State of New South Wales (Hunter New England Local Health District) v Sternbeck (No 4) - [2025] NSWPICPD 41

DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY A MEMBER
CITATION:	State of New South Wales (Hunter New England Local Health District) v Sternbeck (No 4) [2025] NSWPICPD 41
APPELLANT:	State of New South Wales (Hunter New England Local Health District)
RESPONDENT:	Michael David Sternbeck
INSURER:	QBE TMF
FILE NUMBER:	A2-W1171/23
PRESIDENTIAL MEMBER:	President Judge Phillips
DATE OF APPEAL DECISION:	15 May 2025
ORDERS MADE ON APPEAL:	1. The Certificate of Determination dated 30 August 2024 is revoked. 2. On redetermination pursuant to s 352(6A) of the Workplace Injury Management and Workers Compensation Act 1998, I determine that the respondent’s pre-injury average weekly earnings for the injury sustained by the respondent on 4 April 2022 is $807.59.
CATCHWORDS:	WORKERS COMPENSATION – calculation of ‘pre-injury average weekly earnings’ where a worker has been in receipt of payments of weekly compensation in respect of an earlier injury – Secretary, Department of Communities and Justice v Stewart [2024] NSWCA 59 considered and applied – construction of regs 8B, 8C and 8E of the Workers Compensation Regulation 2016 – cl 3 of Sch 3 of the Workers Compensation Act 1987 – members not at liberty to ignore the terms of a remitter from a Presidential member – Secretary, Department of Communities and Justice v Pell [2023] NSWPICPD 19 distinguished – employment arrangement between employer and employee not limited to contractual relationship – requirement for employment arrangement to be identified – Secretary, Department of Communities and Justice v Nitchell [2023] NSWPICPD 36
HEARING:	2 May 2025
REPRESENTATION:	Appellant:
Ms S Warren, counsel
Hall & Wilcox Lawyers
Respondent:
Mr C Tanner, counsel
McNally Jones Staff Lawyers
DECISION UNDER APPEAL:	Sternbeck v State of New South Wales (Hunter New England Local Health District) [2024] NSWPIC 483
MEMBER:	Mr J Isaksen
DATE OF MEMBER’S DECISION:	30 August 2024

INTRODUCTION

The controversy in this appeal is becoming somewhat of a cause celebre in deciding the effect that the receipt of workers compensation payments for a second injury has upon the calculation of an injured worker’s pre-injury average weekly earnings (PIAWE). This matter involves the construction of the Workers Compensation Regulation 2016 (Regulation) and in particular what I will refer to as the “adjustment” provisions appearing in the Regulation at regs 8A–8EA.
Already in this matter, there have been two first instance member decisions and one Presidential member decision on the issue concerning the correct approach to the PIAWE calculation. This will be the fourth decision of the Personal Injury Commission (Commission) attempting to quell this controversy. There have been various other Presidential decisions which have dealt with reg 8C, which are referred to by the parties and the Member below. Additionally, the Court of Appeal has considered the proper approach to construing regs 8A–8E, and reg 8E in particular, in Secretary, Department of Communities and Justice v Stewart,[1] a case I will refer to later in this decision.
[1] [2024] NSWCA 59 (Stewart).
As is thus evident, the question of construction arising is of importance beyond the litigants in this matter. The answer will potentially affect other workers who suffer a second incapacitating injury and the manner in which their employers would then have to approach the PIAWE calculation.

BACKGROUND

The facts in this matter, which I will outline below, are not in dispute. The only dispute is the appropriate method by which the injured worker’s (the respondent to this appeal) PIAWE is calculated. This involves consideration of the Regulation and whether the respondent’s situation is covered by regs 8B or 8C such that he is entitled to an adjustment of the 52-week period. At all times liability to pay workers compensation has been conceded by the appellant employer.
The most succinct exposition of the uncontroversial facts is found in the appeal decision of Acting President Snell of 25 June 2024[2] at paragraphs [1] and [2], which I set out in full:
“1. Michael Sternbeck (the worker/respondent) was employed as a health and security assistant by the Hunter New England Local Health District (correctly sued as the State of New South Wales) (the employer) from about 2006. His duties involved those of a wardsperson (assisting with patient care and moving patients) and security duties (keeping an eye on mental health patients and protecting doctors and nurses). He suffered two work injuries, which are not disputed. In May 2021 he was moving a large patient from a ward bed onto a scanning table when he injured his right shoulder. He underwent a shoulder reconstruction and resumed on full duties from about 26 November 2021. His weekly entitlement while off work was calculated on the basis of pre-injury average weekly earnings (PIAWE) of $1,560.
2. The worker suffered a further injury on 4 April 2022 while moving a heavy patient, on a ward bed, to a CT scan room. The worker grabbed the bed to stop it hitting an open door and strained his left wrist and hand. He underwent surgery on 9 and 30 June 2022, involving a carpal tunnel release, a trigger finger procedure and the reattachment of torn ligaments to his thumb. He resumed work on graduated light duties from 20 September 2022. The worker’s weekly entitlements during this second period of incapacity were calculated on the basis of PIAWE of $807.59 per week. This contrasts with the worker’s statement that his average weekly earnings from 26 November 2021 to 4 April 2022 (the period from his resumption following the first injury to the date of the second injury) were $1,748.86. The reason behind this difference is revealed in a letter from QBE Insurance to the worker’s solicitors dated 12 September 2022. Payments of workers compensation in respect of the first of the injuries were not included in the calculation of PIAWE for the purposes of calculating the compensation entitlements resulting from the second injury. The PIAWE was calculated as if the worker received no income during the period during which he received workers compensation in respect of the first injury.”
[2] State of New South Wales (Hunter New England Local Health District) v Sternbeck [2024] NSWPICPD 38 (Sternbeck No 2).
Based on these facts, the following decisions of the Commission have been issued.

