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058/18

Our Reference: 058/18
Date of review: December 2017

Findings on review

  1. The following are findings made by the State Insurance Regulatory Authority (the Authority) on review.
  2. The amount of the Worker’s pre-injury average weekly earnings is calculated in accordance with Division 2 of Part 3 of the Workers Compensation Act  1987 (the 1987 Act) at $504.92 (subject to the application of the indexation and rounding provisions contained in Division 6A of Part 3 of the 1987 Act).

Background

  1. The Worker sustained injury while working as self-employed director/wardrobe installer with pre-injury employer. The accepted date of injury is the date of injury.
  2. In August 2017, the Insurer made a work capacity decision. It calculated the Worker’s pre­ injury average weekly earnings (PIAWE) at $760.
  3. In October 2017, the Insurer conducted an internal review. It calculated the amount of the Worker’s PIAWE at $504.92. This amount was indexed and rounded pursuant to Division 6A of Part 3 of the 1987 Act at $518.
  4. The Authority received the Worker’s Application for Merit Review in November 2017. I am satisfied that the application was made within time, pursuant to section 44BB(3)(a) of the 1987 Act. The application has been made in the form approved by the Authority.

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.

Submissions

  1. In the application for merit review the Worker’s solicitor makes the following submissions on their behalf:
    • They do not agree with the Insurer's decision regarding his PIAWE. They submit that their 2016-2017 tax return correlates to their ordinary earnings  in accordance with section 44E(1) of the 1987 Act.
    • The Insurer also exceeded the 30 day requirement to respond to their request for a review, it took almost 7 weeks.
  2. The Worker’s solicitor has also made various submissions in response to  requests  for additional information from the Authority and these are addressed in the reasons that follow.
  3. In reply, the Insurer makes the following submissions:
    • The Worker was continuously employed by the same employer for the 52 weeks immediately prior to the injury. In accordance with section 44D(l)(a) of the 1987 Act this is the relevant period.
    • The Worker’s tax return for the period July 2015 to June 2016 indicates that they earned $26,256 for the financial year 2015-2016, which equates to $504.92 per week.
    • The Worker provided a tax return for the period July 2016 -  June 2017 at internal review. This shows earning of $41,336 for the 2016-2017 financial year, which equates to $794.92 per week.
    • The Worker’s tax return for the period July 2016 -  June 2017 shows their post injury earnings (injury date) which does not correlate to the relevant period.
    • The tax return for the period July 2015 -  June 2016 is the most accurate information demonstrating their earnings. The Worker’s PIAWE is therefore $504.94, indexed and rounded at $518.

Information considered

  1. I have considered all of the information that was provided by the parties in relation to this merit review. I have only referred to. the information that is most relevant to my findings in the reasons that are set out below.
  2. I am satisfied the parties have had the opportunity to respond to each other's submissions and that the information provided has been exchanged between the parties.

Nature of merit review

  1. This matter involves a merit review of the work capacity decision of the Insurer in accordance with section 44BB(l)(b) of the 1987 Act. 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.
  2. The review is not a review of the Insurer's procedures in making the work capacity decision and/or internal review decision, therefore, whilst I note that the Worker makes submissions regarding the tardiness of the Insurer in conducting the internal review, it is not a matter than falls within the scope of this merit review.

Reasons

  1. Pursuant to 44C of the 1987 Act, pre-injury average weekly earnings in respect of a "relevant period" are the sum of:
  2. The average of the worker's "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, and
  3. Any overtime and shift allowance payments that are permitted to be included (but only for the purposes of the calculation of weekly payments payable in the first 52 weeks for which weekly payments are payable).
  4. The "relevant period" is defined by section 440 of the 1987 Act:

(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.

  1. "Ordinary earnings" are defined by section 44E of the 1987 Act 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 pa y 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.

  1. The Worker advised that they were continuously employed in their pre-injury role, as a self - employed director/ installer with pre-injury employer  for 6 years prior the injury. There is no indication on the information before me that there was any break in the continuity of their employment. I therefore find that the relevant period pursuant to section 44D(1)(a) of the 1987 Act is June 2015 -  June 2016 (52 weeks immediately prior to the injury).
  2. There was very little evidence provided with the application and reply forms in this matter. Therefore, the Authority sought information such a contract of employment and payslips for the "relevant period" as noted above from the Worker. However, no such information was forthcoming. The Worker’s legal representative advised that they do not have payslips "and only lodges a tax return each year".
  3. The Authority had various further communications with the Worker’s legal representatives in an attempt to gather information regarding his earnings during the relevant period. In December 2017, the Worker’s legal representative indicated that they worked 40 hours per week for each week during the relevant period and that they received the same amount of pay each week. In answer to whether the Worker received a base rate of pay or set rate per hour based on the 40 hours per week they worked, they indicated that they were "unsure" and this was "not applicable".
  4. The Worker’s bank statements from October 2015 - June 2016 were provided. However, these indicated amounts deposited varied. It was therefore put to the Worker’s legal representative that this evidence did not support the submissions that they received the same amount of pay each week. Further, the Authority indicated that I had formed the preliminary view that the best information available as to the amount of the Worker’s ordinary earnings in the 52 weeks prior to the injury was their tax return for the 2015-2016 financial year.
  5. In December 2017, the Worker's legal representative advised that they withdrew the submissions that they received the same amount each week. They stated that they were sub­ contracted by other companies, invoiced them and then paid themselves a wage each week. This wage was paid in both cash and bank deposits. It was submitted that the Worker:

"received a similar income each week, due to the nature of the industry the exact figure cannot be calculated at this stage. The Worker declared their income through their accountant each year".

  1. I acknowledge the Worker’s submission that their 2016-2017 tax return indicate their ordinary earnings. However, this return is for the period July 2016 to June 2017 and therefore does not provide evidence of their actual earnings during the relevant period as found above (June 2015 -  June 2016).
  2. There is very little evidence before me in this matter indicating the Worker’s ordinary earnings for the relevant period, this is notwithstanding multiple attempts by the Authority to obtain such information. Their legal representative has advised that they cannot provide an exact figure as to their weekly earnings, but that they "declared their income through their accountant each year". In these circumstances, I consider that the most reliable information available in this regard is their individual tax return for 2015-2016. This document indicates their total taxable income for the period July 2015- July 2017, which covers most of the relevant period. Their total earnings for this period were $26,256.
  3. The best information available indicates that the Worker’s ordinary earnings during the relevant period were $504.92. There is no indication in the information before me that the Worker received any overtime or shift allowance payment which may be relevant pursuant to section 44C{l)(b) of the 1987 Act.
  4. I therefore find the Worker’s PIAWE pursuant to section 44C of the 1987 Act to be $504.92. This amount is subject to the indexation and rounding provisions in Division 6A, Part 3 of the 1987 Act.

Merit Review Service
Delegate of the State Insurance Regulatory Authority