Peter Hunt
Consultant
CTP Insurance, Insurance
Redundancy Payments and Early Termination Payments Should Not Be Included in PAWE
1 December, 2025
In Brief
- The term “earnings” in clause 4(1) of Schedule 1 to the Motor Accident Injuries Act 2017 (MAIA) should be given its ordinary English meaning of “income gained in return for labour or services provided” by the claimant.
- Payments made to compensate a former employee because their role no longer exists – such as redundancy payments and/or early termination payments – are not income gained in return for labour or services.
- Furthermore a redundancy payment and an early termination payment are not payments received “as an earner” because they are made when the Claimant’s employment has been terminated.
Facts
The Personal Injury Commission (PIC) published its decision in CPP v Youi Pty Limited [2025] NSWPICMR 27 on 28 November 2025.
Following a motor accident, the Claimant sought to recover weekly benefits pursuant to Part 3.3 of MAIA.
The Claimant and the Insurer, however, were not able to agree on the Claimant’s Pre-Accident Weekly Earnings (PAWE).
The Claimant argued that both a redundancy payment and an employee termination payment should be included in the calculation of his PAWE. The Insurer disagreed and argued that these payments were not “earnings”.
The dispute proceeded to the Personal Injury Commission for Merit Review.
Relevant Definition
Clause 4(1) of Schedule 1 to MAIA provides that:
“Pre-accident weekly earnings, in relation to an earner who is injured as a result of a motor accident, means the weekly average of the gross earnings received by the earner as an earner during the 12 months immediately before the day on which the motor accident occurred, unless subclause (2) applies…”
The Merit Reviewer’s Decision
The Merit Reviewer agreed that the redundancy payment and the early termination payment should not be included in the calculation of the Claimant’s PAWE, for the following reasons:
- According to clause 4(2) of Schedule 1 to MAIA, the disputed payments may only be included in the Claimant’s PAWE if they are (a) “earnings” and (b) received by the Claimant as “an earner”.
- Whilst the term “earnings” are not defined by MAIA, the ordinary English meaning of “earnings” is “income gained in return for labour or services provided by an earner”.
- An early termination payment does not constitute “earnings” because it is not a payment made in return for labour or services which the Claimant provided. Rather, the early termination payment was made in lieu of providing notice of his termination.
- Similarly, a redundancy payment is designed to compensate an employee for the inconvenience and hardship that might arise from their role no longer being required.
- Furthermore, given that both the redundancy payment and the early termination payment were made when the Claimant’s employment was terminated, they were not payments made to the Claimant “as an earner” as required by the definition of PAWE in clause 4(1) of Schedule 1.
For these reasons, the Merit Reviewer excluded the redundancy payment and the early termination payment when calculating the Claimant’s PAWE.
Why This Case is Important
The decision in CPP is helpful because it further clarifies what is included and what is not included in the concept of “earnings”.
The decision makes it clear that “earnings” is limited to income received by the Claimant in return for their labour or their services. It does not include other types of payments designed to compensate them for their role being made redundant or because they have not been provided with notice.
The Merit Reviewer acknowledged that some one-off payments may still constitute “earnings” if the payment is in return for labour or services. For example, a one-off bonus would constitute “earnings” because the bonus is paid to reward performance.
If you would like to discuss this case note, please don’t hesitate to get in touch with CTP Practice Group Leader Peter Hunt today.
