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Findings and recommendations on merit review 038/18

Our Reference: 038/18
Date of review: February 2017

Findings on review

  1. The following are the findings of the State Insurance Regulatory Authority (the Authority) on review and are to be the basis of a review decision by the Insurer.
  2. The Worker's pre-injury average weekly earnings (PIAWE) is $1,274 for the first 52 weeks of weekly payments.
  3. The Worker's PIAWE is $1,142 .75 after the first 52 weeks of weekly payments.

Recommendation based on findings

  1. The Insurer is to calculate the Worker's entitlement to weekly payments of compensation in accordance with my findings set out above.
  2. This recommendation is binding on the Insurer in accordance with section 44BB(3)(g) of the Workers Compensation Act 1987 (the 1987 Act).

Background

  1. The Worker injured their back in the course of their employment with the pre-injury employer.
  2. The Insurer conducted a work capacity assessment in October 2017. Following the assessment the Insurer determined that the Worker's PIAWE was $1,045. The work capacity decision was issued by way of a letter dated the day of the assessment.
  3. The Insurer conducted an internal review at the Worker's request. The Insurer conducted the review and wrote to the Worker in December 2017 informing them that it had calculated their PIAWE as $1,150.
  4. The Authority received the application for merit review in January 2018. The application has been accepted.

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. I have considered all of the information that was provided by the parties in relation to the Worker's application for merit review. I have only referred to the information that is most relevant to my findings, in my reasons that are set out below.

