Indus and Secretary, Department of Social Services (Social security)

[2025] ARTA 2050

Indus and Secretary, Department of Social Services (Social security) [2025] ARTA 2050 (12 September 2025)

Applicant:  Mr Indus

Respondent:  Secretary, Department of Social Services

Chief Executive Centrelink

Tribunal Number:   2025/B194923

Tribunal:Member N Foster

Place:Brisbane

Date:12 September 2025

Decision:The Tribunal sets aside the decision under review and remits the matter for reconsideration in accordance with the order that no compensation preclusion period applied at the time of Mr Indus’ claim for jobseeker payment and disability support pension on 5 February 2025.

CATCHWORDS
SOCIAL SECURITY – jobseeker payment and disability support pension – compensation preclusion period – work injury and WorkCover impairment payout – work injury and medical negligence claims settled and lump sum payments – terms of settlement – aggregation of payments – two separate compensable injuries and overlapping preclusion periods – recalculation of periods – applicant’s current financial and medical circumstances would have warranted reducing preclusion period if necessary – decision under review remitted

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been omitted from this decision and replaced with generic information pursuant to subsection 201(1A) of the Social Security (Administration) Act 1999.

Statement of Reasons

BACKGROUND

1. This review is about whether Mr Indus is prevented from receiving jobseeker payment or disability support pension due to the application of a compensation preclusion period.

2. Mr Indus, who is [number] years old, claimed compensation for a work injury that occurred on 2 June 2020.  He also made a medical negligence claim in relation to subsequent treatment of this injury.  On 25 November 2021 WorkCover Queensland (WCQ) paid Mr Indus an impairment payment of $76,813.30.  On 19 September 2023 his work injury claim and his medical negligence claim settled on the basis that he was to be awarded lump sum amounts.  After being notified of these settlements, Services Australia (Centrelink) decided on 14 November 2023 that a compensation preclusion period applied to Mr Indus from 25 November 2021 to 23 June 2027. 

3. On 5 February 2025 Mr Indus lodged claims for jobseeker payment and disability support pension with Centrelink.  On 11 February 2025 Centrelink rejected Mr Indus’ claims on the basis that a compensation preclusion period remained in force. 

4. Mr Indus requested a review and on 15 April 2025 an authorised review officer affirmed Centrelink’s decision.  In doing so, the authorised review officer found that Mr Indus had a compensation preclusion period until 23 June 2027 based on the aggregated total of his impairment payment from 2021 and his two settlement lump sums from 2023.  The authorised review officer further found that there were not special circumstances that warranted a reduction in Mr Indus’ compensation preclusion period.

5. Mr Indus applied to the Tribunal on 6 June 2025.  The application was heard on 12 September 2025, with Mr Indus appearing by telephone and his representative, [Ms A] of [Legal Service 1], appearing in person.

CONSIDERATION

Is Mr Indus’ compensation preclusion period correctly calculated?

1. Under section 1169 of the Social Security Act 1991 (the Act), if a person receives lump sum compensation, then a compensation affected payment (such as jobseeker payment or disability support pension) is not payable during their preclusion period.  This period is calculated under section 1170 of the Act using a formula that takes into account “the compensation part of the lump sum”.  Under subsection 17(3), this is 50% of the lump sum compensation payment where a claim is settled.  In calculating the amount of the lump sum, any periodic compensation payments that must be refunded are to be disregarded – see subsection 17(4).  Otherwise, the gross amount of a person’s lump sum compensation payment must be assessed – see Secretary, DSS v Banks (1990) 20 ALD 19. Where a person is paid more than one lump sum in respect of the same event and at least one payment relates to lost earnings or lost capacity to earn, section 1171 of the Act deems the person to have received one lump sum payment equal to the sum of the multiple payments on the day the most recent payment was received.

2. In Mr Indus’ case, he was awarded three lump sums – an impairment payment of $76,813.20 in November 2021 and two settlement sums in September 2023.  With these latter settlements, there was a global document entitled “Terms of Settlement” dated 19 September 2023, as well as separate deeds of release of the same date addressing each of his claims.  One deed – which stated that it was in relation to personal injuries that Mr Indus allegedly sustained in the course of employment on 2 June 2020 – provided that WCQ would pay him a sum of $1, plus costs of $4,552.95.  WCQ also agreed to forgo recovery of more than $310,000 in statutory benefits.  In the other deed – which was stated to be in relation to medical treatment for wound management that Mr Indus received from two doctors between 2 June 2020 and 25 June 2020 – these doctors agreed to pay him a total sum of $371,000.

