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15.1 What is 'AE'?

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In general terms, AE means 'Able-to-Earn' i.e. the client's residual earning power following the injury.

'AE' is defined in S19(2) as the greater of the following amounts:

a)              the amount per week (if any) that the employee is able to earn in suitable employment

b)              the amount per week (if any) that the employee earns from any employment (including self-employment) that is undertaken by the employee during that week.

The 'AE' amount is used in three incapacity rate calculations in the SRCA:

  • calculation of the 'AE' amount in S19(2). This subsection provides that the weekly rate of incapacity compensation during the first 45 weeks after injury ('maximum rate compensation weeks') is the client's NWE less AE
  • calculation of the 'AE' amount in S19(3). This subsection provides that the weekly rate of incapacity compensation after the first 45 weeks is at a reduced rate of 75% of NWE. The subsection also provides for an increased rate of payment (combining earnings from employment and compensation) where the client undertakes actual employment during the week, and
  • where weekly compensation is paid to former employees under Part X of the SRCA, S132A provides that the amount that the client is able to earn in employment in a week is subtracted from the weekly incapacity compensation otherwise payable.

Section 19(4) of the SRCA sets out matters to which delegates 'shall have regard' when deciding the amount per week that a client is able to earn in suitable employment. These matters are relevant to all three provisions above, and are discussed in relation to 'deeming ability to earn' Note that amendments to the SRCA which commenced on 1 April 2002 provide that the AE amount includes both earnings from suitable employment and any other amount that a client earns from employment (including self-employment) during the week.