Work capacity assessment NSW: what injured workers must do

A work capacity assessment in NSW is a formal evaluation of your ability to work after an injury, and a work capacity decision is the insurer’s legal finding that can increase, reduce, or stop your weekly compensation payments. If you have received a decision notice or been told an assessment is coming, act before the notice period expires.

Immediate steps to take:

• Preserve every Certificate of Capacity your nominated treating doctor has issued.
• Request an updated report from your treating doctor that lists specific functional limits, not just “fit for light duties.”
• Record the exact date on the decision notice — this date starts the clock on your right to seek a review or a stay.
• Contact a workers compensation lawyer if payments are being reduced or stopped.

The legal authority for these assessments sits in section 44A of the Workers Compensation Act 1987, with the State Insurance Regulatory Authority (SIRA) acting as the regulating body for how insurers must conduct them.

Key takeaways

A work capacity decision in NSW can change your weekly payments immediately, and the notice period on the decision document is the deadline that determines what options you still have.

Table of Contents

• When can an insurer require a work capacity assessment in NSW?
• What can a work capacity decision actually cover?
• What types of assessments and reports do insurers use?
• What evidence do insurers rely on when making a decision?
• How do work capacity decisions affect your weekly payments?
• How to challenge a work capacity decision in NSW
• Step-by-step checklist to prepare for your assessment
• Where to get help in NSW
• What experienced advocates see — and what actually changes outcomes
• Carelawyers can review your work capacity decision
• Sources

When can an insurer require a work capacity assessment in NSW?

Section 44A of the Workers Compensation Act 1987 gives insurers the power to conduct a work capacity assessment and defines it as an assessment of an injured worker’s current work capacity. Critically, an assessment is not always necessary before an insurer makes a work capacity decision — the insurer can act on existing evidence alone.

Common timing triggers include:

• Initial PIAWE period: The insurer may check capacity early to establish your pre-injury average weekly earnings baseline.
• 78–130 week window: icare confirms this is the most common period for formal work capacity decisions, as different payment rules apply after 130 weeks.
• Routine two-year reviews: After 130 weeks, insurers must reassess at least every two years.
• Any time new information arises: A new Certificate of Capacity, a specialist report, or a change in your employment situation can all prompt a reassessment.

SIRA requires insurers to reassess work capacity promptly after receiving a Certificate of Capacity that indicates a change, and to inform you of the outcome and your review options.

Some workers are exempt from standard assessment rules. NSW government agency workers classified as “exempt workers” operate under different arrangements, and their Claims Service Provider (CSP) — the insurer or claims manager handling the policy — may have specific obligations under their applicable legislation. If you are unsure which scheme applies to you, check with SIRA or a lawyer before assuming the standard rules apply.

What can a work capacity decision actually cover?

A work capacity decision is not a single, uniform outcome. The insurer can decide on several distinct components, and knowing which one affects your claim tells you exactly what evidence to gather.

Decision components may include:

• Current work capacity: Whether you have no capacity, some capacity, or full capacity for work.
• Suitable employment: What type of work is considered appropriate given your injury, skills, and the labour market.
• Assessed earning capacity: What the insurer believes you could earn in suitable employment, even if you are not currently earning it.
• PIAWE and current weekly earnings: How your weekly payments are calculated and whether they change.
• Risk of further injury: Whether returning to a particular role or task poses an ongoing injury risk.

Outcomes range from no change to a full cessation of weekly payments. An insurer might find you have capacity for 15 hours per week in a sedentary role, assign a notional earning capacity to that finding, and reduce your payments accordingly — even if no employer has actually offered you that work.

The phrasing of the decision matters. A narrow decision (for example, one that addresses only your capacity for your pre-injury role) leaves more room to challenge on vocational grounds than a broad one that covers all suitable employment in the labour market. Read the decision notice carefully and note exactly what the insurer has and has not decided.

What types of assessments and reports do insurers use?

Insurers draw on several different assessment types, and each one tests something different. Understanding what each involves helps you prepare and anticipate what the insurer will rely on.

