Peter Hunt
Principal
CTP Insurance, Insurance
PAWE – When do the “Significant Change” Provisions Apply?
9 December, 2024
In Brief
- Clause 4(3) of Schedule 1 to the Motor Accident Injuries Act 2017 (MAIA) only applies where the change in the Claimant’s circumstances results in “significantly higher” earnings on a “regular” basis.
- A change in circumstances which does not result in significantly higher earnings does not satisfy clause 4(3) and does not trigger clause 4(2)(b).
- A change in circumstances which does not result in regular earnings also does not satisfy clause 4(3) and does not trigger clause 4(2)(b).
Facts
The Personal Injury Commission (PIC) published its decision in Kumar v Allianz Australia Insurance Limited [2024] NSWPICMR 73 on 6 December 2024.
The Claimant was injured in a motor accident on 14 February 2024.
The Insurer initially assessed the Claimant’s pre-accident weekly earnings (PAWE) at $1,570.11. On Internal Review, however, that determination was revoked and substituted with an assessment of $415.78. The Claimant sought a Merit Review of that decision.
The assessment of $415.78 was based on average earnings during the 12-month period prior to the motor accident in accordance with clause 4(1) of Schedule 1 to MAIA.
The Claimant argued that the “significant change in circumstances” trigger in clause 4(3) and 4(2)(b) of Schedule 1 to MAIA applied on two bases:
- He ceased working at 7-Eleven in December 2023 and began working exclusively as a rideshare driver for Uber, some three months before the accident.
- He signed up to the Didi Vehicle Advertising Program on 12 February 2024, two days before the accident.
The Merit Reviewer’s Decision
The Merit Reviewer agreed that Clauses 4(3) and 4(2)(b) of Schedule 1 to MAIA did not apply for the following reasons:
- Rideshare Earnings – clause 4(3) of Schedule 1 to MAIA did not apply because the evidence did not establish that the Claimant’s change in circumstances would result in a “significant increase” in his earnings on a “regular” basis. As a rideshare driver, the Claimant’s earnings would vary week to week based on demand. They may be some periods – for example, around Christmas and New Year – where the Claimant could expect higher earnings but there were other periods when his earnings would be lower than when he worked at 7-Eleven. The requirements of clause 4(3) were not met and, as such, clause 4(2)(b) did not apply.
- Didi Vehicle Advertising Program – clause 4(3) did not apply because the evidence established that the Claimant was entitled to a one-off amount of $1,200, albeit paid by $50 weekly instalments. Given that the amount payable was a one-off payment, it did not qualify as a “significant increase” paid on a “regular” basis.
The Merit Reviewer proceeded to apply clause 4(1) and calculated the Claimant’s PAWE by reference to his average gross earnings, from all sources, in the 12 months prior to the motor accident.
Key Learnings
The decision in Kumar makes it clear that the “significant change” regime in clause 4(3) and 4(2)(b) of Schedule 1 of MAIA only apply where the change in circumstances results in a significant change in the Claimant’s earnings which is regular.
If clause 4(3) applies, then the Claimant’s PAWE is calculated by reference to “the weekly average of the gross earnings the earner received as an earner, or could reasonably have been expected to receive, during the 12 months after the change of circumstances”. In other words, when clause 4(3) applies, the calculation of PAWE requires some consideration of what the Claimant would have earned in the future but for their accident, although ‘the future’ is limited to a 12-month period measured from the date of the change in circumstances.
If neither clause 4(3) applies – nor any of the other exceptions in clause 4(2) – then PAWE is calculated by reference to average gross earnings in the 12 months before the accident, as required by clause 4(1).
If you have a query relating to any of the information in this case note, or would like to discuss a similar matter of your own, please don’t hesitate to get in touch with CTP Insurance Principal, Peter Hunt, today.
