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Findings and recommendations on merit review 005/16

Date of Review: 11 September 2016

Our Reference: 005/16

Finding on Review

  1. The following finding is made by the State Insurance Regulatory Authority (the Authority) on review and is to be the basis of the Insurer’s work capacity decision.
  2. In accordance with section 44C(4) of the Workers Compensation Act 1987 (the 1987 Act) the worker’s pre-injury average weekly earnings are to be determined in accordance with Column 3 of item 7 in Schedule 3 of the 1987 Act, expressed as a weekly sum.

Recommendations Based on Finding

  1. The following recommendations are binding on the Insurer and must be given effect to by the Insurer under section 44BB(3)(g) of the 1987 Act.
  2. The Insurer is to calculate the worker’s entitlement to weekly payments of compensation in accordance with the finding above.
  3. The Insurer is to pay the difference between the amount of weekly compensation paid to the worker and the amount calculated in accordance with my finding above with respect to weeks of compensation already paid.

Background

  1. The worker sustained an injury to his right shoulder on 20 September 2016 while undertaking his duties with the pre-injury employer (the primary employer).
  2. The worker made a claim for weekly payments of compensation. Liability for weekly payments of compensation was accepted by the Insurer.
  3. In a document dated 2 June 2017, the Insurer advised the worker that his PIAWE was $1,009.61 based on his employment with the employer, having applied item 2, of Schedule 3 of the 1987 Act.
  4. The worker made an “application for review by Insurer” under section 287A of the Workplace Injury Management and Workers Compensation Act 1998 dated 5 June 2017.
  5. A document dated 5 July 2017 reveals that the Insurer conducted an internal review of a work capacity decision under Part 3, Division 2, Subdivision 3 of the 1987 Act.
  6. The Insurer decided on internal review that the worker’s pre-injury average weekly earnings again were calculated at $1,009.61, an amount which excludes his earnings from his second job at his second employer. The Insurer referred to Schedule 3, item 2 of the 1987 Act in doing so.
  7. The worker remained dissatisfied with the Insurer’s decision and lodged an application for merit review by the Authority.
  8. The Authority received the application for merit review on 20 July 2017. I am satisfied that the application has been made within 30 days as required under section 44BB(3)(a) of the 1987 Act.

Legislation and Guidelines

  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 2010 (the Regulation);
    • Guidelines for work capacity decision Internal Reviews by Insurers and Merit Reviews by the Authority applicable from 11 October 2013 (the Review Guidelines); and the
    • WorkCover Work Capacity Guidelines as amended (the Work Capacity Guidelines).
  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.

Documents Considered

  1. The documents I have considered in this review are those listed in, and attached to, the worker’s application for merit review, the Insurer’s reply and any further information provided by the parties.

Submissions

  1. In the application for merit review, the worker makes the following submissions:
    • He has been working at the second employer since 2 December 2010, and on 6 January 2011 he became a permanent part-time team member for 4 hours a night for four days a week.
    • Ever since the injury on 20 September 2016, he was unable to work at the second employer because of the injury to his right shoulder.
    • He went on sick leave from the second employer from the day of the injury and has taken all leave from the second employer because of his injury to his right shoulder.
    • Since December 2016, he is on unpaid sick leave from the second employer which is a causing a huge financial stress on him and his family.
    • He attaches a revised letter from the second employer dated 14 July 2017 regarding his permanent position at the second employer.
  2. In reply, the Insurer submits:
    • As the worker is employed by two or more employers and works for one of those employers for at least the ordinary hours fixed in an applicable fair instrument, Item 2 of Schedule 3 of the 1987 Act applies.
    • Pre-injury average weekly earnings are to be calculated with reference to work for the employer for whom the worker works for at least the ordinary (sic) fixed in the fair work instrument.
    • It has determined that pre-injury average weekly earnings are $1,009.61.
    • Item 2 of Schedule 3 states that if a worker employed by 2 or more employers and who works for one of those employers (Employer 1, the employer) for at least the ordinary hours fixed in any applicable fair instrument, the PIAWE is to be calculated in reference to the employer you work for at least the ordinary hours fixed in the fair work instrument.
    • It has been provided with Contracts of employment for 2008 and 2010 with the employer. The employer have confirmed the contract of employment 2010 is still valid and has not changed.
    • The contract for annual salary of $52,500 is for 38 hours per week, inclusive of any applicable allowances loadings and/or overtime.
    • The second employer have confirmed the worker’s secondary employment via letter dated 19 February 2017, in which it is stated that the worker is employed on a part-time basis 16 hours per week. The worker’s earnings show an average of $449.74.
    • As the worker works for one of the employers for at least the ordinary hours fixed in the fair work instrument PIAWE is calculated by reference to the employer that the worker works for at least the ordinary hours fixed in the fair work instrument.
    • The worker’s concurrent employment is not relevant to be included in his PIAWE.

