Assessing permanent impairment

Published: 12 August 2019
Last edited: 12 August 2019

This section does not apply to exempt workers. See instead 'Permanent impairment and exempt workers'.

An assessment of the degree of permanent impairment of a worker as a result of an injury is undertaken by specialist medical practitioners applying diagnostic criteria and evaluation processes. The result is expressed as a percentage of whole person impairment.

A worker’s assessment of degree of permanent impairment is important for two reasons:

  • it determines the amount, if any, of lump sum compensation the worker is entitled to under section 66 of the Workers Compensation Act 1987 (1987 Act), and
  • it acts as a threshold to other entitlements under the Act and at common law (see 'Threshold entitlements').

The percentage of whole person impairment equates to a monetary amount as specified in the Workers compensation benefits guide. These amounts are indexed each year on 1 July.

Permanent impairment assessors

The insurer may need to arrange an independent medical examination for an assessment of permanent impairment.

This assessment should be conducted by a registered medical practitioner recognised as a specialist with qualifications, training and experience relevant to the body system(s) being assessed.

SIRA-approved permanent impairment assessors have successfully completed workers compensation training, and are listed on the SIRA website for each body system they can assess.

The assessor must use the NSW workers compensation guidelines for the evaluation of permanent impairment (Permanent impairment guidelines) to ensure an objective, fair and consistent method of evaluating the degree of permanent impairment.

If there is more than one impairment that requires assessment by different medical specialists, one specialist should be nominated as the lead assessor and determine the final amount of whole person impairment.

The Permanent impairment guidelines provide more information about the assessment of permanent impairment.


Multiple impairments

Where more than one injury arises from the same incident, those injuries are to be treated together as one injury for the purposes of assessing whole person impairment. That is, the impairment for each body part that has been injured in the same incident are to be assessed together (aggregated) to calculate the degree of permanent impairment.

For example, a worker who falls from a scaffolding may suffer injury to the ankle, back and shoulder. The degree of impairment from each body part is combined to produce a single assessment of whole person impairment.

The exception to this rule is in the case of psychiatric or psychological injuries. A worker who receives both a primary psychological injury and a physical injury arising out of the same incident is only entitled to receive lump sum compensation for whichever injury results in the greater amount of compensation.

The impairments for the psychological and physical injuries are to be assessed separately. The results of the two assessments cannot be combined.

Psychiatric and psychological injuries

Psychiatric and psychological injuries in the NSW workers compensation system are defined as primary psychological and psychiatric injuries in which work was found to be a substantial contributing factor.

A primary psychiatric condition is distinguished from a secondary psychiatric or psychological condition.

A secondary psychiatric or psychological condition arises as a consequence of, or secondary to, a physical injury (for example, depression associated with a back injury).

No permanent impairment compensation is payable for permanent impairment that results from a secondary psychological injury (reasonably necessary medical treatment can be paid).

As noted above, impairments arising from primary psychological and psychiatric injuries are to be assessed separately from the degree of impairment that results from physical injuries arising out of the same incident.

Deductions for previous injuries or pre-existing conditions

When calculating the degree of permanent impairment resulting from an injury, the Act allows a deduction to be made for any proportion of the impairment that is due to any previous injury or pre-existing condition or abnormality.