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3.6 Allowances

Document
Last amended 
3 June 2021

3.6.1 Duration ADF allowances are compensated for (difference between DRCA and MRCA)

 

 

Serving

Discharged

Type of allowance

DRCA

MRCA

DRCA

MRCA

Qualification and skills based allowances

i.e. clearance diving, SFDA 

As advised by Chief of Defence Force.

 

 

As advised by Chief of Defence Force.

 

Only pay-related allowances can be compensated.

 

 

Indefinitely.

 

 

As advised by Chief of Defence Force.

 

Only pay-related allowances can be compensated.

 

 

Compensation for hardship based allowances

i.e. deployment, field

As advised by Chief of Defence Force.

 

 

As advised by Chief of Defence Force.

 

Only pay-related allowances can be compensated.

 

As advised by Chief of Defence Force.

 

 

As advised by Chief of Defence Force.

 

Only pay-related allowances can be compensated.

 

3.6.2 Compensation for lost allowances

The calculation of Normal Weekly Earnings/Normal Earnings includes a component to compensate for allowances that form part of the earnings the person has lost due to injury.

In order for an allowance to be compensated, the person must have been actually receiving it prior to the injury (with the exception of those injured in initial training). The allowance must also be taxable. 

The following should not be included in the calculation of NWE/NE:

  • allowances for money spent (or likely to be spent) by the person on expenses (i.e. travel allowance, tropical clothing allowance);
  • allowances that the person is not yet receiving i.e. a member who is injured whilst undertaking pre-deployment training and who cannot subsequently deploy because of that injury, cannot be compensated; and
  • retention bonuses (these are not usually paid as an allowance but rather as a lump sum payment and are not considered allowances).

Example – Allowance a person is not yet receiving

A member who was attempting to transfer from infantry corps to Special Forces is injured during corps training, subsequently the member is never transferred and never begins to receive the Special Forces Disability Allowance (SFDA). The member submits a claim for compensation for lost SFDA. Incapacity payments are not made as the member cannot be compensated for any prospective pay and/or allowances that they would have received upon completion of training (i.e. an allowance they are not yet receiving). N(W)E must be based on the pay and allowances they were receiving prior to the onset of their injury.

The following table provides a guide but is not exhaustive;

Included in NWE/NE

Excluded from NWE/NE

First Aid Allowance

Annual Leave Bonus

Higher Duties Allowance

Meal Allowance

Leading Hand/Supervisor Allowance

Travel Allowance*

Proficiency Allowances (tickets)

Tropical Clothing Allowance

Shift Allowances

Uniform Maintenance Allowance**

*Only if the allowance is to compensate for money spent i.e. meals, hotel etc. rather than it being a component of wages (taxable). If required delegates should confirm this with the employer.

**For periods prior to 13 May, 2021

3.6.3 Types of ADF allowances

3.6.3.1 Service Allowance

The ADF salary structure allows for payment of Service Allowance, in addition to the basic salary, to members of the permanent force who are holding certain ranks. As a result of the ADF Employment Offer Modernisation Program, the Defence Force Remuneration Tribunal have determined that Service, Reserve, Trainee and Uniform Allowances are ‘rolled into’ members’ salary, to establish ‘Military Salary’ with effect from 13 May, 2021.

For periods prior to 13 May, 2021, where Service Allowance is payable, it should be incorporated into the member/ex-member's NWE/NE.

3.6.3.2 Disability Allowances

Disability allowances compensate a serving member for the disabilities associated with service, generally within a specific service environment i.e. a work environment that is hazardous/uncomfortable/stressful etc., the location of service i.e. a remote posting or time spent away from their dependents, or the type of service duties i.e. diving or flying.

3.6.3.2.1 Deployment Allowances

A member of the ADF deployed on warlike or non-warlike service generally receives three separate pay-related allowances:

  • Deployment Allowance or International Campaign Allowance;
  • Field Allowance; and
  • Separation Allowance.

These allowances have been determined as pay-related allowances. When a member is medically evacuated back to Australia due to a service related injury or disease, they may become entitled to compensation for loss of deployment allowances.  

The duration for payment of these allowances varies and is summarised below.

Allowance

Service Type

Duration of allowance

Deployment/International Campaign

Warlike

duration of the deployment plus for the period of any accrued war service and recreation leave whilst on deployment

Deployment

Non warlike

duration of the deployment plus for the period of any accrued war service and recreation leave whilst on deployment

Field

 

ceases when the member leaves the field

Separation

 

ceases upon the member's return to Australia

3.6.3.2.2 War Service leave and additional recreation leave

War service leave is an additional leave benefit for a member who is on warlike service. A member on non-warlike service may also accrue additional recreational leave. When a member is returned from deployment early due to an accepted condition and suffers a loss of allowances they would have received for those accrued War Service/recreation leave days, those allowances can be compensated. However, there is no provision to compensate a person for the leave days not accrued.

