weeks immediately before the injury, voluntarily (otherwise than by reason of an incapacity for work resulting from, or materially contributed to by, an injury that entitles the worker to compensation under this Act):

(a) alters the ordinary hours of work, or

(b) alters the nature of the work performed by the worker,

and, as a result, the worker’s ordinary earnings are reduced, does not include the period before the reduction takes effect.

(3) If, during the period of 52 weeks immediately before the injury, a worker:

(a)  is promoted, or

(b)  is appointed to a different position,

(otherwise than on a temporary basis) and, as a result, the worker’sordinary earnings are increased, the relevant period in relation to the worker begins on the day on which the promotion or appointment takes effect.

21. The Insurer submits the relevant period is 35 weeks. However, the Worker was continuously employed by the pre-injury employer for the period of 52 weeks immediately before the injury and there is no information before me to support a finding that section 44D(2) or (3) applies to the determination of the relevant period. That is, I am not persuaded that the Worker “voluntarily” altered their ordinary hours of work or the nature of work they performed such that their ordinary earnings reduced. I am also not persuaded that the Worker was promoted or appointed to a different position such that their ordinary earnings increased.

22. Therefore, the relevant period is determined under section 44D(1)(a) and it is the period of 52 weeks immediately before the injury, being April 2014 to April 2015.

Ordinary earnings

23. Section 44E of the 1987 Act defines “ordinary earnings” as:

(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,

(ii) amounts paid or payable as piece rates or commissions in respect of that week,

(iii) the monetary value of non-pecuniary benefits provided in respect of that week, or

(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,

(ii) amounts paid or payable as piece rates or commissions in respect of that week,

(iii) the monetary value of non-pecuniary benefits provided in respect of that week.

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

24. I am satisfied on the payment summary that the Worker’s base rate of pay was calculated on the basis of ordinary hours worked. The payment summary does not support that there were amounts paid or payable as piece rates, commissions or non-pecuniary benefits during the relevant period that would be relevant to the calculation of the Worker’s ordinary earnings.

25. Therefore, the Worker’s ordinary earnings are determined under section 44E(1)(a)(i) at the “base rate of pay” for “ordinary hours” in any week which they worked or was on paid leave.

Ordinary hours of work

26. “Ordinary hours of work” are determined under section 44H of the 1987 Act as follows:

In relation to pre-injury average weekly earnings and current weekly earnings, the ordinary hours of work:

(a) in the case of a worker to whom a fair work instrument applies are:

(i) if the ordinary hours of work in relation to a week are agreed or determined in accordance with a fair work instrument between the worker and the employer—those hours, or

(ii) in any other case, the worker’s average weekly hours (excluding any week during which the worker did not actually work and was not on paid leave) during the relevant period, or

(b) in the case of a worker to whom a fair work instrument does not apply:

(i) if the ordinary hours of work are agreed between the worker and the employer, those hours, or

(ii) in any other case, the worker’s average weekly hours (excluding any week during which the worker did not actually work and was not on paid leave) during the relevant period.

27. The Insurer submits that the Worker was employed full-time between July 2014 to June 2014. As I do not have the Worker’s employment contract before me, I accept this submission as I consider it is supported by the payroll summary. the Worker’s full-time hours were 35 per week.

28. On this basis, and noting that I have not been provided with the Worker’s employment contact or a fair work instrument that covered their employment during the relevant period, I am persuaded that the Worker’s ordinary hours of work between July 2014 to June 2014 are to be determined under section 44H(b)(i). It provides that if the ordinary hours of work are agreed between the worker employer, the ordinary hours of work are “those hours”, being 35 per week.

29. After June 2014, the Worker’s ordinary hours of work were 21 per week, except for when they worked an extra 1.5 hours in the week ending November 2014 and 6.25 hours in the week ending March 2015.

30. I note the Worker’s submission that they should have been allowed to work 33.25 hours per week and not 21. However, a worker’s ordinary hours of work are to be determined under section 44H. I have found no persuasive information to support a finding that the Worker’s ordinary hours of work after June 2014 to April 2014, which covers 40 weeks, were agreed between their and the pre-injury employer to be 33.25. When they worked or was on paid leave during that time, their weekly hours of work were 21 except on 2 occasions.

