august 2008

Peter Hanks QC
aCCIDENt
COMPENsatION
aCt REVIEW
final rePort
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CONTENTS
Abbreviations 4
Introduction and acknowledgements 7
Recommendations for change 21
Benefit improvements 35
Chapter 1 Improving understanding and clarity of the legislation 37
Legislation and the scheme 38
Amendments 38
A new Act 40
Chapter 2 Workers’ entitlement to compensation 43
Who is a worker? 45
Contribution of employment to injuries 60
Stress-related and psychiatric injuries 69
Chapter 3 Ensuring timely access to benefits and support 89
Delays in injury notification and determination of claims 92
Introduce provisional liability and streamline injury notification 93
Reduce formalities 111
Introduce electronic lodgement 113
Improve access to medical information 115
Clarify employer obligations 116
Providing greater protection against discrimination 118
Chapter 4 Supporting workers to get back to work after injury 127
The importance of early and durable return to work 128
How should the AC Act support return to work? 131
A new approach to the legislative framework 132
Planning return to work 137
Providing pre-injury or suitable employment 140
Exemption from the obligation to provide pre-injury or suitable employment 144
Risk management and occupational rehabilitation programs 146
Return to work coordinators 148
Labour hire 152
Compliance and enforcement 155
Workers’ right of action 162
Roles of other workplace parties involved in return to work 164
Issue resolution 172
Return to work incentives 173
Chapter 5 Better income replacement 185
Pre-injury average weekly earnings 190
Step-downs and entitlement periods 193
Weekly benefits after 130 weeks for partially incapacitated workers 199
Weekly benefits for workers who undergo medical procedures after 130 weeks 201
Payments pending receipt of funds from common law settlements 202
The relationship between annual and long service leave and weekly benefits 203
Accrual of leave while in receipt of weekly benefits 204
Notional earnings 205
Superannuation 209
Section 96 212
The method of calculating entitlement periods 215
Redemption of weekly benefits 217
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
PAGE 1
CONTENTS continued
Chapter 6 Treatment expenses 219
Timeframes for determining liability 223
Notice of termination of claims 224
Reasonable costs 225
Prior approval of expenses 227
Fee setting 229
Gap payments 231
Duration of benefits 232
Coordinated care programs 234
Ordinary daily living costs 237
Regulation of medical and like providers 238
Chapter 7 Lump sum benefits for significantly injured workers 243
The adequacy of current impairment benefits 249
Hearing loss injuries 260
Gradual process injuries 264
Multiple injuries 264
Two separate systems 268
Delays in lodging claims 270
Delays in processing claims 272
Impairment benefit assessment process 274
Chapter 8 Access to justice for seriously injured workers: common law 277
Assessing proposals for change 285
The deeming test 287
The narrative test for economic loss damages 291
Review of the method of assessing permanent impairment 295
Psychiatric/psychological consequences of physical injuries 296
The impact of ongoing weekly payments on statutory offers 299
Terminally ill workers 302
Access to medical information 303
One application 306
Reduction in scale costs 308
Appeals 310
Chapter 9 Benefits for dependants following work-related deaths 313
Adequacy of current death benefits 318
Eligibility for compensation 322
Accessing death benefits 328
Chapter 10 Transparency in decision-making and the efficient resolution of disputes 333
Performance of the current dispute resolution process 345
A modified approach to dispute resolution 349
Lodging a dispute 350
Internal review of statutory benefit decisions 351
A modified role for the ACCS 355
Arbitration 365
Medical questions 367
Medical Panel referrals by courts 372
Reasons 374
Accountability 375
Composition of Medical Panels 377
The Magistrates’ Court 378
Review of agent decisions by employers 380
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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CONTENTS continued
Chapter 11 Employer premiums 385
Premium calculation 386
Principals and contractors 396
Employer excess 401
Remuneration 404
Premium disputes and appeals 408
Enforcing premium-related obligations 412
Independent review of premium-setting 413
Trustees 418
Uninsured Employers and Indemnity Scheme 419
Chapter 12 Recovery from third parties 423
The recovery formula 425
Application of the recovery provision 427
Labour hire 429
Hold harmless clauses 433
Reimbursement to employers following recoveries 436
Impact of recoveries on premium 436
Chapter 13 Self-insurance 439
The role of self-insurance 440
How should self-insurance be managed 441
Eligibility and approval 442
Ongoing requirements 447
Contributions 448
Audit program 458
Claims management 459
The need for greater flexibility 462
Appendices 1. Amendments to inoperative, irrelevant or superfluous provisions 467
2. Taylor Fry Report 473
3. Access Economics Report 487
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
PAGE 3
ABBREVIATIONS
AC Act Accident Compensation Act 1985
AC Regulations Accident Compensation Regulations 2001
ACCS Accident Compensation Conciliation Service
AMCA Air Conditioning and Mechanical Contractors Association
ACWI Act Accident Compensation (WorkCover Insurance) Act 1993
AEU Australian Education Union
AHEIA Australian Higher Education Industrial Association
Ai Group Australian Industry Group
ALA Australian Lawyers Alliance
AMA Australian Medical Association
AMA-2 American Medical Association Guides to the Evaluation of Permanent Impairment
2nd edition
AMA-4 American Medical Association Guides to the Evaluation of Permanent Impairment
4th edition
AMA-5 American Medical Association Guides to the Evaluation of Permanent Impairment
5th edition
AMIEU Australasian Meat Industry Employees Union
ANF Australian Nursing Federation
APA Australian Physiotherapy Association
ARPA Australian Rehabilitation Providers Association
AWU Australian Workers’ Union
CCP Coordinated Care Program
CFA Country Fire Authority
CIP Community Integration Program
COCA Chiropractic and Osteopathic College of Australia
CPSU Community and Public Sector Union
DEECD Department of Education and Early Childhood Development
ESC Essential Services Commission
GEPIC Guide to the Evaluation of Psychiatric Impairment for Clinicians
HSG Health Services Group
HWCA Heads of Workers’ Compensation Authorities
IDSA Industrial Deaths Support and Advocacy Inc
INSG Injured Nurses Support Group
LIV Law Institute of Victoria
MAV Municipal Association of Victoria
MBS Medical Benefits Schedule
MDT Multi-Disciplinary Team
MGA Master Grocers Australia
MUA Maritime Union of Australia
NAB National Australia Bank
NAL National Acoustic Laboratory
PAGE 4
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
ABBREVIATIONS
NUW National Union of Workers
NZACC New Zealand Accident Compensation Commission
OHS Act Occupational Health and Safety Act 2004
OHS Occupational Health and Safety
OM Originating Motion
Panel Medical Panel
PETP Priority Education and Training Program
PIAWE Pre-injury average weekly earnings
PTSD Post traumatic stress disorder
PWC PricewaterhouseCoopers
RCSA Recruitment and Consulting Services Association
SCE Statistical case estimate
SDA Shop, Distributive & Allied Employers’ Association
SI Serious injury
SIAV Self Insurers Association of Victoria
SRC Act Safety, Rehabilitation and Compensation Act 1998
TA Act Transport Accident Act 1986
TAC Transport Accident Commission
TCFUA Textile Clothing and Footwear Union of Australia (Victoria Branch)
VACC Victorian Automobile Chamber of Commerce
VBIRA Victorian Brain Injury Recovery Association
VCAT Victorian Civil and Administrative Tribunal
VCEA Victorian Congress of Employer Associations
VECCI Victorian Employees’ Chamber of Commerce and Industry
VFF Victorian Farmers Federation
VIEU Victorian Independent Education Union
VTHC Victorian Trades Hall Council
VWA Victorian WorkCover Authority
WC Act Workers Compensation Act 1958
WIC Workplace Industry Classification
WOHC Workers’ Occupational Health Centre
WPI Whole person impairment
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
ABBREVIATIONS
PAGE 5
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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INTRODUCTION
Areas for reform
A consultative review
Overview of the Victorian
WorkCover scheme
The way forward
1. On 10 December 2007, I was commissioned by the Minister for Finance, WorkCover and the
Transport Accident Commission, the Hon Tim Holding, to conduct an independent review of the
Accident Compensation Act 1985 (the AC Act) and associated legislation. My terms of reference
were to provide advice and recommendations in relation to:
• the need to provide fair and effective benefit and premium regimes, having regard to workers’
compensation schemes in other jurisdictions and the need to secure long-term positive
outcomes for injured workers;
• the fundamental need to protect the operational and financial viability of the scheme;
• identifying and resolving anomalies in the AC Act and in the operation of the scheme;
• improving employer and employee understanding of the AC Act;
• reducing the regulatory and administrative burden on employers, including through improved
alignment, where appropriate, with related administrative arrangements both within the State
of Victoria and with other jurisdictions; and
• improving the usability of the legislation through the removal of inoperative, irrelevant or
superfluous provisions.
How to read this report
2. My report is arranged in chapters that address the various components of the legislation and
the scheme. In particular, the chapters cover –
• clarity of the legislation;
• workers’ entitlement to compensation;
• workers’ access to benefits and support;
• workers’ rehabilitation and return to work following injury;
• income replacement benefits for injured workers;
• treatment expenses for injured workers;
• lump sum benefits for significantly injured workers;
• access to common law for significantly injured workers;
• benefits for dependants following work-related deaths;
• decision-making and the efficient resolution of disputes;
• employer premiums;
• recovery from third parties of benefits paid to workers; and
• self-insurance.
3. Immediately following this Introduction are two tables. The first table provides a summary of
each recommendation in the report, with a cross-reference to the location of that
recommendation in the report. The second table lists only those recommendations that involve
the improvement of benefits.
4. I appreciate that reading over 500 pages is a daunting task for even the most committed reader
and I have therefore developed a separate guide to the report. The guide provides a summary
of the report’s more significant recommendations plus an overview of all the benefit
improvements. The guide also includes a full list of the report’s recommendations and the list of
prioritised benefit improvements.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
INTRODUCTION
PAGE 8
AREAS FOR REFORM
5. My proposed package of recommendations seeks to address four areas of reform, namely:
• better rehabilitation and return to work outcomes;
• fair and accessible benefits;
• greater accountability and transparency; and
• improved understanding and usability of the legislation.
Improving return to work is the central objective
6. All stakeholders were united in supporting the importance of improving return to work for
injured workers; and this was a central consideration for me in assessing proposals for reform.
7. An injured worker’s return to work after workplace injury is much influenced by their
relationship with their employer and workplace, as well as by the worker’s recovery from injury.
Although that relationship is a workplace matter, it can be enhanced by the rights and
responsibilities established by the legislation, and can be compromised by the compensation
system.
8. My recommendations for recasting the return to work provisions in the AC Act aim to support
return to work outcomes by setting clear expectations for all parties involved in the return to
work process, without prescribing a one-size-fits-all approach, and supporting the development
of comprehensive guidance material tailored to the needs of participants in different industries
and sectors of the economy.
9. My recommendation for the introduction of provisional liability aims to ensure that workers
receive short-term income support and work with their employer on return to work, without the
divisive issue of establishing liability being the initial focus of a compensation claim, potentially
damaging an employer’s relationship with a worker.
Priorities for benefit reform
10. The Review’s terms of reference indicated that the Review would “provide some scope to
examine the benefits available to injured workers having regard to the need to protect the
long-term financial viability of the scheme”.
11. I have balanced the competing considerations of providing benefits to injured workers and
maintaining the financial viability of the scheme by recommending a package of benefit
improvements that I believe could be funded within existing premium rates.
12. In December 2007, the valuation of the WorkCover scheme indicated that the margin between
the average premium rate and the annual cost of funding the scheme’s liabilities was around
$93 million – an amount commonly referred to as the “implied margin”.
13. I have used the implied margin as a guide to the amount that the scheme may be able to afford
in additional benefits – without putting upward pressure on premiums, or requiring that the
Victorian Workcover Authority (VWA) use investment returns to fund compensation for injuries.
14. The implied margin can only be used as a guide because, by the time the Minister receives my
report, the next valuation of the scheme will be underway and that valuation may significantly
affect the implied margin. The implied margin will also be affected by any initiatives that the
Government decides to fund outside the Review.
15. The actuaries advising me have estimated that, not including administrative costs, the net cost
of my package of recommendations will be in the range of $88.9-$137.1 million a year. It may
be that all the benefit improvements recommended in my report cannot be implemented in one
financial term; nevertheless, I believe that all the benefit improvements should be implemented
by Government – even if implementation occurs over more than one financial term.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
INTRODUCTION
PAGE 9
16. My recommendations for benefit enhancement reflect a number of principles and priorities.
17. The fair, adequate and efficient compensation of the families of deceased workers should
be our first priority. For that reason, I have made a number of recommendations to increase
benefits to the families of deceased workers, to cut the red tape and delays in the delivery
of those benefits and to remove anomalies that could deprive family members of benefits
in some cases.
18. Secondly, increasing benefits paid to injured workers who suffer a permanent impairment is
a high priority. Currently, many of those workers have to begin court proceedings to access
adequate compensation – a time-consuming and costly process. My recommendations will
give permanently impaired workers access to higher benefits quickly, and without the daunting
prospect of going to court.
19. Finally, a key priority should be income support for long-term injured workers. For that reason,
I have recommended that Victoria become the first Australian jurisdiction to compensate long-
term injured workers for the superannuation they would have accrued if they had continued
working. It is also the reason that I have recommended an increase in the level of compensation
for injured workers from 75% to 80% of pre-injury average weekly earnings after the first
13 weeks of incapacity.
20. My recommendations for benefit reform reflect my preference for increasing benefits paid
through the statutory benefit scheme, rather than through common law. That preference
reflects the reality that the statutory benefit scheme provides no-fault compensation and
therefore treats all injured workers equally, and delivers benefit more quickly and at lower
cost than common law.
Greater accountability and transparency
21. Stakeholders also sought greater accountability and transparency, both for decisions made by
the VWA and its agents and for the conduct of other participants in the WorkCover system –
namely employers and medical providers. As a result, I have recommended a new model for the
resolution of disputes about WorkCover claims and premiums, among other recommendations.
Improved understanding and usability of the legislation
22. The AC Act has been amended on 80 occasions, and it now prescribes a series of separate
accident compensation schemes, each covering a different period since 1985. Some of the
early legislative provisions are obsolete, and should be removed. There are also anomalies and
inconsistencies between provisions that have been added at different times.
23. Accordingly, I have recommended that the current accident compensation legislation including
the Accident Compensation (WorkCover Insurance) Act 1993 (the ACWI Act) be recast into a
comprehensive AC Act, arranged more rationally and coherently, and expressed in a more user-
friendly language.
24. I am conscious that my package of recommendations represents a substantial program of
reform, and that the task of moving to a new AC Act will be very demanding. For that reason, I
have recommended a staged approach to legislative change, with significant policy and benefit
changes to be legislated as soon as possible, and the transformation to an entirely new AC Act
occurring within three years.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
INTRODUCTION
PAGE 10
25. Overall, my review has found that the accident compensation legislation is generally working
well. However, the Review has identified many reform opportunities that will cut red tape for
employers and improve compensation for the most disadvantaged – the families of deceased
workers, workers with a permanent impairment and long-term injured workers. There is a
considerable consensus among stakeholders in support of many of these reforms – although
some remain contentious. I encourage the Government – having taken the brave step of
commissioning the first independent review of the AC Act in 20 years – to seize this opportunity
to improve outcomes for injured workers and employers.
A CONSULTATIVE REVIEW
26. My proposed package of reforms is very much the outcome of stakeholder feedback. In my
view, the quality and success of the final recommendations largely belongs to all those who
have taken the time to engage and be involved with the Review.
27. I did not approach this Review with a “back to the drawing board” approach. Rather, I was
guided by the terms of reference which expressed the Victorian Government’s view that “the
underlying principles of the accident compensation laws remain sound”, and then sought the
views of stakeholders and practitioners as to how the legislation and the scheme could be
improved, based on their vast experience.
28. To assist me, the Minister appointed a Stakeholder Reference Group (the SRG), chaired by
Ms Elana Rubin, Chairperson of the VWA. The SRG’s members were:
• Brian Boyd – Secretary, Victorian Trades Hall Council;
• Graham Bird – Federal and Victorian Secretary, Australasian Meat Industry Employees’ Union;
• Cesar Melham – Victorian Branch Secretary, Australian Workers Union;
• Wayne Kayler-Thomson – CEO, Victorian Employers Chamber of Commerce and Industry;
• Tim Piper – Victorian Branch Director, Australian Industry Group;
• Steve Irving – Chairperson, Self Insurers Association of Victoria;
• Jane Stephens – CEO, Australian Medical Association, Victorian Branch;
• Michael Brett Young – CEO, Law Institute of Victoria; and
• Marcus Fogarty – Representative, Australian Lawyers Alliance.
29. The SRG proved invaluable in assisting me to define the issues for the Review, and in acting as
a sounding board for all of the draft chapters of the report, and commenting on the package of
final recommendations.
30. I am very grateful for the time and commitment given by the SRG members throughout the
Review and for the quality of their contributions to the Review.
31. In December 2007, I wrote to over 130 organisations asking them for their initial views on
opportunities for reforming the accident compensation legislation. Their responses helped me
to develop a Discussion Paper, released in March 2008. In that Paper, I called for detailed
submissions on a series of issues and questions. In total, 100 organisations and individuals
made submissions in response to my initial letter and discussion paper. I also held over 100
hours of face-to-face consultation with stakeholders to discuss the issues raised in the Review.
32. I engaged independent expert advisers on a number of technical issues, namely:
• Taylor Fry, who were engaged to provide independent actuarial costings of all
recommendations (Appendix 2); and
• Access Economics, who were engaged to advise on pricing of self-insurance contributions
(Appendix 3).
1
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
INTRODUCTION
PAGE 11
1 Appendix 1 is a table of recommended amendments to inoperative, irrelevant or superfluous
provisions in the legislation.
Acknowledgements
33. I was greatly assisted in this Review by Counsel Assisting, Michael Fleming, and a Review
Secretariat, formed from the Department of Treasury and Finance and the VWA. Indeed,
the preparation of this report would have been impossible without the stimulation and
support provided by Michael and by the Secretariat.
34. I wish to record my sincere thanks to Michael and all members of the Review team for their
assistance to me. Michael brought to the Review a great deal of experience with legal issues
arising under the AC Act, and a good understanding of the social and economic implications
of workers’ compensation. The members of the Secretariat brought to the Review many years
of practical and policy-oriented experience in the public sector. The commitment, insight and
diligence of both Michael and the members of Secretariat have made it possible for my task
to be completed in the short time available, and for the task to be completed so thoroughly
and accurately.
35. I am particularly grateful for the assistance given me by Dave McQueen, the outstanding leader
of the Review Secretariat, Megan O’Halloran, communications and stakeholder manager for the
Review and Linda Timothy, manager of legal and policy for the Review. I do not underestimate
the hard work, support and clear thinking provided by other members of the Secretariat; but
I must express my appreciation for the daily support and clear advice provided by those
three over the past eight months. I should also record the extraordinary level of support,
encouragement and constructive criticism provided throughout my work on the Review by
my personal assistant, Lou Coffey.
36. I would also like to record my sincere appreciation to Elana Rubin, VWA Chairperson, and
Greg Tweedly, Chief Executive, VWA, and all employees of the VWA.
37. Since the beginning of the Review, the VWA has provided full cooperation in answering limitless
requests for information and queries.
38. I hope the recommendations in this report will assist the VWA achieve its mission of working
with the community to deliver outstanding workplace health and safety, together with quality
care and insurance protection to workers and employers.
OVERVIEW OF THE VICTORIAN WORKCOVER SCHEME
39. Workers’ compensation schemes are designed to mitigate and, as far as possible, remove the
serious disadvantage that is so frequently caused by work-related injury or illness.
40. The Victorian WorkCover scheme provides employers with compulsory insurance against the
impact of loss suffered by injured workers. The scheme provides a range of benefits to injured
workers, for life if required, regardless of fault, including weekly compensation, medical and
paramedical treatment, attendant care and lump sum payments.
41. Where death occurs as a result of a work-related injury or illness, support is also provided for
dependants in the form of lump sum compensation and periodic pension payments, counselling
for immediate family members and funeral expenses.
42. The VWA acts as the regulator of Victoria’s workplace occupational health and safety (OHS)
and return to work requirements and as the underwriter of the workers’ compensation scheme.
It administers the scheme through private insurance agents, who manage claims and collect
premiums on behalf of the VWA. Agents are authorised by the VWA to provide services to
employers and injured workers in accordance with the legislation and the standards and
procedures set by the VWA.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
INTRODUCTION
PAGE 12
43. The VWA’s statutory obligations are spelt out in several Acts of Parliament including:
• health and safety at work under the OHS Act;
• workers’ compensation and the rehabilitation of injured workers under the AC Act;
• employer insurance premiums under the ACWI Act;
• explosives and other dangerous goods under the Dangerous Goods Act 1995;
• the transport of dangerous goods by road under Road Transport Reform (Dangerous Goods)
Act 1995; and
• high-risk equipment used in non-work-related situations under the Equipment (Public Safety)
Act 1994.
44. Broadly, the responsibilities of the VWA are to:
• help prevent workplace injuries;
• enforce Victoria’s OHS laws (including selected Commonwealth laws);
• provide reasonably priced insurance against liability for workplace injuries and disease for
employers;
• help injured workers back into the workforce; and
• manage the workers’ compensation scheme by ensuring the prompt delivery of appropriate
services and adopting prudent financial practices.
45. In the VWA’s 2006/2007 Annual Report, the following safety, business and financial performance
was recorded:
• less than 30,000 workplace injury claims for only the second time in its history;
• the lowest workplace injury rate on record (it has reduced by 19% in the past five years);
• fourth successive 10% cut to average premium rates;
• performance from insurance operations of $729 million;
• sixth successive year of full-year actuarial release of $394 million; and
• commencement of a return to work inspectorate.
46. The VWA is governed by a board which is accountable to the Government, stakeholders and the
Victorian community.
A brief history of Victoria’s accident compensation legislation
47. Workers’ compensation legislation in Victoria started in 1914, with benefits payable to workers
for injuries “arising out of and in the course of” employment. The Workers’ Compensation Act
1946 changed the scope to injuries “arising out of or in the course of” employment.
48. In June 1983, the Victorian Government established a Committee of Enquiry into the Victorian
Workers Compensation Scheme chaired by Mr BC Cooney. The Cooney Report
2
led to the
introduction of the AC Act, with the establishment of WorkCare, a single government insurance
scheme to underwrite workers’ compensation, replacing the previous scheme underwritten by
52 private insurers, and the creation of the Accident Compensation Commission to administer
the scheme.
49. The AC Act made sweeping changes to the workers’ compensation system, including public
underwriting, vocational rehabilitation, OHS reforms, and a new dispute resolution system.
50. The AC Act has been amended 80 times since 1985, including, in 1987, changes aimed at
tightening up the system, and focusing particularly on the poor return to work performance.
A new remuneration system for claims agents was introduced and the ability of employers to
change insurance agents was enhanced.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
INTRODUCTION
PAGE 13
2 B C Cooney, Report of the Committee of Enquiry into the Victorian Workers’ Compensation System
1983-84, Victorian Government Printer, 1984.
51. In 1992, the Accident Compensation Commission was abolished and the current VWA was
established to administer the new system. Weekly benefits for workers with a partial work
capacity were restricted, a non-adversarial dispute resolution system through conciliation was
introduced, expert Medical Panels to determine medical questions were established, access to
common law was limited to seriously injured workers and the right to sue for economic loss
was reinstated.
52. In 1993, the ACWI Act was introduced. It required employers to obtain and maintain an
insurance policy with an authorised insurer who was required to reinsure its liability with the
VWA and it required the VWA to establish and maintain a statutory fund for each authorised
insurer.
53. Under the ACWI Act, the insurance risks of authorised insurers were pooled. The rationale was
to ensure that all liabilities could be met under the policies. It was the Government’s intention
for the authorised insurers to bear the insurance risk after full privatisation; however, this
privatisation never occurred. The VWA is now the sole insurer and underwriter of the scheme,
and has appointed agents to determine and collect premiums for individual employers based
on a set formula.
54. In 1996, responsibility for the administration of Victoria’s OHS legislation was transferred to
the VWA.
55. In 1997, the rights of injured workers to pursue common law damages were removed, the
structure of weekly benefits was significantly changed, impairment benefits were introduced to
replace the Table of Maims and compensation for a worker’s death was restructured.
56. In 2000, the rights of seriously injured workers to pursue common law damages were restored
with a new threshold for economic loss; to be effective from 20 October 1999.
57. In 2004, the efficiency of the claims process was improved and early and sustainable return to
work was facilitated.
58. In 2005, provision was made for previously injured workers whose employers exit the Victorian
scheme and enter the Comcare scheme.
59. In 2006, existing benefits were improved – including compensation for the death of a worker,
the extension of the weekly benefits entitlement period from 104 to 130 weeks and increased
payments for workers with a partial work capacity
60. In 2007, the financial guarantee requirements on employers who exit the Victorian WorkCover
scheme (or Victorian self-insurer arrangements) and enter the Comcare scheme were spelt out,
and arrangements were made for the management of tail claim liabilities for Victorian self-
insurers who cease their self-insurance arrangements.
61. Other changes introduced since 2000 included:
• an increase in the minimum lump sum benefits from $5040 to $10,250 to improve access to
benefits for those injured workers unable to obtain common law damages;
• an increase to weekly benefits to include regular overtime and shift allowances for the first
26 weeks of payments;
• changes to the way in which overtime is included in the calculation of pre-injury average
weekly earnings, including clarification of shift allowances after concerns were raised that the
prior method did not reflect modern work arrangements;
• introduction of limited entitlement to weekly benefits for workers over the age of 65 in certain
circumstances; and
• increases in compensation for the death of a worker to a total of $265,590 and the inclusion
of overtime and shift allowances in weekly pensions for surviving family members.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
INTRODUCTION
PAGE 14
62. Since the 2003/2004 financial year, there have also been four consecutive annual 10% cuts
to the average premium rate payable by Victorian employers. The average premium rate has
reduced from 2.22% of wages in 2003/2004 to 1.46% of wages in 2007/2008.
The Australian context
63. Victoria’s workers’ compensation scheme is one of 10 schemes within Australia. Each State
and Territory in Australia has its own workers’ compensation scheme, which is governed by
respective legislation. There are also two national schemes: Comcare, which primarily covers
Commonwealth Government employees, and Seacare, which covers maritime workers.
64. The State, Territory and national schemes vary markedly in design, coverage, benefit
entitlements, compliance and premiums. Each scheme has developed since the introduction of
workers’ compensation legislation in the early 1900s, in the context of its own political, social
and economic environment, and it is not surprising that the schemes are significantly different
in nature, application and content.
65. The differences between the various schemes have driven a variety of reform initiatives aimed
at national uniformity, which gained momentum during the 1970s.
3
66. The more recent reform initiatives can be traced back to the Industry Commission reports of
1995 into workers’ compensation in Australia.
4
In 1989, the Federal Government requested
that the Industry Commission examine whether existing workers’ compensation arrangements
ensured appropriate safety and accident prevention incentives for both employers and
employees in the context of a federal system and sought advice on any changes that should
be implemented. The Industry Commission recommended several changes to workers’
compensation schemes and strongly recommended the establishment of a national framework
for workers’ compensation.
67. As part of the agenda for national consistency, the Australian Safety and Compensation Council
was established to develop policy advice on workers’ compensation and engage State and
Territory governments in progressing nationally consistent workers’ compensation
arrangements. Currently the arrangements vary in the following main areas.
Scheme model
68. Workers’ compensation schemes can be broadly categorised as no-fault or common law, or
a hybrid of both.
69. No-fault schemes pay compensation to injured workers without any inquiry into the question
of who was at fault for the injury. Schemes which adopt this model are the South Australian,
Northern Territory and Commonwealth (Comcare) schemes.
5
70. In some Australian jurisdictions, compensation is available for more serious injuries at common
law on the basis of fault. In these schemes, access to common law is sometimes limited by
an impairment threshold or an irrevocable election between accepting no-fault benefits and
exercising common law rights. Queensland is an example of a model with both these limitations.
71. Schemes with a hybrid of both models provide long term statutory benefits on a no-fault basis
and allow access to common law damages on a fault basis. Schemes that operate under this
model include the Victorian, New South Wales, Western Australian and Australian Capital
Territory schemes.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
INTRODUCTION
PAGE 15
3 Guthrie, R, Purse, K & Meredith, F, Workers’ Compensation and Self-Insurance in Australia – National
Priority or Trojan Horse?, (2006) 17 Insurance Law Journal, 256 at 256.
4 Industry Commission Workers’ Compensation in Australia, Report No. 36, February 1994; Industry
Commission Work, health and safety: An inquiry into occupational health and safety, September 1995.
5 Northern Territory for injuries after 1987; and Victoria between November 1997 and October 1999.
Scheme funding
72. Workers’ compensation schemes are funded in three ways: centrally funded, privately
underwritten or a combination of the two.
73. In centrally funded schemes, a single public insurer (the Government) both underwrites and
administers the scheme. Centrally funded schemes include the Commonwealth (Comcare) and
Queensland schemes.
74. In privately underwritten schemes, approved insurance companies underwrite and primarily
administer the scheme. Privately underwritten schemes include the Seacare, Western
Australian, Tasmanian, the Northern Territory
6
and the Australian Capital Territory schemes.
75. In combination schemes, public insurers underwrite the scheme and are responsible for funds
management and premiums, but other administrative functions are primarily carried out by
private bodies (including private insurers). The Victorian and New South Wales schemes are
hybrid schemes.
Premium
76. The majority of employers in Australia pay workers’ compensation insurance premiums.
However, some smaller employers are exempt by reason of their structure or size and some
larger employers, who meet various prudential requirements, self-insure their liability in respect
of workplace injury. Although self-insurers contribute an amount to help administer the scheme
in the jurisdiction where they operate, they do not pay premiums.
77. Premiums fund each of the schemes’ liabilities. However, cross-jurisdictional comparison is
complex, due to a number of factors. Premiums are set based on actuarial forecasts of claims
liabilities. Generally they are set according to the risk profile of a particular industry, but there is
a multitude of risk profiles. Premium rates are typically fixed as a percentage of an employer’s
remuneration and the definition of “remuneration” varies. Some States have higher levels of
self-insurance (for example, South Australia) and others have lower levels (for example, the
Australian Capital Territory); and excesses apply in certain jurisdictions (for example, in Victoria
the excess is the first 10 days of incapacity with the first $564 of medical costs, with a buy-out
option). Claims liabilities also vary across the States and Territories due to a number of complex
factors considered in further detail below.
78. As a comparison, the Commonwealth scheme, Comcare, had the highest average premium
level for 2006/2007 at 3.03% of aggregate remuneration, closely followed by South Australia at
3.00%.
7
Queensland had the lowest level at 1.20%, and Victoria’s premium rate of 1.62% was
the second lowest of the schemes.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
INTRODUCTION
PAGE 16
6 In the Northern Territory scheme, a public insurer also competes in the private market.
7 No comparable figure was available for the Australian Capital Territory, but was 3.32% for 2004/2005.
Coverage
79. Whether or not a worker is entitled to compensation for an injury at work is dependent on
a number of factors:
• whether the person is a “worker” as defined in the legislation (including where a person
would otherwise not be a worker but is a “deemed worker”);
• whether the person has suffered an “injury” (as defined by the legislation);
• whether there was a sufficient nexus between the worker’s injury and employment, that
is whether the injury arose out of or in the course of employment;
• to what extent the employment has contributed to the injury (for example, employment
in Victoria has to be a “significant contributing factor” for certain types of injuries, and in
New South Wales it has to be a “substantial contributing factor”);
• what constitutes “work” (for example, recess and journey claims are treated differently across
the States and Territories: the New South Wales, Queensland, the Australian Capital Territory
and Seacare cover journey claims with some restrictions, Victoria and South Australia do not);
• whether the worker is entitled to coverage having regard to age (many jurisdictions have
retirement provisions which restrict access to compensation, particularly weekly benefits);
• whether there are any exclusionary provisions which may apply (for example, self-inflicted
injury); there are specific exclusions in each jurisdiction for psychiatric or psychological
injuries (for example, most jurisdictions exclude psychiatric or psychological injury caused by
reasonable administrative or management action).
80. As illustrated above, there are vast differences in the schemes, which determine whether
employers will be responsible for injuries sustained by workers.
Benefits
81. Schemes vary widely in the benefits that workers are entitled to receive. The benefits fall
primarily into four categories:
• weekly benefits (income replacement);
• lump sum benefits (permanent impairment);
• medical treatment; and
• benefits for the death of a worker.
Weekly benefits
82. Weekly benefits are periodic payments intended to replace income and are common to all
schemes. However, the amount, levels and duration of weekly benefits vary markedly between
the schemes. Broadly speaking, most of the schemes decrease the weekly benefits over time
with one or more “step-down” periods.
83. Some schemes have a “cap”, being the maximum amount of weekly benefit allowed. Some
schemes also have a maximum period for which weekly benefits are payable (such as
Queensland, where the maximum period is five years).
84. All of the schemes use various “step-down” provisions in which a worker’s weekly benefits
are decreased over time. Some schemes compensate workers 100% of their weekly earnings
(subject to different rules about how those earnings are calculated). In the initial period of
incapacity for work,
8
the Commonwealth (Comcare), New South Wales, South Australia,
Western Australia, Tasmania, the Australian Capital Territory and the Northern Territory pay 100%
of weekly earnings to injured workers (subject to maximum levels imposed in some
jurisdictions). Victoria pays 95% of a worker’s pre-injury average weekly earnings initially, and
Queensland pays 85%. Some schemes with higher initial compensation levels significantly
reduce benefits after the initial period, either by imposing low long-term weekly compensation,
or by means of a capping provision.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
INTRODUCTION
PAGE 17
8 The initial period varies from one scheme to another: see Chapter 5, “Better income replacement”,
Table 5.2.
85. Weekly payments are calculated differently in each jurisdiction. Some are based on award rates
(where they still exist) or other industrial instruments; some include overtime bonuses or other
allowances or both.
86. Each jurisdiction has different circumstances and methods for terminating or suspending
weekly payments and provides for cessation of weekly benefits in different circumstances.
Victoria and New South Wales have similar provisions relating to the cessation of payments
after 130 or 104 weeks of incapacity, where the worker has a capacity for suitable employment.
Most jurisdictions have suspension or termination provisions to deal with a worker who does
not comply with rehabilitation and return to work obligations or does not attend medical
examinations.
87. In all States and Territories, so-called “redemption” of weekly benefits is permitted. That is,
injured workers may redeem their entitlements to weekly benefits (and all statutory benefits)
in one lump sum amount instead of continuing to receive entitlements in the form of weekly
payments. However Victoria, New South Wales and the Commonwealth (Comcare) only do
so on a very limited basis and subject to restrictions.
Lump sum benefits
88. Where a worker suffers a permanent impairment, lump sum payments are available in all
jurisdictions. Lump sum payments compensate a worker for permanent impairment to a body
part or function. This payment is made in addition to any entitlement to weekly benefits.
89. Some jurisdictions operate with thresholds to the entitlement (for example, Victoria has a
10% whole person impairment (WPI) threshold for physical and 30% WPI threshold for
psychiatric or psychological injury, New South Wales has 1% WPI threshold for physical and
15% WPI threshold for psychological or psychiatric injury), and other jurisdictions have no
thresholds (Western Australia and Queensland). Each jurisdiction has a statutory maximum
(a “cap”) for lump sum payments.
90. The lump sum amount in each jurisdiction is primarily calculated by reference to the AMA
Guides for the Evaluation of Permanent Impairment, although some jurisdictions use different
editions of the Guides. Western Australia uses its own guides as does Comcare, although
those guides are based on the AMA Guides 5
th
edition.
Medical treatment
91. Fundamentally, all jurisdictions cover all reasonable costs associated with treatment,
rehabilitation and hospitalisation. However, the services which are covered and limits
on any amounts payable vary between jurisdictions.
Compensation following the death of a worker
92. If a worker dies because of a workplace injury, all jurisdictions provide access to death benefits
so that the worker’s surviving domestic partner or dependant is entitled to a lump sum, ongoing
living expenses by way of periodic payments and payment of funeral expenses. Coverage varies
between the schemes based on the definition of “dependant”, as do the amounts payable.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
INTRODUCTION
PAGE 18
Common law
93. Access to common law varies between the jurisdictions and has been a continuing area of
contention in the schemes.
94. Before the introduction of no-fault statutory schemes, workers had to begin common law
proceedings for negligence or breach of statutory duty to receive any benefits (in the form of
damages). Initially, the damages available at common law were open-ended, but currently
common law entitlements (where available) are restricted. Negligence (or breach of a statutory
duty) has to be established; and, in some jurisdictions, there are threshold tests (Victoria has a
threshold of 30% WPI or a complicated narrative test for “serious injury” ultimately determined
by a court, and New South Wales has a threshold of 15% WPI). The types of damages that can
be awarded have been restricted (Victoria requires a worker to establish a 40% economic loss
before the worker can sue for economic loss) and “caps” or upper limits have been placed on
awards in some jurisdictions.
95. In some jurisdictions a worker must make an irrevocable election between statutory benefits
and common law damages. South Australia and the Northern Territory have removed access to
common law damages entirely. Victoria removed access to common law damages in November
1997, but reinstated that access from October 1999.
96. One of the biggest differences between the schemes is their relative reliance on common law
or no-fault statutory benefits for compensating injured workers. That relative reliance
determines the scheme model. Generally, those schemes that provide access to common law
have less generous no-fault benefits. The primary example is Queensland. The other schemes
with access to common law are Victoria, New South Wales (with low limits for weekly benefits)
and the Australian Capital Territory.
Regard for other jurisdictions
97. Several jurisdictions have conducted reviews into various aspects of their workers’
compensation schemes. Although the objectives and recommendations made following the
reviews have varied in content, all appear to have considered harmonisation between schemes
as a key outcome.
98. The Review’s terms of reference required the Review to consider workers’ compensation
arrangements in other jurisdictions, as well as complementary statutory schemes, in order
to identify opportunities for alignment, with a view to providing fair and effective benefit and
premium regimes, and easing the administrative burden for employers.
99. In the course of developing recommendations, the Review considered the design and delivery
of the various State, Territory and national workers’ compensation schemes that operate in
Australia.
100. The Review also considered complementary schemes, such as that administered by the
Victorian TAC, noting that those schemes have similarities in design, purpose and processes to
those in the WorkCover scheme. Statutory schemes that interact with the WorkCover scheme,
such as Federal income taxation and social security, were also considered to identify
opportunities for administrative alignment and efficiency,
101. To ensure a best practice workers’ compensation scheme, international experiences were also
considered throughout the course of the Review. Comparisons with the United States and
Canada were drawn because they have State-based (or Province-based) workers’ compensation
schemes
9
similar to the Australian schemes.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
INTRODUCTION
PAGE 19
9 K Purse, The Evolution of Workers’ Compensation Policy in Australia, Health Sociological Review (2005)
14, 8 at 8.
102. Further, Victoria’s Charter of Human Rights
10
became fully operational on 1 January 2008.
Amongst other requirements, the Charter requires all statutory provisions to be interpreted,
and imposes an obligation on the VWA to act in a way that is compatible with human rights.
Accordingly, the Review has considered the impact of the Charter on the current provisions
of the WorkCover scheme and any new provisions which may be recommended.
THE WAY FORWARD
103. Workers’ compensation has long aimed to provide fundamental protection for workers and their
dependants against the risk of injury in the workplace. As workers’ compensation schemes
have developed, they have also provided protection for the interests of employers, by providing
a degree of predictability in the costs of compensating injured workers, by giving financial
recognition to those employers who develop and maintain safe workplaces, and by facilitating
a relatively stable workforce through enhanced rehabilitation and return to work policies.
104. The recommendations made in this report are aimed at strengthening those fundamental
aspects of workers’ compensation. Because my report is made to the Victorian Government,
through the Minister for Finance, WorkCover and the Transport Accident Commission, it will be
the Government that will decide which recommendations will be implemented and how the
program for implementation should be developed.
105. I have no doubt that the Government, in identifying and implementing its priorities, will continue
to emphasise the fundamental scheme objectives of delivering fair and effective benefit and
premium regimes while maintaining the scheme’s operational and financial viability. I believe
that my recommendations can provide a basis for strengthening those objectives and ensuring
that the Victorian workers’ compensation scheme continues its strong performance in delivering
security to workers and employers.
PETER HANKS QC
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
INTRODUCTION
PAGE 20
10 Charter of Human Rights and Responsibilities Act 2006 (Vic).
RECOMMENDATION
SUMMARY
Recommendations for change Reference
Chapter 1 – Improving clarity and understanding of the Act paragraph
1 • Recast Victoria’s accident compensation legislation into a comprehensive Act, arranged
logically and expressed in plain language.
1.24
Chapter 2 – Workers’ entitlements to compensation
2 • Streamline and consolidate the provisions in the AC Act that determine when persons are
regarded as workers and employers, in order to make the provisions easier to understand.
2.17
3 • Simplify the deeming provisions in the AC Act relating to contractors in order to improve
clarity and promote compliance.
2.46
4 • Clarify the operation of the provisions in the AC Act relating to outworkers, together with the
deeming provisions, by deeming all “outworkers” to be workers.
• In addition, the VWA should provide better information about the situations where
outworker arrangements will be deemed to create employment relationships, and the
responsibilities of employers in those situations.
2.99-
2.107
2.108
5 • Extend scheme coverage under the AC Act to municipal councillors. 2.130
6 • Reduce weekly benefits paid to workers injured as a result of driving a motor vehicle
where they are found to have a blood alcohol concentration above 0.05 and below 0.24,
aligning the AC Act with the relevant provisions in the TA Act.
2.203
7 • Amend section 82(2A) of the AC Act to exclude from compensation psychiatric injuries that
arise from an employer’s reasonable management actions.
• “Management actions” should be defined to include performance appraisals, disciplinary
action, demotions and counselling of employees.
2.311-2.313
8 • Introduce mediation or workplace counselling at the request of any party before the
determination of liability for stress-related and psychiatric claims.
2.322-2.331
Chapter 3 – Ensuring timely access to benefits and support
9 • Introduce a more flexible approach to injury notification and making a claim, whether by the
worker, the employer, a person on the worker’s behalf or a doctor, including allowing
notification and lodgement to the employer, or directly to the VWA or its agents.
3.183
10 • Introduce systems to enable electronic and telephone notification of injury and lodgement
of a claim.
3.184
11 • Ensure that claim forms are regarded as valid unless the VWA or employer is unable to identify
adequate information to enable a decision about payment or liability. In addition remove the
distinction between a claim for weekly benefits and a claim for medical and like expenses.
3.163-3.166
12 • Implement a system of provisional liability in Victoria, in conjunction with a streamlined
injury notification process.
• Provisional liability should cover both weekly payments, medical and like expenses.
• A “ceiling” on the duration and amount of provisional payments should be imposed.
• Provisional payments should not continue beyond the time when the agent decides whether
to accept the claim (assuming that the payments have not already ceased because the
“ceiling” has been reached).
• Guidelines should set out the application (and any limitations on the application) of
provisional liability.
• Agents should be able to refuse provisional liability payments in certain circumstances.
• Eligibility for provisional liability for stress claims and other psychiatric injuries should be
guided by the scheme’s experience after the introduction of provisional liability.
• Agents should be authorised to deny provisional payments where there is an increased risk
of fraud or likelihood of a claim being denied.
• Where a claim is denied and fraud is established, any provisional payments should be
recoverable from the worker (either as a debt or from accrued leave).
• Where a claim is ultimately denied, the employer should be able to deduct the amount of
weekly benefits paid from the worker’s accrued sick leave entitlements.
• The cost of provisional liability payments on accepted claims should be treated in the same
way as any other cost on a claim: the cost should count toward the employer’s premium.
• The cost of provisional payments on claims that are subsequently rejected or closed before
liability is determined should count towards the employer’s premium but should not be
taken into account in assigning estimates of the future costs of claims.
• The period for determining liability should be extended to promote better initial decision-making.
3.128-3.150
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
RECOMMENDATION SUMMARY
PAGE 22
Recommendations for change Reference
Chapter 3 – Ensuring timely access to benefits and support continued
13 • Allow VWA and self-insurers to access the necessary medical information relating to a
claimed injury, without requiring the consent of the worker.
3.196
14 • Amend the “additional liability” provision (section 108(4) of the AC Act) for late lodgement
of claims by employers so as to calculate the penalty by reference to the period between
the date when the claim was forwarded to the employer and the date when the claim was
received by the VWA or the agent.
3.211
15 • Remove the current offence of “refusal to receive a claim for compensation” in section
242(3)(a) of the AC Act.
• Include an express requirement for service of the claim on an employer (either personally or
by post or electronically).
3.204
16 • Provide greater protection for workers who experience discrimination for making or
pursuing compensation claims by amending section 242(3) of the AC Act to ensure that:
– a wider range of detrimental conduct, falling short of dismissal (such as demotion,
transfer or reduction in hours) is punishable consistent with OHS, Equal Opportunity and
Long Service Leave Acts;
– prospective employees are protected in addition to current employees and other deemed
workers;
– an offence is committed by an employer where the proscribed reason was the
dominant reason for the discriminatory conduct, aligning the test for liability with the
test under the OHS Act;
– where the prosecution has proved all the facts constituting an offence under section
242(3), other than the reason for the alleged discriminatory conduct, the onus of proof
should shift to the defendant to prove that the dominant reason for the conduct was not
a proscribed reason, further aligning the test for liability with the test under the OHS Act;
– the maximum financial penalty for an offence under section 242(3) is equivalent to the
financial penalty for the comparable offence under the OHS Act, but should not be
punishable by imprisonment; and
– orders for reinstatement and compensation and, in the case of prospective employees,
orders requiring employment should be available to the Court when sentencing for a
discrimination offence.
3.241-
3.248
17 • Include a provision in the AC Act, along the lines of section 131 of the OHS Act, allowing a
worker to request that the VWA bring a prosecution for an alleged offence in relation to
dismissal or discrimination for pursuing a compensation claim.
3.250
18 • Amend the EO Act to ensure that workers who suffer discrimination arising from making or
pursuing a workers’ compensation claim can make complaints to the Equal Opportunity and
Human Rights Commission as the first step in seeking redress.
3.252
Chapter 4 – Supporting workers to get back to work after injury
19 • The AC Act should include a set of principles that apply to return to work. The principles
would help guide employers, injured workers and other stakeholders in interpreting the
legislative requirements, and foster the type of relationship between the various parties that
is essential to a successful return to work process.
4.71-
4.72
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
RECOMMENDATION SUMMARY
PAGE 23
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
RECOMMENDATION SUMMARY
PAGE 24
Recommendations for change Reference
Chapter 4 – Supporting workers to get back to work after injury continued
20 • Reframe return to work obligations as performance-based duties, allowing duty holders
more flexibility to suit the circumstances of the parties involved in the return to work
process and in ensuring compliance with obligations.
• The core employer obligations for employers should be as follows:
– take all reasonable steps to return an injured worker to work as soon as possible;
– take all reasonable steps to provide an injured worker with pre-injury or suitable
employment for a period of 12 months;
– consult as far as is reasonably practicable with the injured worker and treating practitioner
on the injured worker’s return to work;
– take reasonable steps to plan an injured worker’s return to work from the date
of the injury;
– for employers with remuneration of $2 million or more, maintain the appointment of a
person of appropriate seniority to manage return to work at the employer’s workplace
– a return to work co-ordinator;
– for employers with remuneration below $2 million, appoint a return to work co-ordinator
(of appropriate seniority) following an injury in the employer’s workplace;
– develop and make available to the employer’s workers such information about
return to work and occupational rehabilitation as is prescribed by the regulations; and
– take reasonable steps to co-operate with labour hire employers on the return to work
of injured labour hire workers (host employers).
• The AC Act should continue to require workers to make reasonable efforts to participate
in the return to work process (where currently required under the AC Act), including:
– participating in an occupational rehabilitation service and return to work planning;
– returning to work in suitable employment, either at the pre-injury workplace or at
another place of employment; and
– participating in assessments of capacity, rehabilitation progress and future employment
prospects when requested to do so.
4.242-4.245
21 • The VWA should, in consultation with stakeholders, develop subordinate instruments that
set out how to comply with the requirements imposed by the principal legislation, and deal
with issues such as:
– how employers should plan for a worker’s return to work, including the development of
more formal plans for workers who remain incapacitated for longer periods;
– how and when employers should consult with injured workers and treating practitioners;
– what policies and procedures should be maintained by employers to manage return to
work and occupational rehabilitation in their workplaces;
– how those policies and procedures should be made available to workers;
– how employers should maintain a safe and healthy working environment for workers
returning to work following injury;
– how each of the participants in the return to work process (employers, workers, health
and safety representatives (HSRs), treating practitioners and the VWA) should work
together to promote return to work outcomes;
– how host employers should cooperate with labour hire agencies on return to work; and
– what constitutes reasonable efforts to return to work by a worker.
4.246-4.247
22 • Require employers to notify an injured worker before the employer’s obligation to provide
employment comes to an end. The notice period should be prescribed in an appropriate
subordinate instrument.
4.144
23 • The AC Act should specify the competencies required of each person appointed to manage
return to work, without demanding training as the only way of achieving competence.
4.213-4.214
24 • Return to work co-ordinators should be protected against personal liability by including in
the AC Act a provision equivalent to section 58(3) of the OHS Act.
4.217
25 • To avoid duplication of regulation, the requirement to establish a risk management program
should be removed from the AC Act, given that the duties set out in OHS legislation clearly
encompass that requirement.
4.181
26 • An appropriately proportionate regime of sanctions should be constructed to underpin the
recommendation that a new compliance framework be adopted to support injured workers
returning to work.
4.262
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
RECOMMENDATION SUMMARY
PAGE 25
Recommendations for change Reference
Chapter 4 – Supporting workers to get back to work after injury continued
27 • The sanction for workers who fail to make reasonable efforts to participate in the return
to work process should initially involve suspension of weekly benefits, with termination
to follow if the failure is not remedied within 28 days.
4.260-4.261
28 • The powers of the return to work inspectorate should be expanded and the inspectorate
should be provided with appropriate tools to monitor and encourage compliance with the
AC Act. In particular, inspectors should be authorised to direct employers to remedy
contraventions “on the spot”, rather than having to rely on voluntary compliance or the
threat of prosecution.
4.288
29 • The return to work inspectorate should be substantially expanded to a level where the
inspectorate can conduct a credible workplace intervention program.
4.310
30 • Consideration should be given to whether the two inspectorates (OHS and return to work)
should continue to operate as separate entities.
4.313
31 • The processes for review of decisions made by the OHS and return to work inspectorates
should be the same, to ensure consistency and improve transparency and accountability.
The AC Act should identify which decisions are reviewable and which parties are entitled to
request a review of each decision.
4.308-4.309
32 • The VWA should retain the exclusive right to prosecute parties for breaches of the AC Act.
However, the AC Act should be amended to allow any person to seek a review of the VWA’s
decision not to prosecute an offence, consistent with section 131 of the OHS Act.
4.327
33 • The AC Act and the OHS Act should be amended to extend the role of Health and Safety
Representatives, so that they can also represent workers in the return to work process.
• A Health and Safety Representative should be permitted to act as a worker’s representative
only where the worker consents to that representation.
4.339-4.353
34 • A similar framework to the OHS Act should be adopted for resolving issues arising in the
workplace about return to work. The framework should allow for issues to be resolved
using an agreed workplace procedure or, if no such procedure has been agreed, a
prescribed procedure set out in the AC regulations.
4.409
35 • The time within which a worker must choose an occupational rehabilitation provider from a
list provided by the employer or agent should be reduced from 14 to seven days.
4.365
36 • Additional guidance material should be developed so as to assist and support healthcare
professionals in their treatment of injured workers.
4.386
37 • The VWA should pay treating practitioners for their time in facilitating return to work, incuding
by telephone consultations between a healthcare professional and the agent or employer.
4.389
38 • Repeal section 113 of the AC Act which allows employers to direct workers to a
health professional selected by the employer to provide a certificate where capacity for
work is in dispute.
4.397
39 • The VWA should promote the advantages of the JSA and WISE programs to
employers and workers and proactively identify eligible workers to promote access to these
programs.
4.440-4.445
Chapter 5 – Better income replacement
40 • The Government should commission a further review of the method of calculating
pre-injury average weekly earnings (PIAWE) with a view to incorporating changes and
trends in current remuneration arrangements.
5.46-
5.52
41 • Increase weekly benefits from 75% of PIAWE to 80%, after the first 13 weeks. 5.81
42 • Require the VWA to pay superannuation contributions for injured workers receiving weekly
benefits after 52 weeks, for as long as the worker is eligible to receive weekly benefits with
the contributions being made directly to the worker’s chosen fund rather than reimbursing
the employer for making superannuation payments. Payments should be based on the
superannuation guarantee percentage (currently 9%) of the worker’s weekly benefit.
5.181-5.193
43 • Clarify that annual leave and long service leave can be taken in addition to weekly benefits. 5.130
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
RECOMMENDATION SUMMARY
PAGE 26
Recommendations for change Reference
Chapter 5 – Better income replacement continued
44 • Remove the “notional earnings” provisions of the AC Act which give agents a broad
discretion to reduce or cease weekly benefits.
