Open scrollable table of contents

Print entire document

Merit review WC033/18

Our Reference: 033/18
Date of review:

Findings on review

  1. The following are findings made by the State Insurance Regulatory Authority (“the Authority”) on review and are to be the basis for the Insurer’s review decision.
  2. The amount of the worker’s pre-injury average weekly earnings (“PIAWE”) is $798.00 (subject to indexation under section 82A of the 1987 Act).

Recommendations based on findings

  1. The following recommendations made by the Authority are binding on the Insurer and must be given effect to by the Insurer in accordance with section 44BB(3)(g) of the Workers Compensation Act 1987 (“the 1987 Act”).
  2. The Insurer is to determine the worker’s entitlement to weekly payments of compensation in accordance with the above finding from XXXXXXXX.

Background

  1. The worker sustained an injury to their lower back in the course of their employment with the pre-injury employer. The Insurer accepts the date of injury as XXXXXXXX.
  2. The worker has been in receipt of weekly payments of compensation from the Insurer.
  3. On XXXXXXXX, the Insurer made a work capacity decision in respect to the worker’s PIAWE, determining it at $728.47.
  4. The worker applied for internal review of the Insurer’s decision about the amount of their PIAWE. The Insurer conducted an internal review in April 2018 and determined the worker’s PIAWE to be $722.02.
  5. The worker made an application for merit review by the Authority. The application was received in May 2018. The application has been made within 30 days after the worker received notice of the internal review, as is required under section 44BB(3)(a) of the 1987 Act. The application has been lodged 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 makes the following submissions:
    • Before they got the work injury, they worked on a full-time basis (over 50 hours per week) and they worked as a Chef De Partie.
    • But the Insurer has paid them weekly benefits less than what they have calculated as their PIAWE. They also didn’t provide them with the payslips since their claim.
    • When their previous insurer, they “…didn’t get weekly benefits which is applied indexation”.
    • The Insurer has calculated their weekly benefits “…followed the bank statement but the number of the statement is deducted of tax and others so it’s not correct”.
    • Their date of injury is in early 2015 but the Insurer paid the weekly benefits from January 2016.
  2. In reply, the Insurer makes the following submissions:
    • *In making the original decision about PIAWE, the Insurer made several requests for information to the pre-injury employer. The information requested has not been provided the Insurer to date.
    • The rate of PIAWE was calculated as $728.47 based on bank statements provided by the worker which confirmed deposits made by the pre-injury employer. These deposits were made from November 2014 to January 2015.
    • The worker alleges that they were paid cash in hand from September 2014 – November 2014. However, there is no evidence that this arrangement occurred and for this reason, the Insurer was unable to use this in the calculation of their PIAWE.
    • The Insurer reviewed PIAWE at internal review and determined a new rate of $722.02 gross per week. With indexation, the rate of entitlement as of April 2018 is $771.61.
    • In March 2018, the Insurer made a decision that the worker had no current work capacity. No comment was made in relation to PIAWE in this decision.

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. This matter involves a merit review of the Insurer’s work capacity decision in accordance with section 44BB(1)(b) of the 1987 Act.
  2. The review is not a review of the Insurer’s processes in making the work capacity decision and/or the internal review decision. 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.
  3. In their application for merit review, the worker has indicated that they would like the Authority to review the Insurer’s decision in relation to the amount of their PIAWE (section 43(1)(d) of the 1987 Act). This review is confined to only this decision of the Insurer.

Pre-injury Average Weekly Earnings

  1. PIAWE is defined by section 44C of the 1987 Act as follows:
  2. (1) 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 worker 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 payable).

  3. In order to calculate the worker’s PIAWE, section 44C(1)(a) of the 1987 Act requires that I calculate 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.
  4. The ‘relevant period’ is defined by section 44D of the 1987 Act as follows:
  5. (1) Subject to this section, a reference to the relevant periodin 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.

    ….

    (3)    If, during the period of 52 weeks immediately before the injury, a worker:

    (a) is promoted, or

    (b) is appointed to a different position,

    (otherwise than on a temporary basis) and, as a result, the worker’s ordinary earnings are increased, the relevant period in relation to the worker begins on the day on which the promotion or appointment takes effect.

