AE refers to the person’s post-injury earning capacity. AE may be either an 'actual' amount that the person is currently earning, or a deemed amount in accordance with the person's ability to earn (for example in cases where the person is unemployed or underemployed for reasons other than the accepted injury).
AE is defined in Section 19(2) of the DRCA as the greater of the following amounts:
- the amount per week (if any) that the employee is able to earn in suitable employment; or
- the amount per week (if any) that the employee earns from any employment (including self-employment) that is undertaken by the employee during that week.
The 'AE' amount is used in three incapacity rate calculations in the DRCA:
- calculation of the 'AE' amount in Section 19(2). This subsection is applicable to compensation during the first 45 weeks after injury i.e. the maximum rate compensation weeks.
- calculation of the 'AE' amount in Section 19(3). This subsection is applicable to compensation after the first 45 weeks. The subsection also provides for an increased rate of payment (after combining earnings from employment and compensation) where the client undertakes actual employment during the week, and
- where weekly compensation is paid to former employees under Part X of the DRCA, S132A provides that the amount that the client is able to earn in employment in a week is subtracted from the weekly incapacity compensation otherwise payable.
Section 19(4) of the DRCA sets out matters to which delegates 'shall have regard' when deciding the amount per week that a client is able to earn in suitable employment. These matters are relevant to all three provisions listed, and are discussed in relation to 'deeming ability to earn' (section 8.18).
Amendments to the DRCA which commenced on 1 April 2002 provide that the AE amount includes earnings from both suitable employment and any other amount that a person earns from employment (including self-employment) during the week. AE does not include earnings from sources such as family trusts, rental properties etc. Only income resulting from the persons 'own labour' (i.e. work they are doing/able to do) is counted.