GN 5.1A Calculating PIAWE

Published: 13 September 2019
Last edited: 31 October 2019

This guidance applies to the calculation of PIAWE for workers injured on or after 21 October 2019. For workers injured prior to 21 October 2019, see GN 5.1 Calculating PIAWE for workers injured before 21 October 2019 .

This guidance does not apply to exempt workers.

Overview

Workers compensation legislation requires the insurer to commence provisional weekly payments of compensation within seven days after initial notification to the insurer of an injury, unless the insurer has a reasonable excuse for not commencing weekly payments.

In order to commence weekly payments of compensation, the insurer must calculate the worker’s pre-injury average weekly earnings (PIAWE). The calculation of the worker’s PIAWE is a work capacity decision under section 43(1)(d) of the Workers Compensation Act 1987 (1987 Act).

Pay information should be requested from the employer as soon as practicable to meet the legislated timeframe for commencing weekly payments - see sections 267 and 275 of the Workplace Injury Management and Workers Compensation Act 1998 (1998 Act).

Upon commencement on 21 October 2019, Schedule 3, Clause 3 to the 1987 Act will also allow a worker and employer to reach an agreement as to the amount of a worker’s PIAWE. For the insurer to commence weekly payments within seven days of initial notification, the agreement is to be reached promptly.

Note: different rules apply to the calculation of weekly compensation for coal miners.

Definition of ‘pre-injury average weekly earnings’

PIAWE is the average of a worker’s gross weekly earnings over the 52 weeks prior to their date of injury. There are some exceptions to this definition which are noted below.

Formula which shows Gross earnings divided by Relevant earning period (in weeks) equals PIAWE

If a worker is employed by more than one employer at the date of injury, the earnings for all jobs are considered when determining PIAWE (see Schedule 3, clause 2 to the 1987 Act).

Earnings and income

Earnings can include wages, shift and other allowances, overtime amounts, commissions, the value of non-monetary benefits (if a worker no longer has the use of the benefit) and piece rates.

Income does not include:

  • the individual superannuation guarantee shortfall (“superannuation guarantee amount”)
  • a non-monetary benefit if the worker continues to be entitled to the use of the benefit after the injury
  • compensation for loss of earnings under an insurance or compensation scheme (this includes workers compensation payments made during the relevant earning period, and
  • any discretionary payment made without obligation by the employer (this can include incentive bonus payments)

(See Clause 6(2), Schedule 3 to the 1987 Act).

Piece rates

Workers receiving piece rates are paid for each unit of production at a given rate, rather than receiving an hourly rate of pay for their work.

Commissions

Workers who receive commission payments are paid based on completion of a task, or by how much they sell. This may or may not be in addition to an hourly rate of pay.

Allowances

A worker can receive an allowance related to the performance of overtime or shift work. Allowances may also be received by workers who do not perform overtime or shift work. Any allowances for which the worker has received reimbursement are not included in the PIAWE calculation.

Earnings workflow

The earnings workflow describes each of the components of earnings and how they are treated for the purposes of calculating pre-injury average weekly earnings. Pre-injury average weekly earnings are the earnings received by the worker between the start and the end of the relevant earning period, divided by the number of weeks in the relevant earning period. Step one: Determine the gross income for the relevant earning period. Step two: Is compulsory superannuation included in to gross income? If yes, exclude the superannuation guarantee shortfall. Step three: Was the worker paid any compensation for lost earnings? If yes, exclude all compensation payments. Step four: Did the worker receive and discretionary payments from the employer? If yes, exclude discretionary payments made by the employer. Step five: Was a non-monetary benefit withdrawn on or after the injury? If yes, include the value of the non-monetary benefits from the date they were withdrawn. Therefore, pre-injury average weekly earnings are the gross income between the start and end of the relevant earning period, less any compulsory superannuation, compensation and discretionary payments, plus the cash value of any non-monetary benefits withdrawn on or after the injury.

Non-monetary benefits

Non-monetary or ‘non-cash’ benefits are earned by workers in the place of salary. They can include, for example, education fees, residential accommodation, child care or the use of a motor vehicle.

The 1987 Act and the Workers Compensation Guidelines (Guidelines) provide that non-monetary benefits must “be provided to a worker for the performance of work by the worker” and “expressly provides a personal benefit to the worker”.

A worker is considered to have been provided with a non-monetary benefit if they have use of the non-monetary benefit at the date of injury. The non-monetary benefit may only be included in the worker’s PIAWE from the date that the benefit has been relinquished by the worker or withdrawn by the employer following injury (see Clause 6(3), Schedule 3 to the 1987 Act).