  6. The worker has advised that they commenced work with the pre-injury employer in September 2014. Letters from this employer dated October 2014 and March 2015 also confirm this.
  7. The date of injury is in early 2015. Given that the worker was employed for less than 52 weeks immediately before the injury, I find the relevant period is from September 2014 to January 2015 in accordance with 44D(1)(b) of the 1987 Act.
  8. ‘Ordinary earnings’ are defined by section 44E of the 1987 Act as follows:
  9. (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 pay is calculated on the basis of ordinary hours worked, the sum of the following amounts:

    (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. Section 44E of the 1987 Act requires that the worker’s ‘ordinary earnings’ be calculated at the ‘base rate of pay’ for ‘ordinary hours of work’ in any week during which they worked or was on paid leave.
  2. Both the worker and the Insurer have advised that they have made attempts to obtain payslips and information relevant to PIAWE from the pre-injury employer but are unable to obtain any further payslips then what has been provided to the Authority. There are a number of payslips before the Authority however only one of these payslips falls within the relevant period (payslip dated November 2014).
  3. A letter from the pre-injury employer dated March 2015 confirms the worker was employed on a full-time basis and advises the pre-injury employer was closed from December 2014 to January 2015 and that “during this time they received annual leave payment”.
  4. On the information before me, I am satisfied that the worker worked or was on paid leave in all of the weeks of the relevant period.
  5. ‘Base rate of pay’ is defined by section 44G of the 1987 Act as follows:
  6. (1) In relation to pre-injury average weekly earnings and current weekly earnings, a reference to a base rate of pay, is a reference to the rate of pay payable to a worker for his or her ordinary hours of work but does not include any of the following amounts (referred to in this Division as base rate of pay exclusions):

    (a) incentive based payments or bonuses,

    (b) loadings,

    (c) monetary allowances,

    (d) piece rates or commissions,

    (e) overtime or shift allowances,

    (f) any separately identifiable amount not referred to in paragraphs (a) to (e).

  1. The worker’s payslip indicates that their hourly rate in the relevant period was $21.00. In a response to a request for information from the Authority dated June 2018, the worker confirmed they received “around $21 – 23 per hour”. They advised that this rate was slashed to $16.00 to $17.00 per day when a new Head Chef commenced employment. Based on the payslips before me however, this appears to have commenced post the relevant period.
  2. There is no indication that the worker received amounts additional to their hourly rate in the relevant period relevant to the exclusions under section 44G(1).
  3. I find that the worker’s ‘base rate of pay’ in the relevant period was $21.00.
  4. ‘Ordinary hours of work’ are defined in section 44H of the 1987 Act as:
  5. In relation to pre-injury average weekly earnings and current weekly earnings, the ordinary hours of work :

    (a) in the case of a worker to whom a fair work instrument applies are:

    (i) 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

    (ii) 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, or

    (b) in the case of a worker to whom a fair work instrument does not apply:

    (i) if the ordinary hours of work are agreed between the worker and the employer, those hours, or

    (ii) 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.

  6. The worker advised in their email to the Authority dated June 2018 that they requested a copy of their contract from the employer but did not receive a response. The worker also did not provide a copy of any fair work instrument in response to the Authority’s request for this information of June 2018.
  7. Both the letters from the pre-injury employer however, dated October 2014 and March 2015 state the worker’s employment was on a full-time basis and the earlier letter states “They will be working minimum 38 hours per week”. I note that the worker’s payslips show fluctuating hours of work. I am however satisfied on the information before me that their ordinary hours of work were agreed between them and the employer to be a minimum of 38 hours per week.
  8. Pursuant to section 44H(b)(i) of the 1987 Act, I find that the worker’s ‘ordinary hours of work’ were 38 hours per week.

Calculation of PIAWE

  1. Given that the worker’s ‘base rate of pay’ was calculated on the basis of ‘ordinary hours of work’ and both these amounts have been established, the worker’s ‘ordinary earnings’ can be determined in accordance with section 44E(1)(a) of the 1987 Act.
  2. Multiplying the worker’s base rate of pay of $21.00 per hour by 38 hours per week, the worker’s earnings per week was $798.00.
  3. The information before me indicates that the worker did not receive any piece rates, commissions or non-pecuniary benefits during the relevant period that would be relevant to the calculation of their ‘ordinary earnings’ pursuant to section 44E(1)(a)(ii)&(iii) of the 1987 Act.
  4. The workers’ ordinary earnings for the relevant period was therefore $798.00 per week.
  5. I note that Section 44C(5) of the 1987 Act provides:
  6. (5) 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.

  1. The worker’s pay slips indicate that they did not receive any amounts for overtime and shift allowances in the relevant period. Overtime and shift allowances are therefore not relevant to the calculation of their PIAWE.
  2. I find that the worker’s PIAWE is $798.00 in accordance with section 44C(1) of the 1987 Act.
  3. The Insurer is to determine the worker’s entitlement to weekly payments of compensation in accordance with the above finding from XXXXXXXXX (date of the work capacity decision).
  4. The Insurer is to pay the worker the difference between the amount of compensation they were paid and the amount of compensation they should have been paid (subject to any notice period required under section 54 of the 1987 Act) based on the above finding.
  5. I note that the amount of the workers’ PIAWE should continue to be varied by the Insurer on each review date after they became entitled to weekly payments in respect of the injury, in accordance with the indexation provisions under section 82A of the 1987 Act.

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