South Australian Workers Compensation claims – is my section 56 economic loss lump sum payment right?

Under the South Australian Return to Work Act 2014 there are two types of lump sum payments – section 58 for non-economic loss (loss of function) and section 56 for economic loss.

If you’ve suffered a physical injury which is the subject of an accepted workers compensation claim, then you may be eligible for a section 56 lump sum payment for economic loss if you’ve been left with a permanent impairment.

Economic loss lump sum payments were introduced when the Act changed in 2014. One of the changes to the Act means that most injured workers will have an entitlement to a maximum of two years of weekly payments irrespective of their capacity to work (unless they are deemed seriously injured). Part of the justification of introducing economic loss lump sum payments was to compensate injured workers where their income maintenance otherwise ceases after two years.

To be eligible for a section 56 economic loss lump sum payment you must have an accepted physical injury as a result of your employment, which has occurred on or after 1 July 2015 and your injury must be assessed as a Whole Person Impairment (“WPI”) of between 5% and 34%.

Your WPI is assessed by an accredited assessor of your choosing. Your injury must have been determined to have reached maximum medical improvement by a doctor before the assessment can be undertaken.

The formula for determining the s56 lump sum entitlement is:-

LUMP SUM = PRESCRIBED SUM X AGE FACTOR X HOURS WORKED FACTOR

The prescribed sum (“PS”) is found in Schedule 7 of the Return to Work Act 2014 or you can find it in the Schedule of Sums publication on the Return to Work SA website.

The Age Factor (“AF”) is found in Schedule 6 of the Return to Work Act 2014. The AF commences at 100% for a worker aged 25 or younger and drops to 0% for a worker aged 70 or older.

The Hours Worker Factor (“HWF”) is based on the amount of hours you worked at the time of injury expressed as a percentage of full-time work. For example, if you were working full-time, the HWF would be 1. If you were working 19 hours a week then the HWF would be approximately 0.5.

Whilst the PS and AF are generally easy to ascertain, the HWF may vary depending on what the compensating authority considers the hours you worked at the time of your injury were.

If you’ve had an entitlement to weekly payments for this injury, for the purpose of ascertaining the HWF, what constitutes full-time or part-time work must be consistent with the determination(s) made under section 5 when your Average Weekly Earnings rate was set.

If it is not possible to arrive at a fair determination when ascertaining the HWF then the Compensating Authority may apply such factors as it thinks appropriate to arrive at a fair determination of the number of hours per week that will apply.

Furthermore, if you were working part-time at the time of your injury and there is evidence that you had a legally enforceable right to return to full-time work, then the HWF applying will be based on full-time work.

If the HWF used is too low then it will reduce the s56 economic loss lump sum entitlement.

As you are only entitled to one permanent impairment assessment per claim, it is very important that this process is done properly and all possible related injuries are assessed. It is also important that you agree with the HWF used by the Compensating Authority as this can drastically change your lump sum entitlement. If there is an error in the section 56 lump sum calculation then the Determination made by the Compensating Authority can be challenged in the South Australian Employment Tribunal.

It is therefore strongly recommended that you seek advice from a lawyer when pursuing your section 56 and section 58 lump sum entitlements. As you are only entitled to one permanent impairment assessment it is critical that the process is done properly to maximise your entitlements.

Further reading…

If you would like to find out more about your entitlements to claim lump sum payments, or the process involved in Whole Person Impairment (WPI) assessments, have a read of the below blogs that delve deeper into these two topics:

• Whole Person Impairment Assessments – https://tgb.com.au/injured-people/workers-compensation/workers-compensation-claims-in-south-australia-whole-person-impairment-assessments/
• Things to consider before choosing a lump sum payment over weekly payments – https://tgb.com.au/injured-people/workers-compensation/my-s56a-lump-sum-election-what-now/

Get in touch

You should receive legal advice before electing to receive a lump sum payment, as the process can be complex and there is much to consider!

Tindall Gask Bentley has been advising people on their workers compensation claims for over 50 years, so don’t hesitate to get in touch with us. You can register online here and we’ll contact you, or feel free to contact our SA Workers Compensation team on (08) 8212 1077. Alternatively, you can contact the author, Christie Tsoubarakis, on ctsoubarakis@tgb.com.au.