Ability to earn in suitable employment

Ability to earn in suitable employment

Background

Section 19(4) of the Safety, Rehabilitation and Compensation Act 1988 (SRC Act) provides the legislative authority to deem a client able to earn in suitable employment, in certain circumstances.  The amount earned, or deemed to be earned, in suitable employment affects the amount of compensation for incapacity paid to the client.

Suitable employment is defined in s 4(1) of the SRC Act and is discussed separately.  Note that the issue of what constitutes suitable employment must be resolved before considering the question of ability to earn.

Section 40 of the SRC Act is also relevant in that it places a duty on the employer to “take all reasonable steps to provide the employee with suitable employment or to assist the employee to find such employment”.  Section 40 infers an obligation on the Commonwealth even though the employee may no longer be employed by the Commonwealth.

Client is actually in employment - s 19(4)(a)

Section 19(4)(a) of the SRC Act establishes the amount per week that a client is able to earn in suitable employment (AE) where the client is in employment during that week.  Any amount that a client actually earns by their own labour is to be used in the s 19(2) and 19(3) formulae, ie. the amount that a client is able to earn in employment in any week is his or her AE for that week.

Client is not engaged in employment - ability to earn deemed under s 19(4)(b)-(g)

Subsections 19(4)(b)-(g) of the SRC Act provide a basis for deeming an amount earned in suitable employment (AE) in circumstances where the client is not actually engaged in employment.

Such deeming is an important and legitimate claim management tool.  It should be used carefully, having regard to the factors discussed below, but must be actively considered in all cases where incapacity payments are intended to be made.  Furthermore, deeming an AE is a legitimate way of ensuring a focus on rehabilitation and (keeping in mind the factors discussed below and the definition in s 4(1)) should be a potential goal of all RTW plans.  Deeming should be actively considered at the time of formulating RTW plans and at the time of closure.  Clients should be advised up front that deeming may be an outcome at the end of the plan.

In considering the client's AE, regard should be paid to the following provisions:

• s 19(4)(b) deems an ability to earn where the client failed to accept an offer of suitable employment.  The amount deemed is what the client would have earned in that employment;
• s 19(4)(c) deems an ability to earn where the client, having accepted an offer of suitable employment , failed to engage or continue in that employment.  The amount deemed is what the client would have earned in that employment;
• s 19(4)(d) deems an ability to earn where the client received an offer of employment subject to completing a retraining program, and failed to complete the program.  The amount deemed is what the client would have earned in employment after completing the retraining program;
• s 19(4)(e) deems an ability to earn where the client has failed to seek suitable employment.  The amount deemed is what the client could reasonably be expected to earn in suitable employment, having regard to the state of the labour-market;
• s 19(4)(f) requires the Delegate to consider the reasonableness of the client's actions where s 19(4)(b)-(e) apply; and
• s 19(4)(g) directs the Delegate to consider any other relevant matter which may impact on the client's ability to earn and the operation of the deeming provisions. 

Note that the state of the labour-market is a relevant consideration when deeming an ability to earn under each of the paragraphs in s 19(4).