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
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
This figure will vary depending on the value of the redemption
and will be discussed with a worker in detail prior to a redemption
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.
Today's blog writer is Associate in Civil
Litigation (including workplace injury claims), Michael
Associate - Civil Litigation
Please note, this Blog is posted in Adelaide, South Australia
by Andersons Solicitors. It relates
to South Australian legislation.
Andersons Solicitors is a medium sized law firm
servicing metropolitan Adelaide and
regional South Australia across all areas of law for
individuals and businesses.