Weekly payments for exempt workers

Published: 12 August 2019
Last edited: 12 August 2019

Calculating pre-injury earnings for exempt workers

Exempt workers may be entitled to weekly payments when a work-related injury/illness has resulted in:

  • total or partial incapacity for work
  • loss of earnings due to the incapacity.

To demonstrate incapacity, the worker must provide a medical certificate to the insurer. The nominated treating doctor can use the workers compensation certificate of capacity for this purpose (although it is not mandatory for exempt workers).

The insurer calculates weekly payments based on the following:

  • average weekly earnings (AWE) – this is the average amount a worker was receiving each week over a period of time (usually the last 12 months of employment, including overtime and shift allowance), and
  • current weekly wage rate (CWWR) – this applies when a worker is employed under an agreement that fixes a rate for a week or longer period. If no such agreement exists, the CWWR is calculated to be 80 per cent of the average weekly earnings.

Calculating weekly payments for exempt workers

A formula is applied using the worker’s CWWR and AWE to determine the amount of the weekly payment. The formula used to determine this amount depends on factors such as the worker’s entitlement period and their capacity for work.

The formulas, and when to use them, are summarised in the table below:

Weekly payments for exempt workers

 

Section of the 1987 Act

Weekly payment calculation

Total incapacity – first 26 weeks.

36

The worker’s CWWR which is:

  • the worker’s award weekly wage rate, OR
  • 80% of the worker’s AWE if not employed under an award.

Total incapacity – from 27 weeks onwards.

37

The lesser of:

  • the statutory indexed rate, OR
  • 90% of the worker’s AWE.

Partially incapacitated – first 26 weeks.

Where worker is seeking suitable employment but not employed.

381

Note: This period of 26 weeks at the CWWR will be reduced by the number of weeks that the worker has received weekly payments under section 36.

The worker’s CWWR.

Partially incapacitated – from 27 weeks.

Where worker is seeking suitable employment but not employed.

381

Note: This period of 26 weeks will be increased after 26 weeks where the worker has received weekly payments under section 36 so as to reach the 52-week total period.

The greater of:

  • the   statutory indexed rate, OR
  • 80% of the worker’s CWWR.

Partial incapacity – first 26 weeks.

Where worker is working or not seeking suitable employment.

40

The lesser of:

A – B = weekly payment

OR

The weekly amount that the worker would be paid if totally incapacitated (in accordance with section 36 ie the CWWR).

A = AWE

B = Actual earnings or capable of earning

Partial incapacity – from 27 onwards.

Where worker is working or not seeking suitable employment.

40

The lesser of:

A – B = weekly payment

OR

The weekly amount that the worker would be paid if totally incapacitated (in accordance with section 37 ie the statutory indexed rate).

A = AWE

B = Actual earnings or capable of earning

Dependants

37

Additional payments may be payable for dependent spouse and children.

1 Section 38 payments may only be paid for a period not exceeding 52 weeks.

Factors

Definition

Maximum weekly payment

Section 35 of the 1987 Act (as at 30 September 2012)

The weekly compensation amount payable to a worker cannot exceed the maximum weekly payment of compensation. Refer to the Workers compensation benefits guide for the applicable amount.

Current weekly wage rate (CWWR)

Section 42 of the 1987 Act (as at 30 September 2012)

The CWWR applies where the worker is employed under an agreement that fixes a rate for a weekly or longer period. If the worker has no agreement like this, the CWWR is 80% of the AWE.

Average weekly earnings (AWE)

Section 43 of the 1987 Act (as at 30 September 2012)

AWE shows the actual amount the worker was receiving as an average weekly amount over a period. The calculation would reflect the worker’s weekly pay rate and would usually cover:

  • the previous period of the worker’s employment up to 12 months
  • amounts such as overtime and shift allowance.

Statutory indexed rate

As determined in (historical) section 37 of the 1987 Act and indexed in accordance with section 82 on 1 April and 1 October each year.

Payments for exempt workers when totally unfit

During the first 26 weeks of incapacity, exempt workers are entitled to weekly benefits based on their CWWR before the injury.

For workers paid under an award, industrial or enterprise agreement, the weekly wage rate is calculated at 100 per cent of the CWWR (excluding overtime, shift work, payments for special expenses and penalty rates).

For those not employed under an award, industrial or enterprise agreement, the weekly wage rate is calculated at 80 per cent of the worker’s AWE (including regular overtime and allowances).