Submissions

  1. In the application for merit review, the Worker has requested a review of the following work capacity decisions of the Insurer:
    • A decision about the amount of their pre-injury average weekly earnings.
  2. The Worker's submissions in support of their application for merit review are summarised as follows:
    • They were employed by Employer 2 in April 2017. Their duties were very physical and involved moving around furniture, hanging paintings and unwrapping and moving boxes.
    • They averaged 22 hours of work per week in the period April 2017 to May 2017.
    • In the period May 2017 to May 2017 they averaged 22.5 hours per week. They were unable to work at Employer 2 on xx May 2017 due to their injury.
    • After their injury at the pre-injury employer over the two day period in May 2017, they worked for Employer 2 on xx May 2017 and xx May 2017. They were not able to work for Employer 2 on xx May 2017 due to the injury that they sustained with the pre-injury employer.
    • The Worker has provided a detailed account of their work with the pre-injury employer on xx and xx May 2017.
    • According to the work capacity decision dated October 2017, their PIAWE was calculated as $1,045 per week. It is not entirely clear how this figure was calculated apart from being based on two pay slips.
    • It would seem that the Insurer looked at the hourly rates for both of the pre-injury employer and Employer 2, averaged these at $27.50 per hour and then calculated their PIAWE based on a 38-hour week to reach the figure of $1,045 per week.
    • The pay slips relied on by the Insurer were:
      • Employer 2 for the period April 2017 to May 2017.
      • Pre-injury employer for xx and xx May 2017.
    • The Insurer did not have regard to their pay slip for the period x to xx May 2017 for their work at Employer 2 which was an error and was contrary to the provisions of the 1987 Act and the SIRA Guidelines for Claiming Workers Compensation.
    • The Insurer indicated that it made the calculation based on sections 44C(2), 44C(5), 44C(6), 44D and 44E of the 1987 Act. There was no reference to section 44C(4) of the 1987 Act in the notice.
    • As they had concurrent employment at the time of their injury, their PIAWE should have been calculated in accordance with section 44C(4) of the 1987 Act. That section provides that the calculation is made in accordance with Schedule 3 of the 1987 Act.
    • Their PIAWE should be calculated in accordance with Item 7, Column 2 of Schedule 3 of the 1987 Act.
    • The internal review determined that their PIAWE was $1,150 per week.
    • Their submission regarding the application of Schedule 3 of the 1987 Act was accepted by the Insurer.
    • The Insurer again did not use the pay slip for the period x to xx May 2017. This was an error as the pay slip contains information as to their earnings prior to their injury.
    • There is further evidence from Employer 2 (an email dated December 2017 from Employer 2 forwarded to the Insurer on x January 2018), this shows that they worked for a total of 38 hours at $25 per hour from x May 2017 to xx May 2017, together with 3.5 hours of overtime at $37.50 per hour on x May 2017. Their earnings were $1,081 for 7 days work or $154.43 per day. This is equal to $772.14 per week.
    • Their PIAWE should be calculated by combining $600 that they earned with the pre-injury employer and $772.14 for their work with Employer 2 to arrive at a figure of $1,372.14 per week.
  3. In reply, the Insurer's submissions may be summarised as follows:
    • It provides a history of the Worker's injury, the work capacity decision and subsequent internal review.
    • The Worker's PIAWE is to be determined in accordance with section 44C(2)(a) of the 1987 Act and Schedule 3 of the 1987 Act as they had concurrent employment at the time of their injury and had worked with the pre-injury employer for less than 4 weeks at the time of their injury.
    • The Worker had also been employed with Employer 2 for less than 4 weeks at the time of injury.
    • It addressed the Worker's earnings with the pre-injury employer in the internal review decision. A pay slip of their earnings on xx and xx May 2017 indicated that the Worker earned $300 per day.
    • The Worker submitted that they could reasonably have expected to earn $1,500 for 5 days per week, however the evidence indicated that the Worker was employed to complete 2 days' worth of work. Therefore it determined that the Worker could have reasonably expected to earn $600 per week with the pre-injury employer being 2 days per week.
    • The Worker's earnings with Employer 2 were also addressed in the internal review decision. The only information before the Insurer of the Worker's pre­ injury earnings with employer 2 was a pay slip dated May 2017. The Worker provided subsequent pay slips of their employment with employer 2, however, as these were post injury earnings it did not rely on this information when making its decision.
    • It did not rely on the later pay slip as the Worker had returned to their employment with Employer 2 on light duties and for reduced hours following their injury with the pre-injury employer.
    • The pay slip indicated that the Worker worked for 22 hours per week between April 2017 and May 2017 at a rate of 25 per hour. The Worker's ordinary earnings with Employer 2 is therefore $550.
    • As the Worker's PIAWE must be determined "with reference to earnings from work with all employers" it has combined the earnings from employer 2 with those from the pre-injury employer and determined that the Worker's PIAWE is $1,150.
  4. The Authority requested submissions in relation to a preliminary view of the matter that I had formed. An email was sent to the parties requesting responses.
    • The Insurer responded that it agreed with my preliminary view.
    • The Worker provided extensive responses which have been appended to this document.
  5. Of note, the Worker submitted that I would be in error if I were to assess their PIAWE from their employment with the pre-injury employer as the amount determined by the Insurer in this regard was not in dispute.
  6. I have addressed this submission below under "nature of a merit review".

Reasons

Nature of merit review

  1. A merit review is a review of the work capacity decision of the Insurer. It involves considering all of the information that has been provided to me.
  2. I will then make findings and may make recommendations about the work capacity decision that have been referred for review.
  3. The review is not a review of the Insurer's procedures in making the work capacity decision and/or internal review decision.
  4. The Worker has submitted that there is no dispute as to their earnings from the pre-injury employer and that I will fall into error should I review the Insurer's decision in that matter.
  5. The decision of the Insurer referred to the Authority in the Worker's application for merit review was the calculation of their PIAWE. While I accept that the Worker did not dispute the Insurer's findings as to their PIAWE with the pre-injury employer, they have referred the Insurer's decision as to their PIAWE for review.
  6. As outlined below, I have determined that the Worker's PIAWE is to be calculated in accordance with Schedule 3, Item 7 of the 1987 Act. This item requires that:
  7. "The Worker's pre-injury average weekly earnings are to be calculated in accordance with Division 2 ofPart 3 with reference to earnings from work with all the employers." (emphasis added).

