Workers’ Compensation

Workers’ compensation is a crucial insurance policy that helps employees who get injured or sick because of their work. Each state and territory in Australia have its own workers’ compensation system, so the rules, benefits and processes can vary depending on where you live.

At its core, the workers’ compensation scheme provides financial support and covers medical costs for workplace injuries or illnesses caused by work. Every employer is legally required to have workers’ compensation insurance for their employees.

The main functions of workers’ compensation include:

• Providing financial assistance to injured workers
• Covering medical treatment and rehabilitation providers
• Helping workers return to work
• Offering lump-sum payments for permanent injuries.

Each state and territory in Australia have its own regulations and codes of practice for the Workers’ Compensation Act, which means the system can look slightly different across the country.

Depending on your jurisdiction and insurer, the general process may include:

• Work-related injury or illness occurs: The worker experiences an injury or illness directly related to their job.
• Notification and medical assessment: The worker informs their employer about the injury and gets checked by a doctor.
• Lodging a claim: The worker submits a workers’ compensation claim to the appropriate state authority or insurer.
• Claim process and assessment: A claims manager will review the medical evidence and check the worker’s employment details to determine eligibility.
• Compensation payments begin: If the claim is approved, the worker receives weekly compensation or a lump sum to cover lost wages, medical bills, and rehab costs.
• Return to work or permanent impairment assessment: The worker may gradually return to work or get a lump-sum payment if the injury is permanent.

Always check in with your insurer to understand their process in the event of a potential claim. The government agencies that act as the workers’ compensation regulators in each state are:

• New South Wales: State Insurance Regulatory Authority (SIRA) NSW
• Victoria: WorkSafe Victoria
• Queensland: WorkCover Queensland
• Western Australia: WorkCover WA
• South Australia: ReturnToWorkSA
• Tasmania: WorkSafe Tasmania
• Australian Capital Territory: WorkSafe ACT
• Northern Territory: NT WorkSafe.

The compensation authority for commonwealth employees (including federal employees and some national businesses) is Comcare.

The amount of workers’ compensation you may receive depends on how severe the injury is, how much your earned before it, how long your off work and whether the injury causes permanent impairment.

Workers’ compensation payouts generally include:

Lump sum payments for permanent impairment

Workers may be eligible for a one-time, lump-sum payment if an injury results in permanent impairment. These payouts vary widely depending on the injury’s severity.

Weekly payments
For the first 13 weeks: Around 95% of their usual pay.

• After 13 weeks: This drops to 80-85% in most states.
• For long-term incapacity: Ongoing payments may be available for more serious injuries.

Medical and rehab expenses

• Hospital and medical treatments
• Physiotherapy and rehabilitation
• Travel expenses related to treatment.

Workers’ compensation payments are generally taxable in Australia. They are meant to replace income lost due to a work-related injury or illness and cover medical expenses and will be subject to the same tax rules as your wage or salary.

However, if the payments are made as a lump-sum for a permanent injury, some parts of it might be taxable, depending on the specifics of the settlement. If a portion of the settlement includes amounts for lost wages or non-compensatory damages (e.g., damages for pain and suffering in a court settlement), those may be subject to tax.

It’s always a good idea to check with the Australian Taxation Office (ATO) or a tax professional for advice that fits your situation, as there may be exceptions for complicated cases.

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