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4. DRCA Only - Statutory Minimum Earnings Rate
The DRCA provides for a minimum level of compensation (calculated at statutory rates, rather than based on a NWE) in some cases. This provision is governed by subsection 19(6)-(9).
The amounts specified in these subsections have been updated regularly and delegates should apply the amounts as specified in CLIK.
The minimum earnings provisions are applicable:
- after the first 45 weeks of incapacity, and
- if the client is not engaged in actual employment during the week.
Where compensation calculated under subsection 19(3)(a) is less than 'minimum earnings' i.e. the lesser of:
- a statutory rate set by subsection 19(7)(a), (8) and (9)
- 90% of the employee's normal weekly earnings
then the compensation payable is raised to the minimum earnings level.
The 'minimum earnings' level does not apply where the client is engaged in any actual employment during the week. Where the client is so engaged subsections 19(3)(b)-(f) provide for a higher rate of compensation based on their relevant 'adjustment percentage'.
Subsection 19(7)(a) specifies the 'minimum earnings' amount for a client and subsections (8) and (9) provide for a higher amount when the employee has 'prescribed persons' or 'prescribed children' (respectively) wholly or mainly dependent on him or her.
4.1 Prescribed Person
'Prescribed person' is defined in Subsections 19(12) – (14) for the purposes of section 19 (compensation for incapacity) and section 22 (maintained in a hospital). The definition includes the spouse of the client and any person aged 16 or more who has one of the relationships with the client listed in subsection 19(12)(b).
The categories of 'prescribed persons' can be summarised as:
- a spouse of the client, including a de-facto spouse of the same sex or a different sex, a person in a prescribed registered relationship with the client and living with the client and a spouse by Aboriginal or Torres Strait Islander custom (subsection 19(12)(a))
- a person (16 years or older) who has a specified blood or marriage relationship with the client (subsection 19(12)(b)(i)). This includes a relationship arising from adoption or illegitimacy (subsection 19(13))
- a person (16 years or older) who stands in the position of a parent or a child to the client (subsection 19(12)(b)(ii)).
- a person (16 years or older) who is wholly or mainly maintained by the client and who cares for a dependent child of the client (subsection 19(12)(b)(iii)).
A child under 16 cannot be a 'prescribed person'. However, a young person aged between 16 and 24 (inclusive) may, in some circumstances, be both a 'prescribed child' and a 'prescribed person'. In such a case, for the purpose of calculating statutory rates, the person/child will only be counted once.
4.1.1 The meaning of 'wholly or mainly maintained'
'Maintain' is not defined in the DRCA, however its dictionary meaning can be used as a guide i.e. support (life, a condition, etc.) by work, nourishment, expenditure, etc.
In the context, 'wholly or mainly' should be given the same meaning as wholly or mainly dependent, i.e. the person was maintained by the client to a greater degree than by any other person.
4.1.2 Illegitimate and adoptive relationships
Illegitimate and adoptive relationships, and those which are traced through illegitimate or adoptive relationships, are included by force of subsection 19(13). 'Adoption' is defined in section 4 as meaning adoption under a law of a State or Territory or of a foreign country. It does not extend to informal arrangements or foster care arrangements.
4.1.3 Paid child carers
Subsection 19(14) makes it clear that a person qualifying as a care giver for the client's children under paragraph (iii) will NOT be disqualified as dependent merely because the client pays the person to care for the prescribed child. These cases must be decided on their individual facts and circumstances.
4.2 Prescribed Child
'Prescribed child' is defined in subsection 4(1) as;
a) a person under 16, or
b) a person who:
(i) is 16 or more but under 25
(ii) is receiving fulltime education at a school, college, university or other educational institution, and
(iii) is not ordinarily in employment or engaged in work on his or her own account.
4.2.1 'Under 16' and 'under 25'
A person is under 16 years of age when they have not yet attained their 16th birthday. They should be regarded as 16 on and from the date of their 16th birthday.
A person is under 25 years of age when they have not yet attained their 25th birthday. They should be regarded as 25 on and from the date of their 25th birthday.
If a period is to be calculated from a particular day or event (e.g. the child's 16th birthday), the time is to be reckoned exclusive of that day or the day of the event.
4.2.2 The child's age is unknown or uncertain
It is possible that the age of a child may be unknown or uncertain. This most commonly occurs in relation to children born overseas in countries where comprehensive birth records are not kept.
Where there is inconsistent information about a child's date of birth, and an official Birth Certificate issued by an Australian or foreign government is not available, it is suggested that reliance be placed on existing, official Commonwealth Government records unless there is considerable direct evidence that those records are incorrect. Appropriate records include:
- passports issued either in respect of the child or its parents
- entry documentation issued by the Department of Immigration
- family payment information held by the Department of Family and Community Services or Centrelink.