A few things worth knowing about how these work in practice:

• The Certificate of Capacity is the document your nominated treating doctor completes regularly. It is the most frequently used piece of evidence in any assessment, which is why vague language on it causes real problems (more on that below).
• An IME is arranged and paid for by the insurer. The doctor does not treat you — their report goes to the insurer, not your treating team. You are entitled to a copy.
• A Functional Capacity Evaluation is a structured, standardised test. The results feed directly into vocational assessments and insurer decisions about what work you can physically perform.
• Vocational assessments look at your transferable skills, education, and the available labour market. If the insurer uses one to argue you could earn $800 per week in an administrative role, you can commission your own vocational report to challenge that finding.

When preparing an evidence bundle for a dispute, medical record reviews that produce clear, defensible summaries of your clinical history can strengthen the medical component of your case significantly.

What evidence do insurers rely on when making a decision?

The insurer’s job is to assess your capacity to earn, not just your physical fitness. That distinction shapes everything about how they weigh evidence.

Common evidence types insurers consider:

• Certificates of Capacity (all of them, not just the most recent)
• Treating doctor and specialist reports
• IME reports
• Functional Capacity Evaluation results
• Vocational assessments and labour market analyses
• Payslips and employment records (to verify PIAWE and current earnings)
• Return-to-work plans and rehabilitation reports
• Employer records of suitable duties offered

icare notes that insurers weigh medical, vocational, and RTW evidence together. A strong medical picture alone is not always enough — if the vocational evidence suggests you could earn in a different role, the insurer may reduce payments even where your treating doctor says you cannot return to your pre-injury work.

Pro Tip: Ask your nominated treating doctor to record specific functional limits in every Certificate of Capacity: how many hours you can sit, stand, or walk; what weights you can lift; and what tasks you cannot perform. A generic “fit for light duties” statement gives the insurer room to interpret capacity broadly. Specific limits narrow that room considerably. SIRA’s standards of practice on changes in capacity reinforce that Certificates of Capacity are central to how insurers must reassess and communicate decisions.

One consequence that catches workers off guard: if you refuse or fail to properly participate in an insurer-ordered assessment without a reasonable excuse, the insurer can suspend your weekly payments. If you have concerns about an assessment (for example, you believe it is premature or the assessor is not appropriate), get legal advice before declining to attend — do not simply not show up.

How do work capacity decisions affect your weekly payments?

The financial impact of a work capacity decision depends on where you are in your claim and what the insurer has found.

The basic payment calculation compares your PIAWE (pre-injury average weekly earnings) against your assessed current weekly earnings or notional earning capacity. If the insurer finds you can earn $500 per week in suitable employment, your weekly payment may be reduced to reflect that notional capacity — even if you have not actually found that work.

The 78–130 week rules are the most consequential. After 78 weeks of weekly payments, your entitlement shifts. To continue receiving payments beyond 130 weeks under section 38 of the Workers Compensation Act 1987, you generally need to demonstrate you have no current work capacity, or that you are working at least 15 hours per week in suitable employment. A written application after 78 weeks is typically required to access the section 38 pathway, and “high needs” workers may qualify for additional support.

Notice periods matter. Insurers must give you notice before reducing or stopping payments. The notice period varies depending on how long you have been receiving weekly payments, and confusing the notice for the assessment appointment with the notice for the resulting payment change is a common and costly mistake. The practical guidance on work capacity decisions notes that the notice period for a decision that reduces or stops payments can be three months or longer in some circumstances — well beyond the 10 working days’ notice typically given for the assessment appointment itself.

Illustrative example (not legal advice): If your PIAWE is $1,200 per week and the insurer assesses your earning capacity at $600 per week in a suitable sedentary role, your weekly payment may be reduced to approximately $600. If the vocational assessment underpinning that finding is flawed — for example, it relies on roles that do not exist in your local labour market — that is a ground to challenge the decision.

How to challenge a work capacity decision in NSW

Three dispute routes are available, and the one you choose depends on your circumstances and how quickly you need to act.

Route 1: Internal review by the insurer
You can ask the insurer to review its own decision. This is the quickest first step and costs nothing. The insurer must reconsider the decision, but the same organisation that made the original call is reviewing it — which limits how far this route tends to go.

Route 2: SIRA merit review and IRO assistance
SIRA offers a merit review service for certain disputes, and the Independent Review Office (IRO) can provide free legal assistance to help you navigate the process. SIRA’s work capacity decision reviews page sets out which decisions are reviewable and how to apply.

