184.108.40.206 Relevant period | 220.127.116.11 Ordinary hours of work | 18.104.22.168 Ordinary earnings | 22.214.171.124 Base rate of pay | 126.96.36.199 Non-pecuniary benefits can be included in ordinary earnings | 188.8.131.52 Justice Legislation Amendment Act 2020 and PIAWE calculations
- the average of the worker’s ordinary earnings over the relevant period and
- overtime and shift allowance Under the legislation, unless inconsistent with the context or subject-matter — shift allowance means an allowance or loading paid or payable for shift work or working on public holidays, Saturdays or Sundays for the first 26 or 52 weeks of paid or payable weekly payments (earnings enhancement).
The relevant period is the number of weeks used to calculate the worker’s PIAWE and depends on a number of factors, as set out in the following sections. The relevant period begins at the commencement of the period and continues forward until the date of injury (i.e. the relevant period should be calculated forwards from the commencement of the relevant period, not backwards from the date of injury).
Any full week where the worker did not work and was on unpaid leave or was on paid leave at a rate less than the base rate of pay is excluded. If the worker is on leave for only part of a week, this is not excluded.
To calculate the relevant period for earnings enhancement (overtime and shift), only those weeks where the worker has worked or was on paid annual leave at the base rate of pay are included.
If a worker has been on unpaid leave for more than a period of a half (0.5) day, this week is to be excluded as a full week from the relevant period.
The week in which the worker suffers their claimed injury may be considered a partial week or a full week. If the worker’s ordinary earnings are calculated on the basis of actual earnings rather than a base rate of pay and ordinary hours worked, the number of weeks should not be rounded up in taking the average of the worker’s weekly earnings and should be calculated including the fraction of the week.
Employed for 52 weeks before injury
If the worker was continuously employed by the same employer for 52 weeks immediately before the injury, the relevant period is 52 weeks.
Employed for less than 52 weeks before injury
If the worker was continuously employed by the same employer for less than 52 weeks immediately before the injury, the relevant period is the period they have been continuously employed with that employer.
Employed for less than four weeks before injury
If the worker was employed by the same employer for less than four weeks immediately before the injury, PIAWE rate may be based on what the worker could reasonably have been expected to have earned but for the injury, in the 52 weeks after the injury.
Not employed as a full-time worker when injured but was predominantly full-time 78 weeks before injury
If the worker was not a full-time Full-time worker means a worker who is employed for at least the normal number of hours fixed in any industrial award applicable to the worker or if there is no applicable award the prescribed number of hours worker when injured but was seeking full-time employment when injured and was predominantly a full-time worker for 78 weeks immediately before the injury, their PIAWE is based on the average weekly hours (excluding any week during which the worker did not actually work and was not on paid leave) whilst employed in any employment during the 78 weeks.
Promotions or different positions
If the claim for weekly payments is first received by the Agent on or after 5 April 2010 and the worker’s ordinary earnings increased during the 52 weeks immediately before the injury because the worker was (other than on a temporary basis):
- promoted or
- appointed to a different position
any period before the promotion or appointment is disregarded to calculate the worker’s PIAWE.
If the promotion or appointment was confirmed in writing but at the time of injury, the worker had not started in the new role calculate PIAWE as if the promotion or new appointment took effect 52 weeks before the injury.
Note: this does not include pay increases due to CPI Consumer Price Index.
Voluntary alteration of hours or work performed
A worker may voluntarily alter the:
- number of hours they work or
- nature of work they perform which results in a change in their ordinary earnings.
If the alteration is for a reason other than the incapacity which resulted from the claimed injury, the period before the alteration is disregarded in the calculation of the worker’s PIAWE.
Example If, six months before a worker suffered an injury the worker voluntarily chose to work part time, only the six months when the worker was working reduced hours is used to determine PIAWE.
Purchased leave arrangements (48/52)
Some employers allow their employees to purchase extra leave. These arrangements are usually negotiated on an annual basis.
Example The worker purchases an extra two weeks’ leave so they get six weeks’ annual leave rather than the standard four weeks. This has the effect of reducing their annual salary as part of their salary is 'banked' to pay for the extra leave. To calculate PIAWE for a worker who is participating in a purchased leave arrangement during the relevant period, the salary before extra leave payment is made is used to calculate PIAWE.
No impact on relevant period calculation
A purchased leave arrangement does not impact on the relevant period for PIAWE. This is because whilst the worker has less salary due to the offset to purchase more leave, there is no voluntary alteration of the worker’s ordinary hours of work per week (eg the worker continues to work 38 hours per week as before) and no reduction in the worker’s ordinary earnings per week (eg the worker’s hourly rate is the same).
