We strongly recommend that if you have a compensation claim and you are considering a voluntary redundancy, then you should seek independent legal advice. Dan Dwyer Divisional Secretary.

VOLUNTARY/INVOLUNTARY REDUNDANCY AND COMCARE BENEFITS

An injured employee's acceptance of a redundancy package, whether voluntary or involuntary, does not necessarily mean that an employee's entitlements under the Safety, Rehabilitation and Compensation Act 1988 (SRC Act) cease. While an employee continues to suffer the effects of a compensable condition, they will still be entitled to claim benefits under the SRC Act, subject to the usual tests of eligibility.

Where liability exists, and subject to all normal review and approval processes:
> medical expenses would continue to be paid
> incapacity payments could continue
> access to non-medical benefits, such as household services, would also continue.

Prior to offering a redundancy to an employee with an active claim, Comcare outlines the risks of offering a redundancy to the employer. Comcare would not recommend offering a redundancy to an employee who had not demonstrated a sustained and durable return to work. There is a human and financial cost that will put the employee and employer at risk if the employee's current return to work status is not considered during this process. The best outcome for both parties is when a rehabilitation program has been successfully completed

Following an employee's acceptance of a redundancy package, Comcare will continue to undertake regular reviews of an employee's compensation claim and claimed benefits. As the employee's last employer remains the rehabilitation authority they have a duty to assist the employee to find suitable employment despite the fact that the employee has separated from employment. Comcare will continue to work with the rehabilitation authority in relation to the employee's claim and the assistance provided to find suitable employment.

REHABILITATION

Despite an employee separating from Commonwealth1 employment, their previous employing agency remains the 'rehabilitation authority' for the purposes of the SRC Act and accordingly continues to have the authority, powers and obligations for the rehabilitation of the separated employee. Accordingly, they are still able to carry out section 36 assessments and provide rehabilitation programs to these employees. The employer also retains the duty to take all reasonable steps to provide suitable employment to the employee or to assist the employee to find suitable employment if the employee is undertaking or has completed a rehabilitation program (see section 40 of the SRC Act).

'Suitable employment' for an employee who is no longer employed by the Commonwealth is 'any employment', having regard to the clauses in section 4 of the SRC Act which provide the definition of suitable employment. It is up to the employer to either take steps to provide such employment or to assist the employee to find such employment. Any failure by the employee to accept an offer of suitable employment could result in Comcare determining the employee as having an 'ability to earn' in such employment. The rehabilitation authority could also suspend an employee's entitlements to compensation for failing to co-operate in a rehabilitation program.

1 Commonwealth employment includes employment by the Commonwealth, a Commonwealth authority, certain Commonwealth government enterprises and the ACT Public Sector.

BENEFITS

Payment of medical and other entitlements

An employee is entitled to claim medical expenses, following acceptance of a redundancy package, in relation to their compensable condition for as long as medical evidence supports ongoing liability for the compensable condition.

Other entitlements, such as household help, attendant care and claims for aids and appliances, will be assessed on a case-by-case basis.

Comcare will continue to issue determinations of liability subject to the normal evidence requirements of the SRC Act. Payment for any services claimed will be considered in terms of the benefit to the employee and the long term cost-effectiveness of continuing to provide these services. For example, it would be reasonable for Comcare to question the continued need for payment of home help where it has previously been approved as part of a return to work plan or was needed to assist an employee while working.

Separation benefits

Should an employee receive payments from their employer on separation in lieu of unused long service or recreation/annual leave, or a severance payment, this will not affect the manner in which their weekly incapacity payments from Comcare are calculated.

INCAPACITY PAYMENTS

An employee is entitled to claim incapacity payments, following acceptance of a redundancy package, if their compensable condition continues to cause some level of medically certified incapacity for employment.

However, determinations of liability for incapacity payments will be based both on medically certified incapacity, but also the known capacity of the employee to engage in Commonwealth employment prior to accepting redundancy and the capacity of the employee to engage in suitable employment following separation from employment (see 'Separation process' below). An employee will need to continue to supply medical evidence to Comcare in support of each claim for incapacity submitted to Comcare.

Should an employee undertake some other form of employment, including self-employment, following separation from the Commonwealth, any money actually received, or deemed to be received, by the employee will be taken into account when Comcare calculates their incapacity entitlements using the formula under subsection 19(2) of the SRC Act:

Normal weekly earnings (NWE) - Ability to earn (AE)

AE is defined as the greater of the following amounts:
a) the amount per week (if any) that the employee is able to earn in suitable employment
b) the amount per week (if any) that the employee earns from any employment (including self-employment) that is undertaken by the employee in that week.

