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13.2.3 Compensation of 'Formers' and effects of awards of damages


Under S99 of the 1971 Act, weekly compensation for incapacity was not payable to an employee who recovered lump sum damages (i.e. from a civil action) until the amount of compensation foregone equalled the amount of damages received. Where the lump sum was large, this suspension of compensation payments could extend for 10 – 20 years.

In these cases, when compensation once again becomes payable, the client may be entitled to be treated as a former employee.

The client should be treated as a former employee if investigation clearly shows that:

  • they retired from Commonwealth employment before 1 December 1988, and
  • their entitlement to payment of weekly compensation was suspended under S99 of the 1971 Act, before 1 December 1988, because of the recovery of damages.

Note: This does NOT include situations where compensation was redeemed by payment of a lump sum.

Before compensation is paid, evidence must be obtained which demonstrates that the compensation which would have been paid during the intervening period equals or exceeds the common law award. The following points should be noted:

  • contemporaneous medical evidence must support the proposition that the client was incapacitated and identify the period or periods of incapacity
  • medical expenses should be supported by receipts or accounts
  • rates of compensation should be calculated at the applicable rate under the legislation applying at the time for each period of proven incapacity
  • periods of incapacity before 1/12/1988 should be calculated under the 1971 Act (usually Ss45 or 46). Under the 1971 Act, generally the first 26 weeks of incapacity were paid at 100% of NWE and thereafter statutory rates applied.