Note: The following guidance relates to S19 as amended from April 2002. Delegates engaged in paying incapacity for a period prior to April 2002 should therefore read the following summary in conjunction with the more detailed discussion at 31.3.
S19(2A) provides that a week during the first 45 weeks of incapacity (i.e. a period '45 times the employee's normal weekly hours') is to be designated a 'maximum rate compensation week'. S19(2) provides that the entitlement in a 'maximum rate compensation week' is ordinarily to be calculated by the formula:
(NWE – AE)
- NWE is calculated in accordance with S8 and is a formal representation of what the client's earnings would have been but for the injury, i.e. based on average earnings during a 'relevant period' (i.e. a period as defined by S9)
(see chapter 31 about NWE, including 31.2.4 re: 'relevant period') - AE is a representation of the client's post-injury earnings (See chapter 15 and chapter 32)
Note that incapacity payments, being income replacement and not a veteran's pension, is taxable at the appropriate marginal tax rate prior to payment to the client. Instructions as noted on the Tax Declaration form should always be followed.
For reservists the 'reserves earnings' component only of their income is not taxable and is discussed at 31.9 and 38.3.