3.6.3.3 Pay-related allowances

Pay-related allowances are those allowances determined by the Defence Minister for the purposes of the MRCA.  The DRCA does not reference allowances which are pay-related, however delegates may use the determination of an allowance as pay-related as an indication of whether the allowance should be included in the calculation of NWE.

 3.6.3.4 Salary Non-Reduction allowance

A salary non-reduction allowance is a pay-related allowance. The salary non-reduction allowance should be treated as any other pay-related allowance i.e. delegates will need to establish in each case (via DVA SAM) when the allowance would have been adjusted and when it would cease. Further information around when non-reduction allowances would be adjusted and the period for which they are usually payable, can be found at: Defence Pay and Conditions - Division 5 Salary non-reduction provisions.

3.6.4 DRCA policy

3.6.4.1 Legislation

NWE is calculated in accordance with section 8 [3]. NWE is calculated as the person’s average weekly earnings before the date of injury with adjustments made based on employment and other factors arising after the injury.

Section 8(1) of the DRCA defines allowances ('A') in the formula for calculating NWE as:

'A is the average amount of any allowance payable to the employee in each week in respect of his or her employment during the relevant period, other than an allowance payable in respect of special expenses incurred, or likely to be incurred, by the employee in respect of that employment'.

The relevant period (example period) is defined in section 9 [3] and is generally the 2-week period before the date of injury.  However there is some discretion for delegates to use a different period that more accurately reflects a person’s normal weekly earnings.

The intention of including allowances in NWE is to ensure that it is a fair reflection of what the client would have earned but for their injury.

3.6.4.2 Including allowances in NWE for a person who is serving

Subsection 8(10)(a) [3] applies to calculating NWE for a person who is continuing in service. This paragraph allows the NWE, calculated at the date of injury, to be adjusted to reflect the amount the person would receive if not incapacitated for work i.e. NWE should be reduced to ensure that the person does not receive more in compensation than they would receive in earnings if they were not incapacitated. 

In determining whether an allowance should be included in NWE for an incapacitated serving member, delegates should consider whether the allowance would still be available to the member if they had not been injured i.e. the allowance can only be included in NWE for as long as they would have received it if not injured (i.e. until the end of a posting or deployment etc.).

The duration of an allowance should be confirmed by Defence via DVA SAM.

Similarly, if the allowance no longer applies to their employment for reasons unrelated to their injury (i.e. the person changes corps or position and their new role does not attract that allowance), their NWE should be reduced by the amount of that allowance.

Delegates should consider the following when determining NWE (including whether an allowance should continue to be included in NWE):

  • The weekly earnings of a non-injured colleague in the same pre-injury role performed by the member
  • Whether certain allowances overtime/higher duties would currently be available to the member (or to the same extent) if not injured
  • Whether any particular personal or career choices unrelated to the members injury would have reduced their current weekly earnings below their pre-injury earnings.

Example 1 – including allowances for a person who is still serving

A member of 3 RAR is injured whilst participating in a parachute jump. The member is parachute qualified, posted to a parachuting unit and receiving Paratrooper Allowance.  The injury prevents the member from ever being able to parachute again.  The Paratrooper Allowance is included in NWE for the remaining duration of the members posting to 3 RAR.

The member is then posted to a non-parachuting unit (for a reason unrelated to their injury) where they would not have received Paratrooper Allowance.  Paratrooper Allowance is not included in their NWE for the duration of this subsequent posting. 

Later, the member is posted to a special operations unit, where they would have received Paratrooper Allowance if they were able to parachute, however they are unable to qualify because of their injury. The allowance should now be included in their NWE as the reason the allowance was originally removed (and NWE reduced) was due to the allowance being no longer available to them (due to a posting to a different unit for a reason unrelated to their injury). As the allowance would now have been available to the member but is not, due to the injury, the member should be compensated. 

3.6.4.3 Including allowances in NWE for a person who is discharged

In accordance with the FFCA decision in Comcare v Simmons 2014 subsection 8(10)(b) [3] applies to calculating NWE for a person who has discharged from service. For a discharged member NWE is capped at the greater of the earnings they would have received at either:

  1. date of the injury; or
  2. date of discharge.