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, which provides that an injured worker may refer a work capacity decision of the Insurer for review by the Authority (as a merit review of the decision).
  2. 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 light of the submissions made by the worker, the decision of the Insurer referred to the Authority for review is the Insurer’s decision that his earnings from his second job at the second employer, calculated by the Insurer in the amount of $449.74 per week (an amount not disputed by the worker) should not be included in the calculation of his PIAWE.
  4. Therefore, these findings and recommendations will be confined to a merit review of that decision of the Insurer. That decision is a decision that falls under section 43(1)(d) of the 1987 Act.
  5. In an Application For Review by Insurer made under section 287A of the Workplace Injury Management and Workers Compensation Act 1998, the worker referred to his second job at the second employer, advised he was unable to work at the second employer due to his work injury and sought that his income from the second employer be included in the calculation of his PIAWE.
  6. Notwithstanding that the worker sought a review by the Insurer under section 287A of the Workplace Injury Management and Workers Compensation Act 1998, the Insurer proceeded to conduct an internal review and referred to the decision of internal reviewer having been made under Part 3, Division 2, Subdivision 3 of the 1987 Act.
  7. In these circumstances I am satisfied that the dispute has been the subject of internal review by the insurer for the purposes of section 44BB(1)(b) of the 1987 Act.

Pre-injury average weekly earnings

  1. The worker sustained an injury to his right shoulder on 20 September 2016 while undertaking his duties with the primary employer. At the time of the injury, the worker was also working for the second employer on a part-time basis, 16 hours per week.
  2. Section 44C of the 1987 Act defines pre-injury average weekly earnings (PIAWE).
  3. Section 44C(4) of the 1987 Act provides:
    • In relation to a worker of a class referred to in Column 2 of an item in Schedule 3, pre-injury average weekly earnings means the amount determined in accordance with Column 3 of that item, expressed as a weekly sum.
  4. Section 44C(4) of the Act refers to Schedule 3. Schedule 3 describes classes of workers who, in the event that a particular worker is a “worker of a class” referred to in Column 2 of Schedule 3, requires that that class of worker’s PIAWE is the amount determined in accordance with Column 3 of “that item”.
  5. Schedule 3 requires consideration as to whether a worker is of a “class of worker at time of injury”, meaning that the factual circumstances at the time of injury should be considered in order to determine whether a worker is of a particular class.
  6. Further, it may be seen from 44C(4) that the item numbers contained in Column 1 (items 1-9) identify the relevant descriptions for the calculation of pre-injury average weekly earnings in relation to any particular class of worker, as contained in column 3 of Schedule 3.
  7. Ultimately, the amount of PIAWE upon application of Schedule 3 will be the “amount determined in accordance with Column 3 of that item, expressed as a weekly sum”.
  8. Accordingly, I must consider whether The worker is a worker of a class referred to in Column 2 of an item in Schedule 3 for the purposes of section 44C(4) of the 1987 Act.

Schedule 3

Class of worker under item 1 at time of injury

  1. The worker was not a class of worker under item 1 at time of injury as he was not under the age of 21. There is no information before me to support that he was an apprentice, or was required to undergo training, instruction or examination to become qualified to carry on an occupation.