If in the relevant period, the 52 weeks immediately before the worker's injury would otherwise include a period from 1 March 2020 to 31 December 2020 (the prescribed period) and the worker's earnings during the prescribed period are reduced for a COVID-19 reason*, this period is to be excluded from the relevant period.
*COVID-19 reason means the worker’s reduction of earnings was a consequence of one or more of the following occurring during the prescribed period because of the COVID-19 pandemic:
the ordinary hours of work of the worker were reduced
the earnings of the worker were reduced
the nature of the work performed by the worker is altered
In the circumstance where the employer does not have adequate or accurate records of payroll or payments made to a worker, or in the case of a worker being paid cash in hand, the Agent should refer to the relevant industrial award or enterprise bargaining agreement to confirm the worker’s correct pay rate and determine if a worker is entitled to a higher minimum wage than the wage they have been paid. If the worker is entitled to a higher minimum wage under the applicable industrial award or enterprise bargaining agreement, this wage should be used to determine a worker’s PIAWE.
If an industrial award applies
Where an industrial award applies to the worker, the ordinary hours of work are the number of work hours fixed by the worker’s employment contract or industrial agreement or the worker's average weekly hours during the relevant period (excluding any week during which the worker did not actually work and was not on paid leave).
If no industrial award applies
If no industrial award applies the worker’s ordinary hours of work are the ordinary hours of work agreed between the worker and the employer or the average weekly hours during the relevant period (excluding any week during which the worker did not actually work and was not on paid leave).
A worker’s ordinary earnings may include:
- their base rate of pay (including any casual loadings for claims made from 26 September 2017)
For claims made prior to this date, casual loadings are to be excluded from the calculation.
- piece rates including tally bonuses
- the monetary value of certain non-pecuniary benefits (residential accommodation, use of a motor vehicle, health insurance, education fees)
- other amounts that the worker received in lieu of salary the employer was required to pay to a third party under their employment contract (eg where the worker enters into a superannuation salary sacrifice arrangement with their employer).
If a worker does not have a base rate of pay then their ordinary earnings comprises:
- their actual rate of pay including commissions, piece rates and tally bonuses
- the monetary value of certain non-pecuniary benefits (residential accommodation, use of a motor vehicle, health insurance, education fees)
- other amounts that the worker received in lieu of salary that under their employment contract that the employer was required to deal with on behalf of the worker (eg where the worker enters into a superannuation salary sacrifice arrangement with their employer).
Commissions & piece rates
Payments for commissions and piece rates that the worker received in the relevant period are included in the worker’s ordinary earnings.
Tally bonus payments are taken to be piece rates.
If a worker’s base rate of pay is used to calculate their ordinary earnings, commissions, piece rates and tally bonuses are included in the calculation of the worker’s ordinary earnings as separate amounts.
If a worker’s actual rate of pay is used to calculate ordinary earnings then commissions, piece rates and tally bonuses are included in the actual rate of pay.
Overtime & shift allowances
Overtime and shift allowances are not included in the worker’s ordinary earnings but are included separately in the calculation of the worker’s PIAWE.
Base rate of pay means the rate paid to a worker for their ordinary hours of work. It is used to calculate their ordinary earnings.
For most workers their base rate of pay is in their employment contract or industrial agreement. If a worker does not have a set base rate of pay or is paid at a higher rate than that prescribed by the applicable industrial award, their actual rate of pay is used.
Base rate of pay does not include:
- incentives based payments or bonuses
- loadings (except casual loadings for claims made from 26 September 2017)
- monetary allowances
- piece rates or commissions
- overtime or shift allowances
- any other amount that is separately identifiable.
Base rate of pay & casual loadings
Casual loadings are included in a worker's base rate of pay for claims made from 26 September 2017.
Non-fixed hour employees
Where an injured worker does not have an agreement in place to work a minimum amount of hours, they could be considered a non-fixed hour employee.
Some non-fixed hour employees will be paid at time increments (e.g. time and a half and/or double time). These amounts may appear as overtime on payslips however are not to be treated as overtime for the purposes of calculating PIAWE. The ordinary hourly rate is to be separated and calculated as base rate of pay and the remaining component is to be treated as shift allowance.
Example The worker is a casual supermarket employee, with no contracted hours, and could be rostered to work on weekday and/or weekends. Weekends are paid at time and a half and double time (this must be broken down into ordinary hours and shift allowance).
