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Findings and recommendations on merit review 032/18

Our Reference: 032/18
Date of review:

Findings on review

  1. The following is a finding made by the State Insurance Regulatory Authority (“the Authority”) on review and is to be the basis for the Insurer’s review decision.
  2. In accordance with section 44C(4) of the Workers Compensation Act 1987 (“the 1987 Act”), the amount of the worker’s pre-injury average weekly earnings (“PIAWE”) is $980.78.

Recommendations based on finding

  1. The following recommendations made by the Authority are binding on the Insurer and must be given effect to by the Insurer in accordance with section 44(3)(g) of the 1987 Act.
  2. The Insurer is to determine the worker’s entitlement to weekly payments of compensation in accordance with the above finding from November 2017 (subject to any notice period required under section 54 of the 1987 Act).

Background

  1. The worker sustained an injury in the course of their employment as a Delivery Driver with the pre-injury employer. The worker was also employed as a Freight Handler by the secondary pre-injury employer at the time of their injury.
  2. The Insurer made a work capacity decision in November 2017, determining the amount of the worker’s PIAWE as $755.82.
  3. The worker applied for internal review of the Insurer’s work capacity decision. The Insurer conducted an internal review in April 2018. On internal review, the Insurer determined the worker’s PIAWE as $993.11 (excluding indexation). The worker received notification of the Insurer’s decision in April 2018.
  4. The worker’s application for merit review by the Authority was received in May 2018. The application has been made in the form approved by the Authority and within 30 days as required under section 44(3)(a) of the 1987 Act.

Legislation and guidelines

  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.

Documents considered

  1. The documents I have considered in this review are those listed in, and attached to, the application for merit review, the Insurer’s reply and any further information provided by the parties.
  2. I am satisfied that both parties have had the opportunity to respond to the other party’s submissions and that the information provided has been exchanged between the parties.

Submissions

  1. In the application for merit review, the worker refers to a letter from their legal representatives dated January 2018 and attaches a payslip from the secondary pre-injury employer dated October 2017. In their application, they make similar submissions to that contained in that letter. The letter states:
  2. We refer to the above and note that as per the enclosed the insurer payment slip, you are paying my client $718.03 gross per week.

    Please note that at the time of the injury, the applicant was working 2 jobs and is therefore entitled to wages they were receiving at the time of the injury. But for the injury, the applicant would have continued working at both jobs earning $718.03 gross per week from their first job and $957.36 gross per week from their second job.

    We hereby make a claim for their full wages from the date of injury to date and continuing.

  3. In the reply to the worker’s application for merit review, the Insurer outlines its method and calculations adopted in determining the worker’s PIAWE at internal review, at $933.11. It notes however that there was an error at internal review and the worker’s PIAWE should be determined as follows:
  4. (i) The secondary pre-injury employer ($640.23) + the pre-injury employer ($716.97) = $1,357.20/(16.05 hours + 31.81 hours = 47.86 hours) = $28.36 per hour

    (ii) 38 hours (prescribed number of hours a week) x $28.36 = $1,077.68 per week

    Therefore, the Insurer submits PIAWE is $1,077.68 per week.

Reasons

Nature of merit review

  1. This matter involves a merit review of the work capacity decision 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 and recommendations that, in light of the information before me, are most correct and preferable.
  3. The Authority is only able to review the work capacity decisions of an Insurer that are referred for review by a worker in accordance with section 44BB. Section 43(1) of the 1987 Act describes the types of work capacity decisions that can be made by an insurer.
  4. The worker elected in their application for merit review that the Authority review the Insurer’s decision about the amount of their pre-injury average weekly earnings or current weekly earnings [Section 43(1)(d) of the 1987 Act]. The worker confirms in their submissions that they do not agree with the amount of their PIAWE determined by the Insurer. Accordingly, I will proceed to review this decision of the Insurer.

