1. To advise all Comcare staff of the 4 March 1999 increase in the Average Weekly Ordinary Time Earnings for Full Time Adults (AWOTEFA).

2. Subsection 19(5) of the Safety, Rehabilitation and Compensation Act 1988 provides for a ceiling on weekly incapacity payments after the first 45 weeks.

1. This ceiling is 150% of the Average Weekly Ordinary Time Earnings for Full time Adults (AWOTEFA).  The AWOTEFA is updated quarterly by the Australian Bureau of Statistics.

AWOTEFA UPDATE

4. The next increase is expected in May 1999.

3. The contact officer for this Operational Advice is Heather Jeffs, Service Performance Management Group.  The file number is 110/4/6-04.  This document is available for public inspection under section 9 of the Freedom of Information Act 1982.  It can be released on request.  Please ask a Comcare FOI Contact Officer for information on any applicable charges.

Signed

PETER PHARAOH

General Manager

Business Co-ordination Division

5 March 1999

1. To advise all Comcare staff of the June 1999 update in Commonwealth Superannuation pension benefits which may affect compensation benefits payable.

2. The Government portion of Commonwealth Superannuation pension benefits is adjusted annually.

3. Comsuper advise that the Government portion of pension benefits payable under the provisions of the Superannuation Act 1976 will increase 1.1% for the financial year 1999 - 2000.

1. The increase is effective from the 18 June 1999 and will be paid on pension pay day 1 July 1999.

2. A program will be run across PRACSYS as soon as possible to update the amounts paid to claimants.

6. All Comcare staff with responsibilities for calculating incapacity benefits are to note the above.

7. The contact officer for this Operational Advice is Vikki Clingan, Operational Policy Unit, phone (02) 6275 0053.  The file number is 490/7/8-02.  Refer requests for release of this document to the FOI Officer.

(signed)

PETER PHARAOH

General Manager

Business Co-ordination Division

    May 1999

1. To advise all Comcare staff of the 1 July 1999 adjustment in the statutory benefits rates.

2. Section 13 of the Act provides for indexation to be applied to relevant amounts specified in subsections 17(3),(4) or (5), 18(2), 19(7),(8) or (9), 24(9), 27(2), 29(1) or (3), 30(1) or 137(1) on 1 July every year.

2. The relevant percentage published by the Australian Bureau of Statistics reflected an increase of 1.6%.

(signed)

Peter Pharaoh

General Manager

National Operations Division

    May 1999

1. To advise all Comcare staff of the 20 May 1999 increase in the Average Weekly Ordinary Time Earnings for Full Time Adults (AWOTEFA).

2. Subsection 19(5) of the Safety, Rehabilitation and Compensation Act 1988 provides for a ceiling on weekly incapacity payments after the first 45 weeks.
3. This ceiling is 150% of the Average Weekly Ordinary Time Earnings for Full time Adults (AWOTEFA).  The AWOTEFA is updated quarterly by the Australian Bureau of Statistics.

AWOTEFA UPDATE

4. The next increase is expected in August 1999.
5. The contact officer for this Operational Advice is Vikki Clingan, Service Performance Management Group.  The file number is 110/4/6-04.  This document is available for public inspection under section 9 of the Freedom of Information Act 1982.  It can be released on request.  Please ask a Comcare FOI Contact Officer for information on any applicable charges.

signed

PETER PHARAOH

General Manager

Business Co-ordination Division

     May 1999

1. To provide operational policy concerning the consideration of claims involving osteopathic treatment only.

2.     Paragraph 54(2)(b) of the Act requires, in part, that a claim for compensation must be accompanied by a certificate by a legally qualified medical practitioner except where the claim is for compensation for medical expenses (section 16).
3.     Operational Advice 98/003 relates to the acceptance of medical certificates from chiropractors where a claim is for chiropractic treatment only.  The same principle applies to osteopaths.

4.     If an employee is claiming solely for medical expenses for osteopathic treatment, compliance with the provisions of section 54 of the Act does not require the production of a medical certificate from a legally qualified medical practitioner.  In these cases, a certificate from the treating registered osteopathic health care provider (including a precise diagnosis of the condition, as specified in question 13 of the 'Claim for Rehabilitation and Compensation' form), will be sufficient for a claim to be compliant.  It can then be considered in conjunction with relevant evidence such as the accident report, claim form and witness statement to decide if the claim satisfies the requirements of section 16 of the Act.
5.     In respect of initial or ongoing claims for compensation for other medical expenses, incapacity or permanent impairment, a certificate from a legally qualified medical practitioner is required for the purposes of section 54 of the SRC Act.  A certificate from an osteopathic health care provider alone will not suffice, although it can, along with other material, be taken into account by a decision maker in assessing such claims.

6. Where an employee is claiming solely for medical expenses for osteopathic treatment, compliance with the provisions of section 54 of the Act does not require the production of a medical certificate from a legally qualified medical practitioner.  In these cases, a certificate from the treating registered osteopathic health care provider (including a precise diagnosis of the condition, as specified in question 13 of the 'Claim for Rehabilitation and Compensation' form), will be sufficient for a claim to be compliant.  It can then be considered in conjunction with relevant evidence such as the accident report, claim form and witness statement to decide if the claim satisfies the requirements of section 16 of the Act.

6. If medical expenses for osteopathic treatment have been paid under section 16 based on certification from an osteopath only and the employee subsequently claims further benefits such as other medical expenses, incapacity, permanent impairment, it will be necessary for the employee to provide the appropriate medical evidence from a legally qualified medical practitioner to support the ongoing claim.

8.     All claims management staff should note and apply this policy.
9.     Appropriate re-wording of Question 13 of the 'Claim for Rehabilitation and Compensation' form has been undertaken.

8.     The Initial Liability Module on PRACSYS has been amended to reflect this policy.

11. The contact officer for this Operational Advice is Garry Poole, Service Performance and Management Group, phone (02) 6275 0638.  Requests for release of this document should be referred to the FOI Officer.

(signed)

Peter Pharaoh

General Manager

Business Co-ordination Division

11 June 1999

1. To provide administrative procedures, including standard letters, relating to the assessment and payment of permanent impairment awards.

1. This Operational Advice does not examine the policy relating to the assessment of the amount of a permanent impairment award.

3. Operational Advice No 177 “Permanent Impairment: Advice to Employer and Payment of Lump Sum” is revoked.

4.     Additional references relating to this subject are :

• Safety, Rehabilitation and Compensation Act 1988 (the Act).
• Annotated Safety, Rehabilitation and Compensation Act 1988.
• Compensation (Commonwealth Government Employees) Act 1971 (the 1971 Act).
• Guide to the Assessment of the Degree of Permanent Impairment (the Guide).
• Operations Manual Volume 13.
• Operational Advices:

No 37 “Payment of Compensation Benefit where appeal lodged by employer”.

No 79 “Permanent Impairment – Assessment of Compensation Payable for Loss of Hearing”.

No 90 “Permanent Impairment Entitlements – Pre 1 December 1988 Injuries”.

No 97/020 “Permanent Impairment for 1971 Act Conditions Claimed Under the 1988 Act”.

4.     Unlike other sections of the Act sections 24, 25 and 27 deal with non-economic loss.  Receipt of payments under these sections does not affect other entitlements payable under the Act.

4.     Section 24 of the Act provides that where an employee suffers an injury which results in a permanent impairment of at least 10% Whole Person Impairment (WPI) - except in the case of fingers, toes, taste and smell, where lower thresholds apply - a lump sum benefit is payable.  In addition, under section 27 of the Act compensation is payable for any non-economic loss (NEL) suffered by the employee.