Care should be exercised if the only available documentation is based on information supplied by the child or their parents, e.g. school records, bank records, references, etc.
4.2.3 Full-time education
In deciding whether a young person is 'receiving full-time education' (for the purposes of S4(1)), attention should be directed more to the nature of the activity undertaken by the student, rather than the formal status of the course in which they are enrolled.
If a student is recognised as a full-time student by the educational institution which they attend, this can usually be accepted as conclusive of the issue.
However, where the student's enrolment status is part-time, inquiries should be made about the actual work load undertaken by the student. If the total workload (including classes, direct tuition, and private study) exceeds 30 hours per week, it would generally be reasonable to determine that the student is 'receiving full-time education'.
It is quite consistent for a student who is receiving full-time education to engage also in part-time work. Where, however, the student is in full-time paid employment, it is unlikely, in most cases, that they could also be 'receiving full-time education'.
22.214.171.124 School, college, university or other educational institution
A broad view should be taken of the type of institution which is included in this description, the key element is that it is an educational institution.
An educational institution could be expected to exhibit the following characteristics:
- it has a predominant aim of imparting knowledge
- it provides instruction in an area of knowledge or activity
- the instruction is provided by suitably qualified people in an organised or systematic manner and on a regular or continuing basis
- the institution itself has a definite and systematic structure (although it need not be an incorporated body).
There is no requirement that the body must be formally registered as a school or university by a government agency. However, any such body would necessarily fall within the provision by virtue of such registration.
An educational institution could be one part of a larger body which is not otherwise educational in focus.
The following bodies would usually be considered 'educational institutions' within the meaning of the provision:
correspondence schools, schools of the air
dance schools, art schools, drama schools
sports training institutes
business or secretarial colleges
long-term, residential character and skills development programs, e.g. the Leeuwin Sail Training Foundation.
The following bodies usually would not be considered 'educational institutions', unless they included special educational characteristics:
in-house staff training centres
Labour market programs would have to be assessed according to their particular characteristics.
4.2.4 'Ordinarily in employment'
The phrase 'ordinarily in employment' covers situations where the young person is in salaried employment – it does not include self-employment, work as an independent contractor or hobby activities.
In its context, 'ordinarily' has the meaning 'usually' or 'on a regular basis'. Accordingly, it is necessary to examine the factual situation in each case to determine whether the young person is 'ordinarily in employment'. Common situations are discussed below.
126.96.36.199 Recent entry into the workforce
If the young person has only recently started work, it would be inappropriate to determine that they are 'ordinarily' in employment.
188.8.131.52 Recent cessation of employment
On the other hand, if the young person has a long work history and, just before the relevant event they temporarily ceased working, it may be appropriate to determine that they are still 'ordinarily' in employment.
4.2.5 'Ordinarily ... engaged in work on his or her own account'
The phrase 'engaged in work on his or her own account' is directed at situations of self-employment, including situations in which the young person is genuinely working as an independent contractor.
In its context, 'ordinarily' has the meaning 'usually' or 'on a regular basis'. Accordingly, it is necessary to examine the factual situation in each case to determine whether the young person is 'ordinarily' in self-employment. Common situations are discussed below.
If the young person has only recently commenced self-employment, it would be inappropriate to determine that they are 'ordinarily' engaged in work on their own account. A history of self-employment of more than three months is an appropriate period for this assessment. It would also be appropriate to consider periods of work for another employer in making this assessment.
On the other hand, if the young person has a long history of self-employment and/or employment, and, just before the relevant event they temporarily ceased those activities, it may be appropriate to determine that they are still 'ordinarily' engaged in work on their own account.
If a young person is engaged in work on their own account, but the business is not profitable and has not been profitable for some time, it may be the case that they continue to be financially dependent upon another person. In such a case, the self-employment could be disregarded for the purposes of the definition of 'prescribed child'.
A student aged between 16 and 24 (inclusive) who undertakes:
full-time self-employment during school, college or university vacations, or
part-time self-employment throughout the year
will continue to be regarded as a full-time student and not 'ordinarily engaged in work on his or her own account'.
4.3 Meaning of 'dependent'
'Dependent' is defined in section 4 to mean 'dependent for economic support'.
In view of this definition, it is clear that only economic issues may be considered in determining whether a person is 'dependent' upon the injured client for the purposes of the DRCA. Emotional or social dependency cannot be taken into account.
A separate definition of 'dependant' in subsection 4(5) establishes who may be entitled to compensation in the event of the compensable death of a client.
