PIAWE: A Presidential Appeal decision on the Relevant Earning Period

For some time there has been differing views on how to calculate pre-injury average weekly earnings (PIAWE) when in the relevant earning period before the injury, the injured worker had another accepted workers compensation claim with weekly compensation paid.

The fundamentals for calculating PIAWE generally start with determining the relevant earning period. This is often, but not always, a period of 52 weeks before the injury.This relevant period can be shortened for the reasons outlined in Division 2 of Workers Compensation Regulation 2016, clauses 8A to 8F.Once the relevant earning period is identified, the earnings within that period are considered. Clause 6 of Schedule 3 of the Workers Compensation Act 1987 (NSW) (“WCA”) provides detail on what should be included as income and what shouldn’t.The challenge arises when during the relevant earning period, the injured worker has had another claim, which they have received weekly compensation for.On this point, clause 6(2) of Schedule 3 provides a list of what does not include income and at clause 6(2)(c) it provides:

(c) any payment in respect of loss of earnings under a scheme to which the workers compensation legislation relates or under any other insurance or compensation scheme,-

There is little controversy about what at least some of this clause means. It is universally accepted that at the very least the Schedule is providing that any payment of weekly compensation for a prior claim is not included as earnings/income for the calculation of the current claim PIAWE.The question then becomes, what do you do with the weeks in which payments of weekly compensation have been made? There certainly isn’t a clear provision in schedule 3 of the WCA or the Workers Compensation Regulation 2016 dictating what should be done.The decisions in the Personal Injury Commission to date on this issue indicate a pattern of insurers tending to interpret the lack of direct addressing of what to do with the weeks, as justification to include the weeks in the relevant earning period.What this leads to is scenarios like in the case of Nitchell v Secretary (Department of Communities and Justice) [2022] NSWPIC 625¹ where the insurer calculated a full 52 weeks for the relevant earning period but excluded payments received in 14 of those 52 weeks as Ms Nitchell as they represented weekly compensation for a prior workers compensation claim. For Ms Nitchell that meant a PIAWE of $1383.74 per week.In Nitchell, Member Wynyard took the view that the silence in both the Act and the Regulation on what to do with the weeks where workers compensation was paid in the relevant earning period was a ‘lacuna’ in the law. The Member further found it would be ‘unconscionable’ to calculate PIAWE in a way that correctly excluded the workers compensation payments but included the weeks in which they were paid.The Member read words into the Act to essentially exclude the period where workers compensation was paid. For Ms Nitchell, this meant dividing her earnings by 38 weeks instead of the 52 weeks the insurer used increasing her PIAWE to nearly $1900 per week, roughly $500 per week more.We wrote a summary on this decision previously, PIAWE: Workers Compensation Payments in the Relevant Earning Period²The insurer took the same approach in the case of Pell v Secretary, Department of Communities and Justice W1586/22, calculating the workers PIAWE using the same approach that was applied in Nitchell.The facts of Pell are as follows:

• Mr Pell employed as a correctional officer with Department of Communities and Justice.
• Mr Pell sustained a shoulder injury in 2020 in course of his employment.
• Liability for this injury was accepted by the insurer.
• Surgery followed and Mr Pell was off work until 11 May 2021.
• Mr Pell contracted COVID-19 in the course of his employment on 30 August 2022 with the insurer accepting this as a separate claim.
• When calculating Mr Pell’s PIAWE for the COVID-19 claim, the insurer used 52 weeks prior to the date of injury for the relevant earning period for the COVID-19 claim.
• The first 36 weeks of the 52 week relevant earning period used related to time in which the worker received weekly compensation payments from the insurer in relation to the prior shoulder claim.
• The remaining 16 weeks of the 52 weeks in the lead up to the COVID-19 date of injury saw Mr Pell doing his full pre-injury duties.

Taking the approach of including the full 52 weeks but excluding the weekly compensation payments in the 36 weeks for the shoulder claim, resulted in the calculated PIAWE being $1114.49 per week.The below diagram illustrates how the insurer calculated the worker’s PIAWE.

Mr Pell commenced proceedings in the Commission where he argued that the 36 weeks in which he received workers compensation payments on the prior claim should be excluded from the relevant earning period when calculating his PIAWE for the COVID-19 claim. If these weeks were excluded and only the 16 weeks were relied on, the PIAWE would be $2581.81 per week.The below diagram illustrates how Mr Pell argued the PIAWE should be considered.

