My employer offered me a WorkCover redemption. What now?
Wednesday August 21, 2013
Employers who are self-insured in accordance with the Workers Rehabilitation and Compensation Act 1986 are able to offer employees who have a worker's compensation claim a redemption.
In most circumstances, a redemption is a full and final settlement of workers compensation liabilities owed to a worker by their employer and WorkCover SA. You have an option to either only redeem your medical expenses or only redeem your weekly payments or to redeem both. If you are offered a redemption by your self-insured employer, it is essential that you seek legal advice to ensure the redemption calculation incorporates all you are entitled to.
Essentially if you accept a redemption you will no longer be entitled to weekly payments of income and/or payments of Section 32 expenses, being medical expenses for injuries sustained in the course of your employment or any other payments for that specific workplace injury the redemption refers to. This will include any and all injuries and any further injuries, conditions or illnesses that may arise as a result of the original workplace injury. This also includes psychological and psychiatric illnesses.
If you accept a redemption of your workers compensation entitlements, a lump sum payment will be made to you in order to close and finalise your claim. This figure is usually the result of negotiations between the worker and the employer and needs to be entered into voluntarily by both parties. It is crucial to have a lawyer involved to assist with these negotiations and to ensure that the value of the redemption is adequately assessed, as once the agreement is signed, it is unreviewable.
Unfortunately most redemptions don't represent the full potential future workers compensation entitlement for a worker but are a compromise from both the worker and the employer to finalise the claim.
It is important to note that redemptions are tax free and workers may seek a Private Tax Ruling in accordance with the Income Tax Act 1997.
A worker must note that they may also be prevented from claiming medical benefits from Medicare and/or their private health fund for treatment of the work related injuries until such time that the allocated figure within the redemption for medical expenses has been spent. This is normally a nominal figure of about $500.00 to $1,000.00. Once this figure has been spent by a worker, for medical expenses including treatment, he or she should then be able to once again access Medicare and private health benefits. As every private health fund policy can vary it is best to check directly with the fund before accepting a redemption.
A redemption more often than not also involves a termination of employment. The onus is then on the worker to obtain new employment, noting that income assistance will no longer be provided by WorkCover. When considering taking a redemption workers must seriously consider their prospects of obtaining new employment, especially in the circumstance where a worker may have restrictions due to a workplace injury.
In the unfortunate event that a worker suffers a new injury with a new employer a workers compensation claim can still be lodged against this employer. It is however important to note that in the event that income maintenance is provided for the new injury, any previous redemption will impact on the amount paid by the employer as a weekly figure set under Section 35(5) of theWorkers Rehabilitation and Compensation Actwill be deducted. This is because the worker will be taken to be receiving weekly payments from the redemption until the age of sixty five.
This figure will vary depending on the value of the redemption and will be discussed with a worker in detail prior to a redemption being accepted.
It is important that a worker understands all the aspects of any proposed redemption before accepting the offer and must therefore obtain experienced legal, financial and medical advice prior to signing any Redemption Agreement.