In determining the dependency of a child, subsection 4(7) specifies that certain child-related social security payments – family tax benefit (previously family allowance), carer allowance (previously child disability allowance) and double orphan pension – are not to be taken into account.
4.3.1 Establishing Dependency
Section 4 of the DRCA includes two qualifications (in death cases only) to the general requirement to take only economic issues into account when assessing dependency (as a matter of policy and consistency of approach, these deeming provisions are also extended to incapacity cases under section 19):
- subsection 4(4) deems a person to be wholly or partly dependent on a client if the person would have been so dependent but for an incapacity of the client that resulted from a compensable injury
- subsection 4(5) deems a spouse, or a child of a client (being also a prescribed child), to be wholly dependent on the client if they lived with the client at the time of their death.
The definition of spouse includes:
- a person who is, or immediately before the client's death was, a de facto partner of the client, whether they are of the same sex or a different sex; and
- a person who is in a prescribed registered relationship with the client, and living together with the client; and
- a person who is recognised as a spouse of the client by the Aboriginal or Torres Strait Islander custom prevailing in the tribe or group to which the client belongs.
184.108.40.206 Meaning of 'Child' of a client
A 'child of a client' includes a natural or an adopted child of the client, but does not include a step-child, i.e. a spouse's child by another parent. Accordingly, a step-child cannot be deemed as fully dependent on the client. A step-child may, however, be either a prescribed child or a prescribed person and be dependent on the client on the facts of the case.
As a matter of consistency with the definition of 'spouse' in the DRCA, 'child of a client' should include a person who is recognised as a child of the client by the Aboriginal or Torres Strait Islander custom prevailing in the tribe or group to which the client belongs.
4.4 Implications of dependency
Compensation payments may be made under the DRCA in respect of persons who are dependent on an injured or deceased client. The following provisions establish an entitlement:
- subsection 17(3): lump sum compensation for the death of a client to certain persons who were wholly dependent on the client at the time of death
- subsection 17(4): lump sum compensation for the death of a client to certain persons who were partly dependent on the client at the time of death
- subsection 7(5): weekly compensation for the death of a client to prescribed children who were wholly or mainly dependent on the client at the time of death
- subsection 9(8): increased minimum earnings for the purpose of weekly incapacity payments where prescribed persons are wholly or mainly dependent on the client
- subsection 9(9): increased minimum earnings for the purpose of weekly incapacity payments where prescribed children are wholly or mainly dependent on the client.
4.4.1 Meaning of 'Lived with'
Subsection 4(5) of the DRCA deems a spouse or a child of a client (also being a 'prescribed child') to be a person who was wholly dependent upon the client if the spouse or child 'lived with' the client at the time of the client's death. As a matter of policy and consistency of approach, this deeming provision is also extended to incapacity cases under section 19.
In most cases, determining whether a person lived with the client at the relevant time will be a straight-forward application of the dictionary meaning of the phrase i.e. share a home with.
Some special cases are discussed below.
220.127.116.11 Separate dwellings on the same property
If the child or spouse is living at the same property as the client, but actually occupies a separate caravan, bedsitter or shed as their residence, it should generally be accepted that they are living with the client for the purposes of the Act.
18.104.22.168 Temporary absence
If a spouse or child was temporarily absent from home (e.g. on an excursion, visiting friends or relatives, in hospital, etc.) at the time of the client's injury or death, they should be taken to be living with client for the purposes of the deeming clause.
Whether the absence is temporary, or has in fact resulted in the person no longer living with the client, is a matter of fact and degree. Attention should be paid to the reasons for the separation, the intentions of the parties, and the length of the separation.
22.214.171.124 Boarding schools and University colleges
A child who is attending a primary or secondary boarding school, and is expected to return to the home of the client at the end of the school term, should be treated as living with the client.
A young person, aged 18 or over, who is undertaking tertiary or TAFE studies and lives away from the home of the client in a University college or other temporary boarding accommodation, generally should not be treated as living with the client. Note, however, that this simply means that they cannot benefit from the presumption of dependency. They may still be able to prove, on the facts of the case, that they were wholly or mainly dependent on the client.
126.96.36.199 Two homes
It is possible for a person to live in two homes, e.g. where the client is employed in another city from their spouse and the family maintains two households, or where the client is on sea duty and maintains a home ashore for his or her family. In such cases, a spouse or child could be treated as living with the injured client. Any such case should be carefully investigated to determine what the situation actually was at the time of the injury or death.
