Workers compensation regulation bulletin - Issue 74 (October 2019)

PIAWE reforms have commenced

Reforms to simplify and improve the way a worker’s pre-injury average weekly earnings (PIAWE) are calculated commenced today and apply to workers injured on or after 21 October 2019 (excluding exempt workers).

The new simplified PIAWE method:

• is transparent and can be applied across a wide range of working arrangements
• will save time to allow workers, employers and insurers to focus on return to work and improved outcomes for workers
• enables employers and workers to agree the PIAWE amount, as an alternative to insurers making a work capacity decision regarding PIAWE, and
• will reduce disputes in relation to PIAWE.

Calculating PIAWE

PIAWE is defined as the weekly average of a worker’s gross pre-injury earnings in any employment in which the worker was engaged at the time of injury.

To calculate PIAWE, the insurer will determine:

• the relevant earning period applying to the worker, which is the period over which the worker’s average earnings will be calculated (generally the full 52 weeks prior to the date of injury)
• a worker’s gross earnings during the relevant earning period.

The 52-week relevant earning period is adjusted where:

• the worker started in the job less than 52 weeks prior to injury
• there was a financially material and ongoing change to the worker’s earnings during the 52-week period
• the worker had an extended period of unpaid leave, being a period of seven or more consecutive days of no earnings, commencing on a day of unpaid leave.

The insurer may also align a worker’s relevant earning period to the worker’s pay cycle in order to simplify the calculation.

To determine gross earnings, the insurer will consider all income received by the worker for work in any employment, including:

• wages, including paid leave and loadings
• shift, overtime and other allowances paid
• commission and piece rates.

Compulsory superannuation contributions, compensation payments and payments made without obligation by the employer are excluded from gross earnings.

The cash value of non-monetary benefits (such as a motor vehicle) is only included in a worker’s PIAWE if the worker no longer has the use of the benefit after the injury.

Where a worker has more than one job at the time of the injury, average weekly earnings are calculated for each job and added together to determine the worker’s PIAWE, noting that each job may have a different relevant earning period.

PIAWE by agreement

The new PIAWE framework allows the employer and worker to agree on the PIAWE amount to be used for determining the worker's weekly compensation payments.

PIAWE agreements are optional. Where an employer and a worker do not enter into an agreement, the insurer will calculate PIAWE in accordance with the legislation and make a work capacity decision.

There are certain requirements that must be met for an agreement to be valid, including the insurer being satisfied that the agreed PIAWE amount is fair and reasonable.

An employer and worker who have struck an agreement must apply to the insurer for approval of the agreement within five days of initial notification of injury. The following PIAWE agreement form may be used to seek the insurer's approval of an agreement.

PIAWE recalculations

Where PIAWE is recalculated and the new PIAWE amount is higher than what was previously agreed or determined, the worker is entitled to an adjustment payment to make up the difference.

The insurer is to pay the worker the adjustment payment within 14 days.

Indexation

From 21 October 2019, PIAWE is to be indexed on 1 April and 1 October each year after the date of injury.

This applies to all PIAWE calculations, regardless of the date of injury.

Further information

The simplified PIAWE method is supported by new Workers Compensation Guidelines and revised Standards of Practice, which apply from 21 October 2019.

Further information regarding the changes to PIAWE is available on SIRA’s Claims management guide on the SIRA website, including:

• information for workers and other stakeholders in Understanding the claims journey
• detailed guidance notes for insurers to help with implementing the changes in Insurer Guidance.

You can also access a short Reference guide for PIAWE, which provides an overview of the changes, as well as a new PIAWE form and a new PIAWE agreement form.

The changes do not impact other weekly payment arrangements and entitlements.

For more information visit the SIRA website and the NSW Legislation website.

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