Chapter 9Compensation and benefits on termination, illness or death
Part 1Gratuities on retirement and invalidity under the DFRDB Act
Introductory notes
A gratuity will be paid by the Defence Force Retirement and Death Benefits (DFRDB) Authority to a member at the time of retirement, if the member is not entitled to retirement pay, invalidity benefits or preservation benefits under the Defence Force Retirement and Death Benefits Act 1973 (the DFRDB Act).
An advance payment of a gratuity will be paid by the DFRDB Authority to an other rank member after the completion of the appropriate period of service.
A gratuity will be paid by the DFRDB Authority to a member who is retired as medically unfit and is entitled to invalidity benefits under the DFRDB Act and is classified as Class C but not entitled to invalidity pay.
A gratuity is payable to a member on the basis of the number of completed years of eligible service. When a member is entitled to a gratuity at different rates for different periods of eligible service, the member receives the appropriate rate per annum for the exact period of service completed for all except the most recent period, which is calculated to the last completed year of eligible service.
The DFRDB Authority may pay a gratuity to a person other than the member if the member is mentally ill and incapable of managing their affairs, is undergoing imprisonment, or is otherwise under a disability. There are no other circumstances in which a retiring gratuity may be assigned or charged.
This Part applies as necessary to eligible former members.
The DFRDB scheme is a closed scheme and therefore this Part has a limited life.
Relevant provisions of the DFRDB Act
The following provisions of the DFRDB Act are relevant to this Part:
from Part IPreliminary
section 3Interpretation
from Part IIIContributions
section 21Purchase of previous non-contributory service
from Part VInvalidity benefits
section 27Incapacity due to wilful action
section 29Invalidity or incapacity arising during absence without leave exceeding 60days
section 32Class C invalidity benefit
section 34Reclassification in respect of incapacity
section 37Service Chief may inform authority of grounds of retirement
from Part VIICandidates at Parliamentary elections
section 52Effect of election under section 51 (Election by re-instated candidate)
section 53Refund of benefits by re-instated candidates to whom this Part applies
section 55Rights of contributing members who resign to contest elections and are not re-instated
from Part VIIIGeneral provisions applicable to contributions and benefits
section 59Instalments of pension benefits
section 63Non-recipient retired member who again becomes an eligible member within 90 days
from Part IX, Division 3 (Preservation of rights of contributing members ceasing to be eligible members of the Defence Force)
section 77Circumstances in which transfer value payable
section 78Circumstances in which person entitled to deferred benefits
section 83Person entitled to deferred benefits again becoming a member etc. before benefits payable
from Part XContributors under previous benefits scheme etc
section 89Purchase of previous non-contributory service
section 90Elections to become contributors by certain members
from Part XIReview of decisions of Authority
9.1.1Interpretation
(1)In this Part:
eligible service, for a member, means continuous full-time service by the member in relation to which the member is a contributor under the DFRDB Act, including:
(a)a period, continuous with that period of service, for which an amount is paid or payable under section 21 or 55 of the DFRDB Act, or because of the operation of subsection 52 (1) of the DFRDB Act; and
(b)a period for which an amount is paid or payable under subsection 53 (2) of the DFRDB Act; and
(c)any period during that period of service when the member is:
(i)on leave without pay; or
(ii)absent without leave; or
(iii)in custody or under suspension or awaiting or undergoing trial on a charge; or
(iv)serving a period of imprisonment or other detention or undergoing field punishment.
Note: Eligible service does not include a period of previous service in respect of which a member made an election to purchase previous non-contributory service under subsection 27 (1) of the Defence Force Retirement Benefits Act 1948 or under subsection 83(3) of the Defence Force Retirement Benefits Act 1959.
non-effective service, for a member, means a period of eligible service exceeding 21 consecutive days when a member is:
(a)on leave without pay; or
(b)absent without leave; or
(c)in custody or under suspension or awaiting or undergoing trial on a charge in relation to which the member is later convicted and imprisoned or otherwise detained or undergoes field punishment; or
(d)serving a period of imprisonment or other detention or undergoing field punishment.
retirement means retirement as a member of the Defence Force and includes termination of appointment as an officer of, or discharge from, the Defence Force.
