When a common law claim is resolved, the settlement/judgement amount is paid to the worker’s solicitors within 28 days of the settlement.
Weekly payments to a worker whose common law settlement includes a pecuniary (loss of earnings) cease on the date of the settlement.
A worker who resolves a claim for common law damages that includes a pecuniary loss A loss of earning capacity component is entitled to receive a part payment of the lump sum by way of a weekly amount until the date that the settlement cheque is drawn by the Agent.
The weekly part payment is equal to the net amount (after tax) that the worker was receiving in weekly payments before resolution. Payments made between the date of settlement and the date the settlement cheque is drawn are deducted from the settlement/judgement amount.
Where part payments are made
To pay part payments of the settlement/judgement amount:
- the proceedings (or flagged an intention to issue proceedings) must have been against a sole defendant rather than multiple defendants
- the common law settlement/judgement must have included an amount for pecuniary loss
- the worker must have entitled to weekly payments at the date of settlement.
The worker will sign a Deed of Release when their common law claim is settled. The Deed will include a clause confirming that payments paid between the date of settlement and the date the settlement cheque is drawn will be deducted from the settlement amount and paid to the worker.
If a worker issued legal proceedings against multiple defendants their weekly payments cease on the date of the settlement/judgement.
This is because there may be complex contribution issues that need to be addressed where multiple defendants are involved.
Common law settlement for pain & suffering only
If a worker resolves their common law claim for pain and suffering damages only their weekly payments are not affected by the settlement of the common law claim.
An amount equal to four weeks of the worker’s net weekly payment amount that they were receiving before the common law settlement is paid to the worker. The amount can be either paid in weekly instalments or as a one-off payment. The amount paid to the worker as a part payment is deducted from the settlement amount.
Amount to be paid
The net amount is used rather than the gross amount because pecuniary loss at common law is calculated using the worker’s net weekly loss.
If the worker is paid their weekly payments by the employer, the Agent will need to obtain this information. However if the worker is a direct payee, this amount will already be known.
Certificates of capacity
The worker does not need to provide Certificates of Capacity to cover the part payment period.
Tax is not payable and child support payments are not deductible from the settlement amount.
Agents are still required to comply with a Centrelink Notice. However, any debt owed is to be deducted from the total common law settlement amount.
An Agent is therefore able to process the part payment without deducting Centrelink payments and/or before seeking clearance from Centrelink but must not process the remaining balance of the common law settlement whilst waiting for the Deed of Release.
When the Deed of Release has been received, the Agent is required to comply with Centrelink Notices. Debt owed to Centrelink is to be deducted from the final common law settlement payment after is has been adjusted to take into account the part payment.