A commutation is an agreement to pay an injured worker’s entitlements as a lump sum.

By accepting a commutation, the injured worker’s entitlements to weekly payments, medical, hospital, rehabilitation and all other expenses in respect of the injury will no longer be paid by the insurer.

The agreement is made between the injured worker, the employer and the insurer however, WorkCover must certify the commutation meets all the criteria set out in Section 87EA of the Workers Compensation Act 1987.

Preconditions for a commutation

A commutation is only available when the following preconditions have been met:

• the injured worker must have a permanent impairment that is at least a 15 per cent whole person impairment
• compensation for permanent impairment and pain and suffering has been paid
• it is two or more years since the worker first received weekly payments for the injury
• all opportunities for injury management and return to work have been fully exhausted
• the worker has received weekly benefits regularly and periodically throughout the previous six months
• the worker must be entitled to ongoing weekly benefits
• weekly benefits have not been stopped or reduced as a result of the worker not seeking suitable employment

Prior to receiving a commutation:

• the worker must receive independent legal advice and advice on the desirability of the worker obtaining independent financial advice
• the insurer, employer and worker must agree with the commutation
• we must certify compliance with the requirements of section 87EA
• the agreement must be registered with the Workers Compensation Commission in order to take effect.