POLICY DETERMINING A WEEKLY COMPENSATION BENEFIT FOR SELF EMPLOYED FIRE FIGHTERS / EMERGENCY SERVICE WORKERS / RESCUE SERVICE WORKERS

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1 WORKCOVER AUTHORITY POLICY DETERMINING A WEEKLY COMPENSATION BENEFIT FOR SELF EMPLOYED FIRE FIGHTERS / EMERGENCY SERVICE WORKERS / RESCUE SERVICE WORKERS 1. THE RULES This document describes the options and methods that the WorkCover Authority (after here referred to as the Authority) will use to fairly and reasonably determine the weekly compensation benefit payable for volunteers who are incapacitated for work as a result of an injury that entitles them to compensation under the Workers Compensation (Bush Fire, Emergency and Rescue Services) Compensation Act 1987 and who were not working under a contract of service. The relevant workers compensation legislation governing the calculation and provision of compensation benefits for fire fighters or emergency or rescue workers (after here referred to as volunteers) is the Workers Compensation (Bush Fire, Emergency and Rescue Services) Compensation Act 1987 (after here referred to as the WC (BFERS) Act) and the Workers Compensation Act 1987 (after here referred to as the Principal Act). Section 11 (5) and (6) and section 27 (5) and (6) of the WC (BFERS) Act provides the legislative basis for determining the weekly payments payable to a fire fighter or an emergency service worker or a rescue association worker. Extract from sub-section 5 (Sections 11 and 27 of WC (BFERS) Act) (5) In determining the weekly payments of compensation payable to [a fire fighter or an emergency service worker or a rescue association worker,] the [fire fighter s or an emergency service worker s or a rescue association worker s] current weekly wage rate (if less than the [fire fighter s or an emergency service worker s or a rescue association worker s] average weekly earnings) shall be increased by the amount of the difference. Extract from sub-section 6 (Sections 11 and 27 of WC (BFERS) Act) (6) In determining the weekly payments of compensation payable to [a fire fighter or an emergency service worker or a rescue association worker,]: (a) the maximum weekly payment prescribed by section 35 of the Principal Act does not apply, and (b) section 40 of the Principal Act (weekly payment during partial incapacity) shall be construed as if the words but not exceeding $1,000 were omitted from that section. Section 11 (7) of the WC (BFERS) Act provides that a volunteer who was not working under a contract of service at the time of injury, that is, was working under a contract for services (self employed), may still be entitled to a weekly compensation benefit. Extract from sub-section 7 (Sections 11 and 27 of WC (BFERS) Act) (7) If [a fire fighter or an emergency service worker or a rescue association worker,] was not working under a contract of service at the time the [fire fighter or emergency service worker or rescue association worker] received the injury, the [fire fighter s or an emergency service worker s or a rescue association worker s] average weekly earnings or current weekly wage rate for the purposes of this Part shall be such amount as the Authority considers is fair and reasonable in the circumstances. Page 1 of 7

2 The terms average weekly earnings and current weekly wage rate are defined in the Principle Act and carry the same meaning in the WC (BFERS) Act. Sections 42 and 43 of the Principle Act describe how to determine the current weekly wage rate (after here referred to as CWWR) and average weekly earnings (after here referred to as AWE). CWWR is most simply described as the ordinary weekly or hourly Award rate from an industrial Award, that is, the rate without any penalty payments applied. AWE is most simply described as the average rate per week at which the volunteer was being remunerated. It is important to understand that each claim where weekly compensation benefits are claimed is assessed on a case-by-case basis and the information reuirements to determine the correct, fair and reasonable benefit to be paid may differ depending on the volunteer's circumstances. The volunteer is responsible for any costs incurred in gathering and providing information so that a weekly compensation benefit rate can be determined. Weekly compensation benefits are paid under certain sections of the Principal Act. They are: Section 36 total incapacity payments first 26 weeks (AWE or CWWR rate) Section 37 total incapacity payments after first 26 weeks (statutory maximum amount) Section 38 special initial payments while seeking employment for partially incapacitated workers these payments do not apply to a self employed volunteer Section 40 partial incapacity payments (AWE or CWWR of statutory maximum rate) Weekly compensation benefits at the CWWR rate or the AWE rate is payable for 26 weeks of total incapacity. After the payment of 26 weeks of weekly compensation benefits, either for total or partial incapacity, the rate of weekly compensation benefits payable for partial incapacity is subject to a statutory maximum amount described in the Principal Act. After 26 weeks of benefits for total incapacity has been paid the rate of weekly compensation benefits payable for total incapacity is subject to a statutory maximum amount described in the Principal Act For example, If a volunteer has three weeks total incapacity and 23 weeks partial incapacity then if they remain partially incapacitated any subseuent compensation benefit payable for partial incapacity is capped at the statutory maximum. If a volunteer has three weeks total incapacity and 23 weeks partial incapacity and then three weeks total incapacity the workers compensation benefit paid for the second period of total incapacity will be at the AWE or CWWR rate. However any subseuent partial incapacity weekly compensation benefits payable will be capped at the statutory maximum. Benefits paid under section 38 of the Principal Act do not apply for self employed volunteers. This is because the obligation to provide suitable employment is the obligation of the volunteer in his or her capacity as a director of a company or owner of the business, where not a company. The obligation of the employer and the volunteer is identical and reuires both the employer and the volunteer to fulfil. This, therefore, extinguishes the right to a benefit paid under section 38 of the Principal Act. For the purpose of determining an hourly rate for CWWR all calculations are based on the weekly hours worked being the number of ordinary hours identified for a working week as included in the Award e.g. 38 hour working week. For the purpose of determining an hourly rate for AWE all calculations are based on the weekly hours worked being the number of hours identified for ordinary working week as included in an appropriate Award. Where an appropriate Award can t be identified the number of ordinary hours identified for a working week will be 40. Page 2 of 7

