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Duration of Lump Sum Preclusion Period
Last amended: Commencement of the preclusion period
The following table shows when the lump sum preclusion period commences under various conditions:
Then the lump sum preclusion period begins on the day...
both periodic compensation payments and compensation in the form of a lump sum are received for lost earnings or lost capacity to earn
after the last day of the periodic payments period, regardless of any breaks in the receipt of the periodic payments.
a person chooses to receive part of an entitlement to periodic compensation payments in the form of a lump sum
on which the person's periodic compensation payment is a reduced payment due to receipt of the lump sum.
none of the above applies
on which the loss of earnings or loss of earning capacity began.
When does lost earnings or lost capacity to earn begin
Lost earnings or lost capacity to earn would usually commence on the day of the compensable event. However, some situations are not so clear cut, such as where the pensioner continues working with no loss of income following the injury. Delegates should adopt a commonsense approach to making an informed, factual decision based on the impact the compensable injury has had on the individual's earnings and earning capacity.
Examples of preclusion period start date
The following situations are examples of preclusion period start dates:
- A veteran is injured on 27 June 1997 and receives full rate sick pay until ceasing employment on 13 July 1999. The veteran receives no periodic compensation and successfully settles a common law action in October 2000, receiving a lump sum compensation payment. The start date of the preclusion period should be 14 July 1999, the day after employment ceased, as this is the date the lost earnings commenced.
- A person is awarded a lump sum for pain and suffering and future economic loss in respect of injuries sustained at birth. The start date of the preclusion period should be the person's date of birth as this is the date when the loss of earning capacity commenced.
- The preclusion period start date for compensation cases involving post traumatic stress disorder as a result of the 1964 Voyager accident would generally be:
- the day after employment ceased where the person ceased employment before normal retirement age, or
- the day after a promotion was lost if the reason for the loss of promotion and the reason for compensation are connected, or
- the date of injury where the person continued working with no loss of income until ceasing work as a consequence of reaching retirement age.
Lump sum awarded, but periodic payments continue
If periodic payments are paid for an indefinite length of time, and a pensioner receives a lump sum compensation payment, the start date of the preclusion period cannot be determined. In these cases the pensioner is advised that a preclusion period will be applied in the future when periodic payments:
- cease, or
- are reduced because of the lump sum payment.
Preclusion period for compensation received before 20 March 1997
If the person or the person's partner received the lump sum compensation payment before 20 March 1997 the number of weeks in the lump sum preclusion period in relation to a person and the person's partner is:
Compensation part of lump sum/Average weekly earnings
Average weekly earnings is the amount:
estimated as the average total weekly earnings, during a particular month, of all employees (all persons) in Australia, and
last published by the Australian Statistician before the lump sum compensation payment became payable.
Duration of preclusion period for compensation payment received between 20 March 1997 and 19 September 2009
If the person receives the lump sum compensation payment on or after 20 March 1997 and before 20 September 2009 the number of weeks in the lump sum preclusion period in relation to a person is:
52 x Compensation part of lump sum/OIFA + 2.5(MBR + PA)
OIFA means annual ordinary income free area for a person who is not a member of a couple.
MBR means the annual maximum