PIAWE Regulation Changes are here!
As you may have heard, the Workers Compensation Legislation Amendment Act 2018 has recently been passed through the NSW Government; and within this Legislation Amendment the Workers Compensation Amendment (Pre-Injury Average Weekly Earnings) Regulation 2019 was also published.
The PIAWE Regulation will change the way an injured workers pre-injury average weekly earnings (PIAWE) is calculated, and will come into effect for workers injured on or after Monday 21 October 2019. Many of the changes are quite technical in nature and will likely have little to no effect on the calculation of PIAWE for most claims.
We see the most significant change being an amendment to the 52 week drop down which will cease to exist for workers injured on or after 21/10/19. The 52 week drop down currently requires the insurer to exclude any shift or overtime benefits from the PIAWE; which often resulted in a reduction to the PIAWE and thus the top up benefit payable to an injured worker. As an example, a worker whose normal earnings were averaged to be $800 per week, who also had an average of $200 of shift and overtime earnings; would have a PIAWE calculation of $1000 for the first 52 weeks of benefits. This would then be reduced to $800 after 52 weeks of benefits were paid as a result of the $200 shift and overtime benefit being removed. For those workers who are injured on or after 21/10/2019; the $200 shift and overtime component will no longer be removed after 52 weeks of paid benefits; and therefore the PIAWE will remain at $1000 per week (subject to bi-annual indexation). Warren Saunders Insurance Brokers see this as an increased premium risk given wages paid on a claim are typically the greatest impacting cost on a client’s premium.
RELEVANT PERIOD CHANGES
- Any worker who was not continuously employed for a full 52 weeks will only have their PIAWE calculated on the most recent earnings period. Previously, if a worker worked for say 20 weeks, had 10 weeks off and then worked for a further 22 weeks when they were injured; the relevant period would consider the 42 weeks of paid employment. The Amendment means the relevant period will now only consider the recent 22 weeks where the worker was working before injury and not consider any period of paid employment prior to the break in employment. This would be quite relevant to those who employ workers on a seasonal basis for example.
- Any worker whose nature of employment arrangement changes which results in a material change to earnings will have prior periods excluded. For example if a worker goes from part time to full time, any part time earnings are excluded from calculation.
- Any periods where the worker takes unpaid leave for 7 days or more will now be excluded from the relevant period by excluding each day of unpaid leave within the relevant period.
- A PIAWE application can be made by either the worker or the employer within 5 days of the notification of an injury to the insurer. This application needs to be reviewed for approval by the insurer within 7 days unless a Reasonable Excuse applies.
- The insurer also has the power to make payments on the basis of an agreed amount of PIAWE until the application for approval is determined (i.e. an interim payment decision). The PIAWE agreement is NOT a work capacity decision and therefore any PIAWE Work Cap Decision will overrule any PIAWE agreement
- A PIAWE Work Capacity Decision cannot be made before a PIAWE agreement has been made.
As stated above, we do not foresee these changes will have a significant impact on the majority of claims lodged through the NSW icare scheme. Some of the changes seek to make wage benefits and reimbursements more simple, for example through the alignment of the “workers compensation week” and the payroll week / fortnight / month. The challenging components of the Amendments; such as the exclusion of certain periods (for those who have a split in employment or nature of employment changes) will likely only affect the insurer when they are required to make the initial PIAWE agreement or Work Capacity Decision and are not likely to result in a significant increase or decrease in the PIAWE calculation. The most significant change in removing the 52 week drop down will mean there is less of a financial motivation for a worker to increase capacity or return to pre-injury hours at that juncture. It will be important to focus on other motivations of the worker and claim stakeholders at that point in time to influence claims outcomes, as required on a case-by-case basis.