5.151-5.154
45 • Consistent with the approach taken in NSW and Queensland, agents should be able to
adopt a “staged” approach to motivating a worker to comply with the worker’s return to
work obligations:
– A worker should be given notice of the intention to cease or reduce payments unless the
worker complies within a specified period with her or his return to work and rehabilitation
obligations.
– If the worker continues to fail to comply with her or his obligations, payments should be
able to be suspended or reduced for a further period (of up to 28 days), during which time
payments will be reinstated if the worker complies with her or his obligations.
– If the worker continues to fail to comply with her or his obligations following the
suspension period, the agent or self-insurer should be able to cease payments with a
discretion to reinstate payments where the worker subsequently complies.
• Under the proposal, payments during the suspended period will be forfeited and will count
towards the calculation of entitlement periods.
• Workers should have the right to seek a review of any suspension or termination decision or
any refusal to reinstate payments.
• Repeal the provisions, making it a criminal offence for a worker to fail to attend an interview
to discuss employment opportunities or to fail to notify the VWA or a self-insurer that they
have returned to work whilst in receipt of benefits.
5.159-5.165
46 • Subject to appropriate limits, provide weekly benefits to workers who have returned to
work, but who must take time off work for surgical treatment for a work-related injury, after
the expiry of the 130 week entitlement period.
5.114-5.115
47 • Allow for payment of weekly benefits between the date of settlement of a common law
claim and receipt of the settlement payment by the worker.
5.119
48 • In relation to the payment of weekly benefits after 130 weeks for workers who have a partial
capacity to work, and who have returned to work (section 93CD), amend the AC Act to:
– clarify that benefits can be accessed at any time when the worker returns to work;
– ensure that, where a worker is receiving the benefit and the worker’s employment is
withdrawn, the worker is given 13 weeks notice of termination of the benefit;
– clarify that temporary fluctuations in capacity or the availability of work do not affect the
worker’s entitlement; and
– reduce the time within which the VWA must decide whether to accept or reject such a
claim from 90 days to 28 days.
5.103-5.105
49 • Section 96 (which provides that a worker is not entitled to receive weekly benefits in
conjunction with certain other income benefits) should be amended to ensure that:
– workers may access additional insured benefits for loss of earnings or disability up to
100% of their pre-injury actual earnings;
– if workers access additional insured benefits for loss of earnings or disability beyond
100% of their pre-injury actual earnings, the VWA may offset the excess against the
workers’ weekly benefits;
– the scope of section 96 should be broadened to include all disability pensions, including
pensions paid out of income protection insurance, irrespective of whether they are related
to the injury employment;
– offsets are not to apply where a worker accesses superannuation savings in the form of a
pension or a lump sum payment; and
– offsets are not to apply where a worker receives a redundancy, severance or termination
package.
5.216
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
RECOMMENDATION SUMMARY
PAGE 27
Recommendations for change Reference
Chapter 6 – Treatment expenses
50 • The timeframe for determining liability on claims for medical and like expenses should be
fixed in line with the time for determining weekly benefits claims (28 days).
6.37
51 • Prescribe that 28 days notice be provided to a worker when terminating a medical and like
expenses claim.
6.44
52 • Provide consistent information (in the form of guidelines) on the determination of
reasonable costs and make the information easily available to all parties.
6.54-
6.55
53 • Introduce a discretionary power permitting the VWA to require prior approval for some
medical and like expenses.
6.67-
6.74
54 • An independent review of medical and non-medical fees payable by the VWA should be
conducted as soon as possible.
• The review should include consideration of the provision of appropriate financial incentives
for service providers to treat injured workers and support return to work.
6.93-
6.94
55 • The provisions in the AC Act relating to co-ordinated care plans (section 99AAA) are
redundant and should be repealed.
6.144
56 • In line with the TA Act, the AC Act should be amended to authorise the Governor in Council
to fix limits on the contributions payable by the worker for the cost of supported
accommodation.
6.155
57 • The provisions in the AC Act for referring health care providers to their professional bodies
where there are concerns about their behaviour should be maintained. However, the
sanctions available to the VWA should be strengthened. In particular, the VWA should have
the power to suspend future payments to service providers who are found to have engaged
in unprofessional conduct.
6.185-6.187
Chapter 7 – Lump sum benefits for significantly injured workers
58 • Increase the maximum benefit awarded for a permanent injury under the impairment
benefit regime to the equivalent of the maximum common law damages payable for pain
and suffering – that is, from $396,690 to $484,830, to be indexed annually.
7.59
59 • Workers assessed at 81% WPI or greater should be awarded an impairment benefit equal
to the maximum amount of common law damages paid for pain and suffering – that is
$484,830. The amount paid to workers assessed between 71% WPI and 80% WPI should
be increased proportionately.
7.59
60 • The 2003 amendments relating to WPI of the spine, upper extremity, lower extremity and
the pelvis should remain as a permanent adjustment to the method of assessing
musculoskeletal injuries for the purpose of calculating impairment benefits.
7.70
61 • Increase by 10%, the impairment benefit awarded to an injured worker with a spinal injury. 7.82-7.85
62 • Increase the impairment benefit awarded for a 30% psychiatric impairment to the level
of impairment benefit awarded for a 30% physical impairment. Similar adjustments
should be made to the payments for psychiatric impairments assessed between
31% and 70% WPI.
7.103
63 • The VWA should initiate a review of the method of assessing permanent impairment,
with all relevant stakeholders across the Victorian compensation schemes participating
in the review.
7.124
64 • Impairment benefits should be calculated at the date of the determination of a claim rather
than at the date of injury, bringing the calculation into line with the current practice of the TAC.
7.132
65 • Introduce consistent terminology for hearing loss claims and injuries, simplify and
rationalise the provisions relating to hearing loss injuries.
7.142
66 • Define the date of injury for gradual process injuries as:
– the last day of the worker’s employment out of which, or in the course of which, the
injury arose, or
– the date of the claim (if the worker is still employed in that employment at the date of the
claim).
7.168
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
RECOMMENDATION SUMMARY
PAGE 28
Recommendations for change Reference
Chapter 7 – Lump sum benefits for significantly injured workers continued
67 • The VWA should use the provision in the AC Act that allows it to initiate impairment
benefit claims on behalf of injured workers.
7.238
68 • The VWA should consider the feasibility of introducing a “one-stop shop” for the
management of impairment benefits. The “one-stop shop” could be structured in a manner
similar to the Medical Panels, so that there would be a central location where all impairment
benefit claims could be processed and where all independent medical assessments could
occur.
7.270-7.273
Chapter 8 – Access to justice for seriously injured workers: common law
69 • Lower the common law deeming test to 20% whole person impairment (WPI) for physical
injuries only.
8.93
70 • Once the assessment of permanent impairment has been reviewed (see recommendation
62), with the percentages of impairment produced by that assessment reflecting more
accurately the level of impairment suffered by injured workers, a further analysis of the
relevant deeming threshold for all injuries should be undertaken. If that analysis shows that
the new impairment assessment tool can fairly and accurately identify the seriously injured,
it might be possible to abandon the narrative test and rely on a measure of impairment as
the sole gateway to common law damages (after further consultation and consideration of
the effectiveness of the new assessment tool). Even if the narrative test is not abandoned, a
more accurate impairment assessment tool should enable the majority of seriously injured
workers to access common law through the deeming test, rather than the narrative test, as
was intended when the two tests were introduced.
8.134-8.135
71 • Amending section 134AB(28) of the AC Act so that all weekly payments received after
the worker’s statutory counter-offer during the section 134AB(12) process are disregarded
when comparing the judgment, settlement or compromise with the worker’s statutory
counter-offer.
8.184
72 • Allow a serious injury application to continue where a worker dies before the application is
heard by providing that, where the claimant dies before the determination of significant
injury from a cause unrelated to the injury to which the claim relates, the Court may make
a determination of serious injury.
8.192
73 • Where a worker lodges a serious injury application, the worker should be taken to have
given authority for the VWA to request and obtain relevant medical information.
• The AC Act should include a framework that:
– sets clear parameters for the type of information that can be requested and the extent
of the authority;
– provides a mechanism for dealing with disputes that may arise about the provision of
information in an efficient and effective manner, bearing in mind the relevant timeframes;
– enables the serious injury decision-making timeframe to be extended by a further (say)
30 days in the event that vital information has not yet been provided; and
– ensures appropriate and proportionate methods of dealing with non-compliance with the
authority by healthcare providers.
• The current legal costs order will also need to be amended as all workers would be required
to provide a medical information authority and thus no financial incentive or sanction need
be included in the costs order.
8.214-8.215
74 • Amend the AC Act to clarify section 134AB(21). The sub-section should make it clear that,
where an application for serious injury has been denied or accepted, or has resulted in a
determination of serious injury (including a deemed determination), or has otherwise been
resolved, a worker may not make a further application for the same cause of action.
8.232
75 • A review of legal costs in work-related injury litigation is recommended in order to
determine the impact of the 20% scale cost reduction on injured workers and whether the
abolition of the scale cost reduction supported by legal groups is justifiable.
8.252-8.253
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
RECOMMENDATION SUMMARY
PAGE 29
Recommendations for change Reference
Chapter 9 – Benefits for dependants following work-related deaths
76 • Increase the maximum lump sum death benefit payable from $265,590 to the maximum
impairment benefit of $484,830.
9.35
77 • Amend the AC Act to ensure that weekly pensions for dependants are indexed annually. 9.57
78 • Ensure that a surviving partner, as defined in section 5(1) of the AC Act, who is residing
with a worker at the time of the worker’s death, is deemed to be dependent on the
deceased worker.
9.93
79 • At a minimum, the AC Act should provide for a lump sum payment of reasonable
expenses incurred as a result of the worker’s death, including the reasonable cost to a
non-dependant of administering the will of a deceased worker.
• Also, the AC Act should be amended to provide for lump sum payments to family members,
other than dependants, who suffer financial hardship as a result of a worker’s death. The
entitlement to payment should only arise where the deceased worker leaves no dependants.
• A Court should be given power to determine the “reasonable” amount of compensation
that is payable and whether financial hardship has been established as a result of the
work-related death.
9.99-
9.101
80 • Continue eligibility for pensions for dependent children to the age of 25 years, where they
are engaged predominantly in learning, whether study or an apprenticeship, with
such pensions to be subject to an appropriate income cap, and indexed annually.
9.108
81 • Allow a child of a deceased worker who is born after the worker’s death to be treated as a
dependant of the worker, where paternity can be proved.
9.114
82 • Allow for the provisional payment of:
– weekly pensions to dependants;
– the reasonable costs of medical and like expenses incurred between the date of injury
and the worker’s death;
– the reasonable costs of family counselling services; and
– the cost of burial/cremation pending the determination of liability for a death
benefits claim.
9.134
83 • Reduce the role of the Courts in the approval of lump sum entitlements, however, retain
a role for the Magistrates’ Court:
– where vulnerable dependants are to be paid their maximum entitlement under the
AC Act, specifically for the purpose of appointing an appropriate trustee;
– where vulnerable dependants are paid a compromise amount, to ensure that the
settlement is fair and reasonable in all the circumstances; and
– where dependants are not legally represented, to ensure that the agreed settlement is
fair and reasonable in all the circumstances.
9.144
and
9.149
Chapter 10 – Transparency in decision-making and the efficient resolution of disputes
84 • Provide that internal review by the VWA of agents’ decisions (or by a self-insurer of its
decisions) be a mandatory step following lodgement of a dispute with the ACCS, with
internal review to be completed within 14 days and be limited to the evidence available to the
original decision-maker (including the entire claim file).
10.126
85 • The internal review should be completed within 14 days and be limited to the evidence
available to the original decision-maker (including the entire claim file). The review could
involve steps to clarify the available information with all parties but reviewers would not
have power to seek or receive additional information.
• The task of internal review will be to consider whether the original decision was the correct
or preferable decision, having regard to the material that was available to the original
decision-maker, the relevant provisions of the AC Act and the VWA’s (or self-insurer’s) policies.
10.156-
10.164
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
RECOMMENDATION SUMMARY
PAGE 30
Recommendations for change Reference
Chapter 10 – Transparency in decision-making and the efficient resolution of disputes continued
• The review unit (or self-insurer) will not have the power to substitute a new decision but, at
the conclusion of the review, the review unit (or self-insurer) will report the outcome to the
ACCS, with a brief statement of reasons, as one of the following alternatives:
– the original decision is confirmed because, on the material before the original
decision-maker and having regard to the legislation and the VWA’s (or self-insurer’s)
policies, the decision was the correct or preferable decision;
– the original decision is not confirmed because the material before the original
decision-maker is insufficient to enable any decision to be made, having regard to the
legislation and the VWA’s (or self-insurer’s) policies;
– the original decision is not confirmed because, on the material before the original
decision-maker and having regard to the legislation and the VWA’s policies, the decision
was not the correct or preferable decision.
• Where the review unit (or self-insurer) finds that the material before the original decision-maker
is insufficient to enable any decision to be made (the second alternative), the review unit
(or self-insurer) will be required as part of its reasons, to specify any additional information
considered necessary to resolve the dispute, including the opinion of a Medical Panel.
86 • The review unit’s conclusion and the statement of its reasons should be provided to the
injured worker, the employer, the VWA and its agent. The self-insurer’s conclusion and the
statement of its reasons should be provided to the injured worker.
10.166
87 • Ministerial guidelines should be developed, which set out the procedures to be followed on
internal review, and those guidelines will assist self-insurers to perform their equivalent
review function.
10.167
88 • The AC Act internal review unit should be operationally separate from the VWA and report
directly to the CEO.
10.171
89 • Require the ACCS to notify the parties of the outcome of internal review within seven days,
together with information setting out the next steps for the injured worker.
10.179-
10.180
90 • Require workers to request continuation of the conciliation process within 14 days
of that notification (although an extension of time should be possible in
exceptional circumstances).
10.181
91 • Require the conciliation officer to request within seven days that the parties produce
specified information necessary for conciliation to proceed.
10.182
92 • Remove the prohibition on a party, who refuses or fails to produce any document or
provide any information requested by the conciliation officer, from tendering the document
or information as evidence in any proceedings that relate to the dispute before the ACCS
section 56 (9A) of the AC Act.
10.186
93 • Require an outcome certificate be provided by ACCS within seven days of conclusion of
the conciliation conference, with the certificate setting out any terms on which the dispute
was resolved and certifying that the parties acknowledge their intention to be bound by the
result. The AC Act should provide that the certificate be treated as conclusive.
10.188
and
10.209
94 • Where matters remain unresolved, require the outcome certificate to set out any bases for
agreement and identify the issues that remain in dispute and that require determination.
10.210
95 • Remove the powers of conciliation officers to make directions. 10.205
96 • Clarify that parties may not be represented at conciliation by a person who –
– is a legal practitioner; or
– holds a tertiary degree in law or legal studies; or
– is otherwise eligible to be admitted to practice;
unless the conciliation officer and each party to the dispute agree.
10.230
97 • Provide for reimbursement of reasonable costs incurred by workers for attending
conciliation, limited to reasonable travel expenses and related time lost from work.
10.242
98 • Require the VWA and self-insurers to pay the reasonable costs of medical reports
obtained and used for the purposes of conciliation where the medical reports have been
obtained both with the consent of the worker and at the request of the conciliation officer.
10.248-
10.249
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
RECOMMENDATION SUMMARY
PAGE 31
Recommendations for change Reference
Chapter 10 – Transparency in decision-making and the efficient resolution of disputes continued
99 • Revise the ACCS’s governance structure, including the establishment of a Board to give
general directions to the ACCS and monitor its performance.
10.257
100 • Confer increased powers on the Senior Conciliation Officer to ensure that:
– conciliations are conducted expeditiously and consistently;
– conciliation officers comply with appropriate protocols; and
– transparency and accountability measures are introduced.
10.260
101 • Clarify the power of a Medical Panel to return a medical question to the referring body
where the referral is unclear or otherwise inadequate. That power should be in addition to
the Panels’ power to return questions that relate to non-medical matters.
10.302
102 • Amend the definition of “medical question” to address anomalies identified by stakeholders
so as to provide greater clarity and certainty about the matters which may properly be the
subject of a referral to a Medical Panel.
10.303
103 • Provide rights of assistance to persons with a disability (including minors) when attending a
Medical Panel, similar to those contained in sections 26LZD(2) and (3) of the Wrongs Act 1958.
10.305
104 • Provide the Courts with discretion to refuse to refer medical questions to Medical Panels
where the proposed question involves non-medical matters, and where the referral would
not be in the interests of the proper administration of justice.
10.316
105 • Place a time limit on referral by the Courts of medical questions to Medical Panels, with a
power to refer after that time limit where “exceptional circumstances” exist.
10.318
106 • Require Medical Panels to provide written reasons together with their opinions on a medical
question.
10.323
107 • Ensure that the Ombudsman has effective oversight of the Medical Panels’ Convenor’s
administrative functions.
10.335
108 • Repeal the current restriction in section 63(4) of the AC Act on the permitted number of
Medical Panel members.
10.344
109 • Remove the restrictions on the jurisdiction of the Magistrates’ Court with respect to
disputes over statutory benefits.
10.348
110 • Establish an exception to the mandatory requirement for conciliation before proceedings
are issued. Subject to the views of the Court, and an appropriate Court order, parties to the
dispute should be permitted to amend their pleadings to ensure that all outstanding issues
between the parties are brought before the Court in a timely manner.
10.355
111 • Employers should have limited rights to seek internal review of decisions. In particular, they
should have the opportunity to seek review of initial decisions to accept liability for a claim.
The form of internal review for employers should be more extensive than the internal review
contemplated for worker disputes, given the limited impact of any decision made on
internal review and the fact that the employer would not be able to take the matter to the
ACCS or to the Magistrates’ Court.
10.367-
10.368
112 • The review unit should report its conclusion to the employer and to the VWA, which in
turn would be required to apply a conclusion that the agent decision was not confirmed
in the calculation of the employer’s premium.
10.371
113 • The outcome of employer applications for review must be limited to premium impacts, and
not affect benefits already granted to a worker.
10.372
114 • Given that the outcome of employer applications for review would be limited to premium
impacts where the agent’s decision is not confirmed, an employer’s and worker’s return
to work obligations should continue to apply.
10.373
115 • Employers should be given the right to request, from their agents, written reasons for
decisions, particularly in relation to initial liability, as well as at appropriate points throughout
the life of a claim.
10.374
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
RECOMMENDATION SUMMARY
PAGE 32
Recommendations for change Reference
Chapter 11 – Employer premiums
116 • The VWA should improve its information and advice to employers regarding Statistical Case
Estimates (SCEs) by:
– ensuring that claim statements disclose the timing of information used in determining the
SCEs for individual claims; and
– including all estimates of future costs against individual claims, rather than grouping the
estimates in one combined amount at the end of the statement (unless the grouped
amounts are small).
• Improved information should be supported by:
– including information with the premium statement that explains the key drivers of SCEs
(safety, speedy return to work, and staying at work) and tells employers what they can
do to reduce their premiums and where they can get more information;
– providing more detailed and up-to-date information on the VWA website about how
premiums are set, what drives SCEs and how employers can reduce their premiums; and
– making the premium simulator available to employers on the VWA website
whenever possible.
11.53-11.54
117 • Only new claims received to the end of December should be included in the calculation
of premium for the following financial year.
11.59
118 • Employers should have the right to seek a review of their SCEs. However, that right should
be limited to data errors that lead to erroneous estimates.
11.60-11.66
119 • Amend the contractor provisions so that only the deemed employer would declare rateable
remuneration for the deemed worker. The deemed worker would be entitled to make an
injury claim only against the deemed employer’s WorkCover insurance policy.
11.126
120 • The scheme should provide employers with the option of a higher excess of $1,000 for
medical expenses and $15,000 for weekly payments, equivalent to around 16 weeks of
salary.
11.135-
11.139
121 • Alignment of the definitions of remuneration for workers’ compensation and for payroll tax
within Victoria should commence. Alignment of the definitions of remuneration for the
workers’ compensation schemes in Victoria and NSW should also commence, with a long
term objective of aligning the definition across all Australian jurisdictions.
11.174
122 • There should be transparent and robust mechanisms for review of premium decisions made
by the VWA with:
– a formal internal VWA premium review process, which aims to provide a non-adversarial
system for the prompt and low-cost resolution of premium disputes; and
– a codified premium dispute resolution system which allows employers recourse to
independent review (for example, VCAT, the Magistrates’ Court or the Supreme Court),
based on the model for Victorian State taxes.
• The dispute resolution system should include:
– the right of an employer to object to a premium notice (including an adjusted premium)
within a prescribed time period;
– the requirement for the VWA to determine an employer’s objection within a prescribed
time period (for example 60 or 90 days);
– the requirement for the VWA to provide written reasons for its decision so as to ensure
transparency; the reasons would be provided through a formal premium review process
by a VWA internal review unit with parameters codified in legislation; and
– the right of an employer, aggrieved by a decision made by the VWA (or the failure to make
a decision), to seek an independent review within a prescribed time (for example, 60 or 90
days).
11.201-
11.204
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
RECOMMENDATION SUMMARY
PAGE 33
Recommendations for change Reference
Chapter 11 – Employer premiums continued
123 • The VWA should be obliged to pay interest where a review finds that a lower amount of
premium is payable.
11.214
124 • To encourage voluntary disclosure of non-compliance and help reduce the VWA’s
administrative burden, include provisions allowing the remission of penalties in cases of
voluntary disclosure in the ACWI Act.
11.223
125 • Introduce penalties for employers who enter into premium avoidance schemes and for the
promoters of such schemes.
11.224
126 • Introduce a statutory requirement for review of the VWA’s premium-setting by an
independent expert body, such as the Essential Services Commissioner.
11.257
127 • Amend the ACWI Act to overcome the situation where a trustee would be in breach of the
legislation by holding multiple WorkCover insurance policies because the trustee is
classified as the single employer for different independent businesses run under trusts.
11.274
128 • Amend the ACWI Act to allow the VWA to integrate any penalties for an uninsured period
into the employer’s ongoing premium account, and to give the VWA the power to
backdate an employer’s insurance policy to the commencement of employment to cover
an uninsured period. The amendment would remove the need for the current legislative
provisions relating to the UEIS.
11.299
Chapter 12 – Recovery from third parties
129 • “Hold harmless” clauses in arrangements between labour hire companies and host
employers should be void and unenforceable for the purposes of the workers’
compensation scheme.
12.93
130 • Allow the VWA (with an employer’s consent) to recover from third parties the amount of
any excess paid by the employer, with the amount recovered to be paid by the VWA to
the employer.
12.99
Chapter 13 – Self-insurance
131 • A two-step approach, similar to that for licensing major hazard facilities as set out in the
Occupational Health and Safety Regulations 2007, should be used for self-insurance
arrangements, with eligibility applications remaining valid for a set period. The VWA should
be able to charge a fee for the eligibility process.
13.35-
13.37
132 • The VWA should be given the power to set guidelines under the AC Act to support the
management of self-insurers, similar to the power it has to make guidelines under the
OHS Act.
13.42
133 • Applications for self-insurance should be completed within 12 months of the application
being made, or longer at the discretion of the VWA.
13.51
134 • The formula for setting the self-insurance application fee should be modified, to allow
estimates of remuneration to be used where there has been no actual remuneration paid
by an employer in the relevant period.
13.54
135 • The AC Regulations should also be amended to require the employer to provide the VWA
with the information on which the VWA can base its estimate.
13.54
136 • Extend the term of approval for self-insurance to six years, following the first approval, to
reward good performance.
13.61
137 • Allow the VWA to review a self-insurer’s approval where the self-insurer:
– becomes a subsidiary of an Australian parent company;
– fails to meet any of the requirements for approval as a self-insurer; or
– fails to meet any of the prerequisites for approval as a self-insurer.
13.69
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
RECOMMENDATION SUMMARY
PAGE 34
Recommendations for change Reference
Chapter 13 – Self-insurance continued
138 • Remove the 28-day notice period required where the self-insurer requests revocation of
its self-insurance approval.
13.70
139 • Contingent liability insurance excess requirements should be relaxed, allowing self-insurers
to choose a higher or lower excess to suit their individual needs. In addition, the minimum
amount for a bank guarantee that a self-insurer must hold should be removed and the
maximum increased to $5 million or an amount advised by actuaries.
13.82
140 • Amend the self-insurance contributions formula in line with the formula proposed by
Access Economics, namely:
Recovery from self-insured (SI) firm “I” equals:
[SI Specific Costs + (Scheme insured specific fixed costs + Common Costs) Y/Z] (X
i
/Y) r
i
where:
Y is total remuneration for self-insured firms;
Z is total remuneration for scheme-insured and self-insured firms;
X
i
is self-insured firm’s remuneration; and
r
i
is the self-insured firm’s risk weighting.
13.137
141 • A CPI-X cap should be applied to increases in VWA’s costs (with factor X to be initially set at
2% and refined over time by reference to a “self-insurer cost index” based on a study of
self-insurers’ costs of operating their workers’ compensation schemes).
• In addition, an independent audit of VWA’s cost base should be undertaken to ensure that
costs are properly identified and categorised.
13.138
142 • Self-insurer contributions should be included in the issues that can be reviewed by the
independent expert body that reviews premiums.
13.140
143 • Retain the OHS audit requirement for self-insurers and implement the national OHS audit tool. 13.154
144 • Self-insurers should be required to document their claims management policies, provide the
policies to the VWA and make them available to workers to ensure greater transparency and
accountability in decision-making.
13.163
145 • Remove a self-insurer’s requirement to advise the VWA annually of common law
proceedings and pursue recoveries from the AC Regulations.
13.172
146 • Amend the AC Act to provide that, as a condition of approval, self-insurers notify the VWA
within 28 days of commencement of common law proceedings and provide any additional
information relating to those proceedings as requested and within any specified time.
13.173
147 • Align the requirement that self-insurers provide details of rateable remuneration with other
data provision requirements, so that it is due by 31 August of each year.
13.176
148 • Allow increased flexibility for self-insurance in the event of major corporate restructures.
Specifically, the following should be allowed:
– the extension of licence periods for specific times; and
– a non-eligible entity’s application for self-insurance in limited circumstances.
13.200
149 • The AC Act should be amended to allow employers who move from scheme insurance to
self-insurance to elect to retain responsibility for their existing claims.
13.204
150 • Align the provisions governing the movement of self-insured employers to scheme-insurance
or to self-insurance under the Commonwealth scheme by setting a single period over which
liabilities are measured (of six years with an interim step at three years).
• Introduce a defined process for resolving disputes about the value of those liabilities,
to ensure certainty for self-insurers and the VWA.
13.206
151 • Costs borne by the VWA in revoking a self-insurer’s licence (such as the cost of the
actuarial services used to determine the outstanding liabilities at the time of revocation)
should be borne by the self-insurer, and the AC Act should be amended to ensure that the
VWA is able to recover those costs.
13.210
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
BENEFIT IMPROVEMENTS
PAGE 35
Rank Proposed benefits Annual cost
1.
Impairment benefits
Increase maximum impairment benefit to upper limit of common law “pain and suffering”
damages – that is, from $384,180 to $484,830.
$600,000
2.
Death benefits
Increase maximum death payment to maximum impairment benefit payment – that is,
from $265,590 to $484,830.
maximum
$12 million
3.
Superannuation
Amend the AC Act to allow superannuation contributions to be paid into a fund
for workers who continue to receive weekly payments after 52 weeks.
$25.5 million
1
4.
Amend second step-down entitlement
Amend the AC Act so workers continue to receive 95% of PIAWE for the first
13 weeks and 80% thereafter.
$25 million
5.
Serious spinal injuries
• Maintain the amendments made to the AC Act in 2003 relating to the modifier for WPI
assessments for spinal, upper extremity, lower extremity and pelvis impairments.
• Consistent with the approach taken by NSW, increase the entitlement awarded for spinal
impairments by 10% – that is, a 5% NPI entitlement would increase from $10,250 to $11,275.
$5 million
(in addition to
the cost of
maintaining the
2003 amendments)
6.
Psychiatric impairments
• Maintain the 30% WPI psychiatric threshold.
• Maintain the distinction between secondary and non-secondary psychiatric injuries.
• Increase the benefit awarded for 30% psychiatric impairment to the benefit awarded for a
30% physical impairment – that is, from $12,810 to $66,120.
$3 million
7.
Medical procedures after 130 weeks
Amend the AC Act to extend weekly benefits to workers who undergo surgical treatment after
the expiry of 130 weeks in certain circumstances.
$2-5 million
8.
Pensions for dependent children
• Amend the AC Act to increase pensions for dependent children to the end of their 25th year,
where they are engaged predominantly in learning, whether study or an apprenticeship.
• The pension should be subject to an appropriate income cap, indexed annually in accordance
with CPI.
$300,000
9.
Compensation for those persons who are not dependants
The AC Act should provide lump sum payment for persons, other than dependants, who suffer
financial hardship as a result of a worker’s death. The entitlement to payment should only arise
where the deceased worker leaves no dependants.
less than
$2 million
10.
Lower the physical injury deeming threshold for access to common law damages to 20%
Reducing the deeming threshold would allow faster access to benefits for those workers who
would ultimately succeed under the narrative test in any event.
Cost neutral
11.
Preferred date used to calculate lump sum entitlements
The method of calculating impairment benefits should be brought into line with the current
practice of the TAC, that is, entitlement amounts should be based on the value of the
entitlement when the claim is finalised, not the value of the entitlement as at the date of injury.
$5-15 million
RECOMMENDED BENEFIT IMPROVEMENTS
1 This cost takes into account the impact of amending the second step down ($1.5m).
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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IMPROVING
UNDERSTANDING
AND CLARITY OF
THE LEGISLATION
Legislation and the scheme
Amendments
A new Act
1.1. The Review’s terms of reference require me to provide advice and recommendations to identify
and resolve anomalies in the AC Act and in the operation of the scheme, improve employer and
employee understanding of the AC Act and improve the usability of the legislation through the
removal of inoperative, irrelevant or superfluous provisions.
LEGISLATION AND THE SCHEME
1.2. The Review is directed at the AC Act and “associated legislation”, which includes the ACWI Act
and the WC Act, which the VWA also administers.
1.3. Because the terms of reference mention the AC Act, associated legislation and the scheme, the
Review also covers regulations made under those Acts, other statutory instruments such as the
Premiums Order made under the ACWI Act, and documents such as VWA-approved guidelines
and the Claims Manual.
1.4. I believe the basis for any successful statutory benefits regime is the existence of
comprehensive, user-friendly supporting legislation.
1.5. One of the key frustrations with the current workers’ compensation system is the overly
complex legislation which set outs the rules that govern the scheme.
1.6. Two significant features of the legislation make it particularly difficult to understand and use:
the many amendments to the legislation; and the absence of a hierarchy of scheme legislation.
AMENDMENTS
1.7. The AC Act has been amended on 80 occasions. The ACWI Act has been amended on
19 occasions.
1.8. The AC Act and the ACWI Act now prescribe what is in effect a series of accident
compensation schemes, directed at different periods since 31 August 1985.
1.9. Some of the early legislative provisions are spent or obsolete – that is, they no longer have any
effect – and should be removed from the Acts. There are also anomalies as between provisions
that have been added at different times.
1.10. The amendments to the AC Act and the ACWI Act operate from a variety of dates. This is
because definitions, rights and liabilities (including benefits and premiums) have been changed
by successive amendments to the Acts, and almost all of the changes operate prospectively
(that is, from a specified commencement date and not retrospectively).
1.11. To seek to change rights or liabilities retrospectively, particularly to a person’s detriment, is
generally regarded as inappropriate: governments generally do not sponsor retrospective
amendments;
1
the Parliament is usually reluctant to pass retrospective legislation; and the
courts apply a general presumption that, unless legislation is clearly expressed to operate
retrospectively, it should not be given a retrospective effect. For that reason, the AC Act in
particular includes a complex and often repetitive set of provisions that set out entitlements
and obligations that apply only for particular periods.
1.12. Although the ACWI Act is less affected, it too contains provisions that only apply for particular
periods.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
CHAPTER 1 IMPROVING UNDERSTANDING AND CLARITY OF THE LEGISLATION
PAGE 38
1 An exception to that general practice was the amendment of the AC Act made by s 24(1) of the
Transport Accident and Accident Compensation Acts Amendment Act 2007 (which excluded employer
superannuation contributions from the calculation of PIAWE).
1.13. This serial nature of the two Acts makes the legislation particularly difficult to understand.
An employer or employee is not likely to know that to find the date from which a provision
operates often requires searching the table of amendments in the endnotes at the back of
the relevant Act.
Hierarchy of scheme legislation
1.14. Most of the detail of the scheme is in the Acts, the Premiums Order and the Claims Manual.
There is comparatively little in regulations. This is unusual, because Acts typically set out broad
rules and leave the detail to be prescribed in regulations.
1.15. Statutory guidelines made under the Subordinate Legislation Act 1994 (Vic) require policy or
principle to appear in Acts and the detailed implementation of policy or principle to appear in
subordinate legislation, such as regulations.
1.16. From the VWA’s perspective, it may be better to have one source of information. It seems that
this is what the Claims Manual has become, as the Act has become increasingly difficult to
understand.
1.17. I believe the AC Act and the ACWI Act should answer broadly and clearly the basic questions:
• Which injured workers are to be compensated?
• What they are to be compensated for?
• How they are to be compensated?
1.18. It is doubtful that, by reading the AC Act and the ACWI Act, a person could understand the
basic tenets of the scheme, such as:
• Who is covered?
• What is an employer required to do?
• What sorts of illnesses, injuries or diseases are covered?
• What different types of benefits are available?
• How and when is a claim to be made?
• What happens if there is a dispute?
1.19. Because of the constant amendments and the lack of a hierarchy of scheme legislation, the
AC Act does not flow in a logical or chronological sequence. Ideally, reading an Act should be
like following a narrative, with sequential provisions outlining the necessary matters in the order
in which they typically occur. Alternatives, such as the different types of benefits, should be
dealt with in distinct parts or divisions of the legislation. Currently, Part IV of the AC Act jumps
between the different types of compensation, even within single provisions.
Cost and compliance
1.20. There is a cost and compliance implication in having legislation in such an unattractive (and
frequently impenetrable) form. It is extremely unlikely that employers or employees would
persevere in reading the AC Act and the ACWI Act from beginning to end
2
– assuming that they
could gain any insight into the scheme from that exercise. They therefore have to resort to the
VWA (or its agents) or to lawyers and other professional people for information or advice,
costing time and money.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
CHAPTER 1 IMPROVING UNDERSTANDING AND CLARITY OF THE LEGISLATION
PAGE 39
2 Compensation Law Bar Association Submission, 2 May 2008, at p 26, points out that when the AC Act
was first commenced it consisted of 214 pages; at the last reprint on 26
th
July 2006 it consisted of
644 pages.
A NEW ACT
1.21. To my mind, there is an overwhelming case for rewriting the AC Act and the ACWI Act, with
the objective of developing legislation that is arranged in a logical, intelligible and functional
structure and that eliminates obsolete and contradictory provisions.
1.22. In recasting the legislation, there will always be a tension between precision and simplicity.
A framework law can state general principles, leaving the details to be filled in by the courts,
by delegated legislation or in some other way. A law that states general principles has one
advantage: it is relatively easy to read and its general purpose is easy to understand. But it
has one substantial disadvantage: its precise meaning may be uncertain.
3
The OHS Act is
an example. Much of the detail relating to the main principles set out in that Act is contained
in voluminous regulations.
4
1.23. The size of the task of moving to a new Act is daunting. For that reason, structuring the
transition from the current legislation to a new Act so that the transition proceeds in stages
has particular advantages and should result in a better product:
• Immediate benefits can be delivered to injured workers through the amendment of the
current AC Act, without waiting for the development of a complete new legislative package.
• The complex areas that involve specialised input (through the reviews recommended in my
Report)
5
will benefit from allowing the necessary time and expertise for considered analysis.
• Staged development will mean that stakeholders can be engaged in the course of the
re-writing exercise and participate most fully with those areas of greatest interest to their
constituencies.
• Implementation can be rolled out progressively, so that cost impacts can be managed, for
stakeholders and for the VWA.
• A staged program allows for the infusion of national harmonisation elements from time to
time, as harmonisation with other Australian jurisdictions is developed.
1.24. Therefore, I recommend that the entire current accident compensation legislation should be
recast (with the caveat that the wording of those sections that have been the subject of regular
judicial interpretation through litigation should be retained) into a comprehensive Act, arranged
more logically and coherently and expressed in a more accessible fashion in plain language.
1.25. I also recommend that the creation of the new Act be undertaken in stages through legislative
amendment.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
CHAPTER 1 IMPROVING UNDERSTANDING AND CLARITY OF THE LEGISLATION
PAGE 40
3 Australian Government, Office of Parliamentary Counsel 2008, Plain English Manual, viewed 27 May
2008, <www.opc.gov.au>.
4 Occupational Health and Safety Regulations 2007.
5 Chapter 5, Better income replacement, recommends that the Government commission a further
review of the method of calculating PIAWE with a view to incorporating any further reforms as part
of any legislative changes following this Review.
Chapter 7, Lump sum benefits for significantly injured workers, proposes that the VWA initiate a review
of the use of the AMA Guides as the means by which permanent impairment is assessed.
Chapter 6, Treatment expenses, recommends an independent review of the fees payable by the VWA,
covering both medical and like service. That review should consider financial incentives for health
professionals to achieve better return to work outcomes, bearing in mind market rates and scheme
viability.
Design considerations
1.26. The new Act should include the following features:
• a logically sequenced narrative, with provisions outlining the necessary matters in the order
in which they typically occur in practice – the current claims manual may provide a model for
sequencing for some topics;
• grouping together of provisions with a common subject matter;
• grouping of related concepts in a way that makes the relationships easy to understand;
• provision for compulsory WorkCover insurance for employers under WorkCover insurance
policies and the payment of premiums for those polices – that is, the content of the ACWI Act;
• savings and transitional provisions for the various provisions in the current AC Act and ACWI
Act, where necessary, to save their application from, or limit their application to, the date(s) of
commencement of the provisions of the new Act, as well as maintaining any earlier
“grandfathering” or savings in those Acts;
• particular care given to the presentation of the savings and transitional aspect of the
legislation, with each set of provisions that has a limited operation placed in a separate
division or sub-division, clearly marked with the relevant date(s) of operation, with extensive
use of cross-references;
• aids to comprehension and navigation, including objectives provisions, examples, diagrams,
tables, notes to some sections with explanations and cross-references, and possibly the
devices used in some complex Commonwealth legislation of a “readers’ guide” and
“simplified outlines” preceding chapters and parts of the Act; and
• provision for the making of general guidelines, both mandatory guidelines and non-binding
guidelines, as identified in the parts of the new Act authorising their making.
6
1.27. The new Act should be based on a fully-worked preparatory plan that records and outlines the
material that is to be contained both within and outside the primary legislation and records the
degree of generality or specificity to be used.
1.28. The use of a legislative plan will ensure that the emphasis is placed on substance rather than
form. In such an extensive piece of legislation, it will be imperative that a complete detailed
plan be settled before any drafting commences. That approach is the best insurance against
having to make “band aid fixes” to a poorly planned piece of legislation.
[A] draft Bill prepared without previous planning may be more complicated and less clear than
a Bill prepared with the benefit of a detailed draft. By settling a detailed plan before starting to
draft, you can select the drafting structure, terminology and approach that best suit the
function of the draft.
7
1.29. My view is that a transformation of the current legislation into an entirely new Act could be
finalised within three years. I recommend that progress towards such a transformation occur
in stages:
• the first stage should consist of the legislative amendments that are necessary to effect my
recommended policy changes, including changes in benefits;
• a further stage should involve removing anomalies and spent provisions in the AC Act and
the ACWI Act (and any unintended consequences that might flow from the first stage); and
• a later stage should achieve a new Act, to include any legislative changes not contained in
the first stage, together with a re-ordering and reshaping of the AC Act and the ACWI Act
into one streamlined piece of legislation.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
CHAPTER 1 IMPROVING UNDERSTANDING AND CLARITY OF THE LEGISLATION
PAGE 41
6 For a discussion of characterisation of guidelines see Smoker v Pharmacy Restructuring Authority and
Others (1994) 53 FCR 287 at 298-301 (Hill J).
7 Plain English Manual <www.opc.gov.au>.
WorkSafe branding
1.30. Under the AC Act, the VWA is established legally as the Victorian WorkCover Authority.
In 2007, the VWA began re-branding with the intention that the organisation become known
as “WorkSafe Victoria” rather than “the VWA” or “WorkCover”, to build on the community
awareness that the WorkSafe brand had generated. As a matter of course, there were a number
of potential legal implications associated with making those changes to the brand and the use
of the WorkSafe logo.
1.31. I understand that most “WorkCover” branding has been replaced with “WorkSafe Victoria”
branding, on the condition that the new branding is accompanied by a tagline, such as
“WorkSafe Victoria is a trading name of the Victorian WorkCover Authority”, or a similar
expression.
1.32. In a new Act, the further step could be taken to change the legal name of the VWA to WorkSafe
Victoria. This would require the current Authority to be reconstituted with the new name and
made the successor in law to the Victorian WorkCover Authority. The legislation would need to
provide the necessary transitional provisions (including, for example, the retention of entities
created under the AC Act, such as the VWA’s Board of Management).
1.33. A new Act would provide an opportunity to rename the VWA legally and should be taken up
to complete the change that so far has been taken up at the administrative level.
1.34. Therefore, I recommend that the Victorian WorkCover Authority be reconstituted with the new
name of WorkSafe Victoria, as the successor in law to the current VWA.
Amendments to inoperative, irrelevant or superfluous provisions
1.35. The issues outlined in Appendix 1 to my Report propose possible amendments to the AC Act
or the ACWI Act as currently in force. If a new Act is ultimately to replace those Acts, many of
the concerns outlined in Appendix 1 will be irrelevant – other than to act as a warning for the
drafters of the new Act.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
CHAPTER 1 IMPROVING UNDERSTANDING AND CLARITY OF THE LEGISLATION
PAGE 42
WORKERS’
ENTITLEMENT TO
COMPENSATION
Who is a worker?
Contribution of employment to injuries
Stress-related and psychiatric injuries
2.1. Section 82(1) of the AC Act provides that a worker is entitled to compensation if the worker
sustains an injury arising out of or in the course of employment. In this chapter, I examine the
criteria that identify who is entitled to compensation and the circumstances in which the
entitlement to compensation arises.
2.2. Two issues are central to determining whether there is an entitlement to compensation, namely,
whether –
• the injured person fits within the definition of a worker under the AC Act; and
• the person’s injury is sufficiently work-related.
2.3. In the first part of the chapter, I examine who is considered to be a worker for the purposes
of the AC Act. In particular, I discuss the complex provisions governing the circumstances in
which contractors are deemed to be workers under the AC Act, and recommend clarification
of the provisions relating to contractors and outworkers. I also examine the reasons why
self-employed persons are not covered by the scheme. Lastly, I recommend that municipal
councillors should be entitled to compensation.
2.4. In the second part of the chapter, I discuss the level of work-related contribution required before
an injury is compensable, including the current extension of scheme cover to injuries arising
during authorised work recesses, and the current exclusion of injuries arising during journeys
to and from work.
2.5. In the third part of the chapter, I recommend that the reduction in weekly payments for workers
who sustain an injury (not resulting in serious or permanent disablement) while driving a motor
vehicle with a blood alcohol content (BAC) level of 0.05 or greater be aligned with comparable
provisions in the TA Act.
2.6. In the final part of the chapter, I discuss the provisions relating to stress-related and psychiatric
injuries. I consider the particular illnesses or disorders of the mind that constitute an injury
under the AC Act, the exclusionary provisions which provide that compensation is not payable
for an illness or disorder of the mind caused by stress where the stress arose wholly or
predominantly from specific reasonable actions of the employer, and the decision making
processes for stress-related claims. I discuss the complexities and difficulties in determining
liability in response to, and managing, stress-related and psychiatric claims.
2.7. Lastly, I recommend that the AC Act be amended to exclude all psychiatric injuries that arise
from reasonable or appropriate management actions by an employer in relation to a worker,
and to allow for the suspension or adjournment of claims relating to such injuries in special
circumstances, with payments to be made to the worker in the interim. I also recommend that,
as a matter of policy, mediation and/or workplace counselling should be encouraged before
liability is determined for claims relating to psychiatric injuries.
2.8. The broader the definition of a worker, and the greater the range of circumstances that are
regarded as making an injury work-related, the greater the demands on the scheme. On the
other hand, covering fewer workers and narrower categories of injuries under the scheme,
and requiring a stronger link between employment and an injury, would result in more
demands on private insurance and the social security safety net to protect injured workers.
2.9. In considering who should be entitled to compensation and in what circumstances the
entitlement should arise, it is important to balance the goals of:
• ensuring injured workers receive the assistance and support they need to obtain fair benefits;
and
• maintaining a stable and competitive workers’ compensation scheme.
2.10. To help people understand how workers and employers are defined in the AC Act, and when
associated entitlements and obligations arise, it is particularly important that this aspect of the
AC Act be as clear and concise as possible.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
CHAPTER 2 WORKERS’ ENTITLEMENT TO COMPENSATION
PAGE 44
2.11. No fundamental changes are required for the provisions identifying the persons entitled
to compensation and the circumstances in which an entitlement may arise, apart from the
provisions governing psychiatric and stress-related injuries. Essentially, the focus of this
chapter’s recommendations is on improving the clarity of the provisions governing entitlements,
so as to enable workers and employers to better understand their entitlements and
responsibilities under the AC Act.
WHO IS A WORKER?
2.12. Under the AC Act, workers include employees, as well as people who are deemed to be
workers or deemed to be working under a contract of service.
1
2.13. As at June 2006, some 2,249,300 people were covered by the Victorian accident compensation
scheme.
2
The Victorian scheme provides cover to a wider range of people than most other
Australian jurisdictions.
3
However, there are considerable difficulties in determining the exact
proportion of people in paid employment covered by the scheme, mainly because a person’s
status can change depending on the terms of the particular contract governing the person’s
working relationship.
2.14. ABS statistics show an increasing diversity of employment arrangements and significant
increases in non-traditional employer-employee relationships in recent years.
4
Although
the definition of a worker has been expanded to include many contractors working under
non-traditional contract-for-service arrangements (primarily by way of deeming provisions),
there is some concern that, over time, the current definition could cover a diminishing
proportion of the working population.
2.15. Currently, in order to determine whether a person is a “worker” for the purposes of the scheme,
the definition of that term in section 5(1) needs to be considered, together with provisions
which deem some categories of people to be working under a contract of service
5
(effectively
deeming them to be workers) and other provisions which directly deem some people to be
workers.
6
2.16. The definition of worker in section 5(1) does not cross-refer to the sections that operate as
deeming provisions. Given that the sections that operate as deeming provisions are not headed
as such, it would be difficult for anyone with limited knowledge of the AC Act to know which
sections are relevant to determining whether a person is considered a worker or employer
under the scheme.
2.17. There seems to be scope to consolidate some of the deeming provisions to make them more
user-friendly. I recommend streamlining and grouping the provisions relating to the definitions
of worker and employer to make them easier to find and understand.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
CHAPTER 2 WORKERS’ ENTITLEMENT TO COMPENSATION
PAGE 45
1 AC Act, s 5(1).
2 Australian Safety and Compensation Council, Comparison of Workers Compensation Arrangements,
Australian Safety and Compensation Council, Canberra, 2006, p 15.
3 This is because of the “deeming” provisions which extend scheme cover to incorporated contractors
in some circumstances; most other jurisdictions do not provide cover for incorporated contractors.
See paragraphs 2.37 to 2.41 below for further discussion.
4 Australian Bureau of Statistics, Forms of Employment, reissue, ABS cat no. 6359.0, Australian
Government Publishing Service, Canberra, 2006.
5 AC Act, ss 6, 7, 8 and 9.
6 AC Act, ss 10, 11 and 12, 13, 14 and 16.
Contractors
2.18. Whether they operate as individuals or under a company structure, contractors who provide
services to another person (the principal) can be regarded as workers, and therefore covered by
the AC Act, if they meet the conditions set out in the deeming provisions in sections 8 and 9 of
the AC Act.
7
2.19. Section 8(1) of the AC Act deems a natural person engaged by a principal to “perform any work
not being incidental to a trade or business regularly carried on by the contractor in the name of
the contractor or under a firm or business name” to be a worker in certain circumstances.
2.20. When applying section 8, it is necessary to review the contractor’s business history in order to
identify the steps taken by the contractor to establish an independent business. The review will
be wide-ranging and not limited to the financial year in which the contract is made.
2.21. Section 9 deems certain incorporated contractors (as well as natural persons) to be workers;
that is, the section allows companies, and not only individuals, to be deemed workers. In effect,
section 9 removes the “legal fiction” of corporate structures to reveal the working relationships
between the people behind the companies. The test in section 9 limits the review of a
contractor’s business history to the relevant financial year.
2.22. Section 9 was originally taken from payroll tax legislation,
8
although it has been amended over
the years. (Its purpose in the payroll tax legislation was to prevent employers from avoiding
payroll tax by engaging new staff as contractors rather than as employees.)
2.23. The deeming provisions aim to prevent the creation of artificial arrangements that would
inappropriately exclude certain contractors from the scheme. The VWA provides guidelines and
rulings to assist in determining the contracts that are covered by the deeming provisions and
the contracts that are not covered.
2.24. The provisions are quite complex and can create difficulties for employers, possibly leading
to accidental non-compliance. In addition, determining whether a contractor is a worker for
the purpose of a principal’s premium can depend on information that may not be available
to the principal.
Stakeholder views
2.25. The VTHC submits that –
The present provisions relating to independent contractors are both confusing and
cumbersome. We support a re-writing of these sections to improve their clarity.
It is however critically important that the deeming provisions are retained to ensure
independent contractors who are “controlled” by others are captured by the scheme.
9
2.26. It has been acknowledged judicially that provisions attempting to define the circumstances in
which a contractor will be deemed a worker are notoriously difficult to simplify. In World Book
(Australia) Pty Ltd v Federal Commissioner of Taxation,
10
Meagher JA said:
However, once one takes the view that whilst the statutory definitions are apt to catch
payments to some independent contractors but do not extend to all independent contractors,
one is faced with the extraordinarily difficult question of where to draw the line. I do not think
any formula is capable of enunciation which will answer that question.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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PAGE 46
7 The relatively recent Commonwealth legislation, the Independent Contractors Act 2006 (Cth), which
came into effect in March 2007, relates primarily to workplace relations matters and has no effect on
the provisions relating to independent contractors in the AC Act.
8 Payroll Tax Act 1971 (Vic) (as amended), s 3C.
9 VTHC, Submission, 2 May 2008, p 12.
10 (1992) 27 NSWLR 377 at 382.
Retain and simplify the deeming provisions
2.27. In paragraphs 11.118-11.126 of Chapter 11, “Employer premiums”, I recommend the
amendment of the method for calculating premiums for incorporated contractors. My proposal
would exclude the wages paid by the incorporated contractor to the deemed worker from the
deemed employer’s “remuneration”, with the deemed employer declaring remuneration based
on the contract amount paid by the deemed employer to the incorporated contractor. It would
follow that the deemed worker would be entitled to make an injury claim only against the
deemed employer’s WorkCover insurance policy, not against the incorporated contractor.
2.28. My recommendation in relation to premium collection would address the perceived “double
dipping” of premium that can arise where contractors are deemed to be workers. However,
it would not address other problems related to the complexity of the provisions and, on that
basis, I consider that the deeming provisions should be simplified, as discussed below.
2.29. The contractor provisions not only deem certain people to be workers, but also deem others
(the principals) to be employers and certain payments to be remuneration.
11
Accordingly, the
provisions have a significant effect on premium.
2.30. Under section 8 of the AC Act, a contractor who engages an employee or subcontractor to
perform work on the contract can still be deemed a worker if the contractor performs some
of the work. Under section 9 of the AC Act, a contractor will not be deemed to be a worker if
the contractor engages “arm’s-length” labour. However, the provisions do not provide specific
guidance on the amount of labour that will determine when a contract is exempt.
2.31. The Income Tax Assessment Act 1997 (Cth) (the ITA Act) contains a provision to the effect that,
if 80% or more of a contractor’s income derives from the same entity, the contractor will not
be regarded as an independent contractor.
12
Including a similar provision in the AC Act would
provide greater certainty and assist workers and employers to understand the contractor
provisions.
2.32. It would be preferable for such a provision to relate both to contractors who are natural persons
and to incorporated contractors. On the face of it, the amendment could reduce the scope of
coverage, by excluding a small number of natural person contractors from the deeming
provision in section 8. However, in practice, it is estimated that only a very small number of
contractors would be affected. The advantage of the certainty to be gained from introducing
such a provision is expected to outweigh the possibility of excluding those contractors, who
may otherwise have been deemed to be workers.
2.33. Introducing the 80% rule into the AC Act would not remove the difficulty inherent in the
principal having to base its assessment of whether an independent contractor is a worker on
information that is not readily available to the principal. However, employers are required to
make similar assessments of who is an employee for the purposes of payroll tax and Federal
income tax, and the 80% rule is a concept already familiar to many employers because of its
use in the ITA Act.
