SIRA Logo

ACO v CIC Allianz Insurance Ltd [2018] NSWDRS MR 067

NSW DISPUTE RESOLUTION SERVICE (NSWDRS)
JurisdictionMerit Review
CatchwordsStatutory benefits – pre-accident weekly earnings – PAWE – pay increase
Legislation cited                    Motor Accidents Injury Act (NSW) ss 7.12(1), 7.13(4), Schedule 1 clause 4(1), 4(2) & 4(3), Schedule 2(1)(a)
Motor Accident Guidelines effective 13 July 2018 
Motor Accident Injuries Regulation 2017 (NSW)
Cases cited

N/A

Text citedN/A
Parties ACO - Claimant
CIC Allianz Insurance Ltd - Insurer
DisclaimerThis decision has been edited to remove all Unique Personal Identification including the name of the Claimant.

Merit Review Certificate

View the certificate

Issued under section 7.13(4) of the Motor Accident Injuries Act 2017

The Claim
Claimant ACO
InsurerCIC Allianz Insurance Ltd
Claim Number 37C000510
The Reviewable Decision
Date of decision                                         12 September 2018
Nature of decision The amount of pre-accident weekly earnings
The Merit Review
Our Reference 10060063
Merit Reviewer James Lowe
Date of Merit Review Certificate 26 November 2018

Merit Reviewer’s Determination

The reviewable decision is the decision of the Insurer about ACO’s pre-accident weekly earnings.

This is a decision that affects the amount of weekly payments of statutory benefits and is therefore a merit review matter under Schedule 2(1)(a) of the Motor Accident Injuries Act 2017.

The determination of the Merit Review is as follows:

  • The reviewable decision is set aside and the following decision is made in substitution for the reviewable decision:
o  The amount of ACO’s pre-accident weekly earnings (PAWE) is $1,635.17.
  • Effective Date: This determination has effect from the date of the reviewable decision, being 12 September 2018.

James Lowe
Dispute Resolution Service Merit Reviewer

Reasons for determination

Background

1.  ACO was injured in a motor accident at work on 8 August 2018. The Insurer accepted her claim for weekly payments of statutory benefits under the Motor Accidents Injuries Act 2017 (“the Act”).

2.  The dispute is about the calculation of ACO’s pre-accident weekly earnings (“PAWE”). The amount of PAWE affects the amount of weekly payments of statutory benefits.

3.  On 12 September 2018, the Insurer advised ACO that it had calculated the amount of her PAWE to be $1,614.59.

4.  ACO applied for an internal review by the Insurer.

5.  On 18 October 2018, the Insurer gave ACO written notice that it determined the amount of her PAWE to be $1,615.47.

6.  ACO lodged an application for merit review with the Dispute Resolution Service on 2 November 2018. The application has been made in accordance with section 7.12(1) of the Act and the Motor Accident Guidelines (the Guidelines).

Documents and information

7.  I have considered the documents provided in and submitted with the application and the reply and any further information that has been provided to the Dispute Resolution Service and exchanged between the parties.

Submissions

ACO

8.  In the application for merit review, ACO submits that the calculation of her pre-accident pay was based on an average of her gross salary across a 1 year period before the accident. It is submitted that this does not take into account that from January 2018, due to her performance, she had a pay increase resulting in a change to her salary. ACO references subclause 4(2)(b) and subclause (3) of Schedule 1 of the Act, “where it specifies pay increase”.

9.  It is submitted that the internal review included the yearly gross average for the week before the accident, but not including the day of the accident, at $1,574.86. It should be $1,771.69.

Insurer

10.  In reply, the Insurer submits that in addition to the submissions provided in reply to the application, it relies upon the reasons set out in the Certificate of Determination – Internal Review.

11.  The Insurer says that ACO has provided monthly payslips from her employer for the period 1 August 2017 to 31 August 2018. It is submitted that the ‘assessment period’ is 7 August 2017 to 7 August 2018, and ACO’s total gross earnings during that time is $84,004.68. Therefore, ACO’s ordinary gross earnings per week is $1,615.47.

12.  The Insurer submits that the payslips provided by ACO only show a pay increase from March 2018.

13.  The Insurer submits that while ACO submits that subclause 4(2)(b) and subclause (3) of Schedule 1 of the Act applies, the pay rise does not constitute a significant change in her earning circumstances. The assessment period for PAWE calculations start from 12 months immediately before the day on which the motor accident occurred.

14.  It is submitted that the correct interpretation has been made in accordance with the resources provided by SIRA, indicating that the Insurer’s decision is indeed in line with the overall legislative intent.

ACO

15.  On 9 November 2018, ACO gave further submissions, including “the salary increase is/was in recognition of exceeding my agreed performance levels”.

Legislation

16.  In conducting my review, I have considered the following legislation and guidelines:

  • Motor Accident Injuries Act 2017 (NSW) (the Act)
  • Motor Accident Guidelines effective 13 July 2018 (the Guidelines)
  • Motor Accident Injuries Regulation 2017 (NSW) (the Regulation)

Definition of pre-accident weekly earnings

17.  Clause 4(1) of Schedule 1 of the Act defines PAWE as:

Pre-accident weekly earnings, in relation to an earner who is injured as a result of a motor accident, means the weekly average of the gross earnings received by the earner as an earner during the 12 months immediately before the day on which the motor accident occurred, unless subclause (2) applies.

