EXPLANATORY STATEMENT
Safety, Rehabilitation and Compensation Act 1988
Issued by the Minister for Employment and Workplace Relations
Notice of a Disallowable Instrument
Safety, Rehabilitation and Compensation
(Weekly Interest on the Lump Sum) Notice 2008 (2)
The purpose of the instrument to which this Explanatory Statement relates is to specify the rate of weekly interest on the lump sum to be used in calculating compensation in respect of incapacity for work resulting from an injury payable under section 21 or 21A of the Safety, Rehabilitation and Compensation Act 1988 (the SRC Act).
Section 21 of the SRC Act applies where the injured employee has received a superannuation lump sum benefit and section 21A of the SRC Act applies where the injured employee has received both a superannuation lump sum benefit and superannuation pension. In both cases, the weekly amount of the incapacity benefit is reduced by the weekly value of the superannuation lump sum benefit. That weekly value is calculated by multiplying the value of the superannuation lump sum benefit by the interest rate specified by the Minister and dividing the result by 52.
The instrument is a legislative instrument subject to the Legislative Instruments Act 2003.
The instrument specifies a rate of 6.08% for the period 1 July 2008 to 30 June 2009. This rate is derived from the average of the Reserve Bank of Australia provided 10 year Government Bond rates for the period 1 April 2007 to 31 March 2008 of 6.079% rounded to two decimal places.
The rate specified for the period 1 July 2007 to 30 June 2008 was 5.72%.
Overview
The Safety, Rehabilitation and Compensation (Weekly Interest on the Lump Sum) Notice 2008, issued under the Safety, Rehabilitation and Compensation Act 1988, addresses the need to specify the rate of weekly interest on lump sum benefits for the purpose of calculating compensation for incapacity resulting from workplace injuries. This legislation, enacted by the Australian Parliament, aims to ensure that the weekly incapacity benefit is accurately adjusted for the value of superannuation lump sum benefits received by injured employees. The Notice sets the weekly interest rate at 6.08% for the financial year 2008-2009, calculated based on the average Reserve Bank of Australia's 10-year Government Bond rates for the preceding year. This legislative instrument is subject to the Legislative Instruments Act 2003 and represents a procedural measure to provide clarity and consistency in the application of compensation calculations under the SRC Act.
Scope and Application
The Safety, Rehabilitation and Compensation (Weekly Interest on the Lump Sum) Notice 2008 applies to any injured employee who has received a superannuation lump sum benefit and/or a superannuation pension, as defined under the Safety, Rehabilitation and Compensation Act 1988 (SRC Act). This Act governs the compensation provided to employees who suffer injuries that result in incapacity for work. The notice specifically targets the calculation of weekly incapacity benefits by adjusting them based on the value of the superannuation lump sum benefit, as stipulated in sections 21 and 21A of the SRC Act. The notice is a legislative instrument regulated under the Legislative Instruments Act 2003, establishing its legal framework. Geographically, it applies nationwide as it is an instrument of the Commonwealth of Australia, ensuring a uniform approach to compensation calculations across all states and territories. The notice does not explicitly outline exclusions or exemptions but focuses on the specified interest rate for the stipulated period, thereby ensuring consistent application in calculating weekly benefits for injured employees.
Key Provisions
The main operative sections of the Safety, Rehabilitation and Compensation (Weekly Interest on the Lump Sum) Notice 2008 (the Notice) specify the rate of weekly interest on the lump sum used in calculating compensation for incapacity resulting from injury, as outlined in sections 21 and 21A of the Safety, Rehabilitation and Compensation Act 1988 (the SRC Act). Section 21 applies when the injured employee has received a superannuation lump sum benefit, while section 21A applies when the employee has received both a superannuation lump sum benefit and a superannuation pension. The weekly value of the superannuation lump sum benefit is calculated by multiplying the lump sum value by the interest rate specified in the Notice and dividing the result by 52. For the period 1 July 2008 to 30 June 2009, the specified interest rate is 6.08%, derived from the average of the Reserve Bank of Australia's 10-year Government Bond rates for the period 1 April 2007 to 31 March 2008.
The Notice imposes obligations on parties and entities governed by the SRC Act to use the specified interest rate when calculating the weekly value of the superannuation lump sum benefit. This rate must be applied to determine the weekly amount of the incapacity benefit, ensuring that the benefit is reduced by the weekly value of the superannuation lump sum benefit accurately. Employers, insurance companies, and other entities responsible for administering compensation must adhere to the specified interest rate to ensure compliance with the SRC Act. The calculation must follow the prescribed formula to maintain consistency and fairness in compensation payouts.
Failure to comply with the requirements of the Notice can lead to significant consequences, though the Notice does not explicitly detail specific offences, penalties, or consequences for non-compliance. However, given that the Notice is a legislative instrument subject to the Legislative Instruments Act 2003, non-compliance with legislative instruments can generally result in administrative and legal actions. These may include fines, legal proceedings, and potential reputational damage. The precise penalties would be determined by the relevant legislation governing the enforcement of legislative instruments and the specific circumstances of the non-compliance.