2.34. Section 9 of the AC Act, in part because of its origins in payroll tax legislation, has been
described as “convoluted, obscure, involved and, at the very least, its meaning in the AC Act
is difficult to construe”.
13
The difference between the definition of a worker in the AC Act and
the definition of an employee in the Payroll Tax Act 1971 (the PT Act), a difference which is
appropriate given the different objectives of the two Acts, gives rise to the difficulties in
applying section 9 in the context of the scheme.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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11 See generally Mayne Nickless Ltd v McIntosh [1989] VR 878 (Murphy J).
12 Income Tax Assessment Act 1997 (Cth), s 87-15(3).
13 Mayne Nickless Ltd v McIntosh [1989] VR 878 at 881 (Murphy J).
2.35. An unintended effect of taking section 9 of the AC Act from the PT Act is that both sections 8
and 9 of the AC Act provide for the deeming of natural persons as contractors, creating some
overlap between the sections (although section 8 can deem contractors to be workers in
circumstances where section 9 will not). This appears to be an anomaly, which may contribute
to the lack of clarity in the deeming provisions.
2.36. Removing natural persons from the operation of section 9 of the AC Act would move away from
harmonisation of the deeming provisions with the PT Act. However, given that the amendment
would not result in any practical change to scheme coverage or premium, this effect would not
outweigh the benefits of simplifying the provision.
2.37. Other Australian jurisdictions provide cover to natural person contractors to varying degrees,
but do not generally provide for incorporated contractors to be deemed workers.
2.38. In New South Wales, incorporated contractors are not deemed to be workers (and therefore the
principal does not pay premium for them), but an incorporated contractor is required to hold its
own WorkCover insurance policy (on behalf of its own employees). Similarly, in Queensland,
only individuals (not incorporated entities) can be regarded as workers,
14
and a person is not
regarded as a worker if the person performs work under a contract of service with a company
of which the person is a director.
15
2.39. South Australia deems certain classes of natural-person-contractors (such as builders, cleaners,
outworkers, taxi drivers and apprentice jockeys) to be workers if they do the work themselves
and do not employ anyone else to do any of the work;
16
and, in limited circumstances, South
Australia provides cover to incorporated contractors.
2.40. In Tasmania, if a contractor enters into a contract to do work (that is not incidental to a trade or
business regularly carried on by the contractor) exceeding $100 in value, the contractor can be
deemed to be a worker employed by the person with whom the contract has been made.
However, the deeming only applies if the contractor does not sublet the contract or employ any
workers and does not have personal accident insurance.
17
2.41. In Western Australia, a contractor operating through an incorporated entity can only be regarded
as a worker of the principal if the use of an incorporated entity by the worker is found to be part
of an “avoidance arrangement”.
18
2.42. The approaches taken by the other jurisdictions, although simpler for workers and employers
to understand, could provide additional incentives for principals to pressure contractors to
incorporate, and could enable the use of corporate entities to avoid employer obligations under
the AC Act. As discussed in paragraph 2.13 above, Victoria has broader scheme coverage than
most other jurisdictions, with an estimated 93% of employed people covered, as compared to
90% in New South Wales and 82% in Queensland.
19
Therefore, amending Victoria’s deeming
provisions to align with those of New South Wales or Queensland could disentitle a significant
number of workers.
2.43. To prevent those contractors being deemed to be workers could leave people currently covered
by the scheme without access to scheme cover. In effect, it could shift the burden of bearing
the cost of insurance for injured contractors from the principal (generally larger employers) and
the scheme, to the contractor (often small businesses with fewer resources and expertise).
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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PAGE 48
14 Workers’ Compensation and Rehabilitation Act 2003 (Qld), s 11(4).
15 Workers’ Compensation and Rehabilitation Act 2003 (Qld), schedule 2, part 2, cl 1(a).
16 Workers Rehabilitation and Compensation (Claims and Registration) Regulations 1999 (SA), reg 5(1).
17 Workers Rehabilitation and Compensation Act 1988 (Tas), s 4B(1), (2).
18 Workers’ Compensation and Injury Management Act 1981 (WA), s 175AA.
19 Australian Safety and Compensation Council, Comparison of Workers’ Compensation Arrangements in
Australia and New Zealand , Department of Employment and Workplace Relations, Canberra, 2006,
p 15. “Employed” in this context refers to people in gainful employment, rather than the common law
meaning of an employee-employer relationship.
2.44. The complexity of the deeming provisions derive partly from the need to balance providing
cover for people who would, but for the “legal fiction” of operating through a company, be
regarded as workers with collecting an equitable amount of premium to cover the risks and
claims costs of injured workers.
2.45. In order to provide as much guidance as possible in determining when contractors will be
deemed to be workers, some complexity may be required. Provisions that are not sufficiently
detailed may be too easily misapplied. Consideration should be given to whether the more
detailed elements for determining whether a contractor is to be deemed a worker should be
included in regulations or in a schedule to the AC Act, rather than forming part of the main
body of legislation.
2.46. I recommend retaining the deeming provisions relating to contractors and independent
contractors, but simplifying the provisions to improve clarity, assist understanding and promote
compliance.
2.47. Any changes to simplify the provisions will require careful analysis in order to ensure that
simplifying the provisions does not have the unintended consequence of reducing scheme
coverage to workers or unintentionally reducing or increasing the premium payable by principals
or contractors.
Self-employed people
2.48. A self-employed person (or “owner-manager”) is someone who operates a trade or business
under her or his own name or a registered business name and draws an income from the trade
or business.
20
Nationally, self-employed people make up an estimated 10% of the working
population, and there has been little change in this figure over recent years.
21
2.49. Self-employed people who work as contractors can be treated as workers if they fall within
the deeming provisions.
22
However, the deeming provisions do not cover self-employed people
who are not working as contractors.
2.50. While self-employed persons may engage others to work for them, they cannot contract with
themselves, either under their own names or under their business names.
23
2.51. To protect themselves against injury or illness, self-employed persons may choose to obtain
private insurance, such as income protection or disability insurance, trauma insurance or total
and permanent disability insurance.
Stakeholder views
2.52. VECCI recommends that –
. . . research be conducted to consider the feasibility of offering self-employed workers
compensation insurance. A particular price or range of prices could be applied as separate
Workplace Industry Classification (WIC/WICs). An option of mandatory or voluntary registration
could also be considered. That way a person able to show coverage would absolve the
principal from paying premium.
24
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20 Business Victoria 2008, Department of Innovation, Industry and Regional Development, Victoria,
viewed 14 April 2008, <www.business.vic.gov.au>.
21 Australian Bureau of Statistics, Forms of Employment, reissue, Australia, ABS cat no. 6359.0, 2006.
There are significant limitations on estimates of the proportion of self-employed people for present
purposes, because the ABS statistics include owner-managers of incorporated and unincorporated
enterprises as self-employed. For workers’ compensation purposes, an unquantified proportion of
these people would be deemed to be workers or employers under sections 8, 9 and 10 of the AC Act.
22 AC Act, ss 8, 9, 10.
23 VWA, Determining Rateable Remuneration for Contractors Under the Accident Compensation Act 1985,
guideline, 2004. The guideline states that self-employed people cannot employ themselves in a
separate capacity.
24 VECCI, Submission, April 2008, p 15.
2.53. Freehills submits –
Many self-employed persons have expressed a desire to be covered by the WorkCover
system . . .
The AC Act [should] be amended to permit self-employed people in business to take out
individual workers’ compensation policies . . .
25
2.54. The only Australian jurisdiction that has provided for the extension of workers’ compensation
cover to the self-employed is Queensland, which allows self-employed individuals, company
directors, contractors, business partners and trustees who satisfy the definition of “eligible
person”
26
to obtain a workplace personal injury insurance policy. Eligible persons who take out
this type of insurance are covered for loss of salary and medical expenses but, unlike workers,
are not entitled to payment of damages for their injuries.
2.55. However, Queensland has much narrower deeming provisions for contractors than Victoria;
so that, without “eligible person” coverage, a significant number of contractors would not be
covered by the Queensland scheme.
2.56. WorkCover SA also has the power to extend scheme coverage to self-employed people who
apply for an extension of coverage,
27
although no such applications have ever been received
and the South Australian scheme does not actually offer policies to the self-employed.
28
2.57. There appear to be several significant difficulties in extending cover to the self-employed.
2.58. First, the AC Act is predicated on the existence of two parties – an employer and a worker –
each of whom has specific rights and responsibilities. The AC Act requires that each worker
must have an identifiable employer, to provide cover for that worker under the scheme.
2.59. If brought within the Victorian scheme, a self-employed person would be considered both an
employer and a worker, with corresponding rights and responsibilities. For example, the person
would have an employer’s obligation to pay premium and a worker’s entitlement to
compensation.
2.60. Although (as is presently the case under the OHS Act
29
), it would be possible for additional or
distinct duties to be created for self-employed workers, that could require substantial
amendments to the AC Act to ensure that its provisions were expressed so as to apply sensibly
to self-employed workers.
2.61. If a self-employed person were to be injured and incapacitated for work, no premium would be
payable while the worker continued to receive weekly benefits – because the worker and
employer are the same person. In effect the scheme could incur a double cost.
2.62. As a result, the premium for self-employed people would need to take into account the
additional risk to the scheme, which could result in a prohibitively high premium rate. VECCI has
noted that overseas, where workers’ compensation coverage has been offered to the self-
employed, it has proven expensive for the scheme.
30
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25 Freehills, Submission, 11 February 2008, p 9.
26 Workers’ Compensation and Rehabilitation Act 2003 (Qld), s 23.
27 Workers Compensation and Rehabilitation Act 1986 (SA), s 103.
28 WorkCover SA 2008, Employer Frequently Asked Questions, WorkCover Corporation of SA, Adelaide,
viewed 1 May 2008, <www.workcover.com>.
29 OHS Act, s 24.
30 VECCI, Submission, February 2008, p 38.
2.63. As long as the premium charged to self-employed persons covers the cost of paying them
compensation, there should be no net cost to other employers in the scheme.
31
However, in
practice, because employers are currently categorised for premium purposes on the basis of
industry, not legal status, the inclusion of self-employed persons’ claims costs could lead to
changes in industry rates that would impact on other employers. For example, if self-employed
persons had a higher propensity to injury or a slower return to work rate than other workers,
their inclusion in the scheme would lead to an increase in industry rates and cross-subsidisation
by other employers. However, it may be possible to set particular premium rates (or WIC codes)
for the self-employed, rather than categorising them on the basis of industry.
2.64. It is difficult to predict how the OHS and return to work performance of the self-employed
would compare with other employers. On the one hand, a self-employed person may expedite
her or his return to work to ensure that the business continues to operate. On the other hand,
once off work, and with the business in potential disarray, there may be little incentive or
opportunity for a self-employed person to return to work.
2.65. Nationally, 13.9% of all self-employed people suffered a work-related injury in the 12 months
to 30 June 2006. Of that 13.9%, 4.3% worked on a contract basis and 9.6% did not work
on a contract basis.
32
(A proportion of the 4.3% of contractors may fall within the deeming
provisions and accordingly be covered by workers’ compensation insurance.)
2.66. The pricing of workers’ compensation insurance for the self-employed would be very difficult,
given the lack of any claims history for self-employed workers. Setting the price too low would
expose the scheme to under-funding. Setting the price too high would unfairly tax the self-
employed if coverage was compulsory, or lead to low take-up of policies if coverage was
voluntary.
2.67. Therefore, the question whether coverage of the self-employed would be voluntary or
compulsory would also need to be considered. The self-employed would prefer that coverage
was voluntary to retain choice. However, that would expose the scheme to adverse selection –
the self-employed at higher risk of injury may seek insurance and the lower risk self-employed
may not. This would either progressively drive up the cost of insurance for the self-employed,
or lead to scheme employers cross-subsidising the riskier self-employed.
2.68. Several of the above arguments can also be applied to the scheme cover that is currently
provided to sole-employee companies. However, the “legal fiction” of company structures
fits more easily within the existing obligations and framework of the AC Act. Providing cover
to sole-employee companies also means that there is a policy already in place should the
company take on other employees, even on a temporary basis.
2.69. VECCI,
33
the Ai Group
34
and Freehills
35
submit that the current deeming provisions effectively
result in “double dipping” of premium. Currently, in Victoria, where the contractor is a company
that is deemed to be a worker, the principal may be required to pay premium for the payments
made to the contractor. However, the contractor is required to have a WorkCover insurance
policy to cover its own employees and accordingly will pay premium for the employees.
36
This can result in a double collection of premium.
37
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31 Source: advice from the Review’s independent actuaries.
32 Australian Bureau of Statistics, Work-related Injuries, ABS cat no. 6324.0, Australian Government
Publishing Service, Canberra, 2006.
33 VECCI, Submission, February 2008, p 37.
34 Ai Group, Submission, May 2008, p 17.
35 Freehills, Submission, 11 February 2008, p 9.
36 Incorporated companies (even those which employ only one worker) are required to purchase workers’
compensation insurance if their annual remuneration exceeds or is likely to exceed $7500.
37 This issue is explored further in Chapter 11, “Employer premiums”, see paragraphs 11.106-11.114.
2.70. To allow sole traders and other self-employed people to obtain a policy would increase the risk
of double dipping (that is, if an individual who usually works as a sole trader purchased a sole
trader policy, and because of contractual arrangements in one year was deemed to be a worker,
the principal would also pay premium to cover the individual). At present, the potential double
dipping is limited to incorporated entities and individual contractors who act as subcontractors.
38
2.71. Further, many sole traders incorporate because that is the legal structure preferred by their
clients. In many cases, the client is a deemed employer and assumes the employer’s premium
and return to work obligations in the event of injury, meaning that premium is still paid when the
sole employee of a company is injured, and broader return to work opportunities can be pursued.
That outcome addresses one of the risks of extending the scheme to the self-employed.
2.72. Because the legislation is predicated on each worker having an identifiable employer to provide
cover for the worker under the scheme, extending cover to the self-employed, either on a
voluntary or compulsory basis, would require extensive legislative amendment.
2.73. However, as Victoria has the most far-reaching of the deeming provisions, there is less need
to provide cover for the self-employed than in other jurisdictions. Under the current deeming
provisions, some self-employed people are already covered by the scheme. For instance, if a
self-employed person employs any workers, apprentices or trainees, the person must take out
an insurance policy for those employees under the same conditions as other employers. And, if
the self-employed person is contracted to work for another employer, the self-employed person
may be covered under that other employer’s WorkCover policy. Where a person has set up a
company, of which the person is a director and an employee, the person is covered by the
scheme, either through the company’s policy or by a principal contractor’s policy through the
deeming provisions.
2.74. The objective of extending coverage to self-employed people who are not already covered
would be to provide them with access to benefits in the event of workplace injury, rather than
to extend the AC Act’s return to work and occupational rehabilitation rights and responsibilities
to them. That objective can be met through the private insurance market.
2.75. In light of the risks of providing workers’ compensation coverage to the self-employed,
especially on a voluntary basis, as well as the breadth of the current deeming provisions
and the private insurance alternatives available, I do not propose any changes in this area.
I recommend retaining the current position that excludes the self-employed from the scheme
(other than those self-employed who are covered by the current deeming provisions).
Outworkers
2.76. Both Federal and State governments provide legislative protection to outworkers, in recognition
of the fact that outworkers are a vulnerable group of workers who require greater workplace
protection.
2.77. The Outworkers (Improved Protection) Act 2003 (Vic) (the OIP Act) provides that an outworker is
regarded as an employee for the purpose of a range of other legislation, including the OHS Act,
but not the AC Act.
2.78. Outworkers were specifically excluded from the Workers Compensation Act 1958 (the
predecessor to the AC Act) and, although not excluded, were not specifically included in the
original AC Act in 1985. In 1987, the definition of worker in section 5(1) of the AC Act was
amended to include outworkers, by providing that the term includes –
. . . a person (including a domestic servant or outworker) who has entered into or works under
a contract of service or apprenticeship or work or otherwise and whether the contract is
express or implied.
39
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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PAGE 52
38 This issue is explored further in Chapter 11, “Employer premiums”, see paragraphs 11.106-11.114.
39 AC Act, s 5(1).
2.79. However, it has been reported that very few outworkers are engaged through a “contract of
service” (that is, under an employee/employer relationship); rather, they are engaged through
contracts for services (such as contracts to produce or finish an amount of goods), so that the
section 5(1) definition of a “worker” is of limited use. Where an outworker is engaged as a
contractor, the outworker will need to rely on the deeming provisions in sections 8 and 9 of the
AC Act – that is, the contractor will be treated in the same way as all other types of contractors.
Stakeholder views
2.80. The TCFUA submits that –
. . . outworkers are told that it is a pre-condition for receiving work that they must be engaged
as a contractor or they must organise their work arrangements via a business. Many
outworkers thus register businesses or set up companies. These artificial arrangements result
in outworkers being viewed not only as employees or as contractors but also as employers or
as sole proprietors.
40
2.81. The TCFUA submits that the current deeming provisions and the section 5(1) definition of a
“worker” do not provide sufficient protection to all outworkers.
41
It suggests that outworkers
should be provided with additional protection because of their vulnerable status and the
notoriously bad conditions under which they work.
42
2.82. The TCFUA argues that –
The provisions of section 9 of the ACA certainly do not encourage employers to ensure that
they meet their obligations under the workers’ compensation scheme established by the ACA
because of their complexity.
. . . an outworker may be required to set up a company and may “employ” other outworkers,
usually members of his or her family, in order to receive work. In such a circumstance it
appears that he or she will be excluded from the deeming provisions of the ACA,
notwithstanding that he or she is a party to a sham arrangement.
43
2.83. The TCFUA further submits that –
. . . amendments to the ACA are necessary to ensure that all outworkers are entitled to
workers’ compensation . . .
. . . clearly deeming outworkers as workers will end the artificial and inaccurate distinction
between outworkers as employees and outworkers as contractors . . .
44
2.84. It has been suggested that there are substantial difficulties in providing information regarding
rights and obligations under the AC Act to employer/principals and worker/contractors in the
outworker industry – because of the often isolated nature of the work and the cultural and
linguistic backgrounds of the people involved in the outwork industry.
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PAGE 53
40 TCFUA, Submission, 2 May 2008, p 4.
41 TCFUA, Submission, 2 May 2008, pp 5–6.
42 TCFUA, Submission, 2 May 2008, p 2. The submission stated that surveys suggest an estimated 97%
of outworkers are women, and 92% of those women were born overseas.
43 TCFUA, Submission, 2 May 2008, pp 6–7.
44 TCFUA, Submission, 2 May 2008, p 7.
2.85. The TCFUA proposes a definition of outworker for the AC Act that is based on (but not identical
to) the definition in the Industrial Relations Act 1999 (Qld), as follows:
“outworker” means
a person engaged, for someone else’s calling or business, in or about a private residential
premise or at other premises that are not necessarily business or commercial premises of
the employer . . .
45
The TCFUA maintains that the definition should not be confined by reference to industry or
occupation.
46
2.86. The AC Act deeming provisions, although in need of clarification, generally cover outworkers
who operate as natural-person-contractors or sole employees of incorporated contractors where
the outworker’s company is working predominantly for the principal.
2.87. Where an outworker has been incorporated and the company employs workers, the company
must take out a WorkCover insurance policy to cover those workers. If the company also
employs the outworker, the policy will cover the outworker. Accordingly, although the outworker
could not claim compensation against the principal in those circumstances, the outworker can
still claim against her or his own company’s policy and therefore would still be covered under
the AC Act. Where a claim has arisen because of the negligence of another party, such as the
principal, “recovery” proceedings can be taken against that other party by the VWA;
47
so the
principal can still be held liable for injuries arising from the principal’s negligent acts.
2.88. However, the incorporated contractor (that is, the outworker) will be liable to pay the premium
for workers employed by the company. The premium payments may be a significant amount
for an outworker, who would generally receive very low rates of pay.
48
2.89. Further, it is feasible that, in light of the often low levels of English literacy amongst outworkers,
the incorporated outworker may inadvertently fail to take out a WorkCover insurance policy.
If one of the outworker’s family member employees sustains an injury while the outworker
is uninsured, the family member may not claim compensation because of concerns about
sanctions against the uninsured outworker. If the family member does claim compensation,
the incorporated outworker may be penalised because of the failure to maintain insurance:
• the uninsured company may be required to pay up to twice the amount of premium that
would have been payable to the VWA during the period the company was uninsured;
49
• the uninsured company may be required to reimburse the VWA the amount specified by
the VWA as the cost of the relevant injury;
50
and
• the uninsured company may be fined up to 100 penalty units.
2.90. Essentially, an outworker who has incorporated (the “contractor”) will not be a deemed worker
if the services provided to the principal are performed by two or more persons employed by,
or who provide services for, the contractor’s business, unless the VWA determines that the
contract or arrangement under which the services are so supplied was entered into with an
intention of directly or indirectly avoiding or evading payment of premium by any person.
51
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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PAGE 54
45 TCFUA, Submission, 2 May 2008, p 7.
46 TCFUA, Submission, 2 May 2008, p 7.
47 AC Act, s 138.
48 According to the TCFUA submission at p 2, a recent study of outworkers found that the average hourly
rate of pay was $3.60 per hour.
49 ACWI Act, s 7(6).
50 ACWI Act, s 61.
51 AC Act, s 9(1)(f).
2.91. The effect of section 9(1)(f) of the AC Act is that, where two or more persons employed by an
incorporated outworker are performing services related to an outwork contract, the outworker
is not a deemed worker of the principal unless an intention to avoid or evade premium is
apparent. In many cases, it will be difficult to prove that such an arrangement was intended
to avoid or evade payment of premium.
2.92. Where the outworker is an unincorporated contractor who employs other workers, the
outworker’s WorkCover insurance policy will cover the other workers but not the outworker.
In such a situation, the outworker will have to rely solely on the deeming provisions in order
to obtain any cover under the scheme.
2.93. Some concerns have been raised that the deeming provision in section 8 of the AC Act
only applies to contracts where the contractor agrees to perform any work “not being work
incidental to a trade or business regularly carried on by the contractor in the name of the
contractor or under a firm or business name”,
52
and that this restriction may result in
outworkers who have registered business names not falling within the deeming provision.
2.94. However, the registration of a business name will not mean that the deeming provision will not
apply. In determining the application of section 8 of the AC Act, the factual circumstances will
be examined, and the most relevant circumstance will generally be the relationship between
the outworker and the principal. If the outworker has a registered business of providing clothing
alteration services, but provides those services to one principal only, then the outworker is most
likely to be deemed to be a worker of that principal.
2.95. Although the concerns relating to registered business names (as outlined in paragraph 2.94
above) appear for the most part not to have been realised, the status of outworkers in such
situations should be clarified. In particular, given the vulnerable position of many outworkers,
confusion resulting from obscurely drafted provisions such as section 8(1)(a) of the AC Act
could assist dishonest principals to persuade outworkers that they have no entitlement to
compensation even though the entitlement actually exists.
2.96. Workers who are employed by other outworkers, whether incorporated or not, should be
covered by the scheme through the incorporated contractor’s WorkCover insurance policy.
53
Alternatively, if the contractor (in breach of the AC Act) does not have WorkCover insurance,
the principal will be regarded as the workers’ employer and the worker will still be covered
by the scheme. In that situation, the principal has a right of indemnity against the contractor
who failed to maintain insurance.
54
However, the contractor, who may also be an outworker,
will be exposed to prosecution and penalties if the outworker fails to hold insurance.
2.97. Outworkers employed by an incorporated contractor appear to be afforded adequate protection
by the scheme in a formal legalistic sense. However, the principal who engages outworkers is
arguably better placed than any outworker to bear the cost of WorkCover insurance and is a
more appropriate object for compliance and enforcement activities.
2.98. There is clearly a problem with the lack of clarity in the deeming provisions and lack of
understanding of the way in which the deeming provisions apply. The lack of clarity is likely
to contribute to a lack of understanding by outworker contractors about their entitlements to
compensation, and create difficulties in enforcing compliance, with both premium payment
and employer obligations, by those who employ outworkers.
2.99. I recommend that the operation of the provisions relating to outworkers, together with the
deeming provisions, be clarified, by deeming all “outworkers” to be workers.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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PAGE 55
52 AC Act, s 8(1)(a).
53 If the contractor is exempt from the requirement to have a WorkCover insurance policy because the
employer’s annual payroll is less than $7500, the scheme will provide cover under the ACWI Act:
s 7(1), (1A), (1B).
54 AC Act, s 10A.
2.100. For the purpose of that deeming provision, the definition of outworkers should include only
natural persons, sole employee companies and persons employed in “family companies”
(see paragraph 2.105 below) who are engaged by a principal to perform clothing work.
2.101. I consider that, although the TCFUA’s proposed definition (see paragraph 2.85 above) has the
advantage of providing broad cover to a vulnerable sector of the workforce, it could have
unintended consequences if introduced into the AC Act. For example, if all incorporated entities
who employ any number of workers, who are engaged for someone else’s business in or about
private residential premises or other non-business premises of the employer, were regarded as
deemed workers, many genuine contractor companies that provide all manner of services to
other companies could be caught.
2.102. Essentially, a balance is required to provide protection to most outworkers, without
unintentionally extending the protection to people not in need of such protection.
2.103. The definition of outworker in the OIP Act refers to a person engaged, in or about a private
residence or other premises that are not necessarily business or commercial premises, to
perform clothing work.
55
I recommend that the definition of “outworker” in the OIP Act be
adopted, with the exception that “person” be limited to those categories referred to in
paragraph 2.100 above.
2.104. Under the OIP Act, “clothing work” is defined as the packing, processing or working on articles
or material in the clothing industry, and the “clothing industry” is defined
56
to include –
. . . wholly or partly designing, preparing, manufacturing, processing or finishing, or wholly
or partly controlling, managing or supervising the designing, preparing, manufacturing,
processing or finishing, of any type of garment, apparel or articles (such as aprons, all
descriptions of whitework, including napery, sheets, pillow slips, pillow shams, diapers,
handkerchiefs, towels, chenille bedspreads, mosquito nets, chenille bath mats, and when
made into clothing or whitework establishment cot covers, blankets or bedspreads, scarves,
collars, cuffs, neckware, muffs, rugs and mats such as are made in the establishment of a
furrier from furred, haired or woollen skins, hats, caps, bonnets, berets or any other kind
of headwear, umbrellas or parasols or the like), whether inside or outside of a factory
or workroom . . .
2.105. A “family company” could be defined to mean a company that only employs the spouse,
children, grandchildren, parents, grandparents or siblings of the person exercising substantial
control over the company (with power given to the VWA to identify that person).
2.106. I recommend that the OIP Act definitions be followed, because there is merit in retaining the
same definitions to apply across Victorian employment legislation, and also because it would
assist in restricting the possibility of companies in other industries using the provisions as a
way of avoiding their premium obligations.
2.107. I do not recommend extending scheme cover to all incorporated outworkers irrespective of
whom they may employ, because that extension could lead to relatively independent contractor
or subcontractor companies which employ a number of staff being regarded as workers.
2.108. I further recommend that the VWA provide better information to people in the outworker
industry, both principals and contractors, about the situations where outworker arrangements
will be deemed to create employment relationships, and provide better information about the
obligations and responsibilities of employers in those situations. It is essential that a public
awareness campaign accompany any legislative changes, so that the legislative changes can
have a practical, positive outcome for outworkers.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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PAGE 56
55 OIP Act, s 3(1).
56 OIP Act, s 3(1).
Municipal councillors
2.109. Councillors are democratically elected representatives of their local communities. They can
only be removed from their position as councillors under particular provisions in the Local
Government Act 1989 (the LG Act), or through processes that depend on the exercise by
the Minister for Local Government of a statutory discretion. There are currently 79 municipal
councils in Victoria, and approximately 650 municipal councillors.
2.110. Although State Government ministers, members of parliament, office-holders appointed by the
Governor in Council, and members of other public corporations and bodies are covered under
the AC Act
57
because they are deemed to be workers,
58
members of municipal or local councils
are expressly excluded from the deeming provisions.
59
2.111. The reasons for that exclusion, which was introduced in 1994, are not entirely clear. However,
it was probably at least in part because, in 1994, municipal councillors only received
reimbursement for expenses and did not receive an allowance (as they now do). The exclusion
occurred in the context of the restructuring and amalgamation of municipal councils.
Stakeholder views
2.112. The VLGA submits that –
. . . there does not appear to be any sound contemporary arguments of either a technical
or policy basis for not affording this protection [to municipal councillors].
We also note that all State Government appointed Boards are also covered by the Act,
yet would not be considered as employees.
60
2.113. The MAV raises concerns about the inclusion of municipal councillors in the scheme.
It submits that –
. . . further matters . . . [to] consider . . .
• Who will be the “employer” of councillors?
• What will constitute a “workplace” . . . ?
• How will the nexus between the performance of council business and the injury
be established?
• Will the “remuneration” for determining compensation be limited to the councillor’s
allowance or will it include other remuneration?
61
Extend scheme cover to municipal councillors
2.114. The roles and responsibilities of municipal councillors have changed since 1994. In particular,
following changes to the LG Act in 2004, municipal councillors have increasingly been required
to canvas concerns and consult with the community. According to a recent report, 80% of
municipal councillors spend more than 33 hours each week performing their duties as
councillors.
62
Current reviews by the Victorian Electoral Commission of council electoral
systems are creating more multi-member council wards, thereby increasing the geographic
area for which each councillor is responsible.
2.115. Municipal councillors receive an allowance, varying between $6000 for smaller councils and
up to $18,000 for larger metropolitan regions, together with reimbursement of reasonable
expenses (for travel, telephones and computers). Because the payment is an allowance rather
than a salary, municipal councillors do not qualify for superannuation contributions by municipal
councils, although they can salary sacrifice for superannuation.
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57 Victoria, Legislative Council, Debates, 3 May 1994, p 429.
58 AC Act, s 14(2), (3).
59 AC Act, s 14(3). The definition of a worker in s 5(1) of the AC Act depends on the existence of a
common law employer-employee relationship, which is not applicable to councillors; and, accordingly
in the absence of a deeming provision, councillors are not covered by the AC Act.
60 VLGA, Submission, 17 April 2008, p 1.
61 MAV, Submission, 7 May 2008, p 1.
62 Victorian Local Governance Association, Meeting the Sustainable Price of Democracy, final submission
for the Councillor Remuneration Review Panel, 2007, p 7.
2.116. A councillor is regarded as an “officer” under the OHS Act, which means that the councillor
can be prosecuted for her or his municipal council’s breach of the OHS Act, where the breach
is attributable to a failure by the officer to take reasonable care.
63
2.117. Other Australian jurisdictions differ on whether municipal councillors are covered by workers’
compensation.
• In New South Wales, municipal councillors are not covered by the workers’ compensation
scheme; although they are not explicitly excluded, the absence of provisions deeming them
to be workers means that they are not included.
• In Queensland, municipal councillors are generally covered by the workers’ compensation
scheme, with such cover limited to injuries sustained only while attending public meetings
or performing any other duty of office as a member.
64
2.118. Issues may arise as to what constitutes a councillor’s workplace or what activities are
work-related, given that there may be considerable overlap between a councillor’s personal
time and council business. (For example, a councillor may have discussions with municipal
constituents about council matters while shopping). Most municipal councillors are engaged in
additional forms of work (around 36% are employed in other occupations and another 40% are
self-employed)
65
, so that similar issues may arise when a councillor discusses council business
while at her or his other workplace.
2.119. However, those issues are essentially variations on similar complexities that arise in other
deemed employment contexts (such as whether a person employed by an incorporated
contractor who sustains an injury did so in the course of the person’s work for the principal or
the immediate employer). Those issues are not a reason for excluding councillors from cover
under the scheme, particularly given that State parliamentarians, who present similar issues to
those presented by municipal councillors, are covered by the AC Act. Regulations or guidelines
could be used to clarify the circumstances in which councillors would be regarded as acting in
the course of their employment.
2.120. If a worker is injured while working in two or more jobs, the worker’s PIAWE is used to
calculate the worker’s weekly payments, based on the following:
66
• if the worker was employed with one employer for the normal number of hours specified
in the industrial award (or 35 hours per week if there is no award), the earnings from the
main job;
• if the worker was employed for more than 35 hours per week with two or more employers,
the higher earning job; or
• if the worker was employed for less than the normal number of hours specified in an
industrial award or 35 hours or less per week for all jobs, the average of the ordinary time
rates of pay from all jobs multiplied by the lower number of hours (either the normal hours
per week or 35 hours per week).
2.121. Accordingly, if municipal councillors were covered by the scheme, a councillor who sustained
an injury in the course of council duties would be entitled to weekly benefits based on the
councillor’s PIAWE, including the councillor’s other employment.
2.122. The municipal council which was responsible for the injury would have the claims costs
allocated against the council’s policy and used in their premium calculation. The councillor’s
other employer’s premium would not be affected.
2.123. The calculation of an employer’s claims costs is based on the estimated lifetime cost of claims
reported in a particular year; accordingly the amount of a worker’s PIAWE can influence the
effect of a claim on an employer’s premium.
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63 OHS Act, s 144.
64 Workers’ Compensation and Rehabilitation Act 2003 (Qld), s 16.
65 Municipal Association of Victoria, 2006 Councillor Census, MAV, Melbourne, 2006, p 13.
66 VWA Claims Manual 2005, clause 9.3.3.1.
2.124. Given that many municipal councillors have considerable earnings from other employment,
67
if a councillor was injured in the course of her or his work with the council, the council’s
premium would be affected by the full amount of the councillor’s PIAWE (including the
councillor’s earnings from other employment). However, that effect is essentially no different
from the effect on other employers who employ workers who have additional employment.
2.125. If municipal councillors were to be included in the scheme, coverage would extend only to
injuries sustained in the course of their duties as a councillor. Guidance on the scope of these
duties and on what constitutes council business could be provided in regulations or other
guidelines.
2.126. If municipal councillors were regarded as workers, the relevant municipal council would be
regarded as the employer. Deeming municipal councillors to be workers would not affect
their treatment under other legislation. (For example, the deeming would not affect whether
superannuation is payable under the Commonwealth’s superannuation guarantee legislation).
2.127. Under the LG Act, a person is disqualified from becoming or continuing to be a councillor
if “he or she is a member of Council staff of the Council for which she or he intends to be a
Councillor”.
68
That provision might create some confusion in relation to the Council providing
suitable employment if a councillor returns to work after being injured. However, those issues
can be addressed in compliance codes or guidance that will be developed to support the
performance-based return to work duties as referred to in Chapter 4, “Supporting workers
to get back to work after injury”.
69
2.128. Allowances such as those paid to municipal councillors are already covered by the definition
of remuneration in section 3(1) of the ACWI Act (adopted for the purposes of the AC Act by
section 5(1) of that Act). The definition also includes any amount paid or payable by way of
remuneration to a person holding an office under the Crown in right of the State or in the
service of the Crown in right of the State (including remuneration paid or payable to State
parliamentarians).
70
Accordingly, the payments made to councillors for acting in their role
as councillors are already adequately covered by the existing definition of remuneration.
2.129. The estimated cost to the scheme would be between $300,000 and $800,000 a year.
71
Once sufficient claims experience has accumulated (after the first two or three years of
extending coverage to councillors), that cost would be carried by municipal councils through
their premium payments. Municipal councils have an average premium rate of around 2% of
remuneration, and their annual remuneration comes to a total of $1.8 billion. It is estimated that
the additional premium cost to councils of extending compensation to local councillors would
be immaterial.
72
2.130. I recommend that scheme cover under the AC Act be extended to municipal councillors, by
repealing the parenthetical excluding phrase in section 14(3) of the AC Act.
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67 According to the MAV 2006 Councillor Census, p 21, over 21% of councillors reported an annual
income of $52,000-$77,999, nearly 7% reported income of $78,000–$103,999 and 7.37% reported
income of greater than $104,000.
68 LG Act, s 29(1)(d).
69 See paragraph 4.73-4.79.
70 AC Act, s 5(1).
71 This estimate assumes that municipal councillors’ remuneration would include councillors’ main
income source, or their “day job”, estimated at $100,000 per year, being a total of $55 million per year.
The estimated cost would depend on the number of claims per year. Source: advice from the
Review’s independent actuaries.
72 Source: advice from the Review’s independent actuaries.
Volunteers
2.131. A person who engages in voluntary work is not a worker as defined in the AC Act, and so is
not entitled to compensation under the AC Act if he or she suffers an injury arising out of or
in the course of this voluntary work. Volunteer work is not paid, although volunteers may be
reimbursed out-of-pocket expenses.
2.132. It might be said that the absence of some form of workers’ compensation insurance can act
as a disincentive to people performing voluntary services in an emergency and to volunteers
generally.
2.133. However, several Acts provide that various volunteers and other people assisting government
agencies are entitled to compensation if injured while carrying out relevant duties.
73
2.134. Currently, emergency services agencies, such as the CFA, may call on the private sector
when they require additional resources beyond their permanent staff and ongoing volunteers
(for instance, in response to or during recovery from an emergency).
2.135. Those people are not employed by the emergency services agency, nor are they ongoing
volunteers. They are not considered workers and are not directly covered by the WorkCover
scheme. However, they are entitled to receive compensation from a regulatory compensation
scheme administered by the CFA, with the same benefits as if the injured person was a worker
under the AC Act.
74
2.136. Volunteers (other than those deemed to be workers and entitled to workers’ compensation
under various Acts) can lodge a claim in relation to an injury on an insurance policy held by
a volunteer organisation. Volunteers can also take out accident insurance to cover themselves
for their volunteer work.
2.137. The CFA submits that –
CFA volunteers should not be deemed workers under the AC Act. CFA Volunteers are already
covered by a compensation scheme established under the Country Fire Authority Act 1958 and
the Country Fire Authority Regulations 2004. Consequently, there is no gap in the provision of
compensation to CFA volunteers. The CFA Volunteer Compensation Scheme is tailored to meet
the needs of CFA volunteers, many of whom are self-employed, e.g. farmers or trades people.
75
2.138. I consider that there would be few benefits in deeming emergency services conscripts to be
workers under the AC Act as they are largely covered under emergency services legislation.
Particular volunteers are also covered by legislation, as noted in paragraph 2.132 above.
Those that are not covered by workers’ compensation have some protection under the
Wrongs Act 1958 and the OHS Act.
2.139. Accordingly, I recommend that there be no change to the AC Act in respect of statutory
compensation coverage for volunteers and emergency services conscripts.
CONTRIBUTION OF EMPLOYMENT TO INJURIES
2.140. The workers’ compensation scheme is based on the principle that workers are entitled to
compensation for work-related injuries. One factor in determining whether an injury is work-
related is the extent to which employment contributed to or caused the injury. (Alternatively,
an injury may be work-related where the injury occurs in the course of employment.)
76
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73 Including the Victoria State Emergency Services Act 1987 (applies to casual emergency workers),
Juries Act 2000 (applies to jurors), Education and Training Reform Act 2006 (applies to volunteer school
workers and volunteer student workers), Police Assistance Compensation Act 1968 (applies to
volunteers assisting police officers) and Country Fire Authority Act 1958 (applies to casual fire fighters,
volunteer auxiliary workers, and volunteer officers and volunteer members of brigades).
74 Country Fire Authority Act 1958, ss 62-65.
75 CFA, Submission, 29 April 2008, p 4.
76 AC Act, s 82(1).
Which injuries are compensable?
2.141. When the AC Act was introduced in 1985, an injury was broadly defined to include:
• a physical or mental injury;
• industrial deafness;
• a disease contracted in the course of employment at or away from the place of employment
(disease injury); and
• a recurrence, acceleration, exacerbation or deterioration of any pre-existing injury or disease
(aggravation injury).
77
2.142. In 1992, significant amendments were made to the AC Act, introducing the requirement that
employment must be a “significant contributing factor” for any injury (including a disease) to
be compensable.
78
The amendments were made at the same time as other changes aimed
at reducing the costs of the scheme, which at the time faced unfunded liabilities of close to
$2 billion. The introduction of the significant contributing factor test was intended to reduce
the number of claims by reducing the scope of compensable injuries.
2.143. In 2000, the Supreme Court held
79
that the “significant contributing factor” test did not apply to
traumatic injuries but only applied to diseases and to the recurrence, aggravation, acceleration
etc. of a pre-existing injury or disease. Accordingly, it was only necessary for an injury (in the
commonly used sense of that word) to arise out of or in the course of employment to be
compensable. The Supreme Court’s decision was based on the ambiguity of the relevant
amendments, which led to the provisions being construed in favour of workers. The VWA’s
attempts to appeal from that decision to the Court of Appeal and the High Court were
unsuccessful.
80
2.144. After the Supreme Court’s decision, the AC Act was amended in December 2003. The
amendments included initiatives to reduce costs, as well as measures to increase benefits.
Rather than restoring the original intention of the “significant contributing factor” requirement,
the Parliament chose to amend the AC Act so that the “significant contributing factor”
test would apply only to stroke and heart attack injuries, diseases and aggravations etc of
pre-existing injuries. In the second reading speech for the amending Bill, the Minister said that
it was intended to be a “middle-of-the-line amendment”, to look after workers while looking
after the long-term viability of the scheme.
81
2.145. The responsible Minister justified the employment contributions required for different types of
compensable injuries on the basis that injuries other than strokes and heart attacks generally
cost the scheme less, and return to work is relatively quick. The “significant contributing factor”
test was removed for injuries that were believed to pose less financial risk to the scheme.
82
It was intended to strike a balance by removing some of the more costly injuries from the
scheme, leaving less costly injuries that allow an earlier return to work.
2.146. Although not directly addressed in the second reading speech, the nature of strokes and heart
attacks, which involve interactions between other lifestyle issues as well as work-related issues,
generally makes it more difficult to determine whether there is a link between those injuries and
work.
2.147. Currently, most injuries sustained by workers that arise out of or in the course of employment
are compensable under the AC Act. However, the “significant contributing factor” test still
applies to heart attack and stroke injuries, disease and recurrences, aggravations etc. of a
pre-existing injury or disease.
83
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77 AC Act, s 5(1).
78 AC Act, ss 5(1B), 82(1), 82(6) and 135A(2). All of these provisions have since been repealed.
79 Hegedis v Carlton & United Breweries Ltd (2000) 4 VR 296.
80 Carlton & United Breweries Ltd v Hegedis [2002] VSCA 61; special leave refused by the High Court on
14 February 2003.
81 Victoria, Legislative Council, Debates, 20 November 2003, pp 1538-1539.
82 Victoria, Legislative Council, Debates, 20 November 2003, pp 1538-1539.
83 AC Act, s 82(2B) and (2C).
2.148. Most Australian jurisdictions use a broadly similar definition of “disease”. In Victoria, a disease
includes any physical or mental ailment, disorder, defect or morbid condition (whether of
sudden or gradual development).
84
Generally, an injury is distinguished from a disease in that
an injury involves an event that precipitates a sudden physiological change in the worker.
85
2.149. The requirement that employment has significantly contributed to an injury before the injury
is compensable requires a causal association between employment and the injury. For all other
injuries, it is not necessary to show that employment caused the injury if the injury occurred
in the course of employment. For example, if a worker suffers an epileptic seizure (a sudden
physiological change) while at work, the worker will be entitled to compensation for the injury
under the AC Act, provided that the worker had not previously suffered a seizure.
86
Stakeholder views
2.150. The SIAV supports –
. . . an amendment to the Act that requires employment to have been a significant contributing
factor to all injuries. This will decrease the complexity of the application of the legislation and
eliminate argument as to whether a condition might be described as a disease or not.
87
2.151. Ai Group submits that “a major contributing factor” test should replace the “significant
contributing factor” test.
88
VECCI
89
and MGA
90
submit that the “significant contributing factor”
test should be applied to all injuries that arise because of an underlying condition (whether
previously diagnosed or not). Ai Group also supports that approach, as an alternative if its
submission for a “major contributing factor” test is not adopted.
91
2.152. VECCI also seeks –
. . . the removal of the word “recurrence” from the definition for consistency with other
jurisdictions. A recurrence does not always require any external insult (as does aggravation)
and therefore places less of a requirement that work contribute.
92
2.153. Ai Group submits that –
. . . work-relatedness is one of the key issues raised by employers when identifying concerns
with workers compensation schemes.
There is a sense of real annoyance in the case of:
• injuries where the circumstances have no clear contribution from a work activity;
• “gradual onset injuries” where it is not possible to clearly identify a specific incident;
• stress related injuries that are not directly attributable to a specific incident(s) in the
workplace; and
• the recurrence, aggravation, acceleration, exacerbation or deterioration of underlying pre-
existing injuries (including degenerative conditions), especially in relation to older workers.
93
2.154. Both VECCI
94
and Ai Group
95
submit that the lack of a requirement for injuries to be work-
related operates as a disincentive for employers to hire ageing workers or those with a previous
disability, which is contrary to the needs of an ageing workforce.
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84 AC Act, s 5(1).
85 Zickar v MGH Plastic Industries Pty Ltd (1998) 187 CLR 310.
86 See County Court decision, Vitoratos v VWA (unreported, 17 July 2003, No 8318 of 2001).
87 SIAV, Submission, May 2008, p 2.
88 Ai Group, Submission, May 2008, p 12.
89 VECCI, Submission, April 2008, p 7.
90 MGA, Submission, 2 May 2008, p 2.
91 Ai Group, Submission, May 2008, p 11.
92 VECCI, Submission, April 2008, pp 7-8.
93 Ai Group, Submission, May 2008, p 8.
94 VECCI, Submission, April 2008, p 6.
95 Ai Group, Submission, May 2008, p 9.
2.155. VECCI
96
and Ai Group
97
argue that employers can find themselves liable for injuries which are
largely unrelated to a worker’s employment – often carrying significant costs for surgery and
rehabilitation that are disproportionate to their overall responsibility for the injury.
2.156. Victoria Police submits –
The definition of injury . . . requires specific criteria: This is of particular relevance to work
related stress or chronic pain which are assessed on the basis of history as given. Exacerbation
or deterioration of existing illnesses as based upon exacerbation of symptoms, without
objective measures, is impossible for medical practitioner or IME to refute.
98
2.157. The VACC
99
and Freehills
100
also submit that stricter tests should be applied to injuries not
initially caused at the workplace, and that an employer who is regarded as liable for an
aggravation of a pre-existing injury should no longer bear the relevant claims costs after the
cessation of aggravation due to that employment.
2.158. On the other hand, the VTHC submits that the significant contributing factor test should not
apply to any injuries or diseases (and that section 82(2B) and (2C) ought to be deleted from
the AC Act). The VTHC further submits that –
A fundamental pillar of any no-fault compensation scheme that any injury that arises out of,
or in the course of, employment is compensable. There are no valid grounds for making an
arbitrary distinction between types of injuries that should be compensable . . .
101
2.159. The Compensation Law Bar Association submits that –
. . . the current definitions are adequate and represent years of refinement of the definition
together with a considerable overlay of High Court and Court of Appeal jurisprudence.
102
Retain the “significant contributing factor” test
2.160. Both Australia-wide and internationally,
103
many compensation schemes distinguish between
diseases and frank injuries. The distinction is based on the difficulties in establishing the cause
of diseases and the role of individual susceptibilities in giving rise to diseases.
104
2.161. In Western Australia and Tasmania, employment need only be a contributing factor for a disease
to be compensable. The Australian Capital Territory draws a distinction similar to the distinction
drawn in Victoria between diseases and heart attack or stroke injuries, on the one hand, and
other types of injuries, on the other hand. Under the Commonwealth scheme, employment
must have contributed to an ailment or its aggravation (the two alternative components of
“disease”) to a “significant degree”;
105
but an injury, other than a disease, need only arise out
of or in the course of employment.
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96 VECCI, Submission, April 2008, p 6.
97 Ai Group, Submission, May 2008, p 4.
98 Victoria Police, Submission, 12 February 2008, p 3.
99 VACC, Submission, 8 February 2008, p 7.
100 Freehills, Submission, 11 February 2008, p 7.
101 VTHC, Submission, 2 May 2008, p 7.
102 Compensation Law Bar Association, Submission, 2 May 2008, p 5.
103 Compensation schemes in Canada, the United States and New Zealand all differentiate between
discrete injuries and diseases.
104 T Ison, Compensation Systems for Injury and Disease: The Policy Choices, Butterworths, 1994, pp 9-11.
105 SRC Act, s 5B(1). Section 5B(2) lists a series of matters that may be taken into account in deciding
whether employment contributed to an ailment or its aggravation to a significant degree. Section 5B
was added by Act No 54 of 2007. Before the addition of s 5B, s 4(1) of that Act required that
employment made a “material contribution” to the contraction of the ailment or its aggravation –
interpreted by the Full Court of the Federal Court as requiring that employment be “more than a mere
contributing factor”: Comcare v Canute (2005) 148 FCR 232 at [67].
2.162. In New South Wales, no compensation is payable for any injury unless employment was a
“substantial contributing factor”; and, in Queensland, employment has to be a “significant
contributing factor” to any injury.
106
2.163. The broader application of the more stringent “significant contributing factor” tests in New
South Wales and Queensland does not appear to have any substantial impact on the number
of accepted claims, with both States currently (and historically) having a higher rate of accepted
claims per 1000 employees than Victoria.
107
Although a range of complex factors can affect the
claims rate in a jurisdiction, there is no evidence to suggest that the test would have a practical
effect on the claims rate in Victoria.
2.164. All Australian jurisdictions and New Zealand compensate aggravation or acceleration
of injuries.
108
2.165. The extent of the work contribution that is to be required for an injury to be compensable
involves considerations of cost-shifting between employers, injured workers and the social
security system.
2.166. It appears that the aims of the 2003 amendments have been successful. The strong financial
performance of the scheme and the decreasing number of claims (with the exception of
stress-related psychiatric claims)
109
supports the view that the amendments have made some
contribution to protecting the viability of the scheme.
2.167. The 2003 amendments represented a compromise position adopted by the legislature.
To amend the provisions to create another compromise position would, at least initially,
lead to more uncertainty and disputes, and there appears to be no compelling case for shifting
the balance involved in the current compromise.
2.168. I recommend retaining the “significant contributing factor” test for the categories of injury to
which it currently applies, but not extending that test to other categories of injury.
Journey claims
2.169. Injuries sustained while a worker is travelling to or from work are expressly excluded from the
scheme.
110
Claims for such injuries are known as “journey claims”. However, injuries sustained
in motor vehicle accidents that occur in the course of employment (for example, while a worker
is driving a truck as part of her or his work duties) are compensable under the AC Act.
2.170. Journey claims were excluded from coverage under the AC Act in 1992,
111
on the basis that the
employer could not control or take responsibility for accidents that occurred while a worker was
not at work.
112
In introducing the exclusion, the responsible Minister referred to the fact that
journey accidents involving a motor vehicle are covered by the TAC.
113
The exclusion is also
broadly consistent with the OHS Act.
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106 SRC Act, s 5A(1).
107 Commonwealth of Australia, Workplace Relations Ministers’ Council, Comparative Performance
Monitoring Report, 9
th
ed, Department of Education, Employment and Workplace Relations, Canberra,
2008, p 3.
108 Australian Safety and Compensation Council, Comparison of Workers’ Compensation Arrangements in
Australia and New Zealand , Department of Employment and Workplace Relations, 2006, p 39.
109 See paragraph 2.211 below.
110 AC Act, s 83(2)(b) and (c).
111 Accident Compensation (WorkCover) Act 1992.
112 Victoria, Legislative Assembly, Debates, 30 October 1992, p 308.
113 Victoria, Legislative Assembly, Debates, 30 October 1992, p 308
Stakeholder views
2.171. The VTHC submits –
. . . access to the scheme should be reinstated for workers who suffer an injury while travelling
to and from work.
. . . the distinction in s.83 between traveling to and from employment (which is not covered)
and traveling for the purposes of employment (which is covered) is artificial and
unsustainable.
114
2.172. VECCI,
115
Ai Group
116
and the VACC
117
also submit that compensation for journey claims should
be consistent, but recommend that injuries sustained while workers are travelling to or from
home during an authorised recess should be excluded from compensation, for consistency with
the exclusion of injuries while travelling to and from work before and after a shift.
Maintain the exclusion of journey claims
2.173. Other jurisdictions are divided in their treatment of journeys to and from work in their scheme
cover: The New South Wales, Queensland, Northern Territory and Australian Capital Territory
schemes include journey claims with some restrictions, while the other jurisdictions generally
exclude them.
2.174. I recommend that the exclusion of journey claims be maintained and I discuss my reason for
maintaining the exclusion in paragraph 2.187 below.
Recess claims
2.175. The Victorian scheme provides compensation for injuries sustained by a worker during an
authorised break from work, including an injury sustained during an authorised break away from
the employer’s premises, as long as the worker did not voluntarily subject herself or himself to
any abnormal risk of injury.
118
For example, injuries sustained while a worker is peeling fruit at
lunchtime or returning from a shopping centre during a work break may be compensable.
119
Claims for such injuries are known as “recess claims”.
2.176. Recess claims are covered under the New South Wales, Queensland, Western Australian,
Northern Territory and New Zealand schemes with varying conditions. The Commonwealth
and Tasmania generally provide cover only where the worker is onsite during the recess.
2.177. An employer’s responsibility and liability under the OHS Act depends on the extent to which
the employee’s activity or location is under the employer’s control.
