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Redemption Payments

If you’ve been injured at work, you may be receiving workers compensation entitlements. Sometimes, a workers compensation insurer (also known as the compensating authority) will offer a redemption lump sum payment to settle your workers compensation claim. You need to consider carefully whether to accept or reject the offer. Here’s what you need to know.

What is a redemption payment?

A redemption payment is a single lump sum payment instead of ongoing weekly payments and/or payment of medical expenses.

Under what circumstances is a redemption payment made?

Only the compensating authority can offer to make a redemption payment to an injured worker. If the compensating authority does make an offer, redemption payments are offered only under limited circumstances.

The pros and cons

Sometimes, an offer of redemption payment is for a large sum of money. It’s tempting to accept the offer if you want to use the money to buy property or pay off debts, for example. In our experience, however, redemption offers are usually equal to what the worker would have received if they had continued to receive weekly payments and/or payment of medical expenses for the period of their entitlement.

The period of entitlement will vary from person to person, depending on the extent and seriousness of the injuries.  Currently, for all workers (other than seriously injured workers), that period is up to two years of weekly payments for income maintenance and up to three years for medical expenses.

In some cases, the amount offered may not be adequate considering the worker’s injuries. Sometimes, the full extent of the injuries may not be known at the time of a redemption offer. For example, a worker’s symptoms may worsen and down the track and they may require additional expensive medical treatment. It may be that this wasn’t foreseen at the time the offer was made. If a redemption offer is accepted before the extent of the injuries is known, the worker can’t subsequently seek additional compensation for the cost of specific medical treatment.

Taxation and government benefits

When considering whether to accept a redemption payment, you will also need to take into account:

  • That the lump sum is likely to be taxable.
  • Whether any Centrelink entitlements will be affected.
  • Whether you will be required to repay any Centrelink entitlements.
  • Whether any housing trust accommodation or benefits will be affected.
  • Whether you should seek financial or accounting advice.

How we can help

Websters Lawyers has a team of workers compensation lawyers with excellent experience in redemption payment issues. We can provide you with independent advice about whether to accept a redemption payment (if offered). Where appropriate, we can also negotiate with the compensating authority for payment of a larger sum. In some cases, the total cost of the legal advice can be recovered from the compensating authority.

It’s important to remember that if you decide to accept the offer, it’s a “once and for all” payment in settlement of your claim for weekly payments and medical expenses, including surgery if required down the track.

On the flip side, however, you aren’t obliged to accept a redemption offer. If you reject the offer, your weekly payments and/or payment of medical expenses will continue as if the offer was never made.

Contact us today for a free initial consultation to find out how we can help you.


It doesn't cost you anything to know where you stand

*Please note: Websters lawyers is a South Australian based law firm, handling matters exclusive to South Australia, with offices located in Adelaide, Ridgehaven and Smithfield.

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