CEI 5.3 Discretionary Compensation Schemes

1. Scope of these instructions

These Chief Executive's Instructions outline the department's policy in relation to the following discretionary compensation schemes:

• Compensation for Detriment Caused by Defective Administration (CDDA) Scheme
• Act of grace payments
• Ex gratia payments
• Payments in Special Circumstances relating to Australian Public Service (APS) employment.

It does not apply to legal claims for compensation. There are separate instructions that cover this topic. Both sets of instructions are complimentary and should be adhered to when a claim for compensation is received.

Further information is available in "All about discretionary compensation schemes – additional guidance to CEI 5.3".

2. Policy principles

• Officials must not provide compensation to claimants unless it is established that the Commonwealth is legally liable; or in circumstances where no legal liability is likely, it is established that the claimant is eligible for compensation under a discretionary compensation mechanism.
• Officials must not consider a claim under any of the discretionary compensation mechanisms until legal advice has been obtained that the Commonwealth is unlikely to have any legal liability.
• Officials are not to provide an opinion to potential or actual claimants on the likely prospect of a claim.
• Officials must assess and decide each claim on its merits and in accordance with government and departmental policy and relevant legislation (see section 6 – References).
• Officials must use appropriate record keeping procedures and apply appropriate decision making principles so that decisions about whether to make compensation payments are publicly defensible and able to withstand scrutiny.
• Any departmental official approving payments under the CDDA Scheme must have the express authority of the minister to do so.
• Each claimant must be provided with an adequate explanation of the reasons for a recommendation or decision to accept or reject their claim and an opportunity to comment on the investigating officer's report before a final decision is made by the decision maker.
• Where it is evident that a claim for compensation arose from inadequate systems or procedures, officials are required to take action as soon as possible to rectify them.
• Officials are not to financially settle a discretionary compensation claim unless the claimant has signed a deed of release to the Commonwealth and, where appropriate, an indemnity against claims by third parties that arose from the event. The deed (and, where relevant, indemnity) must be cleared by one of the department's legal services providers before it is provided to the claimant.

3. Target audience

This CEI is applicable to all officials (as defined in the 'Definitions' section) in the department.

4. Departmental instructions

4.1. Responsibilities

Officials:

• must refer all enquiries regarding discretionary compensation schemes and claims for discretionary compensation to the Corporate Services Division within five business days of notification or receipt of the claim.
• officials must ensure that legal advice is sought within five business days upon receipt of a claim, to determine whether legal liability exists.

Corporate Services Division:

• coordinates the department's consideration and investigation of claims for discretionary compensation:
  • the General Manager, Governance, Contracts and Services (GCS) Branch, must determine whether a claim should be assessed under the CDDA Scheme
  • the General Manager, GCS Branch, in consultation with the relevant business area within the department, must determine whether the department will investigate and submit a report in relation to an act of grace claim. Where that claim does not relate to a policy, program, action or procedure of the department, the GM, GCS Branch may decline to investigate the claim and refer the matter back to the Department of Finance and Deregulation.
  • the GCS Branch oversights the management of all ex gratia payments received by the department. All ex gratia payments are to be handled in accordance with the Finance Circular 2009/09 - Discretionary Compensation and Waiver of Debt Mechanisms.
  • the General Manager, Human Resources Branch, must determine whether a claim should be assessed under Special Circumstances scheme and, if so, assign an officer to investigate the claim.
• must obtain legal advice from the department's legal services providers regarding any conditions that are to be attached to a payment of money to a claimant, including a Deed of Release.

The secretary:

• has been expressly authorised by the minister to appoint an independent SES Band 1 or 2 officer to investigate each CDDA claim received by the department.
• may determine or make a recommendation regarding a CDDA claim himself, without appointing an investigating officer.
• may appoint an independent SES Band 1 officer to be the investigating officer for each act of grace claim received by the department.

Investigating officer:

• is an official in an area within the department that is independent of the area against which the claim has been made
• must investigate the claim and prepare a report for the appropriate decision maker that assesses the merits of the claim and recommend whether a payment should be made under the CDDA Scheme, act of grace or Special Circumstances mechanisms.
• must assess all CDDA claims in accordance with Attachment A to Finance Circular 2009/09 and any express authorisation of the minister.
• must assess all requests for act of grace payments in accordance with Attachment B to Finance Circular 2009/09. The secretary must approve the report before it is provided to the Department of Finance and Deregulation for consideration.
• must assess all claims for payment in special circumstances in accordance with the APS Commission Circular 2004/4 (Special Circumstances Guidelines) regarding administering claims under section 73 of the Public Service Act 1999.

Decision makers:

• CDDA Scheme:
• • the secretary and deputy secretaries have been given express authority by the minister to determine proposals to make payments under the CDDA Scheme for claims where the investigating officer has recommended payment of up to $100 000 and the matter is not especially sensitive. The secretary and deputy secretaries act as the agent, not the delegate, of the minister.
  • the minister will determine proposals to make payment for CDDA claims where the investigating officer has recommended payment of $100 000 or more or for matters that are especially sensitive.
• Act of grace payments:

Under the Financial Management and Accountability Act 1997 (FMA Act), only the Minister for Finance and Deregulation or his delegate may authorise payment to individuals or other bodies if it is appropriate in special circumstances.

• Ex gratia requests:
• • decisions on ex gratia requests are always made by the Prime Minister and/or Cabinet.
  • GCS Branch develops responses to ex gratia requests in consultation with the Department of Prime Minister and Cabinet and Department of Finance and Deregulation.
• Special Circumstances scheme:
• • the secretary has been authorised to approve payment of up to $100 000 in special circumstances arising out of, or relating to, Australian Public Service employment.
  • where a claim is for $100 000 or more, the claim must be referred to the Minister for Finance and Deregulation for decision.

Chief Finance Officer (CFO):

• where the relevant decision maker has determined that a CDDA payment is to be made, the CFO has been expressly authorised by the minister to approve all such payments.

4.2. Reporting

• The CFO is to report payments and potential liability for payment under all the schemes in the department's annual financial statements.
• Corporate Services Division must:
• • keep records clearly setting out the decision making process and the reasons for the decision made
  • maintain registers for all discretionary compensation payments authorised under the schemes
  • provide the CFO with details of any payments made and contingent departmental or administrative liabilities to assist in the completion of the annual financial statements

5. Breaches

Officials are bound by section 13 of the Public Service Act 1999 (the PS Act Code of Conduct), section44 of the FMA Act and Commonwealth Procurement Guidelines to use Commonwealth resources in an efficient, effective and ethical manner. Officials who do not comply with this CEI may be found to be in breach and sanctions may apply.

6. References

6.1. Legislation

• Commonwealth of Australia Constitution Act
• Financial Management and Accountability Act 1997
• Public Service Act 1999

6.2. Internal Guidance/instruction

• All about Discretionary Compensation Schemes – Additional guidance to CEI 5.3

6.3. External Guidance/instruction

• Finance Circular 2011/05 – Chief Executive's Instructions
• Finance Circular 2009/09 – Discretionary Compensation and Waiver of Debt Mechanisms
• APS Commission Circular 2004/4 (Special Circumstances Guidelines)
• Public Service Act 1999 Advice No. 30
• Commonwealth Ombudsman fact sheet 9 - CDDA
• Commonwealth Ombudsman's report: Putting things right: compensating for defective administration

6.4.Related CEIs:

• CEI 1.5 – Protection and disclosure of information
• CEI 1.6 – Recordkeeping
• CEI 3.1 – Procurement
• CEI on Settlement of legal claims

7. Definitions and Acronyms

Change History