Under the Workers Compensation Act 1987, the insurer has the right to undertake a work capacity assessment in an injured worker's compensation claim. The purpose of a work capacity assessment is to determine what the injured worker's current capacity is to earn in suitable employment as a result of their workplace injury.
Upon the insurer carrying out its work capacity assessment, it has the right to issue a work capacity decision. Work capacity decisions can adversely affect an injured worker's ongoing entitlement to receive weekly compensation payments from the insurer.
When are work capacity assessments required?
Under section 44A of theWorkers Compensation Act1987 ("WC Act"), the insurer has the right to conduct a work capacity assessment and issue a work capacity decision every 2 years. This can happen at any stage of the worker's compensation claim.
The insurer is not permitted to conduct a work capacity assessment or issue a work capacity decision in a worker's compensation claim if it has been determined that an injured worker has a whole person impairment of 31% or greater as a result of the injuries they had sustained at work.
Insurers tend to carry out work capacity assessments and issue work capacity decisions when either of the following events occur in a worker's compensation claim:
- when the injured worker is coming up to receive 130 weeks of weekly compensation payments from the insurer; or
- when the insurer becomes aware that the employer is going to terminate the injured worker's employment because of their workplace injuries; or
- when the injured worker has capacity to work and is unable to return to their place of employment under the advisement of their GP; or
- when the employer is unable to provide suitable duties to the injured worker; or
- after the insurer has provided the injured worker with a small amount of assistance with finding alternative employment, and they have been unable to find such work.
This means that the majority of injured workers under the NSW worker's compensation scheme are at risk of their weekly compensation payments being adversely affected at times when they most need help from the insurer when they are attempting to return to work.
What types of work capacity decisions are made?
Section 43 of the WC Act states that a work capacity decision can be a decision about:
- a worker's current work capacity;
- what constitutes suitable employment; and
- the amount an injured worker is able to earn in suitable employment.
What must an insurer consider when making a work capacity decision?
When the insurer assesses whether suitable employment is available to the injured worker, the insurer must have regard to:
- the nature of the worker's incapacity;
- the worker's age, education, skills and work experience;
- any injury management plan previously or currently implemented; and
- any occupational rehab services that are being provided or have been provided.
What considerations can insurers exclude when making a work capacity decision?
When making a decision as to what constitutes suitable employment, the insurer does not have to have regard to:
- whether the employment is actually available;
- whether the work or the employment is of a type or nature that is generally available in the employment market;
- the nature of the worker's pre-injury employment; and
- the worker's place of residence.
Many insurers have used these exceptions to reduce or stop injured worker's payments.
Many of these decisions start with the insurer organising a vocational assessment by a vocational assessor.
Upon an injured worker undertaking a vocational assessment, they need to ask their GP to notify them when they have received the suitable employment options from the vocational assessor.
It is imperative that the GP discusses these suitable employment options with the injured worker before they sign off on these options and provide their approval to the vocational assessor.
When the GP is talking to the injured worker, they need to ascertain:
- whether they can realistically carry out the duties required because of the injuries they sustained at work (both primary and consequential), and
- whether they can carry out the duties based on their age, education, skills and experience.
If the GP forms the opinion that the suitable employment options are not suitable for the injured worker, they need to notify the vocational assessor and explain the reasons why.
Example where a vocational assessment reduces the weekly payments
- An injured worker was an accountant for a period of 10 years. The injured worker stopped working as an accountant approximately 5 years ago. The injured worker moved into an administrative role after the accounting role approximately 5 years ago.
- The worker got injured at work approximately 2 years ago while working in the administrative role.
- In the administrative role, they earned $40 per hour and worked 38 hours per week, making their pre-injury weekly wages $1,520.
- Since the injury, the worker returned to work on pre-injury duties on a part-time basis of 20 hours per week.
- This means that the employer would pay the first 20 hours of pay and the insurer would pay the remaining 18 hours of worker's compensation payments at the rate $40 per hour. The insurer would therefore pay makeup pay of $720 ($40 x 18 hours).
- The insurer did a vocational assessment that stated that there were accounting jobs available where the injured worker could earn approximately $65 per hour.
- This would mean the insurer has assessed that the injured worker could earn $1,300 (20 hours capacity x $65 per hour).
- On the basis of the potential for the injured worker to earn $65 per hour (rather than $40) whether or not an actual job was available, the insurer reduced the worker's compensation payments from $720 to $220 per week ($1,520 minus $1,300).
This is a significant difference that clearly impacts an injured worker's weekly payments.
Can an injured worker review an adverse work capacity decision?
The insurer is required to give the following notice period to the injured worker if it is going to reduce their entitlement to weekly compensation payments:
- two weeks if the injured worker has received no payments or less than 12 weeks of weekly compensation payments from the insurer; and
- three months if the injured worker has received 12 or more weeks of weekly compensation payments from the insurer.
As soon as the insurer has notified the injured worker that it is going to reduce their entitlement to weekly compensation payments, it is highly recommended that they obtain legal advice from an Independent Legal Assistance and Review Service (ILARS) approved lawyer.
An ILARS-approved lawyer will be able to identify any potential grounds upon which an injured worker can request a review and/or take the necessary steps to refer their matter to the Personal Injury Commission for dispute resolution within the three month notice period.
The lawyers in our Sydney personal injury team are ILARS-approved lawyers and are happy to assist any injured worker with their worker's compensation claim.
Get help from a worker's compensation lawyer
Since late 2023 and into 2024, there has been a dramatic increase in insurers issuing work capacity decisions as a way of reducing their financial liability on a worker's compensation claim, especially in and around the time when injured workers are attempting to return to work.
Therefore, it is imperative that an injured worker obtains legal advice from an ILARS-approved lawyer if either of the following occurs:
- the insurer has notified them that they need to attend a vocational assessment; or
- they receive an adverse work capacity decision from the insurer, which reduces their weekly compensation payments or stops them after the required notice period.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