Delegates should establish whether a person’s NWE (that includes allowances the person was receiving) would be greater if they had continued in the employment they were engaged in at the date of injury; or the employment they were engaged in at date of discharge.

The Comcare Scheme guidance - calculating normal weekly earnings [2] provides detail on establishing NWE and the inclusion of allowances in NWE.  Delegates need to be satisfied that the allowance included would still be payable to the person in the week incapacity payments are payable.

The basis on which an allowance was paid will establish how long it is included in calculations of NWE for a discharged member. Allowances paid on the basis that the person has specific skills should continue to be included in NWE calculations indefinitely, as that allowance would continue to be payable to the person in future employment i.e. they retain that skill and would be paid for it in future employment. An example of this is Paratrooper Allowance or a Special Forces Disability Allowance.

An allowance that is paid only on the basis of particular employment conditions (with no skills based component) is only compensable for as long as those particular conditions of employment exist (i.e. until the end of a posting or contract). Once the work is no longer available the person would not continue to receive that allowance in the future. An example of this type of allowance is District Allowance or Separation Allowance.

Similarly, Higher Duties Allowance (HDA) is only compensable while certain factors exist - i.e. being in a certain location or someone else being on leave. If a person was in receipt of HDA at date of injury or date of discharge, the allowance would only be included in NWE for the period as advised by Defence.

The date allowances would have ceased should be confirmed by Defence via DVA SAM.

The following website can be used to confirm an allowance has a skills based component: http://www.defence.gov.au/PayAndConditions/ADF/Chapter-4/Part-2/Part-C-Div-2.asp [6]

The method of discharge i.e. medical or non-medical has no effect on the calculation of NWE. An allowance cannot be removed from calculations of NWE on the basis of discharge type only i.e. removed on the basis that a person has non-medically discharged from the ADF.

Example 1 – Comparison of NWE at date of injury and date of discharge

A person discharged from the ADF at their own request. NWE is calculated at the date of their injury and at the date of their discharge. At the date of their injury the person was on deployment. A member deployed on warlike or non-warlike service generally receives three separate pay-related allowances:

1. Deployment Allowance or International Campaign Allowance;

2. Field Allowance; and

3. Separation Allowance.

The person was receiving their salary as a Private Pay Group 9, Special Forces Disability Allowance (SFDA), Deployment Allowance, Separation Allowance and Field Allowance. At the date of their discharge the person was receiving their salary as a Private Pay Group 9 and SFDA.

The person’s NWE is higher at the date of their injury due to the inclusion of the Deployment Allowance, Separation Allowance and Field Allowance. However, these allowances are paid only as a result of certain employment conditions, i.e. a deployment, and cannot continue to be included in NWE beyond the date the deployment would have ceased (as confirmed by Defence).

In this example the person’s NWE would be based on their salary as a Private Pay Group 9 plus the SFDA (as this allowance is reliant on the person having certain skills). NWE is calculated as at the rate applicable at date of discharge, beyond which the person’s NWE would be adjusted in line with the Wage Price Index (WPI).

3.6.5 MRCA Policy

3.6.5.1 Legislation

The formula for calculating NE includes a component to compensate a person for the allowances they would have been paid if not for their incapacity. Subsection 91(3) [7] states the person’s ‘normal pay-related allowances’ are those “that would have been paid to the member for the week if the member were not incapacitated for service”.

Subsection 91(4) [7] states that “the Chief of the Defence Force must advise the Commission in writing of the date on which each compensable pay-related allowance would normally have ceased to be paid to the member if the member were not incapacitated for service.” There is no discretion to use a different date. All requests for advice on when an allowance would have ceased if not for the incapacity must be directed through the DVA Single Access Mechanism (DVA SAM).

Section 11 [8] of the MRCA prescribes that the Minister for Defence must determine which allowances are pay-related allowances under section 58B or 58H of the Defence Act 1903. Only pay-related allowances can be included in the calculation of NE.

The person must also have been in receipt of the allowance immediately prior to the onset of incapacity (paragraph 91(5)(a)) [7] for the allowance to be compensable.  For example, a member who is injured whilst undertaking pre-deployment training and who cannot subsequently deploy because of that injury, cannot be compensated with lost deployment allowances.

Additionally, the pay-related allowance must have been:

  • normally payable after completing initial training as discussed in section 189 [9]; or
  • normally payable to a serving member after being promoted as per subsection 186(2)(b) [10].

Example 1 – Allowances for a person injured in initial training

A serving member who is injured whilst undertaking their initial corps-related training can be compensated for any corps-related allowances they would have received upon completion of that training because the corps-related training was part of the member's initial employment training. 