Salary sacrificed items can be considered non-monetary benefits if they are included as part of a salary package. If the value of the item is included in the gross earnings as part of a salary package, the value of the item will need to be separately identified if the non-monetary benefit is retained by the worker.

Amendment to PIAWE 

If a non-monetary benefit is relinquished by the worker, or withdrawn by the employer, after PIAWE has already been determined and applied, the amendment to PIAWE may differ depending on the way in which PIAWE was originally determined.

If the PIAWE amount had originally been determined by the making of a work capacity decision by the insurer, the insurer is to determine the monetary value of the non-monetary benefit and include this value into PIAWE by the making of a work capacity decision (under section 43(1)(d) of the 1987 Act). The new PIAWE amount is effective from the date the worker loses their entitlement to the non-monetary benefit. A work capacity decision notice is to be sent to the worker and written advice of the new PIAWE amount is to be provided to the employer.

If the original PIAWE amount had been determined by agreement between the worker and the employer, the worker and employer may agree a value for the non-monetary benefit. In this situation the original agreement may be varied to include this value in the worker’s PIAWE, however it is still subject to the approval of the insurer. The new PIAWE amount is effective from the date the worker loses their entitlement to the non-monetary benefit. This new agreed PIAWE becomes the new PIAWE, and the worker and the employer are to be advised in writing of the new PIAWE amount.

If the original PIAWE amount had been determined by agreement between the worker and the employer, and the worker and employer are unable to agree a value for the non-monetary benefit, the insurer is to make a work capacity decision regarding PIAWE and a decision notice is sent to the worker and written advice of the new amount is to be provided to the employer. The work capacity decision must include an insurer calculation of the original PIAWE (rather than the agreed amount).

Calculating the value of a non-monetary benefit

There are two ways to calculate the value of a non-monetary benefit:

If fringe benefits tax applies

The employer or the Australian Tax Office (ATO) can advise whether fringe benefits tax applies to a non-monetary benefit. The formula provided in Clause 7(2), Schedule 3 to the 1987 Act is used to calculate the value of the non-monetary benefit.

Value as a fringe benefit is to be determined in accordance with the formula:

TV is the value that would be the taxable value of the benefit as a fringe benefit for the purposes of the Fringe Benefits Tax Assessment Act 1986 of the Commonwealth.

FBT rate is the rate of fringe benefits tax imposed by the Fringe Benefits Tax Assessment Act 1986 of the Commonwealth that applies when the non-monetary benefit is provided.

The taxable value required in that formula can be obtained from the employer. The fringe benefits tax rate is available from the ATO website and is the rate applicable when the non-monetary benefit was provided to the worker.

If the benefit is exempt from fringe benefits tax

If an item is exempt from fringe benefits tax, the amount reasonably payable for that non-monetary benefit must be used. In most cases, this amount can be obtained from the employer, as the employer is required to keep these records for tax reporting purposes.

See Part 10 of the Guidelines for further details regarding factors to consider when determining the monetary value of a non-monetary benefit.

Part 10 of the Guidelines also provides that insurers are to refer to the following when determining the monetary value of a non-monetary benefit:

  • Pay As You Go (PAYG) summaries provided to the worker, or accounting / tax return information for working directors
  • the worker’s contract of employment
  • records kept by the employer as to the value of the non-monetary benefit
  • any records kept by the worker

Insurers may consider other available information where appropriate to do so.

Where this information cannot be obtained from the employer, the insurer will need to determine the amount with reference to other comparable sources. For example, the Rent and Sales Report produced by the NSW Department of Family and Community Services can be used as a guide for the reasonable rental amount that is payable for residential accommodation that is not subject to fringe benefits tax.

(See Clause 7, Schedule 3 to the 1987 Act)

Example - Non-monetary benefits

Jennifer sustained a dislocated shoulder when she was assaulted at work in September 2019. She has been employed for more than 52 weeks and works for Stay Well, a registered public benevolent and health promotion charity.

As a registered charity, her employer is exempt from paying fringe benefits tax. She has a salary package which includes annual professional membership, education fees and cash earnings. Her cash earnings component is $82,560 per year. The amounts paid by the employer on Jennifer’s behalf for her education fees and professional membership are pre-tax amounts.

The insurer determines the value of the education fees to be $8,250.00 per year and the value of the professional membership to be $750.00 per year, based on the employer records of the after-tax value of these items.

