2.18 ‘Top-up’ payments | Military Compensation MRCA Manuals and Resources Library, Incapacity Policy Manual, 2. Investigating Entitlement to Incapacity Payments

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2.18 ‘Top-up’ payments

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Last amended 
8 August 2017

The term ‘top-up payment’ does not feature in the SRCA or MRCA, instead it is an informal term used to describe incapacity payments to people who have earnings. When a person has earnings from employment (actual or deemed) and is paid incapacity payments on top of this amount so that their total earnings (their actual earnings plus incapacity payments) is equal to a percentage of their NE this is often referred to as top-up payments.

The policy relating to ‘top-up’ payments differs between the SRCA and MRCA in recognition of the difference in the definitions of incapacity for work under the legislation.

An incapacity to engage in work ‘at the same level’ is when a person, because of their accepted condition/s is:

  • on a graduated return to work or unable to work their pre-injury (SRCA) or pre-incapacity (MRCA) hours;

  • unable to undertake specific duties of their pre-injury (SRCA) or pre-incapacity (MRCA) employment;

  • unable to work shifts or overtime in line with their pre-injury (SRCA) or pre-incapacity (MRCA) employment; or

  • redeployed to a lower paying position than their pre-injury (SRCA) or pre-incapacity (MRCA) employment.

In each of the situations above a person is in employment but has suffered a financial loss and is eligible to receive incapacity payments.  The payments are based on the difference between their NE and their actual earnings. The value of the incapacity payment a person receives may not directly translate to the amount the person has actually lost.

2.18.1 Legislation

2.18.1.1 SRCA

Section 4 of the SRCA defines incapacity for work. The definition references an incapacity to engage in any work or an incapacity to engage in work at the same level at which he or she was engaged in immediately before the injury happened. This means that the point of reference to establish whether the person would be entitled to ongoing payments after return to work (or if they have been deemed) is the work they were doing in Defence.

2.18.1.2 MRCA

Section 5 of the MRCA defines incapacity for work. The definition references an incapacity to engage at the same level in the work they were doing prior to the onset of incapacity.  This means that the point of reference to establish whether the person would be entitled to ongoing payments after return to work (or if they have been deemed) is the work they were doing prior to the onset of incapacity (this could be defence work or civilian work).

2.18.2 Establishing an inability to engage in work at the ‘same level’

2.18.2.1 Serving member

If a serving member can no longer perform the trade skills or duties they were performing prior to their injury (SRCA) or prior to the onset of their incapacity (MRCA) and is transferred to an alternative occupation within the ADF and the redeployment results in a financial loss, such as a loss of Pay Grade or Rank or allowances, then they are not working at the same level and incapacity payments are payable.  

2.18.2.2 Former member

The SRCA and MRCA do not specifically reference the method of discharge in order to establish if a person is incapacitated for work i.e. medical or non-medical. There is no distinction made between a person who has been medically discharged compared to a person who has been non-medically discharged.  Establishing whether a person is incapacitated is based on the definition of incapacity of work under each Act.

SRCA

The work the person was doing prior to the onset of the injury is considered in order to establish eligibility for payment. Under the SRCA the work the person was doing prior to the injury is their defence service.

Delegates need to be satisfied that the person, following a return to work (or being deemed), continues to have an incapacity for service as a result of the injury (and not any other factors like age or other non-accepted conditions). If the person is incapacitated for service then they are entitled to ongoing payments.

2.18.2.3 Example

A person has discharged and has been employed since their discharge. They have claimed incapacity payments during a period of surgery. As per the policy in section 2.16, the person is incapacitated for the duration of the surgery and recovery. The person then makes a full recovery and returns to their employment. They have the same functional level they had while in service. The person is not entitled to ongoing payments as the person is not incapacitated for service i.e. they would have been fit to continue in service at the same level despite their injury.  If the person was medically discharged this indicates that they are not fit to continue in service.  

If the same person did not fully recover following the surgery and was left with restrictions i.e. significant lifting restrictions, the person would not be considered fit for their pre-injury work (service) and would be entitled to ongoing payments. Medical evidence would be required to establish that the person is unfit for service.

MRCA

The work the person was doing prior to the onset of incapacity is considered in order to establish eligibility for payment. A medically discharged member must demonstrate an incapacity for ADF or civilian work. For a non-medically discharged member, the work they must demonstrate an incapacity for is their civilian work (and the issue of whether they are incapacitated for service is irrelevant).

