Does time off in lieu over overtime count towards the PIAWE?

Shepherd v Snowy Valleys Council [2023] NSWPIC 6 (10 January 2023)

The Applicant sustained an injury to his lower back on 31 March 2020 whilst in the course of his employment with the Respondent. Liability for the injury was accepted however, there was a dispute regarding the calculation of the Applicant’s pre-injury average weekly earnings (PIAWE).

The Respondent calculated the Applicant’s PIAWE to be $1,152, which was the amount of earnings actually paid to the Applicant in the 12 month period prior to his injury. However, in this period the Applicant also undertook 261.25 hours of overtime. Rather than be paid the value of this overtime, he elected to have the Respondent retain the money so he could receive it at a later date, or take it as part of his leave. This was known as “time off in lieu of overtime” or “TOIL”. The Applicant included these amounts in the calculation of his PIAWE. While the Respondent argued that these amounts should not be included in the PIAWE, the parties agreed that if those amounts were included, the PIAWE would increase to $1,299.

The Applicant filed an Application to Resolve a Dispute in respect of the PIAWE dispute.

The Applicant submitted that Clause 2 (2) of Schedule 3 of the Workers Compensation Act 1987 (the 1987 Act) refers to earnings as ‘paid or payable to the worker for work performed’ which indicates that the legislature considered that monies paid to the worker and payable to the worker for work done within a specified time period are to be included within the calculation of PIAWE.

The Respondent relied upon Clauses 2 and 6 of Schedule 3 of the 1987 Act.

Clause 2 of Schedule 3 defines pre-injury average weekly earnings as being ‘the weekly average of the gross pre-injury earnings received by the worker for work in any employment in which the worker was engaged at the time of the injury.’ Clause 6 of Schedule 3 further defines earnings as being ‘the earnings received by a worker in respect of a week means the amount that is the income of the worker received by the worker for work performed in any employment during the week.’

The Respondent submitted that the word ‘received’ was critical in both definitions. The Respondent submitted that as the Applicant did not actually receive the monies for the overtime work during the 12 month period prior to his injury, it could not be included in the earnings for that period in order to calculate PIAWE.

Issues for Determination

• Whether calculation of the Applicant’s PIAWE is to include his accrued overtime hours retained by the Respondent pursuant to Schedule 3 of the 1987 Act.

Decision

Member Isaksen agreed that the significant word in Schedule 3 was ‘received’. The Member agreed with the Applicant that it does not matter when he actually receives the money for the overtime that he worked. The Applicant had undertaken the overtime in the 12 months prior to his injury and by way of agreement with the Respondent, he was to receive payment for that overtime at some later point in time.

The Member accepted the Applicant’s submission of an analogy being that of, where a worker has been underpaid by an employer it would be unfair and unconscionable for the worker’s PIAWE to be calculated based upon the underpayment.

Member Isaksen also found that Clause 2 (2) of Schedule 3 acknowledges that earnings can be ‘paid or payable’ for work performed by the worker and therefore the legislature contemplates earnings that are not actually paid, but are also payable to the Applicant. Whenever those monies are received by the Applicant, they are considered to be monies payable for income earned 12 months prior to his work injury.

The Member was satisfied that the Applicant’s PIAWE was to be calculated based upon the monies he earned whilst in employment with the Respondent in the 12 month period prior to his work injury and therefore, the 261.25 hours of overtime that had been accrued in lieu was to be included. The Applicant’s PIAWE was therefore found to be $1,299.

Implications

This decision highlights that when determining PIAWE, insurers and employers must review all forms of earnings paid or payable to a worker in the 12 months prior to their injury. Whilst payment might not be obtained by the Claimant at the time they performed work for the Insured, the monies could still be considered to be ‘received’ and therefore are to be included in their PIAWE calculation.

The above is not legal advice, and you should remember that all cases depend on the individual circumstances. If you require advice about PIAWE or any other workers compensation issues, you can contact our workers compensation team on (02) 4929 9333 or (02) 8297 5900.