The calculation of Normal Weekly Earnings (NWE) is dependent upon the concept of a 'relevant period'. This 'relevant period' is significant because it is the period of employment from which the client's pre-injury earnings are to be sampled and 'averaged' into an NWE.
'Relevant period' is a phrase defined by Subsection 4(1) to be 'the period calculated under Section 9'. Section 9 then says:
9(1) For the purposes of calculating the normal weekly earnings of an employee before an injury, a reference in Section 8 to the relevant period is, subject to this section, a reference to the latest period of 2 weeks before the date of the injury during which the employee was continuously employed by the Commonwealth or a licensed corporation.
This means that for ordinary purposes,
'relevant period' is the two-week period of employment preceding injury
Special circumstances (1) – S9 adjustments to 'relevant period'.
Subsections 9(2), (3) and (4) provide for a number of circumstances where the 2-week period referred to in 9(1) may not provide a fair representation of the client's NWE. These circumstances will be of only infrequent occurrence, and may therefore be summarised briefly as follows:
- 9(2) provides that where the industrial agreement, award, law etc. governing the client's pay rates actually changed that rate during this same period, only the final (i.e. resulting) pay rate should be taken into account.
- 9(3) operates where a pay rate variation occurs at or very near the end of the 'relevant period' and as a result, the operation of 9(2) reduces the NWE to an impractical or unrepresentative amount. In those cases, the delegate shall instead deem the pay variation to have applied from the beginning of the period and calculate the NWE on that basis.
- 9(4) provides that, if for any reason a client was not paid for an interval during the 2 week 'relevant period', that interval without income should be disregarded (i.e. disregarded when calculating average income for NWE purposes).
Special circumstances (2) – S8 adjustments to 'relevant period'.
Subsection 8(4) says:
8(4) Where, because of the shortness of the relevant period, it is impractical to calculate the normal weekly earnings of an employee before an injury under Subsections (1) or (2), the normal weekly earnings of the employee before the date of injury shall be taken to be the normal weekly earnings before that date of another employee performing comparable work, being normal weekly earnings from employment by the Commonwealth or a licensed corporation and calculated under Subsection (1) or (2), as the case requires.
This means that where a 'relevant period' is of insufficient duration to produce a meaningful NWE in a particular case, a delegate may establish NWE by reference to the employer's generic pay scales, i.e. the normal weekly earnings of other employees 'performing comparable work'.
- This method should of course also take account of the average level of allowance paid to similarly employed persons of that classification/rank.
- Note that the strategies specified by Ss9(2), (3) and (4) relate only to changes to pay rates or from gaps in payment during that period. Subsection 8(4) on the other hand operates where the deficiency is due to the period's 'shortness'.
Furthermore, Subsection 8(5) says
8(5) Where because of the shortness of the relevant period, the normal weekly earnings as calculated in relation to the relevant period under Subsection (1) or (2) would not fairly represent the weekly rate at which the employee was being paid in respect of his or her employment before the injury, the normal weekly earnings before the date of the injury shall be calculated in relation to such other period as Comcare considers reasonable for the purpose of arriving at an amount that does fairly represent the weekly rate at which the employee was being so paid.
This subsection might be applied for example, in a case where a reservist had only irregular or fluctuating casual civilian employment from casual employment, of which the ordinary Ss8(1) period (i.e. the 2 weeks before injury) was not typical or not a fair representation. For instance, it may have been that the client was (uncharacteristically) unemployed during that fortnight, or alternatively was unusually busy, i.e. while generally unemployed was as an exception engaged in seasonal work (e.g. fruit picking) during that period. Where an injured employee is a shift worker the relevant period could be extended to cover the full range of shift rotations. This obviously gives a more accurate of an employees NWE over an appropriate period.
Note that S8(5) allows the delegate to calculate the NWE in accordance with whatever period is considered 'reasonable'. This provides delegates with a wide discretion. Obviously no specific guidance can cover all eventualities which may lead to one period rather than another being considered 'reasonable'. However delegates are reminded that the purpose of the NWE is establish a value of the client's pre-injury earnings, so that compensation can be paid for the degree to which this earning power has been lost. The discretion under S8(5) should be used to produce a just and moderate result.