Insights

Making sense of Section 56 of the Act 2014

September 20, 2020

In work injury matters, there are two types of lump sum payments which come under Sections 58 and 56 of the Return to Work Act 2014. Here, we make sense of Section 56 of the Act.

Lump sum payments under Section 56 of the Act are for permanent impairment caused by a physical injury (not psychological injury). These payments are designed to compensate a worker for economic loss.

Part of the justification behind Section 56 is that under the Act which took effect on 1 July 2015, workers were limited to claim income maintenance (weekly payments) to a maximum of two (2) years unless they were deemed a seriously injured worker. Therefore, the idea being that this lump sum would provide further monetary assistance for economic loss in circumstances where a worker’s income maintenance ceased after two years.

To be eligible for a Section 56 lump sum payment you must have an accepted claim for a work injury, your injury must have occurred on or after 1 July 2015 and your injury must be assessed at a Whole Person Impairment (“WPI”) level of between 5% and 29%.

The level of WPI is assessed as part of a permanent impairment assessment. For more information about same, please read our Insight Making sense of Section 58.  Here we explain the impairment assessment process as well as the fact that your condition will need to have reached maximum medical improvement (“MMI”) before you can undergo such an assessment.

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 therefore strongly recommended that you instruct a lawyer to assist you.

The relevant formula for Section 56 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 – https://www.rtwsa.com/. The PS ranges from $5,000 (indexed) through to $350,000 (indexed).

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. For example, if you were working full-time, the HWF would be 1.

Example

The applicable formula for a 22 y/o worker with a 10% WPI (based on a 2015 injury) who was working full-time at the time of injury is:

LUMP SUM = PS ($42,220) x AF (100%) x HWF (1)

LUMP SUM = $42,220

It is important to keep in mind that you are only entitled to one permanent impairment assessment and as such it is critical that the process is done properly to maximise your entitlements.

Crescent Lawyers offer a Free Initial Appointment for all workplace injury matters.  For rejected claims before the Tribunal, there are no legal costs payable by you.  For lump sum claims, we only charge legal costs if you receive a lump sum payment.  Contact  8312 7055 or email admin@crescentlawyers.com.au.

Free Initial Consultation to discuss matters involving Workplace Injury, Personal Injury, Wills & Grants of Probate.