• 13 min read
What Is a Work Capacity Decision (and Why Does It Matter)?
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By Suzzy at AusRehab
If you’ve been injured at work in NSW, you’ve probably heard the term work capacity decision thrown around by insurers, doctors, or case managers. But what does it actually mean? Why is it so important for your recovery and financial security?
A work capacity decision (WCD) is the insurer’s call on what kind of work you’re fit to do and how that affects your weekly compensation payments. It can determine whether you’re considered fit, partially fit, or unfit for work and what “suitable employment” looks like in your situation.
The impact can be huge: from how much income support you receive, to what duties you can perform, and even whether you’ll need to look at retraining or vocational support. That’s why understanding how these decisions are made (and what you can do if you don’t agree with one) is key to protecting both your recovery and your livelihood.
And here’s where workplace rehabilitation providers like AusRehab exert a major influence in helping injured workers navigate assessments, advocate for fair outcomes, and build safe, sustainable return-to-work (RTW) plans.
What is a work capacity decision in NSW workers’ compensation?
It’s the insurer’s formal determination of your ability to work, based on medical and vocational evidence, and it directly affects your compensation entitlements.
Understanding Work Capacity Decisions in NSW
Work capacity decisions can feel complicated, but at their core, they answer a simple question: what kind of work can this person reasonably do after their injury, if any? Understanding who makes this decision, and why it matters, is key to knowing your rights and planning your recovery.
Who Makes the Decision?
In NSW, your insurer is the one who makes a work capacity decision (WCD). They review the medical evidence, reports from your treating practitioner, and any vocational assessments to decide whether you are:
- Fit for work – able to return to your pre-injury duties without restrictions.
- Partially fit for work – able to do some form of work, but not your full pre-injury role.
- Unfit for work – currently unable to perform any duties due to injury.
Alongside this, the insurer also decides what counts as “suitable employment.” Suitable employment doesn’t always mean going back to the exact job you had before. It’s defined as work you can reasonably do, considering your skills, experience, education, medical condition, and availability of jobs in the labour market.
Why Work Capacity Decisions Matter
A work capacity decision (WCD) directly affects your weekly payments and financial security. Your insurer uses it to decide whether you’ll continue receiving your pre-injury average weekly earnings (PIAWE) or whether those payments will be reduced. Payments are influenced not only by your capacity but also by the earning potential identified in the LMA for any suitable roles.
The 130-week work capacity decision in NSW (2.5 years) is especially critical. At this point, ongoing weekly payments are only available if you’re assessed as having no current work capacity, or if you’re working at least 15 hours a week in suitable employment but still earning less than your pre-injury wage. This often catches workers off guard, which is why staying informed and supported is important.
What happens at the 130-week mark under a work capacity decision?
Your entitlements change significantly, i.e., ongoing payments depend on whether you have capacity for suitable work and how many hours you can sustain.
Work capacity decisions also shape your RTW plan. If you’re deemed partially fit, it means you may not be capable of returning to your pre-injury duties, but you can perform some form of work. Your weekly payments may be reduced or stopped, and you may be expected to seek or accept work that is considered “suitable”.
When are Work Capacity Decisions issued?
Under Section 44A of the Workers Compensation Act 1987 (NSW), the insurer can conduct a work capacity assessment and issue a WCD at any time during the claim, except where a worker has been assessed at 31% whole person impairment (WPI) or more.
In practice, WCDs are commonly triggered:
- around the 130-week mark of weekly payments
- when you have some capacity but cannot return to your pre-injury role
- when your employer has no suitable duties available
- when a claim has stalled with limited return-to-work progress
How Is Work Capacity Assessed?
Work capacity decisions are never made in isolation. Insurers consider a combination of medical evidence, functional testing, and vocational analysis to paint a full picture of what you can and cannot safely do at work.
The process often includes:
- Medical assessments: Your treating practitioner’s medical certificate and specialist reports form the foundation that outlines your injury, treatment progress, and any current restrictions.
- Functional evaluations: Independent providers may carry out a functional capacity evaluation to measure your strength, mobility, and tolerance for different tasks.
