EXPLANATORY STATEMENT
Military Rehabilitation and Compensation (Employer Incentive Scheme) Determination 2026
EMPOWERING PROVISION
The Military Rehabilitation and Compensation Commission (the Commission) and the Minister for Veterans’ Affairs make this instrument under section 62A(1) of the Military Rehabilitation and Compensation Act 2004 (the Act).
PURPOSE
The Military Rehabilitation and Compensation (Employer Incentive Scheme) Determination 2026 (the instrument) determines a scheme for the making of incentive payments to employers to support the employment of former Australian Defence Force members, reservists and cadets in the civilian work force.
The instrument does not create a new support or entitlement but formalises the Department of Veterans’ Affairs (DVA) longstanding policy (described as the former EIS in the instrument) of paying wage subsidies under the Act to civilian organisations and businesses that employ veterans.
OVERVIEW
Section 62A(1) of the Act enables the Commission to determine a scheme for the making of payments to employers providing suitable civilian work to veterans who have been identified for discharge from the Australian Defence Force for medical reasons or those who are incapacitated for service or work by a service injury or disease.
This provision was inserted into the Act by the Veterans’ Affairs Legislation Amendment (Omnibus) Act 2017 to strengthen the legislative foundation for providing vocational rehabilitation assistance to eligible former members, reservists and cadets in the form of wage subsidies to encourage employers to engage injured veterans who have found it difficult to compete in a tight labour market.
The instrument will commence on 1 July 2026 to coincide with the commencement of the majority of the provisions of the Veterans’ Entitlements, Treatment and Support (Simplification and Harmonisation) Act 2025 (VETS Act). The transitional provisions in Schedule 1 of the instrument and the VETS Act will, in conjunction, ensure that any veteran benefiting from wage subsidy payments under the former EIS under the Act or the DRCA EIS under the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (DRCA) immediately before 1 July 2026 will be brought under the new instrument on 1 July 2026.
The instrument reflects all key elements of the former EIS including the calculation of incentive payments under Section 10 as:
- 75 per cent of gross wages for the first three months of employment;
- 40 per cent of gross wages for the second three months of employment; and
- a retention bonus of 10 per cent of annual gross wages (capped at $2,000) paid 12 months after the participant commenced employment.
The instrument includes a requirement under Section 7 for the employer to provide necessary information to the Commission in terms of wages, hours, duties and conditions of employment. The instrument also includes a broad power at Section 14 for the Commission to request information from participants and employers, such as documents regarding wages and business records, that demonstrate compliance with the instrument. Both provisions are necessary to ensure compliance with, and that payments are accurately made under, the terms of the instrument.
In requesting and collecting information from participants and employers under the instrument, relevant communications will include a Privacy Notice advising that any personal information provided is protected by law under the Privacy Act 1988. The Privacy Notice will transparently address who is collecting the information, what information is being collected, why the information is being collected, any disclosure terms and a link to DVA’s Privacy Policy.
Privacy, confidentiality and data handling governance are key requirements in the current contractual arrangements with rehabilitation providers, who will be key in administration of the instrument (as with the former EIS). The Deed of Standing Offer and its Statement of Requirements ensures that rehabilitation providers must be aware of and use the Office of the Australian Information Commissioner’s Guide to Securing Personal Information. This guide outlines the reasonable steps rehabilitation providers are required to take under the Privacy Act 1988 to protect the personal information they hold from misuse, interference, loss, and from unauthorised access, modification, or disclosure. Providers must ensure they collect personal information from clients only after they have provided the client with a privacy collection notice.
The Commission’s powers under the instrument will be delegated to staff in DVA under a delegation instrument made under section 384 of the Act. These delegation arrangements will be consistent with the delegation arrangements that apply to the former EIS, with administrative decisions and payments to employers being made by staff at the APS5 level and above. These delegations are appropriate, necessary and reflect the scale of decisions required by the Commission under the Act. Staff administering the instrument will continue to receive training, support and resources to undertake their duties consistent with the former EIS.