Pre-injury average weekly earnings

  1. The worker sustained their injury in the course of their employment as a delivery driver with the pre-injury employer. The worker was also employed as a Freight Handler with the secondary pre-injury employer at the time of their injury. The worker therefore had 2 employers at the time of their injury.
  2. Section 44C(4) of the 1987 Act provides the following in respect to determining ‘pre-injury average weekly earnings’:
    In relation to a worker of a class referred to in Column 2 of an item in Schedule 3, "pre-injury average weekly earnings" means the amount determined in accordance with Column 3 of that item, expressed as a weekly sum.
  3. Column 2 of Schedule 3 of the 1987 Act is headed ‘class of worker at time of injury’ and the items in Column 2 refer predominately to workers who were ‘employed by 2 or more employers’. Given that the worker was employed by both the pre-injury employer and the secondary pre-injury employer at the time of the injury, their PIAWE is to be determined in accordance with Schedule 3 of the 1987 Act.
  4. In order to calculate the worker’s PIAWE under Schedule 3, I am required to determine which ‘item’ or ‘class of worker’ in Schedule 3 was applicable to them at the time of their injury.Current work capacity and suitable employment.

Class of worker at time of injury

  1. The worker was not an apprentice or under the age of 21 at the time of their injury. They are therefore not a class of worker under Item 1 of Schedule 3 of the 1987 Act.
  2. For the worker to be a class of worker that falls within Items 2, 3 and 5 of Schedule 3 of the 1987 Act, they must have worked for one of their employers for “at least” either the ordinary hours fixed in any applicable fair work instrument or/and the prescribed number of hours each week where no fair work instrument is applicable.
  3. A fair work instrument is defined under section 32A of the 1987 Act as follows:
  4. "fair work instrument" means:

    (a) a fair work instrument (other than an FWA order) within the meaning of the Fair Work Act 2009 of the Commonwealth, or,

    (b) a transitional instrument within the meaning of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 of the Commonwealth.

  1. Section 12 of the Fair Work Act 2009 defines a fair work instrument as follows:
  2. "fair work instrument" means:

    (a)  a modern award; or

    (b) an enterprise agreement; or

    (c) a workplace determination; or

    (d) an FWC order.

  3. In response to a request for information from the Authority, the Insurer advised in May 2018 that “there is no employment contract available” for the worker’s employment with the pre-injury employer and provided a copy of the award that governed this employment, the Road Transport and Distribution Award 2010 (“the Award”). This award is a fair work instrument under the above definitions. I am therefore satisfied that there was a fair work instrument applicable to the worker’s employment.
  4. A Calculating Pre-injury Average Weekly Earnings form completed by a representative of the pre-injury employer dated April 2018 indicates that the worker was employed on a full-time basis with this employer. The Award stipulates at clause 22 that “the ordinary hours of work are an average of 38 per week…”.
  5. As noted above, for the worker to be a class of worker that falls within Items 2, 3 and 5 of Schedule 3 of the 1987 Act, they must have been a worker who “works” for “at least” 38 hours per week with the pre-injury employer. I have 10 of the worker’s payslips from the pre-injury employer before me, covering the period January 2017 to November 2017. Excluding the first payslip as the worker commenced employment part way through that pay cycle and the final payslip as the worker sustained their injury during that pay cycle, the worker worked an average of 38 hours per week in only 3 of the payslips. They worked under an average of 38 hours per week in the remaining 5 payslips.
  6. The worker therefore did not work “for one of those employers for at least the ordinary hours fixed in an applicable fair work instrument”.
  7. The information before me indicates that there was not a fair work instrument applicable to the worker’s employment with the secondary pre-injury employer. However, I do have the worker’s employment agreement for this role and their payslips. Their employment agreement dated September 2017 indicates that they were employed on a casual basis.
  8. For the worker to be a class of worker that falls within Item 5 Schedule 3 of the 1987 Act, they must have worked “at least” the prescribed number of hours each week with the secondary pre-injury employer. Clause 7 of the Regulation defines the “prescribed number of hours-calculation of PIAWE” to be 38 hours per week. I have 5 of the worker’s payslips from the secondary pre-injury employer before me dated before the date of injury. The worker did not work the prescribed number of hours each week on any of these payslips.
  9. The worker is therefore not a worker who falls within Items 2, 3 and 5 of Schedule 3 of the 1987 Act.
  10. Workers who fall within Item 4 of Schedule 3 of the 1987 Act are workers who were employed by 2 or more employers for at least the ordinary hours fixed in any applicable fair work instrument. The worker was employed with the pre-injury employer on a full-time basis however there was no fair work instrument applicable in relation to their employment with the secondary pre-injury employer. The worker is therefore not a worker who falls within Item 4 of Schedule 3 of the 1987 Act.
  11. Workers who fall within Item 6 of Schedule 3 of the 1987 Act are workers who were employed by 2 or more employers for at least the prescribed number of hours each week and to whom no fair work instrument is applicable. Given that the worker was not employed for the prescribed number of hours each week with the secondary pre-injury employer and there was a fair work instrument applicable, the worker is not a worker who falls within Item 6 of Schedule 3 of the 1987 Act.
  12. Item 7 of Schedule 3 of the 1987 Act is in respect to a class of worker who sustained an injury that resulted in an incapacity to work for one or more of the worker’s pre-injury employers but not for all of the employers. The information before me, particularly the worker’s submissions in the application for merit review, indicate that their injury has resulted in an incapacity to work for both of their employers.  In light of this information, I am satisfied that Item 7 of Schedule 3 of the 1987 Act does not apply to the worker.
  13. Item 8 of Schedule 3 of the 1987 Act applies to workers in the following circumstances:
  14. Worker employed by 2 or more employers in circumstances other than those described in the preceding provisions of this Schedule.

