Legal Directions

As we are already witnessing, widespread job losses across a range of sectors are a major consequence of the COVID-19 pandemic.

It will undoubtedly be the case that some of those now job-detached workers will have been stood down while in receipt of weekly compensation while recovering at work.

If such workers suddenly find themselves out of work altogether, are they entitled to an increase in those payments of weekly compensation?

The answer is not as simple as may appear at first instance, but we think a proper application of the legislation provides there should be no change in the weekly payment, provided the worker was engaged in ‘suitable employment’ (as distinct from performing ‘suitable duties’) at the time the worker was stood down and a work capacity decision (WCD) had been made at that time.

There is an important distinction between genuine suitable employment and suitable duties provided by an employer to comply with its return to work obligations.

On that analysis, the following factual scenarios summarises the position:

  • Where a worker is performing ‘suitable duties’ (but is not engaged in ‘suitable employment’) which are removed, the worker is entitled to weekly compensation on the basis that his/her ‘current weekly earnings’ are ‘nil’ until a WCD is made;
  • Where a worker is performing ‘suitable employment’ at the time of being stood down and a WCD has been made, the entitlement to weekly compensation is calculated in accordance with the existing WCD (i.e. no change in compensation payments);
  • Where a worker is performing ‘suitable employment’ at the time he/she is stood down and no WCD decision has been made, a WCD will be required in order to determine the worker’s capacity to earn in suitable employment and the subsequent weekly compensation entitlement. The insurer must provide three months’ notice before reducing or discontinuing the weekly compensation payment pursuant to a WCD.

We consider the following step-by-step analysis of the Workers Compensation Act 1987 (NSW) (the ‘1987 Act’) to be appropriate.

If total or partial incapacity for work results from an injury, section 33 of the 1987 Act creates an entitlement to weekly compensation payable by the employer to the injured worker.

The extent of that entitlement is determined in accordance with sections 34 to 38A and by reference to the pre-injury average weekly earnings (PIAWE) and the ‘current weekly earnings’.

The PIAWE is set at the outset of the claim, and so does not directly factor into this issue.

A worker’s ‘current weekly earnings’ are defined in Schedule 3 to the 1987 Act as the greater of:

  • The worker’s actual gross earnings; or
  • What the worker is able to earn in suitable employment.

The definition of ‘suitable employment’ in section 32A prescribes that regard is to be had to the nature of the incapacity, the worker’s age, education, skills and work experience, any return to work plan, any occupational rehabilitation services or any Guidelines.

Critically though, and relevant to the question at hand, no regard is to be had as to whether the work or the employment is available.

In any case where an employer is unable to provide suitable duties or suitable employment, including because of pandemic related shut-downs, the worker’s actual earnings will be nil but the ability to earn in suitable employment, if assessed in accordance with a proper WCD which is in effect at the time, should be subtracted from the PIAWE.

For practical purposes, assessment of the worker’s actual income (supported by a WCD which has been carried out in accordance with the legislation prior to being stood down) may well be the best measure of the worker’s ability to earn in suitable employment, but only if the duties reflect an actual role and not some artificial position created to accommodate the worker’s medical restrictions.

In those cases, where the worker was not employed in genuine suitable employment and a WCD has not already been made, it would be necessary to make an evidence-based assessment of the worker’s ability to earn pursuant to a WCD which complies with the legislation.

Further information / assistance regarding the issues raised in this article is available from the authors, Robert McKenna – Partner, Brad Stringer – Partner or your usual contact at Moray & Agnew.

(This article was first published on 31 March 2020 and updated on 23 April 2020 to clarify the operation of the provisions discussed.)

The above content is commentary rather than legal advice and was prepared on the basis of applicable legislation, government programs and initiatives that were in place as of the date of publication. Given the ongoing evolution of both the COVID-19 pandemic and frequent consequential changes to the various laws and programs within all Australian states and territories, readers should seek legal advice on the current situation as applicable to their specific circumstances before taking any action in relation to the above.


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