Stakeholder views
2.178. Some employers’ submissions have criticised the inclusion of recess claims in the scheme.
VECCI submits that –
. . . employers have no control over the conduct or activities of workers during an unpaid
authorised recess, particularly once the worker leaves the premises . . . such injuries should
be excluded.
120
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114 VTHC, Submission, 2 May 2008, pp 11-12.
115 VECCI, Submission, April 2008, p 13.
116 Ai Group, Submission, May 2008, p 16.
117 VACC, Submission, 1 May 2008, p 4.
118 AC Act, 83(1)(a).
119 As in Hegedis v Carlton & United Breweries Ltd (2000) 4 VR 296.
120 VECCI, Submission, April 2008, p 13.
2.179. Ai Group has quoted the Productivity Commission,
121
which recommends that coverage for
recess breaks and work-related events be restricted (on the basis of lack of employer control)
to breaks at the workplace or an employer-sanctioned venue.
122
Freehills also submits that
liability for recess claims should be subject to the same employment relationship test as other
injuries.
123
2.180. VECCI also submits that injuries sustained at social or sporting events sponsored by an
employer or during sports classes provided by an employer, such as those promoted through
the newly introduced “Work Health” initiative,
124
be excluded from the scheme, because their
inclusion may be a disincentive to employers providing activities for the health and wellbeing
of their workers.
125
2.181. On the other hand, the CFA submits that social and fitness activities are important for
employees, and that employer-endorsed activities should continue to be covered.
126
2.182. Freehills submits –
• liability for recess injuries should be subject to the same employment relationship test
as other injuries;
• to the extent that recess claims remain, they should not be coded to an employer’s
insurance policy (or used in premium calculation), but rather be the responsibility of the
VWA, who would in turn would have a right of subrogation to recover funds from negligent
third parties.
127
2.183. The VTHC submits that –
Any attempt to disentitle workers injured during authorised breaks would be entirely
inconsistent with the principle . . . that any injury arising out of, or in the course of,
employment is compensable.
. . . removing protections for workers during these periods would . . . be entirely inconsistent
with the fact that these breaks are an inherent part of every day employment . . .
128
Maintain the coverage of recess claims
2.184. In 2000, the Victorian Court of Appeal looked at the evolution of recess claims in the context
of the present section 83(1)(a) of the AC Act.
129
The then President of the Court of Appeal,
Winneke P, traced the origins of the provision back to 1946 and an early rigorous interpretation
given to the words “arising out of or in the course of the employment”:
130
Particular difficulties were encountered in determining whether the course of employment
was still subsisting when the worker had left his place of employment during temporary
recesses – whether customary or authorised. It was clearly to meet such problems that the
Victorian Parliament, conscious no doubt of the remedial nature of the legislation, introduced
the provisions extending the meaning of the words “arising out of or in the course of the
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121 Ai Group, Submission, May 2008, p 9.
122 Australian Government Productivity Commission, National Workers’ Compensation and Occupational
Health and Safety Frameworks Inquiry, report no. 27, Australian Government Productivity Commission,
Melbourne, 2004, p 187.
123 Freehills, Submission, 11 February 2008, p 6.
124 The Victorian Government’s WorkHealth Initiative is intended over the next 5 years to provide for the
screening of workers for their risk of developing chronic diseases such as diabetes and heart disease,
and to provide assistance in managing and preventing the development of these diseases through
lifestyle moderation. J. Brumby, Premier of Victoria, WorkHealth Initiative, media release, 19 March 2008.
125 VECCI, submission, 2 May 2008, p 14.
126 CFA, submission, 1 May 2008, p 1.
127 Freehills, Submission, 11 February 2008, p 7.
128 VTHC submission, 2 May 2008, p 11.
129 TGT Transport v Zammit [2000] VSCA 162.
130 [2000] VSCA 162 at [16].
employment” to encompass, inter alia, circumstances in which the worker had, on a working
day, attended at his place of employment and was either present there when injured or was
injured when temporarily absent during an ordinary recess, without having subjected himself
to any abnormal risk.
2.185. The President of the Court of Appeal quoted
131
the following meaning of “ordinary recess”
given by Windeyer J in the High Court
132
and applied that meaning to “authorised recess”
(in section 83(1)(a) of the AC Act):
. . . a break of limited duration in the continuity of a normal working day, regularly allowed for
meals or rest. The phrase seems to connote a suspension of activity which is to be resumed at
the end of a stated period. Recesses, variously called lunch-hours, tea breaks, smokos, stand-
downs etc, are normal features of employment in many industries.
2.186. The President stressed that “authorised recess” should not be interpreted too broadly to mean
any authorised absence. He said that the 1992 amendments to the legislation
133
were intended
to narrow the range of interruptions of working activity, which would ordinarily be described as
recesses, to those which had in fact been authorised by the employer, whether expressly or by
implication.
134
2.187. Essentially, the distinction between journey claims and recess claims can be said to be that
an injury that occurs during an authorised recess occurs in the “course” of employment, while
an injury that would support a journey claim does not. Further, unlike most journey claims
(if the injury was sustained in an incident directly caused by the driving of a motor vehicle,
train or tram)
135
, for recess claims there is no alternative form of publicly funded compensation
cover for an injured worker.
2.188. Although some recess claims may not be under the control of employers, control does not form
part of the general threshold test for liability to pay compensation: to be compensable, an injury
need only have arisen out of or in the course of employment. For example, if a worker sustains
a twisted ankle at work because the heel broke off the worker’s shoe, the injury will be
compensable even though the accident was not within the employer’s control.
2.189. Where a worker is injured during an authorised recess, essentially the decision is where the
costs of the injury should fall – on the scheme, the public health and social security systems or
private insurance. Given that the employer has authorised the recess, and the worker would in
most circumstances not have been at the relevant place at the relevant time if the worker had
not been in the course of her or his employment, the scheme is the most appropriate source
of compensation. The current exclusion of injuries arising from workers’ voluntary subjection to
an abnormal risk of injury provides sufficient protection for employers against liability resulting
from unreasonable actions by workers during authorised breaks.
2.190. Therefore, I recommend maintaining the existing statutory coverage for recess claims.
2.191. In my view, injuries sustained during social or health and wellbeing programs should continue to
remain covered by the scheme. In encouraging activities that promote the health and wellbeing
of workers, the objectives of which include the reduction of illness in the workplace and
workers’ compensation claims, it would be unfair not to cover workers for injuries sustained
while participating in these activities. The activities can also ultimately benefit employers
through reduced claims and absenteeism.
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131 [2000] VSCA 162 at [20].
132 Landers v Dawson (1964) 110 CLR 644 at 653.
133 Accident Compensation (WorkCover) Act 1992.
134 [2000] VSCA 162 at [25].
135 TA Act, s 3(1).
Blood alcohol concentration limits
2.192. Although the scheme is a no-fault scheme, a worker who sustains an injury that is attributable
to the worker’s own serious and wilful misconduct is generally denied compensation,
136
unless
the injury results in death or serious and permanent disablement.
137
2.193. Serious and wilful misconduct includes being under the influence of alcohol or a drug within
the meaning of the Road Safety Act 1986 (the RS Act)
.138
If a worker has a BAC of 0.24 grams
or more per 100 millilitres of blood while driving a motor vehicle, the worker’s conduct will be
serious and wilful misconduct.
139
The AC Act does not prescribe any consequences where the
injured worker was driving a motor vehicle with a BAC below 0.24.
2.194. Although “serious and permanent disablement” is undefined, it is likely to carry a similar
meaning to the permanent impairment requirement for accessing impairment benefits, rather
than the serious injury threshold test.
140
If that proves to be correct, it would follow that, in
most instances, a person who is entitled to permanent impairment benefits would be protected
from the serious and wilful misconduct exclusion in section 82(4) of the AC Act. However, it is
important that the extent of protection offered by this undefined term be clarified.
2.195. The provisions of the AC Act differ from those of the TA Act, which provides for a one-third
reduction in weekly compensation payments if the injured person’s BAC was more than 0.05
and less than 0.12, and a two-thirds reduction if the BAC was 0.12 or more and less than 0.24.
No weekly compensation is payable if the BAC is 0.24 or more.
141
Stakeholder views
2.196. Freehills notes that –
. . . a worker’s claim will be accepted provided their blood alcohol concentration is below 0.24
whereas such a reading would normally result in disqualification of their driver’s licence for a
lengthy period and possibly coma or death.
142
2.197. The AMCA submits –
Weekly benefits should be reduced in circumstances where employees are injured when
driving a car whilst they have a blood alcohol reading of over 0.05 – this will bring it into line
with the Transport Accident Commission.
143
Align the AC Act provisions with those of the TA Act
2.198. The TA Act provisions are more closely aligned with Victorian road safety laws (prescribed under
the RS Act), which make it an offence for a person to drive a motor vehicle with a BAC over 0.05.
144
The RS Act prescribes penalties of increasing severity where the offence involves a BAC between
0.05 and 0.24. A driver with a BAC greater than 0.24 is effectively regarded as being incapable of
having proper control of a motor vehicle and faces significantly more severe penalties.
145
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136 AC Act, s 82(4).
137 AC Act, s 82(5). The AC Act does not define what constitutes serious and permanent disablement.
138 AC Act, s 82(4).
139 AC Act, s 82(4A)(c).
140 See Chapter 8, “Access to justice for seriously injured workers: common law”, paragraphs 8.72-8.73
and Chapter 7, “Lump sum benefits for significantly injured workers” paragraph 7.15, for discussion
of these requirements.
141 TA Act, s 40(5). The TA Act provisions apply only to weekly benefits to transport accident victims who
suffer a total or partial loss of earnings, and are limited to the first 18 months or such longer period as
a person continues to be entitled to weekly benefits under those sections.
142 Freehills, Submission, 11 February 2008, p 8.
143 AMCA, Submission, 1 May 2008, p 3.
144 RS Act, ss 49 and 50.
145 RS Act, s 49 and schedule 1.
2.199. Currently, the consequences for a person who is injured while driving with a BAC between 0.05
and 0.24 differ depending on whether the accident occurred in the course of employment (and
the injured person is covered by the AC Act) or outside the course of employment (and the
injured person is covered by the TA Act). For example, a taxi driver with a BAC of 0.10 who is
injured while driving a passenger during the course of employment would have full access to
any entitlements to compensation under the AC Act. However, if the driver was injured while
driving home at the end of the shift, any entitlement to weekly benefits under the TA Act would
be reduced by one-third.
2.200. As with the AC Act, other jurisdictions prescribe a particular BAC as a point beyond which there
is no entitlement to workers’ compensation, rather than imposing a graded reduction. Apart
from the Northern Territory, the other jurisdictions do not specify BACs that are comparable with
their transport accident compensation legislation (the specified BACs for denying entitlement to
workers’ compensation are generally higher than the limits under transport accident legislation).
2.201. As noted in paragraphs 2.192 and 2.193 above, the AC Act removes a worker’s entitlement to
compensation where there is serious wilful misconduct (which includes driving with a BAC of
0.24 or more). A worker may have a BAC greater than 0.05, but may not have “wilfully”
participated in “serious” misconduct. For example, a worker may drink two glasses of wine at a
lunch provided by the employer but, contrary to the worker’s belief, the two glasses contained
more alcohol than two standard drinks. If the worker is then found to have a BAC greater than
0.05, it can be said that the worker has not engaged in serious and wilful misconduct so as to
be precluded from accessing weekly benefits.
2.202. Employers have a duty under the OHS Act to control risks in the workplace. That duty would
extend, in some circumstances, to protecting workers from both their own, and other workers’,
alcohol-influenced behaviour. However, as a matter of public policy, particularly given the
emphasis in recent years on discouraging drink-driving, it is appropriate to recognise the
increased risk to which workers are exposing themselves and others by driving with a BAC
over 0.05.
2.203. To this end, I recommend that the AC Act be aligned with the relevant provisions in the TA Act.
I propose a reduction in weekly benefits paid to workers injured as a result of driving a motor
vehicle while they have a BAC above 0.05 and below 0.24, as under the TA Act.
2.204. Because the consumption of alcohol does not necessarily constitute serious wilful misconduct,
any provision that prescribes a reduction in weekly benefits should be separate from the serious
and wilful misconduct provisions. However, in accordance with those provisions, the reduction
in weekly benefits should not apply to situations where the injury has resulted in death or and
permanent disablement. I recommend that “serious and permanent disablement” be defined so
as to clarify the circumstances in which it applies.
STRESS-RELATED AND PSYCHIATRIC INJURIES
2.205. Stress-related and psychiatric claims can cover a range of mental and emotional conditions,
including stress, anxiety, post-traumatic stress disorder, depression and adjustment disorder.
146
2.206. Stress-related and psychiatric claims pose a difficult challenge for all workers’ compensation
schemes. The difficulty arises mainly from the problems involved in diagnosing psychological
and emotional illnesses, and the multiplicity of factors that can contribute to those conditions.
Stress-related and psychiatric claims –
• involve particularly subjective elements, because stress essentially arises from an individual’s
perception of and reactions to external events; and
• differ from physical claims because they are more likely to involve associated workplace
relations issues, such as discrimination, bullying and unfair dismissal, and so they often
involve protracted disputes and litigation.
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146 Australian Safety and Compensation Council, Work-related Mental Disorders in Australia, Department
of Employment and Workplace Relations, Canberra, 2006, p 6.
2.207. Under the AC Act, claims for stress-related and psychiatric injuries are treated differently
to claims for physical injuries in a number of ways. The main differences are:
• the exclusionary provisions in section 82(2A), which disallow compensation for mental
illnesses or disorders arising from stress that was wholly or predominantly due to particular
actions or decisions by employers;
• the requirement in section 82(2C) that employment be a “significant contributing factor” to
a psychiatric injury that is a disease, such as depression brought on through some aspect
of work over a period of time;
• the minimum threshold test for impairment benefits under section 98C, which requires that
a worker have an impairment of not less than 30% where the impairment is psychiatric, as
compared to a 10% impairment where the impairment is physical;
• the serious injury narrative test (allowing an injured worker to sue for common law damages),
which requires psychiatric injury to be “severe”, as compared to the lower threshold of
“serious” for physical injury; and
• the exclusion of secondary psychological consequences of injuries (that is, psychological
consequences that arise from a physical injury, rather than directly from an incident at work)
when assessing impairment under section 98C when passing through the impairment
gateway for common law.
2.208. Psychiatric injuries are treated differently from physical injuries at common law,
147
where mental
distress or suffering (such as grief or anxiety) is not compensable unless there is a recognisable
psychiatric injury or illness. This approach has been justified by the High Court
148
on the
following grounds:
• psychiatric harm is less objectively observable than physical injury, and is therefore more likely
to be trivial or fabricated and more susceptible to shifting medical opinion and conflicting
expert evidence;
• litigation in relation to purely psychiatric harm is likely to operate as an unconscious
disincentive to rehabilitation;
• permitting full recovery for psychiatric harm risks indeterminate liability (because it is very
difficult to determine when someone has fully recovered from a psychiatric harm); and
• liability for purely psychiatric harm may impose an unreasonable or disproportionate burden
on defendants.
2.209. Psychiatric injuries are rarely caused by a single event – they frequently involve additional
factors, such as a worker’s personal life, interpersonal relationships and personality factors.
149
Psychiatric injuries often involve an interaction between work-related and non-work-related
factors, and that interaction can raise difficulties in determining whether an injury is
compensable.
150
2.210. Although the overall financial performance of the Victorian scheme has significantly improved,
the costs of stress-related injuries remain high.
2.211. Throughout Australia, from 1996/1997 to 2003/2004, the number of workers’ compensation
claims decreased in all categories except for mental stress, which increased by 83%.
151
Claims
for mental stress recorded a 12% increase between 2001/2002 and 2004/2005.
152
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147 See Tame v New South Wales (211) CLR 317.
148 Tame v New South Wales (211) CLR 317 at [192] (Gummow and Kirby JJ).
149 Dr R Gutierrez, Injury Management Solutions, Psychological Injury Claims – Why do we keep missing
the boat? Presented at the WorkCover WA Injury Management Conference, October 2007.
150 Dr R Gutierrez, Injury Management Solutions, Psychological Injury Claims – Why Do We Keep Missing
the Boat? Presented at the WorkCover WA Injury Management Conference, October 2007.
151 Australian Safety and Compensation Council, Compendium of Workers’ Compensation Statistics
Australia 2004–2005, Canberra, 2007, p 37.
152 Commonwealth of Australia, Workplace Relations Ministers’ Council, Comparative Performance
Monitoring Report, 9
th
ed, Department of Education, Employment and Workplace Relations, Canberra,
p 12.
2.212. In Victoria, the number of mental stress claims increased from 2418 in 2000/2001 to 2920 in
2003/2004. However, there was a slight decrease in the 2005/2006, when the number of mental
stress claims was 2604
.153
The upward trend in mental stress claims has occurred despite a
reduction in overall claim numbers over recent years, from 31,023 in 2002/2003 to 30,371 in
2005/2006.
154
In 2005/2006, stress claims made up around 9% of overall claim numbers.
155
2.213. The long-term increase in mental stress-related claims has been attributed to factors such
as the increased pressures of work and personal life, increases in expectations, employment
instability and a more litigious society.
156
2.214. Stress-related claims are the most expensive type of workers’ compensation claim. Nationally,
both the average financial cost and time lost from work for stress-related claims is more than
double the average of all new claims.
157
In 2005/2006, more than $133.9 million was paid on
stress-related claims in Victoria, excluding administrative and medico-legal costs
.158
2.215. Stress claims now appear to make up a reasonably stable proportion of claim numbers and
claims costs, although it is possible that there could be further growth in stress claims if
there is an economic downturn and there is an increase in the level of unemployment.
159
2.216. If there is further growth in mental stress claims, the average cost of stress claims means
that those claims could affect the scheme’s ability to provide enhanced benefits and may
place upward pressure on premium costs .
160
2.217. Mental stress-related claims are particularly prevalent in the government and community
sectors, where they make up around 20% of claims.
161
2.218. In 2004, the new OHS Act for the first time specifically defined health to include “psychological
health”,
162
raising the profile of mental stress-related and psychiatric claims and the need to
contain risks in relation to those injuries.
2.219. In recent years, workplace stress has been the focus of ongoing studies and projects in
Victoria. The VWA has recently published guidance material to assist workplaces in the
management of stress risks and has run targeted programs in the public and community
sectors. A large-scale project focusing on the case management of stress-related claims has
also been initiated by the VWA, to focus on better decision-making in stress claims. However,
the project has had limited results.
2.220. Although an approach that focuses on minimising the incidence of stress-related and
psychiatric injuries is essential to controlling the costs of such claims, amendment of the
AC Act may be required to simplify the relevant provisions and decrease the level of disputes
related to those claims.
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153 Source; advice from the Review’s independent actuaries.
154 There has been a 19% reduction in the number of claims over the past five years; VWA, Annual
Report, 2006/2007.
155 Source: advice from the Review’s independent actuaries.
156 Dr S Proud, “Stress claims: a team approach”, presentation notes for the WorkCover WA Injury
Management Conference, October 2007.
157 R Guthrie, “The Australian legal framework for stress claims”, Journal of Law and Medicine, no 14,
2007, p 528.
158 VWA, Stressing the Point: A Study into What Causes Stress in a Budget Sector Workplace, and How it
Can Be Controlled, Melbourne, 2006.
159 Source: advice from the Review’s independent actuaries.
160 VWA, Stressing the Point: A Study into What Causes Stress in a Budget Sector Workplace, and How it
Can Be Controlled, Melbourne, 2006.
161 VWA, Stressing the Point: A Study into What Causes Stress in a Budget Sector Workplace, and How it
Can Be Controlled, Melbourne, 2006.
162 OHS Act, s 5(1).
What illnesses or disorders of the mind constitute an injury?
2.221. The AC Act requires the presence of an injury before there is an entitlement to
compensation.
163
Different terminology is used in various sections of the AC Act to refer to
psychiatric injuries. The general definition of an injury covers any physical or mental injury,
including a disease,
164
while section 82(2A), which relates specifically to “stress”, refers to “an
injury consisting of an illness or disorder of the mind”. However, there is no definition of what
constitutes an illness or disorder of the mind.
2.222. Nor is stress defined in the AC Act. The term is used in section 82(2A) of the AC Act only for the
purpose of referring to a cause of an illness or disorder of the mind, rather than to an illness or
disorder of the mind.
2.223. Stress-related claims can relate either to an injury or to a disease, depending on the origin of
the stress. Where the stress-related illness arises out of a specific (usually traumatic) event,
causing a sudden physiological change in the worker, the stress-related illness is regarded as an
injury.
165
However, in the majority of stress claims, the stress-related illness develops gradually,
and is therefore regarded as a disease. The distinction is important because, where the illness
is a disease; the employment must be a significant contributing factor before the claim can be
accepted.
166
2.224. Although stress may be described colloquially as an illness, it is not an injury because it is not a
diagnosable medical condition,
167
and only those illnesses or disorders of the mind that amount
to injuries are compensable. Stress is a very subjective concept, because it is created by the
interaction between the stressor and the individual. However, in practice, claims that are
accompanied by a diagnosis of “stress” on a medical certificate are often accepted by agents,
the conciliation service and the courts,
168
even where the resultant condition is not identified as
a recognised medical condition.
2.225. Different jurisdictions refer to stress claims in different ways. The New South Wales scheme
does not use the word “stress” but excludes some “psychological injuries” (caused by certain
types of “reasonable action” on the part of the employer) from entitlement to compensation.
169
Queensland refers to “psychiatric or psychological disorders”,
170
and Tasmania and South
Australia refer to “an illness or disorder of the mind”.
171
Stakeholder views
2.226. Ai Group argues that workers should not receive compensation if they are stressed from
undertaking normal work duties of the kind that the average person can undertake without
suffering a psychiatric injury.
172
2.227. VECCI submits –
. . . the legislation be amended to exclude mental injury claims if the alleged cause of the
stress is not real . . .
173
giving as an example the situation where a worker develops a psychiatric injury as a result of
an unfounded belief that his workmates have let down his car tyres.
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163 AC Act, s 82(1).
164 AC Act, s 5(1).
165 Zickar v MGH Plastic Industries Pty Ltd (1998) 187 CLR 310. See paragraph 2.148 above.
166 AC Act, s 82(2C)(b).
167 PH Rosch, Reminiscences of Hans Selye and the Birth of “Stress”, American Institute of Stress, 2007,
viewed 20 November 2007, <http://www.stress.org/hans.htm?AIS=24666e229a9f592779e9a015dd7811e7>
168 See, for example, Comcare v Mooi (1996) 69 FCR 439; Zickar v MGH Plastic Industries Pty Ltd (1998)
187 CLR 310.
169 Workers Compensation Act 1987 (NSW), s 11A(1).
170 Workers’ Compensation and Rehabilitation Act 2003 (Qld), s 32(5).
171 Workers Rehabilitation and Compensation Act 1998 (Tas), s 25(1A); Workers Rehabilitation and
Compensation Act 1986 (SA), s 30A.
172 Ai Group, Submission, May 2008, p 13.
173 VECCI, Submission, April 2008, p 10.
2.228. The AMCA submits that Victoria should adopt the same terminology as New South Wales,
which uses the term “psychological injuries” to refer to stress-related and psychiatric injuries.
174
2.229. In New South Wales, the use of the term “stress” is expressly excluded by a provision that
requires that medical certificates must refer to accepted medical terminology to describe the
worker’s condition, and cannot only use words such as “stress” or “stress condition”.
175
2.230. According to VECCI, the prohibition in New South Wales on certifying stress as a condition has
led to GPs simply replacing the word “stress” with “adjustment disorder”.
176
There does not
appear to have been any decrease in the numbers of stress-related claims in New South Wales
following the change to accepted terminology.
2.231. VECCI
177
and MGA
178
argue that only psychiatrists, clinical psychologists and general
practitioners who have completed additional mental health training should be able to provide
certificates of capacity for stress-related and psychiatric injuries.
179
2.232. VECCI argues that workers may also benefit from such a requirement, because it would help
ensure that workers with those illnesses receive appropriate treatment.
180
2.233. Under the model advocated by VECCI, there would be some restrictions on a worker’s choice
of provider.
181
However, if a worker was required to provide medical evidence in support of a
psychiatric claim from an expert in the field, the VWA and its agents might be less likely to
require workers to attend independent medical examinations with experts. Currently, workers
are often required to attend such examinations in order to establish whether their claims are
compensable.
2.234. The difficulties that arise from the need to rely on a worker’s subjective reporting of history
and her or his symptoms (and on conflicting medical opinions) to determine whether the worker
has a psychiatric injury cannot be avoided through legislative change. However, legislating to
require the presence of a diagnosable medical condition could assist in ensuring that only
actual injuries (as contemplated by the AC Act) are compensable. The requirement that there
be a diagnosable medical condition may provide further support for workers making claims for
psychiatric injuries by encouraging claims for those injuries to be seen as legitimate in the same
way as claims for physical injuries.
2.235. Conversely, research has suggested that stress can cause significant functional disturbances,
which are not necessarily diagnosable under recognised systems of disease classification, but,
without intervention, such conditions can develop into clinical disorders.
182
2.236. Further, the difficulties in determining whether a mental stress injury should be compensable
are not necessarily resolved by relying on publications such as the Diagnostic and Statistical
Manual of Mental Disorders IV (DSM IV), the standard diagnostic text commonly used by
medical specialists in guiding diagnosis of mental disorders.
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174 AMCA, Submission, 1 May 2008, p 1.
175 Workers Compensation Act 1987 (NSW), s 11A(7).
176 VECCI, Submission, April 2008, p 12.
177 VECCI, Submission, April 2008, p 12.
178 MGA, Submission, 1 May 2008, p 3.
179 The training is available through a Commonwealth Government initiative called the Better Outcomes
in Mental Health Care Program. A list of GPs who have undergone this training is available at
<www.beyondblue.org.au>.
180 VECCI, Submission, April 2008, p 12.
181 VECCI, Submission, April 2008, p 12.
182 National Occupational Health and Safety Commission, The NOHSC Symposium on the OHS
Implications of Stress, December 2001, p 5.
2.237. The diagnostic criteria published in DSM IV can be problematic to apply in general practice
scenarios,
183
can differ in application between a treatment and litigation context and can be
affected by issues of degree and subjectivity.
184
DSM IV’s diagnostic criteria (for post-traumatic
stress disorder) have been criticised by the Supreme Court as non-specific, and potentially
indicative of other ailments and conditions which may not be mental disorders.
185
2.238. In any event, denying compensation to workers in such situations until they have a stabilised
and diagnosable condition could lead to delays in providing treatment and support for workers,
and could ultimately result in more severe psychiatric conditions and delayed return to work.
2.239. Accordingly, I do not recommend that compensation for psychiatric or stress-related injuries be
restricted to narrowly defined classes of conditions or those that are classifiable under any
particular classification system.
Employment contribution
2.240. Acknowledgment of the subjective nature of stress-related and psychiatric injuries should not
detract from the duty, accepted in common law and applied in workers’ compensation cases,
186
that an employer must take a worker as the employer finds the worker. Any person with a
natural susceptibility (as distinct from a pre-existing condition), whether it relates to an
inherently weak back or a personality predisposition, is entitled to protection from harm in the
workplace.
2.241. As mentioned in paragraph 2.223 above, most psychiatric injuries, such as depression brought
on through some aspect of work over a period of time, are regarded as diseases and therefore
need to meet the requirement that employment be a “significant contributing factor” before the
injury is compensable.
187
2.242. However, some psychiatric injuries, such as those involving a sudden physiological change in
the worker (for example a post-traumatic stress disorder following an assault at work), may be
regarded as injuries rather than diseases and accordingly do not need to meet the requirement
that employment be a significant contributing factor.
2.243. As discussed in paragraph 2.209 above, psychological and psychiatric injuries often involve a
mixture of contributing factors, including external stressors such as disruptions in relationships
and general health issues;
188
whereas physical injuries are less likely to involve such a mixture.
The reliance by medical examiners on workers’ reporting of symptoms and perception of
events, and the examiners’ inability to verify objectively the likely impact of particular factors on
a person’s psychological state, is likely to lead to a conclusion that, in many situations, work has
made a contribution to a worker’s psychological state.
2.244. In the same way, the multiplicity of causal factors that can be involved in stroke and heart attack
injuries is no doubt one of the reasons for requiring that work be a “significant contributing
factor” before such injuries are compensable. Stress is a commonly cited cause of stroke and
heart attack injuries,
189
as well as of psychiatric injuries.
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183 I Hickie, “Primary care psychiatry is not specialist psychiatry in general practice”, Medical Journal
of Australia, 1999, No. 170, pp 171-173.
184 Burk v Commonwealth [2006] VSC 25 at [32].
185 Burk v Commonwealth [2006] VSC 25 at [35].
186 See, for example, Zlateska v Consolidated Cleaning Services Pty Ltd [2006] VSCA 141.
187 AC Act, s 82(2C).
188 H Kraemer, E Stice, A Kazdin, D Offord and D Kupfer, “How do risk factors work together? Mediators,
moderators, and independent, overlapping, and proxy risk factors”, American Journal of Psychiatry,
No. 158, 2001, p 849.
189 T Chandola, A Britton, E Brunner, H Hemingway, M Malik, M Kumari, E Badrick, M Kivimaki and
M Marmot, “Work stress and coronary heart disease: What are the mechanisms?” European Heart
Journal, 23 January 2008, pp 1-9.
2.245. It appears that stress-related and psychiatric claims, based on a condition that is alleged to have
developed over time, are likely to be more contentious. Claims that are related to a particular
incident (such as a claim for post-traumatic stress disorder after a worker’s involvement in an
armed robbery), are less likely to lead to a dispute about the cause of the injury.
2.246. Australian jurisdictions differ on the level of association required between employment and any
stress-related injury. For example, South Australia and New South Wales require that
employment must have been a “substantial cause” of a psychological injury for that injury to be
compensable,
190
and Tasmania requires employment to have been the major or most significant
factor.
191
However, reviews of court decisions across the jurisdictions suggest that, in practice,
the different tests rarely affect the outcome of claims.
192
Stakeholder views
2.247. Both VECCI
193
and Ai Group
194
have proposed strengthening the contribution requirement so
that work is required to be the most significant contributing factor before a psychiatric injury is
compensable.
Retain the current test
2.248. Court decisions in Victoria and other jurisdictions suggest that changing the “significant
contribution” requirement to a stronger test would have a negligible practical effect on the
outcome of claims.
195
2.249. The proposal by employer groups that employment should be the most significant contributing
factor to a psychiatric injury is, in my view, likely to create substantial difficulties for medical
practitioners, psychologists and decision-makers, given the current difficulties in diagnosing
psychiatric injuries and the interaction between various factors that often give rise to psychiatric
injuries.
2.250. Medical practitioners and psychologists would presumably have to provide evidence on the
relative extent to which each of several possible contributing factors gave rise to a worker’s
injury. In practice, that could be an artificial inquiry.
2.251. I therefore recommend retaining the current test.
Exclusionary provisions
2.252. In 1992, as a result of increasing numbers of stress-related claims, and as part of the
Government’s response to unfunded scheme liabilities approaching $2 billion, the AC Act was
amended to restrict access to compensation for stress-related mental disorders and illnesses
arising from reasonable management action.
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190 Workers Rehabilitation and Compensation Act 1988 (SA), s 30A; Workers Compensation Act 1987
(NSW), s 9A.
191 Workers Rehabilitation and Compensation Act 1988 (Tas), ss 25(1) and 3(2A).
192 Australian Safety and Compensation Council, Australian Workers’ Compensation Law and its
Application – Psychological Injury Claims, Canberra, 2006, p 9.
193 VECCI, Submission, February 2008, p 29.
194 Ai Group, Submission, 2 May 2008, p 13.
195 Courts have interpreted the various tests very flexibly. For example, “material” contributing factor has
been read as requiring that employment be “more than a mere contributing factor”: Comcare v Canute
(2005) 148 FCR 232 at [67]; and as requiring an evaluation of all relevant contributing factors for the
purpose of asking whether the employee’s employment did or did not contribute materially to the
suffering of the ailment, etc. in question: Comcare v Sahu-Khan [2007] FCA 15 at [16]. A “substantial”
contributing factor exists if there was “some causal connection with employment”: Muscat v
Woolworths Ltd [2000] 20 NSWCC 16; and “significant” has been interpreted as meaning that the
contribution to the worker’s injury must be “material”: Mokta v Metro Meat International Ltd [2005]
WASCA 143 at [39].
2.253. Section 82(2A) of the AC Act now provides:
Compensation is not payable in respect of an injury consisting of an illness or disorder of
the mind caused by stress unless the stress did not arise wholly or predominantly from –
(a) reasonable action taken in a reasonable manner by the employer to transfer, demote,
discipline, redeploy, retrench or dismiss the worker; or
(b) a decision of the employer, on reasonable grounds, not to award or to provide promotion,
reclassification or transfer of, or leave of absence of benefit in connection with the
employment, to the worker; or
(c) an expectation of the taking of such action or making of such a decision.
2.254. Although the introduction of section 82(2A) was significant and controversial, there was no
direct reference to the section or the manner of its operation in the second reading speech. The
purpose of the various amendments made by the relevant amending Act (Act No 67 of 1992),
was to narrow entitlements and restrict compensable injury so as to achieve the objective of
cost cutting.
196
2.255. I understand that the section 82(2A) exclusion was intended to ensure that employers
(through the scheme) would not pay for illnesses that arise from a worker’s response to
certain management actions that were considered reasonable.
2.256. It is likely that the objectives of the Victorian Parliament in introducing the section 82(2A)
exclusion were similar to those of the Commonwealth Government when it strengthened
the exclusionary provisions in the Comcare system in 2007, by inserting section s 5A into
the SRC Act, so as to exclude from the class of compensable injuries any injury “suffered
as a result of reasonable administrative action taken in a reasonable manner in respect of
the employee’s employment”.
2.257. The Commonwealth Government justified the introduction of section 5A of the SRC Act on the
ground that it was intended to prevent compensation claims being used to obstruct legitimate
administrative actions by management, and to respond to an increasing number of claims
where remedial action regarding a worker’s poor performance (one example of “reasonable
administrative action”) was the stimulus for the claim.
197
2.258. Not long before the introduction of section 82(2A) into the AC Act, some judicial commentary
(in South Australia) had suggested that it was “absurd” that a person who had an unreasonable
reaction to a merited disciplinary measure should be entitled to compensation.
198
Other jurisdictions
2.259. Following Victoria’s introduction of the section 82(2A) restriction, all other Australian
jurisdictions introduced similar exclusionary provisions. However, while most other States have
since amended their exclusionary provisions, the Victorian provision has not been amended.
2.260. Queensland excludes stress-related injuries arising from “reasonable management actions”;
199
and New South Wales and the Australian Capital Territory exclude such injuries arising from “a
reasonable action taken or proposed to be taken by or on behalf of the employer with respect
to transfer, demotion, promotion, performance appraisal, discipline, retrenchment or dismissal
of workers or provision of employment benefits to workers”.
200
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196 Victoria, Legislative Assembly, Debates, 30 October 1992, p 306-307.
197 Commonwealth of Australia, Senate, Debates, 6 February 2007, p 102.
198 Workers’ Rehabilitation and Compensation Corp v Rubbert [1991] SASC 2862 (King CJ and
Millhouse J).
199 Workers’ Compensation and Rehabilitation Act 2003 (Qld), s 32(5).
200 Workers Compensation Act 1987 (NSW), s 11A; Workers Compensation Act 1951 (ACT), s 4(2).
2.261. The Commonwealth’s exclusionary provision is the broadest, excluding all injuries, diseases and
aggravations of injuries (both physical and mental) suffered as a result of “reasonable
administrative action taken in a reasonable manner in respect of the worker’s employment”.
201
Reasonable administrative action is defined to include (amongst other actions) performance
appraisals, counselling, suspension or disciplinary action.
202
Although the Commonwealth
provisions extend to both physical and mental injuries, it seems likely that, in practice, the
provisions will exclude only mental injuries and perhaps stress-related diseases such as heart
attacks and strokes.
2.262. The broader Commonwealth exclusion was introduced in mid-2007, so its effects are yet to be
seen. The rationale for introducing the broader exclusion was to prevent compensation claims
being used to obstruct legitimate administrative actions by management.
203
Comments by the
then shadow Minister before the November 2007 change of Government foreshadowed a
review of the exclusion as part of the general review of the Comcare scheme; that review is
being conducted at the same time as this Review.
204
2.263. A recent study examining the effectiveness of exclusionary provisions found that, as a general
trend, time-loss stress claims (that is, stress claims resulting in an incapacity for work) were
either increasing or stabilising in all States.
205
Comcare (before the recent changes to the
exclusionary provisions) had a decrease of 2% in the previous year.
206
Tasmania had the highest
increase in claims, while South Australia and Victoria appeared to have the highest overall rate
of time-loss stress claims. The study concluded that, in some jurisdictions, such as Tasmania,
New South Wales and Queensland, the exclusionary provisions had resulted in a very slight
decrease in stress-related claims, although the trend had not continued for more than two
consecutive financial years.
2.264. In summary, it appeared that, in some jurisdictions, the exclusionary provisions had succeeded
in stabilising the number of stress-related claims, but overall those provisions had little effect on
reducing such claims.
2.265. The Review has not identified any common law jurisdiction outside Australia that does not
prescribe different tests for physical and mental injuries. New Zealand (where the compensation
scheme is not limited to work-related injuries) excludes mental injuries that are not
consequential on a person’s physical injuries,
207
unless those injuries arise as a consequence
of particular criminal acts (all of which are sex offences).
208
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201 SRC Act, s 5A(1).
202 SRC Act, s 5A(2).
203 Commonwealth of Australia, Senate, Debates, 6 February 2007, p 102.
204 J Gillard (Minister for Education, Employment and Workplace Relations and Social Inclusion),
Workplace Health and Safety, media release, Parliament House, Canberra, 23 October 2007.
205 R Guthrie and A Babic, Curtin University of Technology, “Why we don’t need stress claim exclusions”,
presentation paper for Injury Management Conference WA, 2007.
206 That decrease may have been a product of the more stringent interpretation given to the predecessor
of s 5A of the SRC Act in Hart v Comcare (2005) 145 FCR 29.
207 Injury Prevention, Rehabilitation and Compensation Act 2001 (NZ), s 26(1)(c).
208 Injury Prevention, Rehabilitation and Compensation Act 2001 (NZ), s 21.
2.266. In Canada, even the provinces with the most generous acceptance of stress-related claims only
provide significantly limited access to compensation for mental injuries. For example, in British
Columbia a worker is entitled to compensation for mental stress only if the mental stress:
• is an acute reaction to a sudden and unexpected traumatic event arising out of and in the
course of the worker’s employment;
• is diagnosed by a physician or a psychologist as a mental or physical condition that is
described in the most recent American Psychiatric Association’s Diagnostic and Statistical
Manual of Mental Disorders at the time of the diagnosis; and
• is not caused by a decision of the worker’s employer relating to the worker’s employment,
including a decision to change the work to be performed or the working conditions, to
discipline the worker or to terminate the worker’s employment.
209
2.267. In Ontario, a worker is not entitled to benefits for mental stress, unless the mental stress is an
acute reaction to a sudden and unexpected traumatic event arising out of and in the course of
her or his employment. A worker is not entitled to benefits for mental stress caused by her or
his employer’s decisions or actions relating to the worker’s employment, including a decision
to change the work to be performed or the working conditions, to discipline the worker or to
terminate the employment.
210
2.268. Quebec has a complex approach to mental injury claims; a psychological or psychiatric
diagnosis is not considered to be an injury (because of the definition of “industrial accident”),
211
so such claims must be regarded as psychological diseases. Generally, in order to be
compensable, there must be objective facts present that show that the causative situation was
beyond the normal scope of the work and outside the normal and foreseeable relationship
between the employer and employee. Claims relating to interpersonal conflicts or relating to
the employer’s right to manage staff will not usually be accepted.
212
2.269. The restrictions on stress claims in Canada occurred in the context of more significant increases
in the numbers of stress-related claims than has been experienced in Australia. In Quebec, the
mental stress claims lodged annually increased from around 1400 claims in 1996 to 3200 claims
in 2005 (a 128% increase). During the same period, the number of accepted mental stress
claims increased from around 1000 to 1300.
213
2.270. As at October 2005, mental health claims were the fastest growing category of disability claims
in Canada, making up an estimated 30% to 40% of the disability claims recorded by Canada’s
major insurers and employers.
214
2.271. Commentators in Canada have pointed to the experience in some states in the United States
of America that initially had a liberal stress claims policy, as the justification for legislative
provisions restricting access for mental claims.
215
For example, California experienced a 540%
increase in the incidence of mental health claims between 1979 and 1988 (over the same period
the incidence of overall injuries decreased by 5%).
216
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209 Workers’ Compensation Act (British Columbia), s 5.1; Rehabilitation and Claims Services Manual, vol 1,
(British Columbia), policy item no 13.20.
210 Workplace Safety and Insurance Act 1997 (Ontario), s 13(4) and (5).
211 An Act Respecting Industrial Accidents and Occupational Diseases (Quebec), s 2.
212 “Workplace/Occupational Stress”, Association of Workers’ Compensation Boards of Canada, 2007, p 9.
<http://www.awcbc.org/common/assets/legislation/stress.pdf>
213 K. Lippel, “Stress, Precarious Employment and Workers’ Compensation: Analysis of case-law from
Quebec”, University of Ottawa, presentation APA:Work, Stress and Health 2008.
214 Safety Canada, Mental Health and the Workplace, Vol XLIX No 4, Canada Safety Council, October
2005. <http://www.safety-council.org/info/OSH/mentalhealth.html>
215 “Compensation for Chronic Stress – a Briefing Paper”, Policy and Regulation Development Bureau,
WorkSafeBC, 23 February 2998, p 9.
216 W.Schaufeli and D. Enzmann, The Burnout Companion to Study and Practice: A critical analysis, CRC
Press, Florida, 1998.
2.272. A detailed exploration of the differences between the legal and social context of North
American and Australian compensation schemes is beyond the scope of this Review. However,
both scheme-related and wider socio-political differences, such as different restrictions in
accessing government funded medical treatment, welfare benefits, and a different litigation
culture, may affect the claims behaviour of workers in these jurisdictions.
2.273. Regardless of the basis for the different behaviours of workers in the different jurisdictions,
it appears likely that the potential for further growth in the number of stress related claims in
Victoria is significantly more constrained than was experienced in the United States of America
or Canada, having regard to the time that has elapsed since the significant increases in stress
claim numbers in the US and Canada and the presently comparatively stable number of stress
claims in Victoria.
2.274. Accordingly, it is my view that the Victorian scheme does not require the extensive restrictions
on the compensability of mental injury claims that are found in the North American schemes.
Problems with the exclusionary provision
2.275. As mentioned in paragraph 2.211 above, despite the significant reduction in the overall number
of new claims both nationally and in Victoria, in recent years the number of stress-related claims
has essentially remained static or has increased.
217
It is, of course, difficult to determine
whether the rate of such claims would have increased faster had the exclusionary provisions
not been introduced.
2.276. Currently, around 40% of all stress-related claims are initially rejected,
218
compared to a
rejection rate of 15% for claims overall; and 22% of all stress-related claims continue to be
rejected after 6 months.
219
Of the decisions to reject stress-related claims that are referred to
conciliation, around 58% are varied.
220
For claims between January and December 2007, only
around 12% of stress-related claims in the budget sector
221
that were initially rejected
continued to be rejected after legal action.
222
2.277. It appears that the exclusionary provision in section 82(2A) may contribute to the divergence
between the number of stress-related claims that are initially rejected and the number of those
claims that remain rejected after legal action. Section 82(2A) is often used as a reason for
rejecting stress-related claims but, to date, no court appears to have upheld a decision to reject
a claim on the basis of section 82(2A). However, it is likely that other elements in the decision-
making processes surrounding stress-related claims also contribute to the high dispute rate.
Stakeholder views
2.278. The exclusionary provision in section 82(2A) is of particular concern for many stakeholders,
representing both workers and employers.
2.279. In general, most union and employer groups appear to agree that the current construction
of section 82(2A) gives rise to unnecessary disputes, with limited practical effect.
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217 VWA, Stressing the Point: A Study into What Causes Stress in a Budget Sector Workplace, and How
it Can Be Controlled, Melbourne, 2006. There was a slight decrease (1%) from January 2005 to
November 2007. Data obtained from the VWA, as at January 2008.
218 Source: VWA.
219 Source: advice from the Review’s independent actuaries.
220 Source: VWA.
221 That is, government-controlled and community entities, including Victoria Police and the DEECD.
222 Source: VWA. This data is only available for budget-sector stress-related claims (that is, government-
controlled and community entities, including Victoria Police and the DEECD); as discussed at
paragraph, a significant proportion of budget sector claims are stress-related and accordingly the
budget sector has been the focus of statistical monitoring in relation to stress-related claims.
2.280. The VTHC submits that –
. . . s.82(2A) creates a fault-based system for mental injuries within a statutory scheme that
purports to be a no-fault scheme. In reality, our statutory benefits system is two-tiered, with
access to protection for workers with mental injuries being much more restrictive than the
access afforded to workers with physical injuries.
223
2.281. The AEU argues that it is discriminatory to distinguish between physical and mental injuries.
224
2.282. The CPSU submits that the operation of section 82(2A) is suitably clear, but the provision has
been misapplied and, as a result, the provision is an impediment to early rehabilitation and
return to work and should be removed.
225
The CPSU argues that amending the exclusionary
provision to include performance management would result in increased litigation.
2.283. The VTHC,
226
the CPSU,
227
the ANF
228
and the AEU
229
support the repeal of the exclusionary
provision and urge that physical and psychiatric injuries be treated in the same way.
2.284. The AMIEU submits that the exclusionary provision has aggravated and exacerbated the
condition of workers with stress-related injuries by creating delays and increasing disputes.
230
2.285. The Magistrates’ Court
231
and the Compensation Law Bar Association
232
state that the current
exclusionary provisions are unwieldy and poorly drafted. The Magistrates’ Court states that the
provision contains a number of double negatives, is uncertain as to onus of proof issues (that is,
the worker must show the injury was work-related, but the employer must show the employer’s
actions were reasonable), and does not consider whether some employment processes, such
as redeployments, performance appraisals and feedback are excluded or included. County
Court judges have also criticised the section because of difficulties in ascertaining its intended
application by reason of the “tortuous” use of double negatives.
233
2.286. Employer groups, such as VECCI, Victoria Police, and the VFF, support the strengthening of the
current exclusionary provision, so as to provide greater protection for employers from claims
brought by workers following disciplinary or management action.
2.287. VECCI submits that –
The prime driver [behind section 82(2A)] was to restore and preserve an employers ability
to make decisions and carry out actions that they were legally required to perform in the
management of the business and the management and control of employees. An employer
is vicariously liable for the actions of its employees and must be free to exercise control free
from the imposition of a substantial financial penalty for doing so because the workers reaction
is accepted as an injury.
234
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223 VTHC, Submission, 2 May 2008, pp 7-8 and p 10.
224 AEU, Submission, 2 May 2008, p 2.
225 CPSU, Submission, pp 9-11.
226 VTHC, Submission, 2 May 2008, p 11.
227 CPSU, Submission, p 9.
228 ANF, Submission, 2 May 2008, p 7.
229 AEU, Submission, 2 May 2008, p 3.
230 AMIEU, Submission, 2 May 2008, p 3.
231 Magistrates’ Court, Submission, 2 May 2008, p 2.
232 CLBA, Submission, 2 May 2008, p 5.
233 See for example Judge Lewis’ comments in Gaweda v Stone Container (Australia) Pty Ltd (County
Court of Victoria, 12 March 1997, unreported).
234 VECCI, Submission, April 2008, p 9.
2.288. Victoria Police submits that –
. . . section 82(2A) be amended to include performance management processes in addition
to the reasonable management of discipline matters. Experience shows that managers often
avoid important conversations regarding performance management due to concerns that
some employees may interpret their intentions and actions negatively and respond by lodging
workers compensation claims . . . This apprehension of managers also limits the opportunity to
offer other support services and flexible arrangements that may assist the employee through
difficult periods.
235
2.289. Ai Group submits that –
An employer must be able to initiate fair and just responses to inappropriate behaviour in
the workplace. If a worker is able to successfully lodge a WorkCover claim related to “stress”
whilst an employer is investigating a serious OHS breach or a complaint about harassment or
bullying, or whilst managing performance issues, the employer and all other workers in that
workplace suffer significant disadvantage.
236
2.290. The VFF submits that –
Many employers are already fearful of employees claiming workers compensation (physical
or psychological illness or disease) when managing an employee’s performance as many
employers realise that it is extremely difficult to dismiss an employee once they are receiving
workers compensation payments.
237
2.291. Vatmi Industries submits that the term “discipline” should be defined in the AC Act to include,
for example, negative or critical comments or reminders reasonably directed to a worker by a
supervisor in the normal course of supervision.
238
2.292. The VACC submits that, in order to clarify the operation of section 82(2A), provision should be
made for developing guidance materials, similar to those under the OHS Act, on the use of the
section.
239
Guidance as to the meaning and scope of certain terms could be contained in
regulations.
2.293. Ai Group submits that the onus of proof in section 82(2A) should be amended so that workers
would bear the onus of demonstrating that their stress was not related to the acts covered by
the exclusionary provisions.
240
Amend the exclusionary provision
2.294. As discussed in paragraph 2.277, there is uncertainty about the operation of section 82(2A).
• Although agents often rely on the section to reject stress-related claims, it appears that
to date no rejection of a claim under the sub-section has survived after being challenged
by a worker.
• The process understandably leads to frustration for both employers and workers, creating
disputes and causing delays in workers accessing medical and psychiatric treatment and
weekly benefits.
• In many cases, the disputes and delays can lead to an exacerbation of the worker’s condition
and deterioration of the relationship between the worker and the employer.
• The outcome can ultimately be a prolonged recovery period and a decrease in the worker’s
prospects of return to work.
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235 Victoria Police, Submission, 2 May 2008, p 1.
236 Ai Group, Submission, May 2008, p 14.
237 VFF, Submission, 2 May 2008, p 5.
238 Vatmi Industries, Submission, 2 April 2008, p 2.
239 VACC, Submission, 1 May 2008, p 3.
240 Ai Group, Submission, 8 February 2008, p 15.
2.295. Although part of the reason for the higher dispute rate may lie in the intrinsic nature of stress-
related and psychiatric injuries and claims, legislative amendments are needed to:
• provide greater clarity and certainty for both workers and employers in determining what
constitutes a compensable psychiatric or stress-related injury under the AC Act;
• reduce unnecessary disputes; and
• provide protection for employers when undertaking appropriate and fair management actions,
as intended by the legislature when introducing section 82(2A).
2.296. The requirement that, in order to be excluded, the stress must arise “wholly or predominantly”
from an employer’s reasonable actions is a very difficult requirement to meet where significant
weight must be given to the worker’s self-reported attribution of the causes of the stress.
2.297. A substantial part of the problem in applying section 82(2A) stems from the relatively narrow
types of management action that fall within the provision. “Disciplinary action” has been
interpreted narrowly by the courts, to mean a formal disciplinary process outside the usual
incidence of employment.
241
Actions taken to determine whether or not disciplinary action
will be taken are not regarded as falling within the provision.
242
For example, where a worker’s
stress arises as the result of a meeting with a manager for the purpose of obtaining and
providing information about misbehaviour by a worker, and the worker was disciplined after
that meeting, the stress is not regarded as arising from the disciplinary action.
243
2.298. Under contemporary standards of employment, in most instances it would be bad practice,
or even a breach of unfair dismissal laws, to discipline a worker formally without first holding
an investigative process or providing some form of informal feedback on the worker’s
performance. However, a worker would be entitled to compensation where the worker is
questioned in a reasonable manner by an employer about allegations of harassment made
by a co-worker, is later dismissed because the allegations are substantiated and sustains
a stress-related mental disorder as a result of the initial questioning.
2.299. Potentially, all decisions by an employer that could fall within section 82(2A)(a) and (b) would be
regarded as being adverse to the worker. In order to be considered “reasonable”, management
decisions usually need to be preceded by a series of other steps, such as a performance
review. However, in the absence of a provision relating to performance appraisals (as in New
South Wales, South Australia and Queensland), reasonable actions taken by employers in
managing their workers’ performance will not fit within the section 82(2A) exclusion.
244
It would
be open to the court to find that management of the worker’s performance contributed to the
stress, and accordingly the exclusionary provision would not apply.
2.300. Further, in order for an employer to show that dismissal or demotion of the worker was
reasonable, the employer will often need to establish that the decision was made because
of, for example, an inability to cope with work responsibilities. It could then be argued that
the employment situation with which the worker was unable to cope was a factor in causing
the stress.
2.301. The provision fails to take account of changes to employers’ work practices since 1992, which
have stemmed in part from greater obligations to protect the health and safety of employees.
These obligations can require, for example, employers to investigate or suspend a worker
immediately in order to respond appropriately to allegations of harassment or discrimination by
other workers. These types of responses appear to increase the potential for employers’ actions
to fall outside the disciplinary action exclusion.
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241 Joseph Beattie v State of Victoria (County Court of Victoria, 2 August 1999, unreported, Judge Strong).
