Firth v HammondCare

CERTIFICATE OF DETERMINATION OF MEMBER
Citation:	Firth v HammondCare [2022] NSWPIC 630
APPLICANT:	Kathryn Firth
RESPONDENT:	HammondCare
Member:	John Isaksen
DATE OF DECISION:	14 November 2022
CATCHWORDS:	WORKERS COMPENSATION - Dispute as to the calculation of the worker’s pre-injury average weekly earnings (PIAWE); whether there was a change of an ongoing nature to the employment arrangement between the worker and the employer which resulted in a financially material change to the worker’s earnings (regulation 8C of the Workers Compensation Regulation 2016); reference to arbitral decisions of Cain v Tamworth Aboriginal Medical Service and Wake v State Emergency Services; Held – there was a change of an ongoing nature to the employment arrangement between the worker and the employer which resulted in a financially material change to the worker’s earnings; calculation made for the relevant earning period and the worker’s PIAWE.
determinations made:	1. There was a change of an ongoing nature to the employment arrangement between the applicant and the respondent on or about 29 June 2020, which resulted in a financially material change to the applicant’s earnings as provided for by Regulation 8C (1) of the Workers Compensation Regulation 2016. 2. The relevant earning period for the calculation of the applicant’s pre-injury average weekly earnings as provided for by Regulation 8C (2) of the Workers Compensation Regulation 2016 is from 29 June 2020 to 6 October 2020. 3. The applicant’s pre-injury average weekly earnings for the purposes of calculating her entitlement to weekly payments of compensation are $809.61.

STATEMENT OF REASONS

BACKGROUND

Kathryn Firth, the applicant in these proceedings, sustained an injury to her right ankle on 6 October 2020 while employed as a Specialised Dementia Carer Grade One with the respondent, HammondCare.
The respondent has admitted liability for this injury. However, there is a dispute between Ms Firth and the respondent as to the calculation of her pre-injury average weekly earnings (PIAWE).
Ms Firth claimed in the Application to Resolve a Dispute (ARD) that her PIAWE is $984.80. That was amended to $957.77 in subsequent written submissions which have been filed and served on behalf of Ms Firth. That calculation is based upon 31 weeks of her employment with the respondent, which commences on 9 March 2020 and continues until her injury on 6 October 2020.
The respondent contends that there was a financially material change to Ms Firth’s earnings on 29 June 2020 when Ms Firth’s position with the respondent was re-classified from Specialised Dementia Carer New Entrant to Specialised Dementia Carer Grade One and because her hourly rate increased from $21.11 to $22.85. The calculation made by the respondent of Ms Firth’s PIAWE from 29 June 2020 to 6 October 2020 is $809.61.

ISSUES FOR DETERMINATION

The parties agree that the following issue remains in dispute:
(a) the calculation of Ms Firth’s PIAWE (Schedule 3, cl 2 of the Workers Compensation Act1987 (the 1987 Act) and regulation 8C of the Workers Compensation Regulation (the 2016 Regulation).

PROCEDURE BEFORE THE PERSONAL INJURY COMMISSION (Commission)

The parties attended a preliminary conference on 30 September 2022, and it was agreed the dispute it would proceed to a determination by way of written submissions. The following timetable was set:
(a)    the applicant to file and serve written submissions by 21 October 2022;
(b)    the respondent to file and serve written submissions in reply by 4 November 2022, and
(c)    the applicant to file and serve written submissions in response to the respondent’s submissions by 11 November 2022.

EVIDENCE

Documentary evidence

The following documents were in evidence before the Commission and considered in making this determination:
(a)    the ARD and attached documents;
(b)    Reply and attached documents;
(c)    applicant’s written submissions filed on 21 October 2022;
(d)    respondent’s written submissions filed on 3 November 2022, and
(e)    applicant’s written submissions in reply filed on 11 November 2022.

Relevant legislative provisions

Clause 2 of Schedule 3 of the 1987 Act relevantly provides:

“2 MEANING OF ‘PRE-INJURY AVERAGE WEEKLY EARNINGS’

‘Pre-injury average weekly earnings’ , in relation to an injured worker, means 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.