Example 2 – Allowances for a person transferring corp

A member who is attempting to transfer from one corps to another (e.g. infantry corps to special services), and is injured during the corps training cannot be compensated for pay and allowances they would have received upon completion of that training.  Any compensation must be based on the pay and allowances they were receiving prior to the onset of their incapacity.

3.6.5.2 Compensation for pay-related allowances immediately after medical discharge

Skills-based allowances such as Special Forces Disability Allowance (SFDA) and Flying Allowance, can be included in the calculation of NE immediately following discharge, and prior to advice from the CDF on an end date of that allowance where:

  • the person was medically discharged; and
  • there is evidence the person was receiving a skills-based allowance at date of discharge - such as an ADF payslip detailing the allowance and rate.

The standard procedures for requesting advice on allowances through DVA SAM should be followed, including procedures for escalating outstanding requests.

In cases where an overpayment has occurred, standard overpayment recovery procedures apply. 

Hardship allowances (i.e. an allowance for being in a certain location) are not to be included immediately. Delegates should wait for confirmation from the CDF on receipt and duration of payment prior to compensating a person for that loss.

3.6.5.3 The effect of method discharge on inclusion of allowances

A person’s method of discharge does not affect whether allowances are included in NE. It is up to the Chief of the Defence Force (CDF) to advise DVA on what date any pay-related allowance would have ceased if not for the incapacity.  In the case of a voluntary discharge, allowances are not lost as a result of the injury, rather as a result of the individual’s decision to leave the ADF. However, a decision cannot be made on that basis alone and instead a request must be made via DVA SAM in order to establish the date the allowance would have ceased if not for the incapacity (common sense would imply that the date advised by the CDF will be the same date as the date of the person’s discharge). However, if the CDF advises a date other than the discharge date then we must use that date.

Clients with 'dual discharges' (e.g. discharged administratively for disciplinary reasons and J5 medical classification) are eligible to receive incapacity payments. Administrative discharges do not invalidate a J5 determination, and can be applied in addition to a medical discharge. Therefore, for incapacity purposes, dual discharges are the same as a medical discharge provided that one of the accepted conditions is the reason for the J5 determination and the medical discharge on the MECRB minutes. Clients in this situation may be eligible to have pay-related allowances included in calculation of NE, depending on the advice from CDF.

Example 1- Allowances included in NE for duration of posting

A serving member who is parachute-qualified and posted to a parachuting unit will receive paratrooper allowance.  For example, a member of 3 RAR is injured whilst participating in a parachute jump. The injury prevents the member from ever being able to parachute again.  Accordingly the member is compensated for this loss by having the allowance included in their NE for the duration of the posting to 3 RAR.

At a later date the member is posted to a non-parachuting unit (for a reason unrelated to their injury) where they would not have received parachuting allowance irrespective of their injury.  Accordingly parachuting allowance is not included in their NE for the duration of this subsequent posting.  However during this time the member's incapacity for parachuting duties has not changed in that they remain incapacitated for any parachuting.

Later on the member is posted to the SASR, where they would receive parachuting allowance if they were able to parachute, however they are unable to qualify for the parachute allowance because of their original injury.

The fact that they were not receiving the allowance immediately prior to being posted to the SASR was only due to them being posted to a unit which did not require them to undertake parachute duties.  However the member was in receipt of the parachuting allowance immediately prior to their initial incapacity at 3 RAR and accordingly is entitled to have parachuting allowance included in their NE.

Crucial to this case is the fact that the member was in receipt of parachute allowance prior to first becoming incapacitated when they were posted to 3 RAR, and the member's incapacity for parachuting duties has been ongoing since that time.  The fact that the member has not been able to maintain their parachuting qualification, of completing two jumps per annum, is only because of their ongoing incapacity.

When the member eventually discharges the member will only be compensated for lost parachuting allowance for as long as Defence advises the allowance would have been payable if not for their injury (i.e. until the end of the posting).

3.6.6 Historical information/Policy

3.6.6.1 Graded Other Ranks Pay Structure (GORPS)

Historically, allowances were comprised of two distinct elements:

  • Qualification and Skill (Q&S); and
  • Disability

The Qualification and Skill component acknowledged the level of additional skills required in a role and the Disability component acknowledged the disabilities associated with certain environments.

As a result of the Australian Defence Force (ADF) Remuneration Reform Project, the Qualification and Skill component of most corps-related allowances were rolled into salary with effect from 9 August 2007 (along with streamlining the pay structure).  Accordingly most corps-related allowances now only consist of a disability component, this includes the Special Forces Disability Allowance (SFDA) formerly the Special Action Forces Allowance (SAFA). 