4.     Section 25 of the Act provides that where an employee suffers a permanent impairment of at least 10% WPI but the impairment is not yet stable, an interim determination of the degree of impairment may be made on the written request of the employee.  The additional benefit under section 27 is not payable at this time but will be assessed when the final award is made under section 24.
5.     Under section 45 of the Act, an employee who is entitled to payments under section 24, 25 or 27 may elect to institute an action for damages against the Commonwealth, in lieu of the permanent impairment benefits.  This election is irrevocable.  Any damages award is, however, limited to $110,000.  Any enquiries about Common Law action should be directed to the action officer.
6.     Section 26 of the Act provides that an amount of compensation payable under section 24 or 25 must be paid within 30 days of the date of assessment.  The date of assessment is deemed to be the date on which the section 24 or section 25 is determined.  If the compensation is not paid within 30 days interest is payable on the amount awarded.  Interest is calculated at the 90 day Bank Bill rate, which varies periodically.  Current rates are available from the Reserve Bank.

10. The attached procedures, and associated standard letters, are designed to ensure that all claims for permanent impairment are managed consistently and that payment of the award is made promptly.

11. All staff involved in the assessment and payment of permanent impairment claims should note and apply the procedures set out in this Operational Advice.  If you have any questions about this advice please ring or email the contact officer.

12. The contact officer for this Operational Advice is Garry Poole, Service Performance and Management Group.  This document is available for release under the Freedom of Information Act 1982.  Requests for release of this document should be referred to the FOI contact officer.

(signed)

Peter Pharaoh

General Manager

Business Co-ordination Division

21 July 1999

1. Claim form provided to employee

A 'Compensation Claim for Permanent Injury' form, with Part A completed by Comcare, and a Non-Economic Loss Questionnaire will be sent to the employee (or their representative) on request.

The form must be sent with a covering letter explaining that Part C needs to be completed by the treating doctor in order that Comcare can decide whether an assessment can proceed at this time – i.e. the impairment is permanent, stabilised, and active treatment has been completed.  It should also be stressed that a full medical report is not required at this stage.  As an employee may elect under section 45 to sue the Commonwealth at any time, i.e. even without having made a claim for permanent impairment or having undergone an assessment, the election form must also be provided at this time.

Letter SL8/1

It should be noted that a 'Compensation Claim for Permanent Injury' form is not required for claims for hearing loss.  A 'Claim for Rehabilitation and Compensation' for hearing loss implies a claim for the lump sum impairment award associated with the condition and the medical evidence required to assess the degree of impairment (an audiogram indicating the percentage loss of hearing) will already have been provided to meet the compliance requirements of the initial claim.

1. Claim form(s) received

(a)Acknowledge receipt to employee (or representative).  As an employee may elect under section 45 to sue the Commonwealth at any time, i.e. even without having made a claim for permanent impairment or having undergone an assessment, the election form must also be provided at this time.

Letter SL8/2emplee

2. Advise employer and invite comments.

Letter SL8/2customer

3. Transitional claim where condition was permanent prior to 1 December 1988.

Letter SL8/3

3. Claim forms with Part C completed by the treating doctor can be examined to decide if a formal assessment can proceed.

Claim forms with a full report from the treating doctor and a NEL Questionnaire may be able to proceed to assessment of the %WPI (Step 3).

3. If review of on-going liability is indicated or currently being undertaken, assessment of the claim for permanent impairment should still continue.  Legal advice has been provided as follows;

'sub-section 24(1) determinations (both as to the presence of permanent impairment and as to the degree) can stand alone without the necessity of there being a previous sub-section 14(1) determination.”

However, before paying an award for a permanent impairment resulting from an injury you would firstly have to be satisfied that the employee suffers from an injury as defined in the Act.

6. If Part C of the Claim form states that the impairment is less than 10%WPI (unless the loss relates to fingers, toes, taste or smell), the claim should be denied citing ss24(7) but advising that if the situation changes a new claim may be submitted.

Letter SL8/4

If this decision is overturned at review, proceed to assessment of %WPI (Step 3).

7.      If Part C of the Claim form states that the impairment is currently at least 10% WPI but has not stabilised and will improve or that active treatment has not been completed, the degree of impairment cannot be assessed.  The claim should be denied, citing ss24(2) but advising that if the situation changes a new claim may be submitted

Letter SL8/6.

If this decision is overturned at review, proceed to assessment of %WPI (Step 3).

8. If Part C of the Claim form states that the impairment is at least 10%WPI, has not stabilised but will only deteriorate, the degree of impairment can be assessed and an interim payment considered under section 25.  Proceed to assessment of %WPI (Step 3).

7.      If Part C of the Claim form states that the impairment is at least 10%WPI, has stabilised and active treatment has been completed, the degree of impairment can be assessed.  Proceed to assessment of %WPI under sections 24 and NEL under s27 (Step 3).

3.    Assessment of %WPI and NEL

Assessment can be made under either sections 24 and 27 or section 25.

1.                If the employee has provided a full report from a doctor, including an assessment of %WPI in accordance with the Guide, and an NEL questionnaire and you are satisfied that the assessment is reasonable, assessment of the $ award under sections 24 & 27 or section 25 can be made (Step 4).

2.      If the evidence provided in (a) requires clarification (e.g. the report was not from the treating doctor and therefore not as likely to carry as much weight, there is conflicting evidence, the assessment was not in accordance with the Guide, there are inconsistencies in the employee's answers in the NEL questionnaire) write to the appropriate person and advise the employee of the present position.  If all issues are then addressed, assessment of the $ award under sections 24 & 27 or section 25 can be made (Step 4).

2.      If the medical evidence provided is considered unsuitable (e.g. the report was not from the treating doctor, there is conflicting evidence, the assessment was not in accordance with the Guide) arrange an assessment by an independent specialist.  The NEL questionnaire should be forwarded for comment.

Letter SL8/7

4.      When there is no medical evidence other than Part C of claim form provided, arrange an assessment by an independent specialist as per (c) above.

4. Assessment and determination of $ award

NOTE: $ award is calculated at the rate applicable at date of determination.  Use PI Calculation sheet in the Operations Manual on KtQ.

1.                                           If the impairment has been assessed as less than 10% WPI, deny liability citing ss24(7), but indicating that if the situation changes a new claim may be submitted.

Letter SL8/9

2. If the impairment is at least 10% WPI, has not stabilised but will only deteriorate, an interim award may be made under section 25.  No section 27 award is calculated at this stage.  This award can only be made on the written request of the employee.

Letter SL8/10

1.                                           If the employee requests an interim award as per (b) above, determine an interim award under section 25.  No section 27 award is calculated at this stage.  Re-assessment will be made when the impairment has stabilised.  Both the employee and employer have the right of review.  The employee is given the option of a section 45 election for return within 21 days.

Letter SL8/11

4. The employer must be advised of the award and given the opportunity to request review.

Letter SL8/12

2.      If the impairment is at least 10% WPI and has stabilised, an award can be made under sections 24 & 27.  Both the employee and employer have the right of review.  The employee is given the option of a section 45 election for return within 21 days.

Letter SL8/13

6. The employer must be advised of the award and given the opportunity to request review.

Letter SL8/12

NOTE: Section 26 provides that interest is payable if award is not paid within 30 days of determination.

A PRACSYS diary should be created for 21 days after determination to prompt payment of the award.

4. Requests for review

Advice from Legal Services Group on the application of sub-section 26(4) is that it provides that when a request for review is made the 30 day deadline for payment no longer applies.  This does not mean that compensation ceases to be payable under sections 24 and 27 or 25 of the Act.

(a)If the Comcare Claims Manager undertakes a reconsideration of their own motion, go back to Step 4.

1.                If the employee requests a reconsideration of the award, the employer must be advised.

If requested by the employee, payment of the award must be made (Step 6), pending the reconsideration decision.  At this point the employee must be advised that if the reviewable decision results in a lesser $ amount being payable he/she will be required to return the difference to Comcare.

