Lump sum compensation

Published: 12 August 2019
Last edited: 12 August 2019

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

A worker who receives an injury that results in a degree of permanent impairment may be entitled to receive compensation for that permanent impairment (in addition to any other compensation under the Act).

Claims for lump sum compensation for injuries that occurred on or after 1 January 2002 are based on an assessment of the worker’s degree of permanent impairment. These assessments are conducted in accordance with the NSW workers compensation guidelines for the evaluation of permanent impairment (the version current at the time of the assessment). (See 'Assessing permanent impairment'.)

If a claim for lump sum compensation was made on or after 19 June 2012, then the worker must have a degree of permanent impairment greater than 10 per cent for a physical injury, in order to be entitled to receive permanent impairment compensation.

No compensation is payable in respect of permanent impairment that results from a primary psychological injury unless the degree of permanent impairment is at least 15 per cent.

Only one claim for permanent impairment compensation can be made in respect of the injury. However, if the worker made a claim for permanent impairment before 19 June 2012, they may be entitled to make one further lump sum compensation claim if their condition has deteriorated.

Injuries before 1 January 2002

For injuries that occurred before 1 January 2002, a claim for lump sum compensation is based on the Table of Disabilities.

Injuries received before 30 June 1987 are compensated according to a Table commonly referred to as the Table of Maims.

Further information can be found in the Workers compensation benefits guide.

Note: Assessment of impairment for coal miners continues to be made under the Table of Disabilities as the 2001 amendments do not apply to coal miners.

Claiming lump sum compensation

A worker can make a claim for lump sum compensation when the injury has reached maximum medical improvement. Maximum medical improvement means that the condition has stabilised and is unlikely to change substantially in the next year with or without treatment.

If a worker is unsure if they have reached maximum medical improvement, they should speak with their treating doctor or specialist.

A completed permanent impairment claim form is required unless the worker’s claim for weekly and other benefits already included a claim for lump sum compensation for permanent impairment.

The claim is to include:

  • what the injury is and any impairments arising from it
  • when it happened
  • any previous injury, condition or abnormality, which caused or might have caused part of an impairment, including any related compensation claims made
  • any previous employment, which caused or might have caused the injury
  • a report from a permanent impairment assessor trained in the assessment of the part or body system being assessed.

If the claim is the first notification of the injury, the worker must also supply information to show that:

  • they were a worker at the date of the injury, as defined by sections 4 or 5 and Schedule 1 to the Workplace Injury Management and Workers Compensation Act 1998 (1998 Act) (see 'Who is a worker?') and
  • the injury meets the definition in section 4 of the 1998 Act (see 'Injury').

For injuries on or after 1 January 2002

If the claim is for an injury sustained on or after 1 January 2002, the permanent impairment assessor’s report must include:

  • a statement that the condition has reached maximum medical improvement
  • an assessment on the body part or system being assessed, including the percentage of permanent impairment in line with the NSW workers compensation guidelines for the evaluation of permanent impairment in effect at the time of the examination
  • if the claim relates to hearing loss, a copy of the audiogram used for the medical report.

For injuries before January 2002

If the claim is for an injury received before January 2002, the Table of Disabilities (see the Workers compensation benefits guide) applies and the worker will need to provide:

  • the percentage amount of loss or impairment of an injury described in the Table of Disabilities
  • a report from a medical practitioner supporting the amount of loss or impairment claimed.

Determining a claim for lump sum compensation

The insurer must, within the timeframes, either:

  • accept liability and make a reasonable offer of settlement, or
  • dispute liability.

The timeframes for determining a claim for lump sum compensation are:

  • within one month after the degree of permanent impairment first becomes fully ascertainable, as agreed or as determined by an approved medical specialist or
  • within two months after the worker has provided to the insurer all the relevant details about the claim.

The timeframes can be extended if the insurer determines that all the relevant information about the claim has not been provided. In that case, the insurer should, within two weeks of receiving the claim:

  • ask the worker to supply this information, and/or
  • arrange for a permanent impairment assessor listed on the SIRA website to examine the worker, and give the worker details of the appointment.

In these cases, the two-month timeframe for determining the claim begins on the date the worker supplies the requested information or attends the examination.


When a worker and an insurer agree as to the degree of permanent impairment that has resulted from the injury and the payment of permanent impairment compensation, the agreement must be in writing. This written agreement is called a 'complying agreement'.

A complying agreement is not valid unless the insurer is satisfied that the worker has obtained independent legal advice or waived the right to obtain independent legal advice, before entering into the agreement. The insurer is required to record evidence that this advice has been obtained or waived in the details of the agreement.

The Workers Compensation Commission (the Commission) may award compensation additional to the compensation payable under a complying agreement if:

  • it is established the agreed degree of permanent impairment is manifestly too low, or
  • the worker has been induced to enter into the agreement as a result of fraud or misrepresentation, or
  • since the agreement was entered into, there has been an increase in the degree of permanent impairment beyond that so agreed.
S21. Negotiation on degree of permanent impairment
Where appropriate, parties will be encouraged to consider negotiating and agreeing the degree of permanent impairment.

Disputes about permanent impairment

Disputes may arise about the level of impairment, deductions for the proportion of the impairment that is due to a previous injury or pre-existing condition, or the injuries included in the assessment.

Once the insurer has disputed liability it must notify the worker. Ideally, the insurer will call the worker to discuss the decision. This will be followed by a written decision notice.

The decision notice

The insurer decision notice should be in plain English, and must include:

  • a concise and easy-to-understand statement of the reasons for the decision and the issues relevant to the dispute (using the approved decision notice summary form)
  • the relevant sections of the legislation on which the insurer relies
  • a statement identifying all the reports and documents submitted by the worker in making the claim for compensation, and by the employer in connection with the claim
  • a statement identifying all the reports that are relevant to the decision, whether or not the report supports the reasons for the decision, as per clause 41 of the Workers Compensation Regulation 2016 (2016 Regulation)
  • if the insurer believes the release of a report may be detrimental to the health and/or safety of the worker or any other person a statement advising that a copy of a report required to be provided by the insurer under clause 41 (3) of the 2016 Regulation (except as provided by clause 41 (5) or (6)) accompanies the notice.
  • that the worker can request (in writing) the insurer to review their decision
  • a statement to the effect that the worker can seek advice or assistance from a union or lawyer
  • that the worker can seek advice or assistance from the Workers Compensation Independent Review Office (WIRO) on 13 94 76
  • that they can contact the Registrar of the Commission by email or post to Level 20, 1 Oxford Street, Darlinghurst NSW 2010.

Where an insurer fails to provide a copy of a report as required by the Regulations, that report is not admissible in proceedings in relation to the dispute concerned.

The decision notice can be delivered personally to a worker or by post. Where provided by post, the decision notice is taken to have been delivered to the worker on the seventh working day after it was posted.

Resolving a dispute

The worker can apply for a review of the insurer decision, or proceed directly to the Workers Compensation Commission to have the dispute resolved.

The worker can proceed to the Commission even while waiting for the outcome of an internal review by the insurer.

See ‘Resolving complaints and disputes' for more information.