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Home » Employers » More Useful Information » Changes To the Worker's Compensation Act and It's Effect on You

Changes To The Act in NSW And It's Effect on You

Following the passing of the Workers Compensation Legislation Amendment Bill 2012, new laws were created that have meant significant changes to the way workers’ compensation benefits claims are assessed and paid, and will affect the majority of all new and existing workers’ compensation claims in NSW.


Reference WorkCover NSW



The changes are a significant win for employers, in terms of premium costs being held at May 2012 levels.  The changes however mean increased responsibilities and accountability for most stakeholders, including employers.  


Although the previous scheme also required a worker who was able to work to do so, in co-operation with the employer or insurer, there is now more emphasis on the employer accommodating the request for suitable duties.  It is now a requirement that:


  • The employer must comply with this request so far as it is practicable.
  • WorkCover inspectors are now authorised to issue employer ‘Improvement Notices’ if they believe the employer is not meeting their obligations in this regard.
  • In addition, it is an offence for the employer if they fail to meet their obligations, subject to a penalty of up to $11,000.
  • If a worker who is able to work fails to make reasonable efforts to do so, he or she may have their weekly payments suspended or – in extreme cases - terminated.




From 1 October 2012, employers have needed to change the way they determine the amount of initial weekly payments for workers whose claim was notified to the agent after 1 October 2012.

The changes to weekly benefit payments that came into effect on 1 October 2012 only applied to claims received on or after 1 October 2012. Workers whose claims were notified prior to 1 October 2012 should continue to be paid according to the existing legislation (i.e. pay either the base award rate or 80 per cent of average weekly earnings) and have been  transitioned to the new legislation after 1 January 2013.

The new legislation removes the distinction between award and non-award workers and also introduces the concept of Pre-Injury Average Weekly Earnings (PIAWE) which will replace Current Weekly Wage Rate (CWWR) as the basis for calculating benefit amounts.


Benefit levels during the first 13 weeks of incapacity (first entitlement period)


Workers who are totally unfit.
During the first 13 weeks of incapacity, workers who are totally unfit for all work should be paid 95 per cent of their PIAWE.


Workers who have a partial incapacity.
During the first 13 weeks of incapacity, workers who have a partial incapacity and are able to work should be paid 95 per cent of their PIAWE. This amount will comprise the actual wages they are earning and a top-up compensation payment.

Pre-injury Average Weekly Earnings (PIAWE)
The PIAWE is the average of weekly earnings over the 52 week period prior to the injury (subject to some exceptions). The calculation of earnings must take into account any periods of paid leave, but must not include any periods of unpaid leave. For more information about how to calculate PIAWE, please consult the WorkCover NSW Calculating Pre-Injury Average Weekly Earnings form.

Non immediate changes to weekly benefits
other changes to weekly benefits that come into effect on 1 October 2012 will not impact employers immediately. These changes are:


Changes to entitlement periods.
The method of calculating initial payments outlined above applies to the first entitlement period (0-13 weeks). The second entitlement period will commence after 13 weeks of weekly benefits have been paid. More information will be provided on these changes in coming weeks on our Changes page.


Cessation of weekly benefits after 260 weeks.
Weekly benefits will cease after 260 weeks (whether or not consecutive) unless worker has been assessed at greater than 20% whole person impairment.

Changes to payment of medical benefits
The key changes to medical benefits as of 1 October 2012 are:


A time limitation on payment of medical and related treatment expenses.
Medical payments will cease 12 months after the last payment of weekly compensation.


Requirement for prior approval of treatment by the insurer (with some exceptions).


Reference: hcamag website  2013




Another aspect of the new act is the introduction of Work Capacity Assessments (WCAx) for all workers compensation claimants.  While the initial focus will be on new claimants, it is anticipated that within 2 years all injured  workers  whose injury occurred before and after the 2012 act was passed will be have undertaken a Work Capacity Assessment.


Work Capacity Assessments as defined in S44A of the new legislation, are not a single event or test, but a continual process of assessment, reassessment and information gathering throughout the life of a claim. The WCAx will take into account medical evidence, vocational retraining and other material specified in WorkCover Guidelines. The WCAx will be used to customise the return to work (RTW) plan and ensure workers who have a capacity to work can be matched to suitable employment.


Reference: yourhrmanager website 2013


Work capacity decisions (S43) may relate to:


  • Current work capacity
  • What constitutes suitable employment;
  • The amount a worker can earn in suitable employment
  • The amount of a worker’s pre injury average weekly earnings or current weekly earnings
  • Whether a worker can engage in suitable employment without increasing risk of re injury or
  • Any decision affecting a worker’s entitlement to weekly benefits.


The Workers Compensation Commission has no jurisdiction to determine a dispute about a work capacity decision.


A worker may refer a work capacity decision for review according to the following hierarchy:


  • An internal review by the insurer
  • A merit review by WorkCover
  • A process review by the WorkCover Independent Review Officer (WIRO)
  • A Supreme Court – Judicial review.


Any disputes related to liability for weekly benefits or medical disputes are NOT work capacity decisions and will still be heard in the WCC. More information is available (see the topics displayed)




Functions associated with the WIRO office commenced from 1 October 2012. Kim Garling, who reports to the Minister and parliament, has been appointed to head the WIRO office.


The WIRO has five main functions:


  • To consider complaints about insurers
  • To conduct procedural reviews of disputed work capacity decisions
  • To resolve disputes between employers and insurers
  • To review matters in the scheme of concern / interest
  • To implement a new free legal service for workers (ILARS)

Reference: QBE website 2013


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