Class of worker under item 2 at the time injury

  1. The class of worker under item 2 at the time of injury refers to:
    • "worker employed by 2 or more employers and who works for one of those employers for at least the ordinary hours fixed in any applicable fair work instrument”.
  2. The first element to be considered under item 2 is whether at the time of injury, The worker was employed by 2 or more employers.
  3. The information before me supports that The worker was employed by 2 employers at the time of injury. The worker sustained the injury in the employ of The primary employer Pty Ltd on 20 September 2016. A letter of Jo-Ann Curtin of The second employer Supermarkets, dated 19 February 2017 states that he has been employed at The second employer since 10 September 2012. He continued this employment and remained employed by The second employer at the time of injury.
  4. The next question is whether he works for at least one of those employers for at least the ordinary hours fixed in any applicable fair work instrument.
  5. The worker’s letter of appointment with the primary employer dated 17 July 2008 states that his employment is covered by the “Federal EBA”. This is “an applicable fair work instrument” for the purpose of Schedule 3 of the 1987 Act in light of the definition of a “fair work instrument” as defined in section 32A of the 1987 Act.
  6. Further, it is apparent from the worker’s employment agreement with the primary employer dated 7 October 2008 that he was employed on a full-time basis. The relevant Fair Work Instrument states at Clause 11 that “a full-time employee is one who is engaged to work for no less than an average of 38 ordinary weekly hours”. There is an applicable fair work instrument that fixes, or sets, ordinary hours of employment (at no less than an average of 38 ordinary weekly hours).
  7. In his statement dated 2 November 2016 the worker states at paragraph 17 that in reality, he “normally works from 7.30am to about 5.30 or 6pm”. At the time of injury the worker was working for at least 38 ordinary hours per week.
  8. Accordingly, on the facts before me, the worker is a worker of a class under item 2 of Schedule 3.

