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Compulsory Work Capacity Assessments in NSW



Under the new Workers Compensation Bill the insurer must, for the purpose of assessing a worker’s entitlement to weekly payment after the second entitlement period, ensure that a Work Capacity Assessment is conducted: (a) during week 78-130; and at least once every 2 years.   The insurer can conduct a work capacity assessment of a worker at any time


 “Work capacity decisions” under s 43, 1987 Act 

The following decisions are “work capacity decisions”:

(a)     A decision about a worker’s current work capacity,

(b)     A decision about what constitutes suitable employment[3] for a worker,

(c)     A decision about the amount an injured worker is able to earn in suitable employmentSuitable employment- means employment in work for which the worker is currently suited:


Having regarded to:

(i)          Nature of the worker’s incapacity and details provided in medical information;

(ii)        The worker’s age, education, skills and work experience;

(iii)       Return to work plan or injury management plan etc.;

(iv)       Any occupational rehabilitation services that are being, or have been, provided.

(v)        Any other matters as the WorkCover Guidelines may specify


It excludes the following:

(i)        Whether the work or employment is available;

(ii)       Whether the work or the employment is of a type of nature that is generally available in the employment market; and

(iii)      The nature of the worker’s pre-injury employment, and

(iv)     The worker’s place of residence. [4]


(d)      A decision about the amount of an injured worker’s pre-injury average weekly earnings[5] or current weekly earnings[6],

(e)      A decision about whether a worker is unable to engage in employment of a certain nature, without substantial risk of further injury, because of the nature of the employment,

(f)       Any other decision of an insurer that affects a worker’s entitlement to weekly payments of compensation, including a decision to suspend, discontinue or reduce the amount of weekly payments of compensation payable to a worker


Under the new act a work capacity decision of an insurer is final and binding and not subject to appeal or review( except review under s44 or judicial review by the Supreme Court: s43(1), 1987 Act).


How are Work Capacity Assessments Performed ?

There is no particular procedure or method/s recommended as to how an insurer may go about assessing a workers work capacity.  A number of methods may be employed, however the discression is with the insurer about how they go about making the assessment and what information they choose to use or leave out.  Some of the methods may include:

  • A request from the Nominated Treating Doctor for information in the form of a report
  • A referral of the worker to an “independent” medical specialist of the insurers choosing to assess the worker and make recommendations concerning work capacity
  • A referral of the worker to a specialist the injured worker has seen or been treated by to reassess the worker and make recommendations concerning work capacity
  • Referral for a functional assessment -  an assessment which assesses specific tasks,  and activities the worker can do and for how long in relation to specific work activities of particular jobs and/ or in carrying out activities of daily living such as house work, driving 
  • A vocational assessment - to look at specific occupations the worker may be able to do in context of their developed skills, work experiences, skills affected by injury and transferable skills - what skills can be carried on into a new work area.
  • A file review organised by the insurer and performed by the insurer taking into consideration assessments on record, employment history, and medial certificates.
  • The insurer may use any of these  methods and may or may not choose to have the injured worker assessed in person


There is no specific background, professional expertise required or skills and qualifications needed of the staff who will decide what method is used for undertaking the Work Capacity Assessment, and in evaluating findings .


Review of Work Capacity Decisions under Section 44, 1987 Act

The only rights of review of an insurer’s work capacity decision,( other than judicial review by the Supreme Court) are:

(a)             review by the insurer (an “internal review”) subject to the WorkCover Guidelines. The review must take place within 30 days after an application for internal review is made by the worker.

(b)            After an internal review, by the Authority, as a merits review of the decision;

(c)             A review only of the insurer’s procedures in making the work capacity decision, by the Independent Review Officer (“IRO”), but not of any judgment or discretion exercised by the insurer in making the decision. 


There are restrictions set out on the right to review of a work capacity decision –and are outlined in the attached appendices.  According to  Kasarne Robinson  Anthony Scarcella in their August 2012  paper[1] Drastic changes to the workers compensation scheme NSW , there are a number of concerns with this aspect of the legislation. 



  1. The insurer does not appear to have to give reasons on their internal review.
  2. The reviewer (the Authority or IRO) doesn’t appear to have to give reasons for the findings, only reasons for the recommendation if the reviewer chooses to make a recommendation, which it appears they aren’t bound to do, but “may” do.  Presumably if the finding is that the insurer should reconsider the work capacity decision they would make recommendations the insurer do so.
  3. There appears to be no time frame in which the Authority or IRO has to make “findings” or a “recommendation”.

  • No legal costs for acting for a worker in relation to review of a work capacity decision 

The new Act prevents a legal practitioner from being paid or recovering any costs incurred in connection with a review under this section.  Hence, workers will need to firstly be aware of their rights to lodge a review, the time restrictions placed on making such an application and prepare the application opposing the decision all by themselves.




Appendix 1.

Restrictions set out on the right to review of a work capacity decision 

Restrictions set out on the right to review of a work capacity decision s44 (2) and (3), 1987 Act as follows:

  • The application for review must be made in the form approved by the Authority and specify the ground on which the review is sought
  • The worker must inform the insurer if they are making an application for review to the Authority or the IRO: s44(2).

For a review to the Authority or IRO:

(a)               the application for review must be made within 30 days after the worker receives the decision on the internal review (for a review to the Authority), or within 30 days of receipt of the Authority’s decision on a review (when the review is to the IRO);

(b)              the worker may make an application for review to the Authority without an internal review if the insurer has failed to conduct an internal review and notify the worker of the internal review in accordance with s44(1)(a).

(c)               the reviewer can decline to review a decision if the application for review is frivolous, vexatious, or because the worker has failed to provide information requested by the reviewer.

(d)              Worker and insurer must provide any information reasonably requested by reviewer.

(e)               Reviewer is to notify the worker and insurer of the finding of the reviews and may make recommendations to the insurer based on those findings (giving reasons for any such recommendation).

(f)                The IRO must also notify the insurer of the findings and the Authority may make recommendations (giving reasons for the recommendations) to the insurer based on those findings.

(g)               Recommendations made by the Authority are binding on the insurer and must be given effect to by the insurer.

(h)              Recommendations by the IRO are binding on the insurer and the Authority.

[1] Defined in s32A, 1987 Act

[2] Defined in s32A, 1987 Act

[3] Defined in s32A, 1987 Act

[4] Drastic changes to the workers compensation scheme nsw courtesy of the workers compensation legislation amendment act 2012 Paper Written by Kasarne Robinson  nthony Scarcella With thanks to Bruce McManamey and Roshana May 7 August 2012

[5] Defined in s44C, 1987 Act

[6] Defined in s44I, 1987 Act

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