History and intent of the NWE provisions
Under the 1971 Act, Average Weekly Earnings (AWE) were a ceiling for incapacity benefits during the first 26 weeks of incapacity. As such, they were not required to be calculated in every case where a client was incapacitated, and the procedures for calculation were complex and time consuming.
In consideration of the benefits base for the 1988 Act, it was decided that, rather than setting a ceiling for benefits, NWE would form the basis for calculation, ie. weekly incapacity benefits would be earnings-related for the full duration of the incapacity. This earnings figure is established via ss 8 and 9 of the SRC Act, which provide for the calculation of a client's normal weekly earnings before their injury.
Under the SRC Act, it is therefore necessary to calculate NWE in all cases where incapacity arises.
Comparison of NWE with AWE (1971 Act)
While the NWE provisions are similar in nature to Average Weekly Earnings calculated under s 25 of the 1971 Act in that there are averaging provisions, there are several differences in the way the calculation are approached. The most relevant difference in the military compensation context is that the period over which earnings are averaged is much shorter (only 2 weeks in some cases). The SRC Act has addressed this by providing for a “relevant period” over which a NWE figure is to be calculated.
Calculating NWE as at 1/12/1988
The following policy has been adopted for establishing NWE on 1 December 1988, the commencing day of the SRC Act.
Where AWE was calculated
Where an Average Weekly Earnings figure (AWE) had been calculated under the 1971 Act, this amount is deemed to be the NWE under the SRC Act from 1 December 1988.
Where AWE was not calculated
Where the client was no longer employed by the ADF on 1 December 1988, the NWE figure is the salary according to the military pay scales (at 1/12/1988) for the rank and pay level of the client at discharge.
Note: This policy must be applied using common sense. Where it is known, or it can be established by evidence, that the client received additional allowances, these should be taken into account in the usual manner for calculating NWE under the 1988 Act.
Historical military pay details for a client can be obtained from DEFPAY using Standard Letter incap16.