(2)For the definition of eligible service in subclause (1), a person is taken to be a member on continuous full-time service for a period if:
(a)under subsection 63 (1) of the DFRDB Act, that Act applies to the person as if the person had not retired, and as if the person were on leave without pay, for the period; or
(b)deferred benefits were applicable to the person under the DFRDB Act and cease to be applicable under section 83 of that Act.
9.1.2Retirement – officers
(1)In this Part:
officer includes Midshipmen and Officer Cadets.
(2)This clause applies to an officer who:
(a)is not entitled on retirement to retirement pay, or invalidity benefit, under the DFRDB Act; and
(b)either:
(i)has completed 10 years’ eligible service and retires on or after attaining the compulsory retiring age for rank; or
(ii)has completed 12 years’ eligible service and retires to meet the needs of the Service before attaining the compulsory retiring age for rank.
(3)The member is entitled on retirement to a gratuity worked out at the rate of $240 for each completed year of eligible service.
(4)However, if the member’s period of eligible service includes a period served as a member other than an officer, the gratuity is the sum of:
(a)an amount worked out at the rate of $100 a year for the period of eligible service as a member other than an officer; and
(b)an amount worked out at the rate of $240 a year for the difference between:
(i)the years of eligible service completed; and
(ii)the period of eligible service served as a member other than an officer.
9.1.3Retirement – certain fixed tenure appointment officers and others
(1)In this clause:
retirement means retirement as a member of the Defence Force and includes termination of appointment as an officer of, or discharge from, the Defence Force or ceasing a period of continuous full-time service.
(2)This clause applies to an officer (other than a medical officer or dental officer) who:
(a)is a member of the Permanent Forces; and
(b)is serving under a fixed tenure appointment (formally known as a short service commission), including an extension of a fixed tenure appointment.
(3)The member is entitled on retirement to a gratuity worked out at the rate of $100 for each completed year of eligible service.
(4)However, if the member’s period of eligible service includes a period served as a member other than an officer, the gratuity is the sum of:
(a)if the officer completed 12 years’ eligible service before appointment as an officer — an amount worked out at the rate of $100 for each year of eligible service completed before appointment; and
(b)if the officer has not completed 12 years’ eligible service before appointment as an officer — an amount worked out using the following table for the number of years of eligible service completed before appointment; and
(c)an amount worked out at the rate of $100 a year for the difference between:
(i)the years of eligible service completed; and
(ii)the period of eligible service served as a member other than an officer.
Number of completed years of eligible service / Amount of gratuity$
1 / 40
2 / 80
3 / 120
4 / 160
5 / 200
6 / 240
7 / 340
8 / 440
9 / 540
10 / 760
11 / 980
9.1.4Retirement – other ranks
(1)This clause applies to a member (other than an officer) who is not entitled on retirement to retirement pay under the Act or invalidity benefit under the Act.
(2)The member is entitled on retirement to a gratuity of:
(a)if the member has completed 12 years’ eligible service — an amount worked out at the rate of $100 for each completed year of eligible service; and
(b)if the member has not completed 12 years’ eligible service — an amount worked out using the table in clause 9.1.3 for the number of years of eligible service completed.
9.1.5Advance payment of retiring gratuity
(1)An application by an other rank member for advance payment of retiring gratuity may be made after the time of qualification. Advance payments of retiring gratuities may then be made to an other rank member as follows:
(a)between three and six years of eligible service — an advance payment of $200 may be paid to an other rank member who has completed a period of not less than three years but less than six years of eligible service, and who is currently serving on an engagement that will end after a total period of not less than sixyears’ unbroken eligible service; and
(b)between six and 12 years of eligible service — an advance payment of $800 may be paid to an other rank member who has completed a period of not less than six years but less than 12 years of eligible service, and who is currently serving on an engagement that will end after a total period of not less than 12years’ unbroken eligible service.