Sternbeck v State of New South Wales (Hunter New England Local Health District) [2023] NSWPIC 192 – decision of Member Garner of 1 May 2023 (Sternbeck No 1)

In Sternbeck No 1 Member Garner found as follows:
“35. The decisions of Sidhu v Secretary Department of Communities and Justice [2021] NSWPIC 522 and Stewart v Secretary, Department of Communities and Justice [2022] NSWPIC 333 and Nitchell v Secretary (Department of Communities and Justice) [2022] NSWPIC 625 each adopt differing approaches to resolution of the issue of whether a period during which a worker received weekly benefits in respect of an unrelated injury should be excluded from the relevant earning period for the purposes of calculation of PIAWE of a later injury.
36.    In Nitchell, Member Wynyard considered the relevant statutory provisions, Sidhu and [Stewart] and relevant principles of statutory interpretation. Member Wynyard considered that the correct approach was that the words ‘immediately before the date of injury’ in Schedule 3(2)(2) should be read to mean ‘immediately before the date of injury, or as adjusted where a worker receives income as defined by Clause 6(2)(c) hereof’.
37.    I do not accept the [employer’s] submissions that Nitchell, Sidhu and [Stewart] were wrongly decided and should not be followed.
38.    With respect, I prefer and adopt the approach adopted by Member Wynyard in Nitchell for the reasons that he outlined in his statement of reasons.
39.    On that basis, I determine that:
(a) the 52 week period provided for the calculation of PIAWE is adjusted by deducting the weeks to which Schedule 3, cl 6(2)(c) applied, and
(b) the [worker’s] weekly benefits should be calculated on PIAWE of $1,748.86.”
The Certificate of Determination issued by Member Garner on 1 May 2023 records:
“The Commission determines:
1. The 52-week period provided for the calculation of pre-injury average weekly (PIAWE) earnings is adjusted by deducting the weeks to which Schedule 3, cl 6(2)(c) of the Workers Compensation Act 1987 applied.
2. The [worker’s] weekly compensation is to be calculated on PIAWE of $1,748.86.
The Commission orders:
3. The [employer] is to pay the [worker] weekly payments of compensation in accordance with s 36(1) of the Workers Compensation Act 1987 as follows:
$1,661.42 per week from 4 April 2022 to 3 July 2022.
4. The [employer] is to pay the [worker] weekly payments of compensation in accordance with s 37(1) of the Workers Compensation Act 1987 as follows:
$1,399.01 per week from 4 July 2022 to 7 March 2023.
5. The parties have 14 days liberty to apply with respect to the calculation of the weekly compensation amounts referred to above.”
Sternbeck No 1 was appealed.

State of New South Wales (Hunter New England Local Health District) v Sternbeck [2024] NSWPICPD 38 – decision of Acting President Snell of 25 June 2024 (Sternbeck No 2)

In Sternbeck No 2, Acting President Snell allowed the appeal, revoking the Certificate of Determination and remitted the matter to be redetermined in accordance with his decision. The Acting President’s dispositive reasoning in Sternbeck No 2 was as follows:
“39. The [worker] appropriately concedes that the decision of the Court of Appeal in Stewart is consistent with the success of the second of the grounds of appeal. This is consistent with the Presidential appeal before me being upheld. The [worker] submits that the Presidential appeal should be held in abeyance, pending a decision in an application for special leave to appeal to the High Court of Australia, brought by the worker in Stewart.
40.    The objects of [the Personal Injury Commission Act 2020 (the 2020 Act)] are set out in s 3 of that Act. Subclauses (c) and (d) of s 3 provide for the following objects:
‘(c)to enable the Commission to resolve the real issues in proceedings justly, quickly, cost effectively and with as little formality as possible,
(d)to ensure that the decisions of the Commission are timely, fair, consistent and of a high quality,’.
41.    Section 4(2) of the 2020 Act provides that, in exercising a discretion conferred by the Act, the Commission should do so ‘in the way that would best promote the objects of this Act or the provision concerned’.
42.    Subsections (1) and (2) of section 42 of the 2020 Act provide:
‘42     Guiding principle to be applied to practice and procedure
(1)The guiding principle for this Act and the Commission rules, in their application to proceedings in the Commission, is to facilitate the just, quick and cost effective resolution of the real issues in the proceedings.
(2)The Commission must seek to give effect to the guiding principle when it—
(a)exercises any power given to it by this Act or the Commission rules, or
(b)interprets any provision of this Act or the Commission rules.’
43.    Section 57(1) of the 2020 Act provides:
‘The Commission may reconsider any matter that has been dealt with by the Commission in the Workers Compensation Division and rescind, alter or amend any decision previously made or given by the Commission in that Division.’
44.    Rule 3 of the Rules provides:
‘The object of these Rules is to give effect to the guiding principle for the [2020] Act and the Commission rules in their application to proceedings in the Commission.’
45.    I am bound by the decision of the Court of Appeal in Stewart. It follows that Ground No. 2 of the appeal should succeed. If I were to accede to the [worker’s] application to hold the matter before me in abeyance, pending determination of the worker’s special leave application (and if that application were successful, a hearing in the High Court) there would inevitably be associated delay. Effect is best given to the objects of the 2020 Act, and the application of the ‘guiding principle’, by dealing with the Presidential appeal rather than deferring it for an uncertain period. Should the ultimate outcome in Stewart be inconsistent with the approach of the majority of the Court of Appeal in that matter, the reconsideration power in s 57 of the 2020 Act is potentially available.
46.    For the above reasons, I do not adopt the approach advocated by the [worker] of holding this Presidential appeal in abeyance, pending further developments in the special leave application in Stewart. Consistent with the decision of the Court of Appeal in Stewart, Ground No. 2 of the [employer’s] grounds succeeds. It is unnecessary to deal with Ground No. 1. The appeal succeeds.
47.    I accept the [employer’s] submission that the calculation of PIAWE should not be adjusted to exclude any part of the relevant earnings period. This is consistent with the decision of the Court of Appeal in Stewart. It is necessary that PIAWE be determined consistently with that decision.” (emphasis added)
Acting President Snell made the following orders:
“1. The Certificate of Determination dated 1 May 2023 is rescinded.
2. The matter is remitted to the Division Head, Workers Compensation Division, to determine the [worker’s] PIAWE consistent with these reasons.” (emphasis added)
I would remark for the sake of completeness, that the application for special leave in Stewart, which was referred to before the Acting President, was rejected by the High Court of Australia on 5 September 2024.[3]

Sternbeck v State of New South Wales (Hunter New England Local Health District) [2024] NSWPIC 483 – decision of Member Isaksen of 30 August 2024 (Sternbeck No 3)

[3] Stewart v Secretary, Department of Communities and Justice ABN 36433875185 [2024] HCASL 239.