242 Comcare v Chenhall (1992) 37 FCR 75.
243 For example, Comcare v Chenhall (1992) 37 FCR 75.
244 R Guthrie, “The Australian legal framework for stress claims”, Journal of Law and Medicine, No. 14,
2007, p 541.
2.302. Although the scheme is intended to provide no-fault cover for injured workers, compensation
is not payable where a worker’s injury is attributable to the worker’s own serious and wilful
misconduct.
245
Arguably, that exclusion should be extended to less direct situations, such as
where a psychological injury has arisen as a result of reasonable disciplinary or investigative
actions taken by an employer following a worker’s alleged misconduct and performance
management and counselling.
2.303. Section 82(2A) only applies to mental injury. Where a worker sustains a heart attack or stroke
because of termination of employment, the entitlement to compensation is not excluded,
although it would be for a worker who suffered a psychological injury in the same
circumstances. The different approaches taken to various types of injuries and stress-related
psychiatric injuries are an acknowledgement that there are fundamental differences between
the detection, causes, treatment and management of different types of injuries that make it
both reasonable and necessary to distinguish between them.
2.304. The different nature of physical and psychiatric claims, including the issues identified by the
High Court in Tame v New South Wales,
246
and the interaction between multiple factors in
contributing to psychiatric injuries, justify the use of different criteria for recognising psychiatric
claims.
2.305. It appears that both the construction of section 82(2A) and changes to work practices have
rendered the provision ineffective in meeting its intended objectives. The provision needs to
be amended to make it easier to understand and apply.
2.306. Employers need to be able to manage their staff in a reasonable way. It is particularly important
to ensure that employers can take reasonable action in order to protect the health and safety of
all their employees.
2.307. Providing an exclusion that relates only to particular categories of administrative decisions made
by employers, such as “performance appraisals”, could lead to further disputes and artificial
distinctions relating to those categories. That approach would also run the risk of narrow
interpretations being applied to the activities, which could frustrate the intended objective of
any amendment (as has occurred with the interpretation of “discipline”).
2.308. However, providing guidance on the types of reasonable management actions that should fall
within the scope of the exclusionary provision (for example through an inclusive rather than
exhaustive list of the types of actions that could constitute a “management action”) could
prevent artificial distinctions from developing, while still providing sufficient limits on the
circumstances where the provision should be applied.
2.309. Extending the exclusionary provision to cover all reasonable management actions would assist
in reducing artificial distinctions between different “types” of decisions made by employers, and
enable employers to exercise reasonable control of their workforce for the general welfare of
their employees without bearing the claims costs of stress-related injuries through excess
payments and premium calculation.
2.310. The intended objectives behind the 1992 amendments, as discussed in paragraph 2.254 above,
which included preventing workers from receiving compensation in relation to unreasonable
reactions to a merited disciplinary or management measure, would best be achieved by
providing an exclusion for all reasonable management actions.
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245 AC Act, s 82(4).
246 (211) CLR 317. See paragraph 2.208 above.
2.311. I therefore recommend the provisions be amended to exclude psychiatric injuries that arise
from the reasonable or appropriate management actions of an employer in relation to a worker;
and that “management actions” be defined to include actions carried out by employers that
relate to performance appraisals, disciplinary action, demotions, counselling of employees and
the like.
2.312. It is important that any changes to the exclusionary provisions or the treatment of psychiatric
injuries should not artificially decrease the number of claims by excluding injuries that ought to
be compensable, and that the changes do not reduce the protection to workers from unfair or
unreasonable actions on the part of employers. Those effects would contradict government
policy to treat psychological health on the same footing as physical health, as evidenced in the
amended definition of “health” in the OHS Act.
247
2.313. In my view, the requirement that management action must have been “reasonable”, before
liability for the consequent psychiatric injury is excluded, should continue to provide protection
to workers from employers’ harsh or unjust management decisions.
The decision-making process for stress-related claims
2.314. Stress-related and psychiatric injury claims often involve relatively complex issues between
workers and employers, and other elements that make decision-making more difficult than for
many physical injury claims. These factors contribute to the high level of disputes arising out
of stress-related and psychiatric injury claims.
2.315. It appears that there are particular problems with the 28-day time limit for determining whether
to accept stress-related and psychiatric injury claims. The injured worker’s psychological state
can make it difficult or inappropriate for the worker to attend independent medical examinations
within the first 28 days of the claim being received by the VWA or an agent. That problem
necessarily limits agents’ ability to make an informed decision about liability.
2.316. Problems can also arise when workers are located in rural areas, or where an injury occurs
through a gradual process or is an aggravation of an earlier injury.
2.317. However, reducing the adversarial nature of dispute resolution is particularly important for
stress-related and psychiatric claims, considering the nature of the worker’s injury and the more
frequent presence of interpersonal elements in such claims. Although a conciliation process
exists, and employers can (although they do not always opt to) take part in that process, the
focus of conciliation is on resolving whether the worker’s claim should be accepted.
Stakeholder views
2.318. In relation to stress-related illnesses, Victoria Police submits that –
. . . more constructive and proactive methods could be considered. Such an initiative may be
to reward employers, through premium reduction, who offer effective Employee Assistance
Programs and provide support services to employees during periods of difficulty. The
employer/employee relationship is bonded through this approach whereas liability questions,
dispute management and legal processes create barriers.
248
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247 OHS Act, s 5(1): “health includes psychological health”.
248 Victoria Police, Submission, 2 May 2008, p 1.
2.319. The AMCA,
249
and the Australasian Faculty of Occupational and Environmental Medicine and
Australian and New Zealand Society of Occupational Medicine (in a joint submission
250
), support
mediation or workplace counselling before the acceptance of stress-related or psychiatric
claims in most circumstances. Joseph Gagliano, a psychologist, submits that –
There needs to be consideration of introducing mediation between employer and employee
around grievances and grievance procedures, very early or as soon as there is the likelihood of
a return to work being considered, planned, instigated . . . This may thus alleviate any
misunderstandings, pain that may be associated with the whole RTW plan.
251
2.320. The AMA submits that there are some potential problems with the proposal for mediation or
workplace counselling. It says that –
Most people our doctors see who have developed a psychiatric injury arising from a
workplace dispute have already experienced mediation that has failed . . . This proposition
would significantly add to the delay before receiving appropriate treatment and before plans
were made for them to return to the workplace or to another workplace.
252
2.321. VECCI opposes introducing provisional liability
253
to apply to all claims, but does not oppose
allowing discretionary provisional payments to workers who claim for psychiatric injuries where
the VWA or the agent is unable to complete investigations within 28 days. VECCI acknowledges
that a comprehensive assessment of some multi-causal claims may take longer than 28 days to
ensure good decision-making, and that extending the period of assessment necessitates paying
the worker.
254
Provide for mediation or workplace counselling
2.322. In my opinion, a more informal mediation or workplace counselling procedure (for example,
similar to an optional step in workplace disputes lodged with the Australian Industrial Relations
Commission), available at the request of any party before the determination of liability for the
claim, may assist in reducing disputes.
255
2.323. Such mediation or workplace counselling should include employers and focus on broader
objectives, such as exploring the cause of the alleged stress, identifying the actions that the
employer can take to reduce or prevent the stressor in the workplace, and considering how to
assist the worker in returning to work. Exceptions to the process would include incidents
involving workplace violence, or where a medical practitioner believes that the process could
harm the worker because of the worker’s psychiatric condition.
2.324. Any suspension of the process of determining liability while waiting on the outcome of
mediation should in many instances be accompanied by provisional liability payments, to avoid
delays in workers receiving appropriate treatment. Alternatively, where it is not appropriate or
possible to make provisional liability payments, the mediation or counselling should occur
before expiry of the 28-day period to determine liability.
2.325. A pilot program is currently being trialled in government departments to provide workplace
relationship counselling in the return to work process, specifically for claims involving stress or
psychological illness where interpersonal conflict is a barrier to return to work
256
and this
approach should be considered.
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249 AMCA, Submission, 1 May 2008, p 2.
250 AFOEM and ANZSOM joint submission, 30 May 2008, p 8.
251 Joseph Gagliano, Submission, 28 April 2008, p 14.
252 AMA, Submission, 29 April 2008, p 2.
253 Provisional liability is discussed further in Chapter 3, “Ensuring timely access to benefits and support”,
paragraphs 3.32-3.150.
254 VECCI, Submission, April 2008, p 19.
255 C Coburn and M Jensen, “Conflict in the workplace – Is mediation an appropriate response?”,
conference presentation, 2006, viewed 21 January 2008, <www.mediationconference.com.au/
2006_Papers/Clare%20Coburn.doc>
256 VWA, “Learn to Return” VWA Return to Work newsletter, March 2008.
2.326. In some instances, where it is acknowledged that the worker has a psychiatric illness, but it
has not been determined whether the illness is compensable, the mediation could focus on
how best to assist the worker in returning to work, irrespective of the cause of the illness.
This would allow earlier intervention than under the existing pilot program by providing an
opportunity at the initial stages of a claim to discuss how to assist the worker and employer
in negotiating appropriate ways to facilitate a return to work. A further benefit may be that the
employer develops a better understanding of the issues in the workplace that are giving rise to
stress, enabling the employer to develop a risk management program to prevent further stress-
related claims.
2.327. The emphasis in the process would be on workers and employers sharing their perspectives
and information on the events that preceded the claim. Care would need to be taken to ensure
that the mediation or workplace counselling was not seen by workers as encouraging them
to withdraw their claim. Anything said in mediation should, of course, be confidential to the
mediation process: it should not be used later to determine entitlement to compensation.
2.328. Legislative change would not be required to implement the mediation or workplace counselling
proposal,
257
although changes may be needed to allow the VWA to pay for the service at an
estimated cost of $5.5 million to $8.5 million a year.
258
Allow for the suspension or adjournment of claims
2.329. Implementing provisional liability in accordance with the recommendation detailed in Chapter 3,
“Ensuring timely access to benefits and support”,
259
would resolve the problems surrounding
the 28-day limit on determining claims. However, if provisional liability is not adopted, I suggest
that, in some circumstances involving stress-related and psychiatric injuries, it may be
appropriate to allow for the adjournment or suspension of the decision-making process to
enable mediation or workplace counselling, and to enable medical information to
be reviewed.
2.330. I do not recommend extending the determination period for all stress-related and psychiatric
claims; rather, I recommend that provision be made for discretionary extensions of time for
claims where further information is needed in order to make a sound decision.
2.331. By enabling better and earlier information-gathering, and discouraging adversarial attempts
to pre-empt decision-making, better decision-making on stress-related and psychiatric injuries
should be possible. Together with the recommended mediation process, the better decision-
making should assist in reducing dispute levels and ultimately allow for earlier intervention and
better return to work outcomes.
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257 A current pilot project (the “Padre Pio Project”) is being undertaken as part of the VWA Return to Work
Fund, in partnership with the Catholic Education Commission of Victoria, to examine the impact of
early intervention (including mediation) in managing workplace stress.
258 The $5.5 million estimate is based on the current number of stress-related claims lodged yearly,
and on the assumption that all claims would go to mediation, with $1600 payable for each claim.
The $8.5 million estimate assumes that the number of stress-related claims lodged would double,
and that all claims would go to mediation, with $2500 payable for each claim. Source: advice from
the Review’s independent actuaries.
259 See Chapter 3, “Ensuring timely access to benefits and support”, paragraphs 3.32-3.150.
Return to work
2.332. It can be difficult to assess what goals should be the focus of psychological or psychiatric
treatment and when such goals are achieved. That difficulty affects the ability to terminate
weekly benefits for stress-related claims and creates difficulties with return to work programs.
2.333. The circumstances that can give rise to stress-related claims mean that it is often not
appropriate to attempt to return a worker to the same or a similar role or workplace. The
subjective nature of many symptoms of stress-related disorders also makes it difficult to assess
whether a worker has a current work capacity.
2.334. Those factors contribute to the average time lost from work for workers with stress-related
and psychiatric claims. Nationally, between 2000/2001 and 2003/2004, workers who submitted
new claims involving mental stress had the longest average time lost from work (approximately
10 weeks). The next highest categories had averages of around four to five weeks.
260
2.335. In Victoria, workers with stress-related claims have a lower sustainable return to work rate than
workers with other types of injuries. For example, a survey of workers, conducted 14 to 19
months after their claims commenced, indicated that, among workers with stress-related
claims, only 66.8% of workers with scheme-insured employers and 71.4% of workers with self-
insured employers had returned to work, compared to the overall average rates of 75.9% for
workers with scheme-insured employers and 82.9% for workers with self-insured employers.
261
2.336. In most instances, employers have an obligation to re-employ an injured worker within
12 months of the date of injury.
262
The Government, through its various departments (the
“budget sector”), including the DEECD and Victoria Police, employs around 10% of the
Victorian workforce, and around 20% of new budget sector claims are for stress, compared
to around 7% of new claims for the rest of the workforce.
263
A higher proportion of workers
with stress-related claims lodged with the DEECD (around 54%) and Victoria Police (around
51%) have not returned to work after 26 weeks, compared to workers overall (around 41%).
264
2.337. Government departments often have large numbers of workplaces and employ large numbers
of staff. They are regarded as the employer of workers at all their workplaces (for example, the
Department of Education is the employer of teachers at all government schools). Accordingly,
under the AC Act, Government departments have an obligation to find an injured worker
suitable employment at any of the workplaces under the departments’ control. However,
if providing suitable employment would cause “unjustifiable hardship” for an employer, the
employer is exempt from the obligation.
265
The issue of these exemptions is explored further
in Chapter 4, “Supporting workers to get back to work after injury”.
2.338. In essence, although considerable improvement in return to work rates for stress-related and
psychiatric claims is desirable, legislative change specifically addressing these claims is not
required. Rather, the problems in returning injured workers with stress-related claims to work
can be dealt with through changes to the return to work process applicable to all claims, and
through changes in policy and compliance to ensure that employers meet their obligations to
assist with providing suitable employment.
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260 Commonwealth of Australia, Workplace Relations Ministers’ Council, Comparative Performance
Monitoring Report, 9
th
ed, Department of Education, Employment and Workplace Relations, Canberra,
2008, p 7.
261 Source: VWA.
262 AC Act, s 155A.
263 VWA, Stressing the Point: A Study into What Causes Stress in a Budget Sector Workplace, and How it
Can Be Controlled, Melbourne, 2006.
264 Source: VWA.
265 AC Act, s 155B(1).
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ENSURING TIMELY
ACCESS TO BENEFITS
AND SUPPORT
Delays in injury notification and
determination of claims
Introduce provisional liability
and streamline injury notification
Reduce formalities
Introduce electronic lodgement
Improve access to medical
information
Clarify employer obligations
Providing greater protection
against discrimination
3.1. The procedures governing access to workers’ compensation benefits are based on an insurance
model. Central elements of the process, such as the need to make a “claim”, the emphasis on
determining liability and employer excess arrangements, all derive from the insurance model.
3.2. I consider that the effectiveness of the scheme could be enhanced through a simpler, fairer
and more efficient system to enable injured workers to access support and benefits.
3.3. In this chapter, I make recommendations aimed at:
• reducing delays in the reporting of claims and the commencement of compensation
payments following injury;
• reducing the formalities involved in notifying injuries and making claims;
• improving access to vital medical information necessary for the VWA to make decisions in
relation to claims;
• clarifying the obligations of employers with respect to receiving claims and forwarding claims
within the legislated timeframes; and
• providing greater protection for workers against discrimination arising from making or
pursuing workers’ compensation claims.
Overview of the scheme
3.4. An injured worker must notify his or her employer within 30 days of becoming aware of an
injury.
1
A worker can provide notice by entering the injury in the register of injuries kept by
the employer under section 101 of the AC Act.
2
3.5. The 30-day time limit may be waived or extended if the VWA or self-insurer is satisfied that:
• it was not reasonably practicable for a worker to comply with the time limit;
• failure to give notice of the injury within the time limit did not unfairly prejudice the employer;
or
• to insist on compliance with the time limit would result in a serious injustice to the worker.
3
3.6. Notification of an injury does not entitle a worker to receive compensation. A claim must be
made before a worker can access any services or benefits under the AC Act.
3.7. Under the OHS Act, employers have a duty to notify the VWA immediately after becoming
aware that an “incident” has occurred at a workplace under the employer’s management and
control.
4
Within 48 hours of being required to notify the VWA, the employer must also give the
VWA a written record of the incident, in an approved form.
5
Incidents are defined to include
incidents that result in death, medical treatment within 48 hours of exposure to a substance,
in-patient hospital treatment, serious head, eye or laceration injuries, spinal injuries and
amputations.
6
3.8. To claim weekly benefits and/or medical treatment because of a workplace injury, a worker must
complete a Worker’s Injury Claim Form. The worker must give the signed claim form to the
worker’s employer (where possible) or to the VWA.
7
3.9. A worker is permitted to notify the VWA of the claim when the worker lodges the claim with the
employer.
8
There is no duty to do so unless the worker is aware that the employer is refusing to
receive the claim or is unlikely to forward it to the VWA.
9
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1 AC Act, s 102(1).
2 AC Act, s 102(3).
3 AC Act, s 102(6).
4 OHS Act, s 38(1).
5 OHS Act, s 38(3).
6 OHS Act, s 37.
7 AC Act, ss 103(1), 106(1).
8 AC Act, s 103(1B).
9 AC Act, s 107(3).
3.10. The claim form includes a signed authority from the worker, authorising the release of medical
information.
10
3.11. The claim form does not distinguish between a claim for weekly benefits and a claim for
medical and like benefits. However, a medical certificate of incapacity must be provided with
a claim for weekly expenses (which are paid for time lost off work).
11
To claim other types of
benefits (such as compensation for permanent impairment), an injured worker must use
different claim forms.
3.12. A claim for weekly benefits must be made as soon as practicable after the worker becomes
aware of the incapacity arising from the injury.
12
A claim for medical and like expenses must
be made within six months of the medical service.
13
3.13. If the worker had a “special excuse” for not making a claim within the prescribed timeframe, the
time limit may be waived or extended.
14
As with the timeframes for injury notification, it is rare
for a worker’s claim to be rejected solely because it was made late. This is in part due to the
flexibility inherent in the requirement that a weekly benefit claim be made “as soon as
practicable”.
3.14. The employer must acknowledge receipt of the claim in writing, as soon as is reasonably
practicable.
3.15. Generally, claims must be forwarded to the VWA within 10 days, unless the claim is for medical
and like expenses that do not exceed the employer’s excess,
15
and has been accepted by the
employer.
16
3.16. The AC Act requires an employer to “accept or reject a claim for weekly benefits within 10 days
of receiving the claim”.
17
However, the employer’s decision is not determinative, and it is the
VWA (through its agent) that determines whether a claim for weekly benefits will be accepted
or rejected.
3.17. The VWA must accept or reject a claim for weekly benefits within 28 days,
18
and accept or
reject a claim for medical and like expenses within 60 days.
19
3.18. If a claim for weekly benefits is accepted, payments are made by the VWA’s agent to the
worker’s employer, who must make the weekly payments to the worker.
20
If an employer is
required to make payment before the employer receives payment from the VWA, the employer
must be reimbursed by the VWA.
21
3.19. The AC Act imposes a range of penalties on employers who fail to comply with their obligations
under the Act. For example, it is an offence for an employer to refuse to receive a claim.
22
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10 AC Act, s. 103(1)(d).
11 AC Act, ss 103(1)(b), 105(1).
12 AC Act, s 103(7)(a).
13 AC Act, s 103(7)(d).
14 AC Act, s 103(8).
15 Employers must pay the first $564 (indexed annually) of reasonable medical and like expenses and the
first 10 days of weekly benefits to an injured worker before the VWA needs to determine liability for
the claim.
16 AC Act, ss 108(1)(ba), (c).
17 AC Act, s 108(2).
18 AC Act, s 109(1).
19 The 60-day limit is a matter of policy, not legislation.
20 AC Act, ss 114D(1), (2).
21 AC Act, s 114D(3).
22 AC Act, s 242(3)(a). The penalty for refusing to receive a claim is 25 penalty units ($2835.50) for a first
offence or 50 penalty units ($5671) for a subsequent offence.
DELAYS IN INJURY NOTIFICATION AND DETERMINATION OF CLAIMS
3.20. As outlined above, the process for obtaining workers’ compensation involves the taking of
various steps by the worker, the employer and the VWA. The process is largely sequential and
each step must be completed within a particular time, which means that there will always be
a time lag between the date of the injury and the payment of compensation. In addition, each
step in the process is susceptible to delays.
3.21. First, an injured worker must lodge a claim – the median time between an injured worker
becoming aware of an injury and lodging a claim is around 20 days.
23
3.22. The claim must then be forwarded by the employer to the VWA (or its agents) within 10 days,
unless the claim is for medical and like expenses.
24
Approximately 90% of claims are forwarded
by employers to the VWA or its agents within the prescribed time limit
25
– the median delay
between workers lodging a claim with their employer and the agent receiving the claim is six
days.
26
3.23. The median delay between the date of injury and the VWA receiving the claim is 31 days.
3.24. Liability for a claim for weekly benefits must be accepted or rejected by the employer within 10
days of receiving the claim.
27
The VWA must accept or reject a claim for weekly benefits within
28 days.
28
The median delay between agents receiving a claim and liability being determined is
10 days.
29
3.25. The median time for completion of the process from the time of injury to a decision on liability
is around 49 days.
30
3.26. Although, under the current scheme, employers are liable to pay the first $564
31
of reasonable
medical and like expenses and the first 10 days of weekly benefits to an injured worker before
the VWA needs to determine a claim for compensation,
32
delays in notifying injuries and
determining liability for claims lead to –
• delays in workers receiving benefits and medical services (which may in turn cause critical
delays in the implementation of return to work and rehabilitation programs); and
• delays in employers receiving appropriate reimbursement from the VWA.
3.27. In addition to the time taken from injury to determination of liability on a claim, around 14% of
claims are disputed (that is, referred by a worker to conciliation or to court, because the worker
is dissatisfied with the VWA’s decision). This is the highest claims dispute rate in Australia, well
above the national average of 8.6%.
33
Over the past five years, there have been minor
fluctuations in the dispute rate in Victoria, with a slight overall increase.
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23 Source: VWA. Data relates to claims between 1 May 2007 and 30 April 2008.
24 AC Act, ss 108(1).
25 Source: VWA and AC Act, s 108(1).
26 Source: VWA. Data relate to claims between 1 May 2007 and 30 April 2008.
27 AC Act, s 108(2).
28 AC Act, s 109(1).
29 Source: VWA. Data relates to claims between 1 May 2007 and 30 April 2008.
30 Source: VWA.
31 This figure is indexed.
32 AC Act, s 125A(3).
33 Commonwealth Department of Education, Employment and Workplace Relations, Workplace Relations
Ministers’ Council: Comparative Performance Monitoring Report, 9
th
ed, DEEWR, Canberra, 2008, p 28.
These statistics should be regarded as a guide only, as this dispute rate is based on all recorded
disputes in one year, divided by all reported claims in that year. Accordingly, it does not allow for the
fact that some claims can have more than one dispute.
3.28. Of the claims that are disputed, only 3.5% are resolved within one month, around 55% are
resolved within three months and 75% are resolved within six months. Around 12% of disputed
claims are not resolved within nine months.
34
3.29. Disputes about claims clearly create additional delays in accessing benefits. Those disputes are
also likely to create an early unfavourable impression for the worker involved, and adversely
affect the worker’s recovery and return to work.
3.30. Several studies have indicated that delays in claims reporting can lead to increased claims costs
and delays in return to work. For example, one study reported that, in Tasmania, on average:
• claims forwarded by employers to insurers in the second and third weeks cost approximately
13% more than those forwarded in the first week;
• claims forwarded in the period from the fourth to sixth weeks cost approximately 25% more
than those forwarded in the first week;
• claims forwarded in the period from the seventh to twelfth weeks cost approximately 34%
more than those forwarded in the first week; and
• claims forwarded after three months cost approximately 91% more than those forwarded in
the first week.
35
3.31. A United States study reported similar effects on claims costs. It found that claims reported
within two weeks of injury were 18% more expensive than those reported by workers within
one week of injury. Claims not reported until the fifth week after injury were 45% more
expensive.
36
INTRODUCE PROVISIONAL LIABILITY AND STREAMLINE INJURY NOTIFICATION
3.32. In January 2002, New South Wales introduced significant changes aimed at streamlining and
simplifying claims lodgement and injury notification.
3.33. In New South Wales, a range of parties can give notice of an injury – the worker, the employer,
or the worker’s representative – for example, the worker’s doctor or a family member.
3.34. A worker, the worker’s representative or the employer must file an injury notification as soon
as possible after becoming aware of a workplace injury.
37
An employer must notify the agent
within 48 hours of an injury, and a claim form must be forwarded within seven days of receipt
from an injured worker.
38
3.35. Injuries can be notified by telephone, electronic transmission or in writing. Claim forms can
be lodged by electronic submission or mail.
39
3.36. The 2002 reforms were accompanied by the introduction of provisional liability which enables
workers to access benefits and support for a limited period after notifying an injury without
submitting a claim form.
40
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34 WE Upjohn Institute for Employment Research, Victorian Worker’s Compensation System: Review and
Analysis, Michigan, 1997, p 23.
35 Department of Workplace Standards Tasmania, Rehabilitation and Compensation Branch, Timeliness
of Claims Reporting, presented to the Workcover Tasmania Board on 27 August 2002.
36 Pitruzzello G, “The High Cost of Delays: Findings of a Lag-Time Study”, Issues Report, Summer 2000.
37 Workplace Injury Management and Workers Compensation Act 1998 (NSW), ss 44(1), 61 and 266.
38 Workplace Injury Management and Workers Compensation Act 1998 (NSW) ss 44(2) and 264, Workers
Compensation Regulations 2003 (NSW), reg 32A and WorkCover NSW, WorkCover Guidelines for
Claiming Compensation Benefits, Part 1, cl 2, NSW Government Gazette No 129, 27 October 2006.
39 Workers Compensation Regulations 2003 (NSW), reg 32.
40 Workplace Injury Management and Workers Compensation Act 1998 (NSW) ss 267 (weekly payments),
280 (medical expenses).
3.37. A claim form is only required if:
• the agent requests a claim form;
• the notification is made two months or more after the injury; or
• the worker’s weekly payments exceed 12 weeks or medical expenses exceed $7500.
41
3.38. Rather than the onus being on the worker and employer to complete the claim form correctly,
the onus is on the agent to gather the information required.
3.39. New South Wales employers are also entitled to a waiver of their excess if they report injuries
to the agent within five days of becoming aware of the injury.
42
3.40. In New South Wales, provisional liability for weekly payments begins when an injury is notified.
An insurer does not have to sight a medical certificate in order to commence weekly payments;
however, the insurer will need to have obtained information to verify a work-related injury and
the expected period of incapacity – for example, by contacting the treating doctor to confirm
the worker’s incapacity.
• Insurers are required to commence making weekly payments on a provisional basis within
seven days of receiving a complete initial notification, unless the insurer is able to rely on
one of the specified reasonable excuses and communicates that excuse to the worker
within the 7 days.
43
• Insurers are also given discretion to accept provisional liability for medical expenses
compensation up to a maximum of $7500.
44
3.41. The New South Wales legislation also provides for interim payments of weekly and medical
expenses compensation, where a dispute about liability is pending before the Workers
Compensation Commission.
45
3.42. Provisional liability was introduced in Tasmania in July 2001, but only for weekly benefits. The
Tasmanian legislation provides that employers must pay weekly benefits within 14 days of
receiving a claim (and earlier if practicable).
46
The employer has 12 weeks to dispute a claim;
47
and, if the employer does not dispute the claim within that period, the claim is deemed to be
accepted.
48
If the employer disputes the claim, the employer must refer the matter to the
Tribunal.
49
3.43. When provisional liability was introduced in Tasmania, the period within which employers were
required to challenge liability was 28 days. The period was increased to 12 weeks in 2004.
3.44. WorkCover Tasmania’s Injury Management Model identifies the introduction of provisional
payments for medical and rehabilitation expenses as a key strategy to facilitate early
intervention. The injury management model has been endorsed by the WorkCover Tasmania
Board and a recent independent review.
50
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41 WorkCover NSW, WorkCover Guidelines for Claiming Compensation Benefits, Part 1, cls 9 and 10,
NSW Government Gazette No 129, 27 October 2006.
42 Workers Compensation Act 1987 (NSW) s 160(9), NSW Insurance Premiums Order 2007–2008.
43 Workplace Injury Management and Workers Compensation Act 1998 (NSW) ss 267(1) and 267(2).
44 Workplace Injury Management and Workers Compensation Act 1998 (NSW) s 280(1); and WorkCover
NSW, WorkCover Guidelines for Claiming Compensation Benefits, cl 10, NSW Government Gazette
No 129, 27 October 2006.
45 Workplace Injury Management and Workers Compensation Act 1998 (NSW) s 297. Interim payments
are made at the direction of the Commission’s Registrar, and are not to exceed $7,500 (for medical
expenses) or 12 weeks (for weekly compensation): ss 297(2), 298(1).
46 Workers Rehabilitation and Compensation Act 1988 (Tas), s 81(1)(a).
47 Workers Rehabilitation and Compensation Act 1988 (Tas), s 81A(1).
48 Workers Rehabilitation and Compensation Act 1988 (Tas), s 81AB.
49 Workers Rehabilitation and Compensation Act 1988 (Tas), s 81A(1)(c).
50 WorkCover Tasmania Board, Return to Work and Injury Management Model, Final Version May 2007,
p 25, and A Clayton, “Review of the Tasmanian Workers Compensation System Report”,
September 2007.
3.45. On 19 June 2008, the South Australian Parliament passed the Workers Rehabilitation and
Compensation (Scheme Review) Act 2008 (SA), which will introduce provisional liability for
medical expenses and weekly payments.
• A new section 32A of the Workers Rehabilitation and Compensation Act 1986 (SA) will give
the WorkCover Corporation power (but not any obligation) to pay up to $5,000 in medical and
like expenses after application for the payment of those expenses.
51
The WorkCover
Corporation can decline to make a payment under section 32A even though it has previously
made a payment under that section.
52
• A new section 50B will direct an employer or the Corporation to make provisional payments
of weekly compensation to a worker within 7 days after initial notification of a disability by
the worker, unless the Corporation determines that there is a reasonable excuse for not
commencing those weekly payments.
53
Provisional weekly payments can continue for up
to 13 weeks.
54
• A decision not to make a provisional payment of medical expenses or weekly payments is
not reviewable.
55
• The amendments introducing provisional liability are expected to come into effect on
1 January 2009.
3.46. The South Australian and Western Australian legislation provide for interim payments, giving the
WorkCover Corporation (in South Australia) and insurers or an arbitrator (in Western Australia)
authority to make interim payments to injured workers without admission of liability.
56
In
contrast to provisional liability, there is no presumption in favour of the worker receiving interim
payments, and the payments are not immediate. In South Australia, if the relevant claim is
subsequently rejected, any interim payments will be recoverable as a debt;
57
In Western
Australia, interim payments can only be recovered if the claim for compensation was fraudulent
or made without proper justification.
58
3.47. The Victorian TA Act does not provide for provisional liability. However, the Transport Accident
Commission accepts 90% of its claims within one day and 95% of its claims within three days,
which makes provisional liability less relevant in the transport accident context.
Stakeholder views
3.48. In submissions to the Review, most employers and employer associations opposed the
introduction of provisional liability on the basis that:
• there was no evidence that it would reduce red tape or improve return to work outcomes;
• it will lead to rorting, especially by workers who have exhausted their sick leave and annual
leave entitlements, increasing scheme costs; and
• the problems that provisional liability is designed to address could be addressed through
other means at a lower cost and risk to the scheme.
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51 Workers Rehabilitation and Compensation Act 1986 (SA), s 32A(3), (4).
52 Workers Rehabilitation and Compensation Act 1986 (SA), s 32A(7).
53 Workers Rehabilitation and Compensation Act 1986 (SA), s 50B(1). “Provisional Payment Guidelines”
will prescribe what can be a “reasonable excuse” for not commencing weekly payments: s 50B(3).
54 Workers Rehabilitation and Compensation Act 1986 (SA), s 50C(1).
55 Workers Rehabilitation and Compensation Act 1986 (SA), ss 32A(10), 50I(a).
56 Workers Rehabilitation and Compensation Act 1986 (SA), ss 106 and 106A; Workers’ Compensation
and Injury Management Act 1981 (WA), ss 231–237.
57 Workers Rehabilitation and Compensation Act 1986 (SA), s 106(2).
58 Workers’ Compensation and Injury Management Act 1981 (WA), s 236(b).
3.49. VECCI notes that provisional liability for all claims is not required to improve decision-making.
An alternative would be to allow agents to provide provisional liability where they need more
time to gather evidence to make a considered liability decision:
VECCI strongly opposes the introduction of provisional payments in Victoria
. . .VECCI would not be adverse to discretionary provisional payments to workers who claim
for psychological injury if the Agent is unable to complete a full investigation in 28 days.
59
3.50. Ai Group states that their members’ experience with provisional liability is –
that once the initial liability has been accepted, there is no further action by the insurer to
investigate entitlements for ongoing compensation. This has the potential to establish an
ongoing entitlement which was never intended or warranted.
60
3.51. Unions, the ALA and the APA support provisional liability. The ALA submits:
These timeframes [10 days for employers to forward claims and 28 days for agents to assess
liability] result in a delay in accessing benefits, and have the potential to cause considerable
financial hardship for injured workers.
These delays also mean that the injured worker may be unable to access necessary medical
treatment (not all of which is available through the public health system). This can have the
effect of entrenching a condition, prolonging the period of incapacity and, therefore,
increasing the total cost of the claim.
Accordingly we are of the view that the Act should be amended to provide that entitlement
to benefits (reasonable medical and like expenses and weekly payments) should commence
within 7 days of a claim being made on a “without prejudice” basis.
61
Potential benefits of provisional liability
3.52. The potential benefits of provisional liability include:
• providing workers with prompt income support while they are incapacitated by work injuries;
• enabling workers to access appropriate treatment earlier;
• a focus by all parties on return to work from the start;
• maintaining a positive employer and worker relationship;
• improved worker satisfaction;
• earlier injury or claim notification;
• improved liability decision-making by agents; and
• improved return to work outcomes.
3.53. The main risk of provisional liability is increased scheme costs associated with more claims,
due to workers submitting fraudulent or speculative claims, and costs incurred on claims that
are subsequently rejected.
3.54. The arguments and evidence for the potential benefits and costs of provisional liability are
discussed in the following sections. In considering the evidence, care needs to be taken in
drawing conclusions because it is difficult to separate the impact of provisional liability from
other factors affecting scheme outcomes.
3.55. To assess the evidence of the impact of provisional liability on the New South Wales scheme,
the Review sought advice from PricewaterhouseCoopers Actuarial (PWC), who are and have
been for some years the scheme actuaries for New South Wales WorkCover and the New South
Wales Treasury Managed Fund (TMF), which self-insures the New South Wales public sector.
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59 VECCI, Submission, May 2008, p 19.
60 Ai Group, Submission, May 2008, p 22.
61 ALA, Submission, February 2008, p 3.
3.56. I appreciate the cooperation and openness provided by New South Wales WorkCover and the
New South Wales Treasury Fund, in allowing PWC to disclose scheme results to the Review.
In considering the New South Wales experience, it is important to note the substantial caveats
made by PWC:
Provisional liability was introduced on 1 January 2002, together with
• restricted access to common law damages and commutations;
• impairment assessment using AMA guidelines;
• changes to s 66 (specific injury) benefit levels and coverage;
• incentive remuneration for insurers (RTW, loss ratios, transition), and in-house WorkCover
“tail” team.
New agent contracts were introduced in January 2006, including revised remuneration
structure. Employer excess waiver was introduced for policies commencing January 2006.
All these simultaneous changes make it impossible to ascribe performance results to any one
factor (including provisional liability).
62
Providing workers with certainty and proper income support
3.57. Under the Victorian scheme, the median delay between an injury and a decision on liability
is 49 days.
63
There is a median delay of 20 days between the date of injury and the worker
lodging a claim, six days between the worker lodging the claim and the agent receiving it,
and 10 days for the agent to make the decision on liability.
64
At the extreme, workers could
wait 75 days, or two-and-a-half months, for payments if the agent utilises the full 28-day
liability determination period, and the employer then takes seven days to make payments.
3.58. The delay in making any payment can be even longer if the claim is denied but is subsequently
accepted. The AMWU cited the cases of five members who suffered delays of between three
and five months before receiving payment because their claim had been disputed.
65
3.59. There is currently no power under the AC Act for the VWA to make payments to a worker
without accepting the worker’s claim for compensation.
66
Conciliation officers have the power
to direct the VWA or self-insurer to pay weekly benefits for a specified period of up to 12 weeks
(known as “interim payments”).
67
However, the direction can only be made if the conciliation
officer is satisfied that there is no arguable case in support of the denial of liability.
68
It follows
that, by directing payments to be made, the conciliation officer is, in effect, ordering that the
claim be accepted (although the VWA or self-insurer can apply to the County Court or
Magistrates’ Court for revocation of a conciliation officer’s direction).
3.60. In practice, many workers will receive income support during this period in the form of sick and
annual leave entitlements, or through their employers paying weekly benefits in advance of the
agent’s decision on liability. In addition, the great majority of workers will have returned to work
during this period, and will therefore be receiving income: 70% of claims involve five or less
days of weekly compensation (in addition to the 10 days of compensation paid through the
employer’s excess).
69
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62 PWC Actuarial, “WorkCover NSW Experience since the Introduction of Provisional Liability: Prepared for
the Review of the Victorian Accident Compensation Act”, May 2008.
63 Source: VWA.
64 Source: VWA.
65 Australian Manufacturing Workers’ Union (Vehicle Division), Submission, May 2008, p 3.
66 Bahonko v Moorfields Community [2006] VSCA 206 at [11].
67 AC Act, ss 57 and 59(5).
68 AC Act, s 59.
69 Source: advice from the Review’s independent actuaries.
3.61. However, for those workers who have exhausted their sick and annual leave entitlements or
who are not entitled to leave (casual employees) and for those workers whose employers
dispute liability and therefore do not pay weekly benefits, and who are off work until liability
is determined, there is a risk of a considerable loss of income and consequential cash flow
problems and anxiety. The AMIEU (Victoria Branch) say that, in the meat industry, workers with
injuries mostly have to wait more than six weeks with no income and no specific treatment,
because generally employers only accept “blood on the floor” claims.
70
3.62. In addition, when workers receive their entitlements after waiting for liability to be determined,
there can be further cash flow problems, because their back payments are taxed at a higher
rate, and they may need to wait a year to recover any overpaid tax from the Tax Office. (This
effect results from PAYE tax being deducted on the basis that the worker’s lump sum
represents a single pay period’s earnings, when in fact it represents many pay periods’
earnings.)
3.63. Where employers make payments to workers before liability has been determined, the current
arrangements disadvantage employers, who are out of pocket until reimbursed by the scheme.
If a worker is off work for two months, the financial burden on a small employer could be
considerable. Tasmania has reported that the initial impetus for provisional liability in that State
came from employers. However, Ai Group contends that delays in reimbursements to
employers could be addressed by streamlining agent processes, rather than introducing
provisional liability.
71
3.64. Provisional liability would not solve payment and reimbursement problems for workers and
employers, but it would reduce delays in workers and employers receiving payments.
Depending on how provisional liability was implemented, it could cut the number of days for
which payments were delayed while the agent assessed liability from 28 days to around seven
days; and, if it was combined with injury notification direct to the agent, it could remove the
10 days in which employers consider liability. Therefore, provisional liability could reduce
payment delays by 30 days. Provisional liability may also reduce the time taken for workers
to lodge claims or give notice of injuries, if it made the process of notifying easier and less
adversarial.
3.65. PWC analysis of New South Wales WorkCover data indicates that, over the period from
December 2001 to December 2007, there has been a significant increase in the proportion of
injured workers in New South Wales who receive their first compensation payment in the same
three month period as their injury. The increase indicates that workers have been receiving
speedier compensation since December 2001, a change which is likely to reflect that, over the
same period, there has been a significant reduction in the delay in notifying agents of injuries.
3.66. The median delay between injury and agent notification of injury in New South Wales has fallen
from 19 days in December 2001 to 6 days in December 2007, with significant reductions
coinciding with the introduction of provisional liability and injury notification in 2002, and the
waiving of employer excess for claims reported early in 2006. On this basis, I conclude that
the introduction of provisional liability and incident notification have probably been significant
factors in the faster submission of claims to agents, and the faster receipt of compensation
benefits by workers.
3.67. PWC analysis of New South Wales WorkCover data indicates that about two-thirds of reported
claims receive provisional liability. The remaining one-third of claims are either immediately
accepted, immediately denied, or are not granted provisional liability. New South Wales
WorkCover has issued guidelines to agents about the specific circumstances where they
can decide not to grant provisional liability (discussed further in paragraph 3.125 below).
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70 Australasian Meat Industry Employees Union (Victoria Branch), Submission, May 2008, p 3.
71 Ai Group, Submission, May 2008, p 20.
3.68. As well as reducing delays in payment, the introduction of provisional liability would mean that
the scheme was designed for the majority of claims, rather than the minority of claims. As
noted above, 15% of claims are initially rejected, and of those rejected claims, 60% remain
rejected after six months. This means that 91% of claims are accepted within six months.
However, by withholding payments until liability is accepted, the scheme is imposing significant
costs on the 91% of workers whose claims are ultimately accepted (and on their employers),
apparently in the interest of avoiding costs associated with the 9% of claims that are ultimately
rejected.
3.69. It is my view that the costs imposed on the workers whose claims are ultimately accepted
provide a persuasive reason in favour of provisional liability. The scheme should be designed to
enable the timely provision of compensation for 91% of claimants whose claims are likely to be
accepted.
Enabling workers to access appropriate treatment earlier
3.70. Where a worker has a claim for weekly benefits and medical and like expenses, the VWA’s
agent makes a single decision on liability, so that the delays discussed in paragraphs 3.57 to
3.63 above also apply to medical and like expenses.
3.71. However, the delay in determining claims for medical and like expenses only (some 35% of all
claims)
72
are considerably greater. The AC Act does not prescribe the time within which liability
for these claims is to be determined. The VWA’s operational policy is that agents determine
liability within 60 days, and the average period is 26 days.
3.72. The AC Act does not provide for agents to pay for medical and like expenses before liability is
determined, apart from occupational rehabilitation, where the VWA or an employer can (but is
not obliged to) pay for reasonable costs before entitlement is established.
73
3.73. Many of the medical benefits required by injured workers are paid through Medicare (for
example, GP consultations and hospital treatment). However, other services (such as
physiotherapy) are not paid by Medicare.
3.74. Sprains and strains account for around two-thirds of the claims received by WorkCover; and the
evidence-based treatment that maximises recovery for those injuries is physiotherapy in the first
six to eight weeks after injury. That physiotherapy could cost a worker between $300 and
$800 – indicating the likely costs to which workers may be exposed before liability has been
determined on their claims.
3.75. As with weekly benefits, the worker may not necessarily be out of pocket. The worker’s service
provider may be willing to treat the worker and bill WorkCover once the claim is accepted.
Similarly, the worker’s employer may be willing to bear the cost of services. However, in those
cases, the risk of liability determination is simply transferred from workers to service providers
and employers.
3.76. Where service providers and employers are not willing to bear that risk, there is a real possibility
that workers may not participate in treatment, prolonging their period of disability and slowing
their return to work. Given that treatment is generally most important in the early or acute
stages of an injury, it does not appear sensible to risk the provision of evidence-based treatment
for the 91% of workers whose claims are accepted in order to avoid unnecessary costs for the
9% of workers whose claims are denied.
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72 Source: VWA.
73 AC Act, s 99A(1).
3.77. In its submission, VECCI argues that there is no evidence that provisional liability would lead to
agents starting return to work efforts any earlier.
74
However, provisional liability could improve
access to treatment by removing financial obstacles to workers accessing treatments
recommended by their doctors, rather than relying on agents directing workers to treatment.
3.78. Provisional liability would allow workers to receive prompt access to treatment, because
workers would be assured that their treatment costs were covered by the scheme irrespective
of liability determination. Provisional liability would not guarantee that workers received
appropriate treatment – this would depend on management by their treating practitioners – but
it would remove a significant barrier to appropriate treatment.
A focus on return to work from the start, and maintaining a positive employer-worker relationship
3.79. The workers’ compensation literature indicates that a workplace culture that is supportive
of injured workers and their graduated reintegration in the workplace, and where there is a
positive relationship between workers and managers, is the most important factor in supporting
return to work.
75
This is borne out by the Victorian experience, which is that the workers least
likely to return to work are those who cannot work with their previous employers for a variety of
reasons (for example, the relationship has broken down, the employer’s business has closed, or
the claim is more than 12 months old and the employer no longer has to hold the worker’s job
open), and workers who have made stress claims, which are often characterised by poor
employer-worker relations.
76
3.80. Victoria’s experience is also that, the longer a worker has been off work, the less likely the
worker is to return to work, irrespective of the worker’s injury. That diminished prospect of
return to work is likely to reflect the fact that the employer-worker relationship becomes weaker
the longer a worker has been off work.
3.81. The current legislative provisions, which require agents to make a liability decision within
28 days, and employers to accept or reject a claim
77
, may jeopardise the employer-worker
relationship by making liability and “blame” the initial focus of the claim, rather than return
to work. Ms Sue Hosking, a psychologist with 26 years experience of the WorkCover scheme
submits –
The current method of claims management often sets up an adversarial relationship between
the worker and the insurance company. This arises particularly when the insurer denies the
initial injury . . .
This is clearly counter-productive in achieving a rapid and appropriate return to health and
work.
78
3.82. The creation of that adversarial relationship is of particular concern, given that the duration of
most claims is short – 70% of claims involve five or fewer days of compensation (in addition
to the employer excess). That is, the vast majority of claims are relatively low-cost, making
disputes over liability less important. However, focusing on the adversarial question of liability
from the start raises the risk of damaging the employer-worker relationship, and turning claims
that should be resolved quickly into claims for long-term compensation.
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74 VECCI, Submission, May 2008, p 17.
75 Hunt H A, Habeck R V, The Michigan disability prevention study. Kalamazoo MI: WE Upjohn Institute
for Employment Research, 1993; Habeck RV, Hunt HA, Van Tol B, “Workplace factors associated with
preventing and managing return to work”, Rehabilitation Counselling Bulletin, 1998, 42(2): 98–143.
76 In August 2005, 44% of workers with any injury who received four weeks of payments went on to
receive 13 weeks of payments. The equivalent figure for workers with a stress claim was 62% in the
private sector and 70% in the public sector. That is, a higher proportion of workers with stress claims
were still on benefits three months after injury, compared to workers with other injuries.
77 AC Act, ss 109 and 108(2).
78 Ms Sue Hosking, Submission, 27 April 2008, pp 1–2.
3.83. Victoria’s experience may reflect that risk: sprains and strains, which should be short-duration
injuries, make up two-thirds of the scheme’s claims of more than one year’s duration.
Provisional liability may help reduce the risk of damaging the employer-worker relationship
by presuming that a worker’s claim is valid, and making return to work, rather than liability
determination, the initial focus of the claim.
3.84. However, VECCI disputes that provisional liability would support positive employer-worker
relationships following workplace injury. VECCI submits that an employer would not look kindly
on a worker to whom the employer was required to pay compensation under provisional liability
even where the employer has asked that the claim be disputed, especially if the claim was
eventually rejected.
79
3.85. Provisional liability would also mean that, in order to obtain initial treatment and income
support, workers would not have to “prove” their injuries. There is medical evidence that
suggests that needing to prove that one is sick or injured can actually impede recovery and
extend disability.
80
3.86. There is limited evidence on the issue whether jurisdictions with provisional liability maintain
better employer-worker relationships. However, a national survey on return to work outcomes,
reported by the Workplace Relations Ministers’ Council, asked injured workers to rate whether
“Generally management at the place where you work will do what they can to help you get back
to work”. In 2006/2007, a significantly higher proportion of Tasmanian injured workers were likely
to agree with this statement compared with Victorian workers, and with the national average.
81
Improved worker satisfaction
3.87. A wide range of factors influence customer service. However, one would expect that provisional
liability would improve customer service to workers by:
• providing workers with income support and reimbursement of medical and like expenses
more quickly;
• removing uncertainty about whether loss of income and treatment costs would be
compensated; and
• making it easier and less stressful for workers to submit claims, because their claims are
presumed valid – especially if coupled with simplified claims or injury notification processes,
as occurs in New South Wales.
3.88. The VWA has stated that improving workers’ satisfaction with service is a key strategic priority.
In 2006/2007, injured worker satisfaction with the scheme was 68.6%, significantly below
employer satisfaction of 82.3%, and well short of the VWA’s 2012 target of 90%.
3.89. The empirical evidence about the impact of provisional liability on customer service is not
conclusive, but suggests that provisional liability could have a positive impact. Complaints
received by the VWA and the VWA’s customer service survey indicate that the leading source
of dissatisfaction for workers is not being paid or being paid late, suggesting that provisional
liability could assist customer service.
3.90. For example, in 2006/2007, among surveyed workers whose claims had not been denied,
whose payments had not been delayed or who had not been required to attend an independent
medical exam, service satisfaction was 89%. However, satisfaction among workers whose
claims or expenses had been denied was only 63%, and among workers whose payments were
late was only 59%.
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79 VECCI, Submission, May 2008, p 18.
80 See Gabbe B J, Cameron P A, Williamson O D, Edwards E R, Graves S E, and Richardson M D,
“The relationship between compensable status and long-term patient outcomes following orthopaedic
trauma”, Medical Journal of Australia, Volume 187, No 1, 2 July 2007.
81 Campbell Research and Consulting, 2006/2007 Australia and New Zealand Return to Work Monitor,
August 2007, p 18. The rating for Tasmania was 3.8 out of a possible 5, and for New South Wales
3.7 out of 5, compared to Victoria’s result of 3.6 out of 5. Nationally, the rating was 3.6.
3.91. Against those results, service satisfaction among workers in the first 26 weeks of their claims
(at 78%) is significantly above the scheme average, despite delays in payment caused by
liability determination; and, where those workers are dissatisfied, factors such as insufficient
contact, slow or unhelpful service and poor, confusing explanations are cited more often than
slow or late payments as a source of dissatisfaction. This suggests that late payments may
be more of an issue for workers with longer claims, and that we need to be cautious before
assuming that speeding up payments at the start of claims through provisional liability will
dramatically improve overall customer service results.
3.92. The Workplace Relations Ministers’ Council’s national survey also asked workers about
customer service, and the responses provide an opportunity to compare results for schemes
with and without provisional liability. In terms of overall customer service rating, New South
Wales and Tasmania were not significantly different from the Australian average. However,
those States’ schemes rated significantly better than the Victorian scheme in terms of ease for
workers making a claim; and a significantly higher proportion of workers in New South Wales
rated their insurer as helpful in return to work compared to workers in Victoria.
82
Earlier injury or claim notification
3.93. As discussed in paragraphs 3.70 to 3.78 above, provisional liability would speed up workers’
access to income support and expense reimbursement by removing the delay associated with
determining liability. It may also reduce delays associated with claim notification by creating
incentives to claim and by removing obstacles to claiming. The assurance that workers will
quickly receive income support and reimbursement of expenses could encourage them to lodge
claims. In addition, the presumption that the claim is valid could remove impediments to
claiming.
3.94. Since commencing the reforms in January 2002, New South Wales has demonstrated a
significant decrease in delays in the reporting of claims.
• Before January 2002, the median delay between the date of injury (as recorded on the claim
form/injury notification) and receipt of the notification/claim form by the agent was around
21 days. This delay included the time lapse between workers notifying their employers, and
employers notifying the agent.
• By December 2005 (before the introduction of the excess waiver)
83
, the delay had halved,
to around eight-and-a-half days.
• Following the introduction of the waiver of excess incentive, the median reporting delay
further reduced to around six days for each claim.
3.95. The median delay between an injury and the agent being notified of that injury in New South
Wales is significantly less than the median 31 days it takes in Victoria.
Improved liability decision-making by agents
3.96. Although provisional liability need not be associated with a longer period for determining
liability, it would facilitate the adoption of a longer period for that purpose, by reducing the risk
that workers would be out-of-pocket while waiting for a determination. As noted in paragraph
3.43 above, Tasmania initially introduced provisional liability without changing its 28-day liability
period, but subsequently extended the liability period to 12 weeks. The New South Wales
legislation provides for liability to be determined within 12 weeks. Under the new scheme for
provisional liability in South Australia, provisional weekly payments will be payable for up to
13 weeks.
84
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82 Campbell Research and Consulting, 2006–07 Australia and New Zealand Return to Work Monitor,
August 2007, pp 19, 47 and 53. 80% of workers in Tasmania and 74% of workers in New South Wales
agreed that it was simple or very simple to put in a claim, compared to only 64% in Victoria. 46% of
injured workers in New South Wales rated their insurer as helpful in return to work compared to 39%
in Victoria.
