Ian Edwards joined the Australian Federal Police in 1985 and was seriously injured in a motorcycle crash the following year.

When he returned to work he helped establish a forensic photographic unit in Brisbane and then became a fraud investigator.

He transferred to Canberra in 1994 to work in uniform and received a bravery award in 1995.

Mr Edwards required surgery to fix broken bones in his hand and wrist and an injury to his shoulder after he was hurt during a demonstration in 1997.

He was offered a pension the following year but instead went into intelligence work and then regional security.

Mr Edwards then shifted to the Australian Tax Office in 2000 to work as a fraud investigator, under the understanding that the required medical clearance would be waived.

He was promoted quickly and won a commendation from the AFP when he rescued a drowning man from a river during a raid in October 2000.

But only weeks later, Mr Edwards was suspended and then 'inexplicably' sacked on the grounds that he was considered physically incapable of doing the job he had been successfully doing for months.

He tried to find a job with other government departments but did not work again until he started a photography business in 2006.

But Comcare had deemed him medically fit to work at least nine hours per week during his five-and-half-years of unemployment.

The government insurer deducted the nine hours work each week from the compensation payments he received for incapacity.

Mr Edwards took Comcare to the Administrative Appeals Tribunal to dispute the decision.

Comcare argued he had been capable of working the nine hours during the timeframe and the amount he could have earned had been correctly deducted from his incapacity payments.

Mr Edwards agreed he could have worked the designated hours during that period if he had been offered suitable work.

But he argued that work had not been available and had never been offered, and, therefore, the amounts should not have been deducted from his entitlements.

Tribunal senior member Bernard McCabe said the question for the tribunal had been whether Mr Edwards's departure from the AFP in 2000, and his failure to seek work in in the private sector before 2006, had been "reasonable in all the circumstances".

The tribunal found, in a judgment published earlier this month, that his decision to quit the AFP had been reasonable as he had been led to believe he would have a permanent role at the ATO.

"I accept his evidence that he was told (and that he honestly believed) the requirement of a health clearance was effectively waived so that his health conditions would not be an obstacle to keeping his job at the ATO," the senior member wrote.

"I accept it was reasonable in light of his injuries not to seek out opportunities in the private sector [and] I also accept it was reasonable for him not to attempt to commence a small business during that period.

"I accept the medical evidence establishes Mr Edwards was capable of working at least nine hours per week in an appropriate role with appropriate support … but after his inexplicable termination by the ATO, he was not provided with any realistic opportunity to actually work for nine hours each week in the period in question."

Mr McCabe ruled the original decision be set aside and substituted with the order that the applicant had been unable to earn between November 2000 and April 2006.