*The contents in this blog relates to legislation in Western Australia.
Schedule 1 Clause 11(2) of the Workers’ Compensation and Injury Management Act 1981 WA (“The Act”) sets the ground rules for calculating the Weekly Workers’ Compensation Rate. The insurer will determine the injured worker’s rate of weekly pay once they have accepted liability for the workers’ compensation claim.
The Act’s intention is to ensure that an injured employee’s weekly workers’ compensation wages should equate as near as possible to an amount that reflects what the injured employee was actually earning prior to sustaining the injury.
The following are the main points for calculating the weekly compensation rate of pay:
- Those workers who are subjected to an industrial award that covers the specific industry, in which the worker is employed, dictates the base rate the worker is entitled to. For example, if the industrial award sets the rate at $30 gross per hour for a 40 hour week, then the base rate is $1,200. However, the base rate in many industrial awards is set as the minimal rate. As such, if the workers base rate prior to injury was say $40 gross per hour over a 40 hour week, then the base rate is $1,600 gross per week. As such it’s important to review the workers’ pay slips to determine what their base rate was paid per week over the period of 52 weeks prior to injury. As such if your base rate per week was $1,600 gross prior to injury, then this is the approximate weekly workers’ compensation rate that should be set once liability is accepted for the worker’s claim. The base rate is not to be averaged out over the course of 52 weeks and in reality, the base rate should remain unchanged unless the worker has been promoted and/or received a pay increase.
- On top of the base rate, a worker is also entitled to claim any overtime, bonuses or allowances that are paid on a regular basis to the worker. The allowances are averaged out by taking 13 weeks’ worth of payslips prior to the date of injury and adding all allowances together, then dividing the amount by 13. That amount is then added on top of the base rate, as such if your allowances average out to $350 gross per week, then this amount is added to the base rate of $1,600. As such for the first 13 weeks’ the worker should be in receipt of $1,950 gross per week. If the employee in the 13 weeks’ prior to injury was on holiday leave or other type of leave, say for 2 weeks, then we add 13 weeks of allowances as showing in the payslips prior to date of injury, but divide it by 11 weeks only, not 13 weeks’. In order to determine what is considered a regular allowance, we review the employees 52 weeks’ worth of payslips prior to the date of injury.
- Further, after the first 13 weeks’ the weekly rate should not be reduced to 85% at all. For an industrial award worker those allowances which are “unusual” or “one off” in nature are simply removed from the calculation. The worker is still entitled to receive the same base rate of $1,600 gross plus the average of the regular allowances worked out over the period of 13 weeks’ prior to injury, minus any allowances which are “unusual” or “one off”. For example, a $50 meal allowance while on a business trip which is otherwise unusual for the workers’ line of work would be deducted from the average 13 week’s allowance of $350 gross per week after the 13th week on workers compensation wages. As such, the worker would be entitled to receive the base rate of $1,600 gross per week plus $300 gross per week, a total of $1,900 gross per week 14th week onwards while in receipt of workers’ compensation wages.
- The rate of pay is set out by the insurer in the correspondence to the worker titled Form 3A confirming acceptance of liability for the workers’ compensation claim.
- It is also important to know that a worker in receipt of weekly compensation wages is not entitled to accrue superannuation, holiday, sick and/or long service leave, unless the industrial award or the specific employment contract stipulates the employer will continue to honour these payments. In addition, Schedule II of the Act sets the maximum prescribed weekly compensation rate of pay which currently is $2,645.90 gross per week. This rate of pay will be increase as of 1 July 2021 to $2,772 gross.
The above is a general overview of the calculation of weekly workers’ compensation rate. In reality, the law is more complex. If you believe you have been incorrectly paid or you see a reduction of your weekly compensation rate by more than $50 after the first 13th weeks, we strongly suggest you consult with a Solicitor to determine the correct rate of weekly compensation wages you are entitled too.