- Vocational assessments: These examine your skills, work history, qualifications, and potential for retraining. AusRehab specialises in comprehensive vocational assessments that match realistic jobs to your abilities.
- Psychological capacity: For some workers, stress, trauma, or mental health injuries also occur, which is why psychological assessments are also considered.
- Labour Market Analysis: Checks local demand and availability for identified roles, reviews duties, skills, hours, and pay rates from job ads, and confirms realistic earning potential.
All of these factors are considered together by the insurer when making a work capacity decision.
What is included in a work capacity assessment?
A typical work capacity assessment brings together medical documentation, results from functional testing, vocational assessments, and, when relevant, psychological evaluations. The goal is to create a clear, fair view of your work capacity, not only in the present but also with consideration for your long-term recovery and potential.
For workers, it’s reassuring to know that rehab providers such as AusRehab don’t just “tick boxes” during this process. Instead, we advocate for realistic outcomes, ensuring both your recovery and your financial security are prioritised.
What If You Disagree with a Work Capacity Decision?
Getting a work capacity decision that feels unfair can be stressful. But here’s the good news: you don’t have to accept it at face value. There are formal steps in place to make sure workers can challenge or review a decision.
Here are the main options:
- Internal review by the insurer – You can request that your insurer re-examine its decision. Sometimes, providing additional medical or functional evidence is enough to change the outcome.
- External review through IRO (Independent Review Office) – If you’re still unhappy, you can take your case to IRO for a free and impartial review. They’ll look at the evidence and decide whether the insurer’s decision is fair.
- Section 44 rights – Under the NSW workers’ compensation legislation, you may have the right to a formal review process depending on the type of decision and your circumstances.
What is a Section 44 review of a work capacity decision?
A Section 44 review is a legal mechanism that allows workers to dispute an insurer’s decision. It’s designed to make sure the decision aligns with medical evidence, your recovery progress, and fair practice.
Evidence is important here. Reports from your doctor, allied health professionals, or independent rehab providers, such as AusRehab, can strengthen your case. For example, a functional capacity evaluation or a vocational assessment can show, in practical terms, what tasks you can manage and what’s not realistic.
How long is the notice period for a work capacity decision?
Workers are typically given at least two weeks’ notice before changes to weekly payments take effect. This is meant to give you time to prepare or request a review.
Can I appeal a work capacity decision through IRO?
Yes. If you’re dissatisfied after the insurer’s internal review, you can apply to IRO for an external review. It’s free, independent, and designed to protect workers’ rights.
The bottom line: you have rights, and you have options. And having strong, well-documented evidence, especially from rehab providers who specialise in workplace assessments and return-to-work planning, can make all the difference in getting a fair outcome.
The Role of Workplace Rehabilitation Providers (AusRehab’s Role)
Work capacity decisions go beyond paperwork. They influence a person’s recovery journey, financial stability, and future employment prospects. That’s where workplace rehabilitation providers like AusRehab step in. Our role is to bridge the gap between medical evidence, insurer requirements, and what’s actually realistic for the worker.
Here’s how we help:
- Functional and vocational assessments
We provide evidence-based evaluations, such as a functional capacity evaluation or vocational assessments, to clearly outline what a worker can safely do. These assessments give insurers and employers a fair and accurate picture. Our assessments identify realistic roles, and our LMAs inform expected earnings, which often shape both the WCD outcome and your weekly payment calculations.
- Liaising with insurers and employers
We don’t just file reports, but we communicate directly with insurers, employers, and other stakeholders to ensure workers aren’t misunderstood or overlooked in the process.
- Evidence for reviews and appeals
When decisions are disputed, our detailed reports provide the medical, ergonomic, or functional evidence that can make all the difference in an internal or external review.
- Sustainable return-to-work planning
We design tailored RTW programs that match the worker’s current capacity with meaningful duties, helping them rebuild confidence while staying safe.
How can workplace rehabilitation providers help with a work capacity decision?
Providers like AusRehab act as independent, expert support. We make sure the worker’s strengths and limitations are properly documented, realistic duties are identified, and recovery stays on track without unnecessary risks.
