How Do Workers’ Compensation Payments Impact Centrelink Benefits?

21 August, 2017


We often receive questions from injured workers about Centrelink and how compensation payments affect their Centrelink benefits.

Centrelink exists to provide a financial safety net for people in times of hardship.  When the hardship is caused by injuries from an accident and the injured party is entitled to a compensation payment, Centrelink has a right to recover some of the money that they have paid as income support since the accident from the injured party’s final compensation payment.

Under Australia’s Centrelink laws, compensation is defined as a payment for personal injury, illness or disease that replaces lost income or earning capacity. This compensation can relate to:

  • Workers compensation payments
  • Motor vehicle accidents
  • Slip and falls; and
  • Criminal injury claims.

When the compensation claim is finalised the insurance company has to pay the recovery sum directly to Centrelink first and then sends the balance to the injured party or their lawyer.

What is the recovery sum?

It is not a simple task to work out exactly how a lump-sum of compensation will impact on your Centrelink benefits. It is equally difficult to work out how much Centrelink will want to take from your settlement funds.

At PPIL we work closely with Centrelink and can perform calculations using Centrelink’s compensation estimator to determine:

  • How much money you may have to repay as a result of an overpayment from Centrelink following a compensation payment, or
  • Whether your Centrelink payments will cease for a period of time following the compensation payment

It must be reinforced that we (or any lawyer) can only estimate the amounts owing to Centrelink. The exact figure will only be known after settlement.

It is important that you speak with your solicitor about any Centrelink ramifications flowing from your personal injury compensation claim. Centrelink recovery is a very tricky area, and you should seek immediate legal advice if you encounter issues involving Centrelink.

You can access further information about Centrelink’s Compensation Recovery here