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Workers compensation provides valuable protection to workers and their employers in the event of a workplace-related injury or disease. Through workers compensation, injured workers can receive weekly payments to cover loss of earning capacity, payment of medical expenses and vocational rehabilitation expenses, where necessary, to assist them return to work.

All NSW employers must have a workers compensation policy to insure themselves against compensation claims for workplace injuries.

Injuries and Claims

When someone is injured at work, the employer, injured worker and insurer each have responsibilities to ensure that the injury is managed properly and the injured worker is given all possible assistance to ensure the safe and speedy recovery.

Who is eligible for Workers Compensation benefits?

A person who is a ‘worker' or deemed to be a worker under the Workplace Injury Management and Workers Compensation Act 1998 is eligible to claim workers compensation if they suffer a work-related injury. A worker includes:

  • those who work for an employer, under an oral or written contract of service or apprenticeship 
  • ‘deemed' workers 
  • full-time, part-time or casual workers


What benefits is an injured worker entitled to?

Depending on the individual claim and the type, nature and severity of the injury, an injured worker may be eligible for all or some of the following payments: 

  • weekly benefits 
  • medical or related treatment 
  • occupational rehabilitation services 
  • ambulance service 
  • hospital treatment 
  • travel expenses to attend appointments for medical and other treatment 
  • lump sums for permanent impairment 
  • lump sums for pain and suffering 
  • vocational re-education and retraining, work aids and equipment, work trials 
  • when the injury results in the death of the worker, the dependent family members may be eligible for death benefits and/or funeral expenses


Benefits to injured workers who are totally unfit to work

  • For the first 26 weeks that a worker is totally unfit for work (total incapacity), the workers compensation payments are at the award rate or enterprise agreement rate of pay, capped at a maximum weekly amount. Overtime, shiftwork, payments for special expenses and penalty rates are excluded.
  • For casual workers not employed under an award rate, workers compensation payments are based on what the worker earned over the past 12 months.
  • Beyond 26 weeks of total incapacity, the workers compensation payments are at the statutory rate, which varies if the worker has a dependent spouse and/or children. The amount currently payable can be found in the WorkCover Benefits Guide.


Benefits to injured workers who return to work on suitable duties

  • If a worker returns to work on partial duties and earns less than before the injury – because they may be working part-time or the suitable duties are at a lower pay rate than their pre-injury job – then an additional amount, called ‘make-up' pay, will be paid.
  • ‘Make-up' pay is the difference between the worker's normal gross weekly wages before the injury (including overtime, shift work, payments for special expenses and penalty rates) and the actual weekly earning after the injury (ie. the value of duties worked). The amount of ‘make-up' pay is limited to the award rate for the first 26 weeks of partial fitness for work and to the statutory rate (capped at a maximum amount) for any weeks of partial fitness for work beyond 26 weeks.


Benefits to injured workers who are fit for suitable duties but no duties are available

  • If there are no suitable duties and the worker is involved in rehabilitation, retraining or job-seeking, they may receive section 38 payments, which include:
  • not more than the award rate of pay within the first 26 weeks of incapacity
  • not more than 80% of the award rate between 27 and 52 weeks of incapacity.


Section 38 payments stop after a maximum 52 weekly payments.

Permanent impairment

If a worker has a permanent impairment as a result of a workplace injury or illness, they may be entitled to receive a payment under section 66 of the Workers Compensation Act 1987.

To receive compensation, the worker will need to lodge a claim that gives an evaluation of permanent loss or permanent impairment (including any entitlement for 'pain and suffering'). The evaluation will be expressed as a percentage loss of a given body part/system (for injuries before 1 January 2002) or a percentage impairment of the whole person (for injuries on or after 1 January 2002).