NOTE. It should be remembered that once payment is accepted the ability to make an election under section 45 is no longer available to the employee.  All relevant correspondence should refer to this.

If the reconsideration affirms the decision and payment has yet to be made, proceed to Step 6.

If the reconsideration varies the decision the additional amount is payable.

If the reconsideration varies the decision unfavourably and payment has been made steps must be taken to recover the overpayment.

1.                If the employer requests a reconsideration of the award, the employee must be advised, particularly in relation to the possible necessity for them to return money to Comcare.

Payment of the award must still be made pending the reconsideration decision (Operational Advice No 37 refers).

If the reconsideration affirms the decision and if for some reason payment is yet to be made, proceed to Step 6.

If the reconsideration varies the decision, go back to Step 4.

No standard letters have been provided for the review process as a number of different situations may apply.  If an IRO requires assistance with the wording of any letters they should ring or e-mail the contact officer for this OA.

4. Payment

Section 26 requires that payment must be made within 30 days of date of assessment (i.e. determination – Step 4).  Payment is deemed to be made when the cheque is issued – i.e. this means when the cheque is posted.

For cheques to be issued as part of the normal cheque run the following applies:

• The cheque will be posted on the Thursday following the cheque run.
• As payment is deemed to be made when the cheque is issued, we have until the last Wednesday night cheque run within 30 days of determination to verify the payment.
• Payment must be processed on PRACSYS no later than between 23 to 29 days after the determination, depending on the date of the Wednesday night cheque run.  Hence the 21 day limit in which the employee is given to return the election form or seek reconsideration.

The above PRACSYS functions must be followed to ensure that Comcare meets its obligations under section 26 of the Act in relation to making payment within 30 days of assessment.  If circumstances occur in relation to the payment which may affect the employee's rights or complicate the management of the permanent impairment claim, ring or e-mail the contact officer for this OA for advice.

Telephone:

Claim Number:

SL8/1

Dear

Safety, Rehabilitation and Compensation Act 1988

Telephone:

Claim Number:

SL8/2customer

Attention:

Safety, Rehabilitation and Compensation Act 1988

re:

Telephone:

Claim Number:

SL8/2emplee

Dear

Telephone:

Claim Number:

SL8/3

Dear

Safety, Rehabilitation and Compensation Act 1988

Telephone:

Claim Number:

SL8/4

Dear

Safety, Rehabilitation and Compensation Act 1988

Telephone:

Claim Number:

SL8/5

Attention:

Safety, Rehabilitation and Compensation Act 1988

re:

Telephone:

Claim Number:

SL8/6

Dear

Safety, Rehabilitation and Compensation Act 1988

Telephone:

Claim Number:

SL8/7

Dear

Safety, Rehabilitation and Compensation Act 1988

re:

Telephone:

Claim Number:

SL8/8

Dear

Safety, Rehabilitation and Compensation Act 1988

Telephone:

Claim Number:

SL8/9

Dear

Safety, Rehabilitation and Compensation Act 1988

Telephone:

Claim Number:

SL8/10

Dear

Safety, Rehabilitation and Compensation Act 1988

Telephone:

Claim Number:

SL8/11

Dear

Safety, Rehabilitation and Compensation Act 1988

Telephone:

Claim Number:

SL8/12

Attention:

Safety, Rehabilitation and Compensation Act 1988

re:

Telephone:

Claim Number:

SL8/13

Dear

Safety, Rehabilitation and Compensation Act 1988

1. To clarify procedures for taxation of lump sum redemption payments made under section 30 or 137 of the Safety, Rehabilitation and Compensation Act 1988 (SRC Act), and
2. To set out the advice to give claimants and agencies regarding the taxation of these payments and alert claimants to potentially under-deducted tax.

3. Read this OA in conjunction with the relevant sections of the Operations Manual.

1. Operational Advices No 161 and 173 are hereby revoked.

5. An assessable lump sum redemption payment is subject to tax instalment deductions.  Pursuant to subsection section 6-5 of the Income Tax Assessment Act 1997, the ATO confirms that, apart from the exception detailed at paragraph 6 below, lump sum redemption payments are assessable because they are an 'income substitute'.

1. The exception: The ATO has advised us not to tax that component of section 137 lump sum payments calculated using the formula at sub section 137(4) i.e. the amount for the period from age 65.  The ATO does not consider this portion to be an 'income substitute'.  Rather, it is a payment for loss of earning capacity and, as such, is not an assessable lump sum.

7. To determine the appropriate amount of tax to deduct from the assessable lump sum:

1.                            Divide the amount of the redemption calculated under sub section 30(2) or sub section 137(3), (do not include any amount calculated under  sub section 137(4)), by 52 to get a figure representing the weekly amount of income to be received by the taxpayer;
2.                            Using the employee's latest Employment Declaration find the rate of tax applicable to the weekly amount above then multiply this by 52 to give the amount of tax to be deducted from the lump sum.

The method used to calculate the amount of tax instalments to be deducted from an assessable lump sum redemption is likely to result in the employee underpaying tax. This is because the lump sum, when added to all other income received during the year, can be enough to move the employee into a higher tax bracket.

1. The paying authority can only deduct a higher rate of tax instalments from the lump sum with the written permission of the employee.  The later in the financial year they receive the lump sum, the larger the shortfall in tax instalment deductions is likely to be for the employee. Receiving a lump sum early in the financial year can minimise these implications.  Employees requesting a redemption under section 137 should have been advised to consider the best timing for requesting a lump sum payment.

8. Implement these procedures immediately in all cases involving redemption of entitlement.

9. The contact officer for this Operational Advice is Vikki Clingan, Service Performance Management Group.  The file number is 110/4/93.  This Operational Advice may be released to members of the public who request it.

(Signed)

Peter Pharaoh

General Manager

Business Co-ordination Division

24 August 1999

Attachments:

A - s 30 Letter to employee and Information Sheet

B – s 137 Letter to employee and Information Sheet

C – Letter to customer agency, s30

D – Letter to customer agency, s137

Attachment A

S 30 Advice to Claimant

Comcare Claims Management Centre

Phone: 1300 366 979 Fax:

Claim Reference:

Dear

Safety, Rehabilitation and Compensation Act 1988

I refer to your claim under the SRC Act for compensation for , your current weekly payments of $ per week and to my letter to you of .

My letter explained how, in certain circumstances, the provisions of section 30 of the Act require Comcare to redeem further payments to the employee.  I remain satisfied that the degree of your incapacity is unlikely to change and, having regard to sub section 30(1), your claim is therefore one where Comcare is required to make a redemption.

Using the formula provided by the Act and taking into account your current weekly entitlement, I have calculated that your weekly payment converts to a redemption of $ (gross).  The redemption amount is subject to taxation. The amount of tax deducted is $. The determination is effective from .  The net lump sum should be available in your account on .  Please call if this does not occur. Comcare recommends that you seek taxation advice before you spend all the money as you may need to set aside some to pay any shortfall of tax.

I have enclosed a copy of my calculation sheet for your information together with an Information Sheet.  Please read this sheet as it provides the relevant extracts from the Act and explains some of the terms and symbols used in the calculation.

Please note that a redemption payment has the effect of ceasing ongoing entitlement to weekly incapacity payments except in the circumstances described in section 31.  This is also explained in the Information Sheet.  However, access to other entitlements available under the Act, such as medical treatment or pharmacy expenses, is not affected by the redemption.

If you have any questions about this matter please contact me on the above number.

Yours sincerely

for Comcare

22 November, 1999

Encl.Calculation of Redemption

Information Sheet

Notice of Rights

INFORMATION SHEET REDEMPTION OF COMPENSATION

Section 30, Safety, Rehabilitation and Compensation Act 1988

Taxation of Lump Sum Redemptions

Advice from the Australian Taxation Office confirms that lump sum redemption payments under section 30 of the SRC Act are an 'income substitute' and as such are assessable pursuant to section 6-5 of the Income Tax Assessment Act 1997.  This means that tax is deducted from these lump sum redemption payments.

