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14.1 What are Normal Weekly Earnings ('NWE')?
Incapacity payments are made on the basis of the client's loss of earned income where that loss is (of course) due to the compensable injury. The SRCA establishes the extent of lost income by reference to his/her 'Normal Weekly Earnings' (NWE).
NWE is determined by reference to formulae and definitions contained by Sections 8 and 9 of the SRCA. Section 8 prescribes how the NWE is to be calculated and Section 9 determines the period of pre-injury employment ('relevant period') from which the NWE is to be averaged.
- Note that the NWE is based upon earnings at the date of injury, and not necessarily when incapacity for work first arises from the injury.
The operation of Sections 8 and 9 is explored in more detail at Chapter 31. However in the most general and most frequently arising case, NWE will be the average amount – including allowances and overtime – that the client was earning in the two weeks prior to the injury.
- Notional, prospective improvements in earning capacity (e.g. likely promotions) are not included in NWE, although the automatic incremental progression normally applicable to trainees, apprentices and officer cadets is taken into account.
The NWE – as adjusted by indexation etc. into the future – is intended to provide a fair representation of what the client could reasonably have expected to earn at any particular time, i.e. would have earned but for the injury. NWE thus provides a significant element – a reference point – for the calculation of the weekly incapacity compensation.
- The basic weekly entitlement under S19 of the SRCA is the difference between the NWE and the weekly amount the client is capable of earning, following the injury. This basic entitlement is then varied according to other formulae in Sections 19, 20, 21 and 21A, i.e. depending on duration of incapacity, hours actually worked and superannuation received. Note that NWE is basic and necessary to all of these calculations of entitlement.
- This method of calculation is outlined in detail at chapter 30.