CERTIFICATE OF DETERMINATION OF MEMBER  	

Citation:	
Stewart v Secretary, Department of Communities and Justice [2022] NSWPIC 333	
		
APPLICANT:	Paul James Stewart	
		
RESPONDENT:	State of New South Wales – Department of Corrective Services	
		
Member:	Cameron Burge	
		
DATE OF DECISION:	28 June 2022	
		
CATCHWORDS:	WORKERS COMPENSATION - Permanent impairment compensation; injury and incapacity agreed; only issue is whether the period for calculating the applicant’s pre-injury average weekly earnings (PIAWE) should be adjusted; the applicant suffered an accepted physical injury for which he was paid weekly compensation for total incapacity from 20 November 2020 to 1 February 2021; the applicant submitted a claim for psychological injury on 1 February 2021 for which liability was also accepted and payments made for total incapacity; in calculating the applicant’s PIAWE the respondent’s insurer in accordance with part 6(2)(c) of schedule 3 of the Workers Compensation Act 1987 (1987 Act) excluded from calculation of the applicant’s PIAWE the payments made for the accepted physical injury; in excluding those payments the respondent’s insurer did not also exclude from calculation of PIAWE the time for which those payments were made leading to the situation where the applicant’s 52-week PIAWE was calculated on only 42 weeks’ worth of income; Held – there is no doubt the compensation payments in respect of the prior injury are required to be excluded (schedule 3, part 6(2)(c) of the 1987 Act); regulation 8D of the Workers Compensation Regulations 2016 (Regulations) relevantly provides for an alignment of the period for calculation of the PIAWE earnings period with any regular interval during which the worker is entitled to receive payment for earnings for work performed in the employment; applying regulation 8D of the Regulations to the circumstances of this case disregarding the period during which the applicant received weekly compensation in respect of the prior injury adjusts the PIAWE earnings period to that during which the applicant actually earned income in his employment with the respondent; the alternative approach excluding the prior compensation payments as required by schedule 3 of the 1987 Act but including in the calculation the period during which compensation was paid creates the logical absurdity of a worker’s 52-week PIAWE being calculated on earnings for a shorter period despite them remaining in employment and only being unable to work because they are suffered an earlier injury for which they are in receipt of compensation payments; accordingly, the period during which the applicant’s PIAWE should be calculated in this matter is 1 February 2020 to 19 November 2020. 	
determinations made:	1.	The relevant earning period for the calculation of pre-injury average weekly earnings should be adjusted to exclude the period where the applicant was paid workers’ compensation benefits for an unrelated injury.
2.	The relevant earning period for the calculation of pre-injury average earnings should therefore be adjusted to 1 February 2020 to 19 November 2020. 