Note : See also clauses 3-5 relating to modifications of pre-injury average weekly earnings by agreement and in relation to apprentices, trainees and persons aged under 21 years.
(2) Except as provided by this clause (or by regulations made under this clause), in calculating the ‘pre-injury earnings’ received by a worker in employment for the purposes of subclause (1), no regard is to be had to earnings in the employment paid or payable to the worker for work performed before or after the period of 52 weeks ending immediately before the date of the injury (‘the relevant earning period’).
(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 payment of earnings for work performed in the employment.”

Regulation 8C of the 2016 Regulation provides:

“8C ADJUSTMENT FOR FINANCIALLY MATERIAL CHANGE TO EARNINGS--SCHEDULE 3, CLAUSE 2(3)(A) OF 1987 ACT

(1) 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 financially material change to the earnings of the worker (for example, a change from full-time to part-time work).
(2) 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.”

The applicant’s evidence and submissions

Ms Firth has provided a statement dated 21 July 2022.
Ms Firth states that she commenced employment with the respondent at its Cardiff facility on 9 March 2020 as a Specialised Dementia Carer New Entrant on a permanent part-time basis working 70 hours per fortnight and being paid at a rate of $21.11 per hour. She states that on or around 12 July 2020 she was placed on the Grade One salary for a Specialised Dementia Carer after completing 500 hours of work for the respondent.
Ms Firth states that her re-classification on or around 12 July 2020 was not a promotion because all employees were subject to the same conditions. She states that there were no changes to her employment duties and nor was she was given any additional responsibilities.
Ms Firth submits that there has not been a “financially material change” to her earnings as a result of increase in her hourly rate on 29 June 2020.
Ms Firth submits that the definition of ‘material’ in the Macquarie Dictionary is:
“a. Of substantial import or much consequence;
b. Law (of evidence, etc) likely to influence the determination of a cause.”
Ms Firth submits that even if the re-classification of her position on 29 June 2020 was a “change of an ongoing nature to the employment arrangement” (regulation 8C (1) of the 2016 Regulation), it did not result in a financially material change to her earnings. She submits that there is no evidence to suggest a causal effect of an increase to her hourly rate of pay
on her subsequent lower average total gross earnings, so that the word “resulting” in
regulation 8C (1) is not engaged.
Ms Firth refers to a decision of Member Wright in Wake v State Emergency Services [2022] NSWPIC 50 (Wake) to submit that the 1987 Act, and by extension the Regulations to that Act, are on the whole still beneficial legislation. Ms Firth submits her situation is comparable to that of a casual employee which is referred to in Wake at [47]:
“This outcome, in my view, would not be anomalous with other not uncommon working situations, such as casual, seasonal or piecemeal workers who may experience unfortunate periods of not receiving earnings in any particular week. As a simple example, a casual worker, who earns $500 gross per week for work performed in a particular week, may work 26 weeks out of the relevant 52 weeks, for example they work every other week. If earnings received are regarded as ‘0’ for weeks not worked and average weeks include weeks not worked, then the PIAWE calculation results in $250 gross per week. The interpretation that I have found in my view avoids such anomalous situations.”
Ms Firth submits that the respondent has seized upon a coincidence where her earnings have decreased despite going to a higher hourly rate. She submits that the application of regulation 8C should avoid the anomalous consequence of fluctuating earnings which have only a tenuous, temporary link to a change in earnings.

