Workers’ compensation in NSW

The workers’ compensation scheme in NSW (previously known as WorkCover) is a compulsory requirement for all employers in NSW, and acts as safety net for workers who get injured or sick because of their job, covering their finances and medical care during recovery.

This system provides financial help and medical care to the workers during their recovery. In simple terms, workers’ compensation helps employees who have suffered a work injury by covering medical treatments, loss of earnings and rehabilitation to help them recover and return to work. If the injury is severe, it can also include a lump-sum payment for permanent impairment.

The State Insurance Regulatory Authority (SIRA) is the NSW government agency that regulates the workers’ compensation scheme. There are currently three types of insurers in NSW:¹

• iCare NSW: iCare workers’ insurance is an NSW government organisation dedicated to supporting people with workplace injuries under the NSW Workers’ Compensation Scheme. It acts for the nominal insurer and engages insurance service providers such as Employers Mutual NSW Limited (EML), Allianz, DXC Technology, GIO, Gallagher Bassett and QBE to manage workers’ compensation claims on its behalf.
• Self-insurers: Self-insurers are employers that are approved by the State Insurance Regulatory Authority (SIRA) to manage and administer their own workers’ compensation claims.
• Specialised insurers: Specialised insurers are licensed by SIRA to manage workers’ compensation claims and provide workers’ compensation insurance cover to employers in a specific industry.

All employers in NSW are required to have workers’ compensation insurance as part of the workplace injury management scheme, as outlined in the Workers Compensation Act 1987. ²This is to cover the costs if one of their employees is injured or falls ill due to work. Although it’s compulsory for all employers to have a valid workers’ compensation insurance policy, in the event that they don’t, an injured worker can still make a claim through the state’s uninsured liability scheme.

If an employee suffers a personal injury while working, they need to notify the employer about the injury or illness as soon as possible. This could range from a minor injury, like a sprained wrist, to something more serious, like an occupational disease. They should also see a doctor to assess the damage and get a certificate of capacity for the claim.

After the injury or illness is reported to your employer, the worker files a workers’ compensation claim with the company’s insurer or iCare NSW. Your employer must provide you with the organisation’s insurer details.

The claim should include medical evidence and details about the injury. Once the claim is submitted, a claims manager will be assigned to the case management and review the worker’s medical information and work details before deciding if the claim is approved.

If the claim is approved, the worker will start receiving their compensation benefits. This could take the form of weekly compensation to replace lost income, reimbursements for medical bills and assistance with rehabilitation.

As the worker recovers, they may be able to return to their job, sometimes with modified duties. If the injury results in long-term impairment, the worker may be eligible for a lump sum payment.

The amount of workers’ compensation that you can receive depends on several factors, including how severe your injury is, how much money you were earning before your injury, how long you’ll be off work and whether your injury led to permanent impairment.

Depending on the type of injury, you may also receive repayment for medical and rehabilitation expenses, which may include hospital stays, doctor visits and physiotherapy.

Your compensation could be in weekly payments (where the first 13 weeks of payments are typically 95% of your income and reduced thereafter) or in one lump sum payment, which could apply in the case of permanent impairment. ³

In most cases, workers’ compensation payments in NSW are not taxable. These payments are meant to replace the income you lose because of a work-related injury or illness, as well as cover your medical expenses.

However, if you receive a lump-sum payment for a permanent injury, some parts of that payment could be taxable, depending on the details of the settlement. If you’re unsure, it’s always a good idea to check with the Australian Taxation Office (ATO) or a tax professional to make sure you’re getting the right information for your specific situation.

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