After the first 26 weeks of incapacity, the weekly benefit paid will be:

  • a fixed rate known as the 'statutory rate', or
  • 90 per cent of AWE, whichever is lesser.

Where there are dependent children and/or a spouse, additional payment allowances are also available.

The statutory rate (currently $523.10) is indexed twice each year in April and October. Current and past rates can be found in the Workers compensation benefits guide.

Payments for exempt workers when partially unfit

If a worker is partially incapacitated and they return to suitable work, they will earn income for the hours they work.

If this income is less than what the worker earned before the injury/illness (for example, they are working part time or at a lower pay rate), then they may also receive a weekly payment, often referred to as 'make up' pay.

Make up pay is usually calculated based on the difference between the worker’s AWE (including overtime, shift work and penalty rates) and the amount they are earning while in suitable work.

Note: A worker's weekly payment during any period of partial incapacity for work is not to exceed the weekly payment payable during a period of total incapacity for work. See section 40(5) of the Workers Compensation Act 1987 (pre-2012 amendments).

Note: The amount of make up pay cannot exceed the amount the worker would receive if they were totally incapacitated.

During the first 26 weeks, weekly payments when working in suitable employment are calculated as the lesser of:

  • the average weekly earnings minus any actual earnings, OR
  • the weekly amount that a worker would be paid if totally incapacitated:
    • the worker’s CWWR, or
    • 80 per cent of AWE if not employed under an award.

If CWWR is more than the maximum weekly compensation amount (currently $2,224.00), the insurer will use $2,224.00 to calculate the entitlements.

The maximum weekly compensation amount is indexed twice each year in April and October. Current and past rates can be found in the Workers compensation benefits guide.

After 26 weeks, an exempt worker’s weekly payments are capped at the statutory rate. The weekly payment amount is calculated as AWE minus actual earnings. This weekly payment amount is capped at the official statutory rate and cannot be more than the worker would earn when totally incapacitated.

The statutory rate (currently $523.10) is indexed twice each year in April and October. Current and past rates can be found in the Workers compensation benefits guide.

Payments for exempt workers when partially unfit and suitable work is not available

A weekly payment may be paid if an exempt worker has some capacity to work, but not full capacity to return to their pre-injury role. This payment may be made if the pre-injury employer does not provide the worker with suitable employment.

To be eligible, a worker must be:

  • partially incapacitated for work and not suitably employed, and
  • undertaking reasonable steps to obtain suitable employment including job seeking and/or undergoing rehabilitation or training.

If no suitable employment is provided, the worker receives a weekly payment for a maximum of 52 weeks while seeking employment.

After this period, the worker may undergo a section 40A assessment  to determine their capacity to earn and entitlement to ongoing weekly benefits. (see 'Section 40A assessment’ below)

During the first 26 weeks where the worker has partial incapacity (including any period of total incapacity already taken), they may receive their CWWR. For any remaining period up to a total of 52 weeks, a worker may receive:

  • the greater of 80 per cent of their CWWR, or
  • the statutory rate.

After this, if the worker continues to have capacity for work, they may be entitled to make up pay. This payment will be based on an assessment of the capacity for work (section 40 assessment).

Section 40A assessment

When a worker has received at least 52 weeks of partial incapacity payments, their weekly pay rate may be reviewed in line with section 40A of the 1987 Act.

The insurer may engage an external provider to undertake an independent assessment to determine the worker’s earning capacity by reviewing their functional restrictions and vocational options, taking into consideration the labour market conditions.

The worker’s weekly earnings are then calculated as the difference between:

  1. the weekly amount they would have been earning as a worker (but for the injury) if they had continued to be employed in the same or similar employment, and
  2. the average weekly amount that they are earning, or would be able to earn in some suitable employment, after the injury.

The difference between the worker’s pre-injury gross wages and the assessed post-injury gross earning capacity is calculated, and the worker will then receive the difference between these amounts up to the statutory rate.

A section 40A rate can be applied in the following circumstances:

  • the worker is employed but not earning up to their pre-injury earnings
  • the worker is unemployed and is seeking suitable employment
  • the worker has unreasonably rejected suitable employment.

If a worker’s weekly entitlements are to be reduced or discontinued, the insurer must provide adequate notice. For workers who have been receiving weekly payments of compensation for a continuous period of one year or more, the prescribed period of notice is six weeks.

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