Items 3-9

  1. A question arises as to whether the correct and preferable approach in this matter is to determine the worker’s PIAWE in accordance with Schedule 3 item 2 (as the Insurer has done) or proceed to consider Schedule 3 in its entirety. This would involve considering whether the worker is of a class described in any of those remaining classes in Schedule 3, and if one or more of those remaining classes apply, considering the class that should be preferred in this matter.
  2. In this regard, for reasons that follow, it is my view that the worker is in fact a class of worker that falls under one of those subsequent classes (which I note would require earnings from his job at the second employer to be included in his PIAWE -namely item 7), so I proceed to examine the issue.
  3. The effect of section 44C(4) of the 1987 Act and Schedule 3 is such that, where the worker is of a class referred to in Column 2 of an item in Schedule 3, PIAWE means the amount determined in accordance with Column 3 of that item, expressed as a weekly sum.
  4. When one considers Schedule 3 as a whole in its legislative context, it is apparent that Schedule 3 and the classes described in that schedule provide for a method of calculating PIAWE for workers “of a class”. Consistent with other provisions contained in section 44C, these methods of calculation referred to in Schedule 3 allow an accurate and fair measure of a worker’s PIAWE where the facts support that a worker falls within that class.
  5. It is apparent that some classes in Schedule 3 might be described as more “specific” in nature than those that appear before them. For example, items 2 and 5 address the same elements, but item 5 requires that an additional element be made out in order that the worker be of that class, or the description of a class may be directed toward a very different but specific state of affairs when contrasted with earlier classes (see for example, item 7 which is directed toward consideration of the worker’s incapacity to work for one but not all employers, or see for example item 9).
  6. Further, it is apparent from reading Column 3 in Schedule 3, that these classes may enable a potentially more beneficial determination of a worker’s PIAWE. If the method for calculating PIAWE in relation to such workers were not at least considered, a worker may be deprived of a more beneficial method for the calculation of PIAWE in circumstances where the legislation had provided for such a method.
  7. The descriptions in Column 2 address a unique set of elements that must be considered in order that a worker is of that class. However, there is overlap in some of the elements that are to be satisfied under each item. This is apparent from items 2-8 which require the element that a worker be “employed by 2 or more employers” be considered.
  8. However, this is further demonstrated by the class described under item 5. It addresses elements that are the same as item number 2, yet item 5 contains an additional element to that described in item 2 (“works for another of those employers for at least the prescribed number of hours each week”) and therefore is more specific in nature than the class falling under item 2.
  9. A “narrow” reading and application of Schedule 3 whereby one eliminates classes in sequential order and which does not allow these further, specific classes and methods of calculating PIAWE to be applied when the facts support that they should be, is neither logical nor consistent with the apparent legislative scheme provided by section 44C of the 1987 Act. Further, such an approach would render at least one of these later classes as otiose as I will later discuss.
  10. The words of section 44C(4) require consideration as to whether a worker is a worker of a class referred to in Column 2 of an item in Schedule 3 (emphasis added). In this way, the words of the provision support that the starting point for examining Schedule 3 is whether a worker is of a class referred to in column 2 of an item.
  11. It is apparent from the words of section 44C(4) that the numbered sequence in Column 1 serves the purpose of identifying the “class of worker at the time of injury” and the relevant column 3 description of the method of calculating pre-injury average weekly earnings. The words used in section 44C(4) do not support or point to any requirement that items contained in Schedule 3 be eliminated in any sequential order without consideration of all classes referred to in the Schedule.
  12. Further, each class described in the items under the Schedule 3 must be there for a purpose. Each class must have “work to do” in the context of the statute, and apply to an existing class of worker.
  13. As I have indicated, if one examines the description of the class of worker under item 5 of Schedule 3, it is apparent it is in the same terms as item 2 of Schedule 3, with the added requirement that a worker must work for another employer for at least the prescribed number of hours each week.
  14. Accordingly, out of logical necessity, any worker who falls into category 5 must also fall into category 2 which appears before it in sequence. If I were to adopt an approach whereby I were to simply stop at the class under item 2 to the exclusion of subsequent classes, the application of the class under item 5 would be rendered otiose. All workers would simply fall within the class under item 2 and the class under item 5 would never have PIAWE determined in the manner provided for that class. This in and of itself clearly demonstrates that one cannot view classes as having to be eliminated in sequential numbered order and that one should stop at the earliest class that the worker falls into.
  15. Further, item 5 contains more elaborate factual elements that must be satisfied so, it has more “onerous” requirements if a worker is to fall within that class. It is not logical that one would simply stop at the class under item 2 in circumstances where a worker meets the more specific criteria in item 5.
  16. However, if one adopts an approach whereby there is a class of worker that falls in the class described under item 5, yet there is also a class of worker that may fall in the class described under item 2 (that is, workers who fall within class 5 without the additional element required by that item), both items apply to a particular class of worker and would perform their intended statutory purpose of prescribing a method of calculation for that class of worker. Both classes would have “work to do” in the context of the Act.
  17. In my view, the same logic may be applied to other items in the schedule, including those directed towards specific elements that must be made out, such as for example, item 7, which addresses circumstances involving the worker’s incapacity to work for one employer but not all employers.
  18. There are other matters that support a consideration of the whole of Schedule 3 in its entirety, and the preferred application of a class in the particular facts and circumstances of a case.
  19. As I have indicated above, it is apparent, when one looks at schedule 3 as a whole, the Schedule may be interpreted in such a way that a worker may fall within multiple classes under the Schedule. Whilst some of the requirements are directed in part to the same matters (for example, 2 or more employers in classes 2-8) each of the classes address a number of elements that must exist.
  20. One only needs to look at the varying descriptions provided in item 1, 9, and those in items 2-8, including item 7, to see that these descriptions address very different elements and it is at least possible or conceivable that in any particular case, a worker might fall into a later class despite also falling within a class that appears in sequence before it.
  21. Items 2-8 of Schedule 3 are all concerned initially with the same element, namely whether a worker is “employed by 2 or more employers”. Item 8 applies in circumstances “other than those described in the preceding provisions of this Schedule” (emphasis added).
  22. The Australian Macquarie Dictionary (7th ed) describes the adjective “preceding” as “that precedes; previous”.
  23. In order to apply item 8, one must consider whether a worker is of a class under items 2 through 7 (and possibly item 1) which are “previous” to item 8. However, the adjective “preceding” used in item 8 does not require that items that precede it be eliminated in sequential order.
  24. That is taking the meaning of “preceding” beyond its ordinary and natural meaning, and has the effect of rendering at least one of the items contained in 1-7 otiose as I have discussed. In my view the word “preceding” as used in item 8 is not inconsistent with the approach I have preferred.
  25. Further unlike item 8, items 2-7 do not require that one consider circumstances “other than those described in the preceding provisions of this schedule”. I am simply required to consider whether The worker is a worker of “a class” having regard to the elements in relation to each item, under column 2.
  26. In my view, I should proceed to consider Schedule 3 in its entirety, and in my view, it is open to me to consider whether the facts demonstrate that The worker falls within any of those later remaining classes within Schedule 3.
  27. If The worker is a worker of another class in Schedule 3 (and I am of the view that he is), the question I must consider is whether that class that should be preferred to determine his PIAWE.

