Workers Guidance - Expanded Access to Commutations

Recent workers compensation reforms have expanded access to commutations for a limited period. This means some people with a claim for workers compensation may be able to settle certain ongoing workers compensation entitlements through a lump sum payment, if their claim meets the necessary preconditions and they are interested in doing so.

A commutation agreement is an agreement between a worker and an insurer that allows the worker to receive a lump sum payment to settle certain ongoing workers compensation entitlements. A commutation agreement only takes effect once it has been approved by the President of the Personal Injury Commission (PIC).

From 1 October 2026, eligible workers can elect to commute their entitlements under the expanded access to commutations. Eligible workers may express interest in commuting their claim by submitting an Expression of Interest (EOI) to their insurer.

It is important to note that commutations are still available under the existing commutation pathways, providing certain preconditions are met. Please contact your insurer for more information.

Am I eligible?

There are three classes of cases that are eligible for commutation under the expanded access to commutations. Different eligibility requirements apply to each class as set out in Part 9A of the Workers Compensation Regulation 2016. Your claim may be eligible for commutation if you meet all of the eligibility requirements for a class of cases.

Before a commutation can proceed, you and the insurer must agree on your degree of permanent impairment.

For all classes of cases, your degree of permanent impairment must be:

• assessed under the NSW Workers Compensation Guidelines for the Evaluation of Permanent Impairment, and
• agreed to by you and the insurer before compensation can be commuted.

You and the insurer are taken to have agreed on your degree of permanent impairment where:

• a medical assessor has issued a medical assessment certificate certifying your degree of permanent impairment; and
• the certificate is not the subject of an appeal when the commutation agreement is made.

How to apply

Step 1: Submit an Expression of Interest (EOI)

If you are interested in a commutation, you must submit an Expression of Interest (EOI) to either your insurer or your employer using the approved SIRA form.

Your EOI must be submitted by 1 April 2028 (within 18 months of 1 October 2026).

If you give your EOI to your employer, your employer must forward it to the insurer within three business days.

Within 10 business days of receiving your EOI, the insurer must:

• confirm receipt of your EOI;
• tell you if any information is missing;
• explain the requirement to obtain independent legal advice;
• explain that you may obtain independent financial advice for a proposed commutation agreement, with the insurer
• paying up to $2,500 towards the cost of that advice;
• explain that, if the proposed commutation amount exceeds $100,000, you must obtain independent financial advice, with
• the insurer paying up to $2,500 towards the cost of that advice;
• explain the assessment process and expected timeframes; and
  provide contact details for enquiries.

Note: Financial advice requirements do not apply to Class 3 (hearing loss) claims.

Step 2: Obtain independent legal advice

Before entering into a commutation agreement, you must obtain independent legal advice about:

• the full legal effect of the commutation agreement; and
• whether you should obtain independent financial advice.

Step 3: Obtain independent financial advice (if required)

For Class 1 and Class 2 claims, you must obtain independent financial advice if the proposed commutation amount exceeds $100,000. If your commutation amount is $100,000 or less, you may still choose to obtain independent financial advice, but it is not required.

The insurer will fund financial advice, up to $2,500, where the advice is provided by a financial adviser operating under an Australian Financial Services Licence (AFSL). To arrange payment, you must provide the insurer with:

• the financial adviser's name and contact details
• the AFSL number under which the adviser operates
• a quote or estimate for the cost of the advice

Note: Financial advice requirements do not apply to Class 3 (hearing loss) claims.

Step 4: Enter into a commutation agreement

If you and the insurer agree to commute your claim, you must complete the approved SIRA commutation agreement form.

Step 5: Apply for approval

The commutation agreement must be submitted to the PIC for approval (Form 5A). The application must include the completed commutation agreement and supporting information required by the PIC.

A commutation agreement only takes effect if it is approved by the President of the PIC.

An application for approval must be made by 1 April 2029 (within 30 months of 1 October 2026).

A commutation agreement can be withdrawn by the worker at any time prior to approval, by giving written notice to the insurer and to the President of the PIC through the PIC’s online portal.

The PIC provides further information on the process and requirements for submitting a completed agreement for approval in its Procedural Direction WC8 – Commutations, which can be accessed on the PIC website via the following link:

Procedural Direction WC8 – Commutations

Once a commutation agreement is approved and paid, you will no longer be entitled to workers compensation benefits for that injury. You should carefully consider the legal advice and financial advice (if applicable) you receive before entering into a commutation agreement.