The words in a NSW workers compensation letter

NSW letters are written out of two Acts: the Workers Compensation Act 1987 and the Workplace Injury Management and Workers Compensation Act 1998. Both are online in full. The most important sentence in a NSW letter is usually one that is not in the letter at all: the stay rule, which is the last entry below.

Each phrase below gives three things: what it means in plain English, where it is defined so you can read the source yourself, and what it does not decide. That last line is the one that matters most, because most of the damage these letters do comes from reading a decision about one thing as a decision about everything.

This page describes published rules. It does not say anything about your claim. Nothing here means you have, or do not have, an entitlement. Only the scheme, an insurer or a court decides that, and a lawyer can tell you how the rules apply to your situation.

14 phrases, decoded

"work capacity decision"

In plain EnglishA named class of insurer decision about your ability to work and what you could earn. It is the engine that reduces or stops weekly payments.

Where it is definedWorkers Compensation Act 1987 (NSW) s 43(1). The listed decisions cover a worker's current work capacity, what constitutes suitable employment, the amount the worker is able to earn in suitable employment, the amount of current weekly earnings, whether the worker cannot do a certain kind of work without substantial risk of further injury, and "any other decision of an insurer that affects a worker's entitlement to weekly payments of compensation, including a decision to suspend, discontinue or reduce" payments on the basis of any of the above.

What this does not decideThree things, expressly. Section 43(2) says a work capacity decision is not a decision to dispute liability for weekly payments, not a decision that can be the subject of a medical dispute under Part 7 of Chapter 7 of the 1998 Act, and not a decision about pre-injury average weekly earnings. Each of those has a different dispute road.

"no current work capacity" and "current work capacity"

In plain EnglishNo current work capacity means a present inability arising from an injury such that the worker cannot return to work, either in the pre-injury job or in suitable employment. Current work capacity is the mirror: able to return to some suitable employment, but with a lower earning capacity than before the injury.

Where it is definedWorkers Compensation Act 1987 (NSW) Schedule 3 clause 9.

What this does not decideIt says nothing about whether such work exists near the worker. That is decided by the definition of suitable employment, immediately below, and the answer there is explicit.

"suitable employment"

In plain EnglishWork the worker is currently suited to, having regard to the nature of the incapacity, medical information including any certificate of capacity, age, education, skills and work experience, return to work planning documents, and occupational rehabilitation provided.

Where it is definedWorkers Compensation Act 1987 (NSW) s 32A, which adds that the assessment is made "regardless of (i) whether the work or the employment is available, and (ii) whether the work or the employment is of a type or nature that is generally available in the employment market, and (iii) the nature of the worker's pre-injury employment, and (iv) the worker's place of residence".

What this does not decideIt does not decide that a job exists, that anyone is hiring, or that the work is anywhere the worker could reach. The section says so in terms. A letter saying a worker is capable of suitable employment is not a finding that a job is available.

"the amount you are able to earn in suitable employment"

In plain EnglishA notional weekly figure that is subtracted from the weekly payment.

Where it is definedWorkers Compensation Act 1987 (NSW) s 43(1)(c) makes it a work capacity decision. Schedule 3 clause 8 defines current weekly earnings as the greater of actual gross earnings or "the weekly amount that the worker is able to earn in suitable employment".

What this does not decideIt is not money the worker receives, and it is not a finding that the money is available. It reduces the payment whether or not it is ever earned.

"second entitlement period"

In plain EnglishThe 117 weeks of weekly payments that follow the first 13 week entitlement period. Together they make 130 weeks.

Where it is definedWorkers Compensation Act 1987 (NSW) s 32A: "an aggregate period of 117 weeks (whether or not consecutive) after the expiry of the first entitlement period". Rates during it are set by s 37.

What this does not decideIt counts weeks of payments, not calendar weeks. It is a counter, not a decision, and reaching the end of it is not itself a finding about the worker.

