Compensation payable

Overview

Weekly payments are made to a worker to compensate for loss of earnings as a result of a work injury. Insurers must use a formula from the Workers Compensation Act 1987 (1987 Act) to calculate a worker’s weekly payments.

This guidance deals with calculating a worker's weekly payments in the various entitlement periods.

The first entitlement period (0-13 weeks)

No work capacity

If the worker has no work capacity due to the work injury, they are entitled to be paid the lower of:

• 95 per cent of their pre-injury average weekly earnings (PIAWE), or
• the maximum weekly compensation amount.

Partial work capacity

If the worker has a reduced capacity for work due to a work injury, they are entitled to receive the lower of:

• 95 per cent of their PIAWE minus the amount of the worker’s current weekly earnings (CWE), or
• the maximum weekly compensation amount minus the amount of the worker’s current weekly earnings.

The second entitlement period (14-130 weeks)

No work capacity

If the worker has no work capacity due to a workplace injury, they are entitled to be paid the lower of:

• 80 per cent of their PIAWE, or
• the maximum weekly compensation amount.

Working 15 hours or more per week

If the worker is working 15 hours or more per week, they are entitled to be paid the lower of:

• 95 per cent of their PIAWE minus the amount of the worker’s current weekly earnings, or
• the maximum weekly compensation amount minus the amount of the worker’s current weekly earnings.

Working less than 15 hours per week

If the worker is working less than 15 hours per week, they are entitled to be paid the lower of:

• 80 per cent of their PIAWE minus the amount of the worker’s current weekly earnings, or
• the maximum weekly compensation amount minus the amount of the worker’s current weekly earnings.

After 52 entitlement weeks

For workers with a date of injury before 26 October 2018, overtime and shift amounts are removed from their PIAWE after 52 entitlement weeks. The formula used to calculate the weekly entitlement of the worker is otherwise unchanged.

Entitlement to weekly payments after the second entitlement period

When a worker meets the special requirements for the continuation of weekly payments after the second entitlement period (as outlined in Insurer guidance GN 5.4 Weekly payments after the second entitlement period), their weekly payment will be calculated in accordance with section 38(6) and (7) of the 1987 Act.

Circumstances not affecting payments after the second entitlement period

Workers who have fluctuating earnings or work patterns may have an entitlement to weekly payments after the second entitlement period. If they occasionally, but for no more than four weeks in a 12-week period after they first received section 38 payments (or in any subsequent consecutive 12 week period), worked more or less hours (even if less than 15 hours) or earned more or less (even if less than $155.00) than when they applied for payments under section 38 of the 1987 Act (section 40 of the 1987 Act).

Entitlements for surgery-related incapacity after the second entitlement period

If, after the second entitlement period, a worker requires secondary surgery, but would otherwise not be entitled to weekly payments during the period of incapacity, they are entitled to receive special weekly benefit compensation under section 41 of the 1987 Act, at the rate prescribed by section 37 of the 1987 Act (the second entitlement period; 14-130 weeks).

In order for weekly payments to be payable, the worker:

• must have received weekly payments of compensation in respect of the initial injury, and have had current work capacity prior to suffering the incapacity resulting from the injury-related surgery
• must have returned to work after the initial injury (whether in self-employment or other employment) for a period not less than 15 hours per week and have been in receipt of current weekly earnings (or current weekly earnings together with a deductible amount) of at least $155 per week (as indexed).

Weekly payments are not payable for any period of incapacity that occurs:

• during the first 13 consecutive weeks after the end of the second entitlement period, or
• more than 13 weeks after the surgery concerned, or
• during any period for which the worker is otherwise entitled to compensation after the second entitlement period (under section 38 of the 1987 Act).

Weekly payments and the JobKeeper payment scheme

Legislative amendments made on 23 October 2020 introduced changes to weekly payment arrangements to clarify the impact of JobKeeper payments on weekly payments of compensation.

Injured workers in receipt of the Commonwealth-funded JobKeeper payment during the COVID-19 pandemic will have the entire payment considered as their current weekly earnings for the purposes of calculating the workers weekly payment entitlement.

The following examples illustrate the weekly payment algorithm during the first entitlement period, for a worker either in receipt or not in receipt of the JobKeeper payment (prior to 28 September 2020, JobKeeper extension 1):

Cessation of weekly payments after five years

Most workers cease to be entitled to weekly payments after a maximum aggregate period of 260 weeks in respect of which a weekly payment is payable to the worker.