Route 3: Personal Injury Commission (PIC)
The PIC handles formal work capacity disputes. Procedural Direction No WC5 sets out the document requirements, timetables, and the expedited assessment pathway for urgent matters. The expedited pathway is designed for cases where payments have been reduced or stopped and the worker needs a faster resolution.

Documents typically required when lodging with the PIC:

• All Certificates of Capacity (complete history, not just recent ones)
• Treating doctor and specialist reports
• IME reports (insurer’s and any you have obtained independently)
• FCE results
• Vocational assessment reports
• Payslips and a wages schedule
• RTW plans and employer correspondence
• Any rehabilitation provider reports

The stay — the most overlooked financial safeguard. Applying to the PIC before the decision’s notice period expires can enable a stay of the payment change, preserving your payments while the dispute is heard. Missing that window means payments may stop or reduce before your case is resolved. See SIRA’s dispute review guidance for how to apply and the conditions that apply to a stay.

For a practical overview of how dispute processes work, the dispute resolution guide for injured workers covers the steps and document bundles in plain language.

Step-by-step checklist to prepare for your assessment

Before the assessment

• Collect every Certificate of Capacity issued since your injury — the complete history, not just the most recent.
• Request a functional report from your nominated treating doctor. Ask them to record specific limits: “Patient can sit for no more than 20 minutes continuously, stand for 10 minutes, and cannot lift more than 2 kg.” Vague language is your biggest evidentiary risk.
• Obtain copies of your RTW plan and any workplace rehabilitation reports.
• Assemble payslips and employment records covering the period before and after your injury.
• Review workplace injury evidence examples to confirm you have not missed a document category.

Sample phrasing to use with your doctor:
“I need my Certificate of Capacity to record specific functional limits for my workers compensation claim. Can you please note the maximum hours I can work, the tasks I cannot perform, and any restrictions on sitting, standing, lifting, or concentration?”

At the assessment

• Bring a concise activity diary covering a typical week: what you can and cannot do, how long tasks take, and what aggravates your symptoms.
• Ask the assessor to record precise functional capacities and limitations in their report.
• Request a copy of any assessment report or outcome letter.
• Do not minimise your symptoms to appear cooperative — describe your worst days, not your best.

After a decision

• Check the decision notice date immediately and note the notice period for any payment change.
• Lodge an internal review if you have grounds, even while preparing a PIC application.
• Prepare a single indexed evidence bundle if escalating to the PIC.
• Document every contact with your employer and insurer: date, who you spoke with, what was offered or refused.

Pro Tip: If your employer has failed to provide genuinely suitable duties, document every offer, refusal, and discussion in writing. SIRA’s guidance on providing suitable work confirms that an employer’s failure to offer meaningful suitable duties can be used as evidence to challenge an insurer’s capacity finding — but only if you have the paper trail to prove it.

Sample lines to document employer RTW offers:
“On [date], I spoke with [name/position] at [employer]. They offered [role/hours/tasks]. I [accepted/declined] because [reason]. No written confirmation was provided.”

Where to get help in NSW

Official contacts and resources:

• SIRA (sira.nsw.gov.au): The regulator. Its workers compensation guidelines cover RTW obligations, suitable duties requirements, and insurer conduct standards. Start here to understand what your insurer is required to do.
• Personal Injury Commission (pi.nsw.gov.au): Handles formal disputes. Procedural Direction WC5 explains exactly what to file and when.
• Independent Review Office (IRO): Provides free legal assistance to workers in disputes. Contact via SIRA’s website.

Accredited workplace rehabilitation providers are independent professionals who can prepare reports on your functional capacity, suitable duties, and RTW progress. Their reports carry weight with insurers and the PIC, particularly when they contradict an insurer-commissioned vocational assessment. You can request an independent rehabilitation assessment — you do not have to rely solely on the provider the insurer appoints.

When to consult a lawyer:

• You have received a notice that weekly payments will be reduced or stopped.
• The insurer’s vocational assessment relies on roles you cannot realistically perform.
• Your PIAWE calculation is disputed.
• You need to apply for a stay before the notice period expires.
• You are approaching the 78–130 week window and have not received clear advice on your section 38 entitlements.
• The insurer has suspended payments after you missed or declined an assessment.