The rate of tax to be deducted from the lump sum is the rate applicable as if the lump sum were included in your total income for this financial year.  The amount of tax is calculated by:

1. dividing the total amount of the redemption by 52 to get a figure representing the weekly amount of income;

1. using the latest Employment Declaration you have provided to us to find the rate of tax applicable to the weekly amount above then multiplying this by 52 to give the amount of tax to be deducted from the lump sum.

The method used to calculate the amount of tax instalments to be deducted from an assessable lump sum redemption is likely to result in underpaid tax. This is because the lump sum, when added to all other income received during the year, can be enough to move you into a higher tax bracket.

Comcare recommends that you seek taxation advice if you have any concerns regarding your overall tax burden for the financial year.

Comcare also recommends that, should you have any concerns regarding other financial implications of receiving this lump sum, you seek financial advice.

Calculation of the amount of the redemption

The following extract from the SRC Act, provides some explanation of the terms and symbols used in the calculation of a redemption.  The weekly amounts shown of $71.53 are those current from 1/7/99.  The amount is indexed.

Section 30 - Redemption of compensation

     (1) Where:

(a)               Comcare is liable to make weekly payments under section 19, 20, 21 or 21A to an employee in respect of an injury resulting in an incapacity;

(b)               the amount of those payments is $71.53* per week or less; and

(c)              Comcare is satisfied that the degree of the employee's incapacity is unlikely to change;

Comcare shall make a determination that its liability to make further payments to the employee under that section be redeemed by the payment to the employee of a lump sum.

     (2) The amount of the lump sum is the amount worked out using the formula:

52 X amount per week X [(specified number + 1)n - 1].

specified number X [(specified number + 1)n]

     (3) For the purposes of subsection (2):

'amount per week' means the amount per week payable to the employee under section 19, 20, 21 or 21A, as the case may be, at the date of the determination;

'specified number' means the number specified by the Minister;

'n' means the number worked out using the formula:

number of days

365

where:

'number of days' means the number of days in the period beginning on the day after the day on which the determination is made and ending on the day immediately before the day on which the employee reaches 65 years of age.

     (4) The Minister may, from time to time, by notice in writing, specify a number (being a specification of the number in decimal notation) for the purposes of subsection (2).

* indexed

Effect on Incapacity Payments

Please note that a redemption payment has the effect of ceasing ongoing entitlement to weekly incapacity payments except in the circumstances described in section 31. However, access to other entitlements available under the Act, such as medical treatment or pharmacy expenses, is not affected by the redemption.

Section 31 of the Act provides for the resumption of incapacity payments in certain circumstances.

“s31. (1)   Where:

1. at any time after a lump sum is paid to an employee under s30 in respect of an injury, the injury results in the employee being incapacitated for work to the extent that the employee is not able to engage in suitable employment; and
2. the incapacity is likely to continue indefinitely;

Comcare is liable to pay compensation to the employee under this section during the period of incapacity.

(2)   The amount of compensation is an amount per week equal to the amount per week that would, but for the payment of the lump sum, have been payable to the employee under section 19, 20, 21 or 21A as the case may be, in respect of the incapacity, less the amount per week that was redeemed at the date of the determination under section 30.”

Attachment B

s 137 Advice to Claimant

Claim number:

Dear

Safety, Rehabilitation and Compensation Act 1988

I refer to your claim under the SRC Act in respect of and to your written request for a redemption of your weekly compensation payments.

I have determined your redemption payment in accordance with section 137 of the Act, based on your weekly compensation entitlement of $, to be $ gross.  The determination is effective from .

I have enclosed a copy of my calculation for your information.

As detailed in the attached Information Sheet, the amount consists of two components. The Australian Taxation Office has advised that the part calculated under sub section 137(3), $ is subject to tax.  Using the method supplied by the ATO to calculate the tax instalments to be deducted, I estimate the instalments to be $.  The tax instalments deducted are an estimate.  The ATO will determine your correct liability when you lodge your return.  The ATO have advised that many Comcare recipients of a lump sum will find that the tax instalments are not enough to cover their full tax liability. Comcare recommends that you seek taxation advice before you spend all the money as you may need to set aside some to pay any shortfall of tax.

As advised in the attached Information Sheet, lump sum redemption payments calculated under sub section 137(4) are not subject to tax.  Therefore I have not deducted any tax instalments from this amount.  Comcare recommends that you seek taxation advice if you have any concerns regarding your overall tax burden for the financial year.

The net lump sum should be available in your account on .  Please call me if this does not occur.

Please note that a redemption payment has the effect of ceasing ongoing entitlement to weekly payments.  However, access to other entitlements available under the SRC Act, such as approved medical treatment or pharmacy expenses, is not affected by the redemption.

If you are dissatisfied with the determination regarding your redemption you can request a reconsideration from Comcare.  I have enclosed a notice of rights for your information.

If you have any questions in relation to your claim please contact me on the above number.

Yours sincerely,

For Comcare

3 August, 1999

Encl.Calculation of Redemption

Information Sheet

Notice of Rights

A lump sum payment amounting to $ will be forwarded to your employer shortly.  I have notified your employer to make the necessary arrangements to determine the net amount payable and make payment direct to you.

INFORMATION SHEET REDEMPTION OF COMPENSATION

Section 137 of the Safety, Rehabilitation and Compensation act 1988

Taxation of Lump Sum Redemptions

Advice received from the Australian Taxation Office confirms that lump sum redemption payments are generally an 'income substitute' and as such are assessable pursuant to section 6-5 of the Income Tax Assessment Act 1997.  This means that, apart from the exception noted below, tax is deducted from lump sum redemption payments.

The exception

The component of the lump sum which is not taxable is the amount calculated using the formula at sub section 137 (4). This component of the calculation takes into account reduced entitlement after age 65.  The formula appears on the next page.

Rate of tax

The rate of tax to be deducted from the assessable lump sum is the rate applicable as if the lump sum were included in your total income for this financial year.  The amount of tax is calculated by:

1. dividing the amount of the redemption calculated under section 137(3), not including any amount calculated under  sub section137(4), by 52 to get a figure representing the weekly amount of income to be received by the taxpayer;
2. using the latest Employment Declaration you have provided to us to find the rate of tax applicable to the weekly amount above, then multiplying this by 52 to give the amount of tax to be deducted from the lump sum.

This method is in accordance with the principle that a taxpayer's total income in the year of receipt is taken into account in determining tax liability for that year.  The method used to calculate the amount of tax instalments to be deducted from an assessable lump sum redemption is likely to result in underpaid tax. This is because the lump sum, when added to all other income received during the year, can be enough to move you into a higher tax bracket.

Comcare recommends that, should you have any concerns regarding the financial implications of receiving this lump sum, you seek financial advice.

Calculation of the amount of the redemption

The following extract from the SRC Act, provides some explanation of the terms and symbols used in the calculation of a redemption.  The weekly amounts shown of $71.53* are those current from 1/7/99.

Section 137 - Redemption on request by former employees

     (1) If:

(a) a relevant authority is liable to make weekly payments of compensation to a former employee in respect of an injury resulting in an incapacity; and

(b) the amount of those payments if $71.53* per week or less; and

(c) the relevant authority is satisfied that the degree of the former employee's incapacity is unlikely to change;

the relevant authority must, on written request by the former employee, make a determination that its liability to make further payments to the former employee be redeemed by the payment to the former employee of a lump sum.

(2) The amount of the lump sum is the sum of:

(a) the amount worked out using the formula in subsection (3); and

(b) the amount worked out using the formula in subsection (4).

