Loss of Earnings Capacity (LOEC) benefits

Policy

TAC will pay loss of earning capacity benefits to a person who has lost the capacity to earn income as a result of transport accident injuries.

Transport Accident Act 1986 reference: s.49, s.50 and s.51

Guidelines

When assessing a claim for loss of earning capacity benefits (LOEC) it is necessary to understand the terms used by the TAC and how they apply. The following three questions explain the terms used in this policy.

What is a loss of earning capacity?

A "loss of earning capacity" is the difference between a person's capacity to earn income before the transport accident injury and their actual capacity to earn income after the transport accident injury taking into consideration:

  • the nature of the injury; and
  • the degree of impairment; and
  • the potential for rehabilitation and the person's ability to undertake rehabilitation; and
  • the person's training, skills and experience; and
  • the age of the person, and
  • employment reasonably available to the person despite the injury.

What is pre-accident earning capacity?

In the Act, "pre-accident earning capacity", is the amount determined by the TAC to be the weekly amount the person had the capacity to earn before the transport accident.

To determine the weekly amount, the TAC takes into account the amount of income the person had the capacity to earn before the accident taking into consideration the type of employment reasonably available to the person having regard to his/her training, skills and experience.

For example, the person completed a teaching degree and was working part-time in a supermarket at the date of the accident. The person had applied for full-time teaching positions and was awaiting notification of full-time work. The person's pre-accident earning capacity would be that of a full-time teacher.

Transport Accident Act 1986 reference: s.49(5) 'pre-accident earning capacity'

What is post-accident earning capacity?

In the Act, "post-accident earning capacity", is the amount determined by the TAC to be the weekly amount the person had the capacity to earn after the transport accident despite their injury.

To determine the weekly amount, the TAC takes into account the amount of income the person has the capacity to earn after the accident taking into consideration the type of employment reasonably available to the person despite the injury and having regard to:

  • the nature of the injury; and
  • the degree of impairment; and
  • the potential for rehabilitation and the person's ability to undertake rehabilitation; and
  • the person's training, skills and experience; and
  • the age of the person.

In the majority of cases where the person has returned to full-time employment after the accident, the level of post-accident earning capacity will be equal to their pre-accident earning capacity.

If the post-accident earning capacity income is lower than the pre-accident earning capacity income, partial payments are made to the injured person. This normally occurs when the person is only capable of undertaking part-time employment.

Transport Accident Act 1986 reference: s.50(5) 'post-accident earning capacity'

What should a client advise the TAC should their situation change?

Changes to a client's economic circumstances, may affect the amount of weekly LOEC benefit they receive. A client is asked to notify the TAC of the following changes:

  • if a partner or child is no longer dependent on them for economic support, eg they have separated or a child ceases to be a full-time student after LOEC payments commence
  • if a partner or child becomes dependent on them for economic support after the accident, eg they marry or have additional children after LOEC payments commence.

Under the Act a client is also obliged to notify the TAC if they start working and receive wages.

Transport Accident Act 1986 reference: s.45A

What information is used to assess the LOEC?

To assess a client's loss of earning capacity the TAC will rely on a range of information, which will enable the TAC to assess the amount of the ongoing loss of earning capacity to be determined, such as:

  • the client's Claim for Compensation form,
  • wage and salary records, including payments for overtime, shiftwork, allowances, bonuses, commissions and salary sacrificed amounts for example - additional superannuation or a motor vehicle,
  • group certificates,
  • personal income tax returns, and
  • in the case of a self-employed person, business taxation returns, profit and loss statements and other business records.

Are there amounts that the TAC does not take into account in assessing the client's ongoing loss of earning capacity?

The TAC will not include the employer's compulsory superannuation contribution when establishing the client's pre-accident earning capacity because this is regarded as a compulsory levy on the employer. The TAC cannot make any ongoing contributions to a person's superannuation fund in place of an employer.

After the first 18 months after an accident the TAC will not pay the cost of employing a person to undertake tasks undertaken by a self-employed client before the accident in their business.

When does the first LOEC benefit payment commence?

The TAC will commence paying LOEC benefits 18 months after the date of the transport accident. In the majority of cases, a client will receive their first LOEC payment on this date or shortly after, however in a few cases the TAC may not have completed the earning capacity review before the expiration of 18 months after the date of the transport accident, (usually because further information is requested). In these cases the TAC will continue to pay loss of earnings benefits (LOE).

When are LOEC payments made?

Payments are made by the TAC when a client's certificate of capacity is received.

What must a client do to ensure they receive regular payments?

A client is asked to submit their certificate(s) of capacity to the TAC at least 5 working days before their next payment of LOEC is due, to allow for the processing of the payment.

How often are payments made?

Clients are paid on a fortnightly basis, in arrears (ie payments are made for the previous fortnightly period of entitlement).

Are there any circumstances when a client's LOEC payment may be expedited (ie. paid outside their normal fortnightly cycle)?

Yes, if a client's regular payment of LOEC is overdue and the TAC is satisfied that every effort by the client has been made to submit the information required to allow for the processing of the payment.

Related policies


View Loss of earnings capacity

Loss of earnings capacity

Summary:

This information sheet is for clients currently receiving TAC loss of earnings capacity (LOEC) benefits. It explains: how the benefits are calculated; how long, by law, the TAC is able to pay; what documents you need to supply to the TAC to continue receiving LOEC payments; and how the TAC can help you get back to work.

View Returning to work

Returning to work

Summary:

This booklet explains how TAC clients can work positively with their employer, health professionals and the TAC to coordinate a safe and smooth return to work. It outlines the TAC services and benefits, such as workplace assessments and modifications, that are available to assist return to work. There's also a useful planner tool and answers to frequently asked questions about return to work programs.