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No. 4 Voluntary Work and its Impact on Incapacity Payments under the SRCA and MRCA

MILITARY REHABILITATION AND COMPENSATION SCHEME POLICY INSTRUCTION  - NUMBER 4

Subject: Voluntary Work and its Impact on Incapacity Payments under the SRCA and MRCA

Last Amended

03 February 2009

Purpose

The purpose of this instruction is to advise of the Military Rehabilitation and Compensation Commission's policy on the effect of voluntary work on capacity to earn for the purpose of assessing eligibility for:

  • incapacity payments under the Safety, Rehabilitation and Compensation Act 1988 (SRCA) and the Military Rehabilitation and Compensation Act 2004 (MRCA); and
  • the Special Rate Disability Pension (SRDP) under the MRCA.

Background

There is no current policy on how voluntary work affects payments under the SRCA or the MRCA.  Some ex-service organisations have sought clarification on this issue.

The Repatriation Commission has a general policy approach that voluntary work does not have the same pressure or stress inherent in paid employment and should not on its own connote a person's capacity to undertake paid work in relation to eligibility for the Special Rate (T&PI) pension under the Veterans' Entitlements Act 1986 (VEA).  This does not give an absolute guarantee that voluntary work will never affect a Special Rate (T&PI) pension and it is always dependent on the individual circumstances of the person and the work they are engaged in.

Rehabilitation

The effect of voluntary work on SRCA and MRCA payments will differ from that of the VEA because of the focus both Acts have on rehabilitation.

Section 38 of the MRCA details the aim of rehabilitation as follows:

'The aim of rehabilitation is to maximise the potential to restore a person who has an impairment, or an incapacity for service or work, to at least the same physical and psychological state, and at least the same social, vocational and educational status as he or she had before the injury or disease.'

The SRCA does not specify the aims of rehabilitation but instead the jurisdiction adopts the National Occupational Health and Safety Commission guidance note for best practice rehabilitation management of occupational injuries and disease. This states in part that:

'Rehabilitation is a managed process involving early intervention with appropriate, adequate and timely services based on assessed needs, and which is aimed at maintaining injured or ill employees in, or returning them to, suitable employment.'

Rehabilitation continued

It further states that the focus is on:

  • 'achievement of optimal physical and mental recovery;
  • return to suitable work at the earliest possible time; and
  • reduction of the human and economic cost of disability to employees, employers and the broader community.'

This focus on returning people to their pre-injury status physically, psychologically and vocationally is reflected in the incapacity provisions of both Acts, where there is an incentive to return members or former members to paid work.  Both the SRCA and MRCA incapacity payment provisions hinge on a person's capacity for suitable employment or suitable work, and the person's ability to earn in suitable employment or work.

As a result, the impact of voluntary work needs to be considered alongside a member or former member's capacity to return to work or to undertake rehabilitation.

Defining voluntary and remunerative work

There is no mention of voluntary work in the SRCA or MRCA legislation.  The legislation only discusses remunerative work.

For policy purposes voluntary work is 'unpaid work for a recognised community or welfare organisation'.  Unpaid work for family, friends, or a business enterprise formed for the purpose of making a financial profit is not classified as voluntary work.

Remunerative work is 'work of a nature capable of attracting remuneration'.

A distinction can be made between the rights and responsibilities that accrue when undertaking remunerative employment and the lack of them with voluntary work.  Voluntary work is usually performed at a time, place and pace that suits the volunteer which is not the case for paid employment.

How incapacity for work payments are calculated under the SRCA

The SRCA enables incapacity payments to be made to a person who is unable to work because of their accepted conditions.  These payments are calculated by reference to the person's normal weekly earnings (NWE) from their service in the Defence Force less what they are currently able to earn (AE).

AE is determined by what the person actually earns or what they are deemed to have the capability of earning, taking into account a number of factors including their accepted conditions, their existing skills and what they may have been re-trained for.

How incapacity for work payments are calculated under the MRCA

Incapacity payments under the MRCA are also calculated on the basis of their Normal Earnings (NE) and what a person may be deemed able to earn (AE).  The calculation of NE under the MRCA differs slightly from the SRCA because, in some circumstances, there is an additional component for loss of ADF benefits.

Like the SRCA, AE is determined by what the person actually earns or what they are deemed to have the capability of earning, taking into account a number of factors including their accepted conditions, their existing skills and what they may have been re-trained for.

How eligibility for the Special Rate Disability Pension (SRDP) is assessed under the MRCA

A person is eligible to choose to take the Special Rate Disability Pension (SRDP) when:

  • the person is in receipt of incapacity payments;
  • the person has an impairment, that is likely to continue indefinitely, of at least 50 impairment points; and
  • the person is unable to undertake remunerative work for more than 10 hours per week, and rehabilitation is unlikely to increase the person's capacity to undertake such work.

The person's ability to undertake remunerative work or the capacity for rehabilitation to increase such ability will be assessed by a rehabilitation provider, following a rehabilitation assessment provided under section 44 of the MRCA.

How a person's ability to earn may be deemed

Both the SRCA and the MRCA set out factors that are to be taken into account in determining what amount a person is able to earn in suitable work or employment.  Such factors include:

  • the person's age and experience and other skills; and
  • the person's suitability for rehabilitation training or vocational re-training.

These factors are assessed on an individual basis, using such things as medical evidence and a rehabilitation assessment, as well as whether or not any return to work rehabilitation action has been undertaken.  The amount a person is able to earn is normally determined following the successful completion of a rehabilitation plan.  The rehabilitation provider will provide an assessment of the claimant's capacity for work.

The receipt of salary or wages, however, is not a prerequisite to determining that an injured member or former member has an ability to earn in suitable employment or work.  If the medical and other evidence indicates that the person has an ability to earn in suitable employment or work, it is not a requirement of either the MRCA or the SRCA that they also receive payment for their employment.  On this basis, the individual's involvement in voluntary work rather than paid employment may be used during a rehabilitation assessment to assess a person's ability to earn, however does not in and of itself connote directly an ability to earn.

How voluntary work is assessed under the SRCA and MRCA

Each case needs to be assessed on its individual circumstances.  Although voluntary work normally does not carry the same pressures and expectations as paid employment, it may in some circumstances, amongst other factors, indicate a person's ability to return to paid employment. However, a client undertaking voluntary work in and of itself does not indicate an ability to undertake remunerative work. All cases must be assessed through appropriate investigation using sound medical opinion and a rehabilitation process.

All incapacity payees must be regularly reviewed by a medical specialist, and the frequency of that review depends on the payee's level of incapacity. If a payee is undertaking voluntary work it will not generally trigger a review of their incapacity payments outside the regular review period except in exceptional circumstances. It must be the accepted condition(s) which form the basis for the person's inability to undertake remunerative work.

A payees incapacity payments may vary if their ability to earn changes based on sound medical opinion, a rehabilitation program and/or other factors depending on the individual case. If a person is undertaking voluntary work it may form part of a person's rehabilitation program and may be one of the factors considered overall in the rehabilitation assessment process.

An incapacity delegate should not, in isolation, determined that a person undertaking voluntary work is capable of an ability to earn for those same hours/work as if it were a paid position. Ultimately, each case should be assessed on its own merits based on sound medical opinion and/or a rehabilitation process.

Engaging in voluntary work can have significant medical/social rehabilitation advantages for claimants.  This policy encourages claimants to undertake some voluntary activity that facilitates or assists in recovery or is a step towards returning to paid employment, or is undertaken where a claimant is unable to undertake or return to paid employment.

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