Workers Compensation Regulation 2016

The Regulation casts a wide net.

Employers are the primary addressees. Category 1 and 2 employers must establish return-to-work programs (cll 11–14), appoint coordinators (cl 19), display or notify programs (cll 16A–18), and keep wages records (cl 166). They face strict liability offences for non-compliance (cll 12, 17) with penalties scaled by category (20 vs 5 penalty units). Self-insurers and specialised-insurer employers are deemed category 1 (cl 3(1)(c)–(d)). Exempt employers (domestic staff, owner-builders, family-only companies) are relieved only to the extent specified (cl 21). Farmers enjoy a limited exemption from subcontractor-premium grouping (cl 55).

Workers benefit from the presumptive disease provisions (Sch 1, cll 4–5D), the detailed PIAWE rules that protect against earnings volatility (Part 4), and the return-to-work duties that employers owe them. They are protected by the medical-report and costs caps (Parts 9 and 17) that prevent unnecessary expense, but they also bear the onus of supplying compliant certificates of capacity (cl 175) and face cost consequences if they fail to mitigate (cl 90).

Insurers (including the Nominal Insurer, scheme agents, self-insurers and specialised insurers) must determine claims within statutory timeframes (cll 9–10), issue compliant dispute notices (cll 38–38B), provide reports to workers (cl 41), and follow payment-increase rules (cl 8N). They calculate and certify cost-of-claims data (cll 147–149) that feed into premium setting. Specialised insurers are carved out of certain grouping provisions (cl 56).

Approved providers of workplace rehabilitation services are regulated under Part 7. They must hold a certificate (cl 23), comply with conditions (cl 25), and risk cancellation for misconduct (cl 33). False claims of approval attract 20 penalty units (cl 34).

Legal practitioners and agents are tightly constrained by the costs regimes in Parts 17 and Sch 6–7. The prohibition on advertising work-injury services (Part 16) applies to both lawyers and non-lawyer agents. Medical practitioners supplying reports face restrictions on the number of forensic reports (cl 44) and must attend the Commission if required (cl 174).

The State Insurance Regulatory Authority (SIRA) is the engine room. It approves forms (cl 3(1)), issues guidelines (cll 3(1), 15, 20), grants and cancels provider certificates (Part 7), determines premium-filing matters, and maintains the register of certificates (cl 31). It can exempt employers (cl 21(f)) and issue penalty notices (cl 71).

Health practitioners are affected indirectly through the regulated disbursements in Sch 6 Part 3 and the power of the Authority to disclose information to the Health Care Complaints Commission (cl 164).

Employers’ duties are both proactive and reactive. They must obtain and maintain a policy (s 155 of the 1987 Act, cl 51), notify injuries within 48 hours (cl 35), keep five-year wages records (cl 166), establish return-to-work programs (cl 11), and nominate approved rehabilitation providers where required by the guidelines (cl 16). They face a positive obligation to provide suitable employment (s 49 of the 1998 Act) and must not obstruct return-to-work coordinators (cl 19). On the claims side, they must respond to provisional liability within seven days (s 267 of the 1998 Act) and cannot make admissions without insurer consent (cl 10 of Sch 3).

Workers’ rights include the presumption that listed diseases are work-related once the employment and test criteria in Sch 1–2 are met (cll 4–5D). They have a right to PIAWE calculated according to the detailed, protective rules in Part 4, including adjustments that exclude pandemic-related downturns (cl 8EA). Return-to-work rights are buttressed by mandatory employer programs and coordinator functions (cll 11–20). Procedural rights include access to all insurer-held reports (cl 41), limits on the number of forensic medical reports the other side can rely on (cl 44), and cost protection through the Sch 6–7 caps.

Insurers’ duties are largely temporal and informational. They must determine liability within 21 days for medical expenses (cl 10) and give detailed reasons in dispute notices (cll 38–38B). They must pay increases within 14 days of a “payment increase decision” (cl 8N, 20-penalty-unit offence). Certificates of currency must be issued on request once the employer supplies a wages estimate (cl 53). Cost-of-claims certificates must be supplied within 21 days of request (cl 147).

Rehabilitation providers have a right to apply for a certificate (cl 22) but must satisfy fitness-and-propriety criteria (cl 23) and comply with ongoing conditions (cl 25). They enjoy procedural fairness before cancellation (cl 33(3)).

Legal and agent practitioners have a right to be paid only up to the Sch 6–7 maxima. They must not advertise in breach of Part 16 (200-penalty-unit offence) and must use approved forms for bills (cl 132).

The Authority’s rights include giving binding directions on return-to-work programs (cl 15), maintaining the provider register (cl 31), and issuing penalty notices (cl 71).