For injuries before 1 January 2002:

  • payments for any permanent loss of efficient use are determined according to the Table of Disabilities
  • in order to receive a payment under section 66 of the Workers Compensation Act 1987, the minimum level (or threshold) of permanent loss must be 1% or more for a given body part or system, but 6% for permanent hearing loss
  • if the claim for permanent loss was made before 12 January 1997, the most a worker can receive is set out in the WorkCover Benefits Guide and is dependent on the date of the injury
  • if the claim was made on or after 12 January 1997 (and it does not matter when the injury happened), the most a worker can receive for a permanent loss is:
  • for a single permanent loss $100,000
  • for a multiple permanent loss $121,000
  • an injured worker may also have access to ‘pain and suffering' payments under section 67 of the Workers Compensation Act 1987, if 10% or more disability (as measured in the Table of Disabilities) is present. The maximum amount payable for pain and suffering is $50,000.


For injuries on or after 1 January 2002:

  • the degree of permanent impairment is assessed using the WorkCover Guides for the Evaluation of Permanent Impairment
  • evaluations of permanent impairment can only be conducted by a suitably qualified medical specialist who is trained in the use of the Guides
  • a minimum level of permanent impairment must be present before compensation payments are made. For permanent impairments, the minimum levels are greater than 1% of the whole person. However, for permanent psychiatric and psychological impairment there is a 15% threshold
  • for hearing loss claims, a minimum level of 6% binaural hearing loss must be present
  • the maximum benefit for permanent impairment has increased to $200,000, calculated in accordance with the formula in the Workers Compensation Act 1987. Necessary income support and medical expenses would continue to be paid once a claim has been settled
  • an injured worker may also have access to ‘pain and suffering' payments under section 67 of the Workers Compensation Act 1987, if 10% or more permanent impairment is present. The maximum amount payable for pain and suffering is $50,000.


Common law damages

A common law claim is made when an injured worker sues their employer in court for damages. To be eligible to take action under common law, three criteria must be met:

  • the worker must demonstrate negligence of the employer or a fellow employee
  • the injured worker must have a permanent impairment that is at least a 15% whole person impairment
  • the claim cannot be started for at least six months after the worker gave notice of the injury to the employer, or not more than three years after the date of injury.


Common law claims are heard in the District or Supreme Courts. Initially, the Workers Compensation Commission attempts to mediate and reach settlement through discussion and agreement of all parties.

Damages are paid as one lump sum, to cover past and future economic loss only. They can be reduced if the worker's own negligence contributed to the injury.

A common law settlement cancels all other entitlements to workers compensation benefits. If a common law claim is not successful, the worker will continue to receive workers compensation under the statutory scheme.

Commutations

A commutation is an injured worker's entitlement to workers compensation benefits paid out as a lump sum of money.

A commutation is only available under the following circumstances:

  • the injured worker must have a permanent impairment that is at least a 15% whole person impairment
  • compensation for permanent impairment and pain and suffering has been paid
  • the worker must be entitled to ongoing weekly benefits and must have received weekly benefits regularly and periodically during the previous six months
  • it is more than two years since the worker first received compensation for the injury
  • all opportunities for injury management and return-to-work have been exhausted
  • weekly benefits have not been stopped or reduced as a result of the worker not cooperating with the injury management plan
  • the worker has received independent legal advice
  • the insurance company and worker must agree with the commutation
  • WorkCover must approve the commutation


All agreements must be registered with the Workers Compensation Commission.

Claims Process

How does an injured worker claim workers compensation?

Before making a claim, the injured worker or their representative must advise the employer that an injury has occurred, and provide medical information. An injured worker does not, in most cases, need to send a written claim form to the insurer to receive workers compensation. Instead, once the insurer has been told of an injury (by the employer, the worker or a third party), the following will occur:

  • provisional liability payments will start within seven days (for most injured workers)
  • the insurer will investigate the facts and decide to either continue or stop further payments. Most of the information that the insurer needs to make a decision about workers compensation will be available from the employer, the worker and the treating doctor.


