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31.1.3 Overview - establishing the components of the NWE calculation

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Note that NWE is based upon the client's earnings for the period whilst in Commonwealth employment, not earnings from subsequent employment undertaken after discharge from the ADF.

In practice, most incapacity payments made to full-time ADF members are made after the member has discharged. In all such cases the NWE is based on the higher of either the rank/pay at date of injury or the rank/pay group at discharge, and subsequently adjusted by the Wage Cost Index as per S8(9) (b&c) of the SRCA.

Section 8 does provide for adjustment to the NWE to account for promotions, changes to award payments, allowances etc. following the injury.

Some clients may have multiple periods of ADF employment, including full-time and part-time service. NWE is always based on earnings from the period of employment during which the injury occurred.

Example: an ex-member enlisted in the Army on 6 August 1968 and discharged from full-time service on 8 August 1980, at which time she held the rank of Corporal Pay Group 3.  She subsequently enlisted in the Reserves and continued to serve for 13 years before discharging in 1993, at the rank of Sergeant Pay Group 4. If she was injured during full-time service her NWE is calculated at discharge from full-time service as a Corporal Pay Group 3.  If she was injured during Reserve service then her NWE is based on Reserve plus civilian earnings at the time of her discharge from the Reserves in 1993. See 31.3 below for guidance on post-injury adjustments to NWE.

Merely notional improvements in earning capacity (e.g. likely future promotions or loss of career prospects) are not taken into account.

  • However some classes of employee (e.g. recruits and trainees, apprentices and officer cadets) are ordinarily advanced in rank and/or pay-level automatically, i.e. as the training course progresses. Subsection 8(6) requires that NWE encompass this incremental form of advancement.
  • This topic is discussed in more detail at 31.3.6 and 31.3.5.