On remitter, the matter was heard by Member Isaksen who issued a decision on 30 August 2024, finding in favour of worker/respondent to this appeal.[4] The Member considered that he was not bound to follow the Court of Appeal in Stewart as that matter had a primary focus on the application of ‘unpaid leave’ in cl 2(3)(a) of Sch 3 of the Workers Compensation Act 1987 (the 1987 Act) and reg 8E of the Regulation. The Member said:
“34. I consider that it is of particular significance that the legislature chose the words ‘engaged in the employment’ rather than merely using the ‘employed’. If reg 8B was to read: ‘not employed from the beginning of the unadjusted earning period’ (sub-clause (1)), or ‘excluding any period before the day on which the worker was first employed in the employment’ (sub-clause (2)), then the [employer’s] submission that there should be no adjustment during the 52 week period because the [worker] remained in continuous employment with the [employer] would be difficult to challenge.
35. However, the use of the term ‘engaged’ indicates an active participation in the actual employment duties of a worker, which for the [worker] in this dispute does not commence until 26 November 2021 when he is able to actually engage in work duties for the [employer] after ceasing to be incapacitated for work due to an earlier and discrete injury. That is the argument pursued by the [worker] and I agree with it.
36. This conclusion is reinforced when considering the use of the term ‘engaged in employment’ elsewhere in the 1987 Act. A search of the 1987 Act reveals the use of this term in ss 19, 19A, 19B and 44B.” (emphasis in original)
[4] The reasons.
The Member then considered other provisions in the Act such as ss 19A(1) and 19B of the 1987 Act in constructing the term ‘engaged in the employment’. This approach resulted in a PIAWE finding of $1,748.86 with respect to reg 8B.
With respect to reg 8C the Member said the decision in Stewart did not consider or comment on the Presidential decisions in Secretary, Department of Communities and Justice v Pell[5] or Secretary, Department of Communities and Justice v Nitchell[6] and as a consequence, the Member followed Pell and Nitchell and said at [46]–[48] of his reasons:
“46. In this dispute there was a change in the ongoing nature to the employment arrangement between the [worker] and [employer] when the [worker] resumed his work duties on 26 November 2021 following a previous work injury and a resultant period of incapacity. There was a financially material change to the earnings of the [worker] when he resumed his work duties as health and security assistant on 26 November 2021 and began to receive income commensurate with the duties he had returned to.
47. I do not accept the submission made by the [employer] that there was no material change in the [worker’s] earnings because workers compensation payments are specifically excluded from the definition of ‘earnings’ and ‘income’. There was a material change to the [worker’s] earnings from 26 November 2021 because he began to be in receipt of earnings by returning to his pre-injury duties with the [employer].
48. The application of reg 8C of the 2016 Regulation to the circumstances of this dispute also results in a determination of PIAWE of $1,748.86.”
[5] [2023] NSWPICPD 19 (Pell).
[6] [2023] NSWPICPD 36 (Nitchell).
The Certificate of Determination issued by Member Isaksen on 30 August 2024 records:
“The Commission determines:
1. The relevant earning period for the calculation of the [worker’s] pre-injury average weekly earnings is adjusted by the application of Regulation 8B of the Workers Compensation Regulation 2016.
2. In the alternative, the relevant earning period for the calculation of the [worker’s] pre-injury average weekly earnings is adjusted by the application of Regulation 8C of the Workers Compensation Regulation 2016.
3. The [worker’s] pre-injury average weekly earnings for the injury sustained by the [worker] on 4 April 2022 is determined to be $1,748.86.”
As is apparent from this history of proceedings, the three Commission decisions have by different reasoning processes, reached differing conclusions to the same question.
The appellant employer appeals from the decision in Sternbeck No 3.

THRESHOLD MATTERS

There is no dispute between the parties that the threshold requirements as to quantum and time pursuant to ss 352(3) and 352(4) of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act) have been met.

GROUNDS OF APPEAL

The appellant relies on the following two grounds of appeal:
(a) Ground One: The Member erred in his interpretation and application of Regulation 8B of the Workers Compensation Regulation 2016.
(b) Ground Two: The Member erred in his interpretation and application of Regulation 8C of the Workers Compensation Regulation 2016.
The appellant confirms that there is no factual dispute in this appeal. The appellant seeks the revocation of the Certificate of Determination dated 30 August 2024 (Sternbeck No 3) and that the matter be redetermined in this decision.
Needless to say, the respondent says that the Member’s decision is correct and maintains that the appeal grounds are unfounded.

LEGISLATION

Schedule 3, clauses 2 and 6 of the 1987 Act provides:
“2.     Meaning of ‘pre-injury average weekly earnings’
(1)     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.
(4)     If the amount of a worker’s pre-injury average weekly earnings is less than any minimum amount prescribed by the regulations as applicable to the worker, the amount of the worker’s pre-injury average weekly earnings is taken to be that minimum amount. Different minimum amounts may be prescribed for different classes of workers, including part-time and full-time workers.”
“6.     Meaning of ‘earnings’
(1)     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.
(2)     The income of a worker does not include─
(a) any minimum amount paid to a superannuation fund or scheme in respect of the week to avoid an individual superannuation guarantee shortfall, within the meaning of the Superannuation Guarantee (Administration) Act 1992 of the Commonwealth, for the worker, or
(b) the monetary value of any non-monetary benefit provided to the worker for the performance of work by the worker, or
(c) any payment in respect of loss of earnings under a scheme to which the workers compensation legislation relates or under any other insurance or compensation scheme, or
(d) any payment made without obligation by the employer.
(3)     However, the monetary value of a non-monetary benefit of a worker is to be included as part of the income of the worker for the purposes of the calculation of the weekly payments of compensation payable to the worker if the worker is not entitled to the use of the benefit.
(4)     The Workers Compensation Guidelines may make provision for or with respect to the matters to be taken into account for the purposes of determining whether a benefit has been provided to a worker or whether the worker is entitled to the use of a benefit.”