STATEMENT OF REASONS

BACKGROUND
1.	Paul James Stewart (the applicant) was employed by the State of New South Wales -Department of Corrective Services (the respondent) as a senior prison officer. He commenced employment with the respondent in or about July 2007 and sustained a non-disputed shoulder injury on or about 20 November 2020. That injury was accepted, and the applicant remained off work until 1 February 2021, during which period, he was paid weekly compensation at the rate of $2,059.86 per week. 
2.	On 1 February 2021, the applicant lodged a claim for psychological injury (post-traumatic stress disorder) as a result of the nature and conditions of his employment over a number of years. That claim was accepted, and the applicant’s pre-injury earnings (PIAWE) was calculated by the insurer at $1,487.38 per week. In the said calculation, the insurer did not include in its calculations of the PIAWE the workers compensation payments made in the period between 20 November 2020 and 1 February 2021. 
3.	The dispute in this matter surrounds what is the correct period for the calculation of the applicant’s pre-injury earnings. 
LEGISLATION
4.	Sch 3 of the Workers Compensation Act 1987 (the 1987 Act) provides a method of calculating pre-injury average weekly earnings as follows:
“(3) 	The regulations may provide for the adjustment of the relevant earning period for a worker in employment (including, for example, by extending or reducing the period)
a.	to take into account any period of unpaid leave or other change in earnings circumstances in the employment, or 
b.	to align the relevant earning period with any regular interval at which the worker is entitled to receive payments of earnings for work performed in the employment”. 
5.	Pursuant to Pt6(2)(c) of Sch 3 of the 1987 Act, in calculating the applicant’s PIAWE, the respondent’s insurer in this matter excluded from calculation the weekly payments made for the accepted physical injury. It did not, however, adjust the period of calculation to exclude the 10 weeks and 3 days during which the applicant was paid that compensation. This has led to the somewhat extraordinary situation where the insurer has calculated the applicant’s 52 week PIAWE based on 42 weeks’ income. 
6.	Further guidance as to the calculation of PIAWE is provided by the Workers’ Compensation Regulation 2016, and in particular, Part 4 (the Regulation). The Regulation identifies classes of workers where PIAWE is to be calculated on a basis other than the average of 52 weeks earnings. 
7.	The Regulation provides guidance in respect of workers who have been not continuously employed (8B) or where there has been a “financial and material change to earnings” (8C) and requires “adjustment for unpaid leave period” (8E). 
8.	There is no question that cl 2 of Schedule 3 to the 1987 Act provides circumstances where the Regulations will make adjustments for the relevant period.
9.	Mr Doak, counsel for the applicant noted that cl 2(3)(b) of Part 6, Schedule 3 to the 1987 Act required the Personal Injury Commission (the Commission) to remove from consideration the period where the worker was paid workers’ compensation benefits. 
10.	In this matter, Mr Doak sought to rely on cl 8D of the Regulation, the provision which states the relevant earning period would align with any regular interval at which the worker was entitled to receive payment of earnings for work performed in the employment.
11.	Mr Doak did not seek to rely on cl 8C which provides for an adjustment for a financial and material change to earnings. 
12.	Cl 8C provides for the adjustment for financial and material changes to earnings. The first paragraph of that section provides that 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 financial and material change to the earnings of the worker (for example, a change from full-time to part-time work). 
13.	The section then goes on to provide 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. In the circumstances of this case, Mr Doak submitted an application of cl 8C would mean the applicant would actually be entitled to nothing, because his earnings before he began receiving compensation payments would be excluded from calculation, as would the compensation payments themselves, meaning the applicable earnings in the 12-month period leading up to the injury in issue would farcically be calculated as zero.
14.	Ms Warren, who appeared for the respondent, submitted that there was no ongoing change in the employment relationship as the applicant in this matter was and remained in full-time employment during the relevant period for calculation of the PIAWE. It was submitted that irrespective of the outcome the Regulation may cause, it is not a matter for a Commission Member to unilaterally determine what is fair and to pay compensation accordingly without regard to the relevant statutory provisions.
15.	In relation to cl 8C, the respondent submitted that there was no change of an ongoing nature to the employment arrangement. The word “ongoing” must have some import, that is there must not be just a change but a change of an ongoing nature in the employment arrangement. 
16.	The respondent favoured a narrow interpretation of cl 8C. Ms Warren submitted there was no financial material change to earnings as a result of the applicant receiving workers’ compensation payments. That is, the status of his employment as a full-time employee had not changed. Instead, she submitted that reading of the regulations would mean because cl 8C did not apply, one would simply remove from consideration the earnings for the period when the applicant was in receipt of weekly benefits as is required by Pt6(2)(c) of Sch 3 of the 1987 Act, leading to a reduced PIAWE as calculated by the respondent’s insurer because the time taken during that period would still be taken into account in calculating the 52 week period. 
17.	The applicant’s primary submission in this matter was that cl 8D of the Regulation would have relevance because it would have the effect of realigning the applicant’s claimed PIAWE period with the time in which she was in work. I accept that submission. Schedule 3 of the 1987 Act and cl 8D of the Regulation have the effect of aligning the relevant period for PIAWE calculation to the regular interval during which the applicant was entitled to receive earnings from his employment. That is, in my view, those provisions have the effect of removing from calculation both the workers compensation payments received by the applicant for the unrelated injury and the period for which those payments were received. 
18.	To do otherwise would leave a worker’s PIAWE to be calculated over 52 weeks by reference to a shorter period of actual paid employment despite, as the respondent itself asserts, there being no change to the employment relationship other than the worker having the misfortune to suffer an earlier injury and to receive weekly payments in respect of it. 
19.	The effect of removing both the compensation payments received for the earlier injury and the period for which they were paid from the calculation of the applicant’s PIAWE in this matter is to adjust the relevant period to 1 February 2020 to 19 November 2020. Such an approach in my view brings consistency between the period worked and the income earned for that work.
20.	For the respondent, Ms Warren submitted cl 8D provided only that the period “may” be adjusted to align pay periods to allow quantification of a weekly amount from, for example, workers paid either fortnightly or monthly. Ms Warren submitted the applicant’s approach was to instead to shorten the relevant period for calculation rather than align disparate pay periods to arrive at a consistent weekly amount, and that such an approach is contrary to the intent of cl 8D.
21.	Mr Doak submitted in reply that 8D in fact applied in this instance, as it referred specifically to a period during which a worker is entitled to receive payment of earnings for work performed in the employment. He submitted the period from 20 November 2020 to 1 February 2021 when the applicant received compensation payments was not a period where the applicant could receive earnings for work carried out. This being so, the applicant submitted that period should be excluded and the relevant period for calculation of PIAWE should be 1 February 2020 to 19 November 2020.
22.	On balance, I accept this submission. The construction of the Regulations put forward by the respondent are, in my view, inconsistent with the beneficial nature of the legislation. The legislation must work together and harmonise the intention so that a productive outcome is obtained. Where there is any ambiguity in the provision, it should be interpreted with the beneficial nature of the legislation for the applicant in mind. I agree that a finding of meaning in statutory language that produces an unjust or capricious result should be avoided.
23.	In the context of this matter, such an outcome would arise if the compensation payments received by the applicant were excluded from calculation, but the time during which they were paid remained part of the calculation. As noted, this would lead to a logically absurd outcome where the applicant was having his income over 52 weeks calculated based on earnings in employment for only 42, because the payments for the prior injury must be excluded. 
24.	Similarly, had cl 8C applied and the period before the change to compensation payments been excluded (that is, the period when the applicant was actually earning income from his employment), the combined effect of excluding that period and also the compensation payments received would mean the applicant’s PIAWE would be zero.
25.	Each of those outcomes would, in my view, plainly be an absurdity. On balance, I accept Mr Doak’s submission concerning the applicability of cl 8D and accordingly find the relevant earning period should be adjusted to 1 February 2020 to 19 November 2020.
SUMMARY
26.	For the above reasons, the Commission will make the findings and orders as set out on page 1 of the Certificate of Determination.