4.5 Meaning of 'Spouse'
A definition of 'spouse' in subsection 4(1) does not purport to define the term, it merely extends its meaning to include de facto spouses, whether of the same sex or a different sex, partners in a prescribed registered relationship and living together and spouses by Indigenous custom.
Subsection 4(5) deems a spouse who was living with a client at the time of the client's death (or injury, as a matter of policy) to be dependent on the client.
4.5.1 Legal marriage
Under common law, 'spouse' is taken to mean two persons of the opposite sex who are legally married according to the laws of Australia. Marriages taking place overseas in accordance with the law of that country are generally recognised as legal marriages for the purposes of Australian law, subject to exceptions in relation to bigamy, prohibited relationships, and either spouse being under 16 years of age.
4.5.2 Separation - legally married persons
As a consequence of a breakdown in their personal relationship, people who are legally married may choose to live separately and apart from their spouse. In some cases, the parties may be separated but continue to live in the same dwelling, i.e. living 'separately and apart under the same roof'.
Whether separated or not, a person who is legally married to a client remains their 'spouse', for the purposes of the DRCA, until death or the grant of a dissolution of marriage (decree absolute). After separation, however, a spouse may not receive certain compensation entitlements because he or she is no longer dependent upon the client.
4.5.3 Extended meanings of spouse
A definition in subsection 4(1) of the DRCA extends the meaning of 'spouse' to include:
- a person of the opposite sex or the same sex who lives with the client on a bone fide domestic basis (a 'de-facto spouse'),
- a person of the opposite sex or the same sex who is in a prescribed registered relationship with the client and who lives with the client, and
- a person who is recognised as the client's spouse by Aboriginal or Torres Strait Islander custom.
4.5.4 De-facto spouses
In deciding whether a bone fide domestic relationship exists, it is necessary to consider all facets of the inter-personal relationship between the parties. It is inappropriate to rely on any one fact as determinative, and it is important to recognise that there is no absolute standard by which a marriage can be described.
The courts and the Administrative Appeals Tribunal have often pointed to the relevance of the following factors in assessing a de facto relationship:
(i) the relationship having a quality of permanence
(ii) the living arrangements and sexual activity of the parties having the quality of exclusiveness
(iii) the pooling of resources
(iv) the sharing of expenses
(v) the parties holding themselves out as married
(vi) the parties having a subjective belief that their relationship is like one of husband and wife
(vii) the parties being joint parents of a child
(viii) the parties having a sexual relationship
(ix) the parties indulging in a joint social life
(x) one party having a legal right to enforce obligations in respect of the other.
The subjective views of the parties as to the nature of the relationship are not determinative, an objective view of the circumstances must also be taken. Note however, the opinion of Fitzgerald J in the Federal Court:
It seems futile to deny that subjective views as to what are involved as basic attributes of the marriage relationship will intrude into the assessment called for. However, it is in my view important that the departmental officers or tribunals charged with the task at least take into account what is the norm for the peer group of the applicant. Only in this way can the legislation be fairly and justly accommodated to a multi-racial and otherwise diverse society.
In the following circumstances, for reasons of public policy, the existence of a de-facto marriage must be rejected:
- either party is under the age of 16 years
- the parties are within a prohibited (incestuous) relationship for the purposes of section 23B of the Marriage Act 1961.
4.5.5 Separated spouses - deemed dependency
As a matter of policy and consistency of approach, the dependency deeming provision in subsection 4(5) is extended to incapacity cases under section 19.
However, an exception is made to this policy approach where a spouse (whether legally married or de-facto) is living separately and apart from the client (including cases of separation under the same roof). In such a case, the spouse is not deemed to be wholly dependent on the incapacitated client, but may be able to demonstrate dependency on the facts of the case.
The deeming provision will always be applied to children of the client who are living with the client, whatever the marital situation between the two parents.
Note that spouses may not be living 'separately and apart' even if one of them is temporarily absent from the joint household. The critical issue for examination is whether the consortium vitae ('the essence of the marriage bond') has broken down or not.
In the case of a de-facto relationship where the parties have temporarily separated, it is also possible that the de-facto partner is no longer a 'spouse', as defined in subsection 4(1) of the DRCA. This is because he or she is no longer living with the client, an integral element of the extended definition of 'spouse'. This issue must be examined on the facts of the individual case, because it is possible that parties are still living together even if one is temporarily absent from the joint household, see the discussion of 'lived with' which raises similar considerations.
Whether spouses are separated is a matter of fact, to be assessed on the basis of all available evidence. Particular attention should be paid to any statements which may have been made to Centrelink (for the purposes of claiming sole parent pension or a single rate of benefit), to statements of fact made in documents filed in the Family Court or in other court proceedings, and to statements of fact made by the parties under oath or in statutory declarations.