  8. I am therefore of the view that to conduct a merit review of the Insurer's decision as to the Worker's PIAWE, I am to conduct the review in accordance with the requirements under Schedule 3, Item 7 of the 1987 Act which stipulates that PIAWE is to be determined with reference to earnings from all the employers.
  9. As I am to make findings that are correct and preferable in this matter, I am required to review all of the matters that are relevant to making findings and recommendations in relation to the matter referred having regard to the accuracy of the outcome in accordance with the 1987 Act.
  10. For this reason I have reviewed the Worker's PIAWE from both of their employers in accordance with the requirements of the 1987 Act.

PIAWE

  1. Introduction. At the time of their injury, the Worker was employed concurrently by two employers. Following the onset of their pain on xx May 2017, the Worker returned to employment with the pre-injury employer for a second day of work. By their own description the work that took place on the second day of their employment with the pre-injury employer exacerbated their problems and they would have been incapacitated to work for that employer had their employment with the pre-injury employer not finished on that day.
  2. In contrast to the work with the pre-injury employer, my understanding from the Worker's submissions is that they returned to work on their next rostered shift with Employer 2 and although they were not fit to undertake their full duties, they were able to undertake light duties and were therefore not incapacitated to work for Employer 2.
  3. PIAWE provisions. Section 44C(4) of the 1987 Act stipulates:
  4. 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.

  5. There is no dispute between the Worker and the Insurer that their PIAWE is to be determined in accordance with Schedule 3, Item 7 of the 1987 Act. Having reviewed each of the items in Schedule 3 of the 1987 Act, I am also of the opinion that item most accurately describes the Worker's circumstances at the time of their injury.
  6. Schedule 3, Item 7, Column 3 of the 1987 Act provides the following method of calculation:
  7. The worker's pre-injury average weekly earnings are to be calculated in accordance with Division 2 of Part

    3 with reference to earnings from work with all the employers.

  8. Division 2 of Part 3 of the 1987 Act is the division that deals with weekly payments of compensation by way of income support.
  9. Section 44C (in division 2 of part 3) of the 1987 Act sets out the definition of PIAWE. There are two definitions in this section of the Act that may apply to the determination of the Worker's PIAWE.
  10. Section 44C(1) of the 1987 Act states that PIAWE is to be determined as follows:
  11. 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  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 pa yable).

  12. Section 44C(2) of the 1987 Act also sets out the following in relation to Workers who were continuously employed by the same employer for less than 4 weeks before the injury:

    If a worker has been continuously employed by the same employer for less than 4 weeks before theinjury, pre-injury average weekly earnings, in relation to that worker, may be calculated having regardto:

    (a)   the average of the worker's ordinary earnings that the worker could reasonably have beenexpected to have earned in that employment, but for the injury, during the period of 52 weeks afterthe injury 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).

  13. The Worker was employed by each of their employers for less than 4 weeks prior to their injury. They have correctly submitted in my view that the application of 44C(2) is discretionary as a Worker in the circumstances described in this section "may" have their PIAWE calculated in accordance with that section. Logically, if the Worker's PIAWE is not calculated in accordance with section 44C(2), then it must be calculated in accordance with 44C(1).
  14. Determining the section for the calculation of PIAWE in relation to their work with the pre-injury employer. The accepted date of injury for the Worker is May 2017. The Worker worked for the pre-injury employer on this day and the following day. Their employment then ceased for reasons other than their injury, being that their contract had ended.
  15. If I were to apply section 44C(1) of the 1987 Act to determine the Worker's PIAWE, I would be required to determine the "relevant period" for the purpose of that section.
  16. Section 440 of the 1987 Act defines the relevant period as follows:
  17. (1)   Subject to this section, a reference to the relevant period in relation to pre-injury average weeklyearnings 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 periodof 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.

