Australia: Reform of the New South Wales Workers Compensation Scheme - Part 1

Last Updated: 1 August 2012
Article by Andrew Spearritt and Michael Poulos


The Workers Compensation Legislation Amendment Bill 2012 and the Safety Return to Work and Support Board Bill 2012 were passed by the New South Wales Legislative Council on Thursday, 21 June 2012.

The bills have introduced a number of changes that affect all new and existing workers compensation claims except "exempt workers" who are identified as the following:

  1. Police officers, paramedics and fire fighters;
  2. Workers injured whilst working in or around a coal mine;
  3. Emergency service volunteers (Life Savers, SES Volunteers and Rural Fire Service); and
  4. People with a dust disease claim under the Workers Compensation (Dust Diseases) Act 1942.

Exempt workers' claims will continue to be managed in accordance with the former regime.

The reform overhaul is significant and includes, amongst other things, changes to journey claims, compensation for pain and suffering, an insurer's liability for medical costs and associated treatment as well as the period of time workers are able to remain in receipt of weekly benefits.

The changes will apply retrospectively and may be applied to some workers already in receipt of compensation.


Section 22A – Further provisions concerning apportionment of liability under s 22

Section 22A (2) relates to a worker's partial incapacity resulting from one or more injuries to the worker where more than one person is liable to pay compensation in respect of that incapacity. In those instances, liability would be apportioned under s 22 between the relevant people.

The amendments have omitted s 22A(2).

Average weekly earnings (AWE)

The pre-injury AWE will be calculated based upon the worker's average ordinary earnings in the period prior to injury.

No current work capacity (formerly referred to as total incapacity)

During the first 13 weeks, workers will receive up to 95% of their pre-injury AWE (minus any wages earned and nonpecuniary benefits, up to $1,838.70 per week).

From 14 to 130 weeks, workers who have no current work capacity will receive up to 80% of their pre-injury AWE.

Current work capacity (formerly referred to as partial incapacity)

Workers who have a current work capacity and are able to work during the first 13 weeks after a claim is made will receive up to 95% of their pre-injury AWE (minus any wages earned and non-pecuniary benefits, up to $1,838.70 per week). This amount is inclusive of the actual wages they are earning less any current earnings or amounts the worker is able to earn in suitable employment.

From 14 to 130 weeks, workers who have returned to work for at least 15 hours per week (earning more than $155 per week) will receive a top up of up to 95% of their preinjury AWE.

From 14 to 130 weeks, workers who have a current work capacity and are working less than 15 hours per week will receive 80% of their pre-injury AWE less any current earnings or amount the worker is able to earn in suitable employment.

Cessation of benefits

If a worker is able to work and is not working at least 15 hours per week by the end of 130 weeks, their entitlements to weekly benefits will cease. However, workers who cannot work (i.e. either no current work capacity or, if current work capacity, have achieved an actual return to paid employment of at least 15 hours per week), will continue to receive benefits of up to 80% of their pre-injury AWE.

Weekly payments will be limited to a maximum of 5 years, or upon the worker reaching Commonwealth retirement age (whichever occurs first).

Workers with a whole person impairment greater than 20% will be exempt from the 5- year capped period and will be eligible to receive weekly payments until reaching the Commonwealth retirement age provided that they have an ongoing total incapacity for employment on the open labour market.

Work Capacity Assessments (WCA)

Workers receiving weekly benefits will undergo WCA throughout the duration of their claim. The results of the WCA will be used to determine the worker's future entitlement to benefits.

"Seriously injured workers", that is workers whose injury has resulted in permanent impairment greater than 30%, will not be required to undergo WCA unless the insurer deems it appropriate and/or the worker requests to undergo an assessment.

Disputes arising from WCA

Work capacity decisions made by an insurer are final and binding on the parties. A worker is able to refer a work capacity decision of an insurer for an internal review by an insurer or to WorkCover or to the Independent Review Officer.

The Workers Compensation Commission no longer has any jurisdiction to determine any dispute about a work capacity decision of an insurer and is not to make a decision in respect of a dispute before the Workers Compensation Commission that is inconsistent with a work capacity decision of an insurer.

Most importantly, a legal practitioner acting for a worker is not entitled to be paid or recover any amount for costs incurred in connection with a review of a work capacity decision of an insurer.


The changes to weekly compensation payments will be retrospective in nature. However, at this stage, the amendments are not yet operative and await proclamation to commence.