Class of worker under Item 3 at time of injury

  1. Whilst The worker was employed by 2 or more employers at the time of injury, he is not a worker “to whom no fair work instrument is applicable”, as I have found that a fair work instrument is applicable to his employment at The primary employer. The worker is not a class of worker under item 3.

Class of worker under Item 4 at time of injury

  1. Whilst The worker is employed by 2 or more employers, the information before me does not support that he is employed by 2 or more employers “for at least the ordinary hours fixed in any applicable fair instrument”. Whilst he was working for The primary employer for at least the ordinary hours fixed in an applicable fair work instrument, the information before me does not demonstrate his part-time hours of 16 hours per week are fixed by an applicable fair work instrument.

Class of worker under Item 5 at time of injury

  1. Whilst The worker was employed by 2 or more employers at the time of injury and he worked for one of those employers (The primary employer) for at least the ordinary hours fixed in any applicable fair work instrument, he was working on a part-time basis for The second employer, at 16 hours per week. He therefore was not working for “another of those employers for at least the prescribed number of hours” (38 hours per week).

Class of worker under Item 6 at time of injury

  1. The evidence does not demonstrate that The worker was “employed by 2 or more employers for at least the prescribed number of hours each week and to whom no fair work instrument is applicable”. Clearly The worker is a worker to whom a fair work instrument is applicable and The worker is not a class of worker described in Item 6.

Class of worker under item 7 at time of injury

  1. The class under item 7 describes a “worker employed by 2 or more employers who sustains an injury that results in an incapacity to work for one or more of those employers, but not for all of those employers”.
  2. I have found that The worker, at the time of injury, was a worker employed by 2 or more employers, being The primary employer and The second employer.
  3. Further, the information before me demonstrates that he is a worker who sustained an injury that results in an incapacity to work for one or more of those employers (The second employer) but not for all of those employers.
  4. The description of the class in item 7 directs attention to whether the worker is a worker who sustains an injury that results in an incapacity to work for one or more of those employers. In In this way, the words used direct attention to an incapacity to work in the sense of a physical incapacity to engage in the performance of the work. Item 7 is not concerned with the worker’s incapacity for work in the broader legal sense. A worker can have an incapacity for work despite not actually having an incapacity to work at the relevant time.
  5. The information before me indicates that the injury resulted in the worker having in incapacity to work for The second employer. The worker has provided a certificate of capacity from his treating doctor. Whilst I do note that certificate post-dates the time of injury, his treating doctor states that The worker “has been unfit for 2nd job at The second employer as shelf stacker due to this injury from 21 September 2016 onwards. He continues to be unfit for work at The second employer from 11 April 2017 onwards til advised otherwise”.
  6. This information is further corroborated by the worker’s submissions to the Authority and a letter he has provided, from The second employer, dated 19 February 2017. That letter states that The worker has been absent from work with The second employer since 30 September 2016 and has used all of his entitlements to cover his absence. Whilst I note the discrepancy of a week in the certificate of capacity and the letter from the second employer, on balance the information persuades me that the injury resulted in an incapacity to work for the employer The second employer.
  7. With respect to his employment at the primary employer, the worker made a statement dated 2 November 2016. That statement indicates that that the worker continued to work on the day of injury and “went to work as usual” the following day. He also attended work on 22 September 2016, and whilst he briefly left to have a scan, returned to work. On 23 September 2016 he was issued a formal warning letter in relation to a “baby seat incident”.
  8. Following this, he was told to take annual leave. It appears that this was likely associated with the performance management and “baby seat” issue that had been raised and while it gave the worker “some time to rest and recover from my shoulder and knee injuries” it does not appear from his statement that he took leave due to the injury or was incapacitated to engage in his employment as a result of the injury.
  9. On the contrary he states in his statement that he continued to work in his role, and now he has advised the Authority in writing that he continued to work in his job at the primary employer but performed suitable duties, performing “75%” of the duties of his job. Further, the only certification before me indicates that he has physical capacity to engage in work with restriction, but was unfit for his job at the second employer as shelf stacker due to this injury from 21 September 2016 onwards, which is the day after the injury.
  10. On the information before me, the worker is a “worker employed by 2 or more employers who sustains an injury that results in an incapacity to work for one or more of those employers but not for all of those employers.”