Once an employee has been incapacitated for more than 45 weeks, their incapacity entitlements will be determined based on the formula under subsection 19(3) of the SRC Act:

(Adjustment percentage x NWE) - AE

The 'adjustment percentage' used will be based on the number of hours worked by the employee in a week.

Note: If an employee is retired, whether voluntarily or involuntarily or on grounds of invalidity retirement, the formula used to calculate their workers' compensation incapacity payments will depend on whether, and the manner in which, they receive their superannuation. It is therefore important for the retired employee to notify Comcare as soon as possible if and when they access their superannuation to avoid overpayment which will be recoverable by Comcare. The starting point of any formula used by Comcare to calculate incapacity payments in this circumstance will be based on the benefit payable under subsection 19(3) of the SRC Act, whether the employee has been incapacitated for 45 weeks or not.

The 'retired and in receipt of superannuation' (sections 20, 21 and 21A) formulae applied take the employer-funded portion of a superannuation scheme pension or lump sum-or a combination of both-into account and act to reduce the section 19(3) benefit such that the combined workers' compensation and superannuation weekly amount cannot exceed 70 per cent of the employee's NWE.

Any money an employee receives, or may be entitled to receive from the employer-funded portion of a superannuation scheme following separation from employment will be taken into account by Comcare when determining the employee's weekly incapacity payments.

'ABILITY TO EARN' AND 'SUITABLE EMPLOYMENT'

For employees who have successfully maintained employment in suitable duties, their acceptance of a voluntary redundancy would normally allow Comcare to determine that they have an 'ability to earn' (AE)-see section 19(2)(a) of the SRC Act. Where Comcare determines an employee has an AE, this has the effect of reducing any weekly entitlement to ongoing incapacity benefits an employee may have-provided the Commonwealth would have been able to continue to offer those duties to the employee had they not accepted the offer of a voluntary separation.

In situations where a redundancy was involuntary, yet the employee had been undertaking suitable duties based on their medical restrictions due to their compensable condition, Comcare would need to investigate the circumstances before determining that an employee had an AE in suitable employment. Accordingly, in genuine involuntary retirement cases, incapacity benefits would be payable based on medical evidence of ongoing incapacity and non-availability of suitable employment until such time as the employer provided the employee with suitable employment or assisted them to find such employment (see section 40 of the SRC Act). However, it is noted that where an employee has been incapacitated for more than 45 weeks and they separate from their employment, they will only be eligible to receive 75 per cent of their NWE as they are not working.

However, it should be noted that an employee also has a responsibility under section 19(4) of the SRC Act to seek suitable employment after becoming incapacitated.

SEPARATION PROCESS

If an employee is made redundant (voluntary or involuntary), Comcare must be advised2 to ensure an employee continues to receive their correct entitlements. Comcare should also be informed of all impending redundancies involving employees who had active claims in the last 12 months.

2 See s114A Notice to Comcare of retirement of employee-this obliges the employer of an employee who is receiving or is entitled to receive SRC Act compensation to give Comcare written notice of their retirement and to identify which superannuation scheme the employee was a member of at the time of retirement.

The following process should be followed upon separation:

1. Employer completes a Cessation of Employment form (available on Comcare's website)

2. Once this form has been received, Comcare will provide the employee with the appropriate forms to allow them to be registered on Comcare's Xpay system. This will ensure the employee continues to receive any incapacity payments they are entitled to receive directly from Comcare. If the employee is accessing their superannuation, an authority will need to be signed allowing Comcare to obtain information from their superannuation fund

3. Any outstanding Claims for Time Off Work (CFTOW) forms are completed and sent to Comcare for determination

4. Comcare reviews and determines as appropriate any outstanding incapacity benefits

5. Comcare reviews the claim and identifies any employee overpayment not yet recovered or fully recovered. If an overpayment is found, Comcare will recover any overpayments from any superannuation benefit payable under its section 114B power (note: tight timeframes are involved in section 114B recovery)

6. If incapacity benefits are payable following retirement, Comcare correctly determines these, either under section 19 for employees who have not received a superannuation benefit (generally employees under age 55) or under sections 20, 21 and 21A for employees who have received, or are entitled to receive a superannuation benefit (generally employees from age 55) and if the above applies.

MORE INFORMATION

Frequently asked questions-Separating from the Commonwealth following a redundancy

Disclaimer: The above hypothetical scenarios are intended as general guidance only. Each claim would be considered on its individual merits and according to the presenting facts, and against the legislation.

For more information, please call us on 1300 366 979, email us at general.enquiries@comcare.gov.au, or visit www.comcare.gov.au/claims.