No. 10 Delegates have the discretion to make interim incapacity payments at the Federal Minimum Wage (FMW) rate under the Military Rehabilitation and Compensation Act 2004 (MRCA)

Purpose

This instruction provides policy advice on the discretion to make interim incapacity payments under the Military Rehabilitation and Compensation Act 2004 (MRCA).

Background

Incapacity payments are paid to claimants in respect of lost or decreased income.  Therefore, incapacity payments may provide vital support to a claimant who might otherwise suffer financial distress as a result of the loss of their livelihood.  As such, incapacity payments for claimant — s in financial hardship are regarded as second only to death compensation payments in priority.

Nevertheless, there is the potential for incapacity compensation claims to be delayed for some weeks or months in cases where, although the entitlement for payment is clear, determination of the rate of payment depends on information from an external agency.

For example, advice from Defence about the client's rank/pay level at discharge may be outstanding.  Alternatively, the information about Commonwealth superannuation received by the claimant may not have been supplied by ComSuper.

Limits to discretion

Delegates have no discretion to assume the “missing” values or the use of the client's unsupported assertion about superannuation amount etc.  Only information sourced from the responsible agency is admissible.

Delegate's Discretion

However, delegates have a discretion to approve interim incapacity payments on the basis of the section 179 provision of the MRCA (“normal earnings that are less than the federal minimum wage”) if:

• entitlement to compensation for incapacity has been established; and
• the claimant will experience financial difficulties if payment is delayed until the actual rate of entitlement to compensation is established; and
• the client has been warned of the potential for overpayment, the consequences thereof (i.e. recovery action), and explicitly authorises the delegate to proceed with interim payments.

This means that interim incapacity payments may be paid at the federal minimum wage (FMW) rate prescribed in section 195 of the Workplace Relations Act 1996 (as amended by the Workplace Relations Amendment (Work Choices) Act 2005 proclaimed on 27 March 2006), currently $484.50 per week.

Recovery of Overpayments

The provision of interim incapacity payments at the FMW rate creates the potential for overpayment.

For example, the eventual ComSuper decision may grant a large pension which reduces the MRCA incapacity compensation entitlements to a level below the rate of the interim incapacity payments.

Section 415 of the MRCA authorises the recovery of overpayments directly from the claimant's entitlements paid under the Act.

Advice to client

Before approving an interim incapacity payment at the FMW rate prescribed under section 179, the delegate must write to the claimant and outline the following:

• advise the claimant that the rate of incapacity compensation entitlement is subject to the amount of any Commonwealth superannuation received by the claimant and that the details of any such Commonwealth superannuation entitlements are not yet known; and/or

• advise the claimant that the rate of incapacity compensation entitlement is subject to the rank/pay level of the claimant at discharge or the “days lost in service” due to injury and that the details of such information are not yet known (whichever is applicable); and

• advise the claimant that they may either:
  1. defer the determination and payment until the information required is received; or
  2. receive interim incapacity compensation at the FMW rate prescribed in the MRCA (the weekly rate payable to the client should be calculated and stated in the letter); and

• advise the claimant that any overpayment of interim incapacity compensation will be recovered by withholding weekly incapacity compensation payments until the full amount of the overpayment is recovered; and

• require the claimant to advise in writing:
  • whether they wish to receive interim incapacity payments; and
  • agreeing to repay any overpayment which occurs.

Interim incapacity payments should not be commenced until the client has assented to these conditions and returned the required authority.

Contact

Any queries concerning this policy instruction should be addressed to Luke Brown on extension 16095.