83 See paragraph 3.39 above.
84 Workers Rehabilitation and Compensation Act 1986 (SA), s 50C(1): see paragraph 3.45 above.
3.97. It is likely that a longer liability period would support better decision-making by agents. It can be
difficult for agents to collect all the information relevant to liability within 28 days. In such cases,
the agent may reject a claim and later reverse the decision when it has received further
information, often as a result of workers appealing against the agent’s decision. The sequence
of rejection, appeal and reversal can sour the employer-worker relationship, jeopardising the
return to work process.
3.98. VWA statistics show that 40% of claims that are initially rejected are subsequently accepted.
When compared with other Australian jurisdictions, this rate of rejection is a very high
proportion and suggests that there may be deficiencies in initial decision-making on liability,
which may be a product of the constrained time available for decision-making.
3.99. The Tasmanian experience suggests that a longer time period for determining liability can
reduce disputes. In July 2004, Tasmania extended the liability determination period from
28 days to 84 days,
85
and introduced a higher threshold for disputing liability. From July 2001,
Tasmanian employers were required to make weekly payments on an interim or without
prejudice basis until liability was either accepted or the Tribunal had determined that a “genuine
dispute” existed. From July 2004, the genuine dispute test was replaced by a higher “reasonably
arguable case” test.
86
3.100. Before the change, the dispute rate in Tasmania was consistently above 15% (despite the
existence of provisional liability); but, after the change, the rate fell to consistently below 10%.
87
That experience suggests that, to reduce disputes, provisional liability needs to be coupled with
an extension in the liability determination period.
3.101. In New South Wales, the introduction of provisional liability in January 2002 coincided with
changes to the dispute resolution system, making it difficult to distinguish the separate impact
of the changes and distorting the data. The Comparative Performance Monitoring Report shows
that the rate of disputes in New South Wales has been at or above the national average in the
two most recent years.
88
3.102. Against the experience in Tasmania and New South Wales, Queensland consistently has the
lowest rate of disputes and does not have provisional liability.
3.103. In response to questions about the liability determination process after a grant of provisional
liability, New South Wales WorkCover has advised the Review that agents start liability
investigations immediately, and can make a decision on liability well before the 12-week mark.
In addition, agents can make an assessment of liability and notify the worker that liability is
accepted or disputed, even before the worker has lodged a claim form.
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85 Workers Rehabilitation and Compensation Act 1988 (Tas) ss 81, 81AA and 81A.
86 Workers Rehabilitation and Compensation Act 1988 (Tas), s 81A(2A) and Workplace Relations Ministers’
Council, “Comparative Performance Monitoring Report: Comparison of Occupational Health and Safety
and Workers’ Compensation Schemes in Australia and New Zealand”, 9
th
ed, February 2008, p 29.
87 Workplace Relations Ministers’ Council, “Comparative Performance Monitoring Report: Comparison of
Occupational Health and Safety and Workers’ Compensation Schemes in Australia and New Zealand”,
9
th
ed, February 2008, p 29.
88 Workplace Relations Ministers’ Council, Comparative Performance Monitoring Report: Comparison of
Occupational Health and Safety and Workers’ Compensation Schemes in Australia and New Zealand,
9
th
ed, February 2008, p 28. The proportion of claims with a dispute in 2004/2005 in New South Wales
was 9.0%, the same as the national average, and the proportion of claims with a dispute in 2005/2006
in New South Wales was 9.3%, higher than the national average of 8.6%.
Improved return to work outcomes
3.104. There is a growing body of Australian medical evidence that, for any injury, the health and return
to work outcomes of compensable patients are worse than for other patients.
89
Researchers
believe this reflects factors associated with the compensation and claims process, which may
include:
• workers needing to prove that they have a disability to gain and maintain entitlement –
perpetuating disability;
• the liability determination process, which inevitably has an adversarial element and therefore
can create psychosocial barriers to return to work;
• health providers’ discontent with the compensation system (for example, because of red
tape, delays in payment and requiring advance approval of treatment) and projecting that
discontent onto their patients;
• workers’ frustration with claims processes and negative customer service experiences;
• the tendency of some workers to adopt, consciously or unconsciously, the role of an invalid;
and
• the reinforcement that the compensation scheme offers for the adoption of such a role.
3.105. To the extent that provisional liability removes or simplifies some of these aspects of the claims
processes, we could expect that it might help reduce the gap between the outcomes for
compensable and non-compensable patients, improving health and return to work. For example,
under provisional liability:
• for the vast majority of claims, which involve a quick return to work, the agent would not need
a determination on liability – the claim could simply be closed when the worker returned to
work;
• at least one of the sources of dissatisfaction for health providers (uncertainty about whether
their bills would be paid) would be removed; and
• at least some of the sources of dissatisfaction for injured workers (for example, uncertainty
about income support and expenses reimbursement, and the difficulty of submitting claims)
would be removed.
3.106. PWC analysis of New South Wales WorkCover data indicates that weekly benefit utilisation
has fallen since the January 2002 reforms. As workers go off benefits when they return to
work, reductions in weekly benefit utilisation suggest improvements in the return to work
performance of the New South Wales scheme.
3.107. However, improvement in return to work performance is not reflected to the same extent
in the Workplace Relations Ministers’ Council return to work survey, which indicates a slight
improvement in the New South Wales results since 2001/2002 (see the graph below). It
should be noted that, for the most recent year, the New South Wales return to work rate
is not significantly different from either the national or Victorian results.
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89 For example, Gabbe B J, Cameron P A, Williamson O D, Edwards E R, Graves S E, and Richardson M D,
“The relationship between compensable status and long-term patient outcomes following orthopaedic
trauma”, Medical Journal of Australia, Volume 187, No 1, 2 July 2007; Cassidy I, Zelle B, Panzica M,
Vogt M, et al. “Influence of worker’s compensation eligibility upon functional recovery 10 to 28 years
after polytrauma”, Am J Surg, 2005; 190: 30–36; Harris I, Mulford J, Solomon M, et al, “Association
between compensation status and outcome after surgery”, JAMA, 2005; 293: 1644-1652.
3.108. PWC analysis of the New South Wales public sector scheme (the TMF Fund) indicates that
there has been no systematic change in the weekly benefit utilisation of injured workers in the
TMF Fund following the January 2002 changes, suggesting no change in return to work results
in that scheme.
3.109. The Workplace Relations Ministers’ Council survey indicates that the return to work rate in
Tasmania is significantly above the national average. However, Tasmania’s return to work rate
was above the national average and Victoria’s rate in 2000/2001, before Tasmania introduced
provisional liability.
90
Potential costs of provisional liability
3.110. Provisional liability could lead to an increase in scheme costs because of the costs incurred on
claims that are subsequently denied, and any additional costs incurred because workers submit
more claims.
3.111. Provisional liability could lead to an increase in fraudulent claims (that is, claims where workers
provide false information), to take advantage of the upfront payment of weekly benefits and
medical costs, because in practice agents would not investigate claims where the worker
quickly returned to work. The adoption of that practice by agents could encourage some
workers to seek payment of the treatment costs of non-work-related injuries through the
workers’ compensation scheme, and then to close their claims before liability is determined.
Some workers might also use the workers’ compensation system to cover short-term leave
from work, including during school holidays.
3.112. Provisional liability could also lead to an increase in speculative claims – that is, claims that
do not involve the provision of false information but that would be unlikely to meet the
requirements for compensation. Workers may be more likely to lodge speculative (or weak)
claims under provisional liability and reformed injury notification procedures, because receiving
payment on a claim would be understood to be easy.
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90 The Campbell National RTW Monitor for 2006/2007 found (at p 1) that the return to work rate for
workers with at least 10 days compensation within the first six months of their claim was 91% in
Tasmania, compared to 85% for Australia, 86% for New South Wales and 85% for Victoria. This
statistic is measuring total return to work, both durable and non-durable. The same survey found (at
p 1) that, in 2000/2001, the return to work rate was 90% in Tasmania, compared to 84% for Australia,
86% for New South Wales and 81% for Victoria.
0
10
20
30
40
50
60
70
80
90
100
Durable RTW Rate: NSW
RTW Rate: NSW
2006/07 2005/06 2004/05 2003/04 2002/03 2001/02 2000/01
RTW Rate is the proportion
of injured workers who have
returned to work between
the time of the claim and
the interview.
Durable RTW Rate is the
proportion of injured workers
who have returned to work
and were still working at the
time of the interview.
P
e
r
c
e
n
t
a
g
e
3.113. Provisional liability may also lead to an increase in valid claims, as the current barriers to making
claims are reduced. As noted in paragraph 3.92 above, workers rate Victoria relatively low in
ease of lodging a claim for compensation. Of course, an increase in valid claims could not
properly be described as a disadvantage of provisional liability, because that increase would
simply see more workers accessing their entitlements; although the increase might be seen as
an added cost of provisional liability, it would be an added cost that the scheme should properly
bear.
3.114. VECCI argues that provisional liability would provide an opportunity for rorting:
Workers who have used up their accrued sick leave, who have no entitlement due to being
a casual or who wish to preserve their accrued sick leave to secure an annual bonus [if their
enterprise bargaining agreement provided for the pay-out of unused sick leave at year’s end]
could readily use access to provisional payments as an alternative.
91
3.115. Victoria Police argues:
Victoria Police is a large employer within the scheme and past trends indicate that where ease
of access to compensation is available, considerable take up of this will occur impacting on
the scheme’s costs and Victoria Police’s service delivery to the community.
92
3.116. PWC analysis of New South Wales WorkCover data shows that the total number of claims fell
over the four years to 2001, remained at roughly the same level for the four-and-a-half years
to June 2005, and have again fallen somewhat since that time.
93
In the public sector scheme
(TMF), claims frequency has not changed significantly since the January 2002 changes, with
the exception of psychological injury claims,
94
which initially grew, but have since returned to
previous levels.
3.117. PWC analysis of New South Wales WorkCover data shows that currently around 2% of claims
that receive provisional liability payments are ultimately denied; however, care should be taken
in interpreting this figure because most provisional liability claims are minor short-term injuries,
which are not tested for validity and are neither formally accepted nor denied.
3.118. PWC also provided the Review with New South Wales’ break-even premium rate for the past
10 years. (The break even premium rate is the premium rate required to fund the scheme’s
liabilities, and is a measure of the scheme’s costs.) New South Wales’ break-even premium rate
peaked in 2000, fell sharply in 2001–02, and has fallen gradually since, indicating that the cost
of the New South Wales scheme has been falling since 2000.
3.119. Based on the PWC analysis, I conclude that provisional liability has not led to a significant
increase in fraudulent and speculative claims or an increase in the costs of the New South
Wales scheme. If there had been such an increase, we could have expected to see a growth in
claim numbers after the change was introduced, and a growth in the proportion of claims being
denied. The growth has not occurred. However, the absence of any such change must be
interpreted in the context of the other significant changes which accompanied provisional
liability, and the possibility that the overall favourable trends in the scheme have confounded
any specific changes caused by provisional liability.
3.120. Introducing provisional liability in Victoria has been estimated to have a potential cost for the
scheme of between $10 million and $20 million a year.
95
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91 VECCI, Submission, May 2008, p 19.
92 Victoria Police, Submission, May 2008, p 3.
93 The PWC measure of total claims excludes deafness claims and claims with zero payments.
94 In NSW, “psychological injury” claims incorporate what are known as “stress claims” in Victoria.
As discussed in Chapter 2, “Workers’ entitlements to compensation”, paragraphs 2.206 and 2.239,
in NSW claims must be for a defined psychological injury and are not accepted if “stress” is the
only claimed condition.
95 Source: advice from the Review’s independent actuaries.
3.121. The figure of $10 million assumes no change in the propensity of workers to claim
compensation, whereas the figure of $20 million assumes a considerable increase in claim
lodgements but without any of the additional claims receiving benefits over the long term. It is
estimated that the impact on scheme liabilities will be a modest increase of around $5 million.
96
3.122. The cost estimates only allow for amounts paid to workers whose claims are subsequently
denied and assumes no change in benefits, but a saving in dispute costs for claims that are
subsequently accepted (of around $2 million a year).
3.123. However, the estimate does not allow for any improvements in the return to work rate, or the
expected associated decrease in compensation costs to the scheme.
3.124. There are several ways in which the cost and risk of fraudulent and speculative claims
associated with provisional liability could be mitigated.
• First, the VWA could develop triage principles to identify the claims most likely to be denied,
so that agents could investigate liability on those claims early in the provisional liability period.
That approach would minimise the costs of provisional liability on those claims.
• Secondly, the duration of the provisional liability period would affect the VWA’s exposure to
fraud and speculation: the longer the provisional liability period, the greater the potential cost;
against this, the longer the period, the longer agents would have to collect information to
make the correct decision on liability.
• Thirdly, the legislation could give agents limited discretion not to accept provisional liability.
3.125. In New South Wales, agents can decide not to grant provisional liability where:
• there is insufficient medical information because the worker has not provided a medical
certificate despite being requested to do so;
• the injured person is unlikely to be a worker (because the person has been unable to verify
her or his status as a worker, or the employer has verified that the person is not a worker);
• the insurer is unable to contact the worker;
• the worker refuses to authorise access to information (including refusing to consent to the
release or collection of personal or health information);
• the employer has provided acceptable evidence that the injury is not work-related;
• the injury is not a significant injury (that is, the worker is likely to be incapacitated for work
for less than seven continuous days); or
• the injury is notified after two months.
97
3.126. In order to guard against the potential for fraud in Victoria, agents could be given the discretion
not to accept provisional liability where there was a proper basis for suspecting that a claim
was fraudulent. For example, provisional liability might be withheld from a worker with a history
of unfounded claims. However, it would be important for agents’ discretion to be limited to
defined situations, in order to maintain the objectives of provisional liability.
3.127. Finally, fraud and speculative claims could be deterred if the legislation allowed the recovery
of provisional liability payments where claims are fraudulent or where liability is denied.
• The Tasmanian legislation allows an employer to recover provisional liability payments from
a worker where the Tribunal has found that the claim was fraudulent, and where the worker
was found to have obstructed or delayed the determination of the claim and the employer’s
liability to make the payments is subsequently determined not to exist,
98
and gives an
employer the right to deduct weekly payments from accrued sick leave where the Tribunal
has found that the employer is not liable.
99
• The New South Wales legislation is more beneficial to workers. There is no requirement to
refund provisional payments where liability is subsequently denied; but a worker may be
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96 Source: advice from the Review’s independent actuaries.
97 WorkCover NSW, WorkCover Guidelines for Claiming Compensation Benefits, Part 1, cl 7, NSW
Government Gazette No 129, 27 October 2006.
98 Workers Rehabilitation and Compensation Act 1988 (Tas), s 81AA(2).
99 Workers Rehabilitation and Compensation Act 1988 (Tas), s 81AA(3).
required to refund payments of weekly compensation received after an interim payment
direction by the Commission’s Registrar.
100
Where the Commission subsequently determines
that there is no liability, the worker will be required to refund those interim payments if the
Commission finds that the claim was fraudulent or made without proper justification.
101
• When provisional liability is introduced into the South Australian legislation on 1 January 2009,
the legislation will allow the WorkCover Corporation and employers to recover as a debt a
provisional liability payment made to a worker if the worker has acted dishonestly in making
an application or providing information for the purposes of the legislation.
102
Conclusion
3.128. In conclusion, I consider that there is a strong case for Victoria to implement provisional liability.
In my opinion, the most persuasive considerations are as follows:
• the current design of the scheme, which assumes that no payments can be made until
liability is determined, means that the 91% of claimants whose claims are accepted have their
payments deferred in the interest of avoiding any payments to the 9% of claimants whose
claims are not accepted: designing the scheme in this way creates uncertainty for injured
workers and delays their access to treatment and income support;
• the fact that 70% of claims are for less than five days of compensation, whereas the bulk
of the scheme’s costs are for long-duration claims: it is important to focus on the mutually
beneficial issue of return to work, rather than the divisive issue of liability determination, so
as to reduce the chance of short-duration claims becoming long-duration claims. Provisional
liability allows workers to receive benefits quickly, so that return to work, rather than liability
determination, becomes the initial focus of claims;
• the evidence that 40% of adverse initial liability decisions are subsequently overturned and
that Victoria’s dispute rate is the highest of all States, indicating the need to improve decision-
making, which may be facilitated by a longer liability determination period;
• the evidence that the return to work and health outcomes of compensable patients are worse
than those of non-compensable patients,
103
indicating the need to reform those aspects of
the claims process that inhibit recovery; and
• the evidence that the introduction of provisional liability in New South Wales has not been
associated with an increase in claim numbers or an increase in the percentage of claims
denied.
104
3.129. I consider that the potential costs of provisional liability can be mitigated through measures
such as triage to fast-track decision-making on potential fraud cases, prescribed circumstances
where agents can decide not to grant provisional liability and rights to recover payments where
the claim is shown to have been fraudulent.
Design issues
If provisional liability is implemented there are a number of design issues that must be resolved,
as follows –
• whether provisional liability should cover both weekly payments and medical and like
expenses;
• the cap on provisional liability payments and when they should cease;
• whether there should be sanctions or safeguards to protect the scheme from fraudulent and
speculative claims;
• how provisional liability payments should be reflected in premium;
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100 The Registrar’s power to direct interim payments is discussed in paragraph 3.41 above.
101 Workplace Injury Management and Workers Compensation Act 1998 (NSW), s 304.
102 Workers Rehabilitation and Compensation Act 1986 (SA), ss 32A(8) and (9), 50H(2) and (3).
103 For example, Gabbe B J, Cameron P A, Williamson O D, Edwards E R, Graves S E, and Richardson M D,
“The relationship between compensable status and long-term patient outcomes following orthopaedic
trauma”, Medical Journal of Australia, Volume 187, No 1, 2 July 2007; Cassidy I, Zelle B, Panzica M,
Vogt M, et al, “Influence of worker’s compensation eligibility upon functional recovery 10 to 28 years
after polytrauma”, Am J Surg, 2005; 190: 30–36; Harris I, Mulford J, Solomon M, et al, “Association
between compensation status and outcome after surgery”, JAMA, 2005; 293: 1644–1652.
104 See paragraphs 3.116, 3.118 above.
• the liability determination period;
• whether provisional liability should be coupled with an injury notification system rather than
a claim lodgement system.
3.130. On the first issue, I consider that provisional liability should cover both weekly payments and
medical and like expenses. My position reflects the fact that 35% of the scheme’s claims are
claims for medical and like expenses only,
105
and that the average period for determining liability
on these claims is 26 days. It also reflects evidence that timely access to treatment facilitates
recovery and return to work, and that uncertainty about reimbursement can deter workers from
seeking treatment. I consider that the reasonable cost principles should apply to reimbursement
of medical and like expenses made under provisional liability. In other words, only those medical
and like expenses that would be regarded as “reasonable costs” would be reimbursed,
irrespective of whether the expense is claimed under provisional liability.
106
3.131. On the second issue, I consider that a “ceiling” should be imposed consistent with the current
levels that apply in New South Wales, being up to 12 weeks of weekly benefits and $7,500 in
medical and like expenses. On the question when provisional liability payments should cease,
the VTHC argues that provisional liability payments “should continue until . . . the administrative
review of any rejected claim takes place”.
107
3.132. In New South Wales, if a worker is receiving provisional liability payments and the agent then
rejects the claim, payments stop. If the worker lodges an appeal, the Workers Compensation
Commission may order that interim payments be made to the worker (see paragraph 3.41
above), but is not required to do so.
3.133. I consider that provisional liability payments should not continue beyond the time when the
agent decides whether to accept the claim (assuming that the payments have not already
ceased because the “ceiling” has been reached: see paragraph 3.131 above). If the agent
denies the claim, payment of medical and like expenses and weekly benefits should cease. At
the moment, 60% of agent liability decisions are upheld, and that proportion should increase if
provisional liability is accompanied by a longer liability determination process to support better
decision-making. I also note that the reforms proposed to the dispute resolution system
108
are
designed to reduce delays between agents’ decisions and the review of those decisions,
therefore reducing the period over which workers would be out of pocket.
3.134. I recommend that the AC Act should authorise the Minister to make guidelines about the
application (and any limitations on the application) of provisional liability.
3.135. On the third issue (possible safeguards against fraudulent and speculative claims), in my
opinion there would be merit in implementing the following elements:
• agents should be authorised to deny provisional liability payments where there is an
increased risk of fraud or likelihood of a claim being denied (subject to clear guidelines issued
by the Minister on how the discretion should be exercised);
• where a claim is denied and fraud is established, agents or employers should be able to
recover payments from workers either as a debt or from accrued leave;
• where a claim is denied, the employer should be able to deduct the amount of weekly
benefits paid from the worker’s accrued sick leave entitlements.
3.136. I recommend that agents should be able to refuse provisional liability payments at least in the
circumstances regarded as “reasonable excuses” in the current New South Wales scheme.
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105 See Chapter 6, “Treatment expenses”, paragraph 6.9.
106 See Chapter 6, “Treatment expenses”, paragraphs 6.5.
107 VTHC, Submission, May 2008, p 14.
108 See Chapter 10, “Transparency in decision-making and the efficient resolution of disputes”,
paragraphs 10.156.
3.137. In New South Wales, psychological injury claims (including stress-related injury claims) are
assessed for provisional liability using the same criteria as apply to other claims. Insurers
cannot deny access to provisional liability for psychological injury claims on the ground that the
injury arose from reasonable management action because that is not one of the “reasonable
excuses” for not commencing provisional weekly payments.
109
Of course, insurers can proceed
to make a decision on the claim and deny liability for psychological injury arising from
reasonable management action – at which point, payment of compensation will cease, unless
the Commission directs interim payments pending the resolution of the worker’s appeal to the
Commission (see paragraph 3.41 above).
3.138. PWC analysis shows that the introduction of provisional liability in New South Wales coincided
with an increase in the frequency of psychological injury claims in the New South Wales public
sector, although that increase may have been a continuation of an earlier trend. The increase
has since been reversed, and the frequency rate of psychological injury claims in the New
South Wales public sector is now back to the level at which it stood before the introduction
of provisional liability.
3.139. Arguments in favour of including stress claims in provisional liability include:
• the benefits of provisional liability listed in paragraph 3.128 above, such as ensuring workers
have access to early intervention, so as to encourage improved return to work outcomes; and
• providing agents with a longer liability determination period to support better decision-
making, which is particularly important for stress claims given their complexity.
3.140. Arguments for the exclusion of stress claims from provisional liability include:
• once stress claims have been provisionally accepted, they are difficult to manage for return
to work (although this argument overlooks the fact that agents can still deny liability for
claims after granting provisional liability);
• around 40% of stress claims are initially rejected (compared to the scheme average of 15%),
so that the risk of making unjustified payments under provisional liability would be high;
• the issue of reasonable management action is likely to be raised in significant proportion of
stress claims, and stress claims often involve associated workplace relations issues, such
as discrimination, bullying and unfair dismissal; those features would make it very difficult
to investigate these types of claims adequately in the short time available before granting
provisional liability (seven days in New South Wales).
3.141. I consider that eligibility for provisional liability for stress claims and other psychiatric injuries
should be guided by the scheme’s experience after the introduction of provisional liability.
• If there is a large increase in stress claims, and an increase in the percentage of those claims
that are subsequently denied, the Minister should have the power to exclude those claims
from provisional liability.
• Conversely, if that increase does not eventuate, then provisional liability should be provided
to stress claims in order to realise its benefits.
This issue underlines the importance of the legislation giving the Minister power to issue
guidelines prescribing the circumstances in which an agent can deny access to provisional
liability payments.
3.142. The fourth issue (how provisional liability would impact on statistical case estimates and
employers’ premiums) is, of course, a key issue for employers.
3.143. In New South Wales, once provisional liability costs are incurred, estimated future claim costs
are attributed to the employer’s claims costs. If a claim is rejected or closed, the estimate of
future costs may be revised, depending on factors such as the likelihood of the claim being
disputed or no further costs being anticipated. However, if a claim is proven to be fraudulent,
or the worker is found not to be a worker, New South Wales WorkCover refunds the related
premium adjustments to the employer.
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109 WorkCover NSW, WorkCover Guidelines for Claiming Compensation Benefits, Part 1, cl 7, NSW
Government Gazette No 129, 27 October 2006.
3.144. I consider that the preferred option would be for provisional liability payments on accepted
claims to be treated in the same way as any other cost of other claims, and for the cost to
count towards the employer’s premium. Implementation of the recommendation in Chapter 11,
“Employer premiums”,
110
that claims only have an SCE assigned after three months’ history on
the claim is available, would improve the accuracy, and in most cases reduce the size, of the
SCE estimate for such claims.
3.145. I recommend that the cost of provisional payments on claims that are subsequently rejected or
closed before liability is determined should count towards the employer’s premium but should
not be taken into account in assigning estimates of the future costs of claims.
3.146. The proposal in paragraph 3.145 above is in line with the current treatment for premium
purposes of the costs of rejected claims. Further, the proposal removes the need to determine
liability on the vast majority of claims that involve quick return to work. If liability is not to be a
factor in the allocation of costs for premium, agents can simply close claims where workers
quickly returned to work, without needing to undertake a formal assessment of liability, thereby
reducing claims administration costs.
3.147. It should be emphasised that the introduction of provisional liability is expected to reduce
employer’s premiums, because one of the main reasons for introducing provisional liability is to
improve scheme return to work outcomes. Therefore, while employers would carry the cost of
provisional liability payments on claims that may ultimately be rejected, that cost should be more
than offset by a reduction in the cost of other claims through faster return to work outcomes.
3.148. As to the fifth issue, I consider that Victoria’s high dispute rate, high rate of reversal of adverse
liability decisions and New South Wales’ and Tasmania’s experience that their dispute rates fell
once the liability determination period was extended, all point to the benefits of extending the
liability determination period.
3.149. Finally, considering the sixth issue, provisional liability can be implemented independently of
injury notification, as is evidenced by the contrasting approaches in New South Wales and
Tasmania. However, it is my view that the potential benefits of provisional liability would be
maximised if implemented in conjunction with injury notification, because the two initiatives are
mutually complementary in improving customer service and timely notification of injuries.
3.150. I recommend that provisional liability be implemented in Victoria, in conjunction with injury
notification.
REDUCE FORMALITIES
3.151. Currently, the approved claim form
111
requires information such as the date, place and nature
of the injury, a signed authority to release medical information, the commencement date of
employment, earning details and standard working hours per week. A claim will be valid only
if the claim form does not contain any material defects, omissions or irregularities.
112
3.152. In many circumstances, not all of the required information is needed for the agent to determine
liability. For example, in the case of an injury that the employer accepts happened at work and
that will require no, or minimal, time off work, a signed authority to release medical information
and the date of commencement of employment would not be critical to determining liability.
3.153. Dr Helen Sutcliffe, occupational physician, of the Workers Occupational Health Centre, submits
that there are specific problems in lodging claims for workers from culturally and linguistically
diverse backgrounds, particularly refugees.
113
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110 See Chapter 11, “Employer premiums” paragraphs 11.28-11.33.
111 As required by s 103(1)(a) of the AC Act.
112 AC Act, s 103(2).
113 Dr Helen Sutcliffe, WOHC, Submission, 3 April 2008, p 1.
3.154. At present, the detailed information required in a claim form, and the requirement that a claim
must not contain material defects, are likely to cause particular problems for workers from
non-English speaking backgrounds.
3.155. Generally, notification of an injury should replace the need to make a claim. Preliminary
notification, providing basic information about the injury, should be required as a first step.
If the agent requires further information in order to determine liability (after making further
inquiries with the worker and employer), or if the injured worker is likely to require more than
a prescribed amount of weekly benefits or medical and like expenses, a claim form should
be required.
3.156. A worker who fails to give notice of an injury within a prescribed time (perhaps one month)
could also be required to lodge a claim. Such a requirement would act as an incentive for
workers to provide early notice of injury.
3.157. A register of all notified injuries, whether in electronic or hard copy form, should continue to be
kept by each employer at the workplace. The register would continue to provide the employer
with records of the incidence of injuries associated with particular areas of the workplace,
systems of work, plant, substances etc. It would also assist in identifying hazards and
assessing risks in the workplace.
3.158. Currently, if a claim for compensation and a medical certificate are not provided at the same
time, the claim is deemed not to have been made until the day on which both documents are
given to the employer.
114
This restriction can cause delays between the lodging of a claim with
an employer and the agent taking action to manage the injury or the return to work process. It
also creates uncertainty for the employer about the validity of the claim. For example, if a
medical certificate served with an approved claim form is deemed invalid under section 105 of
the AC Act, a strict reading of section 103(1)(b) of the AC Act would mean that the claim for
compensation can only be treated as a claim for medical expenses.
3.159. The provision deeming a claim not to have been made can affect the prosecution of employers
for breaches of their obligations to receive and lodge claim forms: section 103(2) of the AC Act
provides that a claim “is deemed not to have been made” if the claim is returned to the
claimant with a notice specifying all material defects, omissions or irregularities. The provision
creates uncertainty, as does the lack of guidance on what constitutes a “material defect,
omission or irregularity”.
3.160. The original AC Act provided that a defect, omission or irregularity did not affect the validity of a
claim, unless the defect, omission or irregularity related to information which was not within the
knowledge of, or ascertainable by, the Accident Compensation Commission (now the VWA),
self-insurer or employer.
115
It is not clear why this provision was changed, although the change
occurred in the context of other amendments, including the introduction of a requirement that
the employer give the worker written acknowledgment of receipt of a claim for compensation.
3.161. Several other jurisdictions take a position similar to the original AC Act. For example, the
Commonwealth scheme provides that substantial compliance with the approved claim form is
sufficient.
116
The Northern Territory and Tasmanian schemes provide that a defect, omission or
irregularity in a claim or certificate does not affect the validity of the claim unless it relates to
information which is not within the knowledge of, or otherwise ascertainable by, the employer
or insurer.
117
South Australia provides that a defect will not bar the making of a claim if the
determination of the claim has not been substantially prejudiced, or if the defect arose from
a reasonable cause.
118
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114 AC Act, s 103(5).
115 AC Act (as originally enacted), s 103.
116 Safety, Rehabilitation and Compensation Act 1988 (Cth), s 54(5).
117 Workers Rehabilitation and Compensation Act (NT), s 82(3); Workers Rehabilitation and Compensation
Act 1988 (Tas), s 34(3).
118 Workers Rehabilitation and Compensation Act 1986 (SA), s 52(3).
3.162. It appears unnecessary and inefficient that defects, omissions or irregularities, particularly those
that can easily be rectified, should render a claim invalid. Where the required information is
readily accessible from the worker or employer, rendering a claim invalid causes unnecessary
delays and complications for both workers and employers.
3.163. If, as discussed in paragraph 3.155 above, lodgement of claims is replaced by injury notification
that requires the provision of fewer details, the likelihood of a defect would be reduced. Further,
injury notification and claims lodgement online and by telephone should reduce the incidence
of errors and omissions in claims, because the use of mandatory fields would ensure that all
required details were provided. Nevertheless, where there is a defect in the notice of injury or
claim, the notification or claim should remain valid unless the agent or employer is unable to
clarify the information.
3.164. That change should make the claims process simpler and more efficient – in particular, for
workers from non-English speaking backgrounds and those who have difficulties with literacy.
3.165. I also recommend removal of the distinction between a claim for weekly benefits and a
claim for medical and like expenses. Following notification of an injury or receipt of a claim,
a determination should be made whether the worker has sustained a compensable injury
(or if provisional liability applies, whether provisional liability payments should commence).
Verification of the existence of an injury would still be required. However, that verification
could be obtained through direct contact between the agent and the worker’s treating
medical practitioner or employer, or through a medical certificate.
3.166. If the injury is accepted as compensable, the worker should be able to apply for weekly benefits
by providing appropriate medical evidence regarding her or his incapacity. A medical certificate
and the presentation of appropriate receipts or tax invoices, or a letter from the intended
treating practitioner, should be sufficient to obtain reimbursement of reasonable medical and
like expenses.
INTRODUCE ELECTRONIC LODGEMENT
3.167. The New South Wales, South Australian and Queensland schemes allow for notification of
injuries and lodging of claims by telephone and online, in addition to the traditional paper-based
methods. In Queensland, an injured worker may lodge a claim directly with WorkCover
Queensland or have the worker’s doctor lodge the claim. In South Australia, a claim can be
lodged by telephone or online with WorkCover SA, and a copy distributed either by WorkCover
SA’s claims agent or the worker to the employer concurrently.
3.168. The current legislative requirements in Victoria for lodging claims (for example that claim forms
must include an authority signed by a worker)
119
are not direct impediments to introducing
electronic notification. The Electronic Transactions Act 2000 (Vic) prescribes a range of methods
by which electronic communications can validly meet almost all requirements for the provision
of hard copy documents, including any requirement that a document be signed by a person.
120
3.169. The requirement that claim forms and medical certificates be served on the worker’s employer
restricts the effectiveness of any moves towards electronic lodgement. Direct lodgement with
the VWA would still require the worker, in most instances, to lodge the claim form and/or
medical certificate with the employer, before action could be taken on the claim.
3.170. Electronic or telephone notification of injury or lodgement of a claim form would reduce the
delay between the date of the injury and commencement of injury management. It would also
make the notification process more efficient, reducing red tape for employers.
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119 AC Act, s 103(1)(d).
120 Electronic Transactions (Victoria) Act 2000 (Vic), s 9.
3.171. The VTHC supports allowing workers and employers to notify injuries and lodge claims by way
of fax and email. It does not support –
. . . the introduction of a capacity to lodge claims or notify injuries by way of telephone . . . this
does not provide sufficient safeguards to workers that lodgments or notifications have been
properly recorded . . .
121
3.172. The Magistrates’ Court submits that it “would be preferable to have a requirement for a claim
form to be in writing as many disputed cases before court involve issues of dispute going to
such matters as date, circumstances and nature of injury”; but the Court acknowledges that
“claim forms could . . . be in email or fax form”.
122
3.173. The APA supports “any process that encourages ease of reporting and therefore helps to
facilitate early intervention to optimise positive health and return to work outcomes”.
123
3.174. MGA supports a simplified system of notification/claims lodgement, including electronic
lodgement,
124
which would particularly assist small employers, who are less likely to be familiar
with the claims process and are more likely to take longer to gather all the information that is
required by the VWA.
3.175. Ai Group does not support direct lodgement of claims with the VWA or agents. Ai Group is
concerned that direct lodgement of claims with the VWA or agents would negatively impact
on communication between the worker and employer, and opposes –
. . . any system which encourages injured workers to by-pass the employer . . .
125
3.176. The VTHC supports workers being allowed to notify injuries and lodge claims directly on the
VWA, because that may assist in reducing claims suppression. However, the VTHC emphasises
that direct notification and lodgement should occur in the context of ensuring proper records
are maintained by the VWA (and its agents) and employers.
126
3.177. The VWA operates a telephone notification system that receives calls from employers about
prescribed workplace “incidents” (which include deaths, serious injuries or exposure of workers
to an immediate health and safety risk),
127
which employers are required to report immediately
under the OHS Act.
128
The TAC and the New South Wales, Queensland and South Australian
workers’ compensation schemes all have some form of telephone notification system. The
proposed telephone notification system could draw on those models.
3.178. Call recording software that enables later clarification or confirmation of details discussed
during telephone conversations is widely available and currently used by many businesses,
including private insurers who record this information for claims purposes. Effective use of
such software would make recording details of telephone notifications and claim lodgements
at least as reliable as traditional hard copy claims reporting.
3.179. The VWA (or its agents), on receiving an injury notification or a claim form, should be required
to advise workers to notify their employers of their injuries or claims. The VWA’s advisory
service and advisory material should also recommend that injured workers advise their
employers of their injuries and claims. I note that workers, who are employed under contractual
conditions that require them to notify their employers of an absence before the commencement
of a shift, would still be bound by such a requirement.
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121 VTHC, Submission, 2 May 2008, p 14.
122 Magistrates’ Court of Victoria, Submission, 2 May 2008, p 3.
123 APA, Submission, 2 May 2008, p 2.
124 MGA, Submission, 2 May 2008, p 5.
125 Ai Group, Submission, May 2008, p 23.
127 OHS Act, s 37. 2008, p 23.
126 VTHC, Submission, 2 May 2008, p 14.
128 OHS Act, s 38(1).
3.180. The expansion of direct notification should be accompanied by a requirement that agents
contact the employer within 48 hours from receipt of a notice of injury or receipt of a claim, in
order to notify the employer of the injury, confirm details and gather information. I recommend
that this notification be included as a performance requirement in the contracts between the
VWA and its agents, with financial sanctions applying to under-performance.
3.181. Procedures would need to be developed by agents to ensure that employers are notified of
every injury notification and claim. In some situations, an employer genuinely may have no
knowledge of a notification or a claim, because the VWA or its agents have failed to notify the
employer. In such a case, the employer should not be responsible for breaches of its obligations
under the AC Act that flow from its non-receipt of a notification or a claim.
3.182. Although the notification proposal may create an additional workload and expense for the VWA
and its agents, the cost to the scheme should be offset by the benefits of enabling simpler and
more efficient access to benefits and support. It would also provide an early opportunity for
agents to discuss return to work processes with employers.
3.183. For the reasons discussed in paragraphs 3.167–3.182 above, I recommend a more flexible
approach to injury notification and making a claim (whether by the worker, the employer, a
person on the worker’s behalf or a doctor), including allowing notification and lodgement to
the employer, or directly to the VWA or its agents.
3.184. I also recommend the introduction of systems to enable electronic and telephone notification
of injury and lodgement of a claim form.
IMPROVE ACCESS TO MEDICAL INFORMATION
3.185. As required by the AC Act,
129
the approved claim form contains an authority to release medical
information, which the worker must sign for the claim to be valid. The authority permits any
person who provides medical or hospital services to the injured worker relating to the injury
or condition to provide any relevant information about the service to the VWA or employer on
request.
3.186. The authority to release medical information in the claim form purports to be irrevocable for the
duration of the claim. However, the AC Act does not provide that the authority is irrevocable. In
contrast, the TA Act expressly provides that a medical authority given by a claimant cannot be
revoked until the claim is finally determined.
130
3.187. It is conceivable that a worker may wish to withdraw her or his consent to the release of
medical information for a range of reasons – for example, if the medical treatment required by
the worker changes from that which was originally thought to be required.
3.188. At present, the only way a worker can effectively withdraw her or his consent to the release of
medical information is by withdrawing the claim.
3.189. The AMA is –
. . . concerned at the increasing trend towards WorkSafe requesting production of workers’
entire medical records pursuant to establishing the merits of workers’ claims for lump sum
compensation.
131
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129 AC Act, s 103(1)(d).
130 TA Act, s 67(1A).
131 AMA, Submission, 8 February 2008, p 3.
3.190. The AMA further submits that the consent of workers to the release of complete medical
records relating to necessary medical treatment should not continue in perpetuity. In extreme
cases, several years can elapse between the giving of consent and treatment being rendered.
There may also be changes in treatment that were unforeseen by the worker at the time the
consent was given. The AMA submits that it –
. . . would support any doctor acting on a patient’s instruction that consent had been
withdrawn.
132
3.191. The SIAV criticises the authority, particularly in relation to impairment benefit claims, on the
basis that it only authorises release of medical information in relation to the claimed injury,
rather than all previous claims and injuries. The SIAV is also concerned about the inability to
obtain information from other States in relation to previous similar injuries to workers. The SIAV
submits that its members report some –
. . . medical practitioners will not release medical information because of concerns that a
worker may withdraw the Authority.
133
3.192. The AHEIA submits that the medical authority provisions should be amended to contain an
express provision similar to that set out under the TA Act. The AHEIA is concerned that –
. . . if workers were to be able to withdraw or revoke their consent to the release of medical
information, the ability of the VWA to continue to process a claim would be significantly
limited.
134
3.193. It is questionable whether, as a matter of public policy, a worker should be asked to give up the
right to withdraw or revoke consent or authority for the life of a claim. Forcing a worker to give
consent where the worker wishes to revoke such consent appears to negate the concept of
consent.
3.194. However, on a practical level, if a worker could revoke the worker’s consent to the release of
medical information, the VWA’s capacity to continue to process the claim would be significantly
limited. It could also effectively frustrate the purposes of the AC Act.
3.195. Attempting to manage a claim in the absence of important medical information could put the
worker at risk of receiving inappropriate treatment or return to work duties. It could also impact
on the employer’s attempts to provide workplace rehabilitation and support.
3.196. Workers should be protected from the release of private, confidential medical information that
is unnecessary or likely to be irrelevant for the purpose of managing their claim. However, it is
imperative that the VWA and any self-insurer have access to medical information when
determining liability for a claim. Provision should therefore be made for the VWA and a
self-insurer to have access to necessary medical information relating to the claimed injury,
without requiring the consent of the worker.
CLARIFY EMPLOYER OBLIGATIONS
3.197. The AC Act makes it an offence for an employer to refuse to receive a claim.
135
However,
there appears to be some uncertainty about what constitutes a refusal to receive a claim,
as prohibited by section 242(3)(a).
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132 AMA, Submission, 8 February 2008, p 4.
133 SIAV, Submission, May 2008, p 4.
134 AHIEA, Submission, 2 May 2008, p 2.
135 AC Act, s 242(3)(a). The penalty for refusing to receive a claim is 25 penalty units ($2835.50) for a first
offence or 50 penalty units ($5671) for a subsequent offence.
3.198. In a recent prosecution conducted by the VWA against the DEECD, the VWA charged the
DEECD with refusing to receive a claim. The injured worker had forwarded a claim for
compensation by registered post to the principal of the school where she worked. The principal
returned the claim form to the injured worker together with a letter stating that the principal
would not sign the claim form. The principal requested that the worker provide an amended
claim for compensation, saying that the principal would not forward the claim unless the
worker supplied an amended claim. The injured worker contacted a union representative,
who forwarded the claim to the agent on the worker’s behalf.
3.199. Arguably, because the school principal had not physically received the injured worker’s claim
form, the DoE could assert that it had not refused to “receive” the claim, even though the
principal returned the claim form to the injured worker and did not forward it to the DoE’s
agent.
3.200. The DoE was ultimately found guilty of refusing to receive the claim by a Magistrate.
136
The
Magistrate was critical of the current wording of section 242(3)(a), and indicated that the
provision could be improved by more clearly specifying that employers must not refuse to
sign or refuse to forward a claim once it has been made.
137
3.201. Other Australian jurisdictions approach the requirement to lodge a claim differently, defining
“service” of a claim by the worker on the employer as involving delivering the claim to the
employer (or their representative) personally or by post.
138
3.202. The method used in other jurisdictions would overcome the current difficulties of proving
“refusal to receive”, because the worker only has to prove service, a common legal term.
139
3.203. The VTHC supports the replacement of the offence relating to refusing to receive a claim for
compensation with an express requirement for service of the claim on an employer.
140
3.204. I recommend that the AC Act be amended to remove the current offence of “refusal to receive
a claim for compensation” in section 242(3)(a) of the AC Act. An express requirement should be
included for service of the claim on an employer (either personally, or by post or electronically).
3.205. Under the AC Act, employers have a duty to forward claims to the VWA within a certain time.
Claims for weekly benefits must be forwarded to the VWA within 10 days of their receipt.
141
Claims for medical and like expenses must be forwarded within 10 days where the claim has
been rejected by the employer or where those expenses exceed the employer’s excess.
142
These provisions are clearly intended to ensure that claims are not avoided, delayed or
suppressed by employers once the claims have been received from an injured worker.
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136 VWA v DEECD, 25 July 2007.
137 Proceedings recorded not transcribed – comments from Senior Prosecutor, VWA.
138 See for example, Workers Rehabilitation and Compensation Act 1988 (Tas), s 35(1); Workplace Injury
Management and Workers Compensation Act 1998 (NSW), s 66(3).
139 Section 49 of the Interpretation of Legislation Act 1984 (Vic) deems service by post to be effected at
the time when the letter would be delivered in the ordinary course of post.
140 VTHC, Submission, 2 May 2008, p 15.
141 AC Act, ss 108(1) and 108(1)(ab).
142 AC Act, ss 108(1), 108(1)(ba), (c).
3.206. Section 108(4) of the AC Act was amended from 1 July 2005 to provide for the imposition
of an additional liability on employers who fail, without reasonable cause, to forward claims
for weekly benefits to their agents within the specified period of 10 days.
• An employer who fails to comply with the 10-day requirement will be liable for weekly
payments made to the worker by the VWA during the period commencing after the
employer’s liability for excess has been reached and ending when the claim is received
by the VWA.
143
• If the employer has “bought out” the employer’s excess,
144
the employer will be liable
for a suitably adjusted amount.
145
3.207. Since the introduction of the employer’s liability in section 108(4), the proportion of claims
forwarded within the prescribed time has increased from 75% in June 2005 to around 90%
in 2007.
146
3.208. The VWA can impose an additional penalty on an employer who fails, without reasonable cause,
to forward a claim for weekly payments within the specified period of 10 days.
147
In addition,
it is an offence, punishable by 10 penalty units (a fine of $1,134.20) for a first offence, and
20 penalty units (a fine of $2,268.40) for a subsequent offence, to fail to comply with the
prescribed timeframe for forwarding claims.
148
3.209. In some circumstances, the liability imposed by section 108(4) of the AC Act may be an
inappropriate sanction for the employer’s omission to forward the claim. The additional penalty
is currently calculated on the amount of weekly benefits to which a worker was entitled
between the date of injury and the date the claim was received by the VWA, but that period
may not be the same as the period during which the employer delayed forwarding the claim.
An employer can be penalised for the worker’s delay in making the claim, which appears an
inappropriate basis for penalising the employer for a breach of the obligation to forward claims.
3.210. As the additional liability appears to have contributed to the earlier forwarding of claims, it
should be retained in substance. However, the calculation of the liability should be changed
to provide a fairer reflection of the extent of the employer’s breach.
3.211. I recommend that the “additional liability” provision in section 108(4) of the AC Act be amended,
to calculate the penalty by reference to the period between the date the claim was forwarded
to the employer and the date the claim was received by the VWA or the agent.
PROVIDING GREATER PROTECTION AGAINST DISCRIMINATION
3.212. Under section 242(3)(b) of the AC Act, it is an offence for an employer to dismiss a worker
because the worker has –
• given the employer notice of an injury;
• taken steps to pursue a claim for compensation; or
• given or attempted to give a claim for compensation to the employer or the VWA.
3.213. Section 242(2) of the AC Act provides that it is an offence for an employer to dismiss a worker
for complying with a request for information made by the VWA
149
or providing information in
the course of a statutory inspection.
150
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143 AC Act, s 108(4)(a).
144 Under s 125A(6) of the AC Act.
145 AC Act, s 108(4)(b).
146 Source: VWA.
147 AC Act, ss 108(4A), (5A).
148 AC Act, s 242(4)(b).
149 The VWA’s power to require a person to furnish information is found in s 239 of the AC Act.
150 The VWA’s power to require a person to give information in the course of a statutory inspection is
found in s 240 of the AC Act.
3.214. Victoria’s OHS Act also protects workers from discrimination for raising health and safety
concerns with their employer or with the VWA. Table 3.1 shows the key differences in the
protections afforded by the AC Act and those afforded by the OHS Act.
3.215. Comparable anti-discrimination provisions are also provided under the Long Service Leave Act
1992 (the LSL Act), the Equal Opportunity Act 1995 (the EO Act), the Outworkers (Improved
Protection) Act 2003 (the OIP Act) and the Workplace Relations Act 1996 (Cth) (the WR Act).
Table 3.1 also compares those provisions with section 242(3) of the AC Act.
TABLE 3.1: COMPARISON OF VICTORIAN ANTI-DISCRIMINATION PROVISIONS
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151 AC Act, ss 242(3), 252.
152 OHS Act, ss 76–78, 130 and 131.
153 Health and Safety Representative.
154 Health and Safety Committee.
155 AC Act, ss 242(3), 252
156 LSL Act, ss 90–93.
Act
Prohibited
conduct
Prohibited
reasons
Test for
establishing
breach
Standard and
onus of proof
Who can bring
an action?
Remedies/
Penalties
AC Act
151
Dismissal Giving notice of
an injury
Taking steps to
pursue a claim
Giving or
attempting to
give a claim to
an employer.
Dismissal must
be “because” of
the prohibited
reasons.
Effectively,
prohibited
reason must be
the sole reason
for dismissal.
Beyond
reasonable
doubt.
Onus on
prosecutor
(VWA) to prove
all elements of
the offence.
VWA or person
authorised by
VWA.
25 penalty units.
50 penalty units
for second and
subsequent
offences.
OHS Act
152
Dismissal
Injury in
employment
Alternation of
position to
detriment
Threats to do
the above
Failure to offer
employment
Less favourable
treatment
Being or
exercising
powers as a
HSR
153
or
member of a
HSC.
154
Assisting or
giving
information to
an inspector,
HSR or HSC
member.
Raising a health
and safety
issue.
Prohibited
reason must be
the “dominant”
reason for the
prohibited
conduct.
Beyond
reasonable
doubt.
Where all the
facts other than
the reason are
proved, the
defendant bears
the onus of
proving the
alleged reason
was not the
dominant
reason.
VWA or
inspector
authorised by
VWA.
A person can
request VWA to
prosecute and
give written
reasons for a
decision not to
prosecute.
Matter can also
be referred to
the DPP.
Individuals
6 months
imprisonment or
a fine of up to 500
penalty units.
Corporations
Fine of up to 2500
penalty units.
Orders for
compensation,
reinstatement and
employment.
LSL Act
156
Termination or
threatened
termination
Alteration of
position to
prejudice
Because an
employee is
entitled to or
seeks to
exercise any
entitlement
under the Act.
Prohibited
conduct must
be “actuated
by” the
proscribed
reason.
Balance of
probabilities.
Defendant
bears the onus
of proving that
conduct not
actuated by
proscribed
reason.
The employee
or an
organisation of
which the
employee is a
member or is
eligible to be
a member.
Civil penalty of up
to $10,000.
Orders for
reimbursement of
lost remuneration,
reinstatement or
up to 12 months
remuneration.
TABLE 3.1: COMPARISON OF VICTORIAN ANTI-DISCRIMINATION PROVISIONS continued
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157 EO Act, ss 96–97, 104, 136 and Part 7 generally.
158 AC Act, ss 242(3), 252.
159 OIP Act, ss 50 and 55.
160 AC Act, ss 242(3), 252.
Act
Prohibited
conduct
Prohibited
reasons
Test for
establishing
breach
Standard and
onus of proof
Who can bring
an action?
Remedies/
Penalties
AC Act
160
Dismissal Giving notice of
an injury
Taking steps to
pursue a claim
Giving or
attempting to
give a claim to
an employer.
Dismissal must
be “because” of
the prohibited
reasons.
Effectively,
prohibited
reason must be
the sole reason
for dismissal.
Beyond
reasonable
doubt.
Onus on
prosecutor
(VWA) to prove
all elements of
the offence.
VWA or person
authorised by
VWA.
25 penalty units.
50 penalty units
for second and
subsequent
offences.
EO Act
157
Victimisation,
subjecting or
threatening to
subject a
person to
detriment.
Making a
complaint or
bringing
proceedings
under the Act
Giving evidence
in proceedings
under the Act
Otherwise
acting in
accordance
with Act
It is irrelevant
whether the
proscribed
reason is the
sole or
dominant
reason, as long
as it is a
substantial
reason.
Balance of
probabilities.
Onus on person
alleging
prohibited
conduct.
Person claiming
contravention or
person
authorised to
act on that
person’s behalf,
person entitled
to claim on
behalf of others
re common
conduct, a
representative
body with
sufficient
interest in the
complaint.
Orders to refrain
from committing
further breaches
and to pay
compensation for
loss and damage.
Outworkers
Act
159
Victimisation,
subjecting or
threatening to
subject a
person to
detriment.
Claiming a
benefit or
exercising a
power, right or
entitlement
under the Act
Bringing a
proceeding
under the Act
Informing a
person of an
alleged
contravention of
the Act.
That the
proscribed
conduct
occurred for a
proscribed
reason.
Beyond
reasonable
doubt.
Onus on
prosecutor.
A person
authorised by
either the
Minister, the
Secretary or a
person
employed in the
Department
(where the
Minister has
authorised the
Secretary or
person)
An officer of the
Textiles Clothing
and Footware
Union of
Australia
(Victorian
Branch).
120 penalty units.
TABLE 3.1: COMPARISON OF VICTORIAN ANTI-DISCRIMINATION PROVISIONS continued
3.216. In his recent review of the administration of the OHS Act, the Hon Bob Stensholt MP
recommended that the adequacy of the current protections for workers against discrimination
should be considered in this Review, with a view to harmonisation the protections afforded by
the AC Act and the OHS Act.
3.217. The Stensholt review also supported consideration of a right for an individual to institute
proceedings in relation to alleged discrimination under both the AC and OHS Acts.
164
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161 WR Act, ss 659(2)(e), 664, 665, 841.
162 AC Act, ss 242(3), 252.
163 WR Act, ss 792, 793, 807, 809 and 841.
164 Bob Stensholt MP, A Report on the Occupational Health and Safety Act 2004: Administrative Review,
December 2007, pp 61–62.
Act
Prohibited
conduct
Prohibited
reasons
Test for
establishing
breach
Standard and
onus of proof
Who can bring
an action?
Remedies/
Penalties
AC Act
162
Dismissal Giving notice of
an injury
Taking steps to
pursue a claim
Giving or
attempting to
give a claim to
an employer.