There are occasions, however, when a worker will need to submit a written claim form, such as:

  • if the insurer requests one (eg. if the insurer is notified two months after the injury)
  • if the worker needs weekly payments for more than 12 weeks or medical expenses of more than $5000
  • if the insurer decides to not start provisional liability payments, or stops making provisional liability payments, and the worker disagrees.


How does the insurer decide whether to accept the claim?

Before provisional liability payments begin or a claim is accepted, the insurer requires certain facts. It will investigate the matter by questioning the employer and the worker, and seeking information from the treating doctor.

Under the Worker's Compensation Act 1987, a person is only entitled to workers compensation if:

  • the person is a 'worker ‘or a 'deemed‘ worker
  • the injury is work-related
  • the work was a substantial contributing factor to the injury
  • the person is covered by NSW workers compensation legislation.


How soon must the insurer make a decision on the claim?

Within seven days of being informed – verbally, electronically, by claim form, etc – that an injury has occurred, the insurer must begin provisional liability payments to the injured worker, unless there is a reasonable excuse to not start payments. It must also decide how long provisional liability payments will continue, up to a maximum of 12 weeks.

If, following the initial notification of injury and commencement of provisional liability payments, a claim form is submitted (after, say, four weeks), the insurer has either 21 days, or until the period of provisional liability expires, to make a decision. Based on the type of injury and incapacity, the insurer may decide to extend provisional liability for a further four weeks.

Is there a time limit for making a workers compensation claim?

A claim for workers compensation should be made within six months of the date of the injury. In special circumstances this can be extended to three years.

The worker is not entitled to compensation unless notice of the injury has been given to the employer as soon as possible after the injury, and before the worker has voluntarily left the employment in which the worker was at the time of the injury.

Workers Compensation Commission

The Workers Compensation Commission replaced the Workers Compensation Resolution Service in January 2002. It handles disputes about:

  • weekly compensation
  • suitable duties
  • medical and related expenses
  • permanent impairment
  • pain and suffering
  • death of a worker
  • payments for damages to personal property, such as clothing and spectacles


Application to the Workers Compensation Commission

Any party to a dispute can make an application to the Workers Compensation Commission regarding weekly benefits, medical and related expenses, damages to personal property, or management of the worker's injury in the workplace. Only a worker, or their representative, can make an application regarding permanent impairment and pain and suffering.

Application forms and information on the application process are available from the Workers Compensation Commission.

There are a number of different types of applications that a party to a dispute can make to the Commission.

Interim Payment Direction (IPD)

An IPD is a direction by the Workers Compensation Commission to start payments to the injured worker. It is only available for weekly benefits, or medical and related expenses, under $5000.

A worker may apply for an IPD if the insurer has not decided or started payments, and has not provided a ‘reasonable excuse'. The application may be made seven days after the worker tells their employer that they have an injury.

The IPD does not mean that the insurer has accepted the claim, rather it is a way of paying the injured worker while more investigation takes place.

Resolve a dispute

Applications to resolve disputes can only be made after:

  • the time limit for making a decision on the claim has passed and the worker has not received a decision from the insurer
  • the worker has received a letter from the insurer saying that the claim has not been accepted
  • the worker has received a letter from the insurer saying that they have accepted the claim, but the amount of compensation is in dispute.


Permanent impairment

Specialist doctors, called approved medical specialists, who are appointed by the President of the Workers Compensation Commission, resolve disputes about permanent impairment and other medical issues.

There are two types of approved medical specialists:

  • those who resolve medical disputes about the worker's condition, eg. the cause of injury, treatment options, fitness for employment
  • those who resolve disputes about permanent impairment.


After investigating, the approved medical specialist issues a Medical Assessment Certificate – the final, binding opinion in disputes about permanent impairment.

In other types of disputes, their opinions are considered by the Arbitrator, who mediates between the parties or issues direction.

For a list of approved medical specialists, see:

  • those who resolve medical disputes
  • those who resolve disputes about permanent impairment.