"a section 38 application"

In plain EnglishThe written application that has to be made for weekly payments to continue past week 130.

Where it is definedWorkers Compensation Act 1987 (NSW) s 38. Entitlement ceases at the end of the second entitlement period unless the section is satisfied (s 38(1)). A worker assessed as having no current work capacity that is likely to continue indefinitely is entitled without applying (s 38(2)). A worker with current work capacity, other than a worker with high needs, is entitled only if they applied in writing in the approved form no earlier than 52 weeks before the end of the period, have returned to work for not less than 15 hours per week earning at least the amount set by s 38(3)(b), and are assessed as incapable of increasing those earnings (s 38(3)). The insurer must ensure a work capacity assessment is conducted during the last 52 weeks of the period, and afterwards at least once every 2 years (s 38(4)).

What this does not decideNothing about medical expenses, nothing about lump sum permanent impairment compensation, and nothing about any insurance held inside superannuation. Note the direction of the window: it opens 52 weeks before the end of the period, so a letter arriving at week 128 is arriving late in that window, not early.

"section 39" or "cessation of weekly payments after 5 years"

In plain EnglishA hard outer limit of 260 weeks on weekly payments.

Where it is definedWorkers Compensation Act 1987 (NSW) s 39(1): no entitlement to weekly payments "after an aggregate period of 260 weeks (whether or not consecutive)". s 39(2): the section does not apply where the degree of permanent impairment is more than 20%.

What this does not decideIt does not touch medical expenses, and clearing it does not clear s 38. The note to the section says that for workers above the 20% threshold, entitlement after 260 weeks is still subject to s 38. Two gates, not one.

If a letter like this has arrivedOpen What happens next with this letter already ticked, and the scheme filled in.

"worker with high needs" and "worker with highest needs"

In plain EnglishStatutory bands. High needs means permanent impairment assessed at more than 20%. Highest needs is the same structure at more than 30%. High needs includes highest needs.

Where it is definedWorkers Compensation Act 1987 (NSW) s 32A. Each band also covers a worker whose assessment is pending because maximum medical improvement has not been reached, or where the insurer is satisfied the degree is likely to be above the threshold. Being in a band exempts a worker from the s 38(3) return to work conditions, sets a minimum weekly payment for highest needs (s 38A), and means the insurer is not to conduct a work capacity assessment for a highest needs worker unless the worker asks (ss 38(5) and 44A(4)).

What this does not decideIt is not a finding about severity in ordinary language, and it is not a diagnosis. It is a percentage band, and the pending limb means a worker can be inside the band while the assessment has not yet happened.

"notice of discontinuation or reduction" and "the required period of notice"

In plain EnglishThe written notice, and how long payments keep running after it before they stop.

Where it is definedWorkplace Injury Management and Workers Compensation Act 1998 (NSW) ss 78 to 84. s 79(2): the notice "must contain a concise and readily understandable statement of the reason for the insurer's decision and of the issues relevant to the decision". s 80: where the decision follows a reassessment resulting from a work capacity decision the period is 3 months; otherwise 2 weeks if payments have run under a year, or 6 weeks if a year or more. s 80(2) applies the notice period only to workers who have received payments for a continuous period of at least 12 weeks. s 84 lets a worker recover payments where notice was not given in accordance with the subdivision.

What this does not decideIt is not the deadline for disputing, and it does not say so on its face. The deadline is hidden inside it, in the stay rule below.

If a letter like this has arrivedOpen What happens next with this letter already ticked, and the scheme filled in.

"internal review"

In plain EnglishAsking the insurer to look at its own work capacity decision again, before any tribunal is involved.

Where it is definedWorkplace Injury Management and Workers Compensation Act 1998 (NSW) s 76 defines it. s 287A: a worker may request review of a disputed work capacity decision, a disputed pre-injury average weekly earnings decision, or a disputed claim; the request "may be made at any time before the dispute is referred for determination by the Commission"; and "the insurer must conduct the review, and notify the worker of the decision on the review, within 14 days after the request is made", with a penalty attached.