Dismissal must
be “because” of
the prohibited
reasons.
Effectively,
prohibited
reason must be
the sole reason
for dismissal.
Beyond
reasonable
doubt.
Onus on
prosecutor
(VWA) to prove
all elements of
the offence.
VWA or person
authorised by
VWA.
25 penalty units.
50 penalty units
for second and
subsequent
offences.
WR Act
161
Termination of
employment
Filing a
complaint, or
participating in
proceedings,
against an
employer
involving
violation of laws
or regulations or
recourse to
competent
administrative
authorities.
An employer
must not
terminate
employment for
a proscribed
reason.
Balance of
probabilities
Employee need
not prove
termination was
for proscribed
reason, but it is
a defence if
employer
proves that
termination was
for a reason/s
not including a
proscribed
reason.
Employee
Trade union
entitled under
its rules to
represent the
interests of the
employee.
Penalty of not
more than $10,000
(payable to the
employee).
Reinstatement.
Compensation of
up to 6 months’
remuneration.
Any other order
necessary to
remedy effect of
termination.
WR Act
163
Dismissal
Injury in
employment
Alteration of
position to
prejudice
Refusal to
employ
Discriminate in
employment
terms
Terminate
contract for
services
Threats to do
any of the
above.
Making or
proposing to
make an
application for a
secret ballot
Participating in a
secret ballot
Making an
inquiry to seek
compliance with
industrial
law/instrument
Participating in a
proceeding
under industrial
law
Giving evidence
in an industrial
law proceeding.
Proscribed
conduct must
not be for a
proscribed
reason.
Balance of
probabilities
Where
proscribed
conduct is
alleged to have
occurred for
proscribed
reason, conduct
presumed to be
for that reason
unless proven
otherwise.
Workplace
inspector
Person affected
by
contravention
Prescribed
persons.
Order imposing
pecuniary penalty
(payable to
employee).
Order requiring
payment of
compensation for
loss and damage.
Any other orders
the Court thinks fit
(including
injunctions).
3.218. In reaching his conclusions, the Hon Bob Stensholt MP referred to the following commitment
given by the Government prior to the 2006 State election:
165
Labor recognises that workplace health and safety representatives play a crucial role in
creating safer workplaces. Labor will legislate to provide enhanced protection from
discrimination and dismissal for health and safety representatives and workers who raise
safety issues, report injuries or make a claim, including the right for an individual to institute
proceedings in relation to an alleged breach with remedies to redress the discrimination.
3.219. In its response to the Stensholt review, the Government indicated that it would “move to
implement the necessary legislative amendments to give practical effect” to its election
commitment.
166
Additional remedies for discrimination
3.220. There is a degree of overlap between the AC Act discrimination provisions and the protections
afforded under the WR Act (for unlawful dismissal on the grounds of temporary absence or
filing a complaint, or unfair dismissal generally) and the EO Act (for discrimination on the basis
of the attributes of employment activity or impairment). However –
• the prohibited grounds for dismissal under the WR Act and the relevant attributes for
discrimination under the EO Act do not coincide with the prohibited grounds for dismissal
under the AC Act;
• access to remedies for unfair dismissal under the WR Act is subject to significant exclusions;
and
• the WR Act prohibitions on dismissal and remedies for unfair dismissal are limited to
“employees”.
3.221. The Commonwealth Government has expressed its intention to amend the WR Act before
1 January 2010, so as to allow greater protection of workers from unfair dismissal. However,
those amendments will not cover all workers and it is likely that restrictions based on a
minimum period of employment with an employer will remain.
3.222. It is clear that those alternative remedies for discrimination, either taken on their own or in
combination, do not comprehensively protect workers from discrimination arising from making
or pursuing compensation claims or raising health and safety issues.
Stakeholder views
3.223. The Workers Occupational Health Centre submits that there is anecdotal evidence that a high
proportion of workers who submit claims eventually lose their employment. The Centre is also
concerned that there is active discrimination in workplaces to avoid the employment of those
who have previously submitted a claim, or have an injury or an illness, and submits that this
inhibits workers from submitting claims or reporting injuries in a timely manner.
167
3.224. The National Union of Workers
168
and the VTHC
169
submit that the provisions in the AC Act
should reflect those in the OHS Act.
3.225. The ANF submits that greater protection from discrimination by employers should be provided
to workers. They support the prohibition of wider categories of discrimination, including less
favourable treatment, demotion, threats and unreasonably changing the injured worker’s
position as a result of a workplace injury.
170
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165 The Hon Bob Stensholt MP, A Report on the Occupational Health and Safety Act 2004: Administrative
Review, December 2007, p 61.
166 Victorian Government Response to: A Report on the Occupational Health and Safety Act 2004 –
Administrative Review, June 2008, p 5.
167 Workers Occupational Health Centre, Submission, 2 May 2008, p 2.
168 National Union of Workers, Submission, 2 May 2008, p 1.
169 VTHC, Submission, 2 May 2008, p 15.
170 ANF, Submission, 2 May 2008, p 4.
3.226. JobWatch, an employment rights legal centre that provides advice and assistance to Victorian
workers via a telephone information service, submits that it is “all too common for a worker [to]
find that their employment is terminated or that they are treated less favourably shortly after
they have provided a WorkCover claim form to their employer”.
171
3.227. JobWatch submits that –
. . . any amendments to the AC Act should go further than just aligning the offences and
penalties with the OHS Act and actually give individual workers standing to commence legal
action for breach of the anti-discrimination provisions of the AC Act.
172
3.228. JobWatch further submits that the test required for a Court to find in favour of an individual
applicant/complainant or the VWA should be in line with the current test for unlawful
termination of employment under the Federal WR Act, namely –
(a) the onus of proof should be reversed such that the employer must prove that the reason
for the termination/discrimination did not include the making of a WorkCover claim by the
worker; and
(b) where there is more than one possible reason for the termination/discrimination, the
WorkCover claim element need not be the dominant reason so long as it was at least one
of the reasons or part of the reason for the discriminatory conduct.
173
3.229. The AMIEU submits that currently, if an employee of a labour hire firm is discriminated against
by the host employer, the host employer cannot be penalised under the anti-discrimination
provisions.
174
3.230. VECCI strongly opposes aligning the AC Act provisions with those in the OHS Act. VECCI
asserts that sections 76 and 77 of the current OHS Act are –
. . . probably the only law in the Westminster system where a citizen can be imprisoned
without the prosecution having to prove its case.
175
3.231. VECCI asserts that, because of the reversal of the onus of proof, the provision removes the
fundamental right of employers to be regarded as innocent until proven guilty.
176
3.232. VECCI and Ai Group oppose the VTHC’s proposal that workers should be able to bring an action
for discrimination. VECCI submits that workers can already use –
. . . the Federal Disability Discrimination Act and the Workplace Relations Act to bring actions
against their employer.
177
The nature and extent of discrimination
3.233. In 2000, the Australian Bureau of Statistics conducted a national survey of 477,800 workers who
reported they had suffered a workplace injury: 60.5% of these workers did not receive workers’
compensation. The reasons for this varied; however, 4.2% (or approximately 12,140 workers)
reported that they did not make a claim for fear of harming their employment prospects.
178
3.234. Prior to the significant changes to Federal industrial laws in 2006 (the “WorkChoices”
amendments), Victorian employees dismissed for exercising rights under the AC Act could bring
unfair dismissal claims and seek reinstatement and/or compensation due under the general
prohibition in those industrial laws on harsh, unjust or unreasonable dismissals.
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171 Job Watch Inc, Submission, May 2008, p 4.
172 Job Watch Inc, Submission, May 2008, p 5.
173 Job Watch Inc, Submission, May 2008, p 6.
174 AMIEU, Submission, 2 May 2008, p 9.
175 VECCI, Submission, April 2008, p 23.
176 VECCI, Submission, April 2008, p 23.
177 VECCI, Submission, April 2008, p 24.
178 ABS, Work-Related Injuries, Australia, September 2000.
3.235. In the full calendar year before the WorkChoices amendments, the Australian Industrial
Relations Commission (the AIRC) heard and determined 13 claims from Victorian employees
involving workers who had made or pursued workers’ compensation claims. According to the
2004/2005 and 2005/2006 AIRC Annual Reports, settlement rates at the conciliation conference
stage for unfair dismissal cases were 77% and 73% respectively. Using those figures, the 13
decided cases would represent approximately a quarter of claims made, that is, around three
quarters of claims would have settled earlier at the conciliation stage.
3.236. Data from the Workplace Rights Information Line (the WRIL), established by the Office of the
Victorian Workplace Rights Advocate, gives a further indication of the extent of complaints of
discriminatory conduct related to workers exercising rights under the AC Act.
3.237. A review of calls to the WRIL from 17 March 2006 to 30 April 2008 indicates that there were
333 workers’ compensation-related calls. Of those calls, approximately 45 callers described
circumstances that could amount to discrimination.
3.238. JobWatch submits that, over the last eight financial years, the JobWatch telephone information
service has received 3,835 inquiries relating to workers’ compensation (2.5% of all inquiries
relating to problems in the workplace). There were 412 telephone calls from workers who
alleged that their employment had been terminated because they had made a workers’
compensation claim.
179
3.239. JobWatch provided a number of case studies relating to discrimination against workers who
had lodged a workers’ compensation claim, as follows:
• Mandy worked on a casual full time basis as a labourer on a farm for nearly 6 months when
she was injured at work. She had a fall and made a WorkCover claim. While Mandy was
away from work on WorkCover her employer sacked her for being off on WorkCover –
he complained the insurance was too high. She had only been off work for 3 days.
• Paul worked as a technician for 2 months. He incurred a workplace injury whereby he tore a
muscle and the next day he informed his employer and gave them his WorCover claim. The
OHS Manager said to Paul that he would be foolish to try and submit a WorkCover claim,
and then said they were kidding.
Paul was dismissed three weeks later. The first thing the employer said to Paul when
terminating his employment was that Paul had thrown a lot of paperwork at him over the
past couple of weeks – in reference to his WorkCover claim – and then the employer said,
almost as an after thought, that Paul’s performance had not been that great and proceeded
to dismiss him summarily. Paul says his performance was fine, and he had not had any
complaints from his employer about his performance previous to the dismissal.
• Con worked as a storeman at a transport company. He was injured at work when his foot
was run over by a forklift that was driven by an unlicensed fork lift driver. Con’s WorkCover
claim was accepted and he returned to work on modified duties. He has had limited contact
with WorkCover and issues have emerged in the workplace since his return. Con has been
treated differently by his employer since he has returned to work and has been disciplined
for issues that are accepted in the workforce. For example he was called into his manager’s
office when he took parental leave and told that it was not acceptable to do so.
180
3.240. It is difficult to ascertain the nature and extent of discrimination arising from making or pursuing
workers’ compensation claims. However, the available information demonstrates that
discrimination by employers against workers exercising their rights under the AC Act occurs,
and that the conduct complained of is not trivial. It is clear that protections are needed to
address the conduct of a small proportion of employers who engage in discriminatory conduct
and to provide a general deterrent to employers from engaging in such conduct.
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179 Job Watch Inc, Submission, May 2008, p 5.
180 Job Watch Inc, Submission, May 2008, p 4.
Improve protections against discrimination
3.241. I consider that the anti-discrimination provisions in the AC Act are not a satisfactory means for
protecting workers from discrimination or providing workers with a remedy for discrimination.
3.242. The current provisions are aimed at an overly narrow category of conduct; they are very difficult
to prosecute; they provide inadequate remedies; and they may only be enforced by the VWA.
3.243. Section 242(3) of the AC Act only prohibits dismissal of a worker, so that a wide range of
detrimental conduct falling short of dismissal (such as demotion, transfer or reduction in hours)
is not punishable under the AC Act. The OHS Act, EO Act and LSL Act provide protection from
those broader forms of detrimental treatment.
3.244. Section 242(3) only prohibits discrimination against “workers” – that is, current employees and
other deemed workers. It does not protect job applicants. It follows that, although it is an
offence to dismiss a worker because the worker has made a claim, it is not an offence to refuse
to employ a job applicant for the same reason.
3.245. To prosecute an offence under section 242(3) of the AC Act successfully, the VWA must
establish that the sole reason for the dismissal was a prohibited reason. An employer will
not commit an offence under that provision unless it can be proved beyond reasonable doubt
that the actions of the worker in making or pursuing the claim were the sole reason for the
employer’s discriminatory action. If there is any other reason for the employer’s action, the
prosecution will not succeed.
3.246. Questions of motivation can be difficult to prove and it is conceivable that there may be a range
of other reasons for a worker’s dismissal that could be used to disguise the dominant reason
for the dismissal. I recommend that the AC Act be amended to provide that an offence is
committed by an employer where a proscribed reason was the dominant reason for the
discriminatory conduct, aligning the test for liability with the test under the OHS Act.
3.247. I further recommend that, where the prosecution has proved all of the facts constituting an
offence under section 242(3), other than the reason for the alleged discriminatory conduct, the
onus of proof should shift to the defendant to prove that the dominant reason for the conduct
was not a proscribed reason, further aligning the test for liability with the test under the OHS
Act. I am convinced that reversing the onus of proof is justified primarily because the offence
turns on a particular matter (being the “reason” for certain conduct) that is peculiarly within the
knowledge of the employer. It is therefore appropriate that the employer be required to explain
why the employer took a particular course of action, rather than requiring the VWA to prove the
employer’s motivation.
3.248. Furthermore, as the offence under section 242(3) of the AC Act is of an equivalent level of
seriousness to the discrimination offences under the OHS Act, I consider that the maximum
financial penalty for an offence under section 242(3) should be equivalent to the financial
penalties under the OHS Act. I agree with VECCI’s concern that reversing the onus of proof
is inappropriate for offences punishable by imprisonment. Accordingly, I recommend that an
offence under section 242(3) should not be punishable by imprisonment. However, orders for
compensation and reinstatement and, in the case of prospective employees, orders requiring
employment should be available to the Court when sentencing.
3.249. Only the VWA is permitted to bring a prosecution under section 242(3). Although I consider
that this should remain the case, I believe that workers should have some capacity to prompt
the bringing of prosecutions and to hold the VWA to account for decisions not to prosecute.
3.250. I recommend that the AC Act should be amended to include a provision, along the lines of
section 131 of the OHS Act, allowing a worker (within a prescribed timeframe) to request that
the VWA bring a prosecution for an alleged offence. The VWA should be required to investigate
the alleged breach within a prescribed timeframe and, following that investigation, advise the
worker whether a prosecution will be brought. If a prosecution is not to be brought, the VWA
should provide reasons for its decision. The worker should be able to ask the Director of Public
Prosecutions to review the VWA’s decision not to prosecute.
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3.251. Although I do not consider that workers (or their representatives) should be able to bring
prosecutions for discrimination offences under the AC Act, a worker should be able to make
a complaint about discriminatory conduct and seek remedies for that conduct, without relying
on the VWA to bring a criminal prosecution.
3.252. The EO Act already provides an avenue for workers to make direct complaints about certain
types of discrimination. However, it is far from clear that a worker who has suffered
discrimination arising from making or pursuing a workers’ compensation claim or raising a
health and safety issue will be covered by the EO Act. I recommend that amendments be made
to the EO Act to ensure that workers who suffer such discrimination can make complaints to
the Equal Opportunity and Human Rights Commission as the first step in seeking redress.
3.253. If the proposed anti-discrimination provisions were included in the EO Act, it would be likely
that only relatively serious breaches of the anti-discrimination provisions in the AC Act would
be prosecuted by the VWA (as is currently the case). The VWA’s prosecution guidelines provide
that prosecutions are only to be brought where such action is in the “public interest”. A
significant element in considering whether the prosecution is in the “public interest” is the
severity of the offence.
181
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181 Victorian Government Gazette, VWA Prosecution Guidelines, No S 127, 1 July 2005, Guidelines
12 and 14.
SUPPORTING WORKERS TO GET
BACK TO WORK AFTER INJURY
The importance of early and durable return to work
How should the AC Act support return to work?
A new approach to the legislative framework
Planning return to work
Providing pre-injury or suitable employment
Exemption from the obligation to provide pre-injury
or suitable employment
Risk management and occupational rehabilitation programs
Return to work coordinators
Labour hire
Compliance and enforcement
Workers’ right of action
Roles of other workplace parties involved in return to work
Issue resolution
Return to work incentives
4.1. The importance of early, safe and lasting return to work outcomes in workers’ compensation
schemes cannot be overstated.
4.2. There are obvious benefits for workers in returning to work as soon as possible after an injury
or illness; and it is well established that getting back to work can assist rehabilitation and
improve a worker’s long-term health and wellbeing. With the appropriate treatment and support,
most injured workers can continue working or get back to work relatively quickly.
4.3. Early and sustained return to work also benefits the workers’ compensation scheme – because
the longer workers are off work, the greater the drain on the scheme’s financial resources.
4.4. The challenge for any workers’ compensation scheme is to create appropriate incentives for
employers and workers to participate in the return to work process, while providing adequate
income and medical support following work-related injury.
4.5. The AC Act has a specific focus on returning injured workers to work. The objects of the Act
include providing injured workers with effective occupational rehabilitation and suitable
employment to enable them to return to work as soon as possible.
1
4.6. The AC Act seeks to achieve those objectives by imposing specific obligations on employers
and workers. This prescriptive approach affords workplaces little flexibility in choosing how they
meet their return to work obligations.
4.7. Most Australian jurisdictions impose similar return to work obligations, but the AC Act is one
of the most prescriptive.
4.8. Many stakeholder submissions to the Review argue that the current approach is overly
prescriptive and complicated. Employer groups strongly believe that the AC Act has an
inappropriate focus on paperwork, and support the adoption of a more outcome-focused model
along the lines of the OHS Act. Worker groups suggest alternatives to ensure better return to
work and rehabilitation outcomes for injured workers, and point to a need for more effective
enforcement of the AC Act’s return to work provisions.
4.9. In this chapter, I:
• examine the importance of return to work in any workers’ compensation scheme and discuss
Victoria’s performance;
• explore how the Act should support return to work, and propose a new outcome-focused
approach;
• discuss how issues associated with the current return to work provisions will be
accommodated in the new approach;
• propose changes to the size, function and powers of the return to work inspectorate;
• discuss the roles of workplace parties in return to work;
• examine the issues involved with return to work in the labour hire context; and
• consider other incentives available to enhance return to work outcomes.
THE IMPORTANCE OF EARLY AND DURABLE RETURN TO WORK
4.10. Research overwhelmingly demonstrates that returning to work after an injury or illness improves
a worker’s long-term physical and mental health and wellbeing, decreasing the risk of chronic
disability.
2
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1 AC Act, s 3(b) and (c).
2 G Waddell, K Burton and M Aylward, “Work and common health problems”, Journal of Insurance
Medicine, 39(2), 2007, pp 109–120; G Waddell and K Burton, “Is work good for your health and well-
being?”, 2006, p ix, viewed 13 May 2008; <www.workingforhealth.gov.uk/documents/is-work-good-for-
you.pdf>; Return to Work Knowledge Base, The issue for treaters, viewed 13 May 2008;
<www.rtwknowledge.org/browse.php?article_id=178&searchresult=true&view_type=research>.
4.11. Long-term unemployment (or what some studies describe as “worklessness”) is associated with
poorer health outcomes
3
as well as substantial economic impacts.
4.12. The costs associated with a work-related injury are borne not only by the worker, but also by the
employer (both directly and through the WorkCover injury insurance scheme) and by the
community (through the social security and health systems). Direct costs include medical
expenses (hospitalisation, medical and allied health practitioner visits and rehabilitation), legal
costs and the costs of hiring a replacement worker. Indirect costs include lost output due to
reduced productivity, lower staff morale and the administration of workers’ compensation claims.
4
4.13. The National Occupational Health and Safety Commission has estimated that the total
economic cost of workplace injury, illness and death to workers, employers and the wider
community is more than $31 billion annually, or some 4.3% of gross domestic product.
5
4.14. Early and sustained return to work significantly benefits the scheme, because scheme liabilities
are driven largely by continuance rates (the average length of time injured workers continue to
receive weekly benefits).
4.15. While most people return to work quite quickly, a small but significant proportion (see Table 4.1
below) are off work for longer periods, some permanently. The long-term incapacitated account
for most of the costs of work-related illness and injury – not only in terms of weekly benefits
and medical and like benefits, but more importantly in terms of the immeasurable social costs
of damage to individuals’ health and quality of life.
6
Victoria’s performance in return to work
4.16. A key measure of the success of injury management is the rate of durable, or long-term, return
to work.
4.17. According to the Return to Work Monitor,
7
in 2006/2007 Victoria had a return to work rate of
85%,
8
which was the same as the national average. The Commonwealth scheme had the best
return to work rate at 92%, with Tasmania following at 91%.
9
4.18. However, Victoria’s durable return to work rate is almost 76%,
10
just below the national average
of 77%.
11
The Commonwealth scheme has a durable return to work rate of 85% and Tasmania’s
rate is 83%.
12
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3 G Waddell, K Burton and M Aylward, “Work and common health problems”, Journal of Insurance
Medicine, 39(2), 2007, pp 109–120.
4 Australian Social Trends, ABS 4102.0, Work-Related Injuries, 2007, p 4; Productivity Commission,
National Workers’ Compensation and Occupational Health and Safety Frameworks, inquiry report,
no 27, 2004, p xxiv.
5 Australian Social Trends, ABS 4102.0, Work-Related Injuries, 2007, p 4; Productivity Commission,
National Workers’ Compensation and Occupational Health and Safety Frameworks, inquiry report,
No. 27, 2004, p XXIV.
6 Return to Work Knowledge Base, Improving return to work outcomes, the Knowledge Base,
and the world wide movement to reduce work disability, viewed 26 June 2008;
<www.rtwknowledge.org/browse.php?article_id=173&view_type=employee>.
7 Campbell Research & Consulting, Return to Work Monitor 2006/2007, HWCA, pp 1-2. The RTW Monitor
is an annual comparative review of rehabilitation and Return to Work outcomes across workers’
compensation schemes in Australia (except Western Australia) and New Zealand. For 2006/2007, a
sample of 3019 workers was drawn from all injured workers who have received 10 or more days’
weekly compensation within nine months of lodging a claim.
8 The Return to Work rate is the percentage of injured workers who have returned to work for some
period within six months of their claim.
9 Campbell Research & Consulting, Return to Work Monitor 2006/2007, HWCA, p 1.
10 The durable return to work rate is the percentage of injured workers who return to work within
six months of their claim and are still at work 6-7 months after injury.
11 The national durable return to work rate of 77% is below its peak level of 80% in 2005/2006, although
it remains higher than the comparative rates compiled in 2000/2001 to 2002/03, Campbell Research &
Consulting, Return to Work Monitor 2006/2007, HWCA, p i.
12 Campbell Research & Consulting, Return to Work Monitor 2006/2007, HWCA, p 2.
4.19. While such comparative reviews have some value, it is important to note that a combination of
factors can influence return to work rates. Further, the timing of the survey and the survey size
may also affect the results of the reviews.
4.20. In 2006, the VWA introduced a new survey to assess sustainable return to work outcomes and
give the VWA an internal benchmarking tool.
13
4.21. For 2008, the VWA survey indicated that the sustainable return to work rate was 78.3%, up from
the 75.8% reported for 2007 and from the 75.5% reported for 2006.
14
The rate was higher
among self-insurers at 84.1%, which had also improved from 82.9% in the previous year.
4.22. Overall, government employers had a return to work rate of 82.5%, large employers
15
had a rate
of 79.9% and small employers
16
had a rate of 75.5%, all improved from 2007.
17
The different
rates may reflect the fact that larger employers (including government employers) generally
have greater capacity and resources for providing suitable employment for injured workers.
18
4.23. As mentioned in paragraph 4.14 above, weekly benefit continuance rates are a major driver of
scheme liabilities. The VWA measures the percentage of workers who continue to receive
weekly benefits at 13, 26, 52 and 134 weeks after injury. Although continuance rates do not
necessarily correlate with the number of workers who have returned to work, because weekly
benefits may cease for a range of reasons, the continuance rates are a useful proxy measure
for return to work.
4.24. As Table 4.1 shows, data for the 2007/2008 financial year indicates that more than a quarter of
all injured workers were receiving some form of weekly benefit six months after their injury.
TABLE 4.1: CONTINUANCE RATES – VICTORIA (APRIL 2008)
4.25. There are also some differences based on the size of the employer. As Table 4.2 shows, small
and government employers have poorer continuance rates than medium and large employers.
TABLE 4.2: CONTINUANCE RATES AT 26 WEEKS – VICTORIA (APRIL 2008)
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13 Sweeney Research, RTW Sustainability Survey Report, research report prepared for the VWA. The
survey includes over 2000 injured workers and identifies the percentage of injured workers (with at
least 10 days off work) who have returned to work and remain working 14-19 months after injury.
14 Sweeney Research, RTW Sustainability Survey Report, research report prepared for the VWA, 2008, p 7.
15 Remuneration more than $20 million.
16 Remuneration less than $1 million.
17 Sweeney Research, RTW Sustainability Survey Report, research report prepared for the VWA, 2008, p 17.
18 Sweeney Research, RTW Sustainability Survey Report, research report prepared for the VWA, 2007, p 29.
19 Source: VWA.
20 Source: VWA.
Weeks of weekly benefits 2007/2008 YTD
19
13 44.33%
26 25.59%
52 15.33%
134 4.33%
Employer size 2007/2008 YTD
20
Small 29.76%
Medium 25.27%
Large 20.52%
Government 26.99%
4.26. It is clear that, although Victoria’s return to work performance overall is comparable with other
Australian jurisdictions, there is room for improvement.
HOW SHOULD THE AC ACT SUPPORT RETURN TO WORK?
4.27. For injured workers, the principal incentives provided by the AC Act to return to work include:
• the financial impacts associated with the step-downs in weekly benefit arrangements, under
which the amount of weekly benefits decreases at certain intervals the longer the worker
remains off work;
21
• the termination of weekly benefits for workers who do not make reasonable efforts to
participate in the return to work process;
22
and
• the use of notional earnings as a basis for reducing or terminating payments (effectively
allowing the VWA to determine the amount that a worker could earn each week, even when
the worker has not returned to work or has only partially done so).
23
4.28. For employers, the principal incentives are built into the WorkCover injury insurance system. The
system is designed to promote improvements in return to work outcomes by linking premiums
to claims performance (so that employers with good claims performance are rewarded with
lower premiums, and vice versa). The linkage provides financial benefits (lower workplace injury
insurance premiums) for employers who return workers to work and achieve early and
sustained return to work. Those employers can also expect other financial benefits, such as
reduced retraining and recruitment costs and improved productivity.
4.29. While healthcare professionals play a central role in ensuring that injured workers are fit to
return to work, their role under the AC Act is less clear. There are no legislated incentives for
healthcare professionals to assist and encourage return to work.
4.30. The VWA has set itself an ambitious target of becoming a return to work centre of excellence
24
and improving return to work outcomes by 30% by 2012.
25
The VWA has developed a number
of strategies to improve return to work outcomes on the basis of best-practice research. These
include the establishment of a $10 million return to work fund to support initiatives by
workplace parties that focus on improving opportunities for injured workers to return to work
successfully.
26
4.31. However, it is clear from the research that a range of factors is critical to ensuring the
successful return to work of an injured worker, and that there are opportunities to improve
Victoria’s return to work performance and further secure the scheme’s financial viability.
4.32. The literature suggests that certain interventions are especially effective in reducing the
duration of incapacity for work. A systematic review of the literature conducted by the Canadian
Institute for Work and Health
27
found that three components – early contact with the worker by
the workplace, an offer of modified work, and contact between healthcare providers and the
workplace – significantly reduce work disability duration and costs.
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21 AC Act, ss 93CA, 93CB, 93CC, 93CD. In Victoria, for the first 13 weeks of incapacity, an injured worker
receives 95% of their PIAWE. Between the 14th and 130th weeks, the worker receives 75% of PIAWE.
Entitlement to weekly benefits ends at 130 weeks, except in some circumstances: see Chapter 5,
“Better income replacement ”, paragraphs 5.16, table 5.1.
22 See Chapter 5, “Better income replacement”, paragraphs 5.18
23 See Chapter 5, “Better income replacement”, paragraphs 5.140-5.147.
24 VWA, Business Plan 2006/2007, viewed 17 June 2008, p 18 <www.worksafe.vic.gov.au/wps/wcm/
resources/file/eb260245a28ba1e/biz_plan_07_08.pdf>.
25 VWA, Annual Report 2007, p 7 <>http://www.worksafe.vic.gov.au/wps/wcm/resources/file/
eb947c4f47bfd9c/AR2007_final.pdf>.
26 An overview of those initiatives is provided in Appendix 4.2.
27 RL Franche, K Cullen, J Clarke, E MacEachen, J Frank, S Sinclair and R Reardon, “Workplace-based
return-to-work interventions: a systematic review of the quantitative and qualitative literature”, 2004,
p 5, viewed 17 June 2008, <www.iwh.on.ca/sr/wd_rtw_interventions.php>.
4.33. While the traditional understanding was that medical treatments and recovery most determine
whether a person is able to return to work, the evidence increasingly demonstrates that many
other factors influence return to work and health outcomes for injured workers.
28
4.34. Personal beliefs, attitudes and behaviours, and the level of partnership in the workplace
between the employer and the injured worker have a real and measurable influence on whether
the person is able to return to work successfully.
29
4.35. It seems that real progress in return to work is not possible without cooperation and
commitment from all parties involved in the process, including healthcare providers, insurance
agents and employers.
30
However, this approach is not fundamentally supported by the current
return to work provisions in the AC Act.
4.36. Recent reviews in other jurisdictions have recommended fostering a supportive culture in the
workplace, because this has been shown to enhance injury management and return to work.
31
4.37. For example, the 2007 review of the South Australian workers’ compensation scheme
recommended that the scheme administrator –
. . . build upon existing initiatives to make the fostering and facilitating of more supportive
workplace cultures within and across the scheme employer community (both levy-paying and
self-insured) a key part of its regulatory mission and programme.
32
4.38. I believe that there are further opportunities that can be realised and that an overhaul of the
legislative framework needs to be considered if the AC Act is to support the scheme in meeting
its return to work targets.
A NEW APPROACH TO THE LEGISLATIVE FRAMEWORK
4.39. The AC Act seeks to achieve its objectives by imposing specific obligations on employers and
workers in the return to work process.
4.40. I do not believe that the detailed prescription in the AC Act assists employers to focus on the
need to return the injured worker to work as soon as it is safe and possible to do so. Nor does
it encourage a focus on building a workplace culture that will enable the worker’s return to work
to be durable.
4.41. It is understandable that employers and workers can be overwhelmed by having to navigate
the complex maze of prescriptive and technical provisions in the current AC Act. Although
the policy behind the current provisions is generally clear, the provisions themselves are often
confusing. As far as possible, the operation of the return to work provisions must be spelt out
clearly and must be capable of being understood by those who are expected to comply.
4.42. As discussed in paragraphs 4.32–4.35 above, the successful return to work of an injured worker
depends on a complex set of factors, such as the will of the worker to return to meaningful
employment, the culture of the workplace where the injury occurred, the willingness of the
employer to keep in contact with the worker and encourage the worker to return to the
workplace and the availability of suitable duties.
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28 Return to Work Knowledge Base, Improving return to work outcomes, the Knowledge Base, and the
world wide movement to reduce work disability, viewed 13 May 2008 <www.rtwknowledge.org/
browse.php?article_id=173&view_type=insurer>.
29 Return to Work Knowledge Base, Improving return to work outcomes, the Knowledge Base, and the
world wide movement to reduce work disability, viewed 13 May 2008 <www.rtwknowledge.org/
browse.php?article_id=173&view_type=insurer>
30 P Foreman, G Murphy and H Swerissen, Facilitators and Barriers to Return to Work: A Literature
Review, Australian Institute for Primary Care, La Trobe University, 2006, p 5.
31 A Clayton, Review of the Tasmanian Workers Compensation System: Report, 2007, p 73; Campbell
Research & Consulting, Return to Work Monitor 2006/2007, HWCA, August 2007, p ii.
32 Bracton Consulting Services Pty Ltd and PricewaterhouseCoopers, Review of the South Australian
Workers’ Compensation System Report, 2007, p 174.
4.43. I believe the legislative framework should focus on supporting successful return to work and
provide mechanisms by which an employer can demonstrate compliance with legislative
requirements without the need for overly prescriptive obligations and tasks. The legislative
framework should be flexible enough to support innovation and be adaptable to emerging
practice in return to work and to disparate work situations.
Victoria’s OHS regime
4.44. To that end, it is instructive to compare the legislative regimes in Victoria for return to work
and OHS.
4.45. The successful prevention of work-related injuries and illnesses through OHS is another key
driver of the viability of any workers’ compensation scheme. As in the case of return to work,
a range of complex factors influence OHS performance, including the workplace environment
and culture, employers’ awareness of their legal obligations, and individual behaviour.
4.46. During the past 50 years, the legislative framework for OHS in all Australian jurisdictions has
evolved from a highly prescriptive regime to one that focuses on the duties of the various
parties in the workplace to ensure a safe working environment.
4.47. Under Victoria’s OHS Act (which is also administered by the VWA), employers are required to
provide a safe workplace for employees, so far as is reasonably practicable.
33
Other duties are
placed on self-employed people,
34
employees,
35
people who manage or control workplaces
36
and various other parties whose activities can affect health and safety in the workplace.
37
The
OHS Act provides for other matters such as consultation with employees,
38
representation of
employees,
39
the OHS inspectorate and enforcement,
40
and review of decisions made by the
VWA and inspectors.
41
4.48. Regulations made under the OHS Act set out more detailed requirements for particular
workplace hazards, hazardous industries, resolution of OHS issues that arise in the workplace
and a range of other matters.
4.49. To provide guidance to duty-holders about how to carry out their duties, the OHS Act provides
for compliance codes.
42
A duty-holder who meets a compliance code is taken to have complied
with the Act, although the duty-holder may also seek to comply by some other means.
A compliance code can be cited by an inspector in a notice, and failure to follow a compliance
code can be cited as evidence in a prosecution for a breach of the OHS Act.
4.50. The VWA publishes a range of other guidance materials to help workplace parties meet their
duties under the OHS Act and OHS Regulations.
Other workers’ compensation regimes
4.51. There are also some fundamental differences in legislative design among workers’ compensation
schemes in other States, most notably in New South Wales and Western Australia.
43
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33 OHS Act, s 21(1). OHS Act, s 20(2) provides for a number of matters, to which regard must be had in
determining what is “reasonably practicable”.
34 OHS Act, s 24.
35 OHS Act, s 25.
36 OHS Act, s 26.
37 OHS Act, ss 27-31.
38 OHS Act, Part 4.
39 OHS Act, Part 7.
40 OHS Act, Part 9.
41 OHS Act, Part 10.
42 OHS Act, Part 12.
43 A summary of return to work obligations under different workers’ compensation schemes is provided
in Appendix 4.1.
4.52. The New South Wales legislation reflects a broader approach to injury management and return
to work, supported by strict requirements for prompt injury reporting and the availability of
provisional liability.
4.53. In New South Wales, injury management obligations are imposed on insurers, with whom the
employer, worker and treating doctor are required to cooperate. An injury management plan
must be developed in consultation with all parties and must be commenced quickly for workers
with significant injuries (within three days).
44
4.54. The Western Australian scheme provides detailed guidelines on how to comply with return to
work obligations in codes of practice, rather than in primary legislation.
45
Stakeholder views
4.55. VECCI recommends that the legislation simply state the outcomes employers must seek
to achieve when assisting injured workers to rehabilitate and return to work. VECCI proposes
that –
. . . an employer must do everything reasonably practicable to assist an injured worker return
to work. This is consistent with the outcome based style of the OHS Act. Employers can
consult with employees on whether a written policy is suited to their workplace.
46
4.56. Ai Group submits that the AC Act currently requires a focus on paperwork –
. . . the focus on the completion of paperwork can distract from the real intent of the process
. . . an employer can be compliant with the obligations to develop a return to work plan, whilst
having made no real attempts to assist the person back to work. Alternatively, a person can be
back at work as part of an effective and sustainable return to work, whilst the employer is
technically in breach of the Act because there is no documented return to work plan.
47
4.57. Ai Group also advocates that –
A performance based approach to facilitating return to work, such as that utilised in OHS
legislation . . . should be adopted.
48
4.58. Similarly, Freehills argues that, for the employer, the return to work process can be –
. . . more about filling in mandatory paperwork, rather than focusing on clinically appropriate
goals that will assist an injured person to return to valuable employment.
49
4.59. In Freehills’ view, the AC Act should contain –
. . . broad principles and essential processes, with the detail being provided in regulations,
codes and guidelines.
50
4.60. ResWorks submits that the focus of the legislation should be on facilitating cooperation, but
noted that the AC Act currently appears designed to foster conflicts of interest and oppositional
relationships between the employee and the worker. ResWorks argues that –
. . . the very nature of the present legislation and its interpretation fosters an intervention in
which the employee/employer relationship too frequently develops into the primary obstacle
to a return to good health and normal duties. This presents whenever there is negativity,
pre-existing, or as a consequence of the injury, between the employee and employer.
51
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44 Workplace Injury Management and Workers Compensation Act 1998 (NSW), ss 43, 45, 46 and 47.
Significant injury is defined as an injury likely to result in incapacity for more than seven days.
45 Workers’ Compensation and Injury Management Act 1981 (WA), s 155.
46 VECCI, Submission, April 2008, p 34.
47 Ai Group, Submission, May 2008, p 35.
48 Ai Group, Submission, May 2008, p 35.
49 Freehills, Submission, 11 February 2008, p 14.
50 Freehills, Submission, 11 February 2008, p 18.
51 ResWorks, Submission, 23 April 2008, p 2.
4.61. MGA is concerned that –
The current system penalises employers for failing to provide suitable employment for injured
employees and allows employees to decide whether or not to carry out those duties. MGA
members are mainly small business employers in the supermarket industry. Most tasks in
supermarkets are associated with manual handling or repetitive work. Due to the current
provisions where the employer is to provide suitable employment upon the return of an
employee into the workplace there is little opportunity for these employers to comply with
their obligations. Small employers are essentially forced into creating jobs with little value
to the business and are faced with paying wages and higher premiums for work that is
unnecessary.
. . . MGA submits that it would be beneficial to provide for a more flexible approach to return
to work programs, with greater emphasis on the need for doctors, employees and
rehabilitation providers to be realistic about the tasks that can be performed.
52
4.62. The SDA submits that –
. . . the written communication presently favored [sic] by the Authority, the agents and self-
insurers is unnecessarily complex and incomprehensible to the great majority of claimants.
53
4.63. In its Discussion Paper,
54
the Review requested views on the question whether employers
should be required to consult injured workers (and treating doctors) on return to work.
4.64. The VTHC
55
and union groups, such as the AEU,
56
the VIEU
57
and the AMIEU,
58
submit that
employers should be required to consult and reach agreement with workers and treating
practitioners, particularly on offers of employment.
4.65. Similarly, the NUW submits that workers and their representatives should be consulted during
any agreement-making process, including return to work and offers of suitable employment.
59
4.66. Healthcare provider groups, such as the APA
60
and the COCA,
61
also advocate mandatory
consultation by employers with both injured workers and treating practitioners, especially
on return to work plans.
4.67. VECCI supports a requirement that employers consult with workers and treating doctors on
offers of suitable employment to the extent that is reasonably practicable.
62
4.68. Ai Group submits that –
Consultation with injured workers (and treating practitioners) is a crucial step in the effective
implementation of return to work . . . any reference to consultation must include the words
“so far as is reasonably practicable”.
63
4.69. On the other hand, the SIAV argues that a duty to consult would duplicate the role of
rehabilitation providers and add to the costs imposed on employers.
64
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52 MGA, Submission, May 2008, p 6.
53 SDA, Submission, April 2008, p 3.
54 Accident Compensation Act Review: Discussion Paper, March 2008, p 24.
55 VTHC, Submission, 2 May 2008, p 17.
56 AEU, Submission, 2 May 2008, p 3.
57 VIEU, Submission, 2 May 2008, p 4.
58 AMIEU, Submission, 2 May 2008, p 10.
59 NUW, Submission, 2 May 2008, p 2.
60 APA, Submission, 2 May 2008, p 2.
61 COCA, Submission, 4 May 2008, p 1.
62 VECCI, Submission, April 2008. p 25.
63 Ai Group, Submission, May 2008, p 26.
64 SIAV, Submission, May 2008, p 9.
Introduce principles of return to work
4.70. In his review of the Occupational Health and Safety Act 1985, Mr Chris Maxwell QC (as his
Honour was at that time) recommended the inclusion of “principles of workplace safety”.
65
Those principles were included in the Occupational Health and Safety Act 2004 (the OHS Act).
66
A set of principles is also included in the Environment Protection Act 1970.
67
4.71. I recommend that the AC Act include a comparable statement of principles that apply to return
to work. The principles would help guide employers, injured workers and other stakeholders in
interpreting the legislative requirements, and foster the type of partnership between the various
parties that is essential to a successful return to work process.
4.72. I propose that the following principles be inserted in the return to work Part of the AC Act:
(a) Every injured worker should be enabled to return to meaningful work, consistent with his
or her capacity, as soon as it is safe and practicable to do so.
(b) Employers, injured workers and other parties involved in the return to work process should
cooperate to ensure that injured workers return to work successfully.
(c) Employers are responsible for providing pre-injury or other suitable employment to enable
injured workers to return to work.
(d) Injured workers are entitled, and should be encouraged, to be assisted, supported and
represented in the return to work process.
(e) Injured workers are entitled to receive effective rehabilitation to facilitate, where possible,
their early and sustainable return to work.
(f) Injured workers are responsible for participating in return to work planning and rehabilitation
and for taking up offers of pre-injury employment or suitable employment where they have
the capacity to do so.
Adopt an outcome-focused approach
4.73. Performance-based duties place the emphasis on achieving desirable outcomes, rather than
prescribing specific processes that must be followed.
4.74. Research has shown that prescriptive requirements involve high compliance costs, stifle
innovation, and prevent continuous improvement. They are efficient in only limited
circumstances.
68
4.75. I propose that the return to work obligations prescribed in the AC Act be reframed as
performance-based duties, which allow more flexibility to suit the circumstances of the parties
involved in the return to work process.
4.76. The core requirements should be that an employer:
• take all reasonable steps to return an injured worker to work as soon as possible; and
• consult as far as reasonably practicable with the injured worker and treating practitioner in
relation to the injured worker’s return to work.
69
4.77. The core duties will need to be supported by additional obligations under the AC Act, including
obligations on workers, which I discuss in paragraphs 4.231–4.240 below.
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65 C Maxwell, Occupational Health and Safety Act Review, March 2004, Department of Treasury and
Finance, 2004, p 22.
66 OHS Act, s 4.
67 OHS Act, s 1A.
68 Industry Commission, Work Health and Safety: Report of the Inquiry into Occupational Health and
Safety, vols 1 & 2, Industry Commission/AGPS, Canberra, 1995, viewed 12 June 2008;
<www.pc.gov.au/__data/assets/pdf_file/0011/6995/47workhev2.pdf>, p 357.
69 Section 36(1) of the OHS Act sets out a process for consultation which may be a model. It may be
appropriate to define consultation similarly in the AC Act.
4.78. The approach of performance-based duties will also need to be supported by appropriate
subordinate instruments. Accordingly, the AC Act should be amended to provide for the making
of those instruments, including regulations and compliance codes.
4.79. Compliance codes should have the same status as compliance codes under the OHS Act, and
would facilitate the provision of specific guidance on how to comply in particular
circumstances.
4.80. Because of its similarity to the framework for OHS in Victoria, the proposed approach will be
familiar to the parties involved with return to work in Victorian workplaces; and it has a range
of other advantages, including:
• clearly stating the duties of employers and workers in relation to return to work;
• moving the focus from “paper compliance” with specific provisions, to compliance with the
key obligation to assist an injured worker to return to work as soon as possible;
• providing more flexibility about the way in which return to work may be achieved in different
circumstances, including labour hire arrangements;
• providing a clear basis for consultation and cooperation between employer and worker; and
• providing a clear legal status for return to work guidance material issued by the VWA.
4.81. A performance-based approach, supported by regulations and guidance in compliance codes,
would clearly set out the standard that must be met, provide supportive advice on how to meet
the required standard and give greater consistency to the return to work process.
4.82. There may be some concern that a new approach to the return to work provisions will create
uncertainty, at least in the short term. The availability of clear comprehensive guidance at an
early stage will be critical to the success of the performance-based approach to return to work,
particularly guidance that is tailored to the needs of different industries and sectors.
4.83. However, I envisage that the VWA will develop the necessary supporting instruments and
guidance material in consultation with stakeholders.
PLANNING RETURN TO WORK
4.84. The AC Act requires all employers to prepare a return to work plan for an injured worker
as soon as practicable, but no later than 10 days after the “relevant day”.
70
4.85. The “relevant day” is defined in section 156(3) of the AC Act as the later of:
• the earliest of the following days – when a claim for weekly payments is accepted; or a
conciliation officer directs that weekly payments are to be paid; or a conciliation officer
recommends that weekly payments are to be paid and the recommendation is accepted
by the employer, the VWA or the self-insurer; or the claim is determined by a court in
favour of the worker; or
• the day when the employer becomes aware, or ought reasonably to have become aware,
that the worker’s period of incapacity is likely to exceed 20 days.
4.86. The definition of the “relevant day” is critical for employers, but difficult to interpret.
4.87. Under section 160(1) of the AC Act, a return to work plan must include:
• the name of the injured worker;
• an estimate of the date on which the worker should be fit to return to work;
• an offer of suitable employment (under section 155A); and
• the steps taken to facilitate the worker’s return to work.
4.88. The plan must also specify any occupational rehabilitation services necessary for the worker’s
return to work and maintenance at work.
71
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70 AC Act, s 156(2). The requirement applies to injuries occurring on or after 1 March 2004.
71 AC Act, s160(1)(b).
4.89. The plan must be prepared and revised in accordance with guidelines issued by the VWA.
72
4.90. Although a return to work plan is required no later than 10 days after the “relevant day”, an
employer’s obligation to provide suitable employment arises only when the worker has a
current work capacity.
73
4.91. The VWA’s Return to Work Guide for Victorian Employers
74
also sets out a number of
requirements, including that:
• the employer must prepare a return to work plan in consultation with the injured worker,
treating practitioner and occupational rehabilitation provider (if involved); and
• the employer must endeavour to arrive at a consensus with those people in relation to the plan.
Stakeholder views
4.92. VECCI
75
and Ai Group
76
both raise concerns that the obligation to prepare a return to work plan is
overly prescriptive and can distract from the real intent of the return to work process. Both argue
that clearer and simpler provisions would be welcome for the calculation of the relevant day.
4.93. VECCI recommends removing the requirement, because it simply achieves compliance and
makes no difference to return to work outcomes.
77
On the other hand, Ai Group argues that,
under a performance-based system, the preparation of a return to work plan may be one way
that the duty can be met.
78
4.94. VECCI submits that –
Confusion between the return to work plan and a written offer of suitable employment results
in innocent non compliance because employers believe they cannot offer a return to work
until the worker is declared fit for suitable employment.
79
4.95. VECCI also note that once the plan is completed –
. . . the employer may take the view that compliance has been achieved and do little or
nothing else to manage a return to work such as keeping regular contact, consulting with
the doctor or physiotherapist.
80
4.96. The VACC, on the other hand, submits that –
. . . obligations in relation to return to work plans are not too onerous on employers and
therefore should remain as they currently are. Simple guidance material on the return to
work process would assist and also Return-to-Work Coordinator training courses should
be promoted further through different media outlets.
81
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72 AC Act, s160(1)(c), s160(2).
73 AC Act, s 155A(2).
74 WorkSafe Victoria June 2005, The Return to Work Guide for Victorian Employers, viewed 24 June 2008
<www.worksafe.vic.gov.au/wps/wcm/resources/file/ebd043435e51e02/returntoworkguide.pdf>.
75 VECCI, Submission, April 2008, p 34.
76 Ai Group, Submission, May 2008, p 34.
77 VECCI, Submission, April 2008, p 36.
78 Ai Group, Submission, May 2008, p 35.
79 VECCI, Submission, April 2008, p 35.
80 VECCI, Submission, April 2008, p 36.
81 VACC, Submission, 1 May 2008, p 9.
4.97. The VTHC submits that the obligation needs to be amended, arguing that mandated guidelines
should be introduced on return to work plans that include –
• the employers’ obligations regarding the preparation of return to work plans;
• consultation and agreement with the worker and treating practitioners;
• offers of suitable employment; and
• the risk management practices to be adopted prior to the worker returning to employment.
82
Make planning return to work a core obligation
4.98. Research indicates that communication, cooperation and agreement on common goals
between the injured worker, the employer and healthcare professionals are critical for good
clinical and occupational outcomes.
83
4.99. It follows that return to work planning should commence at the earliest opportunity, regardless
of access to suitable employment, or the worker’s current work capacity. The current provision
does not support that objective.
4.100. The current rate of compliance with the obligation to prepare a return to work plan within the
current timeframe is 71.9% (the VWA’s target is 90%).
84
4.101. Results from the Return to Work Monitor indicate that injured workers involved in the
development of a return to work plan are more likely to consider the plan helpful than those
who had no involvement.
85
The results further support my recommendation that consultation be
a core employer duty.
4.102. Most jurisdictions have similar requirements for the development of return to work plans.
4.103. However, in New South Wales the insurer must also establish an injury management plan.
86
The injured worker, employer and treating doctor must also be consulted in the establishment
of the plan (to the maximum extent that their co-operation and participation allow).
87
New South
Wales also requires prompt reporting of injuries
88
to the insurer or scheme to ensure early injury
management to support this process.
89
4.104. Effective planning for return to work can be frustrated by the AC Act’s overemphasis on
timeliness of the paperwork rather than the plan’s content, consultation and relevance to the
particular circumstances of the injured worker and the worker’s workplace.
4.105. Nonetheless, planning for return to work should be commenced as soon as an injury occurs
and, to support that objective, I recommend that it be a core employer obligation in the AC Act.
4.106. Information about how to plan, consult and provide information to injured workers and other
workplace parties is more appropriately contained in supporting instruments or guidance
material.
4.107. This approach will allow the development of detailed material that may be tailored to a range
of workplace scenarios.
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82 VTHC, Submission, 2 May 2008, p 21.
83 For example, Bernacki and Tsai, 2003, and Franche and Krause, 2002, cited in P Foreman, G Murphy
and H Swerissen, Facilitators and Barriers to Return to Work: A Literature Review, Australian Institute
for Primary Care, La Trobe University, 2006, p 18.
84 Source: VWA.
85 Campbell Research & Consulting, Return to Work Monitor 2006/2007, HWCA, p ii.
86 Completion of an injury management plan is required for “significant injury”, which is defined as an
injury likely to result in incapacity for more than seven days. The worker and employer are required to
participate and cooperate in the preparation of the injury management plan. Workplace Injury
Management and Workers Compensation Act 1998 (NSW), ss 45, 46, 47.
87 Workplace Injury Management and Workers Compensation Act 1998 (NSW), s 45(2).
88 Workplace Injury Management and Workers Compensation Act 1998 (NSW), s 44.
89 Discussed in Chapter 3, “Ensuring timely access to benefits and support”, paragraphs 3.33-3.35.
PROVIDING PRE-INJURY OR SUITABLE EMPLOYMENT
4.108. Section 155A of the AC Act requires employers to provide employment to an injured worker
who can return to work within a specified period.
4.109. If the worker is able to return to her or his pre-injury role, the employer must offer the worker
that position or an equivalent position – known as “pre-injury employment”.
4.110. If the worker is not able to return to that role but is nonetheless capable of doing some work,
the employer must offer the worker “suitable employment”. Suitable employment is work that
suits the nature of the worker’s injury and the worker’s current work capacity.
90
This may mean
that the worker performs different duties or works fewer hours while recovering fully.
4.111. The employer’s obligation to provide pre-injury or other suitable employment to an injured
worker runs for a total of 12 months. Section 155A of the AC Act sets out a complex method
for calculating the 12-month period.
91
4.112. The provision is prescriptive but difficult to interpret. The period during which pre-injury or
suitable employment must be provided starts on the day when:
92
• a claim for weekly payments is accepted; or
• a conciliation officer gives a direction that weekly payments are to be paid; or
• a conciliation officer makes a recommendation that weekly payments are to be paid and the
recommendation is accepted by the employer or the VWA or the self-insurer; or
• the claim is determined by a court in favour of the worker.
4.113. Under section 155A(3)(c)(i), any period in which the worker does not have an incapacity for work
is excluded from the calculation of the 12-month period. It follows that the obligation to provide
pre-injury or other suitable employment can stop and start over a considerable length of time.
4.114. The following periods may also be excluded from the calculation of the 12-month period:
• the period between the VWA’s rejection of a claim after it has been accepted by the employer
and the resumption of weekly benefit payments; or
• the period between revocation of a conciliation officer’s direction that weekly payments be
made and the resumption of weekly benefit payments.
93
4.115. If the employer provides the worker with employment before the employer is required to do so,
the period of that employment is deducted from the 12 months.