  18. As the Worker was injured on their first day of employment with the pre-injury employer, if I were to determine their PIAWE in by way of applying section 44D(l)(b) of the 1987 Act, there would be no relevant period as the Worker was not continuously employed by the pre-injury employer immediately before their injury. This would result in a potentially unjust outcome for the Worker and I consider that this is the type of situation envisaged by the legislature when making the provisions in section 44C(2) of the 1987 Act.
  19. I have therefore determined that the more appropriate approach is to exercise my discretion and apply the provisions under section 44C(2) of the 1987 Act to determine the Worker's PIAWE with the pre-injury employer.
  20. Determining the section for the calculation of PIAWE in relation to their work with employer 2. The Worker was employed by Employer 2 from April 2017. It is therefore possible to calculate the Worker's PIAWE in relation to their work with Employer 2 in accordance with section 44C(1) of the 1987 Act as there were earnings prior to their injury.
  21. However, because the Worker did not work a full work period for either of the pay periods during their pre-injury work for Employer 2, I consider that a calculation in accordance with section 44C(1) is likely to provide an inaccurate reflection of the amount that the Worker could reasonably have been expected to have earned in that employment, but for the injury, in the 52 weeks after the injury. I have therefore determined that it is most appropriate to determine the Worker's PIAWE in relation to their employment with Employer 2 in accordance with section 44C(2) of the 1987 Act.
  22. Calculating PIAWE for employment with the pre-injury employer. In accordance with section 44C(2) of the 1987 Act, the Worker's PIAWE is to be calculated as follows:
  23. (a) the average of the worker's ordinary earnings that the worker could reasonably have been expectedto have earned in that employment, but for the injury, during the period of 52 weeks after the injuryexpressed 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 ).

  24. The contract that the Worker signed with the pre-injury employer indicated that their proposed dates of employment were "as per P.O". There is a document that has been provided to me, it indicates that it is for labour on x and xx May (no year is specified) and is addressed to the Worker.
  25. The document indicated that the Worker was to be paid $600 for 2 days of work which were to consist of 10 hour days each. A subsequent pay slip dated "weekending xx/05/2017" confirms that this amount was paid to the Worker.
  26. The contract of employment indicates that employment under that contract is to be for a minimum of one day and is on a day to day basis thereafter. It is clear that the employer intended that no employment relationship should continue beyond the end of the agreed period of employment being   x and xx May 2017.
  27. Despite the wording of the contract, in their further submissions to the Authority dated January 2018, the Worker has indicated that a person at the pre-injury employer had indicated that further jobs would be forthcoming. I understand from the Worker's submissions that this conversation took place either before or at the time that the Worker was engaged to undertake the work that they did for the pre-injury employer on   x and xx May 2017.
  28. The information provided by the Worker is that there was a job to set up a set the week following their injury which they were unable to attend and then they were also to be engaged to pack down the set that they had set up on x and xx May 2017.
  29. While the contract that the Worker signed was clearly for a set period that was to end on xx May 2017, it also appeared to be a standard contract of a type that might be used for each casual engagement of a Worker as an alternative to having an ongoing casual employment contract. I do not consider that the wording of the contract precluded the possibility that the pre-injury employer intended to engage the Worker for future jobs and that it would use a similar form for each discrete engagement.
  30. I accept the Worker's submission in relation to the additional employment opportunities that had been offered to them. The information is plausible and there is no information that contradicts the Worker's statements.
  31. I must still determine the Worker's PIAWE in accordance with section 44C(2) of the 1987 Act. This requires a determination of the ordinary earnings that the Worker could reasonably have been expected to earn in that employment (with the pre-injury employer), but for the injury, during the period of 52 weeks after the injury.
  32. The Worker's information satisfies me that they could reasonably have been expected to earn $600 per week for at least two more weeks with the pre-injury employer but for their injury. The question arises whether the Worker could reasonably have been expected to continue to earn that amount for a further 50 weeks after those next two weeks of employment.
  33. There is almost no information to assist me in making a finding in this matter. The only information that I have is the Worker's statement that they understood that offers of employment (and therefore earnings from that employment) would be ongoing, albeit on a job to job basis.
  34. I am satisfied that the Worker's hours of work with Employer 2 would not have precluded them from working two, 10 hour days per week with the pre-injury employer.
  35. On balance, I believe that the correct and preferable finding is that the Worker could reasonably have been expected to earn $600 per week for the 52 weeks after the injury but for that injury with the pre-injury employer.
  36. For the purpose of section 44C(2)(b), there is no indication that there was any overtime of shift allowances that the Worker could reasonably have expected to earn with the pre-injury employer in the 52 weeks following their injury.
  37. I therefore find, in accordance with section 44C(2) of the 1987 Act that the Worker's PIAWE with the pre-injury employer is $600.