18.  Subclause (2) offers different methods to calculate PAWE. The information before me does not support a finding that subclauses 4(2)(a), (a1) or (c) apply to ACO’s circumstances.

19.  However, the submissions are made on the application of subclause (2)(b), which states:

if subclause (3) applies—the weekly average of the gross earnings received by the earner as an earner during the period from when the change of circumstance referred to in that subclause occurred to immediately before the day of the motor accident,

20.  Subclause (3) applies if:

during the 12 months immediately before the day of the motor accident, there was, as a result of any action taken by the earner, a significant change in his or her earnings circumstances that resulted in the earner regularly earning, or becoming entitled to earn, more on a weekly basis than he or she was earning before the change occurred.

Note. Examples of a change of circumstances to which this subclause would apply include a change of job, a promotion, a move from part-time to full-time employment, or a pay increase arising from the achievement of performance standards.

Findings on clause 4(3) of Schedule 1

21.  If the Insurer's submission that the pay increase does not constitute a significant change in ACO’s earning circumstances is accepted, subclause (3) would not apply. I note that the reviewable decision calculated ACO’s PAWE under subclause (1).

22.  However, ACO submits that her salary increased as a result of her performance. She says, “The salary increase is/was in recognition of exceeding my agreed performance levels”. She submits subclause (3) does apply, and she is correct. Her employer, XXXXXX, prepared a letter on 5 March 2018 and, in the following extract, it sets out the change of circumstances to which subclause (3) would apply:

[…] In recognition of your [ACO’s] performance review and overall contribution throughout last year,I am pleased to advise that, effective from 1 January 2018, your Total Cost Remuneration (TCR) has been increased by 3.00%

New FTE TCR:  $93,120 per annum

This increase will [be] paid in the March pay run and backdated. The TCR detailed above is inclusive of taxation, superannuation contributions and other salary deductions. […]

23.  That extract shows that the pay increase was in recognition of ACO’s performance review and her overall contributions to XXXX throughout 2017. Therefore, the pay increase was as a result of any action taken by ACO. The Insurer submits that the pay increase does not constitute a significant change in ACO’s earning circumstances. However, I am persuaded the pay increase was a significant change in her earning circumstances under subclause (3), given the ordinary meaning of significant, as it was of consequence and increased ACO’s earnings by 3%, an amount that XXXX was “pleased” to advise her of.

24.  The Insurer submits that the payslips provided by ACO only show a pay increase from March 2018. However, ACO received $7,449.70 of gross earnings in March and $7,086.70 per month thereafter. On balance, given ACO’s submissions and XXXX’s letter which says the “increase will [be] paid in the March pay run and backdated”, I am persuaded that the higher payment in March allowed for the pay increase to be backdated to 1 January 2018, when ACO was only receiving $6,880.29 per month.

25.  Therefore, I am persuaded that on 1 January 2018, as a result of any action taken by ACO, that she had a significant change in her earning circumstances that resulted in her regularly earning, or becoming entitled to earn, more on a weekly basis than she was earning before the change occurred.

26.  In light of the above, I am satisfied that ACO meets the requirement set out in subclause (3) and it follows that I find that subclause (2)(b) applies.

Calculation of PAWE

27.  ACO submits her PAWE should be $1,771.69.

28.  However, her PAWE under subclause (2)(b) is the weekly average of the gross earnings received by her as an earner during the period from when the change of circumstance referred to in subclause (3) occurred to immediately before the day of the motor accident.

29.  ACO is paid monthly. The payslips show that she received a total of $49,557.32 in gross earnings, described as normal earnings, for the pay periods covering 1 January 2018 to 31 July 2018. That is 212 calendar days or 30.285[…] weeks.

30.  ACO also received $7,086.76 in gross earnings in August 2018. However, the day “immediately before the day of the motor accident” is 7 August 2018. Therefore, there is only a further 1 week, or 7 days, of weekly gross earnings that needs to be determined. That is:

$7,086.76 ÷ 31 total days in August x 7 days = $1,600.236[…].

31.  Therefore, for the period of 1 January 2018 to 7 August 2018, a period of 31.285 weeks, I find ACO received a total of $51,157.556 in gross earnings ($49,557.32 + $1,600.236).

32.  On this basis, and given the reasons above, I find the amount of ACO’s PAWE is $1,635.17 (to the nearest cent), calculated as follows:

$51,157.556 total gross earnings received ÷ 31.285 weeks.

Determination

My determination of the Merit Review is as follows:

  • The reviewable decision is set aside and the following decision is made in substitution for the reviewable decision:
o  The amount of ACO’s PAWE is $1,635.17.
  • Effective Date: It is the function of the Dispute Resolution Service on merit review to arrive at the correct and preferable outcome in respect of the weeks covered by the reviewable decision that is referred for review. Accordingly, this determination has effect from the date of the reviewable decision, being 12 September 2018, and any weeks of weekly payments of statutory benefits prior to that date that were affected by the reviewable decision (if any).

James Lowe
Dispute Resolution Service Merit Reviewer