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Findings and recommendations on merit review 001/14

Merit Review Service decision reference: 001/14

Date of review: September 2014

Findings on review

The following are findings made by the WorkCover Authority of New South Wales (the Authority) on review and are to be the basis for the Insurer’s work capacity decision.

  • The worker has a present inability arising from an injury such that the worker is not able to return to the worker’s pre-injury employment.
  • The worker is able to, and has, returned to work in suitable employment.
  • The worker has current work capacity.
  • The worker is able to earn $843.20 per week in suitable employment.

Recommendations based on findings

The following recommendations made by the Authority are binding on the Insurer and must be given effect to by the Insurer in accordance with section 44(3)(g) of the Workers Compensation Act 1987 Act (the 1987 Act).

  • The worker’s current weekly earnings are to be determined by the Insurer on a week to week basis.
  • In accordance with section 37(2) of the 1987 Act, the worker is entitled to weekly payments of compensation to a maximum amount of $610.30 per week.

Background

The worker developed contact dermatitis in the course of the worker’s employment as a production operator with the pre-injury employer. The accepted date of injury is the date of injury.

The worker was unable to return to the worker’s pre-injury employment, but has secured alternative employment and has been in receipt of weekly payments from the Insurer.

In light of amendments introduced by the Workers Compensation Legislation Amendment Act 2012, the Insurer conducted a work capacity assessment and made a work capacity decision on 10 June 2014 reducing the worker’s entitlement to weekly payments of compensation to $64.50 per week under section 37 of the 1987 Act.

The Insurer undertook an internal review in this matter and made a decision on 30 July 2014.

The application for merit review was received by the Authority on 26 August 2014. The application has been lodged in the form approved by the Authority and made within 30 days, as is required under section 44(3)(a) of the 1987 Act.

No issues have been raised in either the submissions or in the other materials before me about the validity of this application for review by the Authority.

Legislation and guidelines

The legislative framework governing work capacity decisions and reviews is contained in the:

  • Workers Compensation Act 1987 (the 1987 Act);
  • Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act);
  • Workers Compensation Regulation 2010 (the Regulation);
  • Guidelines for work capacity decision Internal Reviews by Insurers and Merit Reviews by the Authority applicable from 11 October 2013 (the Review Guidelines); and the
  • WorkCover Work Capacity Guidelines as amended (the Work Capacity Guidelines).

Section 43 of the 1987 Act defines a “work capacity decision”.

Section 44 of the 1987 Act provides for merit review of a work capacity decision of the Insurer, by the Authority.

Documents and submissions considered in making the decision

The documents and submissions I have considered in making this decision are those listed in, and attached to, the application for merit review, the Insurer’s reply and any further information received by the Authority, which I am satisfied has been exchanged between the parties.

Reasons

Nature of merit review

This matter involves a merit review of the work capacity decision of the Insurer in accordance with section 44(1)(b) of the 1987 Act. The review is not a review of the Insurer’s processes in making the work capacity decision and/or internal review decision. The review requires that I consider all of the information before me substantively on its merits and make findings and recommendations that, in light of the information before me, are most correct and preferable.

Current work capacity and suitable employment

In 2001, the worker developed rashes and was diagnosed with contact dermatitis.  This was not considered to be work related until around 2005, when it was confirmed that the dermatitis was as a result of exposure to cement dust. The worker continued to work in the role as a production operator with the pre-injury employer whilst taking medication and applying creams to manage the dermatitis. At the beginning of 2013, the worker noticed that the worker’s dermatitis was becoming more severe and the worker subsequently lodged a claim for workers compensation. The accepted date of injury is the date of injury.

The worker was able to be transferred to an office based role, however, continued to be exposed to cement dust. The worker was regularly consulting the worker’s doctor who prescribed medication and creams. It was then determined that the worker’s dermatitis would not be reduced whilst being exposed to the cement dust.