Calculating PIAWE for employment with Employer 2.

  1. In accordance with the exercise of my discretion, I will calculate the Worker's PIAWE with employer 2 in accordance with the provisions under section 44C(2) of the 1987 Act (as set out at paragraph 46).
  2. The Worker has made submissions in relation to a proposed method for calculating their PIAWE with Employer 2. The proposed method assumes that they would have worked 5 days per week in this role.
  3. I have accepted the Worker's submission that they were likely to have ongoing work with the pre-injury employer, 2 days per week. I consider it highly unlikely therefore that the Worker would have worked for Employer 2 for 5 days per week in addition to the work with the pre-injury employer.
  4. The Worker has provided information as to their actual and planned days of work in the fortnight for x to xx May 2017. In that period, they worked or were rostered to work for Employer 2 for 10 out of the 14 days and worked for the pre-injury employer for 2 out of the 14 days.
  5. I am satisfied that the Worker was likely to work 12 out of 14 days in any fortnight and that they would prioritise work with the pre-injury employer over work with employer 2 as the pay with the pre-injury employer was greater on an hourly basis and the work days appear to have been longer, therefore yielding higher pay overall.
  6. I therefore find that the Worker was likely to work 4 days per week with employer 2. I do not have a breakdown of the hours that the Worker worked in the period from April to May 2017. I have therefore relied on the information provided by the Worker in an email to their employer (confirmed by their employer) that indicates that hey worked 38 normal hours and 3.5 hours overtime over a period of 7 days.
  7. Section 44C(2)(b) of the 1987 Act allows for the calculation of PIAWE having regard to:
  8. 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. Section 44C(5) of the 1987 Act states:

    An overtime and shift allowance payment is permitted  to be included in the calculation of pre-injury average weekly earnings (but only for  the purposes  of the calculation of weekly payments payable  in the first  52 weeks for which weekly payments  are payable) if:

    (a)    the worker worked paid overtime or carried out work that attracted a shift allowance during the relevant period, and<

    (b)    the worker would, but for  the worker's injury, have been likely, at any time during that 52 week period, to have worked paid  overtime or carried out work that attracted a shift allowance.

  10. As noted above, the Worker worked 3.5 hours of overtime during the period prior to their injury. I consider it likely that the Worker would, but for the injury, have been likely at times during the first 52 weeks for which weekly payments were payable to have worked paid overtime.
  11. I will therefore consider the Worker's overtime earnings when calculating their PIAWE.
  12. I therefore calculate the Worker's PIAWE with Employer 2 as follows:
  13. (38 hours + 7) x 4 = Total weekly hours

    = 21.71 hours per week

    21.71 hours x $25 per hour = weekly earnings before overtime

    = $542.75

    Weekly overtime for the permitted period = 3.5 hours x $37.50

    = $131.25

  14. In accordance with section 44C(2)(b) of the 1987 Act, I find that the Worker's PIAWE for the first 52 weeks of weekly payments is $542.75 + $131.25, that is $674. Thereafter I find that it is $542.75.

Calculating PIAWE in accordance with Schedule 3, item 7 of the 1987 Act.

  1. In accordance with the requirements of Schedule 3, Item 7 set out at 33, I find that the Worker's PIAWE is calculated as follows:

    First 52 weeks of weekly payments

    $542.75 + $131.25 + $600

    = $1,274

    After 52 weeks of weekly payments

    $542.75 + 600

    =$1,142.75

  2. The Insurer is to calculate the Worker's entitlement to weekly payments of compensation in accordance with my findings above.

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