Normal weekly earnings (NWE)
This bulletin has been produced to provide information on the calculation of normal weekly earnings (NWE) under the Return to Work Act 1986.
This calculation is of key importance for determining an injured worker’s compensation entitlement. It is intended to match in most circumstances the amount a person would have continued to earn had they not been injured.
It is based on the worker’s gross remuneration immediately before they first became entitled to compensation. It includes remuneration from any other concurrent employment, provided the worker was employed by that other employer or employers for at least six weeks before they first became entitled to compensation.
One of the objectives of the legislation is to minimise the circumstances when it is necessary to average earnings with all employers over a 12 month period. This will only apply if the period of employment with the liable employer is less than 4 weeks and it is otherwise impracticable to calculate NWE.
1. NWE includes
- overtime, if worked in accordance with a regular and established pattern
- any over-award payment
- any climate allowance, district allowance, leading hand allowance, qualification allowance, shift allowance (if the worker works shift work in accordance with a regular and established pattern) or service grant
- other than for fly in fly out or drive in drive out workers, non-cash benefits provided to the worker by the employer for electricity, meals or accommodation, to a maximum 35% of average weekly earnings.
2. NWE excludes
- a superannuation contribution made by the worker's employer
- an allowance or grant not mentioned in the inclusions
- apart from electricity meals or accommodation, any other form of non-cash benefit provided by the employer
- for fly in fly out or drive in drive out workers, any non-cash benefit provided by the employer.
3. To determine regular and established pattern - overtime and shift work
In determining whether overtime or shift work was worked in accordance with a regular and established pattern, then:
- where the worker was in employment with the employer for at least 6 months before they first became entitled to compensation – regard must be had to the overtime or shift work that the worker worked for that employer during that 6 month period
- if less than 6 months – regard must be had to the overtime or shift work that the worker worked for that employer and whether in the normal course of that employment, the worker would likely have worked overtime or shift work had the injury not occurred.
4. To determine NWE where remuneration is regular and does not vary
Where a worker’s remuneration with an employer does not vary from week to week – the portion of the NWE provided by that employer must be calculated as being equal to the amount of the weekly remuneration.
5. To determine NWE where remuneration varies week to week
Where a worker’s remuneration with an employer varies from week to week, then the portion of the NWE provided by that employer is calculated by averaging the worker’s remuneration for all weeks of paid employment with that employer, during the period of 12 months before the date that the worker first became entitled to compensation (this is called the ‘relevant average remuneration’).
For example, if the worker has only worked 3 months with the employer then remuneration is averaged only over that 3 month period (not over 12 months).
6. To determine NWE where more than one employer
Where there is more than one employer, the portion of the worker’s NWE for each employer should be separately calculated and then added together to arrive at the worker’s NWE.
Earnings from other employers are not included if the worker was not in employment with the other employer or employers for at least 6 weeks before becoming entitled to compensation.
7. To determine NWE where employment less than 4 weeks
If the worker has worked for the employer that is liable to pay compensation for less than less than 4 weeks and it is otherwise impracticable to calculate the NWE of the worker having regard to:
- the worker's period of employment with the employer; and
- the period during which the worker likely would have continued to work for the employer, had the injury not occurred, then
NWE is determined by averaging the worker’s total remuneration from all employers for all weeks of paid employment in the 12 months before the date that the worker first became entitled to compensation (this is called the ‘all employer average remuneration’).
8. If in doubt about the method to use
If there is doubt about the method to be used for the calculation of the worker's NWE – the legislation requires that the method to be used is the one that results in the greatest amount being calculated as the worker's NWE.