The Regulation creates a tiered enforcement regime. Criminal offences carry scaled penalty units. Category 1 employers face 20 units for failing to establish a return-to-work program (cl 12) or appoint a coordinator (cl 19); category 2 employers face 5 units. Failure to notify or display a program attracts 10/2 units respectively (cl 17). The general injury-notification offence is 20 units (cl 36). False statements in certificate applications attract 20 units (cl 32), as does falsely claiming approval (cl 34). Insurers who fail to pay a “payment increase decision” within 14 days face 20 units (cl 8N(1)).

Penalty notices are available under s 246 of the 1998 Act for the offences listed in Sch 5. The prescribed penalties range from 50 units (category 2 program display) to 1,250 units (uninsured employer under s 155(1) of the 1987 Act).

Civil enforcement is primarily through the Personal Injury Commission (PIC). Dispute notices must be given before the Commission can hear a matter (s 289 of the 1998 Act). The PIC can order costs against a party who unreasonably fails to comply with procedural directions or who brings a frivolous claim (cl 127). The Authority can cancel or suspend provider certificates on grounds including false statements, conviction of dishonesty offences, bankruptcy, or cessation of business (cl 33).

The Nominal Insurer can recover unpaid premiums as a debt (s 172 of the 1987 Act) and may impose late-payment fees at the prescribed rate (cl 50). Self-insurers who fail to comply with modified Chapter 3 obligations (Part 11) risk licence conditions or revocation.

The Regulation is expressly parasitic on the 1987 and 1998 Acts (cl 3(1)). Definitions in those Acts and the Interpretation Act 1987 apply (cl 3(1) note). It cross-references the Industrial Relations Act 1996 (authorised officers, cl 35), the Home Building Act 1989 (owner-builder exemption, cl 21), mental-health and guardianship legislation (definition of “person under legal incapacity”, cl 8K(11)), and Commonwealth therapeutic-goods and higher-education legislation (cll 5B(3), 10(1)(b)).

It interacts with the Legal Profession Uniform Law (NSW) through the costs caps (Part 17), the prohibition on unjust costs agreements (cl 114), and the referral of misconduct to the designated local regulatory authority (cl 128). GST treatment is aligned with the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (cll 129, 135, 145(2)(g)).

The Motor Accidents Compensation Act 1999 and Motor Accidents Act 1988 are carved out of certain cost-of-claims calculations (cl 145(4)). The Long Service Corporation Act 2010 receives limited information-sharing (cl 165). The Government Sector Employment Act 2013 authorises special inquiries to receive protected information (cl 165A, inserted 2024).

The Regulation yields to any inconsistent Commission rules or court rules in damages proceedings (s 346(4) of the 1998 Act) but prevails over earlier regulations it repeals (cl 2 of the Regulation).

The Regulation has been frequently amended to respond to legislative reform, pandemics and operational experience.

The Workers Compensation Legislation Amendment Act 2012 introduced the PIAWE concept; the Regulation responded with Parts 3 and 4 (2019 (455), 2019 (616)). The 2015 amendments to weekly payments and medical-expense caps required further adjustments (2016 (780), 2018 (729)).

COVID-19 triggered the most significant recent changes. In 2020 the Regulation inserted cll 5B–5D (presumptive COVID-19 for prescribed employments, prescribed tests, incapacity modifications) and cl 8EA (earnings-period exclusion for the first and second prescribed periods, 23 March–14 June and 15 June–27 September 2020). These changes were driven by the need to reduce evidentiary burdens on essential workers and to neutralise pandemic-induced earning drops that would otherwise distort PIAWE.

Costs tables were overhauled in 2018 (729) and 2020 (744) to reflect the new PIC structure, to introduce “general resolution types” and “special resolution types”, and to add loadings for multiple respondents and lead-scheme-agent complexity. The object was to promote early resolution while preventing cost inflation.

Premium-related changes in 2017 (319) and 2018 (90) refined the definition of “deemed premium income” for self-insurers and updated large-claim limits. The 2022 (820) amendments modernised service of notices (cl 176) and introduced a formula for additional death-benefit administration fees (cl 177).

Each change was reactive: pandemic provisions addressed an unprecedented claims spike; costs reforms responded to the 2018 merger of the former Workers Compensation Commission into the PIC; premium tweaks aligned with SIRA’s market-practice guidelines.

The Regulation has generated limited but important litigation.

In CIC Allianz Insurance Ltd v Simms [2006] NSWCA 190 (pre-dating the current Regulation but still cited), the Court of Appeal held that a regulation could not expand the statutory definition of “injury”. That principle confines the disease presumptions in cll 4–5D to the bounds of ss 19–19B of the 1987 Act.