For high needs workers with more than 20 per cent permanent impairment, entitlement to compensation may continue after 260 weeks. Entitlement after 260 weeks is still subject to section 38 of the 1987 Act.

The requirements for high needs workers under section 38 of the 1987 Act include that a worker must have applied to the insurer no earlier than 52 weeks from the end of the second entitlement period for continuation of weekly payments after the second entitlement period.

A work capacity assessment needs to be conducted for a worker (except for a worker with highest needs) at least once every two years from the last work capacity assessment conducted, for the purposes of determining their entitlement to payments after the second entitlement period.

An insurer is not permitted to conduct a work capacity assessment for a worker with highest needs (a worker assessed with a degree of permanent impairment of greater than 30 per cent) unless appropriate to do so and the worker requests it.

After the second entitlement period, weekly payments for workers with high needs are calculated in accordance with section 38(6) and (7) of the 1987 Act.

After the second entitlement period, weekly payments for workers with highest needs are calculated in accordance with section 38(6) and (7) and 38A of the 1987 Act. See Insurer guidance GN 5.5 Payments to workers with highest needs.

Informing workers of a reduction of weekly payments

The following reductions in weekly payments of compensation are not subject to legislated notice periods:

• after the first entitlement period
• upon the removal of shift and/or overtime amounts from a worker’s PIAWE.

After the first entitlement period

From weeks 14 to 130, workers who continue to have no current work capacity, or who are working less than 15 hours per week, receive up to 80 per cent of their PIAWE (unless the statutory maximum amount applies). For these workers, their weekly payments will reduce after 13 entitlement weeks.

Reductions in weekly payments after the first entitlement period are not subject to legislated notice periods.

Workers should have the opportunity to prepare for any change or reduction in their weekly payments, and sufficient warning of the step-down will enable them to do this.

Providing advice of a legislated step-down

A significant reduction in weekly payments can cause hardship. Standard of practice S9. Reduction in payments of compensation recommends that workers should be notified of legislated step-downs no less than 15 working days prior to a reduction in payments.

While workers are provided with information about legislated step-downs at the time their claim is accepted, a worker may not recall this information by the time the step-down is due to occur. It is preferable that the worker is informed via telephone with follow-up confirmation in writing. Written advice provides the worker with a reference document, and it forms demonstrable evidence that the insurer has provided timely advice to the worker.

Insurers should also provide workers with an opportunity to ask any questions and provide them with the necessary information to request a review of the weekly payment amount if they disagree with the calculation.

Calculating weekly payments

If the worker is earning in other paid employment, the worker must provide enough information for the insurer to calculate the correct weekly payment.

The weekly payment entitlement period starts on the day of the worker’s first incapacity (total or partial) from a work-related injury. This means that what constitutes a week is different for each worker. For example, if a worker’s first day of incapacity is on a Wednesday, their weekly entitlement period is Wednesday to Tuesday.

A worker’s entitlement week may not correspond with the worker’s payroll week however, workers should continue to be paid in-line with their payroll period. The insurer is to calculate the worker’s weekly payment and adjust it to their payroll week and where necessary, inform the employer of the payments to be made.

How to start weekly payments

The insurer should inform the worker and employer in writing when starting weekly payments. The insurer should explain:

• that the payments have started because the insurer has accepted liability
• the amount of weekly payment and how that amount has been calculated
• who will pay the worker (either the employer or the insurer)
• what to do if the worker disagrees with the amount or does not receive payment
• that an injury management plan will be developed, if the worker is unable to return to their pre-injury employment for more than seven continuous days
• that to continue to be entitled to weekly payments, the worker must give the employer or insurer a properly completed Workers compensation certificate of capacity
• that the worker must tell the insurer of any change in employment that affects their earnings, such as starting work for another employer.

How to apply for an alteration in weekly payments

Section 42 of the 1987 Act provides that a worker may apply to the insurer to alter the amount of their weekly payments. The application is made to the insurer in writing for either an increase or reduction of weekly payments.

The worker’s application should specify the reason for the request and be accompanied by any supporting evidence.

Within 28 days after receiving an application, the insurer must approve or reject the application and provide advice in writing to the worker and the employer of their decision.

If the application is rejected, the insurer must include a statement of the reasons for their decision.