If you have been receiving weekly workers’ compensation payments for many months and have recently heard the term ‘work injury damages’ for the first time, this article explains what it means for your claim. A work injury damages claim is a separate claim from the workers’ compensation claim you may already have. It is fault-based, allows an injured worker with a significant injury to recover past and future economic loss where their employer’s negligence caused the injury, and sits on top of your existing workers’ compensation entitlements.
This guide sets out who qualifies, the process, the strict time limits that apply, and, importantly, what recovering a work injury damages settlement means for the standard workers’ compensation benefits you currently rely on.
What Is a Work Injury Damages Claim?
A work injury damages claim, sometimes referred to as a common law negligence claim, is a fault-based claim brought against your employer to recover the earnings you have lost and will lose in future because of a work-related injury caused by your employer’s negligence. It is a distinct claim from the statutory workers’ compensation claim you already have, and it is available only where certain requirements are met.
The State Insurance Regulatory Authority (SIRA), the NSW regulator, describes work injury damages as ‘modified common law damages’. The claim is modified because two important restrictions apply. Only past and future economic loss can be recovered under section 151G of the Workers Compensation Act 1987. And a whole-person impairment threshold must be met before the claim can succeed under section 151H.
This is an NSW-only scheme, governed by the Workers Compensation Act 1987 and the Workplace Injury Management and Workers Compensation Act 1998. The rules differ in other states and territories, and information written for another jurisdiction does not apply here.
How Work Injury Damages Fit With Your Existing Workers' Compensation Claim
The NSW workers’ compensation system is a no-fault scheme. Standard workers’ compensation benefits, including weekly workers’ compensation payments while you are unable to earn, and medical and rehabilitation expenses, are payable regardless of who caused the workplace injury.
A work injury damages claim sits on top of that system and is fault-based. Injured workers who are considering a claim for work injury damages sometimes think of it as their next step, but the sequence in which the two claims proceed is fixed:
- You sustain a work-related injury and report it to your employer.
- Your workers’ compensation claim runs. Ongoing workers’ compensation benefits, including weekly payments, medical costs, and rehabilitation expenses, are payable while your claim is on foot, and no fault needs to be proved.
- Your permanent impairment is assessed by a qualified assessor. Where the section 66 threshold is met, a lump-sum compensation payment for permanent impairment is made. That statutory lump sum must be paid before work injury damages can be recovered (Workplace Injury Management and Workers Compensation Act 1998, sections 280A and 280B).
- Your work injury damages claim is then made against your employer. The workers’ compensation insurer decides liability, and the process described below runs.
Do You Qualify to Claim Work Injury Damages?
To claim work injury damages in NSW, three requirements must all be met. Missing any one of them prevents the claim from succeeding.
- Your employer’s negligence caused your workplace injury
- Your whole person impairment reaches the Section 151H person impairment threshold of at least 15%
- You have received the statutory lump sum compensation to which you are entitled
The second requirement, the whole person impairment threshold, is where most confusion arises and where many other online sources are inaccurate.
The Whole Person Impairment Thresholds Explained
Whole person impairment, often shortened to WPI, is a percentage assigned by a qualified permanent impairment assessor that reflects the permanent effect of your injury on the body as a whole. Three different WPI numbers apply to three different entitlements, and they are commonly confused.
Threshold | What It Unlocks | Fault Required? | Section |
More than 10% WPI | Section 66 statutory lump sum for physical injury | No | s66(1) |
At least 15% WPI | Section 66 statutory lump sum for primary psychological injury | No | s65A(3) |
At least 15% WPI (unchanged) | Work injury damages, physical injury | Yes | s151H(2)(a) |
At least 25% WPI (injuries notified on or after 1 July 2026; rising to more than 26% from 1 July 2027 and at least 28% from 1 July 2029) | Work injury damages, psychological injury | Yes | s151H(2)(b) |
Which threshold applies to your work injury damages claim depends on when your injury was reported, which is explained in the next section.
Two further points are important for the psychological injury threshold. Physical and psychological impairments are assessed separately under section 151H(3)(a) and cannot be combined to reach the threshold. Secondary psychological injury is disregarded under section 151H(3)(b). However, meeting the threshold for one injury type opens the door to a work injury damages claim covering both.
Which Threshold Applies to Your Claim
The section 151H threshold that applies to your work injury damages claim is determined by the notification date, not the date the workplace injury occurred and not the date the claim is lodged.