(3)The formula for the purposes of paragraph (2)(a) is:

52 x amount per week x [(specified number + 1)n - 1]

specified number x [(specified number + 1)n]

(4)The formula for the purposes of paragraph (2)(b) is:

52 x reduced amount per week x [(specified number + 1)1 - 1]

specified number x [(specified number + 1)1]

(5) For the purposes of this section:

'amount per week' means the amount of compensation per week payable to the former employee;

'specified number' means the number specified by the Minister for the purposes of subsection 30(2);

'n' means the number worked out using the formula:

number of days

365

where:

'number of days' means the number of days in the period beginning on the day after the day on which the determination is made and ending on the day immediately before the day on which the employee reaches 65 years of age;

'reduced amount per week' means the amount per week less the amount calculated under the formula in section 134;

'l' means the number worked out in using the formula:

expectation of life - (65 - age);

'expectation of life' means the number of years in the complete expectation of life of the former employee at the date of the determination, as ascertained by reference to the latest Australian Life Tables published by the Australian Statistician;

'age' means the number of completed years in the age of the former employee at the date of the determination.

* indexed

Attachment C

Claims Management Centre

Phone: 1300 366 979 Fax:

Claim number:

Dear ,

SAFETY REHABILITATION & COMPENSATION ACT 1988

RE: Claim No.

I am writing to you with regards to who is currently in receipt of weekly compensation payment from Comcare for sustained on .

Section 30 of the Safety, Rehabilitation and Compensation Act 1988 allows Comcare to determine that if an employee is in receipt of weekly payments under $71.53 (indexed), and that the degree of incapacity suffered by the employee is unlikely to change, Comcare will redeem the weekly payments by awarding a lump sum.

Based on the current weekly entitlement of $, has been awarded a lump sum redemption of $.

Advice received from the Australian Taxation Office (ATO) makes it clear that lump sum redemption payments are generally an 'income substitute' and as such are assessable pursuant to section 6-5 of the Income Tax Assessment Act 1997.  This lump sum redemption payment is subject to tax instalment deductions at the rate of tax determined using the employees latest Employment Declaration.

The appropriate rate of tax to be deducted from this assessable lump sum is determined by:

1. dividing the amount of the redemption calculated under s30(2) by 52 to get a figure representing the weekly amount of income to be received by the taxpayer;

2. using the employee's latest Employment Declaration find the rate of tax applicable to the weekly amount above then multiply this by 52 to give the amount of tax to be deducted from the lump sum.

This method is in accordance with the principle that a taxpayer's total income in the year of receipt is taken into account in determining tax liability for that year.  The ATO has asked us to note that the method used to calculate the amount of tax instalments to be deducted from an assessable lump sum redemption is likely to result in the employee underpaying tax. This is because the lump sum, when added to all other income received during the year, can be enough to move the employee into a higher tax bracket.    The paying agency can only deduct a higher rate of instalments from the lump sum where the claimant has asked in writing for them to do so.

Because of the taxation and Group Certificate implications it is not feasible for Comcare to pay direct by cheque.  In line with the current procedures for payment of incapacity entitlements, it will therefore be necessary for your agency to determine the after tax amount payable and make payment direct to .  The gross amount is to be shown as earnings in their Group Certificate.

The gross amount to be paid will appear in the Incapacity Payment Authority issued by Comcare.The redemption amount will then be paid on your next available Incapacity Reimbursement cheque.

If you have any enquiries regarding these payments, please contact me on .

Yours sincerely,

for Comcare

22 November, 1999

Encl. Letter to employee

Attachment D

Claims Management Centre

Phone: 1300 366 979 Fax:

Claim number:

Dear ,

SAFETY REHABILITATION & COMPENSATION ACT 1988

RE: Claim No.

I am writing to you with regards to who is currently in receipt of weekly compensation payment from Comcare for sustained on .

has applied for a redemption of their weekly compensation payments under s137 of the Safety, Rehabilitation and Compensation Act 1988.

Based on the current weekly entitlement of $, has been awarded a lump sum redemption of $.

Advice received from the Australian Taxation Office (ATO) makes it clear that lump sum redemption payments are generally an 'income substitute' and as such are assessable pursuant to section 6-5 of the Income Tax Assessment Act 1997.  With one exception, a lump sum redemption payment is subject to tax instalment deductions at the rate of tax determined using the person's latest Employment Declaration.

The Taxation Office advises that the exception to this is the component of a lump sum payment made under section 137 which is for the period after the employee turns 65 i.e. the amount calculated using the formula at sub section 137 (4).  This component of the lump sum should not be taxed.

As 's lump sum redemption amount is only for the period from age 65, it is not subject to tax.

The appropriate rate of tax to be deducted from the assessable lump sum is determined by:

1. dividing the amount of the redemption calculated under sub section 137(3), and excluding any amount calculated under ss137(4), by 52 to get a figure representing the weekly amount of income to be received by the taxpayer;

2. using the employee's latest Employment Declaration find the rate of tax applicable to the weekly amount above then multiply this by 52 to give the amount of tax to be deducted from the lump sum.

This method is in accordance with the principle that a taxpayer's total income in the year of receipt is taken into account in determining tax liability for that year.  The Australian Taxation Office has asked us to note that the method used to calculate the amount of tax instalments to be deducted from an assessable lump sum redemption is likely to result in the employee underpaying tax. This is because the lump sum, when added to all other income received during the year, can be enough to move the employee into a higher tax bracket.    The paying agency can only deduct a higher rate of instalments from the lump sum where the claimant has asked in writing for them to do so.

Because of the taxation and Group Certificate implications it is not feasible for Comcare to pay direct by cheque.  In line with the current procedures for payment of incapacity entitlements, it will therefore be necessary for your agency to determine the after tax amount payable and make payment direct to .  The gross amount is to be shown as earnings in their Group Certificate.

The gross amount to be paid will appear in the Incapacity Payment Authority issued by Comcare.  The redemption amount will then be paid on your next available Incapacity Reimbursement cheque.

If you have any enquiries regarding these payments, please do not hesitate to contact me on .

Yours sincerely,

for Comcare

22 November, 1999

Encl. Letter to employee

1. To advise all Comcare staff of the 19 August 1999 increase in the Average Weekly Ordinary Time Earnings for Full Time Adults (AWOTEFA).

2. Subsection 19(5) of the Safety, Rehabilitation and Compensation Act 1988 provides for a ceiling on weekly incapacity payments after the first 45 weeks.

2. This ceiling is 150% of the Average Weekly Ordinary Time Earnings for Full time Adults (AWOTEFA).  The AWOTEFA is updated quarterly by the Australian Bureau of Statistics.

AWOTEFA UPDATE

4. The next increase is expected in November 1999.

5. The contact officer for this Operational Advice is Vikki Clingan, Service Performance and Management Group.  This document is available for release under the Freedom of Information Act 1982.  Requests for release of this document should be referred to the FOI contact officer.

(signed)

Peter Pharaoh

General Manager

Business Co-ordination Division

24 August 1999

1. To provide operational policy information detailing:

1. Comcare's authority to suspend compensation under subsections 36(4) and 37(7) of the Safety, Rehabilitation and Compensation Act 1988 (the Act);
2. the rationale for subsections 36(4) and 37(7) of the Act as self-executing provisions;
3. the benefits available under the Act which are suspended;
4. the consequences of actions taken under subsections 36(4) and 37(7).

1.       One of the intentions of the Act was to establish a “compulsory” rehabilitation obligation on the part of both employees and employers.  Where it was beneficial and appropriate for the individual to be rehabilitated back to work, participation in a rehabilitation program was a requirement for receiving compensation benefits.