The worker ceased working with the pre-injury employer on April 2013 and secured alternative employment as an assistant miller in October 2013 and remains employed in this role.

The worker reported that the worker’s skin is extremely sore which impacts on the worker’s daily living and that the worker’s skin stings while showering. The worker’s sleep is also disturbed due to itchiness. The worker attends regular reviews with the treating doctor, and was advised that the cement dust may remain in the worker’s system for up to 5 years and that the worker will be required to continue with medication and creams during this period. The worker is currently taking Imuran and applying Novasone to the affected areas on a daily basis.

I have before me WorkCover NSW certificates of capacity issued by the treating doctor dated between April 2014 and July 2014. The treating doctor diagnosed the worker with “allergic dermatitis to cement products” and certified the worker as having the capacity for “full” hours a day, 5 days a week. The only restriction on the worker’s work capacity is to “avoid all contact with products involved with cement manufacture”. The most recent certificate of capacity before me indicates that the treating doctor considers this certification to be appropriate until the next review date, which is October 2014.

In the absence of any medical information to the contrary before me, I accept the treating doctor’s certification of the worker’s work capacity. Accordingly, I find that the worker has the capacity for some type of employment for full time hours while avoiding working with all cement products. I consider “full time” hours to mean 40 hours per week, in line with the worker’s pre-injury hours, which were 40 hours per week.

Section 32A of the 1987 Act defines “current work capacity” as:

current work capacity, in relation to a worker, means a present inability arising from an injury such that the worker is not able to return to the worker’s pre-injury employment but is able to return to work in suitable employment

“No current work capacity” is defined in section 32A of the 1987 Act as:

no current work capacity, in relation to a worker, means a present inability arising from an injury such that the worker is not able to return to work, either in the worker’s pre-injury employment or in suitable employment

The worker’s pre-injury employment primarily involved working with cement products. In view of the treating doctor’s recommended restriction that the worker avoid all contact with cement products, I find that the worker has a present inability arising from an injury such that the worker is not able to return to the worker’s pre-injury employment. In order to determine whether the worker has current work capacity, I am required to consider whether the worker is able to return to work in “suitable employment”. Suitable employment is defined in section 32A of the 1987 Act as:

employment in work for which the worker is currently suited:

(a) having regard to:

(i) the nature of the worker’s incapacity and the details provided in medical information including, but not limited to, any certificate of capacity supplied by the worker (under section 44B), and
(ii) the worker’s age, education, skills and work experience, and
(iii) any plan or document prepared as part of the return to work planning process, including an injury management plan under Chapter 3 of the 1998 Act, and
(iv) any occupational rehabilitation services that are being, or have been, provided to or for the worker, and
(v) such other matters as the WorkCover Guidelines may specify, and

(b) regardless of:

(i) whether the work or the employment is available, and
(ii) whether the work or the employment is of a type or nature that is generally available in the employment market, and
(iii) the nature of the worker’s pre-injury employment, and
(iv) the worker’s place of residence.

I have before me a vocational assessment report and an amended vocational assessment report produced by an occupational rehabilitation provider dated May 2013 and August 2013 respectively. The following options have been identified as suitable employment for the worker:

  • Warehouse Administrator
  • Production Manager
  • Production Operator/Clerk

The worker received School Certificate at High School and reported that the worker has also obtained the following qualifications/licences:

  • Forklift Licence
  • First Aid Certificate
  • Confined Space Licence

The worker’s work experience consists of roles as a storeman, professional sports player and forklift driver, and at the time of the worker’s work injury, a production operator.

The worker’s transferable skills are documented as: the ability to receive and count stock items, pack and unpack items, verify inventory, store items, mark stock items, clean and maintain supplies, tools, equipment and storage areas, determine proper storage methods, keep accurate records and examine and inspect stock. The worker also has the ability to provide assistance and direction, operate machinery, observe equipment operations, lift raw materials, finished products and packed items either manually, or while using a hoist and mark or tag identification on parts. Finally, the worker is able to load and unload items, assist production workers, clean and lubricate equipment, drive a forklift and perform data entry/administrative duties.