Ordinary hourly rate - $20
Ordinary rate hours worked – 15
Time and a half hours worked – 10
Double time hours worked – 5
Total hours worked = 30 hours
To calculate base rate of pay:
15 x 20 = $300
10 x 20 = $200
5 x 20 = $100
Base rate of pay = $600
To calculate shift alowance:
10 x 10 = $100
5 x 20 = $100
Shift allowance = $200
Incentive based payments & bonuses
Incentive based payments and bonuses are not included in a worker’s base rate of pay. These payments are therefore excluded from the worker’s ordinary earnings to calculate PIAWE. A worker's annual performance bonus is not included in their base rate of pay this includes a Top of Grade or Value Range Payment as outlined in clause 29.8 of the Victorian Public Service Enterprise Agreement 2020.
Some workers may be entitled to monetary allowances in addition to their base rate of pay for:
- reimbursements for expenses incurred in the course of employment
- responsibilities or skills not taken in account in their base rate of pay and
- the performance of particular tasks or work in particular conditions or locations.
Monetary allowances are excluded from the worker’s base rate of pay and therefore are not included in the calculation of PIAWE. However, under the Fair Work Act 2009 (Cth) an industry award may specify that certain types of payments form part of a worker’s ordinary rate of pay. These payments need to be assessed on their merits to determine if they form part of a worker’s base rate of pay.
Monetary allowances are not included in a worker’s base rate of pay for PIAWE purposes if the payment is for an amount paid to assist a worker to perform special tasks, work in certain locations, use a special skill or pay for work-related An injury/disease is work related if it arose out of or in the course of employment and the scope of employment. expenses. However, if the allowance is for actual work performed, it is included in a worker's base rate of pay.
Examples of allowances that would form part of a worker’s base rate of pay because they are paid for actual work performed by the worker include:
- leading hand allowance (common in the manufacturing industry)
- lift industry allowance (building and construction industry)
- electricians’ licence allowance (building and construction industry)
- higher duties allowance.
Examples of allowances that do not form part of a worker’s base rate of pay include:
- tool allowances
- height allowances
- laundry, travel and meal allowances
mobility payment (as per clause 16.1 of the Victorian Public Service Enterprise Agreement 2020).
A worker's remuneration package may include items which are provided as a non-pecuniary benefit (NPB Non-pecuniary Benefit). A NPB is a benefit that a worker receives as ‘payment in kind’ rather than as a monetary amount.
To calculate a worker’s PIAWE may, where applicable, include the monetary value of certain NPBs. This ensures that the calculation of the worker’s PIAWE accurately reflects the total value of their remuneration package, whether it is paid as a monetary amount or in kind.
The NPB items and services that can be included in PIAWE are:
- residential accommodation and utilities
- use of a motor vehicle
- private health insurance
- education fees.
The monetary value of the NPB is included in the worker’s ordinary earnings. The calculation of the monetary amount of the NPB in the worker’s ordinary earnings depends on the type of NPB.
Salary redirected to a third party
The worker’s ordinary earnings can also include any other amount that is paid to the worker for the performance of work that the worker directs the employer to pay to a third party. To qualify, the payment must be made by the employer on behalf of the worker under the worker’s terms of employment and in accordance with the worker’s instructions.
For example A worker may instruct the employer to make up voluntary payments to a superannuation fund under a salary sacrifice arrangement.
The monetary value of the amount paid is included in the worker’s ordinary earnings.
The Victorian Government introduced the Justice Legislation Amendment (Supporting Victims and Other Matters) Act 2020 (“JLA Act”) on 17 November 2020 to provide vulnerable workers with additional assistance.
The JLA Act amends the WIRC and AC Acts to exclude the period between 1 March 2020 and 31 December 2020 from the relevant period for the purposes of PIAWE calculation, if a worker’s earnings were reduced due to COVID-19
This includes all earnings, including enhanced earnings like overtime and shift allowance.
This ensures that the PIAWE calculation is a fair reflection of the worker’s PIAWE ensuring the worker is not financially disadvantaged for the claim duration.
Claire works in a café.
On 1 May 2020 her weekly hours were reduced from 30h to 5h due to COVID.
Her wage was reduced from $750 to $125 due to COVID-19.
She was injured at work on 1 August 2020.
The JobKeeper payment meant that Claire’s earnings were not reduced for this period – however JobKeeper payments unrelated to work performed are excluded from earnings for the purposes of calculating workers’ compensation entitlements.
Previous PIAWE calculation:
Income for relevant period of 52 weeks = $750*40 weeks + $125*12 weeks = $31,500
PIAWE = 31,000/52 = $606.
PIAWE calculation with legislative change:
Income for relevant period of 40 weeks = $750*40 =$30,000
PIAWE = $30,000/40 = $750
Therefore, with this legislative change, the worker’s PIAWE is not reduced to $606 due to COVID, but remains at $750.