‘Notified’ means the date your workplace injury was formally reported to the workers’ compensation system. That is usually the date your employer or its insurer was informed, or the date the injury was entered into the register of injuries. If you are not sure of the date, it will be recorded on your claim paperwork.
For claims notified before 1 July 2026, the previous threshold of at least 15% WPI continues to apply for both physical and psychological injury (Schedule 6, Part 19Q, clause 2(2) of the Workers Compensation Act 1987). This covers most workers’ compensation claims currently on foot.
For claims notified on or after 1 July 2026, the physical injury threshold for work injury damages remains at least 15% WPI. The psychological injury threshold is at least 25% WPI, rising to more than 26% for injuries notified from 1 July 2027, and at least 28% for injuries notified from 1 July 2029.
Workers Not Affected by the 2026 Changes
Four groups of workers are not affected by the 2026 psychological injury threshold changes and continue under the previous rules:
- Police officers, paramedics, and firefighters (Schedule 6, Part 19Q, clause 3)
- Coal miners (clause 4)
- Workers claiming under the Workers’ Compensation (Dust Diseases) Act 1942 (clause 5)
- Workers claiming under the Workers Compensation (Bush Fire, Emergency and Rescue Services) Act 1987 (clause 6)
The coal miner carve-out is particularly relevant across the Hunter, where NSW coal miners sit outside the iCare Nominal Insurer scheme and are covered separately by Coal Services and Coal Mines Insurance.
If Your Whole Person Impairment Is Below the Threshold
Many injured workers with a genuinely significant injury sit below the section 151H person impairment threshold. Where that applies to you, the following options may remain available:
- The section 66 lump sum has its own lower threshold, requiring more than 10% WPI for a physical injury or at least 15% WPI for a primary psychological injury
- Your ongoing workers’ compensation benefits do not automatically end. Weekly workers’ compensation payments and medical treatment continue, subject to the workers’ compensation system’s separate time limits and thresholds, which also changed on 1 July 2026
- An impairment dispute can be referred to the Personal Injury Commission for determination
- Where your condition worsens, a further impairment assessment may be permitted in limited circumstances
- Where someone other than your employer caused your workplace injury, a separate claim may be available under section 151Z
- Superannuation benefits, including total and permanent disability cover, are entirely separate and are unaffected by any workers’ compensation outcome
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How to Prove Employer Negligence
To establish employer negligence in a work injury damages claim, four elements must be proved:
- The employer owed you a duty of care
- The employer breached that duty
- The employer’s negligence caused your workplace injury
- You suffered loss as a result
Your employer owed a well-established duty to provide a safe system of work, safe premises, safe plant and equipment, and competent co-workers, together with adequate training, supervision, and personal protective equipment. Where the employer failed to meet any of those obligations, and the failure caused the injury, employer fault is made out.
Whether the employer breached its duty and whether the employer’s negligence caused the injury will depend on the circumstances of your particular case.
Medical evidence is central to any work injury claim. Medical reports from your treating specialists, together with witness statements and documented records of what was reported and to whom, are the foundation of a work injury damages case. Records of your actual economic loss, including payslips and taxation records, are also required to establish your past loss and future wage loss.
When the Negligent Party Is Not Your Employer
Where the negligence of a party other than your direct employer caused your work-related injury, it is possible to pursue that party as well as claim workers’ compensation from your employer. This is common on labour hire placements, principal contractor arrangements, and mine sites where multiple companies operate on the same premises.
You cannot recover twice for the same loss. Workers’ compensation already paid is recouped from any damages recovered from the other party. Importantly, a claim against a non-employer is not restricted by section 151G to economic loss only, so a broader range of common law damages may be available in that scenario.
What Work Injury Damages Compensate
A work injury damages settlement compensates for two categories of loss, and only two:
- Past economic loss, being the wages and other income you have lost from the date of injury to the date of settlement
- Future economic loss, being the deprivation or impairment of your earning capacity going forward (section 151G)
Future economic loss is assessed on the basis of your earning capacity, not merely on wages actually missed. An injured worker who has returned to work on reduced hours or in modified duties may still have suffered a significant loss of earning capacity, and future wage loss is calculated accordingly.
The following categories are NOT recoverable in a NSW work injury damages claim:
- Pain and suffering, or any other form of non-economic loss
- Future medical expenses and rehabilitation expenses
- Domestic assistance
- Superannuation loss, other than in respect of past and future economic loss
Medical and rehabilitation expenses continue to be funded through the workers’ compensation scheme up to the point at which a work injury damages settlement is reached. What happens to that funding afterwards is addressed below.