The regulations which are the subject of this appeal appear at Part 4 of the Workers Compensation Regulation 2016. Part 4 commences as follows:
“Part 4 Pre-injury average weekly earnings—injuries occurring on or after 21 October 2019
Division 1 Preliminary
8      Application and operation of Part
(1)     This Part takes effect on and from 21 October 2019.
(2)     This Part applies only to injuries received on or after 21 October 2019.
8AA Definitions
In this Part—
pre-injury average weekly earnings agreement—see clause 8H.
the relevant earning period has the same meaning as in clause 2(2) of Schedule 3 to the 1987 Act.
unadjusted earning period—see clause 8A(3).”
Regulation 8B of the Workers Compensation Regulation 2016, provides:
“8B   Adjustment for workers not continuously employed—Schedule 3, clause 2(3)(a) of 1987 Act
(1)     The relevant earning period for a worker in employment is to be adjusted in accordance with this clause if the worker was not engaged in the employment from the beginning of the unadjusted earning period.
(2)     The relevant earning period for the worker in the employment is to be adjusted by excluding any period before the day on which the worker was first engaged in the employment.”
Regulation 8C of the Workers Compensation Regulation 2016 further requires that:
“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.”

SUBMISSIONS

Hearing

I listed the appeal for hearing on Friday 2 May 2025 to give the parties an opportunity to make submissions on the following matters which I considered needed to be addressed in the interests of procedural fairness. The first matter about the application or not of stare decisis and non-compliance by the Member with Order 2 made by the Acting President was not addressed in either party’s submission. The second matter was to flag my intention to redetermine the matter should error be found in what the Member held.
I set these two matters out more fully below.
In Sternbeck No 2, the Acting President was clearly of the view that the Court of Appeal decision in Stewart bound him in his decision making in this matter.[7] The Acting President revoked the Certificate of Determination in Sternbeck No 1 and remitted the matter to be dealt with by another member “consistent with these reasons.”[8]
[7] Sternbeck No 2, [45].
[8] Sternbeck No 2, Order 2.
In Sternbeck No 3, the Member plainly considered that he was not bound by either Order No 2 made by the Acting President nor by the Court of Appeal decision in Stewart.[9]
[9] Sternbeck No 3, [30]–[31]; [45].
I asked the parties to address on this circumstance by reference to the principle of stare decisis and to answer whether the Member in Sternbeck No 3 was bound to follow the Acting President’s decision, including Order No 2, and the Court of Appeal decision in Stewart. I referred the parties to my decision in Voudouris v TDV Constructions Pty Ltd[10] at [54]–[60] which touched upon the principle.
[10] [2023] NSWPICPD 53.
I also indicated to the parties that in the event that I decided that the Member was in error, given the history of the matter and the need to have this issue determined, I would be minded to redetermine the matter under s 352(6A) of the 1998 Act rather than remit it to yet another member. This was the order sought by the appellant, but I noted that other than resisting the appeal, the respondent had submitted nothing on this possible outcome. I therefore invited the parties to put any submission, over and above what appears in their written submissions, to assist in a redetermination of the matter, should it be necessary to undertake.
Both parties submitted that Stewart was confined to reg 8E. The parties also confirmed their view that the matter before Member Isaksen proceeded on the understanding that regs 8B and 8C were the only matters in contest. Mr Tanner, counsel for the respondent, submitted that the Acting President made “… no finding or reasoning in his decision in relation to 8B or 8C.”[11] The parties otherwise relied on the submissions which were before Member Isaksen and those filed on appeal.
[11] Transcript (T) of hearing 2 May 2025, T 5.25–27.

