Service giving rise to condition | Current service | Normal Earnings (NE) | Actual Earnings (AE) |
Permanent Forces or CFTS | Permanent Forces or CFTS | Full-time ADF pay & allowances (S91) | Actual ADF pay & allowances (S92) |
Part-time Reserve | Part-time Reserve | Reserve pay & allowances (S96-97) + Civilian pay & allowances* (S98-100) | Actual reserve pay & allowances + civilian pay & allowances (S101) |
Permanent Forces or CFTS ( and last period of FT service was PF) | Part-time Reserve | Full-time ADF pay & allowances + Remuneration Amount (S104) | Actual reserve pay & allowances + civilian pay & allowances (S105) |
Permanent Forces or CFTS ( and last period of FT service was CFTS) | Part-time Reserve | Full-time ADF pay & allowances + Remuneration Amount (S109) Or Pre-CFTS civilian earnings** (S111-113) + Reserve pay & allowances *** (S114) | Actual reserve pay & allowances + civilian pay & allowances (S115) |
* Based on a 2-week example period before the onset of incapacity.
** Based on a 2-week example period when continuously engaged in civilian work but prior to CFTS.
*** Based on 1 year example period prior to CFTS.
Delegates have the discretion to determine a different example period as is considered reasonable under Section 113(2).
Service giving rise to injury – Part-time Reserve – Section 95-100
The following formula is applicable when the person:
Was injured during part-time service
Is currently serving
Current service is in the Part-time Reserve
NE = ADF component (Reserve pay and allowances) for the week + civilian component (civilian pay and allowances) for the week
Where:
ADF component for the week is based on how much the Reservist would have earned for the week as a Reservist if not incapacitated for service
Civilian component for the week is based on how much the reservist would have earned from civilian work based on a period before the onset of incapacity.
The components are calculated according to whether or not the person is incapacitated for (Defence) service or for (civilian) work.
Calculating ADF Reserve pay and allowances
The ADF component for a Reservist incapacitated for (Defence) service is calculated in accordance with section 96 [2]:
ADF component = Reserve days for the week x Reserve daily rate of pay + pay related allowance days for the week x amount of pay related allowance
The delegate must obtain details from Defence (via SAM) of the number of days for the week that the Reservist would have been paid as a Reservist, the date any pay-related allowances would have ceased and the number of days the Reservist would have been paid the allowances.
The ADF component for a Reservist not incapacitated for (Defence) service is calculated in accordance with section 97:
ADF component = Actual Reserve earnings including pay-related allowances for the week
This ensures a person's NE is equal to their AE for the ADF component of NE (and the person is compensated for their civilian loss only).
Calculating civilian pay and allowances
The civilian component for a Reservist who is incapacitated for (civilian) work is calculated in accordance with section 98 [2]:
Civilian component = average number of days engaged in civilian work x civilian daily earnings
Where:
Civilian daily earnings for those working before the onset of the incapacity = civilian daily hours x civilian rate of pay including overtime and allowances
Example Period
The example period is normally the last 2-week period the person was engaged in work ending before the onset date of the incapacity. If the example period does not fairly represent the person's pay the delegate may determine a different 2-week period or a period of different length.
Overtime is only included if it was being worked on a regular basis.
If the Reservist was not working before being incapacitated, the civilian component is nil.
The civilian component for a Reservist who is not incapacitated for (civilian) work is calculated in accordance with section 100:
Civilian component = Actual civilian earnings for the week including allowances other than expense allowances.
This ensures a person's NE is equal to their AE for the civilian component of NE.
Example 1 – NE default to national minimum wage for a person in employment Using the same scenario as per example 5.4.2.2 but if the MRCA provisions are applied the result is: As $631.72 is less than the national minimum wage of $672.70 (as at 1 July 2016), her default NE is $672.70 per week. The RAAF Reservist is paid incapacity payments at the rate of $672.70 per week for the 3-week period of her incapacity. The entire amount is assessable for income tax purposes as NE was not calculated by reference to the member's Reserve earnings. Note: Section 182 prescribes that the civilian component of NE is indexed on 1 July each year in accordance with the wage price index (WPI). Example 2 – NE default to national minimum wage for a person not in employment A RAAF Reservist is injured during Reserve employment when she is 16 weeks pregnant. She is fit for sedentary and office based employment and is therefore able to continue her Reserve parades however, is unfit for her civilian work as a contract nurse, for which she earns $650.00 per week. Her nursing contract ended 2 months later. She then provides medical certification to say she is fit to return to nursing duties. She chooses not to work because of pregnancy and for six months after having the baby. She then intends to rejoin the workforce but is informed that she requires surgery to enable this to happen. After surgery she is referred for and is participating in a rehabilitation program and during this time is offered employment with her Reserve Unit on a full time basis (not CFTS). The entitlement is Reserve pay + civilian pay less any actual earnings. If the person was incapacitated for service then the Reserve component of NE is what the service chief advises that the person would have earned if they were not incapacitated for service. When working out the civilian component Section 99(1) defines the example period for an incapacitated Reservist who is incapacitated for work as being the latest 2 weeks during which the Reservist was continuously engaged in civilian work and ending before the onset date for the incapacity. As there are two distinct periods of incapacity in the above scenario the example period for the initial period of incapacity includes her Reserve earnings and her civilian earnings as a Nurse. However because the person has not been continuously incapacitated a new example period needs to be established for the period of incapacity following the surgery. As she was not working during this example period Section 98(4) should apply: The civilian daily earnings for an incapacitated Reservist who was not engaged in civilian work before the onset date for the incapacity is nil. Accordingly, for the second period of incapacity NE will default to the National Minimum Wage (NMW), as the combined civilian and Reserve NE is less than the NMW. |