The role of Warehouse Administrator has been identified as suitable employment for the worker. A Warehouse Administrator administers and coordinates storage and distribution operations within an organisation. The vocational assessment notes that the worker disclosed that the worker had three months of Warehouse Administration experience while at the pre-injury employer on suitable duties. While I acknowledge this, I do not consider three months experience in a suitable duties capacity to be sufficient evidence to determine that the worker possesses the necessary skills, education and experience to undertake this role in the open labour market. Further, I have not been provided with any further information in regards to the role of Warehouse Administrator that would allow me to determine whether the worker would in fact have the necessary education, skills and experience to undertake this role. Accordingly, I am not satisfied the role of Warehouse Administrator is suitable employment for the worker.

The role of Production Manager has been identified as suitable employment for the worker. A Production Manager plans, organises, directs, controls and coordinates the manufacturing activities of an organisation including physical and human resources. The occupational rehabilitation provider noted that the worker has many years of experience as a production operator and as a result, considers that the worker has the transferable skills to perform this role. While I acknowledge many years as a production operator would be advantageous, I am not satisfied that this experience is transferable to a Production Manager role. The worker’s work history does not indicate that the worker has held a management role, particularly in production, and in the absence of any further information in relation to the specific requirements of this role, I am not of the view that the role of Production Manager is suitable employment for the worker.

Finally the role of Production Operator has been identified as suitable employment for the worker. A Production Operator records and coordinates the flow of work and materials between departments, examines goods for orders and prepares production schedules. The worker was employed as a production operator for the pre-injury employer for many years and I note that the occupational rehabilitation provider has indicated that the worker was able to return to the worker’s pre-injury role provided he was not exposed to cement dust in the workplace. I accept this. One could reasonably infer that given the worker has had many years experience in a Production Operator role, he would possess the necessary skills, work experience and education to be suited to the role. Further, in view of the treating doctor having imposed only one restriction on the worker’s capacity for employment, that being, to avoid exposure to cement dust, I am satisfied that the worker would be able to undertake a role outside of this particular environment, having regard to the nature of the worker’s incapacity.

In view of the above, I find that the role of Production Operator to be suitable employment for the worker in accordance with section 32A of the 1987 Act.

I consider it appropriate to note that the role of Production Clerk was identified as suitable employment for the worker in the vocational assessment of 17 May 2013, however, was replaced by Production Operator in the amended vocational assessment of 7 August 2013. Upon review of both assessments, I have concluded that the information provided for both Production Operator and Clerk are identical and as such, I have assessed Production Operator as suitable employment for the worker, as documented in the most recent amended vocational assessment. For this reason, I do not consider it necessary to assess the role of Production Clerk as suitable employment. On 16 September 2014, the Authority contacted the worker to obtain information regarding the worker’s current employment. That same day, the worker provided the following:

  • The worker is currently employed as an assistant miller, performing shift work.
  • The worker was employed to work 42 hours per week, but effective 15 September 2014, the worker’s work hours had been reduced to 38 hours per week.
  • The worker’s duties involve lab testing, setting up of wheat to be milled (computer based) and maintenance of machines and bucket elevators.
  • The worker is required to lift up to 25kg occasionally and is unable to work with cement products.

The worker was able to independently source, secure and maintain the worker’s current employment and has been employed in this role since October 2013. The worker has extensive experience in machine operation, maintenance of machinery and the worker reported that he possessed computer skills as it was a requirement of the worker’s pre-injury role, which he held for many years. In view of this and upon review of the worker’s transferable skills and work history in combination with the fact that the worker has maintained this role for almost a year, I am satisfied that the worker possesses the necessary education, skills and experience to undertake the worker’s current role of assistant miller.