Class of worker under item 8 worker at time of injury

  1. The class under item 8 refers to those workers employed by 2 or more employers “in circumstances other than those described in the preceding provisions of this schedule”. As I have indicated, in my view this means the classes under items 1-7, however the worker is a worker of a class in both items 2 and 7. Accordingly, he is not a worker of a class under item 8.

Class of worker under item 9 worker at time of injury

  1. There is no information before me that the worker during the period of 52 weeks before the injury received advice in writing from the employer that the worker is to be promoted or otherwise appointed to a new position, with the effect as described in item 9.

Calculation of The worker’s PIAWE

  1. I have found that the worker is a class of worker that falls under items 2 and 7 in Schedule 3.
  2. Section 44C(4) provides that in relation to a worker of a class referred to in Column 2 of an item in Schedule 3, pre-injury average weekly earnings means the amount determined in accordance with Column 3 of that item, expressed as a weekly sum.
  3. The class under item 2 would require that the worker’s PAIWE be determined “with reference to the work for the employer for whom the worker works for at least the ordinary hours fixed in the fair work instrument”, being his employment at the primary employer. The class under item 7 requires that The worker’s PIAWE be determined “with reference to earnings from work with all employers”. In The worker’s case, this would allow that his earnings from his second job at the second employer be included in the calculation of his PIAWE.
  4. In my view the worker’s PIAWE should be calculated under the class under item 7.
  5. It is clear that each class requires a different methodology to be adopted. In my view, Item 7 is directed toward a very specific state of affairs when contrasted with item 2. Like item 5, which comes after item 2, the class under item 7 is concerned with a more specific set of circumstances than a worker’s working arrangements with a single employer. Item 7 is directed towards a class worker who sustains an injury that results in an incapacity to work for one or more, but not for all of those employers.
  6. That is precisely the circumstance within which the worker found himself after the injury. The method described in item 7, means that his PIAWE to be determined with reference to earnings from all employers be considered in the calculation of his PIAWE.
  7. One only needs to consider the worker’s circumstances and his very submissions in this review to understand the significance of item 7 for a worker such as the worker in the determination of his PIAWE.
  8. At the time of injury, he had two jobs in the employment market, and his total earnings were derived from a combination of the earnings from both jobs. Yet whilst he could continue to work for one employer, he could not continue to work for the other. He states in his application for review to the Insurer that he is now on unpaid sick leave from this second job “which is causing a lot of financial stress of me and my family”.
  9. Now, the worker’s earnings from his job at the second employer will be included in the calculation of his PIAWE, but as he is earning a wage from the primary employer, that amount hear earns from the primary employer will likely be included in “E” for the purposes of section 35 of the Act, and will be deducted from his PIAWE, allowing his residual earnings from the second employer to be taken into consideration by the Insurer when applying the relevant statutory formula.
  10. I find that in accordance with section 44C(4) of the Workers Compensation Act 1987 (the 1987 Act) the worker’s pre-injury average weekly earnings are to be determined in accordance with Column 3 of item 7 in Schedule 3 of the 1987 Act, expressed as a weekly sum.
  11. The Insurer is to pay the difference between the amount of weekly compensation paid to the worker and the amount calculated in accordance with my finding above with respect to weeks of compensation already paid.