Jennifer’s gross earnings for the 52 weeks are:

$82,560 + $8,250 + $750 = $91,560

Her PIAWE is:

$91,560 ÷ 52 = $1,760.77 per week

Apprentices, trainees and young people

Some workers are entitled to incremental earning increases at certain ages or stages during their employment (see Clause 5, Schedule 3 to the 1987 Act).

This includes:

  • workers under the age of 21
  • apprentices, or
  • trainees for the purposes of becoming qualified to carry on an occupation to which the contract of employment relates.

For these workers, PIAWE is to be recalculated at each age or stage in accordance with what they would have been entitled to receive, had they not become injured and continued in that employment.

Insurers are to assess the considerations listed in the table below as outlined in Table 10.1 in Part 10 of the Guidelines.

ConsiderationDetail
The relevant Award or Enterprise Bargaining Agreement (EBA)If the worker is paid in accordance with an Award or EBA then the hourly base rate of pay and any applicable penalty rates and allowances are to be used.
A comparable relevant Award or EBAIf the worker is not paid in accordance with an Award or EBA, however there is a similar relevant Award or EBA that could apply to the worker, this may be used.
Comparable average earningsWhere no Award or EBA applies to the worker a rate can be determined by reference to the average weekly amount earned by other workers in the same employment for the performance of similar work.
The rate determined is to be based on the date the amount is to be applied.

No applicable rate for a worker who has reached 21 years

If there is no rate applicable to a worker who has reached the age of 21 years, the worker is entitled to receive a rate which is based on a worker who has reached the age of 21 years who performs similar work to the worker. An insurer may determine a rate for these workers based on a rate for a worker who has reached 21 years in similar but not necessarily in the same employment as the worker if such information is not available.

For the purposes of comparison, consideration should be given to the average weekly earnings received by workers performing similar work as the worker during the 52 weeks before they reached the age of 21 years. This rate will be determined based rates current at the time.

If it is not possible to establish a comparable rate the maximum weekly compensation amount is to be used - see Clause 8G of the Workers Compensation Regulation 2016 (2016 Regulation). Note that where the maximum is to be used as PIAWE, the weekly payment formula applies to this rate (that is, taking 95% or 80% of the maximum weekly amount).

The Job outlook website is a useful resource for determining a rate in a similar industry.

Minimum PIAWE

The minimum PIAWE is $155 and is set by Clause 6 of the 2016 Regulation. This amount is not indexed.

If a worker’s PIAWE is calculated to be lower than the minimum PIAWE ($155), then the minimum PIAWE is to be set as the worker’s PIAWE.

Relevant earning period

The relevant earning period is the 52-week period before the workers date of injury. The relevant earning period may be adjusted in the following situations, and in the following order:

  • to take into account a period of less than 52 weeks of continuous employment with the pre-injury employer
  • to take into account any financially material change in the workers earnings circumstances
  • to align with any regular interval at which the worker is paid (optional)
  • to take into account periods of unpaid leave

An alternative method exists for workers continuously employed with the pre-injury employer for less than four weeks (see ‘Short Term Workers’ below).

Relevant earning period workflow

The relevant earning period workflow describes each of the circumstances during the 52 weeks before a worker’s date of injury which may adjust the relevant earning period.  Pre-injury average weekly earnings are the earnings received by the worker between the start and the end of the relevant earning period, divided by the number of weeks in the relevant earning period. The general rule is that the relevant earning period is the 52 weeks prior to the date of injury Step one: Was the worker continuously employed with their employer for less than 52 weeks prior to their date of injury? If yes, adjust the period to this lesser period. Step two: Did the worker have a financially material change in earnings during the period? If yes, adjust the period to commence from the date of the change. Step three: Is it simpler to align the period with the workers employment pay cycle?If yes, the period commences from the first pay week start date and ends on the last pay week end date. Step four: Did the worker take any extended periods of unpaid leave (greater than 7 consecutive days of lost earnings)? If yes, exclude the period from the date of the first day of unpaid leave until the day before the next payable day. The relevant earning period is therefore the number of weeks less any period/s of unpaid leave. Note: increases apply to apprentices, trainees and workers under 21 years of age after their date of injury.

(See Part 4, Division 2 of the 2016 Regulation)

If a worker has been continuously employed with their pre-injury employer for less than 52 weeks the period commencing on the first day of employment to the day before injury is their unadjusted earning period. This period may be further adjusted by the following provisions.

Change in earnings circumstances

The relevant earning period for a worker is to be adjusted if there was an ongoing and financially material change to the worker’s earnings during the 52-weeks immediately prior to the injury arising from a change in earning circumstances.

Examples include a change in role, a change in duties, change in work hours (such as part time to full time), a promotion, a demotion or similar.