As to Ground One

The appellant states that reg 8B applies to workers who are not continuously employed and that the respondent does not have this status as he was always employed by the appellant.
The appellant submits:[12]
[12] Appellant’s submissions dated 27 September 2024.
“19. The appellant employer submits that irrespective of the outcome of the Act and the Regulations may cause, it is not a matter for the Commission to unilaterally determine what is fair without regard to the relevant statutory provisions. Merely because an outcome of the application of the statutory scheme is unattractive does not provide sufficient cause to determine that there is ambiguity to enable wider statutory interpretation and construction. The majority in [Stewart] also highlighted the importance of giving statutory terms, in that case the term unpaid leave, their ordinary meaning and not unduly extending or straining their meaning.
20.    The Member erred in taking into consideration that the time the respondent worker was in receipt of workers compensation benefits resulted in the worker being ‘not engaged in the employment’.
…
22.    The evidence before the Commission supported that the respondent worker remained employed by the appellant employer for the entirety of the unadjusted relevant earning period. The respondent worker remained continuously employed by the appellant employer as a Health and Security Assistant.
…
25.    The Member entangled the term ‘engaged in employment’ to extract a meaning that a worker needs to be specifically undertaking tasks in the employment.
26.    The appellant employer submits that the terms of reg 8B are clear and further clarification for the purposes of interpretation is unnecessary. When interpreting and determining the relevant earning period, one is to look at that clause and the regulations.
27.    The interpretation of the legislation should not go beyond the ‘ordinary and grammatically sense of the statutory words’. As submitted above at [19], this is supported by the comments of the majority in Stewart.
…
33. The effect of the application of Schedule 3 of the 1987 Act is clear and unambiguous. It sets out a clear procedure in which PIAWE is calculated. The relevant earning period is the period of 52 weeks preceding the injury. This period can only be adjusted by the operation of the mechanisms as set out in the Regulation. The payment of workers compensation benefits received during this period is to be excluded once you move to Clause 6 of Schedule 3. The Commission ought to apply the text of Schedule 3 of the 1987 Act and the Regulation and calculate PIAWE accordingly.
34.    The meaning of the text is clear. Statutory interpretation does not allow us to step in and amend the provisions on the basis that the results are inconvenient or impolitic or improbable.
35.    The Member fell into error when he unduly extended the meaning of the terms of reg 8B.
36.    The appellant employer submits that upon the proper interpretation of the 1987 Act and the Regulations, is that reg 8B does not apply to the respondent worker as he was continuously employed by the appellant employer during the relevant period.”
The respondent submits that the Member’s decision with respect to reg 8B addressed what the drafters intended by the words “engaged in employment”. The respondent says this about the Member’s decision and the appellant’s arguments:[13]
[13] Respondent’s submissions dated 7 November 2024.
“6.     The Member accepted at [35] that the term ‘engaged in the employment’ contemplated ‘active participation in the actual employment duties of the worker’, as submitted on behalf of the worker.
7.      That conclusion was open to the member and in keeping with the plain meaning of the words used in Regulation 8B.
8.      Dictionary definitions all confirm that engaged involves the active doing of something:
• Macquarie – busy or occupied; involved
• Cambridge – to take part in something
• Merriam-Webster – involved in activity: occupied, busy
9.      The drafters can be assumed to have used the term to distinguish a period of performance of employment duties, in respect of which earnings would have been payable, from the mere fact of the subsistence of the contract of employment, which would embrace a broader period, including times when the worker was not engaged in the employment and not working.
10.    The Member’s interpretation of the term engagement, which is not ambiguous, was fortified, as he noted at [36], by the use of the term in ss 19, 19A, 19B and 44B of the [1987 Act].
11.    The drafters of the Regulations cannot be understood to have introduced the words ‘engaged in the employment’ at 8B as conveying something different from their meaning in the 1987 Act, and to have intended to introduce an anomaly. They would have had no reason to use those particular words, the meaning of which is plain, in Regulation 8B if they did not consider that the said words conveyed active participation in work as opposed to the mere the fact of employment (in which latter case they would have used ‘employed’, not ‘engaged in the employment’, as noted by the member at [34]).
12.    The appellant’s submissions include inappropriate disparagement of the Member, accusing him of ‘twist[ing] the meaning behind the regulation’, thus suggesting wrongful distortion and misrepresentation by the Member of the words in question. In this vein, the appellant has accused the Member of ‘inflating the meaning of the terms of the regulation in order to apply a wider meaning to reg 8B than can be permitted’.
13.    As noted above, the Member’s conclusion involved recognition of the ordinary and grammatical meaning of the words ‘engaged in the employment’. The appellant’s assertion that the Member’s conclusion involves wilful misinterpretation of Regulation 8B is unfounded, and fails to acknowledge the meaning of the words and their purpose in facilitating correct determination of the actual loss of earnings suffered by the worker.
14.    The appellant’s submission at [29] that ‘Before resorting to principles of statutory construction, an anomaly or ambiguity must exist’, fails to appreciate that the primary principle of statutory construction requires interpretation of the words used by the drafters having regard to their ordinary meaning. The Member did so. He did not engage in any exercise purporting to address an anomaly or ambiguity, because the words in question were clear and presented no such challenge.
15.    The appellant’s submission at [31] that the legislation ‘is not entirely beneficial in nature’ is misconceived insofar as Regulation 8B is concerned. Whereas certain provisions of the legislation and the regulations have involved measures to exclude or limit compensation, there can be no sound or reasonable argument that Regulation 8B was intended to facilitate a determination of PIAWE that would penalise a worker for having suffered a prior injury, and that would provide for diminished compensation that did not remotely address the worker’s actual loss of earnings consequent upon a second injury, such loss to be logically determined with reference to remuneration earned prior to the second injury when the worker was engaged in actual work.
16.    The appellant’s submissions fail to engage with drafters’ rationale for introducing the words ‘engaged in the employment’ in Regulation 8B(1). What is the purpose of those words, if not to distinguish, as in the current case, between a period when the worker was engaged in the employment (by doing work for which he was remunerated), and a period, or periods, when not thus engaged? The words direct the reader to the relevant period when the preinjury earning capacity of the worker is confirmed by the work in which he was engaged and the remuneration he accordingly earned when thus engaged. The wording of Regulation 8B, in focusing on the period of actual pre-injury work and remuneration, ensures determination of the true pre-injury earning capacity of the worker, and avoids calculation of a reduced figure that is not related to those actual earnings, and is the arbitrary result of a process of averaging which incorporates periods when the worker was not engaged in any work and was not in receipt of income (thus having no relevance to, and providing no evidence of, his actual earning capacity).
17.    It will be noted that the appellant has simply ignored the Member’s reasoning at [34] which explains how Regulation 8B would have a different effect, in keeping with the interpretation sought be the appellant, if the word ‘employed’ had been adopted instead of ‘engaged in the employment’.
18.    It follows that the Member’s interpretation of Regulation 8B involved no error, and that this ground of appeal is unfounded.”