2.       There has been discussion between Comcare and employers for some time about who has the power to suspend compensation under subsections 36(4) and 37(7), whether such a decision once made is reviewable, and whether such a suspension encompasses all benefits under the Act.

3.       The relevant sections of the Act are:

Section 36

Section 36 of the Act deals with the assessment of an injured employee's capacity to undertake a rehabilitation program.  Subsection 36(4) states:

"(4) Where an employee refuses or fails, without reasonable excuse, to undergo an examination in accordance with a requirement, or in any way obstructs such an examination, the employee's rights to compensation under this Act, and to institute or continue any proceedings under this Act in relation to compensation, are suspended until the examination takes place."

Section 37

Section 37 of the Act deals with the provision of rehabilitation programs for injured employees.  Subsection 37(7) states:

"(7) Where an employee refuses or fails, without reasonable excuse, to undertake a rehabilitation program provided for the employee under this section, the employee's rights to compensation under this Act, and to institute or continue any proceedings under this Act in relation to compensation, are suspended until the employee begins to undertake the program.”

4. Comcare sought General Counsel's advice on :

• who has the power to suspend under 37(7);

• whether the action to suspend is reviewable;

• whether all benefits are suspended.

1. General Counsel has provided Comcare with the following advice:

1. who has the authority to suspend compensation under subsections 36(4) and 37(7) of the Act

Under subsections 36(4) and 37(7) of the Act, it is Comcare that decides and informs the employee that his or her rights to compensation and rights to institute proceedings under the Act are suspended.

1. whether subsections 36(4) and 37(7) of the Act are self-executing provisions

The Federal Court in the recent case of Trajkovski v Telstra Corporation Limited held that subsection 37(7) of the Act is self-executing.  This case supports the view that subsection 36(4) is also self-executing because subsection 36(4) contains the same wording as contained in subsection 37(7).

A self-executing provision means that the provision will automatically come into operation once a set of circumstances exist.  Accordingly, a Claims Manager does not make a decision to suspend entitlements under subsections 36(4) and 37(7), but instead must identify when the set of circumstances referred to in the subsections come into existence.  When examining these circumstances, the Claims Manager should give the employee ample opportunity to explain their circumstances especially if there is any doubt, and then decide if any excuse offered is indeed reasonable.  Once the Claims Manager has identified the existence of the set of circumstances, he or she must undertake the action described in the PROCEDURES Section of this Advice.

Reasonableness Of The Excuse:

The decision by Comcare about whether an excuse is reasonable or otherwise is subject to reconsideration and full rights under the Administrative Appeals Tribunal (AAT) Act 1975.  The same processes that apply to review of other decisions under the Act apply when examining the issue of the reasonableness of the excuse.

Action To Suspend.

If an employee wishes to challenge the suspension of their rights to compensation or rights to institute or continue proceedings under the Act, then they file an application under section 39B of the Judiciary Act 1903.  If such an application came before the Federal Court, it would have to hear evidence as to whether the employee provided a reasonable excuse in not undertaking an examination or rehabilitation program.

If an employee submits a request for a review of the decision to suspend they must be advised of the process required as above.  However, the employee should be advised that a review by Comcare and subsequently through the AAT if required,  can be undertaken on the issue of the reasonableness of the excuse provided which resulted in the suspension.  A favourable review of this decision would have the effect of reinstating compensation entitlements.

2. If 'compensation' is suspended, whether this encompasses all benefits available under the Act

Suspension of compensation means suspending compensation under sections 15 to 21, 21A, 22, 24, 25, 27, 29, 39 and Part X of the Act.

However, the right to undertake an examination or rehabilitation program is not suspended.

1. Comcare is now adopting Counsel's advice.  In addition to this Operational Advice a Customer Circular (CC no 29, May 1999) and a Working With You article (Issue 20, July 1999) have been issued.

2. If an employer has a claim in which they consider suspension under either subsection 36(4) or 37(7) is appropriate, the employer should provide full details to Comcare's Claims Manager.  The Claims Manager needs to be satisfied that the employer has discussed with the employee their responsibilities to undertake rehabilitation.

1. Consideration should be given to the employer's recommendation within ten days.  If the Claims Manager agrees with the employer's recommendation, having examined any reasons already provided by the claimant for non-attendance or non-participation in a program, the Claims Manager should then send an initial letter to the employee advising the employee of the consequences of, without a reasonable excuse;

• not undergoing a rehabilitation assessment under section 36                         Letter 1
• not undertaking a rehabilitation program under section 37                             Letter 2

A copy of this advice must to be sent to the employer                                                Letter 3

1. “Reasonable excuse” guidelines.

Any reasons provided by the claimant must be examined as to their “reasonableness”.  What constitutes 'reasonable excuse' will vary from case to case however the following would be examples of a 'reasonable excuse'

• The physical inability of the employee to attend the assessment or rehabilitation program
• The inappropriateness of the duties required to be undertaken by the employee
• Urgent family matters e.g. life and death situations.

In the first two circumstances supporting medical evidence would be required.

On the other hand the following excuses would not be considered reasonable

• Resignation
• Travel overseas.

1. If the Claims Manager considers that the excuse is reasonable they should discuss this immediately with the employer for them to re-examine the timing and suitability of a rehabilitation assessment or rehabilitation program.

2. If the Claims Manager considers the excuse is not reasonable they then advise the employee that their compensation entitlements are suspended.  Their rights to institute or continue proceedings under the Act, however, are suspended except for requesting a reconsideration of this decision.  The following letters apply

• not attending the examination                                                                        Letter 4

• not undertaking the rehabilitation program                                                      Letter 5

A copy of this advice to the employer                                                                    Letter 6

A copy of the Notice of Rights is attached to each of the above letters.  Full reasons as to why the Claims Manager did not consider the excuse(s) provided (if any) by the claimant as reasonable must be explained in the letter advising of the suspension of payments.  The issue of the “reasonableness of the excuse” forms the basis for any possible reconsideration under the SRC Act or application to the AAT.

If after the receipt of the notice of suspension the employee undertakes the assessment or rehabilitation program then payments of compensation will be reinstated, however not for the period of suspension.  This will be advised to the claimant in the initial advices ie letters 1 and 2.

1. The 'CSUS.CM' screen in PRACSYS should be used to suspend payments.  Details are contained in the Operations Manual Volume 10, Part 2, 'Suspending The Compensation Claim'.

2. All staff with responsibilities for claims management and rehabilitation should note the above advice.

1. Case management training programs and the policy handbook for Case Managers will also incorporate this advice.

4. The contact officer for this Operational Advice is Gene Reardon, Manager National Rehabilitation Policy Unit, phone (03) 9601 4119.  Requests for the release of this document should be referred to the FOI Officer.

Peter Pharaoh

General Manager

Business Co-ordination Division

25 August 1999

Letter 1

Telephon — e: 1300 366 979 Facsimile:

Claim Number:

Dear

Safety, Rehabilitation and Compensation Act 1988

Reference: Subsection 36(4) of the Act

I refer to your claim for compensation in respect of and to the appointment scheduled for [date ]that was arranged to assess your capability to undertake a rehabilitation program.

I understand that since the assessment was organised, the following difficulties have arisen:

• (insert details or chronological details of appointments etc made and failures by the employee in respect to these.)

I wish to draw your attention to Subsection 36(4) of the Act which indicates that your rights to compensation and your rights to institute or continue proceedings under the Act may be suspended if you refuse or fail without reasonable excuse to undergo an assessment arranged for you.

On the basis of the information set out above, it appears that you have refused or failed to attend a scheduled assessment to assess your capability to undergo a rehabilitation program.  If your refusal to attend the assessment is considered to be without reasonable excuse, your rights to compensation and to institute or continue proceedings under the Act are suspended.  If this occurs no further compensation payments would be able to be made to you until you undertake the assessment

On the evidence available to me it appears that you have not provided a reasonable excuse.