In this case, the relevant period is to be reduced so that it commences on the day on which the change to the worker’s earnings took effect and ends on the day immediately prior to the date of injury.

Example - Change in earning circumstances

Bronwyn was employed as a Director in a child care centre. Her full-time earnings were $1,219.00 per week. She injured her wrist after tripping on Lego at the centre, and currently has no capacity for work.

During the 52 weeks before her date of injury, she had been working full time (18 weeks), she then took 18 weeks maternity leave at half pay after the birth of her child.

She returned to work initially for 2 days per week for 8 weeks, and then 3 days per week up until her date of injury (a further 8 weeks). During the 52-week period before her injury Bronwyn took no unpaid leave, performed no overtime or shift work and received no allowances or non-monetary benefits.

The insurer determined that she had a change in earnings circumstances when she increased to 3 days per week on an ongoing basis. Therefore, her PIAWE was calculated based on a relevant earning period of 8 weeks since this change, during which Bronwyn earned $5,851.36.

The insurer determines Bronwyn’s PIAWE to be:

$5,851.36 ÷ 8 = $731.42 per week.

Alignment of relevant earning period with the worker’s pay period

An insurer may choose to align the workers relevant earning period with the employers pay period if it will make the determination of PIAWE more straightforward.

This approach is not be used if the insurer considers that, by aligning with the pay period, the result would likely decrease the worker’s PIAWE.

The period may be adjusted in any way (shifted, reduced or extended) but may not be adjusted so that it commences on a day before the day on which a material and permanent change to the worker’s earnings took effect.

This provision makes it easier for insurers to determine a worker’s earnings during the relevant earning period by enabling insurers to adjust the relevant earning period so that:

  • the relevant earning period commences on the first day of the pay period in which the day 52-weeks immediately prior to the date of injury falls, or
  • where there has been a material and permanent change in the worker’s earnings during the 52-weeks immediately prior to the date of injury, the relevant earning period commences on the first day of the first full pay period after the day on which the change in the worker’s earnings took effect

AND

  • the relevant earning period ends on the last day of the last full pay cycle immediately prior to the date of injury.
Example - Alignment with the worker's pay period

Pauline has been employed as a medical receptionist for three and a half years. She works 38 hours per week, Monday to Friday. On Friday 9 March 2018 she injured her lower back during the course of her employment. She has taken no unpaid leave, her earnings circumstances have not changed, and she has a Thursday to Wednesday pay week.

Pauline’s relevant earning period is adjusted below to disregard the day before her injury (Thursday 8 March 2018) to align with her pay cycle Thursday - Wednesday (going backwards). The 52-week period is extended by a corresponding day at the beginning of the period to allow for 52 full weeks.

52 weeks adjusted by 3 days to align with pay cycle

Unpaid leave

The relevant earning period for a worker is to be adjusted if, during any period of seven or more consecutive calendar days within the relevant earning period the worker did not receive earnings due to having taken a period of unpaid leave. The period is defined from the first day of unpaid leave and ends on the day before the worker returns to work or to a day of paid leave.

The period is excluded only if:

  • the period is equal to or greater than seven consecutive calendar days, and
  • contains no days on which the worker received earnings from the employment from which the unpaid leave was taken.
Example one - Unpaid leave

Thomas works 3 days per week (Tuesday, Thursday and Friday). He commenced employment as an executive assistant on 23 April 2019 and sustained a work-related injury on 4 July 2019.

From Thursday 6 June to Friday 21 June 2019 he took 3 weeks leave comprising 3 days paid sick leave and 5 days unpaid leave.

For the purposes of adjusting the relevant earning period, the consecutive period commences from the first day he took unpaid leave (Thursday 13 June) and ends on the day before he resumed work (Monday 24 June), as highlighted on the calendar below. The period is 12 days (or 1.7 weeks) and therefore is excluded from the relevant earning period as it is greater than 7 consecutive calendar days.

Note, if the period following the unpaid leave period is a day of paid leave, this would be treated the same as it would if Thomas would have returned to work on that day.

Calendar June 2019, highlight days worked Tuesday, Thursday and Friday. Highlighted days sick and unpaid leave day. Shades unpaid leave period from 13 June to 24 June 2019.

A maternity leave arrangement may be dealt with in accordance with the unpaid leave provisions, depending on the return to work arrangements after the maternity leave period.

Example two - Unpaid leave

Eva was employed as a Director in a child care centre. Her full-time earnings were $1,225.10 per week. She also received a laundry allowance of $9.49 per week. Eva injured her shoulder after tripping on a toy at the centre, and currently has no capacity for work.

