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Our ref. WC009/18

Our Reference: 009/18

Findings on review

  1. The following are the findings of 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 $973.15.

Recommendation based on findings

  1. The Insurer is to calculate the worker’s entitlement to weekly payments of compensation in accordance with my findings 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 was injured in the course of their employment with their pre-injury employer. At the time of their injury, the worker was also employed in a casual capacity with their secondary pre-injury employer.
  2. In July 2017, the Insurer made a work capacity decision as to the worker’s PIAWE. The Insurer determined that the worker’s PIAWE was $1,252.39 per week. The worker was notified of the decision by way of a letter dated July 2017.
  3. The Insurer conducted an internal review of its decision. The reviewer determined that the worker’s PIAWE was $1,062.62. The worker was notified of the outcome of the internal review in a letter dated August 2017.
  4. The Authority received the application for merit review in September 2017. The application has been accepted.

Legislation

  1. The legislative framework governing work capacity decisions and reviews is contained in the:
    • Workers Compensation Act 1987 (the 1987 Act);
    • Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act);
    • Workers Compensation Regulation 2016 (the Regulation);
  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:
    • The calculation of their PIAWE.
  2. The worker’s submissions in support of their application for merit review are summarised as follows:
  3. The Insurer’s calculations are incorrect.
  4. The worker has calculated the PIAWE as being the sum of their average earnings from their two jobs being $743.10 per week and $628.06 per week.
  5. The amount that the Insurer has calculated as their PIAWE in the internal review is lower than the initial calculation of their PIAWE.
  6. The Insurer did not provide copies of the spreadsheets that it used to calculate their average weekly earnings for their two roles.
  7. The worker would like to rely on the actual information contained in their pay slips to be taken into account.
  8. In reply, the Insurer’s submissions may be summarised as follows:
    • It relies on its internal review decision and has calculated the worker’s PIAWE in accordance with item 8 of Schedule 2 of the 1987 Act.
    • It has set out its calculations in the response. I have carefully studied these.

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.

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. I am required to consider all of the information that has been provided and make findings and recommendations that are most correct and preferable.

PIAWE

  1. The worker has referred the Insurer’s calculation of their PIAWE for review by the Authority.
  2. At the time of their injury, the worker had two employers. The worker sustained their injury in the course of their employment for their pre-injury employer. In their secondary pre-injury employer, they had worked two roles.
  3. A review of the worker’s pay slips indicates that they worked variable, casual hours for each of their employers. Generally, the hours that they worked for each of the employers were less than 38 hours per week which is the prescribed number of hours under Part 3, clause 7 of the Regulation. The number of ordinary hours for full time employment prescribed in both the The NUW and AMSRO Market and Social Research Industry Agreement 2013-2016 and the Hospitality Industry General Award 2010 is also 38 per week.
  4. At the time of their injury, the worker was not under the age of 21, an apprentice or under a contract of employment requiring further study in return for an increase in wage rate.
  5. At the time of their injury, I understand from correspondence between the occupational rehabilitation provider and the Insurer dated July 2017, that at the time of their injury, the worker was unable to do either of their roles.
  6. I am therefore satisfied that item 8 of Schedule 3 of the 1987 Act is the relevant section to be applied when determining the worker’s PIAWE.
  7. Item 8 of Schedule 3 states:
Class of worker at the time of injury Calculation of pre-injury average weekly earnings
Worker employed by 2 or more employers in circumstances other than those described in the preceding provisions of this Schedule. 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.

Ordinary earnings

  1. In order to calculate the worker’s PIAWE, I am required to determine their average ordinary earnings and to express these as an amount per hour.
  2. Section 44E of the 1987 Act sets out the definition of ordinary earnings as follows:
  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:
    1. if the worker’s base rate of pay is calculated on the basis of ordinary hours worked, the sum of the following amounts:
    2. the worker’s earnings calculated at that rate for ordinary hours in that week during which the worker worked or was on paid leave,
    3. amounts paid or payable as piece rates or commissions in respect of that week,
    4. the monetary value of non-pecuniary benefits provided in respect of that week.
  1. Having read the fair work instruments that determine the worker’s base rate of pay, I am satisfied that the base rate of pay for each of the worker’s roles is calculated on the basis of ordinary hours.
  2. According to the worker’s pay slips from their employers, they did not receive any piece rates or commissions and did not receive any non-pecuniary benefits.
  3. As ordinary earnings are determined in relation to a week in the relevant period, I am required to determine the relevant period.