At the end of the day, our goal is simple: keep recovery fair, safe, and sustainable, making workers feel supported and employers stay confident they’re meeting their obligations.
Getting Support with Work Capacity Decisions
Work capacity decisions are more than just administrative steps. They directly affect your income, your ability to return to work, and your overall recovery. Whether you’re fully fit, partially fit, or currently unable to work, the way your capacity is assessed directly impacts your financial stability and long-term employment.
Having the right support can make a significant difference. A trusted workplace rehabilitation provider like AusRehab ensures your strengths, limitations, and goals are properly recognised.
Return to Work with Confidence, AusRehab Can Help!
✅ Functional & vocational assessments
✅ Personalised return-to-work plans
✅ Support with reviews and evidence for appeals
✅ Sustainable strategies for long-term employment
📞 1300 391 947
📧 office@ausrehab.com
🔗 Book a free consultation today and take the next step toward a safe, sustainable return to work.
FAQs: Common Worker Questions
When it comes to work capacity decisions, the paperwork and legal terms can feel overwhelming. Here are some of the most common questions injured workers ask us.
What is a work capacity decision SIRA?
SIRA (the State Insurance Regulatory Authority in NSW) oversees the workers’ compensation system. They set the rules insurers must follow when making these decisions. If something feels off, knowing SIRA’s role can help you understand your rights.
What goes into a Work Capacity Decision?
When the insurer issues a WCD, they weigh:
- your functional capacity, age, education, and work history
- suitable job options identified by the vocational assessor or workplace rehabilitation provider
- earning potential for those roles based on the Labour Market Analysis (LMA)
This is used to decide whether you are fit, partially fit, or currently unfit, and how your weekly payments should be calculated.
What is a work capacity decision notice period?
When your insurer makes a work capacity decision, they’ll send you a notice outlining the outcome. Usually, this comes with a set notice period, meaning you have time to understand the decision and, if needed, prepare a review or appeal.
Who provides vocational assessments for work capacity in NSW?
These assessments are typically carried out by a workplace rehabilitation provider such as AusRehab. They look at your transferrable skills, qualifications, and functional abilities to match you with safe and suitable work.
Who decides if I am fit, partially fit, or unfit for work?
The decision is made by your insurer. They base it on medical reports from your treating doctor, specialist opinions, and vocational assessments. These help determine whether you can return to your usual job, do modified duties, or are currently unable to work at all.
What is considered “suitable employment” in a work capacity assessment?
A suitable employment refers to the work you can reasonably perform given your injury, qualifications, skills, and the local labour market, not just any job available.
For many workers, this definition can feel broad, which is why independent vocational assessments from a provider like AusRehab are so valuable. They ensure that your actual abilities, not just assumptions, are taken into account.
How does a work capacity decision affect weekly compensation entitlements?
Your weekly payments depend on the outcome of the work capacity decision. If you’re found to have full or partial capacity for suitable work, your payments may be reduced or stopped.
If you’re assessed as having no current capacity for work, your payments may continue. This decision becomes especially important at the 130-week mark, where stricter rules apply.
What is included in a work capacity assessment form?
A work capacity assessment form generally covers your medical details, functional abilities, work history, and any restrictions. It’s a structured way for insurers to gather the information they need to make their decision.
What is the difference between a work capacity decision and a work capacity certificate?
A work capacity decision is made by the insurer and determines your ability to work and your entitlements. A work capacity certificate is completed by your doctor, outlining your medical capacity and restrictions. The insurer uses this certificate as part of its decision-making process.
Does AusRehab provide support for workers challenging a work capacity decision?
Yes. AusRehab can provide functional evaluation or vocational assessment reports, workplace assessments, and other evidence to support a review or appeal of a decision. We also liaise directly with insurers, employers, and treating practitioners to advocate for fair outcomes.
How can AusRehab help with functional and vocational assessments?
Our team conducts detailed functional capacity evaluations and vocational assessments to give insurers and employers a clear, realistic understanding of what you can safely do at work. This ensures your recovery and return-to-work plan is based on accurate, evidence-based information.
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