Workers Compensation lump sum

Calculating multiple Section 56 Economic Lump Sum Entitlements

Whilst most Injury Management Practitioners have calculated a Section 56 economic lump sum entitlement, some Practitioners may not have yet calculated a second 56 entitlement under the Return to Work Act 2014 (SA) and may not realise how the Act describes this entitlement to be calculated.

Section 56(6) states:

56-Lump sum payments – economic loss

(6) If-

(a) a worker suffers a work injury that gives rise to an entitlement under this section; and

(b) the workers subsequently suffers-

(i) an aggravation, acceleration, exacerbation, deterioration or recurrence of the injury referred to in paragraph (a); or

(ii) a new work injury

and the worker, as a result, has a second entitlement under this section,

There will be a reduction of the lump sum payable under this section in respect of the second entitlement by the amount of the payment for the earlier entitlement, unless such a reduction is incorporated into the provisions of the Impairment Assessment Guidelines (and then this subsection will apply in relation to any third or subsequent entitlement in the same way in order to ensure that each lump sum previously paid is taken into account as new entitlements arise).

Basically, there is no double dipping at the 100% rate for any subsequent entitlements.

For example, Ms Jones received a WPI assessment of 7% for an injury sustained in January 2016 and received a S56 economic lump sum payment of $10,558.70. Ms Jones then sustained a new injury in August 2017 which assessed at 8% and S56 economic loss sum of $17,821.44 (100%), the entitlement paid for S56 on the 2017 injury would be reduced by the amount previously paid in 2016.

Likewise, if the entitlement for the 2017 injury fell under the previously paid S56 figure of $10,558.70 then the entitlement would be nil.

This is certainly a section that all employers should ensure is being applied and calculated accurately given the difference could be a matter of thousands.

Contact us for more information on 8210 2800.