In the oral decision delivered, Member Young, agreed with Mr Pell and found that the PIAWE should be $2581.81 per week. This is a significant difference for Mr Pell’s PIAWE. More than double!In finding for Mr Pell that the PIAWE should be $2581.81 per week, Member Young referred to a decision of Member Beilby in Sidhu v Secretary, Department of Communities and Justice [2021] NSWPIC 522³, saying they involved a similar issue.⁴Sidhu involved factually similar circumstances to Pell. The main difference is that the prior workers compensation claim that occurred in Sidhu was in the midst of the 52 week relevant earning period as opposed to in Pell where Mr Pell had an active prior workers compensation claim at the commencement of the 52 week relevant earning period.

In Sidhu, Member Beilby found that clause 8C of the Workers Compensation Regulation 2016 applied. This clause provides:

(1) The relevant earning period for a worker is to be adjusted in accordance with this clause if, during the unadjusted earning period, there was a change of an ongoing nature to the employment arrangement resulting in a financially material change to the earnings of the worker (for example, a change from full-time to part-time work).(2) The relevant earning period is to be adjusted by excluding from the period any period before the change to the earnings of the worker occurred.

Member Beilby found in Sidhu that clause 8C was activated for weeks in the relevant earning period when an injured worker received workers compensation payments for a prior claim.⁵ The Member agreed to exclude the period of nine weeks from what otherwise would have been a 52 week relevant earning period, when workers compensation payments were made in the relevant earning period.In the decision of Pell, Member Young followed the principles in Sidhu and excluded the first 36 weeks of the 52 week relevant earning period when workers compensation was paid, finding:

“In those circumstances, in my view, and in accordance with, I think, the decision of Member Beilby, that period should be carved out of the equation for [pre-injury average weekly earnings] and it is those weeks prior to the event of incapacity, which include the 52 weeks but exclude the period and payments within the workers compensation period, that should be considered.”⁶

The decision of Member Young was appealed and Deputy President (DP) Wood has recently published the outcome of the appeal in Secretary, Department of Communities and Justice v Pell [2023] NSWPICPD 19.⁷At [42] – [47], DP Wood briefly summarised the decision of Sidhu that Member Young relied on in Pell pointing out that Sidhu itself was not appealed.Ultimately, DP Wood confirmed the decision of Member Young finding that the Member had not erred in making their decision.⁸This appeal decision of DP Wood is worth noting. We can glean from Nitchell, Sidhu and Pell that insurers seem to take the approach of excluding workers compensation payments made for prior claims in the relevant earning period whilst still including the weeks in which these payments are made. In Nitchell, Sidhu and Pell this led to a reduced PIAWE for the injured worker. It has been the decision of each Member that the weeks in which these prior workers compensation payments have been made should also be excluded, and now, one of these decisions has been upheld on appeal.We do note DP Wood took care to comment at the end of the decision at [59] and [60] about that factual circumstances that were relevant to the appeal:59. The appellant has failed to establish error on the part of the Member and the appeal fails. It should be noted that, in this case, the respondent was in receipt of weekly compensation for his prior injury at the commencement of the 52 week period. Regulation 8C(2) provides that “The relevant earning period is to be adjusted by excluding from the period any period before the change to the earnings of the worker occurred.”How the period should be adjusted in circumstances where the injured worker’s receipt of workers compensation, or other change to earnings, is to be assessed where the period within the 52 weeks falls between two periods of full employment is not relevant to this appeal.These last comments are worth noting for practitioners. Whilst confirming the decision in Pell, DP Wood has specifically noted that the factual scenario in Sidhu was not part of the appeal.Reference 1: http://www6.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWPIC/2022/625.html Reference 2: https://www.walkerlawgroup.com.au/piawe-compensation-payments-earning-period/ Reference 3: http://www8.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWPIC/2021/522.html Reference 4: Discussed at para 9 of Secretary, Department of Communities and Justice v Pell [2023] NSWPICPD 19Reference 5: Discussed at para 46 of Secretary, Department of Communities and Justice v Pell [2023] NSWPICPD 19Reference 6: Discussed at para 50 of Secretary, Department of Communities and Justice v Pell [2023] NSWPICPD 19Reference 7: http://www8.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWPICPD/2023/19.html Reference 8: Para 54, 58