Editors --- "Disability support pension: income maintenance period due to leave payment; accrued monies prior to 20 September 2006" [2008] SocSecRpr 12; (2008) 10(1) Social Security Reporter, Article 12

• THORPE and SECRETARY TO THE DEWR
• Background
• The issue
• Removal from employment
• Income maintenance period
• Formal decision

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Disability support pension: income maintenance period due to leave payment; accrued monies prior to 20 September 2006

THORPE and SECRETARY TO THE DEWR

(2007/2013)

Decided: 3rd December 2007 by J. Campbell

Background

Thorpe worked as a police constable with the Western Australia Police Force (WAPF). Thorpe commenced sick leave resulting from work related matters on 4 May 2004. Following that, the Police Commissioner issued a notice to Thorpe containing his intention to recommend to the Minister of Police that Thorpe be removed from the WAPF on medical grounds, pursuant to s.33L of the Police Act 1892. On 1December 2006 Thorpe was removed from his role as a Police Officer. He was informed that due to his medical conditions he was not able to continue to perform the required duties. As a consequence, Thorpe received an eligible termination payment of $7755.36, and leave payments of $15,663 for 82 days unused long service leave and $36,236.95 in lieu of unused annual leave.

On 1 December 2006 Thorpe lodged a claim for disability support pension (DSP). This claim was approved on12 December 2006 pursuant to s.94 of the Social Security Act 1991 (the Act), but payment in relation to such a claim was precluded until 26August 2007, because of an Income Maintenance Period (IMP).The decision in relation to the IMP was considered and affirmed by an authorised review officer on 6 February 2007. The matter was further considered by the SSAT and affirmed in a decision dated 6 March 2007.

The issue

The relevant issues in this matter were:

- Did Thorpe’s removal on medical grounds from his employment fall within the phrase ‘termination of employment’ within the meaning of s.1064 F2of the Act?

- Should monies paid in lieu of long service and annual leave accrued prior to 20 September 2006 (being the date upon which Module F, s.1064became operative) be taken into account in the calculation of the IMP?

Removal from employment

On the first issue, the AAT decided that the term ‘removal’ when considered in the context of employment, enjoys similar meaning to the other terms used in the Act, namely dismissal and termination. Thorpe’s main contention was that ‘removal’ from the Police Force is not mentioned in the Act while other words such as redundancy, retirement, resignation, death and termination are. The AAT said that, ‘the end result is cessation of employment, an outcome congruent within the meaning of the word termination in the context of employment’.

Income maintenance period

The Employment and Workplace Relations Legislation Amendment (Welfare to Work and Other Measures)Act 2005 (the Amendment Act) amended the Act and was assented to on14 December 2005. Included within that Act was a schedule 16 which introduced a Module F to the Pension Rate Calculator, nominated in s.1064 of the Act. The effect of this amendment was that from 20 September 2006, a person who claims DSP under s.94 of the Act may have, in particular circumstances, an IMP imposed. Section 1064 F5 details that certain lump sum payments received as a termination payment are to be considered ordinary income for a period equal to the period to which the payment relates.

Thorpe contended that the Amendment Act did not become operative until 20 September 2006 and thus that only leave payments made in respect of annual leave and long service leave accrued after 20 September 2006 should be taken into account and considered ordinary income for the purposes of the IMP.

The AAT decided that all lump sum termination payments made after 20 September 2006 were to be treated as ordinary income, without limitation as to period of accrual, with such income to be used in calculating the rate of payment of DSP. The AAT found that it was clearly the intention of the Amendment Act to have similar maintenance provisions applied to most income support payments for working age people, and that if leave accruals prior to the commencement date of 20 September 2006 were to be disregarded in the circumstances of termination payments, the Amendment Act would have so stated.

Formal decision

The AAT affirmed the decision under review.

[M.L.]