Injured Yourself In The Workplace? The Pros & Cons Of A Lump Sum Compensation Payout.

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If you have been injured at work it is important to fully understand the benefits that you are entitled to receive and the manner in which those benefits can be paid to you. In NSW the Workers Compensation Benefit System is comprised of the following legislative Acts:

  • Workers Compensation Act 1987
  • Workplace Injury Management and Workers Compensation Act 1998
  • Workers Compensation (Dust Diseases) Act 1942
  • Workers Compensation Regulation 2010 — this Regulation sets out the details of the administration of the workers’ compensation system including premiums, benefit rates, forms, administration, and the Premium Discount Scheme. 

In accordance with the current Australian workers’ compensation system, injured workers can be entitled to ongoing payments of compensation or a one time redemption payment for their injuries. This type of payment is also known as a lump sum payment which is made directly to the injured worker in a single payment.

If an injured worker is found to have a permanent impairment, then per Part 2 Division 5 of the Return To Work Act of 2014, that injured worker can opt for a lump sum compensation payment in lieu of weekly compensation payments. The amount of a lump sum payment is determined based upon a formula that takes into account the workers’ level of impairment, the age of the worker and the hours worked.

A lump sum payment can only be made if the following criteria are met:

(a) the worker has received competent professional advice about the consequences of redemption; and

(b) the worker has received advice from a recognised health practitioner about the future medical services (and, if relevant, therapeutic appliances and other forms of assistance related to his or her future health) that the worker will or is likely to require on account of the work injury and any related surgery, treatment or condition.

In the instance that an injured worker is deemed to have a permanent impairment but does not want to opt for a lump sum payment of compensation, the worker can be entitled to weekly benefits that are paid beyond the 260-week limitation of benefits under the Workers’ Compensation Act 1987, Section 39. For an injured worker to qualify for such payments the injury must have left a permanent disability of 20% or more.

The injured worker must meet the qualifications of section 38 of the Workers’ Compensation Act of 1987 to be eligible for ongoing payments of disability.

(3) a worker, not of high needs, can qualify for ongoing payments if:

(a) the worker has applied to the insurer in writing

(b) the worker has returned to work within the minimum requirements and

(c) the worker is assessed by the insurer as being, and as likely to continue indefinitely to be, incapable of undertaking further additional employment or work that would increase the worker’s current weekly earnings.

If the injured worker is of high needs, then the worker must also apply to the insurance company in writing and also submit to a work capacity assessment every 2 years, unless waived by the insurance carrier. The rate of compensation is then determined by a legislated mathematical equation.

The benefit of ongoing payments is that the worker has a steady stream of income which can be combined with his or her ongoing working abilities. However, in choosing this option the worker also must submit to ongoing work assessments by the insurer.  The benefit of the lump sum payment is that the worker can then use the monies per their own discretion. The monies can be invested for income growth or used for ongoing support.

In the event that you are faced with these particular issues and concerns, please contact the offices of Owen Hodge Lawyers on 1800 770 780.


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