Relevant period

  1. Section 44D(1) of the 1987 Act defines the relevant period as:
  2. 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:
    1. 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
    2. 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 pay slips provided by the worker indicate that they were employed with each of the employers continuously for 52 weeks prior to their injury. The relevant period is therefore 52 weeks.

Ordinary hours of work

  1. In calculating the worker’s PIAWE, I am to multiply their average ordinary earnings by the lesser of their average ordinary hours of work or the prescribed rate.
  2. “Ordinary hours of work” is defined in section 44H of the 1987 Act as follows:
    1. In relation to pre-injury average weekly earnings and current weekly earnings, the ordinary hours of work:
      1. in the case of a worker to whom a fair work instrument applies are:
        1. 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
        2. 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.
  1. While fair work instruments applied to both of the worker’s employment arrangements, the hours of work varied substantially from week to week and I am satisfied that they were not agreed in accordance with the fair work instruments between the worker and their employers. The worker’s ordinary hours of work are therefore to be determined in accordance with section 44H(a)(ii) of the 1987 Act as follows:

Pre-injury employer ordinary hours of work

Total hours of work/weeks of work

= 970 hours/42

= 23.1 hours per week

Secondary pre-injury employer ordinary hours of work

Total hours of work/weeks of work

= 614.9/52

= 11.83 hours per week

Average ordinary hours of work

Pre-injury employer Average + Secondary pre-injury employer Average

= 23.1 + 11.83

= 34.93

  1. I find that the worker’s ordinary hours of work were 34.36 per week in the relevant period.

Ordinary earnings as an hourly rate

  1. In accordance with item 8 of Schedule 3, I am to calculate the worker’s ordinary earnings as an amount per hour for all of the work carried out in the relevant period.
  2. I note that as a casual worker, there were some months during which the worker was on leave from their role and that this time was unpaid. In accordance with the definition of ordinary earnings in section 44E(1) of the 1987 Act, the weeks on which the worker was on unpaid leave.
  3. To calculate the worker’s ordinary earnings as an hourly rate, I have multiplied their hours of work in each role by the hourly rate for that role and have divided this by the total number of hours worked. The worker received a pay increase for their role at their pre-injury employer in the fortnight ending XX February 2017, I have therefore calculated their ordinary earnings for this role in separate periods for pre and post XX February 2017.

Ordinary earnings for secondary pre-injury employer

Total hours of work x rate of pay for ordinary hours

= 614.9 hours x $26.68

= $16,405.63

Ordinary earnings for pre-injury employer pre XX February 2017

Total hours of work x rate of pay for ordinary hours

= 688.25 hours x $28.41

= $19,553.18

Ordinary earnings for pre-injury employer post XX February 2017

Total hours of work x rate of pay for ordinary hours

= 281.75 hours x $29.12

= $8,204.56

Ordinary earnings as an hourly rate

Total earnings at rate of pay for ordinary hours/Total hours for the period

= ($16,405.63+ $19,553.18 + $8,204.56)/(614.9 + 970)

= $44,163.37/1,584.90

= $27.86 per hour

Calculation of PIAWE

  1. I am to calculate the worker’s PIAWE in accordance with Schedule 3, item 8 of the 1987 Act. I must multiply their ordinary earnings expressed as an hourly rate by either their average ordinary hours or the prescribed number of hours, whichever is lesser. As the worker’s average ordinary hours are less than the 38 hours prescribed in Part 3, clause 7 of the Regulation, I will use their average ordinary hours for the calculation.
  2. I therefore calculate the worker’s PIAWE as follows:

Average ordinary hours x ordinary earnings (hourly rate)

= 34.93 x $27.86

= $973.15 per week

  1. I find that the worker’s PIAWE is $973.15 per week.

Merit reviewer
Merit Review Service
Delegate of the State insurance regulatory authority