(2)If a member is paid an advance payment of $200 under paragraph (1) (a), this amount will be deducted from any further advance payment under paragraph(1)(b).
9.1.6Recovery of advance
(1)Any amounts of retiring gratuity advanced to a member (or an amount liable to be repaid by the member under section 59 (1) of the DFRDB Act) will be deducted from the amount payable to the member on their retirement as a retirement gratuity under this Part or as retirement pay.
(2)If the amount advanced exceeds the member's total entitlement, the difference will be recovered from the member, unless the member dies during service or is retired with invalidity benefits.
9.1.7Invalidity
(1)This clause applies to a person who becomes entitled to an amount of invalidity benefit under subsection 32 (2) of the DFRDB Act. This refers to retirement of a member on the grounds of invalidity or of physical or mental incapacity to perform their duties.
(2)Unless subclause (4) applies, if the person was an officer immediately before retirement, the person is entitled to a gratuity worked out at the rate of $150 for each completed year of eligible service.
(3)However, if the member’s period of eligible service includes a period served as a member other than an officer, the gratuity is the sum of:
(a)an amount worked out at the rate of $100 a year for the period of eligible service as a member other than an officer; and
(b)an amount worked out at the rate of $150 a year for the difference between:
(i)the years of eligible service completed; and
(ii)the period of eligible service served as a member other than an officer.
(4)If the person:
(a)retired on or after attaining the compulsory retiring age for rank; and
(b)would have been entitled to a gratuity under clause 9.1.2 if the person had not retired on the grounds of invalidity,
the amount of gratuity is the amount that the person would have received under clause 9.1.2.
(5)If the person was a member other than an officer immediately before retirement, the person is entitled to a gratuity worked out at the rate of $100 for each completed year of eligible service.
(6)If, on reclassification as Class C under section 34 of the DFRDB Act, a person becomes entitled under this clause to a gratuity, the amount of gratuity must be reduced by any amount by which the total amount of invalidity pay received by the person under the DFRDB Act exceeds the amount that would have been payable under subsection 32 (2) of that Act if the person had been classified Class C on retirement.
(7)If a member retired on grounds other than invalidity and a gratuity becomes payable to the member under this section, the amount of gratuity payable under this section must be reduced to the amount (if any) by which the gratuity payable, but for this subclause, under this section exceeds the amount of gratuity otherwise paid under this Part.
9.1.8Gratuity not payable
(1)A member is not entitled to a gratuity under this Part:
(a)if the member is not paid invalidity benefit because of the operation of section 27 or 29 of the DFRDB Act;
(b)for a period of eligible service for which a transfer value is payable under section 77 of the DFRDB Act; or
(c)for a period of eligible service in relation to which deferred benefits are applicable.
(2)However, if deferred benefits cease to be applicable in relation to the period of eligible service because of the operation of subsection 78 (6) of the DFRDB Act, the member is entitled to a gratuity under this Part as if the deferred benefits had not been applicable to the period.
9.1.9Reduction of amount for non-effective service
(1)The amount of retiring gratuity payable to a member will be reduced pro-rata if their period of eligible service includes one or more periods of non-effective service. The retiring gratuity which would otherwise be payable to the member will be reduced under the formula set out in this clause.
(2)This clause applies if:
(a)a member’s period of eligible service includes a period or periods of noneffective service; and
(b)the member’s period of eligible service is equal to or less than the sum of:
(i)the member’s completed years of eligible service; and
(ii)the total of the periods of non-effective service.
(3)The amount of gratuity to which the member would, but for this clause, be entitled under this Part must be reduced under the formula:
A (B – C)
B
where:
Ais the amount of gratuity to which the member would, but for this clause, be entitled under this Part.
Bis the member’s completed years of eligible service.
Cis the period by which the sum of the periods in subparagraphs (1) (b) (i) and (ii) exceeds the member’s period of eligible service.
