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Merit review WC044/18

Our Reference: 044/18
Date of review: 

Findings

  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 $471.78 in the first 52 weeks for which weekly payments are payable.
  3. The amount of the Worker’s pre-injury average weekly earnings (“PIAWE”) is $435.97 after the first 52 weeks for which weekly payments are payable.

Recommendation based on findings

  1. The following recommendation 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.

Background

  1. The Worker sustained an injury 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. In July 2017, the Insurer made a work capacity decision in respect to the amount of the Worker’s PIAWE. The Insurer determined that the Worker’s PIAWE was in the amount of $581.10.
  4. The Worker applied for internal review of the Insurer’s decision regarding the amount of their PIAWE. The Insurer conducted an internal review in March 2018 and maintained its decision.
  5. The Worker made an application for merit review by the Authority. The application was received in March 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’s legal representatives make the following submissions on their behalf:
    • The Worker sustained an injury with the Insurer on XXXXXXXX (deemed date).
    • The Worker commenced employment with the pre-injury employer on or around March 2015.
    • The Worker was therefore employed for the period 52 weeks immediately before the injury.
    • Under section 44D(1)(a) of the 1987 Act, the ‘relevant period’ is:

    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

    • As such, the relevant period, as outlined in the attached Payroll Analyst Report is December 2015 to November 2016 (i.e. 52 weeks prior to the injury).
    • Having regard to the above, the total gross earnings for the relevant period as outlined in the attached Payroll Analyst Report is $37,909.17.
    • Expressed as a weekly sum, this equates to $729.02.
    • It is therefore submitted that the Worker’s PIAWE should be calculated at $729.02.
  2. In reply, the Insurer makes the following submissions:
    • The Insurer maintains its decision in line with the original work capacity decision dated July 2017, which the Insurer subsequently upheld at internal review.
    • The Insurer submits that it requested from both the Worker and their solicitors further information in order to effectively undertake the request for review of PIAWE.
    • To date this further information has not been received and should the Worker wish to submit to the Insurer the requested information (below), it would be in a better position to determine their PIAWE.
      • - Copies of employment contract
      • - Copies of fair work instrument
      • - Tax returns
      • - Payslips from December 2015 to May 2016
      • - Enterprise Bargaining Agreement
    • It is noted that the Worker has two concurrent claims at present:
      • - Date of injury June 2016 (XXXXXXXX)
      • - Date of injury December 2016 (XXXXXXXX)
    • The Insurer therefore considers that the relevant period for this claim is from December 2015 to May 2016 as it cannot include any period of workers compensation wages, hence the further information above is required.
    • The Insurer notes that it has received a further payroll analyst report with a new period being from March 2015 through to November 2017. This is still not enough to make the final decision.
    • Should the Worker or their solicitors wish to provide the requested information the Insurer will be able to review and determine the Worker’s PIAWE.

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 work capacity decision of the Insurer in accordance with section 44BB(1)(b) of the 1987 Act.
  2. The review is not a review of the Insurer’s procedures in making the work capacity decision and/or 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. The Authority is only able to review the work capacity decisions of an Insurer that are referred for review by a worker in accordance with section 44BB.
  4. Section 43(1) of the 1987 Act describes the types of work capacity decisions that can be made by an Insurer.
  5. The Worker has indicated in their application for merit review that they would like the Authority to review the Insurer’s decision in relation to the amount of their PIAWE under section 43(1)(d) of the 1987 Act. These findings and recommendations will therefore be confined to a merit review of this decision of the Insurer.

Pre-injury Average Weekly Earnings

  1. PIAWE is defined by section 44C of the 1987 Act as follows:

    (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).
  2. 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.

The relevant period

  1. The ‘relevant period’ is defined by section 44D of the 1987 Act as follows:
  2. (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.

    (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 earningsare increased, the relevant period in relation to the worker begins on the day on which the promotion or appointment takes effect.

  3. Pay slips before me indicate that the Worker was continuously employed by the pre-injury employer for over 52 weeks immediately before their injury. There is no information to indicate they were promoted or appointed to a new position during this period.
  4. I note that the Insurer submits that the relevant period is from December 2015 to May 2016 as it cannot include any period of workers compensation wages. I acknowledge the Insurer’s submissions that workers compensation payments should not be included when calculating the Worker’s PIAWE. This however does not affect the relevant period for weeks the Worker did actually work. Below, I have excluded 3 weeks in which the Worker did not work and only received workers compensation payments. For the remaining weeks in which the Worker received workers compensation, I have excluded the workers compensation amounts from the Worker’s ordinary earnings.
  5. I am satisfied that the ‘relevant period’ is 52 weeks immediately before the injury.

Ordinary Earnings

  1. ‘Ordinary earnings’ are defined by section 44E of the 1987 Act as follows:
  2. (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:

    (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.

  3. 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 he worked or was on paid leave.
  4. Excluding the Worker’s payslip for the week of their injury as it is not clear how many hours of that week the Worker worked prior to the date of injury, the Payroll Analyst Report provides information in relation to the Worker’s earnings for the preceding 52 weeks.
  5. I note that there are also 35 payslips before me for weeks in the relevant period but not payslips for all 52 weeks.
  6. Upon review of the Payroll Analyst Report, I am satisfied that the Worker worked or was on paid leave in 49 weeks of the relevant period. In the weeks ending June 2016, June 2016 and June 2016, the Worker did not work. They received weekly payments compensation in those weeks in respect to a separate work-related injury.
  7. I find that the Worker’s ‘ordinary earnings’ should be averaged based on the 49 pay slip weeks immediately before the injury in which they worked or was on paid leave.