3 Weekly compensation benefits paid to volunteers are taxed at PAYG rates in accordance with the nominations made by the volunteer when completing the Australian Taxation Office (ATO) Tax File Number Declaration Form unless the ATO has approved some other taxation arrangement for a volunteer and the ATO provides this information to WorkCover Claims Branch (ABN Branch No. 011) as the declared payer. 2. INFORMATION REQUIRED In order to fairly and reasonably determine the weekly compensation benefit payable to a selfemployed volunteer who is incapacitated for work as a result of an injury the following information is to be provided by the volunteer to the Authority: Completed Statement of Claim for Time Lost by Self Employed Volunteers form; Documentation as reuired below for the Options 1, 2 or 3 selected by the volunteer to enable calculation of the amount of the weekly compensation benefit to be paid Completed ATO Tax File Number Declaration form Only Section A is to be completed by the volunteer; Medical Certificate/s confirming capacity for work The volunteer is responsible for any costs incurred in gathering and providing information so that a weekly compensation benefit rate can be determined. 3. OPTIONS AVAILABLE TO DETERMINE THE WEEKLY COMPENSATION BENEFIT There are three options that the Authority can use to determine a weekly compensation benefit to be paid to volunteers who were not working under a contract of service. The option preferred for the calculation to determine the weekly compensation benefit will be at the discretion of the volunteer. Option 1 Average weekly earnings (AWE) Calculate the average weekly earnings of the volunteer. Option 2 Current weekly wage rate (CWWR) Selection of an appropriate award to reflect the type of work in which the volunteer was engaged in just prior to the injury to determine a current weekly wage rate. Option 3 Engaging a temporary worker Calculation of a rate that is payable when some other person is employed by the volunteer to perform the work that would be performed by the volunteer. 4. METHOD USED TO DETERMINE THE WEEKLY COMPENSATION BENEFIT FOR EACH OPTION Option 1 Method of calculating the average weekly earnings (AWE) 1. Workers compensation legislation reuires that average weekly earnings shall be computed in such manner as is best calculated to give the rate per week at which the worker was being remunerated (section 43 (1) (a) of the 1987 Act). 2. The volunteer is to provide to the Authority a documented record of their personal AWE for the 12 month period prior to the injury. Page 3 of 7

4 3. The AWE referred to are the earnings obtained by the volunteer for which the volunteer pays personal income tax. 4. Where the only information available to determine an income is a business record that has been certified by an accountant, e.g. a profit and loss statement, this will be acceptable. However, the personal taxable amount i.e. the net profit amount (or the loss amount) will form the basis of the calculation of the AWE. 5. Where a profit and loss statement is used some business expenses may be considered for inclusion for the purpose of calculating the AWE. This may be allowed because it is recognised that there will be some recurring expenses reuired to maintain the business operation while the volunteer is incapacitated and not able to work. The Authority will determine which expenses are to be counted for inclusion in calculating AWE. Also, some expenses will not be counted for AWE purposes as it is expenditure incurred through undertaking work and would be charged out to clients or would not be incurred while the volunteer is incapacitated. Business Partnership Arrangements Special Provisions 6. Where a volunteer s business operation is a recognised or a registered partnership business arrangement, then for the purposes of determining average weekly earnings the Authority may consider the method of calculating the weekly compensation benefit to be paid to be the aggregate weekly income of a business providing the following conditions are met: a) The volunteer, being the injured partner in the business arrangement, is the principal provider of labour to that business and the business is unable to generate income without the labour of the injured partner; and b) The business income is an income for a single household, being the household of the injured partner and is the sole income for that household. 7. In reference to these special provisions the definition, applicability and limitations of the term partnership shall be taken to mean the definition, applicability and limitations as defined in the NSW Partnership Act If the business partnership is not registered as a partnership business the independently corroborated evidence e.g. the profit and loss statement completed by an accountant showing that the partnership is recognised on the document will be reuired. 9. The applicability of these special provisions shall be at the discretion of the Authority. Working Director of a Company Special Provisions 10. In the first instance where the volunteer is a working director of a company the weekly compensation benefit payable will be determined from the income paid to the volunteer by the company for which the volunteer pays personal income tax. That is the volunteer is an employee of a company and not necessarily a self employed volunteer. 11. However, it is recognised that where the volunteer is the principal provider of labour to that company as the working director and the company is unable to generate income without the labour of the working director; and the company income is an income for a single household, being the household of the working director and is the sole income for that household then for the purposes of determining average weekly earnings the Authority may consider the method of calculating the weekly compensation benefit to be paid as identified in steps 1 to 5 above. 12. In the alternative, if the income paid to the volunteer by the company for which the volunteer pays personal income tax is a very low amount then the volunteer can choose to use Option 2 or 3 for the calculation of a weekly compensation benefit. 13. The applicability of these special provisions shall be at the discretion of the Authority. Page 4 of 7