9.1.10Repayment
(1)This clause applies if a person who has been paid a gratuity under this Part or, before 6 January 2000 (the date when Determination 2000/1, Condition of Service, commenced), under Determination 0705, Gratuities:
(a)becomes entitled to invalidity pay under section 37 of the DFRDB Act or on a review or appeal under Part XI of that Act; or
(b)becomes a person to whom the DFRDB Act applies because of the operation of section 63 of the Act.
(2)An amount equal to the amount of gratuity is recoverable from the person as a debt due to the Commonwealth.
(3)The amount recoverable may be paid in a lump sum or, if approved by the CDF, in instalments.
(4)For subsection (3), the CDF must have regard to:
(a)the person’s salary; and
(b)the total amount to be repaid; and
(c)any remaining period of service.
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Part 2Redundancy benefit
9.2.1Purpose
The purpose of this Part is to provide financial benefits for members of the Permanent Forces who are declared redundant.
9.2.2Member this Part applies to
This Part applies to a member who:
(a)has completed more than two years of continuous full-time service; and
(b)ceases to be a member of the Permanent Forces on being declared redundant in accordance with arrangements approved by the Minister.
9.2.3Entitlement
(1)The member is entitled, on the day the member ceases to be a member of the Permanent Forces as a result of being declared redundant, to an amount equal to a fortnight’s salary for each completed year of relevant service (if any) plus a pro-rata payment for each part year of such service completed.
(2)However, the amount payable under subclause (1) must not exceed:
(a)48 weeks of salary; or
(b)if the member’s compulsory retirement age is less than 48 weeks from the day the member ceases to be a member of the Permanent Forces as a result of being declared redundant — salary for the number of weeks in that period.
(3)In this clause:
relevant service has the same meaning as in subclause 8.2.3 (1).
salary, on the day the member ceases to be a member of the Permanent Forces as a result of being made redundant, includes:
(a)flying allowance (qualification and skill);
(b)if the member has been entitled to higher duties allowance for a continuous period of 12 months or more immediately before the day the member received written notice of the redundancy — the rate of allowance to which the member is entitled on that day;
(c)service allowance;
(d)special action forces allowance (qualification and skill);
(e)specialist operations allowance (qualification and skill);
(f)submarine service allowance (qualification and skill).
9.2.4Additional payment
(1)If a member is given written notice of the redundancy and ceases service at the member’s own request during the notice period, the member is entitled to an additional amount equal to the salary the member would otherwise have received for the remainder of the notice period.
(2)In this clause:
salary means the salary and any allowance to which a member would be entitled for the unexpired portion of the notice period, if the period were a period of recreation leave.
9.2.5Amount repayable by member
(1)This clause applies if:
(a)a member has been paid an amount under this Part as a result of the member being declared redundant; and
(b)the member subsequently commences a further period of continuous full-time service within one year of ceasing to be a member of the Permanent Forces as a result of being declared redundant; and
(c)the Minister did not authorise that further period of continuous full-time service.
(2)The member must repay to the Commonwealth the amount that was previously paid to the member under this Part.
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Part 3Groups moved out of the Defence Force – section 72 of the Public Service Act 1999
9.3.1Election not to receive certain payments
(1)This clause applies to a member who ceases to be a member because the Public Service Commissioner, acting under section 72 of the Public Service Act 1999 in order to give effect to an administrative re-arrangement, determines that the member is to be engaged as an employee under the Public Service Act 1999 (an APS employee).
(2)If it is permitted under:
(a)a determination under subsection 24 (1) of the Public Service Act 1999; or
(b)an award, certified agreement or Australian Workplace Agreement of the employing Agency that comes into effect on or after the day when the member became engaged as an APS employee, and applies to the member instead of a determination described in paragraph (a),
the member may choose in writing, at any time up to 14 days after the member ceases to be a member, not to be paid the whole or part of the amount of recreation leave or long service leave to which the member would otherwise be, or have been, entitled on ceasing to be a member.
(3)When a member chooses not to be paid under subclause (2), they retain the portion of credit permitted by arrangements referred to in paragraphs (2) (a) and (b) and may use it as an APS employee.