The treating doctor places no restrictions upon the worker other than the worker is not to work around cement products. The description of duties above does not indicate that the worker works with cement dust, therefore, I am satisfied that he is not contravening this particular restriction. Further, the worker has been able to maintain this role for almost a year with no reported difficulties. Accordingly, I consider that the worker’s current employment as an assistant miller is suited to the nature of the worker’s incapacity.

Accordingly, I find that the worker is able to, and has, returned to work in suitable employment. I therefore find that the worker has current work capacity pursuant to section 32A of the 1987 Act.

Entitlement periods for ongoing weekly payments

The following provisions of the 1987 Act provide the basis for determination and calculation of a worker’s weekly payments entitlement:

  1. Weekly payments in the first 13 weeks are to be determined in accordance with section 36 of the 1987 Act (“the first entitlement period”);
  2. Weekly payments in weeks 14–130 are to be determined in accordance with section 37 of the 1987 Act (“the second entitlement period”); and
  3. Weekly payments after the second entitlement period (after week 130) are to be determined in accordance with subsections 38(6) or (7), but only if the special requirements for continuation of weekly payments after the second entitlement period are met in accordance with section 38 of the 1987 Act.

The Insurer, in their reply to an application for merit review dated 29 August 2014, confirmed that the worker had received 83 weeks of weekly payments of compensation. I therefore find that the worker’s entitlement to weekly payments of compensation currently falls in the second entitlement period and is to be calculated in accordance with section 37 of the 1987 Act.

In that regard, I have payslips before me dated between November 2013 and August 2014. These payslips reveal that the worker is consistently working greater than 15 hours per week. Therefore, section 37(2) of the 1987 Act provides the basis upon which the worker’s entitlement to weekly payments of compensation is to be calculated, as follows:

(2) The weekly payment of compensation to which an injured worker who has current work capacity and has returned to work for not less than 15 hours per week is entitled during the second entitlement period is to be at the rate of:

(a) (AWE × 95%) − (E + D), or
(b) MAX − (E + D),
whichever is the lesser.

Calculation of entitlement

“E” is described in section 35 of the 1987 Act as:

E means the amount to be taken into account as the worker’s earnings after the injury, calculated as whichever of the following is the greater amount:

(a)  the amount the worker is able to earn in suitable employment,
(b)  the workers current weekly earnings.

MAX means the maximum weekly compensation amount.

“D” is the amount of any non-pecuniary benefits which in the worker’s case is nil.

“AWE” means the worker’s pre-injury average weekly earnings.

“Pre-injury average weekly earnings” is defined by section 44C of the 1987 Act.

The worker is not an existing recipient of weekly payments of compensation, therefore the worker’s pre-injury average weekly earnings are to be calculated using the definition provided by section 44C of the 1987 Act.

It would appear that the Insurer has calculated the worker’s pre-injury average weekly earnings in accordance with section 44C(1)(b) of the 1987 Act to be $1,464.70 per week. Further, the Insurer has applied section 82A of the 1987 Act and indexed the worker’s pre-injury average weekly earnings to $1,530 per week.

The worker makes the following submission in the worker’s application for merit review:

"I think it [the decision] should be changed to be increased to the difference between my AWE of $1,530 per week and my current wage (whatever that might be) as there is no evidence to suggest that I am able to earn more than I am currently earning."

Having considered the worker’s application for merit review, it is clear that the does not dispute the figure arrived at by the Insurer for the worker’s pre-injury average weekly earnings. Rather, the worker disputes the figure the Insurer has arrived at for the amount to be taken into account as the worker’s earnings after the injury (“E”).

In these circumstances, I do not consider a review of the amount of the worker’s pre-injury earnings is required, and I make no finding or recommendation in that regard. The effect of this is that the Insurer’s decision about the amount of the worker’s pre-injury average weekly earnings remains unchanged.