3. In calculating Mr Indus’ compensation preclusion period, Centrelink has applied section 1171 of the Act and added his impairment payment of $76,813.30 to the gross WCQ settlement figure of $318,418.89.  Centrelink has then deducted his WCQ periodic compensation payments of $87,423.33 from this amount to give a net settlement figure of $307,808.86.  As Mr Indus’ medical negligence claim arose out of the same injury as his WCQ claim and was settled on the same date, Centrelink has then added on the medical negligence settlement amount of $371,000 to get a global settlement figure of $682,443.92.  After taking 50% of this figure and dividing it by $1,166 (the relevant statutory divisor as at the date of settlement), Centrelink has determined that Mr Indus has a preclusion period of 291 weeks.  This preclusion period runs from 25 November 2021 (the day after Mr Indus’ periodic WCQ payments ceased) until 23 June 2027.

4. When asked by the Tribunal why his compensation claims settled on the same date, Mr Indus was unsure why this was the case.  He indicated that his medical negligence claim was different to the claim against his employer and related to treatment he received after he had injured his leg at work.  He had attended an after-hours surgery with a 20 cm tear to his leg.  A doctor had stitched up his leg without taking an X-ray.  As there was a piece of metal still in his leg, the wound became infected.  Mr Indus later received treatment from another doctor, who was also included in the medical negligence action.

5. In disputing Centrelink’s calculations of the preclusion period, [Ms A] contended in both her written and oral submissions to the Tribunal that Mr Indus had received lump sum compensation payments in respect of two compensable injuries with separate dates of injury.  These were his workplace injury on 2 June 2020 and a separate compensable injury arising from the medical treatment he received between 2 June 2020 and 25 June 2020.  As a consequence, Mr Indus’ lump sums must be apportioned to the corresponding separate dates of injury, as found by the Federal Magistrates Court in its decision in Savage v DEWR [2008] FMCA 32 (Savage).  This meant that Mr Indus had separate, overlapping preclusion periods as a result of his WCQ settlement and his medical negligence settlement, with these running until approximately 11 June 2023 and 22 September 2023 respectively.  In making these calculations, [Ms A] also contended that the relevant statutory divisor should be $1,198.70, the figure as at 6 December 2023, the date that Mr Indus’ actually received his settlement funds.

6. In determining the preclusion period that should apply in Mr Indus’ case, the Tribunal is mindful that, for lump sums to be added together under section 1171 of the Act, a person must receive two or more lump sum payments in relation to the same event that gave rise to their entitlement to compensation.  In Savage, Centrelink had added together two WCQ settlements, which related to separate incidents and injuries, on the basis that the claims had settled on the same date.  In concluding that this approach was incorrect and that two separate, overlapping preclusion periods existed, the Court observed that subsection 17(5A) of the Act provides that the event that gives rise to a person’s entitlement to compensation is either the accident (where the injury is caused by one) or the injury first becoming apparent, and that the event is not the settlement under which the compensation is payable.  As the compensation recipient in Savage had had multiple accidents, it was not appropriate to add his settlement amounts together under section 1171 of the Act.  Furthermore, the Court observed that, even where there is a single global settlement, there can still be more than one lump sum for the purpose of section 1170 of the Act if there were separate accidents or injuries.

7. With Mr Indus, the documentation before the Tribunal indicates that, although his WCQ claim and medical negligence claim both settled on 19 September 2023 and they were addressed in a global settlement document, each claim also had its own separate deed of release.  As set out in those deeds, the settlement amounts paid to Mr Indus were in relation to distinct matters – namely, his initial work injury on 2 June 2020 and the deleterious impact of subsequent medical treatment that took place between 2 June 2020 and 25 June 2020.  While recognising that Mr Indus’ claims can both be linked to a common originating incident – his accident at work on 2 June 2020 – the Tribunal is satisfied that the lump sums themselves relate to different events and injuries.  In such circumstances, the Tribunal finds that, in accordance with the decision in Savage, each of Mr Indus’ settlements gives rise to its own separate compensation preclusion period under the Act and that Centrelink’s calculations that have added the WCQ settlement and medical negligence settlement together are incorrect.