The PIAWE provisions have produced disputes about the meaning of “financially material change” (cl 8C) and the interaction between the 52-week look-back and the COVID-19 exclusion (cl 8EA). The PIC has consistently held that the sequential adjustments in cl 8A must be applied in the listed order and that the “unadjusted earning period” is the baseline before any exclusion.

Costs caps have been challenged on constitutional grounds (Attorney General (NSW) v Commonwealth (intervening in Crosby v Kelly [2012] NSWCA 64)) but the caps have been upheld as valid regulation of court procedure. The prohibition on advertising (Part 16) survived a challenge in Vickery v The Law Society of NSW [2013] NSWADT 289 on the basis that it was a proportionate restriction on commercial speech.

Controversy continues around the interaction between the one-further-claim rule (cl 11 of this Schedule) and s 322A of the 1998 Act. Some stakeholders argue that the 2012 amendments, combined with the one-claim rule, have unfairly limited seriously injured workers’ access to lump-sum compensation. The 2022 amendments to death benefits (cl 177) have also attracted criticism for the complexity of the formula used to calculate the additional administrative fee.

No regulation provision has been struck down, but the PIC and courts have read down overly broad insurer interpretations of the costs tables, emphasising that the tables are “maximum” not “fixed” amounts and must be applied with regard to the reasonableness criteria in cl 111.

Most practitioners miss three recurring traps.

First, the sequential nature of the PIAWE adjustments in cl 8A is mandatory. Many overlook that cl 8EA (COVID-19) is applied after unpaid-leave and alignment adjustments but before the final relevant earning period is locked in. An incorrect order can produce a materially lower PIAWE and therefore lower weekly payments for the entire claim.

Second, the “special resolution” items in Table 3 of Sch 6 are not additive to the general resolutions in Table 1. Clause 7 of Part 1 of Sch 6 requires a dollar-for-dollar deduction of any Table 3 amount already paid when a later Table 1 resolution occurs on the same issue. Failure to make this deduction has led to costs assessments being set aside on review.

Third, the advertising prohibition in Part 16 is not limited to “legal” services. Clause 73 catches any advertisement that “promotes the availability or use of an agent to provide agent services” if it mentions work injury or a work-injury service. The definition of “agent” (cl 72) includes anyone who assists with forms or arranges medical examinations for a fee. Social-media posts, Google ads and even firm websites have attracted penalty notices.

Another subtle gotcha is the interaction between cl 8K(8)–(9) and work-capacity decisions. Once an insurer has made a work-capacity decision on PIAWE it cannot later approve a PIAWE agreement. Many solicitors discover this too late when the insurer refuses to sign the agreement.

Finally, the country/interstate loadings in Sch 6 Part 3 are calculated by reference to the Motor Accidents Compensation Regulation 2015 Sch 1 cll 3–4. Many lawyers still use the obsolete 2010 formula, producing irrecoverable over-claims.

Employers should:

1. Determine category status annually using the $50,000 basic-tariff-premium threshold (cl 3).
2. Adopt or create a return-to-work program that expressly incorporates the Authority’s guidelines (cl 14).
3. Appoint a coordinator who has completed the approved training (cl 19(1)(a)).
4. Use the Authority-approved form for wages declarations (cll 138–139) and retain records for five years (cl 166).
5. Notify injuries electronically or in the approved form within 48 hours (cl 35) and keep the three specified records (cl 35(2)).

Insurers must:

1. Issue compliant s 78 notices that list all reports, attach required documents, and contain the approved summary (cl 38).
2. Pay any increase resulting from a payment-increase decision within 14 days (cl 8N).
3. Apply the PIAWE adjustments in the exact order set out in cl 8A(2).
4. For COVID-19 claims, apply the prescribed tests in Sch 2 Part 2 and the incapacity modifications in cl 5C.

Legal practitioners should:

1. Calculate costs by first identifying the resolution type in Table 2 or 3 of Sch 6, then adding any Table 4 loadings, then applying the country loading if applicable.
2. Never advertise in a way that mentions “work injury”, “injury at work”, or “workers compensation” unless the exception in cl 74 or 75 applies.
3. When preparing a bill, identify each general or special resolution type by item and column number (cl 103(2)(a)).
4. Advise clients in writing before entering a costs agreement that they may still be liable for the excess over the regulated maximum (cl 93(1)(c)).

Rehabilitation providers must maintain compliance with the conditions notified by the Authority (cl 25) and avoid any statement that could be construed as false or misleading (cl 32).

All parties should monitor the Authority’s website for updated guidelines, approved forms, and fee orders, because the Regulation expressly incorporates them (cll 3(1), 15, 20, Sch 6 Part 3). Regular reconciliation of PIAWE calculations against the sequential adjustments in cl 8A will avoid the most common disputes that reach the PIC.