Consideration

I accept that Stewart in the Court of Appeal was concerned with the proper approach to the construction of reg 8E. However, Stewart was about more than just reg 8E and in some passages, more broadly addressed the adjustment scheme provided by regs 8A–EA. Leeming JA described it in the following terms:
“1. ‘Pre-injury average weekly earnings’ has long been a central element of the regime for workers compensation. Substantially the same notion may be seen in the significance of ‘average weekly earnings during the previous twelve months’ in s 9(1)(a) of the Workers’ Compensation Act 1926 (NSW) and in earlier regimes such as cl 2(d) of para 1 of the Second Schedule of the Workmen’s Compensation Act 1910 (NSW). But there are many reasons why pre-injury average weekly earnings may be an inapt basis to calculate statutory payments: the worker may have been unemployed, or have changed jobs, or been promoted, or been on leave for some of the period throughout which the average is calculated. Hence for more than a century there have been mechanisms authorising adjustments to the calculation of the average. The current regime is found in regs 8A–8EA of the Workers Compensation Regulation 2016. The issue in this appeal turns on reg 8E, a precondition of which is whether the injured worker ‘took a period of unpaid leave’ in the period over which the average would be taken. Did reg 8E apply to the calculation of ‘pre-injury average weekly earnings’ in circumstances where for three months prior to the date of the respondent’s second injury, Mr Stewart was incapacitated and receiving weekly payments under the Act by reason of his first injury?
…
4. Regulations 8B–8E of the Workers Compensation Regulation 2016 (NSW) are reproduced by Stern JA, as is the uncontroversial background. All those regulations operate by way of ‘adjustment’ of the ‘relevant earning period’ for the purposes of the calculation of ‘pre-injury average weekly earnings’, pursuant to Sch 3 cl 2(3) of the Act. There is no dispute that the regulation-making power in that subclause extended to the circumstance where, for the three months prior to the date of a second injury, the worker had been in receipt of workers compensation payments which are to be disregarded in accordance with cl 6(2)(c). The regulation-making power authorises the ‘adjustment’ of the relevant earning period including, relevantly, ‘to take into account any period of unpaid leave or other change in earnings circumstances in the employment’.
…
14. The second consideration is that the various regulations which make adjustments on no view accommodate a worker who suffers two injuries, the first of which is only partially incapacitating (such for example that the worker is in receipt of some wages from the employer but also some payments under the Act), and then suffers a further injury. That tends to confirm the limits on a court’s ability by way of construction to address what are perceived to be gaps in its operation, and the awkwardness of construing a period of unpaid leave to extend to a period when the worker was wholly incapacitated and in receipt of workers compensation payments.
15. The third consideration is that the critical provisions do not have the appearance of a comprehensive scheme. Instead, they are a series of ‘adjustments’, all of which are intended to deal heuristically with the miscellany of factors which may alter the calculation of a worker’s ‘pre-injury average weekly earnings’. Examples include where, within the 52 weeks preceding the injury, the worker was not in continuous employment, or changed his or her position, or did not receive remuneration on a weekly basis, or was on unpaid leave for some of the period. None addresses the circumstance which gives rise to the present appeal, namely, where the worker suffers two incapacitating injuries at two different times. Although in general a construction which results in a coherent scheme should be preferred, it seems to me that the features of the regime outlined above tend to diminish the utility of notions of coherence, and disfavour straining the statutory language so as to accommodate circumstances which are not addressed explicitly.” (emphasis added)
At [147] , Griffiths AJA said the following:
“… although purpose is undoubtedly a relevant consideration in the task of construction, it has limited utility in a case such as this. That is because, although the legislation can accurately be described as ‘beneficial’, it also represents the outcome of a balancing of competing considerations in implementing that purpose. Moreover, it is important to appreciate that one part of the implementation of that purpose is the creation of the regulation-making power to address any anomalies or unfairness in the operation of the primary legislation. This has important ramifications for the Court’s role in legislative construction.” (emphasis added)
The Member, in his decision at reasons [30], [31] and [45], discounted the application of Stewart to this matter for the reasons expressed therein, principally because Stewart was about reg 8E and not regs 8B and 8C which constituted the issues he was called upon to decide. I do not read Stewart as being as limited in application as the Member states. The passages I have set out above go beyond merely construing reg 8E and consider the overall effect of the adjustment scheme. Namely, that the scheme is neither comprehensive nor coherent. And, referring to the scheme in toto, Leeming JA states that none of the regulations deal with the situation where a worker suffers two incapacitating injuries at two different times.[14] This last statement is important when one considers that this is the precise situation in this matter and how the Member dealt with reg 8B (and 8C).
[14] Stewart, [15].
The dispositive passages of the Member’s reasons on reg 8B comprise of the following:
“34. I consider that it is of particular significance that the legislature chose the words ‘engaged in the employment’ rather than merely using the ‘employed’. If reg 8B was to read: ‘not employed from the beginning of the unadjusted earning period’ (sub-clause (1)), or ‘excluding any period before the day on which the worker was first employed in the employment’ (sub-clause (2)), then the [employer’s] submission that there should be no adjustment during the 52 week period because the [worker] remained in continuous employment with the [employer] would be difficult to challenge.
35. However, the use of the term ‘engaged’ indicates an active participation in the actual employment duties of a worker, which for the [worker] in this dispute does not commence until 26 November 2021 when he is able to actually engage in work duties for the [employer] after ceasing to be incapacitated for work due to an earlier and discrete injury. That is the argument pursued by the [worker] and I agree with it.
…
42. The use of the term ‘engaged in the employment’ rather than simply ‘employed’ in reg 8B, and the consideration of the term ‘engaged in employment’ as it appears elsewhere in the 1987 Act, allows me to conclude that the [worker] first engaged in employment with the [employer] in the 52 week period wherein PIAWE is to [be] calculated on 26 November 2021. This results in a determination of PIAWE of $1,748.86.” (emphasis in original)

