Mercantile Mutual Insurance (Workers Compensation) Ltd v Di Cecco

Mercantile Mutual Insurance (Workers Compensation) Ltd appealed to the Court of Appeal of New South Wales against a decision of the Workers Compensation Commission. The dispute concerned the extent of the respondent's entitlement to weekly payments of compensation under the *Workers Compensation Act 1987* (NSW) following a work-related injury.

The primary legal issue before the Court of Appeal was whether the respondent, who had returned to work in a modified capacity, was entitled to receive weekly payments of compensation calculated by reference to his pre-injury earnings, despite earning more in his new role than he did in his pre-injury employment. This involved an interpretation of section 16 of the *Workers Compensation Act 1987* (NSW), specifically concerning the calculation of weekly payments for an injured worker who has returned to work.

The Court of Appeal, in dismissing the appeal, reasoned that section 16 of the Act provided for the calculation of weekly payments based on the difference between the worker's pre-injury average weekly earnings and their current weekly earnings. Crucially, the Court held that the section did not permit an employer to reduce weekly payments simply because the worker's current earnings exceeded their pre-injury earnings, provided the worker was still suffering a loss of earning capacity as a result of the injury. The Court affirmed that the purpose of section 16 was to compensate for a loss of earning capacity, not to provide a windfall or to penalise an employer where a worker's earnings had increased.