What this does not decideIt does not buy time by itself. Section 82 restarts the required period of notice only where the review decision leads to a discontinuation or reduction. Section 83 says the period is not restarted where the review simply affirms the original decision. So an internal review that fails leaves the original clock running.

"stay"

In plain EnglishThe rule that pauses a decision to discontinue or reduce weekly payments while the dispute is with the Personal Injury Commission.

Where it is definedWorkplace Injury Management and Workers Compensation Act 1998 (NSW) s 289B. Referring a dispute to the Commission about a work capacity decision to discontinue or reduce payments, or about pre-injury average weekly earnings, operates to stay the decision, but "only if the dispute is referred for determination by the Commission before the expiry of the required period of notice under section 80".

What this does not decideIt does not operate automatically and it does not operate late. This is the hardest deadline in the NSW letter, and the letter usually does not present it as one. The notice period is the window.

"medical assessment certificate"

In plain EnglishThe certificate a medical assessor issues setting out the matters referred, the assessment, the reasons and the facts relied on.

Where it is definedWorkplace Injury Management and Workers Compensation Act 1998 (NSW) ss 324 to 327. s 326(1): the assessment "is conclusively presumed to be correct" in proceedings as to the degree of permanent impairment, apportionment, loss of hearing, whether impairment is permanent, and whether the degree is fully ascertainable. s 326(2): as to any other matter it is evidence but not conclusive. s 327 limits appeals to four grounds, and s 327(3A) requires a deterioration to increase permanent impairment by at least a further 10 percentage points. Threshold context: Workers Compensation Act 1987 (NSW) s 66(1) requires more than 10% for permanent impairment compensation, and s 65A(3) sets 15% for primary psychological injury.

What this does not decideCapacity for work, entitlement to weekly payments, or liability. It decides the impairment percentage and, on the matters in s 326(1), it decides it effectively finally. Section 324(2) also carries a trap in the other direction: refusing or obstructing the assessor's examination suspends the right to compensation until the examination happens.

"certificate of capacity"

In plain EnglishThe treating doctor's certificate about incapacity for work, for a period of up to 28 days at a time.

Where it is definedWorkers Compensation Act 1987 (NSW) s 44B. It must certify incapacity and whether the worker has current work capacity or no current work capacity, and specify the expected duration. s 44B(5): a certificate has no effect for a period more than 90 days before it is provided. s 44B(6): the insurer may discontinue weekly payments if the worker does not comply within 7 days of the requirement being communicated.

What this does not decideIt does not bind the insurer. The treating doctor's tick on this form is evidence, not a decision, and s 44A(3) says a work capacity assessment "is not necessary for the making of a work capacity decision by an insurer".

"the IRO"

In plain EnglishA NSW statutory office that handles complaints about insurers and funds legal advice for injured workers through ILARS.

Where it is definedIRO, About Us: established 1 March 2021 under the Personal Injury Commission Act 2020 (NSW), with statutory functions including finding solutions for injured people who have complaints about their insurer, managing ILARS, and conducting inquiries. IRO, Complaints and Enquiries: covers complaints about weekly benefits, medical treatment, denials of liability and delays in determining claims, aims to review and acknowledge a complaint within two business days, and can contact the insurer on the worker's behalf.

What this does not decideIt does not determine the claim and it does not replace the Personal Injury Commission. It also states it cannot assist exempt workers or motor accident claimants in accessing legal assistance.

Where this fits

• What happens at 130 weeks and 260 weeks in NSW: the payment schedule, with section numbers
• When your NSW workers compensation payments change or stop
• The Letter Decoder: all five senders

Every phrase, section number and quotation on this page was checked against the sources linked above on 14 August 2026. If something has changed since, tell us and we will fix it: contact.