Calculating normal weekly earnings

Weekly compensation payments are based on the wages a worker received from their current employer in the 12 months before their injury.

For a worker who only recently started work with their employer, or who doesn’t have 12 months’ employment history, an insurer may simply base earnings on what has been earned in the time of a worker’s employment.

If this isn't possible, an insurer can use another worker's earnings as a guide. This means someone who was employed by the same employer, under the same industrial instrument. An industrial instrument is an award or workplace agreement that governs the conditions of a worker’s employment. More information can be found on fairwork.gov.au at Find my award and Agreements.

Employer excess

Employer excess is similar to the excess paid on any other insurance policy. It represents the first payment of weekly compensation, which is paid to an injured worker by their employer.

Workers’ compensation insurance covers an employer if any of their workers experience a work-related injury or illness. If a worker needs to take time off, an employer will have to pay an excess.

A worker’s normal weekly earnings are one of the things an insurer will consider when determining an employer’s excess.

What’s included?

Wage payments are the regular amount a worker would receive if they hadn't been injured at work. The amount may differ from a worker’s average weekly earnings. Wage payments can include:

• salary or wages
• regular overtime
• higher duties
• penalty rates
• allowances (except those listed below).

Wage payments don't include:

• allowances or expenses relating to travel, car, relocation, meal, education, living in the country or away from home, entertainment, clothing, tools and vehicles
• superannuation
• any lump-sum termination payments for superannuation, accrued holidays, long service leave or any other purpose
• amounts paid to a worker as an employer excess.

Calculating wages

If a worker earned different amounts each week before their injury, an insurer will calculate their normal weekly earnings using the pay information provided by their employer.

An insurer will ask an employer to provide wages information, such as a payroll report or payslips. This information will be used to calculate a worker’s normal earnings, and how much to pay them in weekly compensation.

An insurer will need some information from an employer to work out weekly compensation payments for any workers who claim and may need time off work to recover.  When an insurer receives a claim, they will ask an employer to provide:

• An itemised payroll report for 12 months before the date of injury. The report must show each payment including wages, penalties and allowances for each pay period, OR
• Payslips for 12 months before the date of injury (or from the date they started, if less than 12 months).

An insurer will use this information to calculate a worker’s weekly compensation benefits.

They will then confirm the payment amounts to the worker and their employer.

If an employer or worker is concerned with the calculation they should contact their insurer directly. If an insurer is unable to resolve their concerns, they can request a written explanation from their insurer and seek a review of the decision with the Workers' Compensation Regulator.