The respondent’s submissions

The respondent submits that there was a change of an ongoing nature to the employment arrangement as between Ms Firth and the respondent which resulted in a financially material change to Ms Firth’s earnings when Ms Firth had commenced employment as a Specialised Dementia Carer New Entrant on a permanent part time basis earning $21.11 per hour, but after the completion of 500 hours of work she was re-classified to a Specialised Dementia Carer Grade One with a rate of $22.85 per hour.
The respondent relies upon a decision of Member Wright in Cain v Tamworth Aboriginal Medical Service [2021] NSWPIC 193 (Cain) wherein it was determined that an increase in the worker’s hourly rate from $24 to $26 came within the provisions of regulation 8C of a change of an ongoing nature to the employment arrangement resulting in a financially material change to the earnings of the worker.
The respondent relies upon the decision of Cain to submit that the term ‘employment arrangement’ is broad and includes a worker’s employment agreement and terms and conditions of employment, which includes wages, hourly rates of pay, and changes from part time to full time work.
The respondent submits that a financially material change is not limited to an increase in earnings, and regulation 8C is to be applied regardless of whether the ‘material change’ results in a decrease or increase to a worker’s earnings.

Determination

The application of regulation 8C of the 2016 Regulation involves, in my view, a two step approach of firstly identifying ‘a change of an ongoing nature to the employment arrangement’, and then secondly identifying the financially material change to the earnings of a worker which results from that change in the employment arrangement.
Member Wright noted in Cain at [18] that ‘employment arrangement’ is not defined in the 2016 Regulation. There is only one example given in regulation 8C a change of an ongoing nature to the employment arrangement, being a change from full-time to part-time work. Member Wright said in Cain at [21]:
“In my view, the example listed in regulation 8C (‘a change from full-time to part-time work’) does not place a limit on the content of the ‘employment arrangement’. The term ‘employment arrangement’ in regulation 8C is not expressed to be limited by the example given. Even if this were so, a change from full-time to part-time work could also be characterised as a change in the employment contract, with the result that other changes to the employment contract would also be included in a change in the employment arrangements. In this case, a change to the hourly rate of pay, as evidenced by the payslips attached to the ARD and the Reply, and as specified in the Employment Agreement referred to below, also forms a change to the employment contract and hence the employment arrangements.”
Ms Firth states that there was no change to her duties, and she was not given any additional responsibilities, once she had completed 500 hours of work for the respondent. There is no evidence from any officer or employee of the respondent of Ms Firth having a change of duties or added responsibilities or a change in the level of her supervision once her position was re-classified from Specialised Dementia Carer New Entrant to Specialised Dementia Carer Grade One.
The letter to Ms Firth from the respondent dated 3 March which contains an offer of employment states that Ms Firth is to be employed in accordance with an employment contract attached to that letter and the HammondCare Residential Care and HammondCare At Home Enterprise Agreement 2018. However, there is no copy of that Enterprise Agreement in the material before the Commission. That Enterprise Agreement might include tasks indicative of a certain level or classification of employment, which might assist in determining if there was a change of an ongoing nature to the employment arrangement when Ms Firth was re-classified from Specialised Dementia Carer New Entrant to Specialised Dementia Carer Grade One.
That there was no change in the duties, responsibilities or supervision of Ms Firth upon being re-classified from Specialised Dementia Carer New Entrant to Specialised Dementia Carer Grade One tends to support the contention that there was no actual change of an ongoing nature to the employment arrangement. However, in the absence of any definition of ‘employment arrangement’ in the 2016 Regulation, I agree with the broad approach taken in Cain to the application of the ‘employment arrangement’ between a worker and employer.
There was a change of an ongoing nature to the employment arrangement when Ms Firth had completed 500 hours of her employment. Once that milestone was reached, she became eligible for an increase in her hourly rate of pay. That was a change in the arrangement between Ms Firth and the respondent which was ongoing because Ms Firth was now to receive a higher hourly rate of pay in a new classification of employment.
I do not accept the submission made on behalf of Ms Firth that there was not a financially material change to her earnings upon being re-classified from Specialised Dementia Carer New Entrant to Specialised Dementia Carer Grade One. The increase in her rate from $21.11 per hour to $22.85 per hour was of substantial import because this was increase of about 8.25%.