  15. For the above reasons, I consider that the worker is a worker other than a worker described in the provisions preceding to that of Item 8, Schedule 3 of the 1987 Act. I am therefore satisfied that the worker is of a class of worker that falls under Item 8, Schedule 3 of the 1987 Act and that their PIAWE should be determined in accordance with Item 8, Schedule 3 of the 1987 Act.

PIAWE under Class 8, Schedule 3 of the 1987 Act

  1. Class 8, Schedule 3 of the 1987 Act provides the basis to calculate the worker’s PIAWE as follows:
  2. The worker’s pre-injury average weekly earnings are the worker’s average ordinary earnings expressed as an amount per hour for all work carried out by the worker for all employers multiplied by:

    (a)  the prescribed number of hours per week, or

    (b)  the total of the worker’s ordinary hours per week, whichever is the lesser.

  3. To calculate the worker’s PIAWE, I must determine their average “ordinary earnings” expressed as an amount per hour for all work carried out by them for all employers, multiplied by (a) or (b), whichever is the lesser.
  4. To determine the worker’s ordinary earnings under section 44E of the 1987 Act, I must multiply their “base rate of pay” by their “ordinary hours of work”.
  5. “Ordinary earnings” are defined by section 44E of the 1987 Act as:
  6. (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.

  7. “Ordinary hours of work” are defined in section 44H of the 1987 Act as:
  8. (1) 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.

  9. “Base rate of pay” is defined by section 44G of the 1987 Act as follows:
  10. (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).

Ordinary earnings with the pre-injury employer

  1. As noted above, the worker’s employment with the pre-injury employer was governed by an award. The Calculating Pre-injury Average Weekly Earnings form completed by a representative of the pre-injury employer dated April 2018 indicates that there was agreement between the worker and employer that their employment would be on a full-time basis. The Award specifies that the ordinary hours of work for full-time employees is 38 hours per week. Based on this information, I am satisfied that the worker’s “ordinary hours of work” for PIAWE should be determined in accordance with section 44H(a)(i) of the 1987 Act. The worker’s ordinary hours of work in this role were 38 hours per week.
  2. When determining the worker’s ordinary earnings in this role, I note that their payslips indicate that their base rate of pay is calculated on the basis of ordinary hours worked. Their ordinary earnings should therefore be calculated under section 44E(1)(a) of the 1987 Act.
  3. The worker’s payslips from the pre-injury employer indicate that their “base hourly” rate at the time of their injury was $19.86. I note that the worker also received bonuses classified as “bonus $1 per parcel over base” in addition amounts to their “base hourly” rate of pay. These amounts are however to be excluded pursuant to section 44G(1)(a) of the 1987 Act when determining the worker’s base rate of pay.
  4. Multiplying $19.86 per hour by 38 hours per week, I find that the worker’s earnings calculated at that rate for ordinary hours in the weeks during which they worked or was on paid leave in accordance with section 44E(1)(a)(i) of the 1987 Act was $754.68.
  5. On the information before me, the worker did not receive any piece rates, commissions or non-pecuniary benefits relevant to section 44E(1)(a)(ii) and (iii) of the 1987 Act.
  6. The worker’s ordinary earnings in their role with the pre-injury employer is therefore $754.68 per week.

