The calculation of pre-injury average weekly earnings (PIAWE) for injured workers is always important to get right.
The fundamentals to calculating most PIAWEs involves the determination of the gross earnings of the injured worker and dividing it by the period of time (AKA the ‘relevant earning period’) in which it was earned.
Naturally this means the accurate calculating of both the gross earnings and the ‘relevant earning period’ is vital. If an insurer overlooks some income from the calculation of the gross earnings, this
will inevitably lower the PIAWE. Similarly, if periods of time are included in the ‘relevant earning period’ that shouldn’t be, this too will lower the PIAWE.
The 2016 Workers Compensation Regulation provides assistance on what periods of time shouldn’t be included in the ‘relevant earning period’ for calculation of PIAWE. This includes clause 8E which applies when there is applicable unpaid leave. The clause excludes from the ‘relevant earning period’ unpaid leave in the following circumstances:
(1) The relevant earning period for a worker is to be adjusted in accordance with this clause if, during any period of not less than seven consecutive calendar days within the unadjusted earning period—
(a) no earnings in the employment were paid or payable to the worker, and
(b) the worker took a period of unpaid leave (the unpaid leave period) commencing on the first day of that consecutive period.
The flow on effect of applying this provision is that when applicable, an injured worker’s PIAWE will inevitably be increased.
Personal Injury Commission (PIC) decisions published in the last year or so indicate that some insurers are failing to pass along the benefit of clause 8E when the injured worker’s employment classification is as a casual worker.
A now growing number of PIC decisions have seen an approach that allows for casual workers to have the benefit of clause 8E when calculating PIAWE.
Wake v State Emergency Services [2022] NSWPIC 50
The first case we are aware of involved Member Wright who commented on the issue in a decision of Wake v State Emergency Services [2022] NSWPIC 50 (Wake).
The dispute in Wake wasn’t to do with whether an injured worker employed as a casual was entitled to the benefit of Clause 8E. The facts of the case involved consideration of whether half paid long service leave could attract the application of Clause 8E. In finding that the provision applied in the facts of the case before him, Member Wright went on to illustrate his decision in paragraph 47 in the following way:
“This outcome, in my view, would not be anomalous with other not uncommon working situations, such as casual, seasonal or piecemeal workers who may experience unfortunate periods of not receiving earnings in any particular week. As a simple example, a casual worker, who earns $500 gross per week for work performed in a particular week, may work 26 weeks out of the relevant 52 weeks, for example they work every other week. If earnings received are regarded as “0” for weeks not worked and average weeks include weeks not worked, then the PIAWE calculation results in $250 gross per week. The interpretation that I have found in my view avoids such anomalous situations.”
Field v Secretary, Department of Education [2023] NSWPIC 214
Sometime after this, the issue was subject to a dispute before Member Sweeney in Field v Secretary, Department of Education [2023] NSWPIC 214 (Field).
In Field, the injured worker was a casual teacher who sustained an accepted injury in the course of his employment. During the ‘relevant earning period’ Field had weeks with no work. Field argued that these weeks not worked should be excluded from the ‘relevant earning period’ by operation of clause 8E. The insurer disagreed.
Member Sweeney ultimately found that the weeks not worked should attract the benefit of clause 8E though when you consider his reasoning in paragraph 43 you will note that he relied heavily on Member Wright’s comments in Wake:
“In my opinion none of the clauses assist the applicant’s case. Uninstructed by the reasoning in Wake, I would hold that the methodology adopted by the respondent in calculating PIAWE complied with the statutory scheme. While, in my opinion, the outcome in that case does not sit comfortably with the language of Schedule 3, I do not conclude that it is plainly wrong. In the circumstances, it is appropriate that I follow it, pending determination of the issue by the Presidential unit.”
Nounou v Allstaff Australia Sydney Pty Limited [2023] NSWPIC 234
A similar dispute involving PIAWE and whether a casual worker should receive the benefit of clause 8E was determined by Member Burge in Nounou v Allstaff Australia Sydney Pty Limited [2023] NSWPIC 234.
At paragraph 16 of this decision, the Member recorded the evidence of the State Manager for Allstaff who said in his statement:
“As a casual employee, Mr Nounou is paid a higher rate of pay by way of casual loading to compensate him for the inconsistent nature of employment and payment by the hour for entitlements such as annual leave, personal leave and public holidays that permanent employees are entitled to.””
Whilst acknowledging the accuracy of this comment, the Member still found that clause 8E applied stating in paragraph 17 of the decision:
“I have little difficulty accepting the accuracy of Mr Wilford’s statement; however, it does not obviate the operation of cl 8E of the 2016 Regulation. The respondent having appropriately conceded the applicant was on unpaid leave for a period of not less than seven consecutive days during which he was not paid any income by it, cl 8E of the 2016 Regulation is in my view operable. Nothing in the clause, notwithstanding Mr Wilford’s observations, excludes casual employees from its operation.”
Al Kibbah v Chandler Macleod Group Limited [2023] NSWPIC 620 (20 Nov 2023)
This week the Personal Injury Commission published a further decision of Member Isaksen in Al Kibbah v Chandler Macleod Group Limited [2023] NSWPIC 620 (20
November 2023) (Al Kibbah).
One of the issues in Al Kibbah was whether he, as a casual worker, was entitled to the application of clause 8E in circumstances where two separate periods of unpaid leave of at least 7 days had occurred during the ‘relevant earning period’.
Part of the argument of the insurer/employer is that as a casual, Al Kibbah:
‘had no entitlement to annual leave or personal leave, but that this is compensated for by the applicant receiving a higher rate of pay than full time employees.’ (para 55)
This was a similar argument to what was made in Nounou.
The Member noted though that the National Employment Standards specifically provide for certain types of leave for a casual (para 56-57). The Member summarised his view about leave in paragraph 61:
“It seems to me that the term ‘leave’ as it is applied in regulation 8E is a period of time which a worker has away from undertaking actual work in his or her employment which is provided for by law (such as annual leave or compassionate leave), directed by the employer (such as garden leave or due to a downturn in work), or allowed with the express or implied consent of the employer (suchas leave without pay). In my view, the latter situation applies in this dispute.”
The Member further noted at paragraph 71 that in another appeal level case of:
“Secretary, Department of Communities and Justice [2023] NSWPICPD (Stewart), DP Wood said in regard to regulation 8E at [94] that: “In my view, an unjust outcome would result if a narrow view was taken to the term ‘unpaid leave’” and that “the intention of legislation...was clearly to apply fairness to
the calculation of pre-injury average weekly earnings.”
Ultimately the Member found that the two periods amounted to unpaid leave and were to be excluded from the ‘relevant earning period’ for purposes of calculating PIAWE.
Summary
These decisions have an important bearing on the calculation of PIAWE. They all indicate that an injured worker employed as a casual with periods of at least 7 days of unpaid leave, is entitled to the benefit of clause 8E in the calculation of the ‘relevant earning period’ almost inevitably leading to an increased PIAWE.
