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14.2 Structure of NWE (Content of S8 and S9 of SRCA)

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The calculation of NWE is governed by the joint action of Sections 8 and 9 of the SRCA, and the various elements of those sections can be tabulated as follows:

8(1)

determines how the NWE for ordinary hours of employment is to be calculated. In brief, S8(1) provides a formula which is, in effect:

(hours worked per week x rate paid per hour) + allowances also paid

with both rate and hours averaged from a 'relevant period' defined by S9

8(2)

supplements the NWE calculated at 8(1) by taking account of overtime the client was 'required to work' on a 'regular basis' during the same 'relevant period' as referred to in 8(1). Note that while full-time (permanent force) members of the ADF work long and irregular hours they do not work 'overtime'. This SRCA S8 provision therefore relates only to the civilian employment of part-time reservists.

S9

defines the term 'relevant period' used in Ss8(1) & (2). In short, Subsection 9(1) provides that the 'relevant period' is to be the latest 2 week period before the injury. Subsequently, Ss9(2), (3) & (4) make special provision where the clients pay rate changed during this period, or contained an interval without income etc.

8(3)

makes provision for the NWE of part-time employees, i.e. in the DVA context,
this = Reservists. In summary, the NWE of a part-time employee is to incorporate all other income received, not just the earnings from the Commonwealth. Thus, Subsection 8(3) is the authority to take reservists' civilian earnings into account when formulating NWE.

8(4)

provides that where it is impractical to calculate an NWE because of the short duration of employment during the relevant period, the delegate may set the NWE by reference to the earnings of another employee doing similar work. In effect, this permits the use of standard pay scales to set NWE, and the generality of service conditions and expectations to set the level of allowances.

8(5)

is similar to S8(4) in that it provides for an alternative method of determining NWE where that derived from the usual S9(1) 'relevant period' does not provide a fair representation (e.g. where the client has an irregularly variable income). In this case a new relevant period may be chosen 'as Comcare considers reasonable' i.e. at the delegates discretion.

8(6) & (7)

allow for changes ('updates') to the NWE after injury, i.e. by indexation of pay rates or through regular pay increments that would have occurred automatically had the client not been injured.

8(8)

provides that where a part-time employee has no other earnings (i.e. other than from that part-time employment with the Commonwealth) the delegate must calculate the NWE to incorporate an amount 'that the employee would have been able to earn at the date of injury'. In the DVA context, this applies only to reservists who do not have civilian employment.

8(9)–(9D)

specify procedures for the annual update of post-injury NWE for ex-employees i.e. discharged ADF members. The original pay rates used to calculate NWE are now adjusted by percentage in line with a specified Wage Cost Index, rather than varied in timing and amount with the rates applicable to the ADF (or the industrial award etc. relevant to the civilian employment of a reservist). These current procedures date from an amendment to the SRCA effective from 1 October 2001.

8(10)

sets an upper limit on the amount of NWE. In short, it may not exceed the amount which would have been earned had the client not been incapacitated.

Note: Procedures for calculation of NWE in accordance with the above sections, is described in more detail at Chapter 31.