Consistent with determinations made under the former EIS, determinations made under the instrument are original determinations under the Act and if a participant is dissatisfied with a decision made under the instrument, they can apply to the Commission for a review of that decision. A decision cannot be reviewed by the person who made the original decision.
EXPLANATION OF PROVISIONS
Part 1 - Preliminary
Section 1 states the name of the instrument.
Section 2 provides that the instrument commences on 1 July 2026.
Section 3 sets out the authority for the Commission and the Minister for Veterans’ Affairs making the instrument, under section 62A(1) of the Military Rehabilitation and Compensation Act 2004 (the Act).
Section 4 provides the definitions of words used in the instrument or references to where terms are defined in other provisions in the instrument.
Section 5 is a standard provision that activates the items in the Schedule.
Section 6 describes the meaning of an EIS participant and how approval can be given to a person to participate, which includes the Commission being required to assist the person to find suitable civilian work under paragraph 61(3)(c) or subsection 62(3) of the Act, that the person is participating in an approved rehabilitation program and that the person is receiving compensation for incapacity under Part 3 or 4 of Chapter 4 of the Act.
Section 7 defines the meaning of qualifying employment including that the employment is in Australia, is ongoing, not self-employment, a sub-contracted position or a government-funded position and that the employer is not an immediate relative of the EIS participant.
Section 8 explains the meaning and purpose of an employment day in relation to the first day of qualifying employment, which is relevant for calculating payments and for other conditions in the instrument.
Part 2 – Payments to employers
Section 9 sets out that the Commission may make payments to an employer who is providing qualifying employment to an EIS participant. This section also defines the meaning of employer and of the two employment stages.
Section 10 sets out that the initial, secondary and tertiary payments are calculated based on gross wages paid over a stated period of the employment, respectively at 75 per cent of gross wages, 40 per cent of gross wages and the lesser amount of 10 per cent of gross wages or $2,000.
Section 11 sets out that the employer must submit a claim for each incentive payment in the approved form and the time period for those claims. Consistent with the former EIS, the form will be accessible to employers via the DVA website and will include a Privacy Notice advising that any personal information collected is protected by law under the Privacy Act 1988.
Section 12 sets out the parameters under which the Commission may make incentive payments including that the payments have been calculated and claimed consistent with the instrument.
Section 13 sets out the grounds under which the Commission may refuse to make a payment to an employer, such as the employer dismissing another employee for the purpose of creating a vacancy for an EIS participant. This provision seeks to balance the interests of the EIS participant and their employer with the need to safeguard other employees and their employment.
Section 14 sets out the Commission’s power to request information from an employer or participant to ensure compliance with, and payments under, the conditions of the instrument such as documents that record wages paid to the participant and business records that demonstrate an employer’s compliance with the instrument. The power allows the Commission to:
- mitigate fraud and ensure that payments are properly calculated based on wages actually paid to the EIS participant; and
- ensure that employers are upholding the conditions of the scheme, so that EIS participants enjoy safe and legally compliant employment conditions.
Schedule 1 – Transitional provisions
The Schedule is intended to ensure that veterans and employers benefiting from wage subsidies under the former EIS or DRCA EIS will be regulated by the instrument. The provisions will provide a smooth transition to the new instrument by ensuring that matters such as unprocessed applications or payment claims can be resolved under the terms of the instrument from 1 July 2026.
Part 1 – Preliminary
Section 1 provides the definitions of words used in the Schedule, including DRCA EIS and former EIS which are the former policy schemes under the Act and the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988.
Section 2 prevents employers from receiving a payment for a payment already received (i.e. double payments are not permitted).
Part 2 – Transitional matters relating to former EIS
Section 3 sets out that the instrument applies to existing employment provided to a person under the former EIS.
Section 4 sets out that a process or claim made but not determined under the former EIS is taken to have been made under the instrument.
Part 3 – Transitional matters relating to DRCA EIS
Section 5 sets out that the instrument applies to existing employment provided to a person if that employment was provided under the DRCA EIS and from 1 July 2026, Part 2 of Chapter 3 of the Act applies to the person because of section 104 of the MRCA Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004.
Section 6 sets out that a process or claim made but not determined under the DRCA EIS is taken to have been made under the instrument.