During the 52-weeks before her date of injury, Eva had been working full time however she took 18-weeks of unpaid maternity leave after the birth of her child. Eva then returned to work on a full-time basis. Eva performed no overtime or shift work and received no other allowances or non-monetary benefits during the relevant earning period.

Her relevant earning period is determined by removing the 18-weeks of unpaid leave. Her gross earnings for the period are $41,976.06 (this includes her weekly laundry allowance), and her relevant earning period is 34 weeks.

Her PIAWE is therefore $41,976.06 ÷ 34 = $1,234.59

The insurer determines Eva’s PIAWE to be $1,234.59 per week.

Concurrent employment and the relevant earning period

If a worker is engaged in more than one job at the time they sustain an injury, any jobs other than the job out of or in the course of which the injury arose (“primary job”) are considered secondary employment.

The average weekly earnings are calculated for all secondary employment in the same way as average weekly earnings are calculated for the primary job.

The earnings for each employment are determined separately. The relevant earning period is considered independently for each job. The amounts for each employment are then added together to determine PIAWE.

Example one - Concurrent employment

John sustained a severe laceration injury on 26 May 2019 while employed as a cellar door salesperson. The injury resulting in an admission to hospital and a brief period of rehabilitation. John had been employed in this role for more than 52 weeks when he was injured.

John also had a second job as a part time senior editor grade 2, and he had been employed in that role for 16 weeks before the injury.

John had no capacity to work in either job, and the insurer calculated his PIAWE based on the earnings from both jobs. John took no unpaid leave and had no financially material change in earnings circumstances in either of his jobs.

Job one: Relevant earning period = 52 weeks

Period of employment job one - 28/05/2018 to 25/05/2019

Job two: Relevant earning period = 16 weeks

John’s earnings for his first job are calculated over a 52-week period.

As John was only employed in his second job for 16 weeks, his earnings for that job are calculated over a 16-week period.

Example two - Concurrent employment

Wes sustained an injury on 26 May 2019 while employed as a Hedge Fund Manager. He was diagnosed with a fracture to his right arm, resulting in an admission to hospital and a brief period of rehabilitation. Wes had been employed in this role for 16 weeks when he was injured.

Wes also had a second job where he worked as a part time Policy Officer, and he had been employed in that role for more than 52 weeks. When Wes commenced his job as a Hedge Fund Manager, he reduced his hours as a Policy Officer from full time to 14 hours per week to accommodate his new job.

Wes had no capacity to work in either job, and the insurer calculated his PIAWE based on the earnings from both jobs. Wes took no unpaid leave in either job but did have a financially material change in earnings circumstances in his secondary employment when he reduced his hours.

Job one: Relevant earning period = 16 weeks

Period of employment for job one: 3/02/2019 to 25/05/2019

Job two: Relevant earning period = 16 weeks

Period of employment for job two - adjusted earning period 03/02/2019 to 25/05/2019

Wes’s earnings for his first job are calculated over a 16-week period.

Even though Wes was employed in his second job for more than 52 weeks, the relevant earning period for his second job is adjusted to reflect a financially material change in earnings circumstances.

Short term workers

Workers who have been continuously employed by the same employer for less than four weeks may have their PIAWE calculated by having regard to the weekly earnings they could have expected to earn in that employment in the 52-weeks after the injury (see Clause 4, Schedule 3 to the 1987 Act).

When considering prospective earnings, the insurer is to take the following into account:

  • any contract of employment (in writing or implied) in place before the date or injury
  • any award or enterprise bargaining agreement for the worker
  • pre-injury hours worked and earnings received during the 52 weeks prior to the injury.

Should the above points be of limited assistance, regard can be given to the average weekly amount earned by others performing similar work as the worker, but not necessarily in the same employment as the worker during the 52-weeks before the injury.

See Clause 8F of the 2016 Regulation.

Example one - Short term worker

Dorothy has been continuously employed for less than four days as a casual shop assistant.

She commenced work on a Monday and worked for six hours that day. She worked on Tuesday and Wednesday for 7.6 hours per day. On the fourth day of her employment she slipped and fell on a wet floor, fracturing her arm.

Dorothy was paid at the casual hourly rate of $25.99 per hour. She received no allowances or non-cash benefits.