As is evident, the Member approached reg 8B on the basis that it had application in its terms to the situation in this matter, namely a worker suffering two injuries at different times, each of which rendered the worker incapacitated at different times.
For the following reasons, I consider that the Member’s approach was in error.
Firstly, reg 8B on its face and on a plain reading of the words, does not advert to the factual situation presented in this matter. There is no sanction within the terms of reg 8B permitting the construction that the adjustment provision was directed to “active participation in the actual employment duties of a worker”.[15] This is, with respect, “straining the statutory language so as to accommodate circumstances which are not addressed explicitly.”[16]
[15] Reasons, [35].
[16] Stewart, [15], per Leeming JA.
Secondly, I refer to, but do not repeat, the section of Stewart entitled “Relevant principles of statutory construction”[17] as representing the applicable principles that I will apply with respect to the Member’s approach.
[17] Stewart, [66]–[74], per Stern JA.
Thirdly, for the purposes of reg 8B, “the relevant earning period” has the same meaning as in cl 2(2) of Sch 3 to the 1987 Act which provision appears above.
Clause 3 of Sch 3 of the 1987 Act (above) then references adjustments of this period which can be made by regulation. This is a reference to the Regulation, specifically regs 8B–8EA.
Applying the plain words of these provisions to the facts produces the following result.
The respondent suffered his first injury in May 2021, having been employed by the appellant since 2006. At the point of his injury in May 2021, the “relevant earning period” (as defined) is the 52 weeks immediately preceding May 2021. The respondent worker had been an employee of the appellant for this entire period, indeed he had been employed for a significantly longer period. In terms of reg 8B, he was thus engaged from the beginning of the unadjusted earning period.
However, the respondent had the misfortune to suffer a second injury on 4 April 2022 which injury again incapacitated him for work. In terms of this injury and applying the relevant provisions to that circumstance, the respondent worker was, in accordance with reg 8B(1), engaged in employment at the beginning of the unadjusted earning period, that is at 4 April 2021. There is no dispute that the respondent was not engaged in the employment at this point, being the beginning of the unadjusted earning period. Reg 8B(1) on its face therefore cannot be enlivened to produce an adjustment.
This reasoning applies likewise to reg 8B(2). Excluding any period before the day on which the worker was first engaged in employment does not assist as the worker was first engaged in the employment in 2006.
Reading regs 8B(1) and (2), it is apparent to me that it is directed to the circumstance where a new employee is engaged and suffers injury relatively early on in their employment – that is at some point during the first 52 weeks of employment. It is designed to adjust the period to exclude the pre-employment period if that is partly within the 52-week period pre-injury, hence the use of the words in reg 8B(1) “the beginning of the unadjusted earning period” and in reg 8B(2), “the day on which the worker was first engaged in the employment.”
Fourthly, the Member was bound to follow the terms of the remitter from the Acting President in Sternbeck No 2. Members are not at liberty to ignore the terms of a remitter from a Presidential member.
Fifthly, for the reasons I have set out in this decision, the Member was also bound to follow and apply Stewart. As I have set out from the decision of Leeming JA in Stewart,[18] none of the provisions in the Regulation explicitly address the circumstance present in this case. There was thus no permit to apply the adjustment provisions.
[18] Stewart, [15], at [37] above.
The Member was in error to adjust the relevant earning period on the basis that reg 8B was enlivened.
Ground One has been established.

As to Ground Two

The appellant submits the following:[19]
[19] Appellant’s submissions dated 27 September 2024.
“47. The Member erred in taking into consideration that the time the respondent worker was in receipt of workers compensation benefits and then returned to work resulted in ‘a change of an ongoing nature to the employment arrangement resulting in a financially material change to the earnings of the worker’.
48.    The regulation provides an example of the intention for the application of the provision, being a change from full-time to part-time work.
49.    The appellant employer respectfully submits that it does not encompass the respondent’s worker’s situation.
50.    The respondent worker remained employed as a full time Health and Security Assistant. There was no change in that employment arrangement during the unadjusted period. There was no change to his designation, duties, and pay rates. The nature of the employment arrangement with the appellant employer did not change.
51.    There was no change to the nature of the employment arrangement between the respondent worker and the appellant employer. His employment arrangement was not altered in any respect let alone one of an ongoing nature. Further, there was no change in the employment relationship that resulted ‘in a financially material change to the earnings of the worker’.
52. ‘Earnings’ is defined in Clause 6(1) of Schedule 3 of the 1987 Act. Workers compensation payments are specifically excluded from the definition of ‘income’ and therefore excluded from the definition of ‘earnings’. Any payment of workers compensation benefits would not result in a change in earnings.
53.    The conditions required for the application of reg 8C have not been met. It is not limited to only a change in earnings. There must be a change of an ongoing nature in the employment arrangement that has resulted in a financially material change in the earnings. The Member fell into error when he determined that reg 8C applied in the alternative to reg 8B.
…
55.    The interpretation of the legislation should not go beyond the ‘ordinary and grammatically sense of the statutory words’. This is supported by the comments of the majority in Stewart, which highlighted the importance of giving statutory terms their ordinary meaning and not unduly extending or straining their meaning.”
In reply the respondent submitted the following:[20]
“19. The Member found, as was open to him, and obvious on the evidence, that there ‘was a change of an ongoing nature to the employment arrangement resulting in a financially material change to the earnings of the worker’ when the worker resumed his work duties on 26 November 2021 following a previous work injury and a resultant period of incapacity.
20. The Member referred to and relied upon the Presidential decisions of [Pell] and [Nitchell] as involving ‘circumstances very similar to this dispute’, and as supporting the application of Regulation 8C to the current claim.
21.The appellant’s submissions fail to acknowledge or address either Pell or Nitchell, and the respects in which those decisions confirm the application of Regulation 8C to the circumstances of the worker, as determined by the Member.
22. It follows that the appellant makes out no basis of error with regard to the Member’s interpretation and application of Regulation 8C, and that this ground of appeal, like the first, is unfounded.”
[20] Respondent’s submissions dated 7 November 2024.

