The legislation provides for the indexation of:
- statutory maximum amounts
- the worker’s PIAWE.
Twice the State average weekly earnings
The statutory maximum for claims for weekly payments first made on or after 5 April 2010 is based on twice the State average weekly earnings.
State average weekly earnings are not indexed but are recalculated on 1 July each year using the appropriate figures published by the Australian Bureau of Statistics (ABS).
‘State average weekly earnings’ for compensation payable in a financial year, is the most recent average weekly earnings in original terms as published by the ABS as at 15 June in the preceding financial year of employees for Victoria.
Indexation based on average weekly earnings
Indexation is based on the movement in the average weekly earnings for employees in Victoria. It is calculated using the average weekly total earnings of employees in Victoria in original terms published by the ABS as at the 15th day of the month preceding the month in which the date on which the variation is made falls and the average weekly total earnings of employees in Victoria in original terms for the corresponding reference period one year earlier published by the ABS.
Note: See negative indexation section below
Statutory maximum amounts indexed on 1 July
Statutory maximum amounts are indexed on 1 July each year and remain constant throughout the financial year.
The statutory maximum of twice the average weekly earnings for employees in Victoria for new claims with an entitlement date on or after 1 July each year is determined by using the most recent published figure from the ABS as at 15 June. This may mean that the statutory maximum amount is different across claims depending on the date that the entitlement to weekly payments commenced if there has been a reduction in the average weekly earnings over the last 12 months.
See: Impact of maximums
If the change in average weekly earnings is negative and would result in a reduction of a worker’s PIAWE if indexed, the worker’s weekly payments stay the same.
When indexation next occurs the previous negative percentage amount is offset against any positive movement in the indexed amount. The PIAWE will not increase until all the reduction has been offset even if this takes more than one year
|Year 1||Year 2|
Indexation factor = -1.25%
Worker’s PIAWE and weekly payments remain the same.
Indexation factor = 3.25%
Worker’s PIAWE is indexed by 2%, to take into account the -1.25% that affected the previous year’s indexation.
Weekly payments are indexed
The weekly payment amount is varied by indexing the PIAWE rate of the worker.
Note: Under the legislation, where the amount being indexed is:
- less than $1,000, the indexed figure can be rounded to the nearest whole $1
- greater or equal to $1,000, the indexed figure can be rounded to the nearest $10
Indexation dates before & after 5 March 1990
The date that workers received their annual indexation was modified with effect from 5 March 1990:
After 5 March 1990
For workers who are entitled to weekly payments on or after 5 March 1990, the indexation occurs on the anniversary of the day on which the worker became entitled to weekly payments for that injury. For example, if a worker became entitled to weekly payments on 15 April 2002, the first anniversary of the entitlement was 15 April 2003.
Before 5 March 1990
For workers who became entitled to weekly payments before 5 March 1990, the anniversary of the entitlement is deemed to be 1 July.