A commutation agreement is an agreement to commute a liability for workers compensation to a lump sum amount that is made between you (the worker), your employer and the insurer.
If your commutation agreement is registered with the Workers Compensation Commission (WCC), you will no longer be entitled to future weekly payments, or to claim medical, hospital, rehabilitation expenses for any injury referred to in the agreement.
Preconditions for a commutation
A commutation is only available when SIRA has certified that the following preconditions have been met:
- you have an injury that has resulted in permanent impairment of at least 15 per cent
- compensation for permanent impairment has been paid
- it has been more than two years since you first received weekly payments for the injury
- all opportunities for injury management and return to work have been fully exhausted
- you have received weekly payments (regularly and periodically) throughout the previous six months
- you have an entitlement to ongoing weekly payments
- weekly payments have not been reduced or discontinued as a result of you not complying with your return to work obligations.
It is suggested that your application is undertaken by either your employer's insurer or your legal representative. This ensures all relevant information about your claim is provided to SIRA so we can confirm whether the preconditions have been met.
A commutation agreement
If SIRA certifies that you have met the preconditions you can proceed to make a commutation agreement with the insurer acting on behalf of your employer.
However, before you make a commutation agreement the following must happen:
- you must receive independent legal advice, including advice that is in your best interest to get independent financial advice
- you and your legal adviser must certify in writing that you have been provided with and have understood the advice above.
The commutation agreement must be registered with the WCC in order to take effect.
Further information is available in the guidelines for claiming workers compensation.
Sometimes there can be disputes about compensation. If there’s a dispute, there’s help available. Our workers compensation disputes section has more information on how we can help.