8. In calculating the preclusion periods that should apply in relation to each settlement, the Tribunal notes that, with regard to the WCQ settlement, Centrelink has used a net settlement figure of $307,808.86, having correctly added on the previous impairment payment as required under section 1171 of the Act.  (This step has been omitted by [Ms A] in her calculations.)  Applying the 50% rule in subsection 17(3) of the Act to a net settlement figure of $307,808.86 results in a compensation part of the lump sum of $153,904.43.  With regard to the statutory divisor that should be used, the Tribunal notes that section 17 of the Act provides that this is an income cut-off amount calculated at the time that the compensation was received.  Where compensation claims are settled without a court judgment, Centrelink treats compensation as being received on the date the agreement was finalised and the funds became payable (i.e. date of settlement) – see the Social Security Guide at 4.13.2.60.  This policy is routinely applied in matters that come before the Tribunal and allows a preclusion period to be calculated immediately upon notification of a settlement, rather than requiring a person to wait until their funds have been paid directly to them, something that can often take many months.  As Mr Indus’ WCQ claim settled on 19 September 2023, the relevant divisor at that time was $1,166 and results in a preclusion period of 131 weeks.  Given that Mr Indus’ periodic WCQ payments ceased on 24 November 2021, the Tribunal finds that a preclusion period applies in relation to his WCQ settlement from 25 November 2021 until 30 May 2024.

9. With Mr Indus’ medical negligence settlement, the compensation part of the lump sum is 50% of $371,000, i.e. $185,500.  When divided by $1,166, this gives rise to a preclusion period of 159 weeks.  As there was no periodic compensation paid to Mr Indus in relation to the medical negligence claim, the Tribunal finds that he has a preclusion period from 25 June 2020 (the end date of the medical treatment in question) until 13 July 2023.

10. As both of Mr Indus’ compensation preclusion periods end prior to 5 February 2025, the Tribunal concludes that he was not precluded from receiving jobseeker payment or disability support pension as at 5 February 2025 due to his receipt of compensation.  The Tribunal will therefore set aside the decision under review and return Mr Indus’ matter to Centrelink so that his eligibility for payment at that date can be reconsidered.

Should Mr Indus’ preclusion period be reduced?

1. For the sake of completeness, the Tribunal observes that, had Mr Indus been ineligible for payment due to the application of a compensation preclusion period, it would also need to be considered whether the preclusion period should be reduced under section 1184K of the Act.  Under this section, some or all of a person’s compensation payment may be disregarded in special circumstances, thereby reducing their preclusion period.

2. Mr Indus’ evidence to the Tribunal about his current circumstances was stark and confronting.  He told the Tribunal that he has no money at all, with the last of his compensation having been spent in mid-2024.  He is living in his car and has done so since he was evicted from his rental accommodation in January.  He has been getting by solely on the generosity of charities and family members.  He no longer has a concession card so he cannot afford to pay for his diabetes medication.  He continues to experience ongoing pain from his leg injury.  He is distressed about his situation and said that he just needs a small sum of money so he can have something to live on.

3. In her written submissions, [Ms A] contended that there were special circumstances in Mr Indus’ case that warranted the exercise of section 1184K of the Act in his favour.  These included the large disparity between the amount of compensation used by Centrelink to calculate Mr Indus’ preclusion period and the sum that he actually received, the fact that all of his compensation has now been spent (including on repayment of pre-existing loans and debts), his current destitution and homelessness, his extremely poor mental health and his reliance on family members (including his 21‑year‑old daughter) to access basic necessities of life.  In support of these submissions, [Ms A] provided an array of supporting documents, including bank statements and letters from Mr Indus’ treating doctor and multiple welfare organisations.  The Tribunal was also provided with documents showing that Mr Indus still owes more than $30,000 in rental arrears and more than $20,000 in other debts, bills and fines.

4. While it is well established that the special circumstances discretion in section 1184K of the Act should be exercised sparingly, the facts of Mr Indus’ case – in particular, the dire nature of his current predicament – would have warranted the Tribunal reducing his preclusion period had this been necessary.  However, as the Tribunal has found that Mr Indus’ overlapping preclusion periods have now been served in full, it is unnecessary for the discretion in section 1184K of the Act to be applied in his case.

DECISION

The Tribunal sets aside the decision under review and remits the matter for reconsideration in accordance with the order that no compensation preclusion period applied at the time of Mr Indus’ claim for jobseeker payment and disability support pension on 5 February 2025.

Date of hearing:	Friday 12 September 2025
Representative for the Applicant:	[Ms A], [Legal Service 1]