The impact of COVID-19 shutdowns on the calculation of weekly compensation

The recent COVID-19 pandemic has changed the way we do a lot of things, and the impact of the COVID-19 shut down on calculation of weekly compensation was considered in the context of section 37 of the Workers Compensation Act 1987 (1987 Act) in the matter of Watson v Murrays Australia Pty Ltd [2021] NSWWCC 9.

Background

The worker injured his lower back on 30 July 2018, and the respondent accepted liability for this injury as well as a consequential hernia which occurred during rehabilitation.

The worker was partially incapacitated and had returned to work for more than 15 hours per week. Under section 37(2)(b) of the 1987 Act, the worker was entitled to weekly compensation at 95% of his pre-injury average weekly (PIAWE) less earnings in employment, and the insurer was paying weekly compensation on this basis.

On 19 March 2020 the worker was stood down from work due to the impact of the COVID-19 pandemic. He received Job Keeper payments, which Arbitrator Burge observed formed part of his assessable earnings.

The worker argued he should be entitled to ongoing weekly payments at 95% of his PIAWE less earnings in accordance with section 37(2) of the 1987 Act because he was working more than 15 hours per week until he was stood down.

The worker argued that, once a return to work for more than 15 hours per week had occurred, the requirements of section 37(2) of the 1987 Act are satisfied and, therefore, any entitlement from that time onwards must be calculated by reference to section 37(2) using 95% PIAWE, even if in subsequent weeks they work less than 15 hours per week.

He argued the intention of section 37 was to encourage workers to return to work, and he had complied with the terms of the section. He further argued that, but for the pandemic, he would have continued carrying out his usual duties for more than 15 hours per week, and he should not be penalised by having his weekly compensation reduced as a consequence of his employer’s business closing in such extraordinary circumstances.

Conversely the employer argued the starting point should be 80% of PIAWE under section 37(3) of the 1987 Act, as the worker was not currently working more than 15 hours per week. The employer argued the interpretation advanced by the worker was not consistent with the wording or intent of the legislation.

Decision

Arbitrator Burge found that section 37(3) of the 1987 Act applied as the legislation had a temporal element and section 37(2) required the worker to be carrying out paid work of more than 15 hours per week.

The Arbitrator found that Division 2 of the 1987 Act contemplated weekly compensation being payable to an injured worker suffering incapacity for work as a result of a workplace injury, and Parliament had ‘envisaged the payments for lost income being made on a weekly basis referable to the incapacity and circumstances of an injured worker at any given time’.

Accordingly, the Arbitrator concluded there may be periods where an injured worker returns to work and satisfies the provisions of section 37(2) of the 1987 Act to qualify for higher rate, before having periods of total incapacity or partial incapacity which render them unable to work greater than 15 hours per week. In such circumstances, the amount of weekly compensation would alter in accordance with the provisions of the Act.

The Arbitrator concluded an injured worker cannot render section 37(3) of the 1987 Act irrelevant by merely working a single week, or a period of several weeks, for greater than 15 hours, then either ceasing work or working less than 15 hours per week.

While the Arbitrator accepted the worker’s stand-down was beyond his control and but for the COVID-19 pandemic he would have continued working, the statutory provisions did not allow him to take the circumstances into account.  

He ordered ongoing payment of weekly compensation in accordance with section 37(3) of the 1897 Act at the lower rate and taking into account Job Keeper payments.

Key takeaways

This decision is interesting because it provides some clarity for insurers when calculating weekly compensation entitlements where the worker has been stood down from work due to the COVID-19 pandemic, and confirms the calculation is to be made with regard to the current circumstances, and not what was occurring before the shutdowns that have occurred. The decision also confirms Job Keeper payments constitute earnings in relation to weekly compensation.

It is important insurers are aware of a worker’s current work circumstances, as COVID-19 related stand-down provides a basis to reduce weekly compensation payments, and on the other hand a return to work for more than 15 hours per week would entitle the worker to weekly payments of 95% of PIAWE less earnings. Each case needs to be considered on its own facts.

Authors: Kate Ralph & Mick Franco