Practical review
What to check in this situation
- Identify the injury date, injury class, assessment status and current indexed rate period.
- Check deductions, combination sequence and whether all accepted injuries were assessed.
- Separate the medical percentage from arithmetic in the insurer offer or agreement.
Records that may help
Keep the complete impairment report, accepted-injury material, prior claims, insurer offer, agreement and calculation sheet.
Next procedural step
The calculator covers injuries from 1 January 2017 only and provides an estimate, not a medical assessment or guaranteed entitlement.
What Section 66 covers
Section 66 provides lump sum compensation for permanent impairment where the statutory requirements are met. It is one part of a NSW workers compensation claim and is separate from weekly payments, treatment expenses and work injury damages. A diagnosis, operation or inability to return to work does not by itself establish the WPI percentage.
Physical injury claims generally require more than 10% WPI. A primary psychological injury generally requires at least 15% WPI. Those are eligibility thresholds, not predicted outcomes, and the law applying to the injury date and claim should be checked.
How a NSW permanent impairment percentage is built
For a permanent impairment lump-sum claim, a valid WPI opinion should show a chain from the accepted diagnosis to the applicable NSW method, measured findings, any regional conversion, any permitted combination and any pre-existing impairment deduction. This matters when understanding the medical assessment before making decisions about a claim or offer; a report that only records an examination does not explain the percentage.
1. Confirm the body system and diagnosis
Spine, upper limb, lower limb, hearing, respiratory, skin, neurological and primary psychiatric impairments use different methods. The referral should identify the accepted injury and any consequential physical condition being assessed.
2. Decide whether maximum medical improvement has been reached
In a permanent impairment lump-sum claim, NSW Guidelines paragraph 1.15 requires a well-stabilised condition unlikely to change substantially in the next year, with or without treatment. If adequate treatment could still materially improve the assessed condition, paragraph 1.16 requires the timing to be deferred.
3. Apply the correct NSW/AMA method and measure the required findings
When preparing a permanent impairment lump-sum claim, the NSW Guidelines prevail over AMA5. The body system determines whether the assessor measures DRE clinical features, active joint movement, nerve sensory and motor loss, audiometric thresholds, pulmonary function, skin criteria, neurological function or the six PIRS domains.
4. Convert regional values and combine only where permitted
For a permanent impairment lump-sum claim, a digit, hand, upper-extremity, foot or lower-extremity value may require conversion before it becomes WPI. Permitted physical WPI values use the AMA5 Combined Values Chart rather than ordinary addition. For example, 20% WPI combined with 10% WPI is 28%, because the second value applies to the remaining 80%. This arithmetic only demonstrates the chart.
5. Explain deductions and excluded methods
In a permanent impairment lump-sum claim, a pre-existing diagnosis does not justify an automatic deduction. Section 323 first requires a finding that a previous injury, pre-existing condition or abnormality actually contributed to the assessed degree of permanent impairment. Only the proportion due to that earlier impairment is deducted. AMA5 Chapter 18 pain is excluded; pain is ordinarily addressed through the underlying diagnosed condition. Primary psychiatric WPI is assessed separately and cannot be combined with physical WPI, secondary psychiatric impairment is not assessed for WPI, and NSW excludes using ADL to alter upper- or lower-extremity ratings.
Worked illustration: a pre-existing impairment deduction
In this illustration of a permanent impairment lump-sum claim, assume the body-system method produces 20% WPI and the assessor first finds that an earlier condition contributed to that assessed impairment. If the extent of that contribution is too difficult or costly to determine, section 323 permits an assumed deduction of one tenth of the impairment unless that assumption is at odds with the available evidence. One tenth of 20 is 2, so the arithmetic produces 18% WPI after deduction.
The threshold finding matters. In Walton v State of New South Wales (Hunter New England Local Health District) [2026] NSWSC 824, the Court explained that the mere existence of a condition, or evidence that it caused pain, is not enough. The condition must have increased or contributed to the degree of impairment being assessed before the one-tenth assumption can be used. The figures above explain deduction arithmetic only and do not predict an individual result.
Read the Walton section 323 case note or section 323 in the current 1998 Act.
Sources for this framework
Sources used for a permanent impairment lump-sum claim: NSW Workers Compensation Guidelines for the Evaluation of Permanent Impairment, Fourth Edition, paragraphs 1.6-1.24 and 1.27-1.31; AMA5 Chapters 1-2 and the Combined Values Chart at pages 604-606. NSW uses AMA4 Chapter 8 for the visual system. The body-system guides identify the additional paragraph and table where relevant.