Consultation
The Commission has been paying wage subsidies to employers for over two decades under the former EIS and the DRCA EIS, on terms consistent with this instrument. This instrument will strengthen the legal basis for these payments and will not make any other changes to these long-standing arrangements. On these grounds and consistent with subsection 17(1) of the Legislation Act 2003, it is appropriate and reasonable that no consultation is undertaken.
On 5 December 2025, an Australian Government Impact Analysis Preliminary Assessment Form for the proposed instrument was provided to the Office of Impact Analysis (OIA) by DVA. The response dated 8 December 2025 from the OIA advised that the proposal did not require an Impact Analysis.
Supplementary information was provided to the OIA by DVA on 30 January 2026 and on the same day, OIA confirmed that no Impact Analysis was required.
Human rights implications
This instrument is compatible with the human rights and freedoms recognised or declared under section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. A full statement of compatibility is set out in Attachment A.
Making the instrument
The instrument is made by the Military Rehabilitation and Compensation Commission.
Approved by
Minister for Veterans’ Affairs
Rule-maker
Attachment A
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Military Rehabilitation and Compensation (Employer Incentive Scheme) Determination 2026
This disallowable legislative instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (the recognised rights).
Overview of the Disallowable Legislative Instrument
The Military Rehabilitation and Compensation (Employer Incentive Scheme) Determination 2026 (the instrument) determines a scheme, in accordance with section 62A(1) of the Act, for the making of incentive payments to employers to support the employment of former Australian Defence Force members, reservists and cadets in the civilian work force.
The instrument does not create a new support or entitlement but formalises the Department of Veterans’ Affairs longstanding policy (described as the former EIS in the instrument) of paying wage subsidies under the Act to civilian organisations and businesses that employ veterans.
Human rights implications
This disallowable instrument engages the following rights:
- The right to work and to the enjoyment of just and favourable conditions of work (such as renumeration and safe and healthy working conditions) as contained in Articles 6(1) and 7 of the International Covenant on Economic, Social and Cultural Rights.
The instrument promotes and is compatible with the right to work, as it supports the employment of veterans who have been identified for discharge from the Australian Defence Force for medical reasons or those who are incapacitated for service or work by a service injury or disease, by providing wage subsidies to civilian employers. This is a voluntary scheme that supports veterans to compete in a tight labour market.
- The right to privacy as contained in Article 17 of the International Covenant on Economic, Social and Cultural Rights.
Noting that there is no requirement that a veteran participate in the scheme, if a veteran chooses to participate, the instrument limits their right to privacy by requiring their employer to provide necessary information to the Commission in terms of wages, hours, duties and conditions of employment under Section 7. The instrument also includes a broad power at Section 14 for the Commission to request information from participants and employers, such as documents regarding wages and business records, that demonstrate compliance with the instrument.
Both provisions are reasonable, necessary and proportionate to ensure compliance with, and that payments are accurately made under, the terms of the instrument. This is particularly important in the context of value of the subsidies payable under the instrument which consist of 75 per cent of gross wages for the first three months of employment (uncapped) and 40 per cent of gross wages for the second three months of employment (uncapped) as per Section 10.
This limitation is managed by relevant communications including a Privacy Notice in line with the Privacy Act 1988, which will outline the purpose of collecting the information, any disclosure terms and provide a link to DVA’s Privacy Policy. Privacy, confidentiality and data handling governance are also key requirements in the current contractual arrangements with rehabilitation providers, who will be key in administration of the instrument. Rehabilitation providers must be aware of and use the Office of the Australian Information Commissioner’s Guide to Securing Personal Information, which outlines the reasonable steps required to take under the Privacy Act 1988 to protect personal information.
Conclusion
This disallowable legislative instrument is compatible with human rights as it engages and promotes the right to work and to the enjoyment of just and favourable conditions of work to support the employment of former Australian Defence Force members, reservists and cadets in the civilian work force. To the extent that it limits the right to privacy, those limitations are reasonable, necessary and proportionate.
Minister for Veterans’ Affairs
Rule-Maker