The initial notification of injury was provided to the insurer and the insurer now needs to determine Dorothy’s PIAWE to commence weekly payments.
As Dorothy had been continuously employed for less than four weeks, the insurer may determine her PIAWE based on what she could have expected to have earned in that employment in the 52 weeks after her injury. The insurer chose this option due to her very short relevant earning period. Dorothy did not have a written contract of employment, but she was paid in accordance with the General Retail Industry Award 2010. The insurer spoke to the employer who confirmed that it was expected that Dorothy would have worked 7.6 hours per day for 5 days during the week, but not on weekends.

The insurer calculates Dorothy’s PIAWE to be:

5 days x 7.6 hours x $25.99 = $987.62

The insurer determines Dorothy’s PIAWE to be $987.62 per week based on the above calculation.

A short-term worker may also have their PIAWE calculated using the relevant earning period before their date of injury.

Note: Before considering which option to use for a short-term worker, the insurer should take into consideration whether this option is the fairest approach for the worker.

Example two - Short term worker

Timothy has been continuously employed for 3 weeks as a casual shop assistant.

He is called in to work shifts based on the employer’s requirements. During those 3 weeks, he has worked day shifts (8 x week days and 2 x Sundays). Each shift was 6 hours long. He earns $25.99 per hour (including casual loading) during the week and $38.46 per hour (including casual and shift loadings) on Sundays. Timothy received no other allowances or non-cash benefits.

On his last shift, he fell off a ladder fracturing his right wrist. The initial notification of injury was provided to the insurer and the insurer now needs to determine Timothy’s PIAWE to commence weekly payments.

Although Timothy has been continuously employed for less than four weeks, the insurer chose to calculate his PIAWE based on his pre-injury earnings. The insurer made this choice as:

  • there was no written contract of employment for Timothy and while he was paid under an award, he and his employer disagreed about the expectation of his work pattern post injury, and
  • Timothy had been employed for long enough for the insurer to fairly determine average weekly earnings.

The insurer calculates Timothy’s PIAWE for the 3-week period as follows:

  • For the weekdays: 8 days × 6 hours × $25.99 = $1,247.52
  • For the Sundays: 2 days × 6 hours × $38.46 = $461.52
  • Total earnings:  $1,247.52 + $461.52 = $1,709.04

PIAWE:  $1,709.04 ÷ 3 = $569.68

The insurer determines Timothy’s PIAWE to be $569.68 per week based on the above calculation.

PIAWE Agreement

A worker and employer may reach agreement about the amount of PIAWE. If the insurer considers that such an agreement is fair and reasonable, they are to give effect to that agreement.

Application for approval

Written evidence of the agreement between the parties will be provided to the insurer to support the agreed amount, and include:

  • the PIAWE amount*
  • the date of the agreement
  • the name, injury date and claim number for the worker
  • the name of the employer
  • the name and contact details of the person authorised by the employer to enter into the agreement
  • details of any other employment in which the worker is engaged
  • any evidence which supports the agreement (e.g payslip or contract of employment)
  • any other information the employer or worker considers were taken into account in reaching the agreement
  • acknowledgement of consent to the agreement

* The agreed PIAWE remains subject to minimum PIAWE and the maximum weekly compensation amount.

(See Clause 8J of the 2016 Regulation).

The application for approval is to be made within five days of notification of the injury to the insurer.

Note: If a worker or their employer choose to withdraw their application, they are to give notice to the insurer in writing.

Approval of the agreement

The insurer will determine whether to approve or refuse to approve the agreement within seven days of receiving the application.

To approve the agreement the insurer needs to be satisfied that the agreed amount reasonably reflects the worker’s PIAWE and that the agreement is fair and reasonable. The approval of the agreement is not a work capacity decision.

An insurer’s obligation to approve or refuse an agreement within seven days ceases if the insurer disputes liability for weekly payments of compensation.

If the insurer has a reasonable excuse for not commencing weekly payments, the insurer has seven days to approve or refuse to approve the agreement after:

  • ceasing to have a reasonable excuse for not commencing weekly payments, or
  • the claim has been accepted

whichever is earlier.

If a worker is under legal incapacity an insurer must not approve a PIAWE agreement. As defined in Part 6 of the Workers Compensation Commission Rules 2011, a person under legal incapacity includes:

(a) a child under the age of 18 years,

(b) an involuntary patient or forensic patient within the meaning of the Mental Health Act 2007,

(c) a person under guardianship within the meaning of the Guardianship Act 1987,

(d) a protected person within the meaning of the NSW Trustee and Guardian Act 2009, and

(e) an incommunicate person, being a person who has such a physical or mental disability that he or she is unable to receive communications, or express his or her will, with respect to his or her property or affairs.

An insurer may commence making weekly payments to the worker based on the agreed amount until the agreement has been determined. This is an interim payment decision and is not a work capacity decision.

