Work injury damages and WPI thresholds in NSW

Section 151G of the Workers Compensation Act 1987 limits most work injury damages to past economic loss from lost earnings and future economic loss from reduced earning capacity. The claim is therefore different from a Section 66 lump sum, weekly payments or treatment-expense claim.

The damages analysis usually examines the worker's pre-injury earnings, likely career path, post-injury earning capacity, realistic employment options and the effect of the injury on future work. It does not create an ongoing fund for treatment or care.

• Did the injury result from the employer's negligence or another tort?
• Has the applicable permanent impairment threshold been met?
• Is the assessment accepted by the insurer or determined through the Personal Injury Commission?
• Can past earnings loss or future impairment of earning capacity be proved?
• Have all statutory permanent impairment lump sums to which the worker is entitled been paid before settlement?
• Have limitation periods and the statutory pre-filing process been addressed?

A worker should not apply the physical 15% threshold automatically to every psychological claim. Transitional rules, notification date and worker category can change the analysis. The principal assessment is now used for the threshold across statutory entitlements.

The fact that an injury occurred at work is not enough by itself. The worker must establish the employer breach and causation required by the common law and statute. Contributory negligence can reduce the damages amount.

• incident reports, photographs, CCTV enquiries and witness accounts;
• risk assessments, safe work procedures and training records;
• maintenance, inspection and equipment records;
• staffing, roster and workload records where relevant;
• earlier complaints, hazard reports or similar incidents;
• evidence connecting the alleged breach to the injury and loss.

The medical diagnosis alone does not prove the amount of earning loss. The evidence must connect the injury to the worker's actual reduction in earning capacity and account for realistic work that remains available.

• payslips, tax returns, payroll history, rosters, overtime and allowances;
• evidence of likely promotion, training or career progression where it is not speculative;
• certificates of capacity, treating opinions and functional assessments;
• suitable duties offers, return-to-work attempts and rehabilitation material;
• post-injury earnings, job applications and realistic labour-market evidence.

The WPI threshold is based on the principal assessment. Any section 323 deduction can therefore decide whether the threshold is met. A deduction is not justified merely because a pre-existing diagnosis or degeneration exists; it must have contributed to the assessed degree of impairment.

Walton v State of New South Wales (Hunter New England Local Health District) [2026] NSWSC 824 confirms that the causal contribution must be found before the one-tenth assumption is used. The damages threshold should be assessed on the final valid WPI, not an undeducted working figure.

SIRA states that a work injury damages settlement removes all further entitlements to workers compensation payments associated with that injury, including weekly payments and medical, hospital and rehabilitation expenses. Weekly payments already paid may also have to be repaid from the settlement amount.

Once the damages payment is received, weekly payments stop and the workers compensation case for that injury is usually over. Because the settlement ends future statutory benefits for the injury, the worker should understand the calculation, repayment position and loss of future entitlements before accepting an offer.

The settlement is not an additional payment that leaves weekly payments and treatment expenses running unchanged. Its statutory consequences should be explained before agreement.

A damages claim should identify the injury, impairment, alleged employer negligence and economic loss, with supporting material. SIRA states that a permanent impairment assessor report must be included. The insurer then determines liability under the statutory process.

Court proceedings generally must begin within three years of the injury date unless the court grants leave. A worker should not infer from this general information that a particular late claim is barred or can automatically proceed; limitation advice depends on the procedural history.