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CM5514 Calculation of Loss of Earnings Allowance
REPATRIATION COMMISSION GUIDELINES
CM 5514 - Calculation of Loss of Earnings Allowance
These Guidelines are not directives and should not be used as a substitute for the proper application of the law to the particular circumstances of each case.
The Guidelines set out the Repatriation Commission's position on the legislation concerning calculation of loss of earnings allowance (LOE). They are based on the words of the legislation. The Guidelines indicate the way in which the Commission believes the legislation should be applied.
Section 108 (2) of the VEA provides for the payment of LOE to veterans in respect of any loss of salary or wages, or loss of earnings on his or her own account from an occupation in which he or she is engaged, suffered by reason of:
- the veteran's undergoing treatment for incapacity from a war-caused injury or war-caused disease;
- the veteran's having to wait for the supply of, or repairs to, an artificial replacement or other surgical aid or appliance necessitated by such an incapacity;
- an investigation of a claim or application made by the veteran under Part II or of a pension granted to a veteran under that Part; or
- the veteran's undergoing treatment associated with such an investigation;
for the period in respect of which the veteran suffered that loss.
Purpose of these Guidelines
These guidelines explain how loss of earnings should be calculated in all cases. Advice is provided on how to calculate an hourly and/or daily rate of loss of earnings.
Loss of Earnings Formula
The quantum of LOE allowance is governed by s.108 (8) which provides for:
- an amount that is the difference between the special rate pension less a veteran's disability pension (if any) including specific disability allowance under s.27;
- the amount of salary, wages or earnings lost, less any payment by way of compensation, gratuity or contract,
whichever is the lesser.
The special rate of disability pension, currently $762.60 per fortnight, is almost always the lesser amount as the Federal Minimum Wage is currently $896.80 per fortnight.
While the legislation establishes a fortnightly rate, it is silent on how the allowance should be calculated for periods of days or hours. Consequently, this guideline provides the Commission's view on how to strike hourly and/or daily rates in order to calculate a payment for periods shorter than a fortnight during which the veteran is absent from work.
Daily rate formula
The Repatriation Commission has decided (CM 5514) that for calculation of LOE it will adopt a 'standard' working fortnight of 80 hours.
This decision took into account that the present 8 hour test for the special rate of disability pension was based on the premise that a totally and permanently incapacitated veteran could not work more than one day per week. This was related to the five day 40 hour working week or 80 hours per fortnight. It is consistent to apply the same standard fortnight to LOE that is used for special rate pension eligibility.
This approach means that all veterans in receipt of the same level of disability pension when absent from work for the same number of hours will receive the same level of LOE.
In order to calculate an hourly rate of loss of earnings, the Special Rate pension and a veteran's disability pension will by divided by 80. The resulting hourly rate can then be multiplied by the number of hours or days the veteran was away from work to reach a loss of earnings amount for periods less than a fortnight.
Attached are examples of how this approach will operate.
19 December 2003
Examples of Calculations
If a veteran was away from work for the full fortnight and receives a disability pension at 10% of the general rate, then the calculation of a loss of earnings allowance would be;
$762.60 - $28.91 = $733.69 per fortnight.
If a veteran was away from work for one full day of 7 hours and receives a disability pension at 50% of the general rate, then the calculation would be;
$762.60 - $144.55 = $618.05 per fortnight.
The figure of $618.05 will then be divided by 80 to reach an hourly figure of $7.725 and multiplied by 7 for the number of hours he was absent.
This veteran would be paid $54.08 for the day he is away from work.
If a different veteran was away from work for one full day of 9 hours and receives a disability pension at 50% of the general rate, then the calculation would be;
$762.60 - $144.55 = $618.05 per fortnight.
The figure of $618.05 will then be divided by 80 to reach an hourly figure of $7.725
and multiplied by 9 for the number of hours he was absent.
This veteran would be paid $69.53 for the day he is away from work.
If a veteran misses only two hours of work and usually receives a disability pension at 80% of the general rate, then the calculation would be;
$762.60 - $231.28 = $531.32 per fortnight.
The figure $531.32 will then be divided by 80 to reach an hourly figure of $6.642.
This would be multiplied by 2 for the two hours missed to reach a payment of $13.28.
Should a veteran be away for 1 day and 1 hour, the calculation for the day and the hour would be added together to form the total amount paid to the veteran.