Sternbeck v State of New South Wales (Hunter New England Local Health District)
[2024] NSWPIC 483
•30 August 2024
| CERTIFICATE OF DETERMINATION OF MEMBER | |
| CITATION: | Sternbeck v State of New South Wales (Hunter New England Local Health District) [2024] NSWPIC 483 |
| APPLICANT: | Michael David Sternbeck |
| RESPONDENT: | State of New South Wales (Hunter New England Local Health District) |
| MEMBER: | John Isaksen |
| DATE OF DECISION: | 30 August 2024 |
| CATCHWORDS: | WORKERS COMPENSATION - Dispute as to the calculation of the worker’s pre-injury average weekly earnings (PIAWE); worker was in receipt of weekly payments of compensation for a previous work injury during the relevant earning period; worker relies upon regulations 8B and/or 8C of the Workers Compensation Regulation 2016; Secretary, Department of Communities and Justice v Pell and Secretary, Department of Communities and Justice v Nitchell referred to; Held – the worker was not engaged in the employment with the respondent for part of the relevant earning period; there was a financially material change to the earnings of the worker in the relevant earning period; the relevant earning period for the calculation of PIAWE is adjusted; PIAWE determined accordingly. |
| DETERMINATIONS MADE: | The Commission determines: 1. The relevant earning period for the calculation of the applicant’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 applicant’s pre-injury average weekly earnings is adjusted by the application of Regulation 8C of the Workers Compensation Regulation 2016. 3. The applicant’s pre-injury average weekly earnings for the injury sustained by the applicant on 4 April 2022 is determined to be $1,748.86. |
STATEMENT OF REASONS
BACKGROUND
The applicant in these proceedings, Michael Sternbeck, sustained an injury to his left hand and wrist on 4 April 2022 while employed as a health and security assistant with the Hunter New England Local Health District at John Hunter Hospital.
The respondent admits liability for this injury. The applicant claims weekly payments of compensation from 4 April 2022 to 7 March 2023 on the basis of having no current work capacity.
The applicant had previously sustained an injury to his right shoulder in the course of his employment with the respondent and had received weekly payments of compensation for that compensable injury between May 2021 and 25 November 2021.
The respondent calculated the applicant’s pre-injury average weekly earnings (PIAWE) at $807.59 for the payment of weekly benefits of compensation for the injury that was sustained on 4 April 2022. The payments of weekly benefits of compensation in respect of the earlier injury to the right shoulder were not included in the calculation of PIAWE by the respondent for the injury sustained on 4 April 2022. The PIAWE was calculated as if the applicant received no income during the period which he received weekly payments of compensation for the early injury to the right shoulder.
The issue before the Personal Injury Commission (Commission) has been the calculation of the applicant’s PIAWE. The applicant contends that the period during which the applicant received weekly payments of compensation for the first injury (May 2021 to
25 November 2022) should not be included in the calculation of PIAWE for the injury sustained on 4 April 2022. The applicant calculates his PIAWE on that basis to be $1,748.86.This matter was listed for preliminary conference before Member Garner on 22 March 2023. The Application to Resolve a Dispute (ARD) was amended at that conference for the claim of weekly payments of compensation to be restricted to a period from 4 April 2022 to
7 March 2023. A Direction was made by Member Garner for a timetable for the parties to file written submissions on “the issue of calculation of PIAWE”.Member Garner provided a written decision on 1 May 2023 which included a determination that PIAWE is to be $1,748.86.
That decision of Member Garner was then the subject of an appeal by the respondent. Acting President Snell delivered a decision on 25 June 2024 in State of New South Wales (Hunter New England Local Health District) v Sternbeck [2024] NSWPICPD 38 (Sternbeck)).
Acting President Snell followed the majority decision of the Court of Appeal in Secretary, Department of Communities and Justice [2024] NSWCA 59 (Stewart) which found that absence from work while receiving workers compensation benefits does not constitute ‘unpaid leave’ as it appears in cl 2(3)(a) of Sch 3 of the Workers Compensation Act 1987 (the 1987 Act) and in reg 8E of the Workers Compensation Regulation 2016 (the 2016 Regulation). AJA Griffiths said in Stewart at [137]:
“…in my respectful view, the term ‘leave’ does not cover the situation where a worker is absent from employment due to compensable injury in the ordinary sense of that term.”
Acting President Snell said in Sternbeck at [47]:
“I accept the appellant’s submission that the calculation of PIAWE should not be adjusted to exclude any part of the relevant earning 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.”
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 respondent’s pre-injury average weekly earnings (PIAWE) consistent with these reasons.”
This matter was listed for a further conference on 4 July 2024. Mr Tanner appeared for the applicant and requested that the applicant be heard on his claim by way of an oral hearing or written submissions. Mr Tanner submitted that the decision in Stewart, which was followed by AP Snell in Sternbeck, confined itself to reg 8E.