In establishing whether a person should receive incapacity payments delegates should consider the method of their discharge to determine which type of work the person needs to demonstrate an incapacity for, but this is not the only determining factor. There are a range of circumstances where a former member may be entitled to ongoing incapacity payments when they have an ability to earn.

The simplest scenario is when a person has been medically discharged, is working in civilian employment but the medical evidence indicates that they continue to suffer from the accepted condition and are unable to return to ADF employment (i.e. the work they were engaged in prior to the onset of incapacity). In most cases, a medical discharge will preclude a person returning to ADF employment but medical certification is still required.

In other cases a person may have been non-medically discharged and claiming incapacity payments because they have been unable to continue in their civilian employment due to their injury.  If a person is totally incapacitated due to their injury, receives incapacity payments (with no earnings held in calculations) and subsequently commences new employment, their entitlement to continuing payment after commencing employment is based on whether their new civilian work is at the same level as their previous civilian work i.e. the same level of earnings and hours.

Alternatively, a person may be continuing in the same employment but not at the same level due to their accepted condition i.e. working less hours or different duties that do not attract the same pay. As they are not working at the same level as they were engaged in prior to the onset of the incapacity they would be entitled to payments despite continuing to have earnings.

Person not in employment

If a person has not been in employment post discharge, receives incapacity payments and participates in rehabilitation and is then subsequently employed, the delegate should consider if the person is incapacitated for the work that would be ‘reasonably likely that he or she would otherwise be engaged in’ (Section 5) in order to assess whether payments would be continuing.  The delegate must determine if the work they are now doing is ‘at the same level’ in order to determine if the person’s payments should continue. The issue here is that there is no demonstrated reference point to establish if they are working ‘at the same level’.

To establish what work the person may have been reasonably engaged in if not for their injury or disease, the delegate should consider the work the person could have been doing based on their education, skill set, job market, location etc. A rehabilitation assessment may be the most appropriate way to establish this. If the person returns to employment after a rehabilitation plan, incapacity payments should continue if they are not working at the same level prior to the incapacity i.e. they have been unable to secure employment at the same level as the work they would have been reasonably likely to be working in if not for the injury.  In these cases, working at the same level considers more than just working the same hours (and should consider whether they are earning the same amount). See section 2.16.2. 

2.18.2.4 Examples

Example 1

A person was medically discharged from the ADF. After discharge they secure employment as a full-time plumber. The person is earning less in their civilian plumbing role then they were earning in their ADF role. As the person is not working at the same level (i.e. they are earning less) as they were before the onset of incapacity they are entitled to ongoing payments.

Example 2

A person was non-medically discharged and has claimed incapacity payments as their civilian work is not suitable due to their accepted condition. They are put into payment and on a rehabilitation plan. The person was working as a plumber earning $50,000 per year. The person is rehabilitated back into full-time work as a plumbing supplies sales assistant earning $30,000 per year. As the work is not at the same level (i.e. it pays less) the person is entitled to continuing payments.

Example 3

A person was non-medically discharged and has claimed incapacity payments as they are not able to continue working full-time in their role as a plumber due to their accepted condition.  They are put into payment and on a rehabilitation plan initially continuing to work 20 hours per week. Modifications are made to their duties and they eventually return to work for 30 hours per week. As the work is not at the same level (i.e. less hours) the person is entitled to continuing payments. Should the person eventually return to full-time hours and earnings i.e. work at the same level, they would no longer be entitled to top up payments as there is no financial loss.

It is important to note the person should be engaged with rehabilitation as soon as possible in order to assist them maximise their capacity and minimise their loss.

Example 4

A person has non-medically discharged and has not worked since their discharge. They have claimed incapacity payments during a period of surgery. They do not recover completely following the surgery and continue to have restrictions for employment i.e. no heavy lifting/squatting. The person is put into payment during their period of total incapacity and then during a rehabilitation plan. At the commencement of the plan, the rehabilitation service provider is able to establish the type of work the person could have been reasonably likely to have been engaged in if not for their injury or disease. It is established that the person has a range of skills, and relevant education and experience related to plumbing and could have been working full-time. They then secure employment working as a plumbing supplies sales assistant working full-time hours. As the person is working at the same level as they could have been prior to the period of the incapacity they are not continued in payment.