‘Nominal Nostradamus’: The predictive process for assessing capacity under Section 38(3)(c) of the Workers Compensation Act 1987.

Macarthur Fresh Wholesalers Pty Ltd v Deitz [2026] NSWPICPD 23

Rankin Ellison Lawyers were recently successful, whilst instructing Ms Margaret Allars SC, with respect to a Presidential Appeal before Deputy President Snell. This important decision with respect to Section 38(3)(c) of the Workers Compensation Act 1987 (WCA) is briefly outlined below.

Background

The Worker suffered an accepted right shoulder injury on 22 July 2022 when he slipped and fell from the back of his work truck.

On 21 June 2024 the Insurer issued a work capacity decision reducing the Worker’s weekly payments on the basis he could work 24 hours per week in suitable employment.

On 12 November 2024 the Insurer informed the Worker that his payments were coming to an end as he did not meet the requirements to receive weekly payments after 130 weeks as required by Section 38(3)(c) of the WCA. At that time, he was certified fit for 24 hours per week, but his hours of work fluctuated depending on the shifts offered by his new employer.

The Worker then lodged an Application to Resolve a Dispute on 29 April 2025, and the matter came before a Member of the Personal Injury Commission for Conciliation/Arbitration. The Member issued a certificate of determination dated 17 July 2025.

The Member made an Award for the Worker. He was satisfied that the Worker met the criteria for ongoing payments under Section 38. In reaching that decision, he found that:

• The Worker was incapable of performing his pre-injury duties.
• Any evidence of a present further capacity for work/employment that had not been realised by the worker was “irrelevant” to Section 38(3)(c) as this was already taken into account by the calculation of ‘current weekly earnings’ as defined by the WCA.

Presidential Appeal

The Appellant employer filed an Appeal on the following grounds:

• The Member had erred in the interpretation of Section 38(3)(c) in finding that any evidence of current capacity to undertake further additional employment or work was irrelevant.
• The Member had erred by providing inadequate reasons in order to understand how the decision had been reached.
• The Member had erred in making an error of discretion by taking into account an irrelevant matter, being whether the Worker could return to “pre-injury duties”.
• The Member had erred by failing to take into account or gave insufficient weight to the payslip evidence and the Worker’s own statement which confirmed that he was assured 24 hours per week and that he had regularly worked in excess of such.

Outcome

The Deputy President accepted the Appellant’s construction of Section 38(3)(c). He found that:

• In order to decide whether additional employment or work would increase the current weekly earnings, you need to look at what those earnings are at the time of assessment. The Member erred in finding that evidence of current capacity was irrelevant to the operation of Section 38(3)(c). This amounted to an incorrect application of Section 38(3)(c) (The operative paragraph being [149]).
• Section 38(3)(c) also requires a prediction as to the worker’s likely future earnings.
• The Appellant employer’s construction of Section 38(3)(c) was more consistent with the context of the statutory scheme.

The Deputy President also accepted the Appellant’s submission that the Member erred in utilising an inability to return to pre-injury duties as the standard for satisfaction of Section 38(3)(c). It was not necessary for the Member to determine whether the Worker could return to his pre-injury duties when applying Section 38(3)(c). The Member’s reasoning relied on that finding, and this was an error which vitiated the decision.

Having accepted that the Member had erred, the Deputy President went on to re-determine the matter.

Re-determination findings

• The Worker’s evidence, including medical evidence, wage material and his statement, supported that he was capable of, and in fact was regularly, working more than his certified 24 hours per week.
• On that basis, the Deputy President was not satisfied that the Worker had established that he is likely to continue indefinitely to be incapable of undertaking further additional employment or work that would increase his current weekly earnings.
• He then did not meet the condition imposed by Section 38(3)(c) and was not entitled to weekly benefits under Section 38.

Implications

• Section 38(3)(c) requires both an assessment of an injured worker’s present capacity to undertake further or additional employment that would increase their current weekly earnings and an assessment of a likelihood of an incapacity to do so into the future, that being an indefinite or non-defined period.
• Section 38(3)(c) requires that the starting point be a worker’s actual realised current weekly earnings and the taking into account of any capacity to increase those earnings, and then predicting what the likely future situation would be.
• A worker’s inability to return to pre-injury duties is not the standard for satisfying an incapacity for the purposes of Section 38(3)(c).
• In making decisions under Section 38, it is important for Insurers to carefully explore lay evidence including payslips and statement evidence to identify whether a worker’s actual realised ability to work and earn is in line with the medical opinion as to capacity.
• Finally, in making or preparing to make decisions under Section 38, it is also important for Insurers to ensure that medical evidence as to capacity directly deals with the criteria of Section 38(3)(c), and the question of expected future capacity. This includes medical evidence providing a clear opinion as to expected increases and the timelines for such.

Should you have any queries concerning a workers compensation matter, please contact our team on either (02) 4929 9333 or (02) 8297 5900.