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3.5 Adjustments to NWE and NE
3.5.1 Incremental Advances
NWE and NE should be adjusted in line with incremental pay advances that the person actually received, or would have received if not for their discharge. This is covered by subsection 8(6) of the SRCA and section 185 of the MRCA. Prior policy indicated that time-based increments were only applicable to serving members or medically discharged former members. Increments should now be applied to all cases (regardless of discharge type). Cases that have not had increments applied should be adjusted as they are identified (i.e. via a review).
An ‘increment’ means an automatic or periodic increase in payment on the basis of age, length or continuity of service. In the context of ADF pay scales it is an advance in pay within a pay group. Advancement between pay groups is generally subject to training and assessment of satisfactory performance. Individuals do not ordinarily move through those pay groups automatically (with the exception of recruits, officer cadets etc).
Increments in respect of a serving Reservist's civilian employment are applied as they would have been attained so long as the person is still serving in the Reserves.
Information on when an increment would have been attained should be obtained from Defence via DVA SAM.
3.5.2 Actual promotion
NWE and NE should be adjusted in line with pay increases due to actual ADF promotions up until the date of discharge. This is covered by subsection 8(7) of the SRCA and section 186 of the MRCA and is applicable to both Permanent Forces and Reserve members. A person must actually be promoted in order to receive the increase to NWE/NE.
In the case of a SRCA Reservist, adjustment of NWE for promotion will include promotion in the member's civilian employment but only so long as the member is still serving in the Reserve Force at the time of the civilian promotion.
If a person is injured in Permanent Forces service but transitions to Reserve service and subsequently receives incapacity payments as a result of the injury arising from their Permanent Forces service, only those promotions earned while a Permanent Forces member can be included in NWE/NE (i.e. no promotions earned in Reserve service can be applied to the calculation of NWE/NE).
If the same person receives incapacity payments as a result of an injury arising from their Reserve service, any promotions earned while in that Reserve service can be applied to the calculation of NWE/NE.
The person may also transfer from Reserve service to Permanent Forces, if the person was injured in Reserce service, only the promotions received while in that Reserve service can be applied to the calculation of NWE/NE.
3.5.3 Military and civilian award rate pay rises
NWE should be increased in line with increases to salary or allowances resulting from a change to the relevant award/determination/industrial agreement etc. This means the ADF component of NWE is increased in line with military pay rises for serving members. The civilian component of NWE (where applicable) should also be increased in line with current pay rates.
The military pay scale relevant to a serving member is the pay scale current during the period of incapacity.
Subsection 8(10)(a) allows a person’s NWE to be reduced to ensure a person does not receive more compensation then they would have received if they were not injured. For example if a person’s actual salary is reduced due to a reason other than their accepted injury (i.e. a voluntary change in position due to personal reasons), their NWE should also be adjusted in line with the reduction.
30 November 1995
With effect 30 November 1995, an ADF pay restructure occurred which resulted in changes from pay levels to pay groups. If a person is discharged prior to 30 November 1995, their rank and pay is adjusted on this date to align with the new pay groups. This change did not result in a reduction to a person’s pay. The Defence Determination is available here.
There are certain ranks and pay levels which this change did not affect but in general terms the following changes occurred with effect 30 November 1995:
Column 1. Former Pay Level
Column 2. Pay Group
If a person discharged prior to 30 November 1995 and has claimed compensation for a period after 30 November 1995, their equivalent rank and pay group immediately prior to the 30 November 1995 pay restructure must be established (via Defence). It is not required that a request is made to Defence for the post-1995 rank and pay information as this can be established using the Defence Determination (available via link above).
Prior to 1 October 2001
Prior to 1 October 2001, NWE was increased as per a serving member i.e. in line with military pay rises. Delegates must apply this method when paying a period of incapacity prior to October 2001.
The military pay scale relevant to a discharged member is the pay scale current at discharge.
Post 1 October 2001
The SRCA was amended on 1 October 2001 to provide for a new method of calculating NWE for discharged employees (the method for serving members did not change).
Subsection 8(9)(B) provides for the NWE of a discharged member to be increased annually on 1 July by reference to a statutory indexation rate, the Wage Price Index (WPI). After 1 October 2001 NWE is no longer changed in line military pay rises, instead a percentage increase is applied.
The military pay scale relevant to a discharged member is the military pay scale current on 1 October 2001 i.e. the ADF pay rate decision of 1 March 2001. This is then updated annually by the indexation rate commencing 1 July 2002.
