Commutations
A commutation is an agreement between your worker and insurer to finalise the claim via a single lump sum payment.
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Preconditions for a commutation
The pathway to a commutation agreement
What is commutation?
A commutation is an agreement between your worker and your Claims Service Provider (CSP) to make a single lump sum payment that includes weekly benefits and/or medical, hospital and rehabilitation expenses for the workplace injury.
Once settled, this payment extinguishes the Claims Service Provider's ongoing liability for the claim and no further payments can be made. The commutation agreement must be registered with the Personal Injury Commission.
Back to top ⇡Preconditions for a commutation
Commutations are not a common outcome in the NSW workers compensation scheme and there are a number of preconditions that must be met before a commutation can occur.
A claim for commutation is only available for your worker when the State Insurance Regulatory Authority (SIRA) is satisfied the following preconditions have been achieved:
- their injury has resulted in a permanent impairment of at least 15 percent whole person impairment (WPI)
- compensation for the WPI has been paid by the insurer
- at least two years of weekly benefits have been paid
- all avenues for injury management and return to work have been fully exhausted
- they have received continuous weekly benefits throughout the previous six months
- they have a continuing entitlement to ongoing weekly benefits
- their weekly benefits have not been terminated by the insurer because of not complying with their return to work obligations.
The pathway to a commutation agreement
Your worker will need a lawyer to assist them with the commutation process. They will help them navigate each of the steps along the way and provide independent advice.
These are the steps along the pathway to commutation:
- First, their lawyer may express interest in commutation in writing and provide supporting information to your CSP.
- Your CSP may require additional supportive information, which may include but not limited to updated medical information and vocational rehabilitation evidence.
- Once your CSP agrees that your worker has met the preconditions, the commutation application is sent to SIRA.
- If SIRA approve the commutation application, your worker's lawyer may negotiate the terms of commutation with the CSP and proceed to register the agreement within the Personal Injury Commission.
- Before entering the commutation agreement, your worker needs to obtain independent legal advice that deems (in writing) that they understand the full implications of the agreement and that it is in their best interest to obtain independent advice about the financial consequences of the agreement. They will be required to confirm in writing that they have received and understood the advice about the legal implications and agree to the commutation process.
- Once the agreement has been registered by the Personal Injury Commission, your CSP is required to pay the settlement money:
- Within seven days of the registration by the Personal Injury Commission.
- Within a longer period if the agreement specifies one.