How a Work Injury Damages Payout Is Calculated
There is no fixed formula for calculating work injury damages. A lump sum amount is arrived at by working through several inputs, and any figure produced online without knowledge of your particular circumstances is not your figure.
The inputs a work injury damages lawyer will assess include:
- Your working life remaining, calculated to pension age
- Your actual pre-injury earnings, including base wages, overtime, shift penalties, and allowances
- Your residual earning capacity, if any
- Superannuation lost on past and future loss of income
- Weekly workers’ compensation payments already received, which are repaid out of any settlement
Several statutory limits then apply to the calculation. Earnings above a statutory maximum are disregarded (section 151I). Future economic loss is discounted to present value (section 151J). Contributory negligence, where the injured worker has partly contributed to the injury, reduces damages proportionately (section 151N). Interest may be awarded on past loss (section 151M).
The result is a lump-sum payment that reflects the injured worker’s specific circumstances.
What a Work Injury Damages Settlement Ends
A work injury damages settlement is a final resolution of the fault-based claim against your employer. Once the settlement is accepted, it cannot be reopened if your injury worsens in future.
Section 151A of the Workers Compensation Act 1987 sets out the consequences of recovering damages. Once a work injury damages settlement is finalised for a particular injury:
- Your entitlement to further compensation for that injury under the workers’ compensation scheme ends
- The weekly payments already made to you are repaid out of the settlement
- Your entitlement to participate in an injury management programme ends
- The insurer’s future funding of medical, hospital, and rehabilitation treatment for that injury ends
Two points of precision are worth noting. Only weekly workers’ compensation payments already made are repaid out of the settlement. Medical expenses already paid are not clawed back. And there is no Section 66 lump-sum credit against work injury damages, meaning the impairment lump sum you may have received is not deducted from the damages amount.
The consequences for future treatment are important. Where surgery or ongoing rehabilitation is likely on the same injury in the years after settlement, the cost of that future treatment must be met from your own resources or through private cover.
Three questions are worth answering carefully before accepting a work injury damages settlement:
- Is your condition medically stable, or is it still changing?
- Is further surgery or treatment for the injury likely?
- How many working years remain before retirement?
The right time to settle and the appropriate lump sum amount differ significantly for a 35-year-old with a stable back injury and a 55-year-old facing further surgery. If a workers’ compensation claim for a work injury is not ultimately successful, your standard workers’ compensation benefits continue.
Time Limits for a Work Injury Damages Claim
Strict time limits apply to a work injury damages claim in NSW. Court proceedings must be commenced within three years of the date the injury was received, unless the court grants leave to extend (section 151D of the Workers Compensation Act 1987). The Limitation Act 1969 does not apply to a work injury damages claim.
Section 151DA of the Act stops the limitation clock in certain situations. Time does not run while a threshold medical dispute is before the Personal Injury Commission, and time does not run while a served pre-filing statement remains current.
From 1 July 2026, most workers are entitled to only one permanent impairment assessment per injury under the workers’ compensation system. SIRA requires that independent legal advice be obtained before that assessment is made. This is a substantial reason to seek legal advice from work injury damages lawyers early in the workers’ compensation claim, and not only when a work injury damages claim is being contemplated.
Key Takeaways
- A work injury damages claim is a separate, fault-based claim that sits on top of your existing workers' compensation entitlements and covers past and future economic loss only.
- Three requirements must be met to claim: your employer's negligence caused the injury, your whole person impairment reaches the section 151H threshold, and you have received any statutory lump sum owed to you.
- The physical injury threshold remains at 15% WPI. For claims notified from 1 July 2026, the psychological injury threshold rises to 25% WPI, with further increases in 2027 and 2029.
- Police, paramedics, firefighters, coal miners, dust diseases claimants, and bush fire and emergency services workers are not affected by the 2026 psychological injury changes.
- Court proceedings must be commenced within three years of the date the injury was received under section 151D, so early legal advice is important, particularly before your permanent impairment assessment.
Get Legal Advice on Your Work Injury Damages Claim
If you have received a permanent impairment assessment, a section 78 notice, or an insurer decision you do not understand, our work injury damages lawyers can review it and explain what it means for your claim and for your financial future. Contact our team today.
