8.4 AE when a person is actually in employment

Any income that a person actually earns by his or her labour is considered to be an amount earned in suitable employment and is to be included as AE. This includes earnings from self-employment and commissions, see section 8.6 and 8.7.

AE for a serving member includes any amount earned in employment with the ADF as well as earnings or what the person is able to earn from civilian employment for part-time reservists.

To establish a person’s AE on the basis of actual earnings, the following information is required:

• Pay slips or similar documents to establish hours worked and amount received.

• Medical certificates (to establish capacity).

The gross value of earnings are held in calculations.

In cases where the delegate is satisfied that a person is working below their full capacity (either level of employment or hours in employment), the person may be deemed with an ability to earn at a higher amount (see section 8.18).

8.4.1 Allowances included in AE

The following types of allowances should be included in the calculation of AE:

• allowances which are taxable (other than expense allowances);

• allowances which are paid in respect of specific skills or qualifications attained by the person i.e. allowances paid for licences, tickets, certificates.

Generally, the following types of payments should not be included in the calculation of AE:

• allowances for money spent, or likely to be spent, by the person on expenses i.e. travel allowance, meal allowance;

• retention bonuses (these can be paid either as a lump sum payment or periodically - e.g. fortnightly, and are not considered allowances).

Allowances which should be included and excluded from AE calculations are listed in the following table. Note however that the list is not exhaustive.

MRCA section 132 (1) (b) provides the definition of AE for a person in employment as; 'the amount (if any) that the person earns for the week (including from allowances other than expense allowances) from any work that is undertaken by the person during the week.'

Whether or not travel allowance is included in calculation of AE depends on the prupose of the payment. Where it is confirmed the allowance was paid for travel expenses (i.e. accommodation, food/drink and incidental costs) rather than a payment for the inconvenience of/time spent travelling, it should be excluded from AE calculations.

If the basis for receiving an allowance is unclear from the information provided (usually a payslip), further details should be obtained from the person or the employer. For example, the employer can clarify whether a person is receiving an allowance for a particular skill or trade proficiency, or if an allowance is intended to compensate the employee for costs associated with undertaking their employment such as laundering/maintaining a workplace uniform, or requiring high-speed internet connection at home.

Where a person may receive a penalty rate of pay i.e. a higher rate of pay for working certain hours or in certain conditions the higher rate of pay is included in AE. Overtime hours and rates are also included as AE.