Consideration

The Member’s decision on reg 8C is found in the following paragraphs of the reasons:
“44. Deputy President Wood in both Pell and Nitchell determined that there was ‘a change to the ongoing nature to the employment arrangement’ when the worker returned to pre-injury duties and there was ‘a financially material change to the earnings of the worker’ when the worker had an increase in earnings from the lesser rate received in workers compensation payments. Deputy President Wood summarised her decision in Pell at [83] in Nitchell:
‘On appeal, I confirmed the Member’s decision. I considered that the words of reg 8C should be read as they are expressed. Regulation 8C required ‘a change of an ongoing nature to the employment arrangement.’ The ‘employment arrangement’ was not limited to the contractual relationship between the parties and the change was of an ongoing nature because the worker returned to his pre-injury duties in accordance with a return-to work arrangement. The return to pre-injury earnings resulted in a financially material change to the worker’s earnings because he had been, up to that time, in receipt of weekly compensation at a lesser rate than his usual employment earnings.’
45.    The Court of Appeal in Stewart did not consider or comment on the decisions in Pell and Nitchell, nor did the Court engage in a consideration of reg 8C. The decisions of Pell and Nitchell should therefore be followed in this dispute.
46.    In this dispute there was a change in the ongoing nature to the employment arrangement between the [worker] and [employer] when the [worker] resumed his work duties on 26 November 2021 following a previous work injury and a resultant period of incapacity. There was a financially material change to the earnings of the [worker] when he resumed his work duties as health and security assistant on 26 November 2021 and began to receive income commensurate with the duties he had returned to.
47.    I do not accept the submission made by the [employer] that there was no material change in the [worker’s] earnings because workers compensation payments are specifically excluded from the definition of ‘earnings’ and ‘income’. There was a material change to the [worker’s] earnings from 26 November 2021 because he began to be in receipt of earnings by returning to his pre-injury duties with the [employer].
48.    The application of reg 8C of the 2016 Regulation to the circumstances of this dispute also results in a determination of PIAWE of $1,748.86.”
The Member has at reasons [46] found that there was “a change in the ongoing nature to the employment relationship between the [worker] and the [employer] when the [worker] resumed his work duties on 26 November 2021 following a previous work injury and a resultant period of incapacity.” At reasons [47] the Member has found that there was a material change in the worker’s earning when he returned to work on 26 November 2021.
The Member has not identified, in terms, what the asserted change was to the employment relationship, nor what the material change in earnings was due to the changed employment arrangement. The Member appears to state that the asserted change was the worker’s return to full time work on 26 November 2021 and the earnings change from workers compensation back onto his usual wages.[21] I deal with this below.
[21] Reasons, [47].
In the respondent worker’s statement dated 28 November 2022,[22] the respondent describes his first injury in May 2021 which led to shoulder surgery. The respondent then says, “I made a full recovery and returned to work on about 26 November 2021 on full unrestricted duties.”[23] The worker describes while on workers compensation he received 95% of his pre-injury average weekly earnings for 13 weeks, and 80% thereafter.
[22] Application to Resolve a Dispute (ARD), pp 1–4.
[23] ARD, p 2, [9].
The respondent’s evidence, which was not challenged on this point, does not reveal any change to the ongoing nature of the employment arrangement. To the contrary, the statement is silent as to any change and after the respondent returned to work on 26 November 2021, it was on “full unrestricted duties.” The only conclusion one could reasonably draw from this statement is that the respondent made a complete recovery and returned to his full pre-injury duties. It is telling that the respondent does not state, that having returned to work on 26 November 2021, that he suffered any material change in earnings as required by reg 8C. In my opinion, there was no factual basis for the Member’s finding at reasons [46].
I accept that when the respondent was in receipt of workers compensation benefits, he received his statutory entitlements which were less than his pre-injury average weekly earnings. However, this diminution and subsequent return to pre-injury earning levels after 26 November 2021 was due to the operation of the workers compensation legislation rather than as a result of any change in the nature of the employment arrangement as required in reg 8C. When the respondent returned to work, his earnings returned to their pre-injury levels. That is, they increased from the statutory amount of 80%. As stated, this occurred by operation of law.
Indeed, before the Member and on this appeal, the respondent has asserted that there was a change in the employment arrangement as if it were a self-evident fact without actually identifying the change in terms. I do not accept that a return to work after a period of incapacity and the receipt of workers compensation payments is a material change in employment arrangements, which was the effect of the Presidential decisions of Pell and Nitchell which were relied upon by the respondent. Neither decision considered the types of circumstances that constituted an “employment arrangement”, rather both applied the situation as presented as satisfying that circumstance.
I agree with the remarks in Nitchell (at [83]), that an employment arrangement is not limited to the contractual relationship between the parties and indeed it can extend beyond a contract.[24] An arrangement can be an agreement, an understanding or a compact, the legal effect may depend on its context, or it may have no legal effect. But the “employment arrangement”, however constituted, must be an arrangement between the employer and employee concerned. The return to work after a period of receipt of workers compensation has none of the hallmarks of an arrangement inter partes, rather it is the application of the workers compensation statutory scheme. That is, the respondent was paid weekly compensation during his period of incapacity as a consequence of his rights under the workers compensation legislation. His employment agreement (whether written, oral, and/or implied by common law) and any arrangements associated with the employment continued to exist. Once the respondent was fit to return to his duties, he resumed unrestricted full-time duties.
[24] Caltex Oil (Australia) Pty Ltd v Feenan [1980] NSWLR 724, 729–730, per Hutley JA.
There was no evidence in this matter about any “employment arrangement” which constituted an agreement, arrangement, compact or understanding between the appellant and the respondent about the matters the Member found was the employment arrangement at reasons [46]–[47]. These were just events which happened consistent with the respondent’s right to receive workers compensation payments and to return to work when able to do so.
I also would remark that Pell and Nitchell were decided before Stewart and can thus be distinguished accordingly. Both proceeded on the basis that reg 8C could respond in the circumstance of a second injury. I do not consider that I am bound to follow these two earlier Presidential decisions on the basis of comity as was put by Counsel for the respondent.[25]
[25] T 16.5.
There was no relevant change to the employment arrangement, other than the fact the respondent returned to work on 26 November 2021, that was relied on by the respondent.
As stated by Leeming JA in Stewart (at [15]), the regulations do not address the situation where a worker suffers a second injury. Regulation 8C does not in terms deal with this scenario. For the reasons expressed in Stewart, the solution for any perceived unfairness in the application of the Regulation to the facts presented in Stewart and this matter is not to be found in straining the language of the Regulation in order to produce a coherent or fair outcome. The solution, if one is thought to be desirable, lay in a review of the Regulation. I would remark that there has been no change to the Regulation since the decision in Stewart.
The Member was in error in finding that reg 8C was enlivened in this matter so as to require an adjustment be made to the respondent’s relevant earning period.
Ground Two is established.

REDETERMINATION

At the hearing on 2 May 2025, I indicated to the parties that in light of the history of this matter, were I to find error on the Member’s part, I would proceed to redetermine the matter under s 352(6A) of the 1998 Act. I have found error in the Member’s decision and the decision will be revoked.
For the reasons I have expressed above, the respondent is not entitled to have the relevant earning period adjusted under either reg 8B or 8C. There was no controversy in this matter that if there was no adjustment, the respondent’s PIAWE figure would be $807.59. This results in the respondent’s pre-injury average weekly earnings for the injury sustained on 4 April 2022 being determined in the amount of $807.59. I so determine.

DECISION

The Certificate of Determination dated 30 August 2024 is revoked.
On redetermination pursuant to s 352(6A) of the 1998 Act, I determine that the respondent’s pre-injury average weekly earnings for the injury sustained by the respondent on 4 April 2022 is $807.59.

Judge Phillips
PRESIDENT

15 May 2025