4.5.6 More than one spouse
It is possible in a claim for a client to have more than one spouse, i.e. where a client is separated from his or her legal spouse and is living with a de-facto spouse. However, only one amount can be added to the statutory amounts of compensation in any case, irrespective of the number of spouses. Entitlement to compensation in such cases must be determined according to the individual facts of the case.
4.5.7 'Wholly or mainly dependent'
Generally, whether a person is wholly or mainly dependent on an injured client for the purposes of section 19 is a question of fact to be decided in the circumstances of individual cases.
4.5.8 Spouses and children
The spouse and the natural or adopted child of a client (if also a prescribed child) are to be deemed to be wholly dependent on the client if they lived with the client at the time of the injury.
This occurs by operation of a deeming provision in death cases (subsection 4(5) of the DRCA). The same approach is also taken in incapacity cases in the interests of consistency of policy.
4.5.9 Other prescribed persons and prescribed children
In other cases, regard must be had to the level of any income which the person receives, and whether it would be sufficient to provide economic independence. In this regard, the social security pension rate for adults may be referred to as a general guide to the level of income necessary for economic independence.
Where, however, the client's contribution to the economic independence of the prescribed person is critical, dependency (in the whole or the main) will be established.
Subsection 4(7) provides that certain payments under the A New Tax System (Family Assistance) Act 1999 (family tax benefit Part A, carer allowance and double orphan pension) must not be taken into account when deciding whether a child is dependent on a client.
In appropriate cases, consideration may be given to offsetting a prescribed person's income by any personal commitments outside the household expenditure, e.g. debts incurred prior to marriage, child support obligations.
4.5.10 Mainly dependent
The reference to 'mainly' dependent ensures that the requirement for economic dependency is not absolute. What is required is that the person or child be dependent 'in the main' or 'as to the greater part', and not merely be 'partly' or 'to some degree' dependent on the injured client.
In practice, for the purposes of the DRCA, 'mainly' dependent is to be taken to mean that the person or child was more dependent on the client for economic support than on anyone else. Investigation needs to be carried out to establish the facts of each individual case.
188.8.131.52 Examples - wholly or mainly dependent
1. The client is the sole working parent = child is wholly dependent on the client.
2. The child's other parent is responsible for 30% of income prior to the injury = child mainly dependent on the client.
3. A spouse or child lived with the injured client at the time of the injury = child deemed to be wholly dependent upon the client.
4. The person or child is separately receiving an annual income greater than that provided by the injured client = child is not wholly or mainly dependent (unless it was a spouse or child who lived with the client at the time of the injury).
4.6 Treatment of income support payments
4.6.1 Full rate income support payments
Receipt of the following full-rate income support payments would generally exclude a prescribed person or prescribed child from being regarded as wholly or mainly dependent on the client:
- a social security pension (e.g. age pension, disability support pension, parenting payment (single), carer payment)
- service pension
- a social security income support payment paid at adult rates (e.g. Jobseeker payment, austudy payment, special benefit, mature age allowance)
- a Disability Compensation Payment from the Department of Veterans' Affairs at or above the General Rate (i.e. including extreme disablement adjustment, intermediate rate and special TPI rate)
- AUSTUDY (independent rate)
- ABSTUDY (independent rate)
- Youth allowance (independent rate, special rate, or rate with dependent child).
On the facts of the individual case, the person may in some cases continue to be partly dependent on the client for the purpose of death benefits under section 17.
4.6.2 Youth or part rate payments
Receipt of the following payments would generally prevent a prescribed person or prescribed child from being regarded as wholly or mainly dependent on the client:
- youth allowance (away from home rate)
- special benefit (equivalent youth rate)
- youth training allowance (before 30/6/98)
- newstart allowance (under 21 rate) (before 30/6/98)
- tertiary AUSTUDY (standard or away-from-home rate) (before 30/6/98).
4.6.3 Social security and other payments not affecting dependency
Receipt of the following payments alone generally would not prevent a prescribed person or prescribed child from being treated as wholly or mainly dependent on the client:
- parenting payment (partnered)
- maternity allowance
- maternity immunisation allowance
- family tax benefit Part B
- family tax payment (before 1/7/00)
- mobility allowance
- Disability Compensation Payment from the Department of Veterans' Affairs at below General Rate
- youth allowance (at home rate)
- secondary AUSTUDY (standard rate)
- ABSTUDY (under 18, at home rate)
- crisis payment
- child care benefit.
Note that family tax payment (Part A rate), carer allowance and double orphan pension are to be disregarded (subsection 4(7)).