An insurer cannot make a work capacity decision about PIAWE before the agreement is approved, and an insurer cannot approve an agreement once a work capacity decision has been made.

After the application is determined, the insurer must notify the worker and employer of the outcome of the determination.

Example one - PIAWE agreement

Hannah sustained an injury while working as full-time Veterinary Nurse. She consistently works 38 hours per week and earns $941.10 per week.

When waiting in hospital to be seen after she injured herself at work, she reviewed SIRA's new claims management guide to understand the claims journey and what to do next.

She completed the application for approval of an agreement form (which she found on SIRA's website). When she got home from hospital, she attached four of her most recent payslips and forwarded this information to her employer. Her employer agreed, and the form was promptly submitted to the insurer within 4 days of her injury.

The insurer received the application for approval of an agreement, and following discussion with both Hannah and the employer, the insurer approved the agreement on the basis that they were satisfied the agreed amount reasonably reflected her earnings.

The insurer approved the agreement by day 7, and commenced provisional weekly payments using the agreed amount as Hannah’s PIAWE.

Variation of the agreement

An agreement about PIAWE may only be made once. However, the agreement may be varied to include the cash value of a non-monetary benefit where it is withdrawn after injury.

Agreement workflow

The agreement workflow describes the pre-injury average weekly earnings agreement process and timeframes.  Once an injury is notified to the insurer, and weekly payments are payable, the insurer is to commence weekly payments within 7 days from notification.  If the employer and worker do not reach an agreement as to the amount of pre-injury average weekly earnings, the insurer makes a work capacity decision about pre-injury average weekly earnings. If a worker and employer reach agreement, the agreement application must reach the insurer by day 5 from notification of injury.  The insurer then has 7 days from receipt to determine the application. The insurer may approve the application if it meets the necessary criteria, or they may refuse to approve the application.  If they refuse to approve the application, they must make a work capacity decision. If the insurer approves the application, the agreement takes effect.  The worker or employer may later withdraw from the agreement after it has taken effect.  If so, the insurer must make a work capacity decision to determine pre-injury average weekly earnings. If a non-monetary benefit is withdrawn after the agreement has taken effect, the worker and employer may agree a value of the non-monetary benefit and the original agreement is varied to include the value of the non-monetary benefit,  if the worker and employer do not reach agreement about the value of the non-monetary benefit, the insurer must make a work capacity decision to determine pre-injury average weekly earnings.

Withdrawal of the agreement

Once an agreement has been approved by the insurer, the worker or employer can withdraw from the agreement by giving notice to the other party and to the insurer. Within seven days of receiving the notice from the worker and/or employer the insurer is to make a work capacity decision to determine PIAWE and provide the worker and employer with written notice of the withdrawal from the agreement and advise the amount of the new PIAWE in a work capacity decision notice.

If the new PIAWE amount is higher than the PIAWE amount in the withdrawn agreement, the worker is to be paid the back payment in accordance with the following formula:

X – Y = Z

Where:

X is the amount of weekly compensation the worker should have received (based on the new PIAWE) from the date the worker first became entitled to weekly payments up to the date in which the last weekly payment was made.

Y is the amount of weekly compensation already paid to the worker over the same period.

Z is the amount owed to the worker over the same period (that is, the “adjustment payment”).

All future payments are to be based on the new PIAWE as determined by the insurer.

If the worker has more than one job when they sustain their injury, the worker and the employer for the job in which the worker was injured may reach agreement about earnings for multiple employments.

See Part 4, Division 4 of the 2016 Regulation.

Example two - PIAWE agreement

After George sustained a work injury the insurer informs George and his employer (Simon) that they may reach an agreement about George’s PIAWE. The insurer informs George that he can contact his union or WIRO if he requires assistance or advice regarding his claim and PIAWE agreement.

Simon suggests to George that to expedite the process they should average his two most recent payslips to determine his PIAWE. George agreed, and Simon applied to the insurer for approval of the agreement, providing the two recent payslips as the information that was considered.

However, George had recently gone through a difficult time. Four weeks before his injury, George’s brother died, and he took two weeks leave. Once he returned to work, he performed no overtime as he had to make personal arrangements for his brother’s family.

The insurer examined the agreement application and payslips and contacted Simon. The insurer asked Simon whether the amount of leave taken by George was unusual for the period and whether George normally performed any overtime. Simon informed the insurer that the recent leave taken by George was out of the ordinary, and that he would normally perform overtime every week.