Ms Malone on behalf of the respondent did not oppose that application. A timetable was made for written submissions as follows:
(a) the applicant to file and serve written submissions in support of his claim for weekly payments of compensation by 25 July 2024;
(b) the respondent to file and serve written submissions in reply by 8 August 2024, and
(c) the applicant to file and serve any written submissions in response to the respondent’s submissions by 15 August 2024.
ISSUES FOR DETERMINATION
The parties agree that the following issue remains in dispute:
(a) the calculation of the applicant’s PIAWE (Sch 3 of the 1987 Act and regs 8B and 8C of the 2016 Regulation).
EVIDENCE
Documentary evidence
The following documents were in evidence before the Commission and considered in making this determination:
(a) ARD and attached documents;
(b) Reply and attached documents;
(c) Written submissions filed by the applicant on 19 April 2023, 25 July 2024 and
19 August 2014;(d) written submissions filed by the respondent on 5 April 2023 and 8 August 2024;
(e) Certificate of Determination of the Commission dated 1 May 2023, and
(f) Determination of Appeal Against Decision of the Commission Constituted by a Member dated 25 June 2024.
RELEVANT LEGISLATION
Schedule 3, cl 2 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.”
Schedule 3, cl 6 of the 1987 Act provides:
“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.”
Clause 8B of the Regulations 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.”
Clause 8C of the Regulations 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.”
SUBMISSIONS
The applicant’s submissions
The applicant submits that a review of regs 8B to 8G of the 2016 Regulation indicates that the intention of the legislature was to ensure the calculation of pre-injury earnings focuses on the period in which the worker is working to their true or uninjured capacity.
In regard to reg 8B, the applicant submits that he was “not engaged in the employment from the beginning of the unadjusted earning period” because he was suffering the incapacitating effects of an earlier injury which prevented such engagement. The applicant was only able to become “engaged” after regaining his capacity and being able to resume work and being in receipt of earnings. The applicant “first engaged in the employment” on 26 November 2021, and the calculation of PIAWE should be from that date until 4 April 2022.
The applicant submits that the intention of the legislature was to ensure that the relevant period for the calculation of PIAWE is to be restricted to the period when the worker actually worked and was paid in respect of such work.
In regard to reg 8C, the applicant submits that the obvious “change of an ongoing nature to the employment arrangement resulting in a financially material change to the earnings of the worker” is the change from having no incapacity and no entitlement to income to being able to work with effect from 26 November 2021. From the moment the applicant resumed work from his first injury there was an ongoing arrangement whereby the respondent became bound to accept the applicant’s tender for services, and the applicant then became entitled to be remunerated for his work.
The applicant refers to s 3 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act) which includes a provision of “income support during incapacity” to workers who have suffered compensable injuries, and he submits that the respondent has provided no logical explanation as to why the legislative scheme would provide for a worker who suffered successive injuries to receive less income support than a worker who has suffered a single injury.
The respondent’s submissions
The respondent submits that the decision in Stewart unanimously dismissed a notice of contention which attempted to advance the existence of a general discretion to alter the period during which PIAWE is calculated under Sch 3 of the 1987 Act.
The majority in Stewart highlighted the importance of giving statutory terms, in that case the term ‘unpaid leave’, their ordinary meaning and not unduly extending or straining the meaning. The respondent submits that to apply the terms ‘change of an ongoing nature to the employment arrangement’ (reg 8C) or ‘continuous employment’ (reg 8B) to the circumstances of a worker resuming work after a period of work related incapacity, with no change to or break from their employment arrangement, is unduly extending the meaning of those provisions.
In regard to reg 8B, the respondent submits that the applicant’s payslips reveal that nothing about the applicant’s employment with the respondent changed while he was in receipt of workers compensation payments or when he returned to work and was in receipt of earnings. The applicant remained in continuous employment with the respondent as a health and security assistant.
In regard to reg 8C, the respondent submits that there are two conditions to be met by the applicant, but he does not satisfy either of those conditions. Firstly, there must be a ‘change of an ongoing nature to the employment arrangement’. The respondent submits that the applicant’s return to work on 26 November 2021 did not constitute such a change because the applicant simply resumed work under the arrangement that had been in place since he commenced employment as a health and security assistant in 2009.
Secondly, the applicant had no earnings during his period of incapacity because workers compensation payments are specifically excluded from the definition of ‘income’ (which in turn defines ‘earnings’) in cl 6 of Sch 3 of the 1987 Act. The resumption of normal duties therefore could not have resulted in a material change to the applicant’s earnings.
FINDINGS AND REASONS
An order made by DP Snell in Sternbeck was that the applicant’s PIAWE be determined consistent with the reasons set out in the appeal decision. That amounts to $807.59, which is the weekly average of the applicant’s gross pre-injury earnings in the 52 weeks prior to the injury he sustained on 4 April 2022.
