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What is Workers Compensation and How Does it Work?

Workers Compensation

Co-authored by: Brooklyn Younger


  • If you have sustained an Injury or illness during the course of your employment, you may be eligible for Workers Compensation in New South Wales.
  • The NSW Workers Compensation Scheme provides support to injured workers, assisting them to recover and return to work.
  • You can be eligible to receive wages, be entitled to reasonable medical coverage and assistance with return to work, where possible.
  • Work related Injury can be both, physical and/or psychological.

Introduction to Workers Compensation Scheme

The New South Wales Workers Compensation Scheme was established to provide NSW employees with the support. Workers Compensation in New South Wales is governed by the Workers Compensation Act 1987 (‘the Act’), which provides several opportunities for compensation for eligible injured workers.

The State Insurance Regulatory Authority (SIRA) is the NSW Government agency responsible for regulating the NSW workers compensation system.

There are three main workers compensation Insurers in NSW, icare, self-insurers and specialised insurers. In NSW, icare is the insurance provider and is also responsible for care services to authorities and different workers compensation schemes.

What is Workers Compensation scheme

Workers’ compensation is a form of insurance to assist injured workers after they sustain work related injuries and to cover for:

  • Average weekly earnings when they are unfit to work due to work related injury.
  • Reasonable medical expenses.
  • Lump sum compensation payment.

Work related injury

To have sustained an “injury” for Workers Compensation in New South Wales, your impairment is to meet the definition under section 4 of the Workers Compensation Act 1987. An Injury under the Act is defined as:

  • A personal injury arising out of or in the course of employment, or
  • A disease injury, which may have been contracted in the course of employment or the aggravation of a disease within the course of employment.

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Eligibility under workers’ compensation

There are various tests and requirements that you must meet to be eligible for entitlements under the Workers Compensation Scheme in New South Wales, including:

  • You must be a ‘worker’ as per the Workplace Injury Management and Workers Compensation Act 1988.
  • You must have sustained an injury as defined under section 4 of the Workers Compensation Act.
  • Your employment must have been a substantial contributing factor to your physical injury.
  • For psychological injuries, disease injuries, or aggravation of a disease injury, your employment must have been the main contributing factor.

An injured worker may also be eligible for:

  • Lump sum compensation payment for permanent impairment.
  • Domestic assistance if the worker suffers from work-related incapacity.
  • Training/educating to assist in returning to work.
  • Hearing impairment claims.
  • Death benefit claims.

Once you have met the criteria for Workers Compensation, you may be eligible for weekly payments and/or the coverage of medical and treatment expenses pursuant to section 60 of the Act. After pursuing entitlements under section 60, you may be, if applicable, entitled to lump sum compensation under section 66 of the Act.

To be assessed for eligibility for lump sum compensation, you will be sent to an Independent Medical Examination (“IME”), where you will be allocated a percentage of Whole Person Impairment (“WPI”) upon assessment.

If you have sustained a physical injury on or after 19 June 2012, you must achieve a WPI threshold that is greater than 10%, meaning that your percentage must be 11% or higher. As for psychological injuries, you must achieve a WPI threshold of 15% or greater to be eligible for lump sum compensation. Only one claim for permanent impairment compensation can be made in respect of the injury.

However, if you sustained injury, resulting in permanent impairment before 19 June 2012, you may be entitled to make one further lump sum compensation claim if your condition has deteriorated.

Pre-19 June 2012, the workers could bring claims for permanent impairment compensation under s66 even if their WPI was less than 11% and for pain and suffering under s67 if the applicable threshold of 10% WPI was satisfied.

Steps to file workers’ compensation claim

An Injured worker must notify their employer as soon as they sustain a work-related injury or illness or as soon as they become aware of their injury.

They should provide below details to their employer:

  • Date and time of the injury, or deed date of injury.
  • Complete description of the reasons for the injury.
  • Full description of the injury.
  • WorkCover Certificate of Capacity, completed by their nominated treating physician.
  • Personal injury claim form.

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Exempt workers claim

Exempt workers include police officers, firefighters and paramedics. They are considered exempt from 2012 and 2015 amendments to the Workers Compensation Act and are entitled to different benefits than other classes of workers. They are assessed under a different scheme.

They may be eligible to receive weekly workers’ compensation payments for as long as they suffer a partial or total incapacity for work. They may be eligible to receive payments up to the retirement age.

Other classes of workers can only claim for one lump sum compensation payment, whereas exempt workers can claim more than one lump sum payment.

If an exempt worker is assessed with 10% or more whole person impairment, then may be entitled to claim for ‘pain and suffering’ up to a maximum of $50,000 under s67 of the Act. Whereas others are not entitled to ‘pain and suffering’.

Time limit to file workers compensation claim

Workers should file their workers compensation claim as soon as they get injured at work or as soon as they become aware of their work-related injury or illness.  However, a claim can be made within six months from the date of injury.

If you have finished working with an employer and only became aware of your injury/illness afterwards due to the delayed onset, you could still very well be eligible for workers compensation. It is important you seek legal guidance as soon as possible.

Legal assistance with your workers’ compensation claim

Liaising directly with your employer and/or workers’ compensation insurer can be exhausting and sometimes daunting. Therefore, it is best to seek legal advice as soon as you become aware of your injury/illness.

Free initial advice and no upfront fee

As mentioned above, time limits for making and disputing a claim decision are strictly legislated.

We offer free initial advice and don’t charge any upfront fee. Not only that, but we also offer most of the cases on “No Win No Fee” basis. So, benefit from our “free initial advice” and allow us to help you to make a claim or to appeal a decision.

Coutts has IRO approved lawyers. That means if you are eligible, we will  obtain an IRO grant to cover your legal cost disbursements.

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Contact Coutts today.

This blog is merely general and non-specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever to this blog, including all or any reliance on this blog or use or application of this blog by you.

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