Ordinary earnings with the secondary pre-injury employer

  1. Given that a fair work instrument did not apply in respect to the worker’s employment with the secondary pre-injury employer and they worked on a casual basis with no agreed hours of work in this role, I am satisfied that the worker’s “ordinary hours of work” should be determined in accordance with section 44H(1)(b)(ii) of the 1987 Act. This section refers to the “relevant period”.
  2. The “relevant period” is defined by section 44D of the 1987 Act as follows:

    (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.

  3. The worker commenced employment with the pre-injury employer in February 2017 and their date of injury is in XX November 2017. They were continuously employed by the pre-injury employer during this period. In accordance with section 44D(1)(b) of the 1987 Act, I find that the “relevant period” is XX February 2017 to XX November 2017.
  4. In respect to the worker’s employment with the secondary pre-injury employer, I have 5 payslips from this role before me that fall in the relevant period (payslip for week ending XX November 2011 excluded). This information indicates that the worker worked or was on paid leave with the secondary pre-injury employer for 5 weeks of the relevant period. The sum of the total hours the worker worked in those 5 weeks is 80.25. The worker’s average weekly hours during the relevant period in accordance with section 44H(1)(a)(ii) of the 1987 Act is therefore 16.05 hours (80.25 hours ÷ 5 weeks). I am satisfied that this is the worker’s “ordinary hours of work” in relation to this role.
  5. When determining the worker’s ordinary earnings with the secondary pre-injury employer, their payslips indicate that their base rate of pay is calculated on the basis of ordinary hours worked. Their ordinary earnings should therefore be calculated under section 44E(1)(a) of the 1987 Act.
  6. At the time of their injury, the worker’s payslips indicate that their hourly rate was $39.89. They did not receive any additional amounts to this hourly rate. The worker’s “base rate of pay” in accordance with section 44G of the 1987 Act is therefore $39.89.
  7. Multiplying $39.89 per hour by 16.05 hours per week, I am satisfied that the worker’s earnings with the secondary pre-injury employer calculated at that rate for ordinary hours in that week during which they worked or was on paid leave in accordance with section 44E(1)(a)(i) of the 1987 Act is $640.23.
  8. On the information before me, the worker did not receive any piece rates, commissions or non-pecuniary benefits relevant to section 44E(1)(a)(ii) and (iii) of the 1987 Act in this role.
  9. The worker’s “ordinary earnings” with the secondary pre-injury employer is therefore $640.23 per week.

Calculation of PIAWE

  1. Column 3, Item 8, Schedule 3 of the 1987 Act provides that the worker’s average ordinary earnings are to be expressed as an amount per hour for all work carried out by them, for all employers.
  2. The worker’s average ordinary earnings for the work they carried out for both the above employers is $1,394.91 ($754.68 + $640.23), for a total of 54.05 hours of work (38 + 16.05).
  3. Therefore, the worker’s average ordinary earnings expressed as an amount per hour is $25.8077 ($1,394.91 / 54.05 hours).
  4. Column 3, Item 8, Schedule 3 of the 1987 Act provides that the above figure ($25.8077) is to be multiplied by the prescribed number of hours per week (38 hours per week) or the total or the workers ordinary hours per week (54.05 per week), whichever is the lesser.
  5. In accordance with Column 3, Item 8, Schedule 3 of the 1987 Act, I find the worker’s PIAWE is $980.69 ($25.8077 per hour x 38 hours per week).
  6. I note that the amount of the worker’s PIAWE, as calculated above, should be varied by the Insurer on each review date after they became entitled to weekly payments in respect of the injury, in accordance with the indexation provisions under section 82A of the 1987 Act.

Merit Reviewer
Merit Review Service
Delegate of the WorkCover Authority of NSW