However, the initial decision by the Member in this dispute did not fully consider the application of reg 8B and reg 8C. The decision in Sternbeck followed the majority of the Court of Appeal in Stewart, which primarily addressed the application of ‘unpaid leave’ in cl 2 (3)(a) of Sch 3 of the 1987 Act and reg 8E of the 2016 Regulation.
The respondent has not argued that the applicant is now estopped from seeking any benefit which he might obtain pursuant to reg 8B or reg 8C and has made submissions which addresses those two regulations.
Regulation 8B
I was not directed to any decisions regarding the application of reg 8B of the 2016 Regulation in the submissions from the parties. There has been a recent decision of Wilson v Ascott Sales Integration Pty Ltd [2024] NSWPICPD 42 (Wilson), which involved reg 8B, but that decision did not involve a consideration of the term ‘engaged in the employment’, which is at the centre of the submissions in this dispute.
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 respondent’s submission that there should be no adjustment during the 52 week period because the applicant remained in continuous employment with the respondent would be difficult to challenge.
However, the use of the term ‘engaged’ indicates an active participation in the actual employment duties of a worker, which for the applicant in this dispute does not commence until 26 November 2021 when he is able to actually engage in work duties for the respondent after ceasing to be incapacitated for work due to an earlier and discrete injury. That is the argument pursued by the applicant and I agree with it.
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.
Section 19 (1) of the 1987 Act provides:
“(1) If a worker, during a time when the worker is engaged in employment of a kind prescribed by the regulations as an employment to which this subsection applies, contracts a disease prescribed by the regulations as a disease that is related to employment of that kind, then for the purposes of this Act, unless the contrary is established--
(a) the disease shall be deemed to have been contracted by the worker in the course of the employment in which the worker was so engaged, and
(b) that employment shall be deemed to have been a substantial contributing factor to the disease.”
Column 2 of Sch 1 of the 2016 Regulation then lists actual work tasks such as the manufacture of lead compounds or the handling of mercury ore, which, if engaged in by a worker, deems an injury to have been sustained in the course of employment if the worker contracts a particular disease set out in column 1. The emphasis in s 19 and the accompanying regulations is therefore on actual engagement in certain prescribed work duties rather than merely being employed in an industry where those duties might occur.
Section 19A (1) of the 1987 Act allows for a presumption for certain cancers to be contracted in the course of employment of an eligible firefighter. Sections 19A (2) and (3) provide:
“(2) A worker is an
‘eligible firefighter’ if the worker—(a) has, at any time, been engaged in firefighting employment, and
(b) has contracted a disease that is a cancer of a kind specified in Schedule 4.
(3) A worker has been engaged in
‘firefighting employment’ if—(a) the worker has, at any time, been employed by any person, body or agency (or former body or agency) prescribed for the purposes of this section by the regulations, and
(b) in the course of that employment, the worker has performed firefighting activities.”
The engagement in firefighting employment is contingent upon a firefighter performing firefighting activities, and not merely being employed as a firefighter.
Section 19B of the 1987 Act allows for a presumption in favour of a worker contracting COVID-19 in the course of employment where a worker is engaged in certain prescribed employment such as the health care sector or educational institutions. However, one means of rebutting that presumption is for an employer to prove that the worker was not actually working during a period when the disease could have been contracted. An interrogation of the actual work undertaken or engaged in by the worker is then required, and merely being employed in certain prescribed employment may not be sufficient for a worker to obtain the benefit of this section of the 1987 Act.
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 applicant first engaged in employment with the respondent in the 52 week period wherein PIAWE is to calculated on 26 November 2021. This results in a determination of PIAWE of $1,748.86.
Regulation 8C
The Presidential decisions of Secretary, Department of Communities and Justice v Pell [2023] NSWPICPD 19 (Pell) and Secretary, Department of Communities and Justice v Nitchell [2023] NSWPICPD 36 (Nitchell) involved the application of reg 8C in circumstances very similar to this dispute, being where a worker had been totally or partially incapacitated as a result of an earlier work injury and received weekly payments of compensation for part of the 52 week period for the calculation of PIAWE.
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.”
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.
In this dispute there was a change in the ongoing nature to the employment arrangement between the applicant and respondent when the applicant 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 applicant 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.I do not accept the submission made by the respondent that there was no material change in the applicant’s earnings because workers compensation payments are specifically excluded from the definition of ‘earnings’ and ‘income’. There was a material change to the applicant’s earnings from 26 November 2021 because he began to be in receipt of earnings by returning to his pre-injury duties with the respondent.
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.
Conclusion
The application both reg 8B and 8C of the 2016 Regulation to the circumstances of this dispute allows for the relevant earning period for the calculation of the applicant’s PIAWE to be adjusted and to be determined to be $1,748.86.
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