3.6.6.1.1 Claims for periods of incapacity that pre-date GORPS

The qualification and skill component of an allowance should be included in NWE/NE calculations indefinitely and the disability component included for only so long as it would have been received.

3.6.6.2 DRCA – Historic ‘Simmons’ information

The DRCA policy in relation to allowances was revised in line with the outcome of Comcare v Simmons [2014] FCAFC4 (Simmons) [1].

3.6.6.2.1 Pre ‘Simmons’

Prior to the date of this decision (13 February 2014), the inclusion of allowances in calculations of NWE was determined in accordance with the policy for calculating Normal Earnings under the MRCA. 

The cases of Kennedy and Military Rehabilitation and Compensation Commission [2007] AATA 19 (15 January 2007) [4] and Hillman and Military Rehabilitation and Compensation Commission [2011] AATA (28 January 2011) [5] were used to guide policy on the inclusion of SFDA in NWE prior to Simmons on 13 February 2014 i.e. paid depending on the individual circumstances of the case and advice from Defence on when the allowance would have ceased if not for the injury.

3.6.6.2.2 Application of ‘Simmons’

The revised policy is based on the Comcare Scheme guidance - Calculating normal weekly earnings [2].

This policy should be applied from 13 February 2014. Delegates are not expected to initiate a retrospective adjustment of decisions made prior to 13 February 2014 (i.e. if allowances have been removed from the calculation of NWE prior to 13 February 2014). Any requests for a reconsideration on a decision made prior to 13 February 2014 to remove allowances from the calculation of NWE should be referred to the Appeals and Reconsiderations section.

3.6.7 Pay-related Allowances

Every effort is made to keep the list below up to date, however, if an allowance is not included, delegates can check the determinations on which allowances are pay-related allowances via the following links:  https://www.defence.gov.au/PayAndConditions/ADF/Chapter-4/Part-2/default.asp [11]

The following have been determined as pay-related allowances:

Allowances from 1 July 2004

  • Adventurous Training Allowance
  • Arduous Conditions Allowance
  • Diving Allowance
  • Field Allowance
  • Flight Duties Allowance
  • Flying Allowance
  • Hard Lying Allowance
  • Language Proficiency Allowance
  • Medical Grade 4 Allowance
  • Paratrooper Allowance
  • Salary Non-Reduction Allowance
  • Seagoing Allowance
  • Service Allowance
  • Special Action Forces Allowance
  • Specialist Operations Allowance
  • Submarine Escape Allowance
  • Submarine Service Allowance

Allowance from 2 December 2004

  • Navy Medical Grades (Additional Responsibility) Allowance

Allowances from 31 May 2005

  • ADF District Allowance
  • Antarctic Allowance
  • Antarctic Common Duties Allowance
  • Antarctic Parity Allowance
  • Attraction Allowance – Papua New Guinea
  • Bare Base Allowance
  • Cadet Forces Allowance
  • Civilian Practice Support Allowance
  • Defence Attache Baghdad Allowance
  • Deployment Allowance
  • District Allowance
  • Hardship Allowance
  • Higher Duties Allowance
  • International Campaign Allowance
  • Port Wakefield Allowance
  • Retention Allowance
  • Separation Allowance
  • Trainees Dependant Allowance
  • Woomera Allowance

Allowance from 1 September 2005

  • Scherger Allowance

Allowance From 20 February 2006

  • Flying and Flight Duties Allowance

Allowance from 9 March 2006

  • Deployment Allowance

Allowance from 20 April 2006

  • Army Reserve Light Cavalry Scout – Salary Non-Reduction

Allowance from 12 June 2006

  • Deployment allowance – Timor Leste

Allowance from 1 September 2006

  • Reserve Service Allowance

Allowance from 6 November 2006

  • Deployment Allowance – Lebanon

Allowance from 13 December 2007

  • Allowance for Specialist Operations
  • Special Forces Disability Allowance

Allowance from 4 June 2008

  • Flying and Flight Duties Allowance
  • Submarine Service Allowance

Allowance from 1 July 2008

  • Reserve Allowance (replaces Reserve Service Allowance)

Allowance from 8 January 2009

  • Trainee Allowance

Allowance from 12 September 2013

  • Adventurous training instructor allowance
  • Arduous conditions instructor allowance
  • Flying disability allowance
  • Submarine escape disability allowance
  • Recruit instructor sustainability allowance
  • Recruit instructor disability allowance

Allowance from 30 January 2014

  • Maritime disability allowance
  • Boarding party allowance
  • Maritime sustainability allowance