Commutations

Existing commutation pathway

Eligibility

This pathway is available where the President of the Personal Injury Commission (PIC) approves that the following specific legislative preconditions have been met:

• you have an injury that has resulted in permanent impairment of at least 15%
• compensation for permanent impairment has been paid
• it has been more than 2 years since you first received weekly payments for the injury
• all opportunities for injury management and return to work have been fully exhausted
• you have received weekly payments regularly in the previous 6 months
• you have an existing and continuing entitlement to ongoing weekly payments
• weekly payments have not been terminated as a result of you not complying with any return to work obligations
• you do not have a ‘catastrophic injury’ as described in Part 9 of the workers compensation guidelines.

Payments that may or may not be commuted

• Your weekly payments of compensation and compensation for all treatment or services (including medical, hospital and rehabilitation expenses) can be commuted.
• Weekly payments to a dependent child of a deceased worker cannot be commuted.
• If you have a catastrophic injury, you cannot commute your medical, hospital and rehabilitation entitlements. You can commute your weekly payments. Refer to Part 9 of the workers compensation guidelines.

Legal advice

Before entering into a commutation agreement, you must receive independent legal advice.

The legal adviser must certify in writing that you have been advised:

• on the full legal implications of the agreement
• that it is in your best interest to get independent advice about any financial consequences before entering into the agreement.

You will also be required to confirm in writing that you have received and understood this legal advice, as part of the agreement process.

Approval by the Personal Injury Commission

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A commutation agreement can be withdrawn by the worker at any time prior to approval, by giving written notice to the insurer and to the President of the PIC through the PIC’s online portal.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

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

Expanded access commutation pathway (from 1 October 2026)

Workers compensation reforms provide expanded access, for a limited period, to commutations for some workers who may not meet the eligibility requirements under the existing commutation pathway.

Under these reforms, you may be eligible to commute your claim even if you would not have met the eligibility requirements in the existing commutation pathway.

Who do these changes apply to?

These changes do not apply to coal miners, claims for dust diseases, or volunteer workers.

When do the changes start?

The Expression of Interest (EOI) process commences on 1 October 2026.

Agreement on 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 your 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.

Who is 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 the Part 9A of the Workers Compensation Regulation 2016. A worker’s claim may be eligible for commutation if they meet all of the eligibility requirements for a class of cases.

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 your employer or the insurer 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 are able to seek independent financial advice for a proposed commutation agreement, and that costs of up to $2,500 related to obtaining that advice will be paid for by the insurer;
• explain that you must obtain independent financial advice if your commutation is for more than $100,000 (with the costs of up to $2,500 related to obtaining that advice to be paid for by the insurer);
• explain the assessment process and expected timeframes; and
• provide contact details for questions and concerns.

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 implications of the commutation agreement; and
• whether you should obtain independent financial advice before entering into the agreement.

Step 3: Obtain independent financial advice (if required)

When is financial advice required?

For Class 1 and Class 2 claims, you must obtain independent financial advice if the proposed commutation amount exceeds $100,000.

Can I still obtain financial advice if the amount is $100,000 or less?

Yes. You may choose to obtain independent financial advice.

Who pays?

The insurer must pay the financial adviser directly. The insurer is only required to pay for advice provided by a financial adviser operating under an Australian Financial Services Licence (AFSL), up to a maximum of $2,500.

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, the agreement must be completed using the approved SIRA commutation agreement.

Step 5: Apply for approval by the Personal Injury Commission

A commutation agreement under the expanded access commutation pathways cannot be approved unless an application for approval is made by 1 April 2029 (within 30 months of 1 October 2026).

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.

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.

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.

Key timeframes