The insurer told Simon that they could not approve the agreement, as they did not consider it reasonably reflected his PIAWE for the 52 weeks before the injury.

Interim PIAWE

Interim payment decision

If an insurer is not able to either approve, or refuse to approve, an application for agreement by day seven from initial notification of injury, then they may give effect to the agreed amount as the PIAWE. This is an interim payment decision and allows the insurer to make weekly payments based on the agreed amount of PIAWE until the application for approval of the agreement has been determined.

The same timeframes apply to approval of the agreement. An interim payment decision is not a work capacity decision. If an insurer subsequently refuses to approve the agreement, they are to determine PIAWE by way of a work capacity decision.

If the calculated PIAWE is higher than the amount in the agreement, the new rate and the outstanding adjustment payment is to be made to the worker within 14 days from the date of the work capacity decision (see Clause 8N to the 2016 Regulation).

Work capacity decision

Insurers should request pay information from the employer as soon as possible. The insurer can inform the employer of their obligation under section 264(2) of the 1998 Act, which requires employers to provide information to insurers within seven days of the insurer’s request.

If an insurer determines that there is likely to be a delay in receiving all information required to determine PIAWE to enable weekly payments to commence within seven days of notification, they should request whatever supporting information they can from the worker to inform an interim PIAWE calculation (see Standard of Practice 7: Interim pre-injury average weekly earnings).

The amount of the interim PIAWE and how that amount was determined must be communicated to the worker by way of a work capacity decision (see section 43(1)(d) of the 1987 Act).

The worker should be informed that this PIAWE is an interim amount until sufficient information is provided to enable the correct PIAWE to be determined.

The insurer should also advise the worker that an adjustment payment may be payable if PIAWE is later determined to be higher than the interim amount. The new rate and the outstanding adjustment payment must be made to the worker within 14 days from the date of the work capacity decision (see Clause 8N to the 2016 Regulation).

Note: An insurer is to continue to engage with the employer to obtain the missing information to determine the worker’s correct PIAWE.

Where there is an interim PIAWE, and the employer does not respond to insurer requests for information, the insurer may contact SIRA on 13 10 50 to determine whether further action is required.

Self-employment, working directors and deemed workers

Before calculating PIAWE, an insurer must first establish whether a self-employed worker is considered a deemed worker in accordance with Schedule 1 to the 1998 Act.

PIAWE for deemed workers is calculated as it would be for all eligible workers. However, the types of evidence gathered may be different based on the worker’s earning circumstances. Business activity statements reflect business activity only and are therefore not useful, and payslips are generally not available. Useful information may include:

  • pay as you go (PAYG) summaries
  • group certificates/tax returns
  • bank statements.

Indexation of PIAWE

The method of indexing PIAWE outlined below applies from 21 October 2019 to all injured workers with a date of injury on or after 1 October 2012.

For indexation review dates before 21 October 2019, refer to GN 5.1 Calculating PIAWE for workers injured before 21 October 2019

Indexation of a worker’s PIAWE is considered on 1 April and 1 October each year (see Part 3, Division 6A of the 1987 Act).

To apply indexation in accordance with Part 3, Division 6A of the 1987 Act, the insurer requires:

  1. the existing PIAWE amount
  2. the current B/C1 figure

The PIAWE is multiplied by the B/C figure and this amount is then rounded to the nearest whole $1 if the result is less than $1,000. If the result is greater than or equal to $1,000, the result should be rounded to the nearest whole $10.

1As the indexation factor is made by an Order approved by SIRA, an insurer is to refer to the amount in the Order. The current B/C figure is available in the latest Workers compensation benefits guide.

Workers not in receipt of weekly payments

If a worker was not in receipt of weekly payments over one or more indexation review dates, and later became entitled to weekly payments, it is necessary to go back to apply the indexation process for all missed review dates from the date the worker first became entitled to weekly payments for that injury.

Gathering information for the PIAWE calculation

The insurer needs to gather as much information as possible to calculate the correct entitlement for the worker. This may include:

  • a completed PIAWE form
  • copies of payslips or any available payroll records covering the relevant period
  • any relevant Fair Work instrument, contract of employment or enterprise bargaining agreement
  • leave records
  • tax returns
  • any other supporting documentation specific to a worker’s employment circumstances.

If the worker has more than one job at the time of injury, the above information (where relevant) should be gathered for the employment with all employers.

Current weekly earnings

Current weekly earnings are either:

  • the worker’s actual gross earnings in respect of a week, or
  • the weekly amount the worker is able to earn in suitable employment,

whichever is the greater amount.

See Clause 8, Schedule 3 to the 1987 Act.

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