You must therefore either:

1. undergo an examination for the assessment of your capability of undertaking a rehabilitation program; or

1. provide reasons for refusing or failing to do so.

Please note that if you have not taken either of these steps within 14 days of the date of this letter, Comcare will suspend payment of your compensation entitlements.  If this occurs and you later attend a rehabilitation assessment your access to compensation will immediately resume but no compensation will be payable for the duration of the suspension.

If you have any questions relating to this claim, please call on 1300 366 979 or write to Comcare quoting the claim number stated above.  Should you wish to visit Comcare to talk about this letter please call 1300 366 979 to make an appointment.

Yours sincerely

Comcare Claims Management Centre

Letter 2

Telephon — e: 1300 366 979 Facsimile:

Claim Number:

Dear

Safety, Rehabilitation and Compensation Act 1988

Reference: Subsection 37(7) of the Act.

I refer to your claim for compensation in respect of and to the rehabilitation program which was set up for you on [date].

You will recall that on when the program was established you were provided with a form entitled “Return to Work Plan” which set out your rights and obligations in relation to the program.  A copy is attached for your information.

I understand that since the program was set up, the following difficulties have arisen in relation to its implementation:

• (insert chronological details of appointments etc made and failures by the employee in respect to these.)

I wish to draw your attention to Subsection 37(7) of the Act which indicates that your rights to compensation and your rights to institute or continue proceedings under the Act may be suspended if you refuse or fail without reasonable excuse to undergo a rehabilitation program set up for you.

On the basis of the information set out above, it appears that you have refused or failed to undertake a rehabilitation program provided for you.  If your refusal to undergo the rehabilitation program is considered to be without reasonable excuse, your rights to compensation and to institute or continue proceedings under the Act are suspended.  Consequently no further compensation payments would be able to be made to you until you undertake the rehabilitation program.

You must therefore either:

1. commence or recommence your rehabilitation program as agreed; or
2. provide reasons you may have for refusing or failing to do so.

If within 14 days of the date of this letter you have not taken either of these steps, Comcare will suspend payment of your compensation entitlements. If this occurs and you later attend a rehabilitation assessment your access to compensation will immediately resume but no compensation will be payable for the duration of the suspension.

If you have any questions relating to this claim, please call on 1300 366 979 or write to Comcare quoting the claim number stated above.  Should you wish to visit Comcare to talk about this letter please call 1300 366 979 to make an appointment.

Yours sincerely

Comcare Claims Management Centre

Telephone: Letter 3

Claim Number:

Safety, Rehabilitation and Compensation Act 1988

re:

Please find enclosed a copy of the letter forwarded to the claimant in relation to their non-attendance at an appointment to assess their capability to [undertake a rehabilitation program] OR [their non commencement of a rehabilitation program].

You may wish to call the employee to confirm that they have received their advice.

As the employer, please provide immediate advice if the claimant provides additional evidence or if he/she [attends for an assessment OR undertakes a rehabilitation program].

If you have any questions in relation to this claim, please call on or write to Comcare quoting the claim number stated above.

Comcare Claims Management Centre

[date]

Encl. Letter to the claimant.

Telephone: 1300 366 979 Facsimile: Letter 4

Claim Number:

Dear

Safety, Rehabilitation and Compensation Act 1988

Suspension of Compensation Entitlements under subsection (36(4)

I refer to my letter to you dated (copy attached).

I confirm that on an examination was arranged to assess your capability to undertake a rehabilitation program.

I note your reasons that .

As you have not provided me with a reasonable excuse for refusing or failing to attend the assessment, your compensation entitlements are suspended.  Your rights to institute or continue proceedings under the Act are suspended except as outlined below.  No compensation can be paid to you during the period of the suspension.

If you subsequently attend an assessment your compensation entitlements will be reinstated from the date of that assessment.

Yours rights of review of the decision that your excuse was not reasonable are outlined in the attached Notice of Rights.  If you wish to have the issue of suspension of compensation reconsidered you will need to make an application to the Federal Court under section 39B of the Judiciary Act.

If you have any questions relating to this claim, please call on 1300 366 979 or write to Comcare quoting the claim number stated above.  Should you wish to visit Comcare to talk about this letter please call 1300 366 979 to make an appointment.

Yours sincerely

Comcare Claims Management Centre

Telephone: 1300 366 979 Facsimile: Letter 5Letter

Claim Number:

Dear

Safety, Rehabilitation and Compensation Act 1988

Suspension of Compensation Entitlements under subsection 37(7)

I refer to my letter to you dated (copy attached).

I confirm that on a rehabilitation program was provided for you.

I note your reasons that .

As you have not provided me with a reasonable excuse for refusing or failing to undertake the rehabilitation program, your compensation entitlements are suspended.  Your rights to institute or continue proceedings under the Act are suspended except as outlined below.  No compensation can be paid to you during the period of the suspension.

If you subsequently undertake a rehabilitation program your compensation entitlements will be commenced from the date that you begin the rehabilitation program.

Yours rights of review of the decision that your excuse was not reasonable are outlined in the attached Notice of Rights.  If you wish to have the issue of suspension of compensation reconsidered you will need to make an application to the Federal Court under section 39B of the Judiciary Act.

If you have any questions relating to this claim, please call on 1300 366 979 or write to Comcare quoting the claim number stated above.  Should you wish to visit Comcare to talk about this letter please call 1300 366 979 to make an appointment.

Yours sincerely

Comcare Claims Management Centre

Encl: Notice of Rights

Copy of Letter.

Telephone: Letter 6

Claim Number:

Attention:

Safety, Rehabilitation and Compensation Act 1988

re:

I refer to the employee's non-attendance at an assessment under Section 36(4) of the Act or non-commencement of the rehabilitation program.

A copy of the letter sent to the employee outlining the basis of the decision on the claim is attached for your information.

Yours rights of review of the decision that the excuse provided by the employee was not reasonable are outlined in that attached Notice of Rights.  If you wish to have the issue of suspension of compensation reconsidered you will need to make an application to the Federal Court under section 39B of the Judiciary Act.

If you have any questions in relation to this claim, please call on or write to Comcare quoting the claim number stated above.

Comcare Claims Management Centre

[date]

Encl.Notice of Rights

Copy of letter.

1. To provide information on the interaction between compensation and redundancy packages which will assist Claims Managers in determining how the provisions of the Safety, Rehabilitation and Compensation Act 1988 (SRC Act) should apply to employees who have received redundancy packages.
2. This Operational Advice replaces OA96/015.

3. While the employee continues to suffer the effects of a compensable condition he or she will still be entitled to incapacity and other entitlements under the SRC Act, subject to the usual tests of eligibility.  Acceptance of a redundancy package does not  mean that an employee's entitlements under the SRC Act should cease.

8. All staff with responsibilities for claims management should note the above advice.

9. The contact officer for this Operational Advice is Vikki Clingan, Service Performance Management Group.  This document is available for release under the Freedom of Information Act 1982.  Requests for release of this document should be referred to the FOI contact officer.

(signed)

Peter Pharaoh

General Manager

Business Co-ordination Division

9 September 1999

ATTACHMENT A

Operational Advice 99/013

Voluntary retrenchment where an excess employee is not fit and is not at work

When can an offer be made to an excess employee who is not fit for and not at work?

1. When deciding whether to make an offer of voluntary retrenchment to an excess employee who is not fit for and not at work, consideration needs to be given to protecting the Commonwealth from unnecessary liability arising under workers' compensation legislation or at common law in relation to an illness or injury. Agencies, however, may offer voluntary retrenchment to an excess employee who is not fit for and not at work in the following circumstances.