Ms Firth’s payslip for the fortnight ending 9 August 2020 records her earnings to be $2,900.85, which included additional allowances for working on Saturday and Sunday, and on afternoon and night shifts. This pay period provided earnings of almost $500 per week more than what she had previously received while working for the respondent, except for the fortnight ending 19 April 2020 when she earned $2,643.37. That is consistent with an expectation that her weekly or fortnightly earnings would increase with a corresponding increase in her hourly rate of pay. It was a material change to her earnings.
However, for reasons which have not been disclosed by Ms Firth, her weekly earnings decreased from 9 August 2020 until the date of her injury. Her pay slips from 26 July 2020 until the date of her injury record her taking some annual leave and sick leave. Ms Firth’s pay slips record that by 18 August 2020 she was taking unpaid sick leave, presumably because she had exhausted her paid sick leave entitlements.
Ms Firth submits that the anomalous consequence of fluctuating earnings should be avoided when applying regulation 8C. However, regulation 8C is based upon there being change of an ongoing nature to an employment arrangement which results in a financially material change to the earnings of a worker. If that scenario is established (and in my view that has occurred in this dispute) then it becomes necessary to calculate the earnings for the relevant period following that change in the employment arrangement up until the time of an injury.
As I have already observed, the usual expectation is that the worker can expect an increase in weekly earnings. This was the argument which was pursued with success in Cain. Unfortunately, that did not occur for Ms Firth during the 14 weeks or so that she worked from the time of her re-classification and increase in her hourly rate of pay until the date of her injury, and hence she is in the unusual situation where her PIAWE is less when calculated from 29 June 2020 than if it were calculated from the commencement of her employment on 9 March 2020.
I consider Ms Firth’s reference and reliance upon the decision in Wake to be misplaced. Firstly, in Wake there was a period during which the worker only received income from the employer by way of half pay for long service leave and Member Wright formed the view that this should not be regarded as ‘earnings’ and not be included in the calculation of PIAWE. In this dispute Ms Firth has received at least some earnings for every week that she worked with the respondent.
Secondly, the comparison made by Ms Firth to a casual employee which is referred to in Wake [at 47] does not apply in her situation because Member Wright was referring to weeks when a casual employee would not work at all, and the Member considered those weeks should not be counted at all when calculating PIAWE. If there were weeks when Ms Firth did not work at all for the respondent then it is arguable, based upon the reasons set out in Wake, that those weeks should be counted. However, as I have already noted, Ms Firth did work every week for the respondent and she also provides no explanation as to reasons for taking annual leave, sick leave and then unpaid sick leave from 26 July 2020 until the date of her injury.
I can only reiterate that the starting point for a determination of this dispute is whether there was a change of an ongoing nature to the employment arrangement between Ms Firth and the respondent. There was such a change and therefore earnings are calculated for the relevant period following that change in the employment arrangement up until the time of an injury.
Ms Firth has only made a calculation of her average earnings from 9 March 2020 to 6 October 2020. She has not made a separate calculation for the period from 29 June 2020 to 6 October 2020 to challenge the calculation made for this period by the respondent.
There are also errors in the list of earnings set out in Ms Firth’s written submissions during this period. The earnings for the fortnight ending 20 September 2020 should be $1,396.63, and not $1,936.63, and the earnings for the last pay period should be $160.66 and not $693.27.
I have made my own calculation for the period from 29 June 2020 to 6 October 2020, and that calculation comes within a few dollars of the calculation made by the respondent for this period of $809.61. I therefore accept the calculation made by the respondent for the relevant period of $809.61. This is in the absence of any alternate and accurate calculation made for this period by Ms Firth.
I find that, pursuant to regulation 8C, Ms Firth’s re-classification from Specialised Dementia Carer New Entrant to Specialised Dementia Carer Grade One on 29 June 2020, and the corresponding increase in her hourly rate due to that re-classification, was a change of an ongoing nature to the employment arrangement between Ms Firth and the respondent, resulting in a financially material change to the earnings of Ms Firth. Pursuant to regulation 8C (2), the relevant earning period is from 29 June 2020 to 6 October 2020.
Ms Firth’s PIAWE for the purposes of calculating her entitlement to weekly payments of compensation are $809.61.

[2022] NSWPIC 630

14 November 2022