Base Rate of Pay

  1. ‘Base rate of pay’ is defined by section 44G of the 1987 Act as follows:

    (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).

  2. The Worker’s pay slips indicate that their hourly rate throughout the relevant period, classified as ‘Ordinary’ or ‘Statutory Ho’ on the payslips’, was:
    • $19.00 from December 2015 to September 2016
    • $19.60 from September 2016 (back payments made) to November 2016.
  3. The Worker’s pay slips indicate that they at times in the relevant period received additional amounts to their hourly rate of pay. Those amounts are classified on their payslip as ‘Time & Half’, ‘Double’ and ‘Leave Loading’. Section 44G(1)(b) and (e) of the 1987 Act, outlined above, defines ‘base rate of pay’ to be exclusive of ‘loadings’ and ‘overtime or shift allowances’ respectively. Accordingly, the additional amounts the Worker received to their hourly rate of pay under ‘Time & Half’, ‘Double’ and ‘Leave Loading’ are to be excluded from the calculation of their ‘base rate of pay’.
  4. I find that the Worker’s ‘base rate of pay’ in the relevant period was $19.00 from January 2016 to September 2016 and $19.60 from September 2016 to November 2016.

Ordinary Hours of Work

  1. ‘Ordinary hours of work’ are defined in section 44H of the 1987 Act as:
  2. 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.

  3. I note that the Insurer indicates in its internal review decision that the Worker’s “agreed ordinary hours” are 26.39 hours per week and that they were employed on a part-time basis. It is unclear where the Insurer obtained this information from. The Worker’s legal representatives indicate in an email dated April 2018 that the Worker did not have an employment contract and the payslips and Payroll Analyst Report show fluctuating hours of work. The information does not support the Worker had agreed hours of work. It appears the Insurer may have calculated average hours per week. Given the information before me and the submissions made by the Insurer that it was unable to effectively undertake the request for review of PIAWE due to a lack of information, I have not relied on the information regarding the Worker’s “agreed ordinary hours” in the Insurer’s internal review decision.
  4. Attached to an email dated April 2018, the Worker provided a copy of the Poultry Processing Award 2010 in response to a request for information from the Authority for any enterprise agreements that covered their employment. A fair work instrument therefore applied to the Worker’s employment.
  5. As noted above, the Worker’s hours of work fluctuate on the information before me and there is no indication of any agreed hours of work.
  6. Given that a fair work instrument applied and the Worker’s hours of work were not “agreed or determined … between the worker and the employer”, I am satisfied the Worker’s PIAWE should be calculated in accordance with section 44H(a)(ii) of the 1987 Act. That is their average weekly hours during the relevant period.
  7. Based on analysis of the Payroll Analyst Report with cross reference to the Worker’s payslips and then calculations, their total hours (excluding hours classified as ‘Workers Comp’) on the different hourly rates in the relevant period, was:
    • 1211.12 hours at $19.00 from December 2015 to September 2016
    • 429.9 hours at $19.60 from September 2016 to November 2016.
  8. However, as noted above the Worker received back payments in the pay week commencing September 2016. They received 249 hours of back pay at $0.60 for ‘ordinary hours’ and 12 hours of back pay at $0.90 for ‘Time & Half’ hours. That is a total of 261 hours of back pay of $0.60 when the shift allowance component of ‘Time & Half’ ($0.30) is excluded (base rate of pay exclusion). The total hours of the Worker’s different hourly rates in the relevant period was therefore:
    • 950.12 hours at $19.00 (deducted 261 hours of back pay)
    • 168.9 at $19.60 (added 261 hours of back pay)

Calculation of Ordinary Earnings

  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. The total of the Worker’s base rate of pay for the ordinary hours of work during the relevant period is therefore $21,362.72 [$18,052.28 (950.12 x $19.00) + $3,310.44 (168.9 x $19.60)].
  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 Worker’s average ordinary earnings for the relevant period is therefore $435.97 per week ($21,362.72 divided by 49 weeks).

Overtime and Shift Allowances

  1. I note that Section 44C(5) of the 1987 Act provides:

    (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.

  2. The Worker’s pay slips indicate that they did not receive any amounts for overtime in the relevant period. As noted above, the Worker did however receive shift allowances classified as ‘Time & Half’ and ‘Double’ on a number of their payslips. There is nothing on the information before me to indicate they would not have continued to work shifts that attracted a shift allowance but for their injury.
  3. I am satisfied that shift allowances are permitted to be included in the calculation of the Worker’s PIAWE in the first 52 weeks for which weekly payments are payable pursuant to section 44C(2)(b) of the 1987 Act.
  4. The Worker received a total amount of $1,754.88 in shift allowances in the relevant period based on a calculation of the amount provided in the Payroll Analyst Report. This equates $35.81 per week ($1,754.88 ÷ 49).
  5. I find the amount of $35.81 per week to be the amount of shift allowances that is permitted to be included in the Worker’s PIAWE in the first 52 weeks for which weekly payments are payable pursuant to section 44C(2)(b) of the 1987 Act.

Finding on PIAWE

  1. I find that the Worker’s PIAWE is $471.78 in the first 52 weeks for which weekly payments are payable. I find the Worker’s PIAWE is $435.97 after the first 52 weeks for which weekly payments are payable.
  2. I note that the amount of the Worker’s PIAWE, as calculated above, should be varied by the Insurer on each review date after the Worker 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