Work injury damages and recoveries

Work injury damages claims

If a worker is injured in circumstances where the employer was negligent, the worker may have right to claim work injury damages.

A claim for work injury damages is limited to compensation for:

• past economic loss due to loss of earnings, and
• future economic loss due to the deprivation or impairment of earning capacity.

There is no entitlement to general damages for pain and suffering, domestic assistance, medical treatment expenses or other traditional components of common law damages.

Note: Different rules apply to calculating damages for coal miners.

Impact on other entitlements

A successful work injury damages claim will extinguish all ongoing entitlements to workers compensation under the Acts, in respect of the injury. The worker will also be required to pay back the amount of weekly benefits already paid on their claim.

If a work injury damages claim is unsuccessful, the worker can continue to receive statutory benefits (subject to meeting the requirements of the Acts).

Eligibility

To be eligible to claim work injury damages, the worker’s injury must have:

• resulted from the employer’s negligence or other tort (wrongful act), and
• satisfy a permanent impairment threshold of at least 15 per cent whole person impairment.

The worker must claim lump sum compensation for the injury under section 66 of the Workers Compensation Act 1987 (1987 Act), either before or at the same time as claiming work injury damages.

How workers can claim work injury damages

The worker’s claim for work injury damages must be in writing and 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
• any previous employment, which caused or might have caused the injury
• the employer’s alleged negligent act(s), and any available supporting documentation
• the economic loss being claimed as damages and any available supporting documentation.

The worker’s claim should include a report from an approved permanent impairment assessor listed on the SIRA website, and trained in the assessment of the part or body system being assessed.

The report must include:

• a statement that the condition has reached maximum medical improvement
• an assessment on the part or system of the body being assessed including the percentage of permanent impairment in line with the NSW workers compensation guidelines for the evaluation of permanent impairment (Permanent impairment guidelines) in effect at the time of the examination.

If the work injury damages claim is lodged with the employer, the employer must send the claim to their insurer within seven days of receipt.

If the insurer requests more information, the employer must also respond within seven days of receiving the request with all information that is reasonably obtainable.

Determining liability

The insurer must determine the claim for work injury damages within:

• one month after the degree of permanent impairment becomes fully ascertainable, or
• within two months after all relevant particulars of the claim have been provided to the insurer,

whichever is the later.

The insurer is required to either:

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

‘Fully ascertainable’ means the degree of impairment or injury has been agreed by the parties, or determined by a medical assessor (and not under appeal).

If the insurer needs more information, it must, within two weeks of receiving the claim, ask the worker to supply this information, and/or arrange for an independent medical examination, 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 missing information or attends the examination.

When it has determined liability, the insurer must notify the worker whether it accepts that the degree of permanent impairment is enough to award damages (that is, at least 15 per cent).

Making an offer of settlement

If the insurer accepts liability, it must make a reasonable offer of settlement that sets out the amount of damages, or a way to determine this amount.

Where it only accepts partial liability, the offer must include enough details to show how much is accepted.

Settlement offer

An insurer’s settlement offer should include:

• details of the damages
• information about the injury, such as the date
• the extent of any existing condition or abnormality
• the documents the worker submitted for the claim
• the documents the insurer relied on in making the offer
• information on how the worker can accept or decline the offer
• a statement that, if the offer is not accepted, the worker must serve on the insurer and employer a pre-filing statement (see 'Issuing a pre-filing statement' below) setting out the particulars that will be relied on to support the claim.

Dispute liability

If the insurer disputes liability for the work injury damages claim, a decision notice is required to be provided to the worker under section 78 of the Workplace Injury Management and Workers Compensation Act 1998 (1998 Act).

Further information on decision notice requirements can be found in 'Liability'.

Issuing a pre-filing statement

Where an insurer disputes liability for a work injury damages claim, the worker must serve a pre-filing statement on the employer and the insurer before the worker can commence mediation or court proceedings to recover work injury damages.

The worker can only do this if the insurer:

• wholly disputes liability for the claim, or
• has made an offer of settlement and one month has passed, or
• has not determined the claim on time.

The pre-filing statement must include:

• details of the claim and the evidence the worker will rely on
• a copy of the Statement of Claim the worker intends to file in the court
• attachments with information and documents required by the Workers Compensation Acts, the Personal Injury Commission Act 2020 and Personal Injury Commission Rules 2021.

The attachments must contain a certificate from a medical assessor or notification of the insurer’s acceptance that the injury has led to the degree of permanent impairment of at least 15 per cent.

In most cases, the claim must be referred for mediation in the Personal Injury Commission (the Commission) before starting court proceedings. The Commission will attempt to mediate and reach settlement through discussion with all parties. If an agreement cannot be reached, work injury damages claims are most commonly heard in the District Court.

Responding to a pre-filing statement

The insurer must respond to the pre-filing statement within 28 days of receiving it, by either:

• accepting liability or
• disputing liability and serving a pre-filing defence within 28 days.

If the insurer does not accept liability, it must issue a pre-filing defence to the worker, detailing its defence and the evidence it will rely on.

If the pre-filing statement is defective, the insurer must advise the worker within seven days. It must state the alleged defects and outline how the worker can correct these. If the worker disputes the defects, the dispute can be referred to the Registrar of the Commission.

Mediation

Mediation is a fair, unbiased and informal process in which parties, with the assistance of a mediator, have the opportunity to identify the issues in dispute, develop options, consider alternatives and aim to reach an agreed outcome that resolves a claim for work injury damages. Mediators are appointed by the Commission.

Before starting court proceedings, the worker must refer a claim to the Commission for mediation. The worker must wait at least 28 days after issuing the pre-filing statement before doing so.

If the insurer fails to respond within 42 days of receiving the pre-filing statement, the worker can start court proceedings to recover damages without mediation. Where this occurs, the insurer is prevented from filing a defence which disputes liability.

The insurer may only decline to take part in the mediation if it wholly disputes liability.

The mediator will try to help the parties to reach an agreement, so there is no need to go to court. The mediation will commence with an introduction and explanation of the process of mediation in the Commission. Parties are encouraged to participate in joint exploratory discussions facilitated by the mediator. Parties will also have the opportunity to hold private meetings, with and without the mediator, and may move between private and joint sessions as appropriate as they explore options for settlement.

If they cannot agree, the mediator will issue a certificate certifying the final offers of settlement the parties have made. The offers made at the mediation must not be disclosed to the court until after the matter is determined.

The Commission has produced a video covering the mediation process.

Starting court proceedings

If starting court proceedings for work injury damages, the worker must do so within three years of the injury date, unless they have the Court’s leave.

Court proceedings may start when a worker has issued a pre-filing statement and:

• the insurer has failed to respond within 42 days
• the insurer has wholly disputed liability and declined to take part in mediation, and the mediator has issued a certificate to this effect, or
• mediation has been unsuccessful, and the Registrar has issued a certificate to this effect.

In court, the parties can only refer to:

• the matters from the pre-filing statement and pre-filing defence
• the reports and evidence in those statements, except with the Court’s leave.

Legal advice and costs

Workers should seek independent legal advice before beginning a work injury damages claim. If the worker is not sure how to locate a suitable legal representative, they can contact the Law Society of NSW.

How much a lawyer can charge a worker for representing them in a work injury damages claim is outlined in the Workers Compensation Regulation 2016 (2016 Regulation). However, the worker’s lawyer may ask the worker to enter into a separate costs agreement through which they may be entitled to charge more than the regulated costs under the Regulation.

Note: There are legal cost implications in court proceedings if the matter is not resolved at mediation. More information is provided in Insurer guidance GN 9.2 Work injury damages.