2. In compensation cases, where:

• there is little or no likelihood of further improvement in the employee's condition,
• the employee is unable to return to his or her former duties, or to be placed in another suitable position, and
• the agency has consulted with Comcare and sought advice on the implications for continued liability for the Commonwealth, and the impact on a claimant's benefits and on the agency's premium; and

in non-compensation cases, where:

• there is little or no likelihood of further improvement in the employee's condition,
• the employee is unable to return to his or her former duties, or to be placed in another suitable position, and
• the agency has consulted with the Australian Government Health Service (AGHS) to establish that invalidity retirement is not appropriate.

3. It is important that before making an offer of voluntary retrenchment to an employee absent from work through illness or injury, an agency should also be satisfied that:

• the employee is an excess employee;
• the appropriateness of invalidity retirement has been assessed and any request for invalidity retirement has been considered and determined by the relevant Superannuation Board; and
• the Commonwealth is not exposed to unnecessary or increased liability arising under workers' compensation legislation or at common law in relation to an illness or injury as a result of the agency offering, and the employee accepting, voluntary retrenchment.

4. It continues to be inappropriate to offer voluntary retrenchment in circumstances where an employee is undergoing a graduated return to duty, where the prognosis for the condition is unknown or where the employee may be totally and permanently incapacitated for duty and a request for invalidity retirement has been made but the relevant Superannuation Board has not considered and determined the request.

5. An offer of voluntary retrenchment should not to be made to an excess employee who is absent from duty for minor illness or injury, whether a compensation or non-compensation case, where there is a reasonable prospect of the employee returning to duty. In such cases, voluntary retrenchment should only be offered to the employee after they have returned to duty.

6. Voluntary retrenchment is management-initiated and it is a matter for the agency to decide, in all cases where the above circumstances have been satisfied, whether an offer of voluntary retrenchment is to be made or not.

Impact on other benefits

Payments excluded from salary for severance pay purposes

7. Salary for severance pay purposes is defined in an agency's certified agreement or the APS Award, as the case may be. In calculating the severance benefits any incapacity payment made under workers' compensation legislation (Comcare benefit) or any partial invalidity pension (superannuation benefit) being paid to the employee is not considered as an allowance. The salary for severance pay purposes for an excess employee receiving compensation payments is the salary the employee would have received had the employee not been absent from work and been performing normal duties during the period.

ATTACHMENT B

Operational Advice 99/013

SUGGESTED ADVICE TO EMPLOYERS

IN SELECTED CASES

Note:  These suggested forms of reply are indicative only and will not necessarily fit all situations.

They are drafted as standard text and should be used wherever possible.

Each case must be carefully considered before deciding which reply to use and all blank spaces should be filled in before forwarding it to the employer c — oncerned.

ATTACHMENT C

Operational Advice 99/013

INFORMATION FOR EMPLOYEEs

Effect of redundancy package on

compensation entitlements

If you are currently in receipt of compensation entitlements, the acceptance of a redundancy package will impact on your ongoing incapacity payments following separation.

You should discuss the implications of accepting the package with your Human Resources (HR) area, who, if the questions are specifically compensation related can call your Claims Manager in Comcare.  In some instances, due to the complexity of  individual cases, the Claims Manager will not be able to provide specific information on payment amounts but will only be able to give general information on the provisions of the Safety, Rehabilitation and Compensation Act 1988 (SRC Act).

As a beginning though, consider the following points when contemplating acceptance of a package.

Ongoing Liability

Where a condition has been accepted as being work related, liability will continue for as long as the condition continues to exist and to be work related.  Please note however that the continued acceptance of liability does not necessarily mean that weekly payments will continue.

NOTE: Compensation payments are not necessarily permanent and can not be relied upon in determining any long term financial plans.

Incapacity Entitlements

Incapacity entitlements are those payments made to employees for loss of earnings.  The nature of the redundancy package accepted is likely to affect continued payments to current employees following separation from the APS.

Where you are actively seeking redundancy, it is likely that ongoing incapacity payments will be reduced or even cease.

You should check with your HR area on how you might be affected.  Incapacity payments following separation cannot be calculated until the following information is officially provided to Comcare:

• the nature of the redundancy;

• the structure of the payment package;

• the timing (dates) for payment and separation.

This means that Comcare will not be able to provide you with any specific information on amounts or payment of incapacity until after you have been made redundant.

Separation Pay

Payments in lieu of recreation and long service leave, and severance pay will not be taken into account in calculating any ongoing incapacity payments.

Superannuation

Any employer funded components of superannuation payouts will be taken into account in calculating any ongoing incapacity payments.  (This includes funds paid out as lump sums, pensions, or preserved by choice).

taxation

Comcare staff will not provide any information on the taxation implications of redundancy and compensation.  Please see your HR area or call the Australian Taxation Office.

Medical or other related costs

For as long as liability exists, and subject to normal reviews and approvals, Comcare will continue to pay medical and other claims related expenses.

Employment

Employment, or ability to engage in employment, following separation is likely to reduce ongoing incapacity payments.  You must inform Comcare if this occurs, whether or not it is paid.

If you would like further information, you may wish to ask your employer for a copy of the Public Service and Merit Protection Commission's  'Management of Excess Staff Situations in the APS'

ATTACHMENT D

Operational Advice 99/013

Type: INVOLUNTARY (including redundancies where there is little or no choice due to Agency imperatives)

* – Superannuation amount and superannuation contribution

† – Apply AE only if Commonwealth employment offered to employee

Type: VOLUNTARY (by substitution or through deliberate  effort on the part of the employee)

1. To advise officers arranging for examinations by legally qualified medical practitioners that practitioners should be registered in the State or Territory in which an examination or treatment is to occur.

1. Read this Operational Advice in conjunction with OA 98/014, Examination of Claimants by legally qualified medical practitioners under Section 57.

3. Claims managers have occasionally arranged for a legally qualified medical practitioner to travel from interstate when a relevant specialist has not been available locally and the employee has not been able to travel.

8. If necessary, to identify a suitable specialist refer to the ILM Research Library, Policy folder.  This folder includes a list of medical specialities and qualifications and an Index of Specialists which identifies the State or Territory in which they are located.

1. If you intend to arrange for a legally qualified medical practitioner to travel interstate to examine an employee, you must confirm with the doctor at the time of making the initial approach, that he or she is registered with the relevant medical board of the State or Territory where they are to examine the employee.

2. If this is not the case, advise them to seek registration under the relevant State or Territory legislation before medico-legal examinations are conducted.

3. If, inadvertently, a report is obtained from a medical practitioner who is not registered in the State or Territory in which the examination takes place, Comcare may not be precluded from relying on such a medical report.  However, you must refer the matter immediately to the Service Performance Management Group.

12. The contact officer for this Operational Advice is Vikki Clingan, Service Performance Management Group.  This document is available for release under the Freedom of Information Act 1982.  Requests for release of this document should be referred to the FOI contact officer.

(signed)

Peter Pharaoh

General Manager

Business Co-ordination Division

11 November 1999

1. To advise all Comcare staff of the 18 November 1999 increase in the Average Weekly Ordinary Time Earnings for Full Time Adults (AWOTEFA).

2. Subsection 19(5) of the Safety, Rehabilitation and Compensation Act 1988 provides for a ceiling on weekly incapacity payments after the first 45 weeks.

3. This ceiling is 150% of the Average Weekly Ordinary Time Earnings for Full time Adults (AWOTEFA).  The AWOTEFA is updated quarterly by the Australian Bureau of Statistics.

AWOTEFA UPDATE

4. The next increase is expected in February 2000.

5. The contact officer for this Operational Advice is Vikki Clingan, Service Performance and Management Group.  This document is available for release under the Freedom of Information Act 1982.  Requests for release of this document should be referred to the FOI contact officer.

(signed)

Peter Pharaoh

General Manager

Business Co-ordination Division

19 November 1999