5 Option 2 Method of determining current weekly wage rate (CWWR) through the application of an award rate This option is available for where the volunteer is unable to provide details of their AWE during the 12-month period prior to the date of injury or chooses not to do so. The volunteer will be reuired to provide to the Authority information on the type of work in which the volunteer was engaged just prior to the injury. Using this information the Authority will nominate the most appropriate award and job classification that are to be utilised to determine the current weekly wage rate for the claimant. The value of the ordinary weekly rate for the nominated job classification in the Award will be the volunteer s current weekly wage rate and will then be payable as the claimant s weekly entitlement. Option 3 Engaging a temporary worker An injured volunteer may choose to engage the services of some other person to do the work that they themselves would normally have done had they not have been injured. Payment arrangements and conditions for the employment of a temporary worker, including workers compensation insurance is the responsibility of the volunteer. Should the injured volunteer choose to utilise this option weekly entitlements will continue to be paid to the volunteer at the rate determined either through Option 1 (AWE) or Option 2 (CWWR). The rate will be taxed at the appropriate personal income tax rate as declared by the volunteer on the ATO Tax File Number Declaration form that the volunteer has completed. In some circumstances it is conceivable that due to the nature of the volunteer s work the replacement labour may be reuired to work for periods of time exceeding the weekly benefit being paid to the injured volunteer i.e. based on a 40 hour week. Consideration may be given to increasing the payment to the volunteer to cover the need for the extra hours. In such circumstances the volunteer will be reuired to establish the number of hours that the replacement labour worked each week in excess of the normal hours i.e. 40 hours, and the reason the excess hours were reuired. Subseuent to the provision of this information and at the discretion of the Authority, the weekly compensation benefit paid for the period of extra hours worked may be increased to pay for the euivalent hours. The hourly rate payable will remain the same as that determined using Option 1 or 2. That is, there is no penalty provisions payable on the rate. 5. INTERIM PAYMENT ARRANGEMENTS In cases where liability has been accepted, interim weekly payments may commence immediately, with the agreement of the volunteer, while the volunteer elects Option 1, 2 or 3 and obtains the necessary supporting information to be forwarded to the Authority. The actual weekly rate to be applied for the interim payment arrangement is determined by the application of Schedule 6, Part 4, Clause 7 of the Workers Compensation Act 1987, i.e. weekly wage rate where no award exists. This weekly rate is indexed biannually on 1 April and 1 October each year. These payments are payable for a maximum period of 12 weeks. Page 5 of 7

6 So that the interim payment arrangements do not continue past 12 weeks the claimant is reuired to provide the election of Option 1, 2 or 3 and the necessary supporting information within a reasonable timeframe. If the information is not supplied within 12 weeks Option 2 will be implemented as the method of calculating the amount of weekly compensation benefits to be paid. 5. EXCEPTIONAL CIRCUMSTANCES It is acknowledged that certain unforeseen scenarios may arise that are not adeuately addressed by the three options identified. Those instances will be specially considered in an effort to achieve a fair and reasonable resolution of the particular issue at hand. Page 6 of 7

7 NOMINATION OF WEEKLY COMPENSATION BENEFIT OPTION I, claim number hereby declare that option would most likely be applicable to my current financial circumstances resulting from the injury of / / while participating in an authorised activity with I submit the following documentation in support of my claim for WorkCover s consideration. (Please tick whichever is applicable to your claim) OPTION 1 Financial business records from my accountant substantiating my average weekly earnings of $ calculated on a 12-month period immediately prior to the date of injury. OPTION 2 A list of the duties I was engaged in prior to the above date of injury. OPTION 3 Copy of wage records showing hours worked and list of duties of the hired person performing my pre-injury duties and independent evidence of the need to work the additional hours. OTHER DOCUMENTATION Medical certificate confirming my incapacity for work. ATO Tax File Number Declaration form with Section A only completed. DECLARATION I hereby solemnly and sincerely declare that the particulars I have included on this form are true and correct in every detail, and I have not withheld any information and that the injuries I have received were caused in the manner stated above and in no other way whatsoever. Please send all information to WorkCover Claims Branch, Locked Bag 2906, Lisarow, NSW Signature of volunteer Date: Page 7 of 7