A commutation is where you (the worker) and insurer agree to a single lump sum payment. This payment should be sufficient to cover all future weekly payments and/or medical, hospital and rehabilitation expenses for the injury.
A commutation agreement must be registered with the Workers Compensation Commission (WCC).
Once your commutation agreement is registered with the WCC, you will no longer be entitled to future weekly payments, or to claim medical, hospital or 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 throughout the previous six months
- you have an existing and continuing entitlement to ongoing weekly payments
- weekly payments have not been terminated as a result of you not complying with your return to work obligations.
You, your legal representative or the insurer can make the application for the certification that all preconditions have been met. The completed application must include all relevant information about your claim.
Once you and the insurer agree to both the commutation and the amount, and SIRA certifies that you have met the preconditions, you can proceed to register the commutation agreement with the WCC.
Before entering into a commutation agreement, you must receive independent legal advice. The legal adviser must certify in writing that you have been advised:
- on the full legal implications of the agreement
- that it is in your best interest to get independent advice about any financial consequences before entering into the agreement.
You will also be required to confirm in writing that you have received and understood this legal advice, as part of the agreement process.
The commutation agreement must be registered with the WCC in order to take effect.
Once the agreement is registered by the WCC, the insurer must pay the money:
- within seven days of the registration, or
- within a longer period if the agreement specifies one.
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.