The WPI indexation amount is applied in full on each payment date, i.e. it is NOT paid on a pro-rata basis where the member has been discharged for less than a full year.
Example 1 – Increasing NWE for a discharged member
A person is claiming incapacity payments for a period in 2016. The person was discharged on 1/1/1995 as a Private pay level 2. At that time their ADF salary was $1072.86 per week (as per the pay rates from 15/12/1994). At 30 November 1995, the person’s pay level 2 is converted to the new pay group 1. Prior to 1/10/01 the person’s ADF salary continues to be adjusted in line with ADF pay rises and as at 1/3/01 the person’s ADF salary as a PTE 1 is $1316.76. After 1/10/01 the person’s ADF salary is adjusted in line with the WPI.
For Reservists, once the person has discharged from the ADF the civilian component of NWE as well as the Reserve component can only be increased by the WPI, even where the person continues in civilian employment.
The WPI rate is published by the Australian Bureau of Statistics' and can be found in CLIK.
The ADF component of NE should be adjusted in line with increases to military pay. This is covered by section 185 of the MRCA.
The civilian component of NE (where applicable) should be adjusted annually from 1 July by reference to the Wage Price Index (WPI) to 31 December of the previous year. This rate is published by the Australian Bureau of Statistics and can be found in CLIK.
Where NE is based on full-time ADF pay and allowances, a remuneration loading is included in NE to compensate for the loss of non-salary benefits a person received whilst serving in the ADF (specified in the legislation as $100 originally). The remuneration amount is increased annually on 1 July by reference to the percentage increase in the ADF Workplace Remuneration Arrangements at 31 December of the previous year (section 183).
3.5.4 Adjustments to NE/NWE for Recruits, Officer Cadets, Apprentices etc.
If a person is injured during their initial training NE/NWE is established at the rank and pay level (plus allowances) they would have attained upon completion of that training, from the date they would normally have completed the training. This applies to recruits, officer cadets, apprentices and other trainees. This policy is applicable regardless of the method of discharge of the person from the ADF.
Note that this only applies to those members whose normal earnings in the ADF are at the trainee level prior to adjustment. For example a member who has completed initial training in other ranks and who is then injured whilst undergoing initial officer training i.e. a Private who undertakes Officer Cadet Training has their salary maintained at their existing rank and pay group during the training period, NWE/NE is then set at that amount with no further progression applied.
Increments that are normally payable as the person progresses through their training are also payable at that same date. NE/NWE continues to be based on that initial level of appointment with no further promotions applied (i.e. those dependent upon successful further training).
The following information is required from Defence:
- the rank and pay group the person would have held after completing training;
- the date from which that rank would have been attained; and
- any pay-related allowances the person would have received after completing training.
In some circumstances Defence may be unable or unwilling to provide a response on which pay group the person would have attained if they had completed their training i.e. where a recruit is discharged prior to being assigned a specific billet, corps or mustering. In these cases where there has been genuine yet unsuccessful attempts to establish the appropriate pay group, that person's NWE/NE may be progressed to a Private Pay Group 3 or equivalent (for a recruit) or a Lieutenant Pay Group 2 for an officer cadet who was studying at the Australian Defence Force Academy (ADFA). Typically a person studying at the Royal Military College (Duntroon) is progressed to a Lieutenant Pay Group 2. The duration of initial employment training for a recruit should be deemed to be 6 months.
22.214.171.124 Example 1 – Calculating NWE/NE for a recruit
An Army recruit injured during week 2 of basic training and medically discharged 3 months later, without being assigned to a specific corps (and Defence have been unable to advise on the person’s expected pay group if they had completed training), NWE/NE is calculated as follows:
1. Private recruit for 80 days from the date of enlistment;
2. Private Trainee for 6 months from the date of their ‘march out’ from the Army Recruit Training Centre;
3. Private Pay Group 3 thereafter (adjusted for increments).
Note - In this example the recruit continued to be employed in the Army for 3 months post injury and paid as a Private recruit. Therefore the recruit will have actual earnings equivalent to a Private recruit for that 3 months.
3.5.5 When Categories of Defence Work and Allowances are Abolished
Section 187 of the MRCA provides that when a category of defence work on which a person's NE is based on is abolished, the delegate must determine which of the current categories should be used to determine NE.
Similarly, under section 188, when an allowance ceases to exist before the cessation date that had been advised by Defence, the delegate must determine which of the current allowances (if any) the person would have been paid instead and use this in determining NE. The same cessation date is used.