Ability to earn in suitable employment

As noted above, I have found the role of Production Operator to be suitable employment for the worker to perform. Upon review of the vocational assessments produced by the occupational rehabilitation provider, particularly the Labour Market Analyses, I note that I have been provided with three amounts a Production Operator may be remunerated as follows:

  • Job Markets Australia - $1,389 per week
  • Manufacturing and Associated Industries Occupations Award 2010 - $670.20 per week
  • Local Labour Market - $1,000 per week

In assessing the amount that the worker may earn in “suitable employment”, I am required to have regard to the matters contained in the definition of “suitable employment” in section 32A of the 1987 Act. That definition requires that I take into consideration, among other things, the nature of the worker’s incapacity, the worker’s age, the worker’s education skills and experience. In my view, the best information that is before me that reflects the worker’s ability to earn in suitable employment, as defined, is the worker’s current rate of pay. In view of the vastly differing amounts I have been provided in the vocational assessments for the role of Production Operator, I consider it appropriate to assess the worker’s current employment as an assistant miller, which I have also determined to be suitable employment, with respect to the worker’s ability to earn in suitable employment.

The worker secured the worker’s current role and has maintained this for almost a year. In view of this, I am satisfied that the worker’s current rate of pay is commensurate with the worker’s skills, experience and education, therefore, a more accurate reflection of the worker’s ability to earn in suitable employment. In that regard, I note that payslips before me indicate that the worker’s base rate of pay is $21.08 per hour. I have also found that the worker has the capacity to work 40 hours per week. Accordingly, I calculate the worker’s ability to earn in suitable employment as follows:

$21.08 per hour x 40 hours per week = $843.20 per week

Current weekly earnings

Current weekly earnings are defined in section 44I of the 1987 Act as follows:

In this Act, current weekly earnings of a worker in relation to a week means:

(a) If the worker’s base rate of pay is calculated on the basis of ordinary hours worked, the sum of the following amounts:

(i) The worker’s earnings calculated at that rate for the ordinary hours worked during that week,
(ii) Amounts paid or payable for overtime or shift allowances in respect of that week,
(iii) Amounts paid or payable as piece rates or commissions in respect of that week, or

(b) In any other case, the worker’s actual earnings in respect of that week but not including any amount that is a base rate of pay exclusion unless it is:

(i) Paid or payable for overtime or shift allowances in respect of that week, or
(ii) Paid or payable as piece rates or commissions in respect of that week.

The worker’s current weekly earnings fluctuate from week to week dependent upon the hours the worker may perform. I also note that the worker receives shift allowances for night/weekend shifts that may be relevant to the calculation of the worker’s current weekly earnings. In these circumstances, I consider that the Insurer is to calculate the worker’s current weekly earnings, and ultimately the worker’s entitlement to weekly payments of compensation on a week to week basis.

For the purposes of “E”, I determine the amount able to be earned in suitable employment to be $843.20. I find this amount to be the amount taken into account as the worker’s earnings after the injury, except in circumstances where the worker’s current weekly earnings exceed that amount. In applying the formula provided by section 37(2) of the 1987 Act, I calculate the worker’s maximum entitlement to weekly payments of compensation as:

$1,530 X 95% = $1453.50
$1453.50 - $843.20 = $610.30

For the worker’s benefit, I have found that the worker has the ability to earn $843.20 per week in suitable employment. In the event the worker earns less than this amount, the maximum the worker will be entitled to will be $610.30 per week, based on the formula prescribed by section 37(2) of the 1987 Act as above. In the event that the worker earns greater than $843.20 per week, the worker will be required to provide payslips to the Insurer in order for them to calculate the worker’s current weekly earnings and thus calculate the worker’s entitlement to weekly payments of compensation. If the worker earns greater than 95% of the AWE as above ($1,453.50), the worker’s entitlement to weekly payments of compensation will be nil.

I therefore find that the worker is entitled to weekly payments of compensation to a maximum amount of $610.30 per week, in accordance with section 37(2) of the 1987 Act.