Workers compensation claims in South Australia: Should I accept a redemption payment, and what are the key considerations?
If you have an accepted workers compensation claim in South Australia, then you may be able to negotiate a redemption of your entitlements to weekly payments and/or medical expenses. The big question is, should you accept a redemption payment, and what are the key considerations?
The biggest thing to consider is whether or not the redemption payment will be fair and adequate in your particular circumstances.
If a redemption payment offer is accepted before the extent of the injuries is known, an injured worker can’t subsequently seek additional compensation. Because of this it is important that you seek legal advice before you accept a redemption payment to make sure you will not be out of pocket in the future.
What is a redemption payment?
A redemption payment is a single lump sum payment that may be made instead of ongoing weekly payments and/or payment of medical expenses.
Sections 53 and 54 of the Return to Work Act 2014 (SA) allow for agreement to be reached between the Compensating Authority and an injured worker for a lump sum payment to be made reflecting the future liability to pay weekly payments and/or medical expenses in order to finalise a claim. Instead of staying on the system and continuing to claim compensation within the relevant entitlement periods, a redemption acts to finalise all ongoing and future entitlements to compensation.
How much is a redemption payment worth?
Redemption payments are entirely open to negotiation. The Compensating Authority cannot force you to accept a redemption payment, and likewise an injured worker cannot force a Compensating Authority to pay one. For that reason, the amount of a redemption payment cannot be fixed or reviewed by the Tribunal. They can only be reached by agreement between you and the Compensating Authority.
Is a redemption payment taxed?
If a redemption payment includes an amount representing a liability to pay future weekly payments, then that component will be taxed.
A redemption payment for medical expenses only will not generally be subject to any tax implications.
Having said this, it is important that you obtain independent financial advice in relation to the issue of taxation.
Is there any impact on Centrelink?
Centrelink is notified of a redemption payment. If there are any debts owed to Centrelink then they will likely have a right of recovery from any redemption monies paid by the Compensating Authority.
If you are an injured worker and you accept a redemption payment, you may also be subsequently precluded from obtaining Centrelink benefits for a period of time. The amount of the preclusion period will depend on the amount of the redemption payment, and any other lump sum compensation paid at the same time. Centrelink may also seek to recover amounts paid in the past by way of benefits.
Services SA (Child Support) is also notified of a redemption payment. Child support may also seek to recover amounts owing from the redemption payment.
What happens once I accept a redemption payment?
Once agreement has been reached on the redemption payment figure, a contract is signed by the parties. Part of the agreement involves the requirement for you to be provided with professional advice, financial advice, and medical advice.
The professional advice is provided by a lawyer and relates to the legal effects of the redemption payment on an injured worker. Financial advice must be provided in relation to the investment and the use of the redemption monies. The medical advice aspects requires that a doctor signs a certificate confirming that the extent of the injured worker’s incapacity for work can be determined with a reasonable degree of confidence.
The Compensating Authority is liable to pay prescribed fees for an injured worker to obtain the required professional (legal) and financial advice in relation to the redemption payment.
Do I need a lawyer to negotiate a redemption?
To ensure that you fully understand the pros and cons of a redemption payment relevant to your specific circumstances, it is important to seek professional advice from a lawyer who is competent and has expertise in workers compensation claims before you come to an agreement with the Compensating Authority.
The most critical reason why you should obtain legal advice is that, in some cases, the amount offered by the Compensating Authority is not adequate when taking into considering an injured worker’s injuries. Sometimes, the full extent of the injuries may not be known at the time of a redemption payment offer. If a redemption payment offer is accepted before the extent of the injuries is known, an injured worker can’t subsequently seek additional compensation.
Below are examples of the advice your lawyer may provide to you:
- Whether the redemption payment is likely to be adequate, taking into account your specific injuries (especially important given that you are unable to seek further compensation for this injury once a redemption payment has been accepted);
- Any likely tax implications on the redemption amount;
- Whether Medicare and/or private health insurance can be used in relation to future medical services;
- The effect the redemption payment may have on future employment, in particular in relation to employment with government entities;
- Any Centrelink recovery of monies and/or preclusion periods that may apply to you.
Get in touch!
TGB Lawyers’ experienced team of workers compensation lawyers work hard to fight in your corner and protect your rights.
The laws that govern workers compensation are state-based, so it is important your lawyers are experienced with the laws relevant to you. TGB Lawyers has focused expertise in this area in South Australia, Western Australia and the Northern Territory. Let us manage your claim, so you can concentrate on your recovery.
If you would like help and advice about your workers compensation claim, please get in touch with us here, or call us on:
SA – (08) 8212 1077
WA – (08) 9211 5800
NT – (08) 8941 7814