How are Loss of Earnings (LOE) benefits assessed?
This policy should be read together with the Loss of Earnings Benefits policy.
How are Loss of Earnings (LOE) Benefits Assessed?
To assess a client's LOE benefit, the TAC will need to have regard to the client's 'pre-accident weekly earnings'. The weekly earnings are calculated differently depending on the client's accident date. Refer to:
- Pre-accident weekly earnings (for accidents on or after 1 January 2005)
- Pre-accident weekly earnings (for accidents on or before 31 December 2004)
What information does the TAC need to assess LOE?
To assess a client's LOE benefit the TAC requires information to demonstrate objective evidence of earnings. The TAC considers the following primary documents to be objective evidence of earnings:
- Tax returns with notice of income tax assessment issued by the Australian Taxation Office
- Pay slips
- Wage records
- A contract of employment
- Statement of offer of employment
- PAYG Payment Summary.
How does the TAC assess LOE if the client does not have formal evidence of earnings?
If a client does not have primary documents to evidence earnings the TAC can still consider a client's loss of earnings, however, the TAC will ask the client to provide the following secondary documents as objective evidence to demonstrate his/her loss of earnings:
- Bank statements showing regular deposits of earnings from the employer/employee
The TAC may also consider:
- Statements from employer(s) accompanied by a Statutory Declaration form
- Statements from other independent witnesses providing evidence of regular work and earnings
- Employment rosters/timesheets
- Letter/s from service providers.
Does a waiting or preclusion period apply before LOE is paid?
Under section 43(1)(a) of the Transport Accident Act (1986), the TAC is not liable to pay LOE benefits during the "first five days" of financial loss incurred as a result of the transport accident injury. A client who qualifies for an LOE benefit must wait for the "first five days" exclusion period to end before his/her LOE payments commence. During this time a client is expected to use his/her own funds before receiving the first LOE payment from the TAC.
Transport Accident Act 1986 reference: s.43(1)(a)
There are also a number of different waiting or preclusion periods called "non-payments periods" that may or may not apply to a client depending on his/her particular circumstances and the date of the transport accident. Refer to 'In which circumstances will the TAC will apply a non-payment period? ' in the Who is Eligible to Receive LOE Benefits? policy.
Can the "first five days" exclusion period be waived?
A client in "acute financial hardship" can claim for a waiver of the "first five days" exclusion period. The TAC is able to waive the waiting period when it is satisfied that the client does not have sufficient income to cover his/her reasonable and immediate family living expenses and would suffer acute financial hardship. Refer to the definition of Financial Hardship. In deciding the matter, the TAC will take into account whether the client has:
- unused sick or annual leave entitlements from his/her employer
- outstanding debts such as loan repayments, electricity, gas and other household expenses and
- a bank balance with sufficient funds to cover outstanding debts and his/her anticipated living costs expenditure.
Transport Accident Act 1986 reference: s.43(2)
How is the LOE rate assessed for a client who has not returned to work because of their transport accident related injuries?
After assessing the client's pre-accident weekly earnings, the TAC will then calculate 80% of this amount. This rate will be compared to the prescribed minimum weekly rate applicable at the time of the assessment. Where the client has dependants, the prescribed minimum weekly rate is increased for each dependant.
The total LOE benefit that the TAC may pay to the client is the greater of:
- 80% of the client's pre-accident weekly earnings, or
- the prescribed minimum weekly amount, or
- if the client has dependants, the prescribed minimum weekly rate plus an allowance for each dependant.
However, the weekly LOE benefit must not exceed the lesser of:
- the prescribed weekly maximum amount, or
- 100% of the client's pre-accident weekly earnings.
How is the LOE rate assessed for a client who has returned to work part-time?
The TAC will pay 'partial' LOE benefits to a client who is unable to return to work on a full-time basis due to injuries that are the result of the transport accident, but is able to return to work on a part-time basis.
The TAC will pay 85% of the difference between the client's pre-accident weekly earnings and the client's 'current weekly earnings'. The current weekly earnings are the client's post accident earnings calculated at the client's ordinary time rate of pay for the normal number of hours per week.
This rate will be compared to the prescribed minimum weekly rate applicable at the time of the assessment, less the client's current weekly earnings. Where the client has dependants, the prescribed minimum weekly rate is increased for each dependant.
The partial LOE benefit that the TAC may pay to the client is the greater of:
- 85% of the difference between the client's pre-accident weekly earnings and the current weekly earnings, or
- the prescribed minimum weekly amount less the earner's current weekly earnings, or
- if the client has dependants, the prescribed minimum weekly rate, plus an allowance for each dependant less the client's current weekly earnings.
However the partial LOE benefit can not be greater than the lesser of :
- the prescribed weekly maximum amount, less the client's current weekly earnings, or
- 100% of the client's pre-accident weekly earnings, less the client's current weekly earnings.
If the client's ongoing wage varies from week to week, the TAC will assess his/her entitlement on a weekly basis upon receipt of payslips. Where the client is unable to obtain payslips, the client's employer must provide written confirmation of the continuing wages, including:
- the client's hourly and gross weekly rate
- the total hours worked by the client per week and any variations to those hours.
Does the TAC include a client's superannuation and non salary benefits when calculating the client's LOE rate?
The TAC considers a person's salary to be the amount of gross earnings before the person's salary is structured into a mix of salary and non salary benefits.
The TAC will not include the employer's compulsory superannuation contribution when calculating a client's LOE rate or contribute to a person's superannuation fund in place of the employer.
Can the TAC consider scholarship amounts when determining a client's eligibility for LOE benefits?
The TAC will consider a client's scholarship/stipend amounts when determining eligibility for LOE benefits and in assessing the LOE rate provided that:
- the scholarship is principally provided as work or research to benefit the scholarship provider, and
- the person is or continues to be part of an arrangement with the scholarship provider that is for their labour, and
- the person is entitled to work like conditions such as paid sick leave, annual leave and maternity leave, etc. as part of the scholarship.
The TAC may also consider whether the person becomes or continues to be an employee of the scholarship provider.
What if a client disagrees with the TAC's decision to reduce or cease LOE benefits?
A client who disagrees with the TAC's decision to reduce or cease LOE benefits is able to have the decision reviewed. Refer to the Reviewing a TAC Decision policy.
For persons other than an employee refer to:
Last updated 26 August 2011