Choose the body-system permanent impairment guide for the measurements, conversion steps and verified examples relevant to the injury.
Current process
Permanent impairment assessments from 1 July 2026 to mid-2027
NSW is in an interim period. Separate examinations arranged by the worker and insurer can still occur, but an interim assessment must be performed by an assessor on SIRA's register. Liability for the injury must have been determined before an interim assessment is made.
Independent legal advice is compulsory
A worker must receive independent legal advice about the full legal implications before being seen by a permanent impairment assessor. Advice is also required before entering an impairment agreement.
The assessment can affect several entitlements
The principal assessment is used across weekly payments, medical and related treatment expenses, Section 66 lump sum compensation, commutation access and work injury damages. It is not only a lump sum calculation.
Agreement or medical dispute
If the worker and insurer agree on the degree of impairment, they may enter a written impairment agreement. If they do not agree, the insurer must give written notice and either party may refer the disagreement to the Personal Injury Commission as a medical dispute, supported by medical evidence.
A further assessment is tightly restricted
A second or later assessment during the interim period requires agreement that there appears to be unexpected and material deterioration. The deterioration must be capable of increasing the impairment by at least a further 10 percentage points. Ordinary age-related deterioration does not meet that test.
Important transitional rules
If a pre-reform assessment made before 1 July 2026 has not yet been used for a Section 66 claim, SIRA says the claim must be made before 1 July 2028. No new Section 66A complying agreements can be entered from 1 July 2026. A different permanent impairment process is expected to commence from mid-2027.
The 2026 principal-assessment changes do not apply in the same way to exempt workers (police officers, paramedics and firefighters), coal miners, volunteers, dust disease claims or claims with a pre-2002 injury date.
Last reviewed 20 July 2026. Sources: SIRA worker guidance and SIRA interim assessment guidance. See also the PIC dispute guide.
Evidence to organise before assessment
- the claim form, accepted injury wording and insurer decisions
- GP, specialist, hospital and allied-health records that show diagnosis and progress
- imaging, pathology and operation reports relevant to the body system
- earlier assessments and records relevant to any pre-existing impairment deduction
- current treatment plans and an explanation of whether further material improvement is expected
- body-system measurements such as movement, neurological findings, audiology, pulmonary testing or PIRS function, as applicable
Common report problems
- the report assesses a diagnosis or body part that does not match the accepted injury
- MMI is asserted without addressing planned treatment or recent surgery
- the wrong body-system method or an excluded method is used
- regional impairment is not converted to WPI correctly
- percentages are added when the Combined Values Chart is required
- a section 323 deduction is made without first identifying how the earlier condition increased the assessed impairment
- primary psychiatric WPI is combined with physical WPI, or secondary psychological symptoms are incorrectly rated
Pre-existing impairment is not presumed
The NSW Supreme Court confirmed in Walton that the causal step comes first. An earlier condition must have increased or contributed to the assessed degree of impairment. The one-tenth assumption cannot be used merely because degeneration, earlier pain or a diagnosis exists.
Questions workers often ask
What is Section 66 compensation?
Section 66 of the Workers Compensation Act 1987 provides lump sum compensation for permanent impairment where the statutory requirements are met. The amount and eligibility depend on a valid permanent impairment assessment and the law applying to the claim.
When can WPI be assessed?
The NSW Guidelines require maximum medical improvement: the condition should be well stabilised and unlikely to change substantially in the next year, with or without treatment. Assessment should generally be deferred if adequate further treatment could materially improve the impairment.
What changed on 1 July 2026?
The principal-assessment framework makes the interim assessment or resulting agreement or determination relevant across several statutory entitlements. During the interim period, a worker must receive independent legal advice before being seen by a permanent impairment assessor and before entering an impairment agreement.
Can physical and psychological WPI be combined?
No. A primary psychiatric impairment is assessed separately under the NSW PIRS method and cannot be combined with physical WPI. Secondary psychiatric or psychological impairment is not assessed for WPI.
Can a pre-existing condition reduce WPI?
Only if the earlier injury, condition or abnormality actually contributed to the assessed degree of impairment. The assessor then deducts that proportion. A one-tenth assumption applies only where the proportion is too difficult or costly to determine and the assumption is not at odds with the evidence.
General information
This information is general in nature and is not legal advice. The assessment and transitional rules should be applied to the injury date, accepted conditions and procedural history of the individual claim.
Last reviewed 20 July 2026.
Permanent impairment and dispute guides
Need advice before an assessment or impairment agreement?
Send the accepted injury description, relevant medical reports and insurer correspondence so the assessment stage and current process can be identified.