Getting legal advice early — before the notice period expires — is almost always cheaper and more effective than trying to recover ground after payments have already changed. For workers considering no win no fee legal representation, the financial barrier to getting advice is lower than many people assume.

What experienced advocates see — and what actually changes outcomes

The same mistakes appear in work capacity disputes, repeatedly. Certificates of Capacity that say “fit for light duties” without specifying what “light” means. RTW plans that were never signed or updated after the worker’s condition changed. Decision notices that sat unopened for two weeks while the notice period ticked down.

The fix for vague Certificates of Capacity is straightforward: brief your nominated treating doctor before every appointment. Tell them what the insurer is relying on and ask them to be specific. A Certificate that says “maximum 3 hours per day, no lifting above 2 kg, no prolonged sitting beyond 20 minutes” is a fundamentally different document from one that says “light duties only.”

The employer documentation gap is less obvious but just as damaging. Workers who cannot show what suitable duties were offered — or refused — lose a powerful line of challenge. If your employer never genuinely offered suitable work, or offered something that was not actually suitable, that failure is evidence. But only if you recorded it at the time.

Missed notice periods are the hardest to recover from. Once the payment change takes effect and no stay was sought, you are disputing a decision that has already altered your financial position. The PIC can still hear the matter, but the urgency and the leverage are different. The stay application is the tactical move most workers do not know to make.

If you have a decision notice in front of you and you are not sure what it means or what to do next, that is exactly the moment to get a lawyer to review it — not after the notice period has passed.

Carelawyers can review your work capacity decision

Receiving a notice that your weekly payments are being reduced or stopped is stressful, and the procedural steps that follow are genuinely time-sensitive. Carelawyers works with injured workers across NSW on exactly these situations: reviewing work capacity decisions, preparing evidence bundles, lodging PIC applications, and seeking stays to preserve payment continuity while disputes proceed.

The firm operates on a no win, no fee basis for workers compensation matters, which means the cost of getting advice should not be the reason you wait. Direct access to your lawyer — not a case manager or a paralegal — is how Carelawyers works, so the person reviewing your decision is the person who will represent you.

If you have received a work capacity decision or been told an assessment is coming, contact Carelawyers for a free initial review of your decision notice and evidence. The earlier you act, the more options remain open.

Sources

These are the primary sources this article draws on. Each one is worth bookmarking if you are preparing an evidence bundle or lodging a dispute.

Workers Compensation Act 1987, section 44A — AustLII
The legislative text. Read this to understand the exact statutory power insurers rely on and the definition of a work capacity assessment. AustLII’s version is free, current, and the authoritative source for the legislation.

SIRA — Work capacity decision reviews
Explains all three dispute routes, how to apply for a stay, and the conditions that apply. The operational starting point for anyone contesting a decision.

SIRA — Standards of practice: changes in capacity
Sets out what insurers must do when a Certificate of Capacity indicates a change. Useful when the insurer has not acted promptly or has not communicated review options.

icare — Work capacity decisions
Plain-language explanation of how decisions are made, what evidence is used, and how payments are affected. Good first read for workers new to the process.

Personal Injury Commission — Procedural Direction No WC5
The procedural rules for work capacity disputes at the PIC. Read this before filing to understand document requirements, timetables, and the expedited assessment pathway.

SIRA — Workers compensation guidelines
Covers RTW program requirements, employer obligations, and suitable duties standards. Relevant when documenting employer failures as part of a dispute.

SIRA — Providing suitable work
Explains what employers must do and document when offering suitable duties. Use this when building the employer-conduct component of an evidence bundle.

This article is general information, not a substitute for advice from a qualified lawyer. Consult a qualified legal professional about your own circumstances before acting on anything here.

• WORKERS COMPENSATION ACT 1987 – SECT 44A
• S11. Changes in capacity | SIRA: Workers compensation claims management guide
• Procedural direction — work capacity disputes | PIC

Recommended

• Workers Comp Weekly Payments Process: NSW Guide For Injured Workers
• Work Injury Damages In NSW: What You’re Owed
• Workers Compensation Entitlements Checklist For Injured Australians
• Workers Compensation Lawyers Sydney & NSW | No Win No Fee