Upon commencement, insurers will be required to conduct a WCA of workers currently in receipt of weekly payments within 12 months from the date of proclamation.

Upon expiration of a period of 3 months after an insurer first conducts a WCA of an existing recipient of weekly payments, the new weekly benefits system will then apply to the worker. However, the weekly payments amendments do not apply to the compensation payable to the worker in respect of any period of incapacity during the first 26 weeks.


The calculation of AWE has been simplified and should minimise the possibility of confusion and error when calculating a worker's entitlement to weekly benefits.

Once proclamation has been made, it appears that rehabilitation providers will receive an influx of WCA requests from insurers within the coming 12 months. Insurers should consider arranging work capacity assessments of current weekly recipients sooner rather than later in order to avoid undue delay.


Permanent impairment claims (s 66)

In order to receive compensation for permanent impairment with respect to a physical injury only, a threshold of over 10% whole person impairment must be achieved.

The threshold for psychological claims, ie 15% whole person impairment, remains unchanged.

One assessment of whole person impairment

A worker will only be entitled to bring one claim for whole person impairment. The worker will no longer be entitled to bring further claims where injuries deteriorate.

An injured worker can only be assessed for permanent impairment once by an Approved Medical Specialist.

Pain and suffering (s 67)

This section has been omitted and is no longer available.


An amendment made under Schedule 2 extends to a claim for compensation made on or after 19 June 2012, but not to such a claim made before that date.


The merging of ss 66 and 67 into one entitlement will eliminate all disputes arising in relation to an award pursuant to s 67.

Further, workers sustaining injury after 19 June 2012 will no longer be entitled to bring a claim for further loss. This will most likely restrict the number of workers satisfying the threshold to proceed with work injury damages claims.


Claims for damages for nervous shock by relatives or dependants of an injured or deceased worker are now prevented because their injuries are not deemed to be work injuries.


An amendment made by Schedule 3 of the 2012 amending Act extends to a claim for damages in respect of harm suffered before 19 June 2012, but does not apply to a claim for damages if the claimant commenced court proceedings for the recovery of work injury damages before 19 June 2012.


Medical expenses

Payment for medical and related treatment will end:

  • 12 months after a claim for compensation in respect of the injury was first made; OR
  • 12 months after the worker ceased to be entitled to weekly payments of compensation;

whichever occurs last.

The above does not apply to a "seriously injured worker", i.e. a worker that has been assessed as suffering from whole person impairment greater than 30%. Those workers continue to be covered for their medical and related expenses.

The WorkCover Guidelines will be able to limit an employer's liability for medical/hospital treatment and rehabilitation (s 60). Further, an employer's liability for payment of medical and related expenses will be limited and subject to various preconditions in order to ensure that the treatment/service provided is appropriate and approved by the insurer.


Amendments relating to the limitation on payment of medical expenses are not yet operative and will commence upon proclamation.

An amendment made by the 2012 amending Act to s 60 of the Workers Compensation Act, 1987 does not apply in respect of any treatment or service provided before the commencement of the amendment, 27 June 2012.


Workers who do not meet the definition of a "seriously injured worker" will be affected by the new amendments and see their medical and other related expenses capped within the relevant timeframe.


Of particular significance is the fact that the new changes omit s 10(3)(a) of the Workers Compensation Act 1987 meaning that the daily or other periodic journeys between the worker's place of abode and place of employment are no longer covered under the workers compensation system.

The new laws will only apply to instances where there is a "real and substantial" connection between the person's employment and the incident out of which the injury arose.


An amendment made by Schedule 5 of the 2012 amending Act extends to an injury received on or after 19 June 2012 but does not apply to an injury received before that date.


The definition of journey claims has been significantly restricted. All claims relating to travel to and from work will now require careful consideration by the insurer before determining liability.


A worker is not entitled to compensation in respect of an injury that consists of, is caused by, results in, or is associated with, a heart attack injury or stroke injury unless the nature of the employment gave rise to a significantly greater risk of the worker suffering that type of injury.


The amendments apply to an injury received on or after 19 June 2012, but do not apply to an injury received before that date.


For a disease injury, the worker's employment must be the main contributing factor to the contraction of the disease as opposed to a substantial contributing factor.


An amendment made by Schedule 7 of the 2012 amending Act extends to an injury received on or after 19 June 2012 but does not apply to an injury received before that date.

Related Article

Reform of the New South Wales Workers Compensation Scheme - Part 2

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