31. In light of the above, I find the Worker’s ordinary hours of work in relation to a week are:

35 hours from April 2014 to June 2014
21 hours from June 2014 to December 2014, December 2014 to February 2015 and March 2015 to April 2015
22.5 hours from December 2014 to December 2014
27.5 hours from February 2015 to March 2015

Base rate of pay

32. Section 44G defines that in relation to PIAWE, a reference to base rate of pay is a reference to the rate of pay payable to the Worker for their ordinary hours of work.

33. My findings on the Worker’s ordinary hours of work are set out above.

34. I again note that the Worker’s ordinary hours of work for the period April 2014 to June 2014 is equal to 35. The payroll summary shows that rate of pay payable to the Worker for those ordinary hours of work was $1,016.93. When the Worker’s ordinary hours of work were 21, the rate of payable to them were $624.02. In the week ending November 2014 the Worker’s ordinary hours of work were 22.5 and the rate of pay payable to them for those hours was $669.62. In the week ending March 2015 the Worker’s ordinary hours of work were 27.5 and the rate of pay payable to them for those hours was $818.77.

35. In summary, I find the rate pay of payable to the Worker for their ordinary hours of work was:

$1,016.93 from April 2014 to June 2014
$624.02 from June 2014 to December 2014, December 2014 to February 2015 and March 2015 to April 2015
$669.62 from December 2014 to December 2014
$818.77 from February 2015 to March 2015

Findings on ordinary earnings

36. My findings on the Worker’s base rate(s) of pay and ordinary hours of work are set out above. Their ordinary earnings are to be calculated at those rates for those ordinary hours in the weeks during which they worked or was on paid leave.

37. I note that the Insurer, on internal review, has excluded any period of a week from the calculation of the Worker’s ordinary earnings if for a part of that week they had “reduced earnings” as shown in the payment summary.

38. However, while there were 10 occasions when the Worker had reduced earnings, they had worked in all those weeks except 2. The weeks in which the Worker worked or was on paid leave, even if for part of the week, are not to be excluded from the calculation of ordinary earnings. In this regard, I note that ordinary earnings are determined on the weeks “during which the worker worked or was on paid leave”. There are 43 weeks during which the Worker worked or was on paid leave.

39. The payroll summary supports that the Worker’s working week was Monday to Friday. On this basis, I have determined the total of the Worker’s ordinary earnings to be $31,709.54, as set out below:

$11,999.77 $1,016.93 (base rate of pay for ordinary hours of work) x 11.8 (working weeks in which the Worker worked or was on paid leave from April 2014 to June 2014) = $11,999.77
$18,221.38 $624.02 (base rate of pay for ordinary hours of work) x 29.2 (working weeks in which the Worker worked or was on paid leave from June 2014 to December 2014, December 2014 to February 2015 and March 2015 to April 2015) = $18,221.38
$669.62 1 week
$818.77 1 week
($11,999.77 + $18,221.38 + $669.62 + $818.77) = $31,709.54

40. The Worker’s ordinary earnings expressed as a weekly average is $737.43 ($31,709.54 ÷ 43 weeks and rounded to the nearest cent).

Findings on PIAWE

41. In order to calculate the Worker’s PIAWE, section 44C(1)(a) of the 1987 Act requires that I calculate the average of their ordinary earnings (which I have found to be $737.43) during the relevant period expressed as a weekly sum.

42. I find the amount of the Worker’s PIAWE is $737.43.

43. The Insurer is to calculate the Worker’s entitlement to weekly payments of compensation in accordance with my findings from July 2018 (the date of the Insurer’s original work capacity decision). This finding is subject to any notice period required under section 54 of the 1987 Act.

44. I note the Worker’s entitlement to weekly payments of compensation is subject to indexation by varying the amount of their PIAWE in accordance with Division 6A of Part 3 of the 1987 Act.

Merit Review Service
Delegate of the State Insurance Regulatory Authority