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

Merit Review Certificate

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:

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:

20.  Subclause (3) applies if:

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:

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:

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:

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:

• 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