94
4.116. The provisions outlined in paragraphs 4.114 and 4.115 above were introduced to ensure that
injured workers whose claims had been disputed retained an entitlement to suitable
employment, and that employers who provided employment when a claim was in dispute were
not required to provide employment for a longer period.
4.117. Given that an employer’s obligation is not continuous and a number of factors may affect the
currency of the obligation, the date on which the obligation ends may not be readily identifiable
by a worker. However, there is no obligation under the AC Act to advise a worker when the
employer’s obligation to provide pre-injury or suitable employment is ending.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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90 AC Act, s 5(1). The following factors need to be taken into account in determining suitable
employment: (a) the nature of the worker’s incapacity and pre-injury employment; (b) the worker’s
age, education, skills and work experience; (c) the worker’s place of residence; (d) the details given in
medical information, including the medical certificate supplied by the worker; (e) the worker’s return
to work plan, if any; and (f) if any occupational rehabilitation services are being provided to or for the
worker.
91 This provision only applies to injuries on or after 1 March 2004. For injuries before 1 March 2004,
re-employment obligations apply within the first 12 months after a worker’s injury while the worker
has an incapacity for work (or the sum of periods not more than 12 months in total). AC Act, s 122
(repealed).
92 AC Act, s 155A(1), (3)(a).
93 AC Act, s 155A(c)(ii).
94 AC Act, s 155A(3)(d)(ii).
Stakeholder views
4.118. Unions and the ALA
95
argue that the period in which pre-injury or suitable employment must
be provided should be extended beyond 52 weeks.
4.119. The VTHC submits that the period should be extended to 130 weeks, in line with the
entitlement period for weekly benefits.
96
The VTHC submits that –
This provision discriminates against more seriously injured workers who have a longer
recuperation period, or against workers who require surgery during that intial 12 month
window.
97
4.120. The SDA submits that the period should be extended to two years.
98
4.121. The WOHC supports the VTHC view and argues that the period should be extended to up
to three years, to support workers with long-term injuries or illnesses.
99
4.122. VECCI recognises that the calculation of the period is overly complex and in need of clarification
but opposes any extension of the current period.
100
4.123. The SIAV endorses a clearer and simpler explanation as to when the 12-month period begins
and ends. The SIAV proposes that the date should begin from the date that a worker first
becomes incapacitated for employment and should conclude at an aggregate of 52 weeks of
incapacity for work.
101
4.124. Ai Group also welcomes clearer and simpler provisions provided any redrafted provisions do not
disadvantage employers or workers. Ai Group opposes any extension of the period in which
pre-injury or suitable employment must be provided, principally due to concerns about adverse
impacts on return to work rates. Ai Group notes that, in South Australia, where there is an
ongoing obligation to re-employ the worker, there is a comparably lower return to work rate.
102
4.125. The VACC considers that the current 12-month period should be retained as it –
. . . provides a very reasonable opportunity for the employee to be rehabilitated in the
workplace, with a view to returning to full time pre-injury duties. Small to medium size
businesses would struggle both financially and also from an operational perspective if this
period was extended. These businesses have little or no capacity to pick up skilled or semi
skilled workers to be employed in a temporary fill capacity.
Furthermore, in the majority of cases where an employee is absent due to a work related
injury other employees have to pick up the job as well as do their own. In some cases the
person who picks up the role is the owner of the business. This in turn has the potential to
lead to a more stressful work environment.
Long term absences also have a financial impact as an employer in a small business operation
would have to meet the cost of trying to find a temporary replacement for the injured worker,
meet training costs for the replacement worker, recruitment costs and other resources
allocated to start a new person in the business. Larger businesses have the capacity to divert
resources from other areas to cover for an injured employee which limits costs.
An extension of the period would therefore have differential impacts on employers depending
on the size of the business.
103
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95 ALA, Submission, 8 February 2008, p 14.
96 VTHC, Submission, 2 May 2008, pp 17-18.
97 VTHC, Submission, 2 May 2008, p 17.
98 SDA, Submission, April 2008, p 3.
99 WOHC, Submission, 2 May 2008, p 5.
100 VECCI, Submission, April 2008, pp 25-26.
101 SIAV, Submission, May 2008, p 6.
102 The evidence on this point appears to be mixed. The Commonwealth scheme, which imposes
an ongoing obligation to re-employ injured workers, has the best return to work outcomes of any
Australian jurisdiction.
103 VACC, Submission, 1 May 2008, pp 6-7.
4.126. Freehills suggests that the 12-month period should have a clearly defined start and end point.
Freehills submits that the current 12-month period is unclear and misunderstood. Freehills
observes that the obligations can in fact exist for many years, given the exclusion, from the
12 months, of periods in which there is no incapacity (common where a condition is
intermittent).
104
4.127. The SDA submits that a large number of injured workers remain unaware of their limited job
protection until it is too late. The SDA says that the VWA should write to all injured claimants,
upon lodgement of their claims, advising them of the finite duration of their job protection.
105
4.128. The Compensation Law Bar Association notes that it is not uncommon for an employer to
dismiss an injured worker at the end of the 12-month period. The Association advocates a
notice period, which might galvanise both the employer and worker into pursuing return to work
options at that time.
106
4.129. Ai Group argues there would be no benefit in a notice requirement.
107
Similarly, the VACC does
not support a notice period because it –
. . . would be pre-empting the outcome for the worker and therefore, would not assist the
rehabilitation process in any way.
108
4.130. The SIAV does not agree that a worker should be given notice, because it considers that this
may provide an incentive to some workers to place pressure on their treating medical
practitioners to provide them with a clearance for work.
109
Create a core obligation: the provision of pre-injury or suitable employment for an aggregate
period of 12 months
4.131. The argument that the obligation to offer pre-injury or suitable employment should continue for
as long as the injured worker is entitled to weekly benefits has some merit.
4.132. By definition, injured workers are only entitled to receive weekly benefits for as long as they are
incapacitated for work and security of employment is important in supporting the rehabilitation
of injured workers.
4.133. However, injured workers’ need for security of employment must be balanced with employers’
need for commercial certainty. Long-term absences or long-term guarantees of employment
would have a financial impact on employers. Small employers, in particular, are less able to
meet the costs associated with long-term guarantees of employment.
4.134. In Australia, most workers’ compensation schemes that oblige employers to offer employment
to an injured worker limit the obligation to 12 months. In New South Wales, the worker is
entitled to suitable employment (if it is reasonably practicable)
110
and is protected from
dismissal for six months.
111
In South Australia, the obligation lasts indefinitely, subject to it
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104 Freehills, Submission, 11 February 2008, p 15.
105 SDA, Submission, April 2008, p 3.
106 Compensation Law Bar Association, Submission, 2 May 2008, p 9.
107 Ai Group, Submission, May 2008, p 28.
108 VACC, Submission, 1 May 2008, p 7.
109 SIAV, Submission, May 2008, p 6.
110 Workplace Injury Management and Workers Compensation Act 1998 (NSW), s 49.
111 An employer who dismisses an injured worker is guilty of an offence if the worker is dismissed
because the worker is not fit for employment as a result of the injury, and the worker is dismissed
within six months after the worker first became unfit for employment. If the employer offers a
dismissed injured worker’s position to another worker, the employer must advise them that the injured
worker may be reinstated to that position within two years of the date of injury. The Industrial
Relations Commission may order reinstatement. Workers Compensation Act 1987 (NSW), s 248.
being reasonably practicable to provide employment.
112
Under the Commonwealth scheme,
the employer is required to take all reasonable steps to provide an employee with suitable
employment where the employee is undertaking or has completed a rehabilitation program.
113
4.135. I believe the current provision in Victoria offers a reasonable compromise between the interests
of workers and the interests of employers.
4.136. However, the current provision is very complex and should be simplified to ensure transparency
and assist compliance.
4.137. I consider that the periods currently included and excluded by the AC Act in calculating the
12-month period are sound, because excluding periods during which the worker no longer has
an incapacity adequately supports the practical reality for many workers whose capacity may
fluctuate.
4.138. Accordingly, I recommend that the AC Act require employers to take all reasonable steps to
provide an injured worker with pre-injury or suitable employment for a period of 12 months as
a core duty to support return to work.
4.139. The AC Act should provide for appropriate subordinate instruments that would set out a clear
and detailed method for calculation of the 12-month period, based on the current provisions.
Introduce a notice period
4.140. Other jurisdictions (South Australia and Western Australia) require an employer to give an
injured worker notice if the employer intends to dismiss the worker.
114
New South Wales also
prohibits an employer from employing another person to replace an injured worker within two
years, without first notifying the injured worker.
115
4.141. Although termination of the employer’s obligation under the AC Act does not imply termination
of employment, it is arguable that workers should be advised in advance of the end of the
obligation.
4.142. This would ensure transparency and enable an injured worker to enter into discussions with the
worker’s employer or make decisions about future employment arrangements.
4.143. Injured workers in Victoria are generally given between 14 days’ and 13 weeks’ notice
116
of the
cessation of their entitlement to weekly benefits, and VWA policy states that workers should
be given 28 days’ notice that their entitlement to medical and like benefits is to end.
4.144. On balance, it seems reasonable that an employer should be required to notify an injured
worker before the employer’s obligation to provide employment comes to an end. I recommend
the introduction of a notice period to be prescribed in an appropriate subordinate instrument.
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112 Workers Rehabilitation and Compensation Act 1986 (SA), s 58B. The obligation does not apply where
the worker left the employment before incapacity for work commenced, the worker terminated the
employment after incapacity for work commenced or where less than 10 workers are employed and
the worker’s incapacity lasts longer than one year.
113 Safety, Rehabilitation and Compensation Act 1988 (Cth), s 40(1).
114 Workers Rehabilitation and Compensation Act 1986 (SA), s 58C; Workers’ Compensation and Injury
Management Act 1981 (WA), s 84AB.
115 Workers Compensation Act 1987 (NSW), s 247.
116 No notice is required where the worker has returned to work, has received less than 12 weeks of
weekly benefits, is no longer entitled to receive payments pursuant to the AC Act or has obtained
payments fraudulently. See AC Act, ss 114(6), 93E, 93EA, 93F, 96, 97(2) and 97(7).
EXEMPTION FROM THE OBLIGATION TO PROVIDE PRE-INJURY OR SUITABLE
EMPLOYMENT
4.145. Under section 155B an employer is exempt from the obligation to provide pre-injury or suitable
employment if complying with the obligation would cause the employer “unjustifiable hardship”.
This provision is similar to provisions in various anti-discrimination statutes,
117
under which the
onus is on the defendant to establish unjustifiable hardship.
4.146. Section 155B of the AC Act contains a non-exhaustive list of factors that can be relevant in
assessing unjustifiable hardship. The factors are:
• the nature of the benefit likely to accrue, or the detriment likely to be suffered, by any relevant
person;
• the effect on the worker of their incapacity for work;
• the financial circumstances of the employer and the estimated cost to the employer of
compliance;
• the extent of previous efforts by the employer to rehabilitate the worker;
• the sustainability of the relevant work in the medium to longer term with regard to the
worker’s injury;
• the worker’s length of service;
• the employer’s documented return to work policy;
• the potential for retraining the worker;
• the number of workers to which the employer has already extended suitable employment;
• the extent to which the injury that caused or materially contributed to the worker’s incapacity
is related to the worker’s employment with the employer; and
• the worker’s potential to obtain suitable employment elsewhere if they are not given suitable
employment by the employer.
4.147. No further guidance is available to assist an employer in assessing whether this provision is
relevant to the employer’s situation. The absence of procedural fairness guidance is problematic
for both employers and workers.
Stakeholder views
4.148. VECCI submits that the meaning of unjustifiable hardship needs to be clarified, so that it will be
clear when employers are exempt from the duty.
118
4.149. Ai Group submits that is not appropriate to have an exemption clause which can only be used
as a defence, arguing that employers should be afforded certainty about whether their decision
not to provide duties is reasonable.
119
4.150. The Master Plumbers and Mechanical Services Association notes the lack of clearly defined
circumstances that constitute unjustifiable hardship, and also submits that the provision is
confusing in some areas and irrelevant in others.
120
4.151. The SIAV favours an extension of the exemption provision in section 155B(2) to include further
examples of situations where compliance would cause unjustifiable hardship to a self-insurer.
It contends that –
The present list of exemptions does not refer to circumstances where there has been
misconduct or reasons other than the worker’s alleged injury for the termination of the
worker’s employment.
121
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117 See the Disability Discrimination Act 1992 (Cth), s 11; Anti-Discrimination Act 1977 (NSW), s 49C.
118 VECCI, Submission, April 2008, p 22.
119 Ai Group, May 2008, p 29.
120 Master Plumbers and Mechanical Services, Submission, 8 February 2008, p 3.
121 SIAV, Submission, May 2008, p 6.
4.152. VECCI submits that the following scenarios should be covered by the operation of section 155B:
• The worker is an ex-employee who claimed after their employment ceased.
• The worker is a deemed worker under section 8 or 9.
• The worker was a casual or was engaged for a set period or particular task and that time or
task is passed and and no longer required.
• The worker is one who had they never claimed compensation would now be redundant.
• The worker and their Treating Doctor certify before the 12 month period that the worker can
never return to that place of employment.
• The worker having been engaged on suitable employment engages in conduct that results
in a legal termination of the workers employment.
• The employer is able to demonstrate that no work matching the matters specified in the
section 5 definition of suitable employment is available to the worker at the employers’ [sic]
workplace.
• The employer is a small employer and able to satisfy the Authority that sustainable suitable
employment cannot be provided.
• The worker was a key employee with rare skills and the employer is able to demonstrate it
was not possible to replace the worker with a temporary person with the same skills.
122
4.153. The VACC submits that an employer should be exempt from the obligation to provide
employment where the employer has no duties which satisfy the worker’s restrictions.
123
4.154. The VFF is concerned that –
. . . many farmers are pressured into “creating” meaningless and non value adding duties for
employees in order to comply with the AC Act. Such duties may create frustration for workers
and employers, which could [lead] to a deterioration of the employment relationship. Farmers
have also expressed concern about the safety of workers performing alternative employment
on their farms. For these reasons, the VFF submits that the threshold test of “unjustifiable
hardship” for determining whether an employer may be exempt from providing suitable
employment should be lowered, or the AC Act should be amended to confer that the nature
of an employer’s business must be considered in determining whether unjustifiable hardship
exists.
. . .
Agricultural employment can be very seasonal and often dependent on many circumstances
outside the control of farmers, such as weather conditions and commodity prices . . . Put
simply, a farmer may have no work to offer and is forced into a situation of providing ongoing
casual employment which was never intended. The VFF submits that the AC Act be amended
to consider the situation where an employee is offered short term casual employment and the
employer has no job for the employee to return to.
124
Develop better supporting information
4.155. It is arguable that in a number of the situations outlined by stakeholders (see paragraphs 4.148
– 4.154 above), employers would be exempt from the requirement to provide pre-injury or
suitable employment under the current AC Act. However, my recommendation that employers
be required to take all reasonable steps to provide an injured worker with pre-injury or suitable
employment for a period of 12 months obviates the need for prescriptive exclusions.
4.156. I propose, instead, that the concept of taking “all reasonable steps” to comply with the
obligation to provide employment be covered in a compliance code or codes. Such instruments
are a more appropriate vehicle for detailed and specific guidance to provide employers with
greater certainty about their obligations and assist compliance with the revised performance-
based duty.
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122 VECCI, Submission, April 2008, p 27.
123 VACC, Submission, 1 May 2008, p 7.
124 VFF, Submission, May 2008, pp 8-9.
RISK MANAGEMENT AND OCCUPATIONAL REHABILITATION PROGRAMS
4.157. Employers with annual rateable remuneration of more than $1 million must establish and
maintain a risk management program and an occupational rehabilitation program at all times.
125
4.158. Employers with annual rateable remuneration of $1 million or less must establish and maintain a
risk management program and an occupational rehabilitation program where they have a worker
with an incapacity for work caused by a workplace injury.
126
The programs must be prepared
within three months after the “relevant day”.
127
4.159. The distinction between larger and smaller employers in relation to the obligation to implement
these programs (noted in paragraphs 4.157 and 4.158 above) was introduced in 1994. The
distinction was clearly designed to reduce administrative burdens on smaller employers.
4.160. Occupational rehabilitation programs must include a statement of the employer’s return to work
policy, the name of the return to work coordinator nominated by the employer and the name of
at least one occupational rehabilitation provider.
128
The AC Act requires that the program be
developed in consultation with the employer’s workers, be in writing, and be made available to
all workers.
129
4.161. A risk management program must set out the steps to be taken after an injury has occurred in
the workplace to reduce, as far as is practicable, the risk of subsequent injuries of that kind.
130
There is no express requirement that the program be in writing.
Stakeholder views
4.162. Ai Group is concerned that –
The content of the [rehabilitation and risk management] programs are largely established
by the Act. On this basis, the requirement to develop the programs in consultation with
employees is problematic. Genuine consultation cannot occur when so much of the program
is prescribed.
131
4.163. VECCI questions whether there is a need for the development of an occupational rehabilitation
program. VECCI argues that large employers who operate most aspects of their business in
accordance with written policies may wish to develop a policy on return to work but such a
requirement should not be legislated.
132
4.164. The SIAV submits that the requirement to have occupational rehabilitation and risk management
programs does not generate better outcomes and increases administrative burdens.
133
On the
other hand, the VACC argues that the programs are satisfactory and do not impose a major
burden on employers.
134
4.165. According to VECCI, the requirements imposed on employers under the OHS Act mean there
is no need to articulate an equivalent duty in the AC Act to do what is reasonably practicable
to reduce risk through a risk management program.
135
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125 AC Act, s 156(1). These employers are required to establish and maintain these programs within
three months of the certification or assessment of their rateable remuneration.
126 AC Act, s 156(2)(b).
127 See paragraph 4.4.85 above for the definition of “relevant day”.
128 AC Act, s 158(1)(a). The occupational rehabilitation program must also provide for any additional
matters specified by the VWA: AC Act, s 158(1)(b).
129 AC Act, s 158(1)(c).
130 AC Act, s 159.
131 Ai Group, Submission, February 2008, p 34.
132 VECCI, Submission, April 2008, p 32.
133 SIAV, Submission, May 2008, p 7.
134 VACC, Submission, 1 May 2008, p 8.
135 VECCI, Submission, April 2008, p 33.
4.166. The CFA also supports the removal of the risk management requirement on similar grounds.
136
The SIAV submits that the obligation falls within the ambit of the OHS Act and “should be
regulated in that fashion rather than by the AC Act”.
137
4.167. Ai Group notes that the requirements of a risk management program in the AC Act are –
. . . inconsistent with the contemporary definition of risk management which is about the
proactive identification and control of risks, prior to injuries occurring. In addition, the
requirements duplicate and possibly undermine the obligations in the Occupational Health
and Safety Act 2004.
138
4.168. According to the VACC, risk management programs provided for under the AC Act have very
little relevance in workplaces and the requirement to prepare them should be removed.
139
4.169. However, the VTHC believes risk management programs are of critical importance, submitting
that there is a difference between what is covered under the OHS Act and the AC Act. The
VTHC is of the view that –
Under the OHS Act, employers are required to undertake risk assessments to prevent injuries.
Under the AC Act, the procedures required relate to steps to be taken after an injury has
occurred to prevent the risk of subsequent injury of that nature.
140
4.170. Ai Group
141
and the VACC
142
argue that the threshold for establishment of occupational
rehabilitation and risk management programs should be increased.
4.171. Some stakeholders indicate that another threshold should be used instead of rateable
remuneration. For instance, VECCI submits that a 20-employee threshold should be used;
143
and Ai Group submits that it may be more appropriate to base the threshold on risk.
144
4.172. The VTHC believes that all employers should be required to establish and maintain the
programs regardless of their size.
145
Make the obligation to develop and make available information about occupational rehabilitation
and return to work a core obligation
4.173. Providing workers with adequate information about occupational rehabilitation and return to
work is vital to establishing a workplace culture that supports returning injured workers to work.
4.174. However, navigation of the complex legislative requirements that relate to occupational
rehabilitation plans and an emphasis on paper compliance can divert attention from the desired
outcome.
4.175. The intent of the existing duties is to ensure that policies and procedures about:
• occupational rehabilitation, including occupational rehabilitation providers; and
• return to work, including (where appropriate) the nominated return to work coordinator;
are developed and made available to workers.
4.176. Thus, I recommend that the AC Act require employers to develop and make available to workers
information about those matters and that further details about that information be clearly set
out in regulations.
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PAGE 147
136 CFA, Submission, 29 April 2008, p 2.
137 SIAV, Submission, May 2008, p 8.
138 Ai Group, Submission, May 2008, p 33.
139 VACC, Submission, 1 May 2008, p 8.
140 VTHC, Submission, 2 May 2008, p 20.
141 Ai Group, Submission, May 2008, p 32.
142 VACC, Submission, 1 May 2008, p 8.
143 VECCI, Submission, April 2008, p 33.
144 Ai Group, Submission, May 2008, p 33.
145 VTHC, Submission, 2 May 2008, p 20.
4.177. Information about how to consult with workers on those matters and appropriate means of
making information available to workers should be provided in detailed guidance or compliance
codes, to assist employers to meet their return to work obligations and provide greater certainty
about compliance.
Remove the explicit obligations to establish a risk management program
4.178. Employers are not expressly required to develop a risk management program under the OHS
Act. However, the obligation to provide and maintain a working environment that is safe and
without risks to health requires employers to eliminate (or otherwise reduce) risks to health and
safety so far as is reasonably practicable.
146
4.179. Part 3 of the OHS Act sets out other general duties relating to health and safety and further
particulars are provided in the OHS Regulations 2007.
4.180. The VWA’s Return to Work Guide for Victorian Employers describes risk management program
activities following an injury as including:
• an injury report;
• investigation to identify the cause(s) of the injury;
• risk assessment to review the cause(s) of the injury;
• risk control via identifying and implementing all practicable measures to eliminate or reduce
the cause of the injury; and
• once implemented, monitoring of any risk controls to ensure the controls are effective in
preventing further injury.
4.181. The duties set out in the OHS legislation are broad and clearly encompass the risk management
program required under the AC Act. To avoid duplication, reduce red tape for employers and
ensure consistency between both Acts, I recommend that the requirement to establish a risk
management program be removed from the AC Act.
RETURN TO WORK COORDINATORS
4.182. A large employer is required to nominate a return to work coordinator as part of the employer’s
occupational rehabilitation program.
147
All other employers are required to nominate a return to
work coordinator as soon as practicable, but no later than 10 days, after the “relevant day”.
148
4.183. Although the AC Act requires the appointment of a return to work coordinator and sets out the
coordinator’s functions,
149
there is no requirement that the return to work coordinator have
appropriate seniority in order adequately to perform those functions, nor is there any
requirement for training.
4.184. The absence of any prescribed qualifications or skills may mean (particularly in a small
workplace) that the return to work coordinator’s role is undertaken by a person working in
administration, such as a pay clerk.
4.185. A two-day return to work coordinator training course developed and endorsed by the VWA is
available. The training was developed in consultation with key employer associations, the VTHC
and representatives from the SIAV. It is conducted by approved training providers.
150
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146 OHS Act, ss 20, 21(1).
147 AC Act, ss 156(1) and 158(1).
148 Refer to paragraph 4.85 for the definition of “relevant day”.
149 AC Act, s 161.
150 WorkSafe Victoria, viewed 3 July 2008; <www.worksafe.vic.gov.au/wps/wcm/connect/WorkSafe/
Home/Injury+and+Claims/Returning+to+Work/Return+To+Work+Co-ordinators/>.
4.186. To date, 3255 people have completed the training, representing approximately 13% of medium
and large (including government) Victorian employers, and there are currently 6061 return to
work coordinators registered with the VWA.
151
4.187. Both New South Wales
152
and Queensland
153
require return to work coordinators to undertake
approved or accredited training.
4.188. The return to work obligations under the AC Act are placed on the employer. Section 242(6) of
the AC Act makes it clear that the liability for failing to comply with a provision in Part VI of the
AC Act (which deals with return to work plans) falls on an employer.
4.189. However, the return to work coordinator provisions (in particular, section 161) create the
impression that the return to work coordinator may be personally liable if the coordinator fails
to meet some of the obligations under the AC Act.
4.190. This issue is addressed in section 58(3) of the OHS Act, which ensures that duties are not
imposed directly on health and safety representatives. The subsection provides:
Nothing in the Act or the regulations imposes, or is to be taken to impose, a function or duty
on a health and safety representative in that capacity.
Stakeholder views
4.191. Ai Group suggests that –
It may be appropriate to mirror the provisions in the OHS Act associated with the nomination
of a management representative to deal with OHS Issues, i.e. that the RTWC must have an
“appropriate level of seniority, and be sufficiently competent” to undertake the role.
This approach may also overcome the tendency for some organisations to view the RTWC role
as one that is focused on paperwork and therefore allocated to a person of relatively low
seniority, with good administration and keyboarding skills.
154
4.192. The VTHC submits that return to work coordinators should attend compulsory training,
accredited by the VWA and paid for by the employer through paid time off work to attend
the training.
155
4.193. Ai Group is concerned that mandating specific training for return to work coordinators may
be problematic and particularly difficult for small employers. Ai Group submits –
Highly skilled and experienced RTWCs who have been undertaking the role for an extended
period are unlikely to need additional training. Whilst they may get some value out of a
refresher, our trainers have reported that it can be unnecessary to cover the base level of
information for these participants. This cohort would get greater benefit from attending a skills-
enhancing seminar or conference . . .
At the other end of the continuum, RTWCs in small organisations do not benefit greatly from
the experience of attending the endorsed program. In fact, the nature of the course requires a
reasonable amount of experience if one is to participate effectively. Our trainers have reported
that it is particularly difficult to deliver this course when all participants are new to the role of
RTWC.
We have found that a 1/2 day seminar which outlines all the key legislative obligations
associated with WorkCover, or one-on-one assistance when a claim occurs, is a much better
approach for those RTWCs who work in organisations with a low level of claims.
156
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151 Source: VWA.
152 In New South Wales, only return to work coordinators at category 1 employers (base tariff premium of
over $50,000) must undertake approved training. Workers Compensation Regulations 2003, reg 15l(1)(a).
153 Workers’ Compensation and Rehabilitation Act 2003 (Qld), s 41(a); Workers’ Compensation and
Rehabilitation Regulation 2003 (Qld), reg 99A.
154 Ai Group, Submission, February 2008, p 38.
155 VTHC, Submission, 25 January 2008, p 4.
156 Ai Group, Submission, February 2008, pp 37-38.
4.194. The ANF urges the Review to consider imposing a duty on employers to ensure that return to
work coordinators have the skills, resources and authority to discharge their functions. The ANF
submits that return to work coordinators often fail to meet their obligations and survey results
indicate that 51% of nurses were very unsatisfied with the service provided by their return to
work coordinator.
157
Appointment of appropriate person to manage return to work to be a core obligation
4.195. Most jurisdictions place more onerous return to work obligations on larger employers. In
Victoria, the more onerous obligations include nomination of a return to work coordinator as
part of an occupational rehabilitation program, regardless of whether an injury has occurred:
see paragraph 4.182 above.
4.196. In order to identify larger employers, schemes take into account various aspects such as
remuneration, premium and/or the number of workers employed.
4.197. In Victoria, rateable remuneration of $1 million
158
is used as the threshold at which the
requirement to implement an occupational rehabilitation program is activated.
4.198. In New South Wales, all employers are required to establish return to work programs.
159
An employer is also required to develop a customised return to work program if the employer
employs more than 20 workers and is insured by a specialist insurer, if the employer’s premium
exceeds $50,000 a year, or if the employer is self-insured.
160
4.199. Similarly, an employer is required to employ or engage a return to work coordinator if the
employer employs more than 20 workers and is insured by a specialist insurer, if the employer’s
premium exceeds $50,000 a year, or if the employer is self-insured.
161
4.200. Queensland requires an employer to implement a rehabilitation policy and procedure
162
and
appoint a rehabilitation and return to work coordinator
163
if the employer has 30 or more
workers at a workplace in a high-risk industry
164
or if the employer has a payroll in Queensland
of more than $4.9 million for the preceding financial year (subject to variation by notice in the
Industrial Gazette).
165
4.201. In Tasmania, employers who employ more than 50 workers must provide a rehabilitation
coordinator.
166
Employers who employ more than 20 employees must prepare a rehabilitation
policy.
167
4.202. Considering the Victorian obligation to implement an occupational rehabilitation program
(see paragraph 4.197 above), the current equivalent to rateable remuneration of $1 million
in 1994 (when s 156 was enacted) would be $1.76 million.
168
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157 ANF, Submission, 2 May 2008, p 8.
158 AC Act, s 156(1).
159 Workplace Injury Management and Workers Compensation Act 1998 (NSW), s 52.
160 WorkCover NSW, Standard Return to Work Programs, p 1; viewed 23 July 2008;
<http://www.workcover.
nsw.gov.au/NR/rdonlyres/599236E2-EA98-45E4-A675-8FFFE8600956/0/standard_return_to_work_
program_0004.pdf>.
161 Workers Compensation Regulation 2003 (NSW), regs 3A and 15I.
162 Workers’ Compensation and Rehabilitation Act 2003 (Qld), s 227.
163 Workers’ Compensation and Rehabilitation Act 2003 (Qld), s 226.
164 Defined in schedule 5A of the Workers’ Compensation and Rehabilitation Regulation 2003 (Qld).
165 Workers’ Compensation and Rehabilitation Regulation 2003 (Qld), regs 99C, 99D.
166 Workers Rehabilitation and Compensation Act 1988 (Tas), s 143A.
167 Workers Rehabilitation and Compensation Act 1988 (Tas), s 143.
168 Using Australian Bureau of Statistics table 6302.0 – average weekly earnings full-time adult ordinary
time earnings for private and public sectors, comparing the November 2007 trend estimate figure with
the November 1994 trend estimate figure.
4.203. Recent VWA projects, aimed at more effectively targeting compliance and enforcement
initiatives, have segmented employers on the basis of remuneration. For that purpose, the VWA
considers small employers to be those with remuneration of up to $2 million, medium-sized
employers to be those with remuneration between $2 million and $20 million, and large
employers to be those with remuneration over $20 million.
4.204. An alternative approach would be to use the premium payable by each employer as a basis to
differentiate employers, factoring in a measure of each employer’s risk of claims. However, that
approach would not reflect the claims experience of the smallest employers, whose premiums
are calculated on the bases of remuneration and industry rate.
4.205. The role of return to work coordinators is critical to the overall return to work process. They are
a dedicated resource for coordinating a worker’s return to work on behalf of the employer.
4.206. Thus, I recommend that, following an injury, nomination of an individual to manage the worker’s
return to work should be a core employer obligation
169
under the AC Act.
4.207. Small employers should be allowed sufficient flexibility to meet the requirement to appoint a
return to work coordinator without imposing an undue financial burden: they should be able to
nominate themselves or a management representative for the duration of the injury.
4.208. On the basis of the VWA’s segmentation strategy, the AC Act should require employers with
remuneration of $2 million or more (indexed annually) to maintain a return to work coordinator
at all times.
4.209. The role and functions of the return to work coordinator should be set out in more detail in
supporting instruments and guidance material.
4.210. In all cases, the person nominated to manage return to work should be of appropriate seniority
within the workplace to perform the role adequately.
Allow for a flexible approach to developing competencies
4.211. Although it is imperative that the person nominated to manage return to work is competent
to perform that role effectively, it is arguable whether training should be mandatory.
4.212. For some employers, especially those who have few claims, mandatory training may impose
an unreasonable cost.
4.213. Without undermining the critical value of training, I consider that a more flexible approach
to developing the required competencies is needed.
4.214. A preferable approach would be to specify the competencies required of each person
appointed to manage return to work, without demanding training as the only way of achieving
competence. That approach would allow other means of gaining appropriate skills and
experience, such as workplace mentoring.
4.215. That approach has been adopted for employer representatives under the OHS Act, and the VWA
has produced guidance on the competencies required of employer representatives.
170
Ensure the person appointed is not personally liable
4.216. The AC Act clearly states that it is the employer who is liable for failing to comply with a
provision in Part VI of the AC Act: see paragraph 4.188 above. It is imperative to ensure that no
personal liability is imposed on a return to work coordinator (in that capacity) for an employer’s
failure to comply with Part VI.
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169 That is, an obligation imposed by the AC Act.
170 WorkSafe Victoria, Employer Representative Competencies, viewed 20 June 2008;
<www.worksafe.vic.gov.au/wps/wcm/resources/file/ebce42435de8942/employer_rep_comp.pdf>.
4.217. A provision equivalent to section 58(3) of the OHS Act should therefore be included in the
AC Act to ensure that return to work coordinators are protected against liability.
LABOUR HIRE
4.218. It is estimated that over a quarter of all Victorian workplaces use labour hire arrangements;
171
and the number of workplaces doing so has grown rapidly in recent years. In 2005, labour hire
employees were estimated to represent up to 3% of Australia’s workforce.
172
It is likely that, in
2008, the proportion of the Victorian workforce made up by labour hire employees has grown
beyond 3%.
4.219. Although labour hire agencies and host employers share responsibility for the workplace health
and safety of labour hire workers,
173
if a worker who is employed by a labour hire agency is
injured at the worker’s “host firm”, the statutory obligations relating to return to work fall only
on the labour hire agency.
4.220. The definition of “employer” in section 5(1) of the AC Act provides that the labour hire firm is
the employer when there are labour hire arrangements. The definition has been in place since
1985 and “employer” was similarly defined under the earlier Workers Compensation Act
1958.
174
4.221. Host employers currently have no obligation to participate in the rehabilitation and return to
work of injured labour hire workers. The absence of any obligation on the host employer to
provide the worker with suitable employment reduces the opportunities for effective workplace
rehabilitation for these workers.
Stakeholder views
4.222. The RCSA, which represents labour hire agencies, submits that the obligation to provide
suitable employment to the injured worker should extend to host employers so far as it is
reasonably practicable for the host employer to do so. Alternatively, the RCSA suggests that the
host employer should at least assist the worker back to work in conjunction with the labour hire
firm.
175
4.223. VECCI opposes the imposition of any new legal obligation on host employers through the AC
Act. VECCI notes that it would be unfair to impose a burden on the host employer, particularly
where the contract was short-term. VECCI also argues that providing such employment would
be costly and, where the requirements of section 138 recoveries are maintained, would make
the use of labour hire a high-risk option.
176
4.224. Similarly, Ai Group argues against the AC Act placing obligations on host employers, particularly
where the employment was intended to be short-term. Ai Group submits that the arrangements
should be left to the commercial environment and not be placed in legislation.
177
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171 Economic Development Committee, Victorian Parliamentary Inquiry into Labour Hire Employment in
Victoria, final report, 2005, p xxii; citing Ian Watson, Earnings, Employment Benefits and Industrial
Coverage in Victoria: A Report to the Victorian Industrial Relations Taskforce (Volume 1), ACIRRT,
University of Sydney, July 2000, p 30.
172 Economic Development Committee, Victorian Parliamentary Inquiry into Labour Hire Employment in
Victoria, final report, 2005, p 1; citing P Laplagne, M Glover and T Fry, The Growth of Labour Hire
Employment in Australia, Staff Working Paper, Productivity Commission, Melbourne, February 2005,
p 7.
173 Economic Development Committee, Victorian Parliamentary Inquiry into Labour Hire Employment in
Victoria, final report, 2005, p 100.
174 Workers Compensation Act 1958, s 3.
175 RCSA, Submission, 2 May 2008, p 3.
176 VECCI, Submission, April 2008, p 29.
177 Ai Group, Submission, May 2008, p 30.
4.225. On the other hand, the VTHC recommends that –
. . . the legislation be amended to provide a dual obligation on both the labour hire firm and
the host employer to provide suitable employment.
178
Make cooperation between host employers and the labour hire agencies a core obligation
4.226. In my view, requiring all host employers to provide suitable employment for workers employed
by labour hire agencies, if applied generally, would be oppressive and undermine the cost-
effectiveness of labour hire arrangements.
4.227. However, I am persuaded by the argument that the reduction in suitable employment
opportunities for labour hire workers places greater pressure, not only on the health of
individual workers, but also on the costs of workers’ compensation claims for labour hire
agencies and the scheme as a whole.
179
4.228. Cooperation between workplace parties is critical for achieving the best return to work and
rehabilitation outcomes. I believe that a requirement that (host) employers take all reasonable
steps to cooperate with labour hire agencies in the return to work of injured labour hire workers
would signal the importance of this approach.
4.229. The VWA, in consultation with stakeholders, should develop the necessary supporting
instruments and guidance material to indicate how host employers should cooperate with
labour hire agencies on return to work.
4.230. Guidance material should focus on specific industries and address the issue of compliance
in short-term and long-term labour hire arrangements.
Workers’ obligations
4.231. To facilitate return to work, the AC Act also imposes requirements on injured workers.
4.232. In particular, in order to continue to receive weekly benefits,
180
a worker is required to
• make every reasonable effort to participate in an occupational rehabilitation service or
a return to work plan;
181
• make every reasonable effort to return to work in suitable employment;
182
and
• participate in assessments of the worker’s capacity, rehabilitation progress and future
employment prospects when requested to do so.
183
4.233. The worker must also submit at reasonable intervals to an examination by an independent
medical examiner.
184
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178 VTHC, Submission, 2 May 2008, p 19.
179 Economic Development Committee, Victorian Parliamentary Inquiry into Labour Hire Employment in
Victoria, final report, 2005, p 102.
180 These apply where a worker has no work capacity.
181 AC Act, s 93CA(3)(a)(i); s 93CB(3)(a)(i); s 93CC(3)(a). During the first and second entitlement periods
where the worker has a capacity for work, the worker is required to participate in an occupational
rehabilitation service or return to work plan, rather than make every reasonable effort to participate:
AC Act, s 93CA(3)(b)(i); s 93CB(3)(b)(i).
182 AC Act, s 93CA(3)(a)(ii); s 93CB(3)(a)(ii); s 93CC(3)(b). During the first and second entitlement period,
where a worker has a current work capacity, the worker is required to make every reasonable effort to
return to work in suitable employment at the worker’s place of employment in cooperation with the
employer and the Authority (or self-insurer): AC Act, s 93CA(3)(b)(ii); s 93CB(3)(b)(ii); s 93CB(3)(c)(ii0.
Where the worker’s employer cannot provide suitable employment, the worker must make every effort
to return to work at another place of employment: AC Act, s 93CA(3)(b)(iii); s 93CB(3)(b)(iii);
s 93CB(3)(c)(iii).
183 AC Act, ss 93CA(3)(a)(iii), 93CA(3)(b)(iv); ss 93CB(3)(a)(iii), 93CB(3)(c)(iv); s 93CC(3)(c).
184 AC Act, s 112.
4.234. To receive weekly benefits, a worker must also obtain certificates of capacity from a healthcare
professional (prescribed in the AC Act).
185
Finally, if the worker is receiving weekly benefits,
the worker must attend an interview with the VWA or the self-insurer for the purpose of
determining whether the worker’s opportunities for employment can be enhanced, when
required by the VWA or self-insurer.
186
Realign workers’ obligations and provide guidance
4.235. I believe it is appropriate to require injured workers to engage in the return to work process.
4.236. That requirement is already expressed in the AC Act. However, the obligation is currently
expressed as a ground for the termination of weekly benefits and are located with the
provisions that relate to weekly payments.
187
4.237. The location of the obligation detracts from the significance of worker engagement in the return
to work process. A more appropriate signal of the importance of the obligation would be
provided if the duty was framed positively and placed alongside employers’ duties, to provide a
degree of symmetry to the return to work obligations.
4.238. I propose that the AC Act should continue to require workers to make reasonable efforts to
participate in the return to work process (as currently required under the AC Act), including:
• participating in an occupational rehabilitation service and return to work planning;
• returning to work in suitable employment, either at the pre-injury workplace or at another
place of employment; and
• participating in assessments of capacity, rehabilitation progress and future employment
prospects when requested to do so.
4.239. I also recommend that further guidance about what constitutes reasonable efforts to return to
work be included in a compliance code.
4.240. I consider that the sanction for failure to make reasonable efforts to participate in the return to
work process should initially involve suspension of weekly benefits, with termination to follow if
the failure is not remedied within 28 days.
4.241. I discuss the application of penalties for non-compliance with return to work obligations more
broadly in paragraphs 4.261–4.262 below, and in chapter 5, “Better income replacement”,
at paragraphs 5.157-5.162.
Summary of recommendations
4.242. In summary, then, I recommend that the current return to work obligations be reframed
as performance-based duties, thus allowing duty holders more flexibility in the means of
compliance. Crucially, this approach is intended to shift the focus away from paper compliance
and towards achieving early and sustained return to work for injured workers.
4.243. I propose that the core employer obligations
188
should be to:
• take all reasonable steps to return an injured worker to work as soon as possible;
• take all reasonable steps to provide an injured worker with pre-injury or suitable employment
for a period of 12 months;
• consult as far as is reasonably practicable with the injured worker and treating practitioner
on the injured worker’s return to work;
189
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185 AC Act, s 111.
186 AC Act, s 162.
187 AC Act, ss 93CA, 93CB, 93CC.
188 That is, obligations imposed by the AC Act.
189 Section 36(1) of the OHS Act sets out a process for consultation which may be a model. It may be
appropriate to similarly define consultation in the AC Act.
• take reasonable steps to plan an injured worker’s return to work from the date of the injury;
• for employers with remuneration of $2 million or more, maintain the appointment of a person
of appropriate seniority to manage return to work at the employer’s workplace – a return to
work co-ordinator;
• for employers with remuneration below $2 million, appoint a return to work coordinator (of
appropriate seniority) following an injury in the employer’s workplace;
• develop and make available to the employer’s workers such information about return to work
and occupational rehabilitation as is prescribed by the regulations; and
• take reasonable steps to co-operate with labour hire employers on the return to work of
injured labour hire workers (host employers), with the content of those reasonable steps to be
guided by a compliance code.
4.244. I also propose that the AC Act should continue to require workers to make reasonable efforts to
participate in the return to work process (where currently required under the AC Act), including:
• participating in an occupational rehabilitation service and return to work planning;
• returning to work in suitable employment, either at the pre-injury workplace or at another
place of employment; and
• participating in assessments of capacity, rehabilitation progress and future employment
prospects when requested to do so.
The sanction for failure to make those reasonable efforts should initially involve suspension of
weekly benefits, with termination to follow if the failure is not remedied within 28 days.
4.245. The current requirement to implement a risk management program (sections 156(1)(b) and 159
of the AC Act) is an unnecessary duplication of the extensive obligations imposed on employers
under the OHS Act. Although employers should continue to maintain a safe and healthy
environment, I propose removing that requirement from the AC Act.
4.246. The VWA should, in consultation with stakeholders develop subordinate instruments that set
out how to comply with the requirements imposed by the principal legislation.
4.247. The subordinate instruments will deal with issues such as –
• how employers should plan for a worker’s return to work, including the development of more
formal plans for workers who remain incapacitated for longer periods;
• how and when employers should consult with injured workers and treating practitioners;
• what policies and procedures should be maintained by employers to manage return to work
and occupational rehabilitation in their workplaces (including procedures for the nomination
of the three approved occupational rehabilitation providers from whom workers may choose
when they need such services);
• how those policies and procedures should be made available to workers;
• how employers should maintain a safe and healthy working environment for workers returning
to work following injury;
• how each of the participants in the return to work process (employers, workers, health and
safety representatives (HSRs), treating practitioners and the VWA) should work together to
promote return to work outcomes; and
• how host employers should cooperate with labour hire agencies on return to work.
4.248. The move to a new compliance framework should be complemented by a properly resourced
inspectorate with appropriate powers, responsible for monitoring and enforcing return to work
obligations and giving advice and support to workplace parties about compliance issues:
see paragraphs 4.287–4.292 below.
COMPLIANCE AND ENFORCEMENT
4.249. The VWA supports, monitors and enforces compliance with return to work obligations through
its Compliance and Enforcement branch and the recently established return to work
inspectorate.
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4.250. The VWA carries out a range of activities to encourage compliance with the return to work
requirements, including providing information and guidance, such as the Return to Work Guide
for Victorian Employers,
190
as well as enforcement through prosecution where appropriate.
4.251. The tools available to the VWA, aside from prosecution, include the imposition of additional
liabilities for breaches of certain provisions,
191
letters of caution, sentencing options and post-
prosecution activities such as publishing information about the outcome of the prosecution.
192
Penalties for non-compliance
4.252. The AC Act creates offences and penalties that aim to encourage employers and workers to
comply with their return to work obligations.
4.253. The AC Act provides that, where employers fail to meet their return to work obligations, they
can be prosecuted and fined. The current maximum penalty for failing to provide pre-injury or
suitable employment is 250 penalty units (currently $28,355).
193
For other employer obligations
relating to return to work, the maximum penalty is 120 penalty units (currently $13,610).
194
4.254. There are also sanctions for workers under the AC Act. For example, as discussed in paragraph
4.232 above, an injured worker’s weekly benefits may be terminated if the worker fails to make
every reasonable effort to return to work in suitable employment and participate in an
occupational rehabilitation service or a return to work plan.
4.255. Further, the AC Act provides that, where a worker fails to meet certain obligations in relation to
return to work, the worker may be subject to prosecution. It is an offence for an injured worker
to fail to attend an interview with the VWA or the self-insurer for the purpose of determining
whether the worker’s opportunities for employment can be enhanced.
195
The maximum penalty
is 20 penalty units (currently $2268).
196
4.256. It is also an offence for a worker who is on weekly benefits to fail to notify the employer or the
VWA when the worker returns to work.
197
The maximum penalty is 10 penalty units for the first
offence (currently $1134) and 20 penalty units for subsequent offences (currently $2268).
198
Stakeholder views
4.257. The Compensation Law Bar Association submits that the current sanctions for a worker who
fails to comply with the return to work obligations are extremely harsh.
199
4.258. VECCI submits that benefit termination is an adequate incentive for workers to participate
in return to work programs, but points out that agents rarely apply the sanction in the first
26 weeks. VECCI also argues that omitting to make a decision to cease payments when
there are grounds to do so should be subject to independent review.
200
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190 WorkSafe Victoria, The Return to Work Guide for Victorian Employers, viewed 24 June 2008;
<www.worksafe.vic.gov.au/wps/wcm/resources/file/ebd043435e51e02/returntoworkguide.pdf>.
191 For example, AC Act, s 108(4A).
192 VWA, RCBU Compliance and Enforcement Policy (Incorporating the General Prosecution Guidelines),
2003.
193 AC Act, s 242(1).
194 AC Act, s 242(6).
195 AC Act, s 162.
196 AC Act, s 242(8).
197 AC Act, s 123(2) and (3).
198 AC Act, s 242(5).
199 Compensation Law Bar Association, Submission, 2 May 2008, p 8.
200 VECCI, Submission, April 2008, p 41.
Introduce a broader range of measures to address non-compliance
4.259. In my view, penalties for non-compliance with workers’ obligations should be proportionate to
the gravity of the non-compliance. The AC Act should provide for a range of sanctions.
4.260. For example, I consider that a failure to participate in an interview to determine future
employment prospects should be subject to suspension or termination of weekly benefits,
rather than criminal consequences.
201
4.261. Criminal consequences should not flow from a worker’s failure to report a return to work, a
failure that may occur inadvertently. However, fraudulently obtaining (or attempting to obtain)
payments should remain a separate offence under the AC Act, and be subject to criminal
consequences
.202
4.262. With those comments in mind, I recommend that an appropriately proportionate regime of
sanctions be constructed to underpin my recommendation that a new compliance framework
be adopted to support injured workers returning to work.
The return to work inspectorate
4.263. The AC Act confers on authorised persons powers to enter, inspect and examine any premises
to monitor and enforce compliance with the AC Act and the ACWI Act.
203
4.264. The AC Act also gives the VWA the power to require, for specific purposes, any person to
provide information, attend and give evidence, and produce all books in the person’s custody
and control.
204
The specific purposes include:
• determining whether a provision of the AC Act or the ACWI Act has been contravened;
• inquiring into or ascertaining a person’s liability or entitlement under the AC Act or the
ACWI Act; and
• ascertaining the identity of any person who may have a liability or entitlement under either Act
or who may affect the liability or entitlement of another related, associated or connected
person.
4.265. Traditionally, the powers have been delegated to investigators whose role is to investigate non-
compliance with the AC Act and the ACWI Act. However, the VWA has recently expanded the
role of authorised persons and established a return to work inspectorate to carry out
compliance and enforcement activities in relation to the return to work obligations.
4.266. The functions of the return to work inspectorate are to:
• raise awareness of the obligations of employers;
• identify non-compliance;
• facilitate the development of return to work plans through provision of relevant information;
• encourage the establishment of occupational rehabilitation programs; and
• encourage better liaison between key stakeholders.
4.267. As part of a pilot program for the return to work inspectorate, six inspectors conducted
479 workplace visits between November 2006 and November 2007.
4.268. A minority of visits demonstrated some non-compliance in relation to return to work plans, but
100% compliance was achieved at the time of each follow-up visit.
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201 See the discussion and recommendations in Chapter 5, “Better income replacement”,
paragraphs 5.162 and 5.165.
202 AC Act, s 248.
203 AC Act, s 240.
204 AC Act, s 239.
4.269. A larger proportion of employers did not have an occupational rehabilitation program in place
that met all the requirements of the AC Act. Deficiencies included a failure to develop a return
to work policy and a failure to consult with workers on the policy. Similarly, there was 100%
compliance by the time of the follow-up visits.
4.270. Some employers did not meet all the requirements of the AC Act in relation to risk management
programs, but were able to demonstrate compliance based on the work they had done to
comply with the OHS Act.
205
4.271. Overall, satisfaction with the return to work inspectorate is very high.
206
Approximately three-
quarters of employers who were visited reported that the inspectors’ visits led to a greater
understanding of return to work issues. Over half the employers indicated that the visit changed
their workplace’s approach and practices relating to return to work.
207
4.272. The return to work inspectorate is being increased to 10 inspectors, and the VWA is employing
inspectors with a wider range of skills (such as rehabilitation or case management skills) to
address the different needs of employers in the return to work context, as opposed to the OHS
context.
4.273. It has recently been proposed that the Victorian model be adopted in South Australia.
208
4.274. Table 4.3 summarises the results of the VWA’s compliance and enforcement activities.
TABLE 4.3: COMPLIANCE BRANCH ENFORCEMENT ACTION, 1 JULY 2006 – 30 JUNE 2007
AND 1 JULY 2007 – 30 APRIL 2008 (YTD)
209
4.275. As seen in table 4.3, letters of caution and advice are the main enforcement activity in relation
to return to work. The other available enforcement mechanism is prosecution. Unlike their OHS
counterparts, return to work inspectors do not have the power to issue improvement notices or
directions during site visits to require contraventions to be remedied.
4.276. Although the recent establishment of a return to work inspectorate has improved the VWA’s
capacity to ensure compliance with return to work requirements, the effectiveness of the
inspectorate is constrained by the narrow range of tools available to ensure compliance. At the
same time, the consequences of enforcement activity for employers are either low (letter of
caution or advice) or extremely high (prosecution).
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205 Source: VWA.
206 Source: VWA.
207 Source: VWA.
208 Bracton Consulting Services Pty Ltd and PricewaterhouseCoopers, Review of the South Australian
Workers’ Compensation System Report, December 2007, p 180.
209 Source: VWA.
Offence
Caution/Letter of advice Prosecutions completed
06/07 07/08 (YTD) 06/07 07/08 (YTD)
Failure to prepare an return to work plan 19 27 10 2
Failure to provide suitable employment 0 7 2 0
Stakeholder views
4.277. Unions strongly support a dedicated return to work inspectorate with appropriate powers and
resources. In particular, the VTHC is of the view that the return to work inspectorate should
have the power to –
• issue formal notices requiring employers to prepare or provide offers of employment suited
to the worker;
• issue penalty notices for breaches of the AC Act, including failing to provide return to work
plans, rehabilitation and employment suited to the worker;
• ensure compliance with the objects of the AC Act.
210
4.278. VECCI does not object to the return to work inspectorate having additional powers to issue
notices. However, VECCI submits that the inspectors should not be involved in –
• identifying suitable work and offering that to the worker and/or treating doctor;
• identifying suitable work and issuing a notice directing the employer to offer a specific job
of suitable employment;
• consulting with the treating doctor about return to work unless the treating doctor has
sought the inspector’s intervention;
• [issuing] a notice directing the worker to accept an offer of suitable employment;
• [acting] as a Case Manager for a worker;
• [engaging] in any investigation for the purpose of prosecution (but like OHS Inspectors be
required to refer suspected non-compliance to the compliance branch for comprehensive
investigation in accordance with the [Authority’s] Prosecution Policy).
211
4.279. Ai Group argues that VWA’s agents are best placed to identify whether employers are meeting
their return to work obligations and contended that –
It is not appropriate to overlay an inspection process where agents are currently well-equipped
to deal with return to work issues which are currently the focus of the inspectorate.
212
4.280. Ai Group submits that, if there is to be a return to work inspection regime, it would seem
appropriate to enable the current OHS inspectorate to address return to work issues during
other compliance programs and activities. In particular, Ai Group contends –
It is not appropriate to establish a separate Return to Work inspectorate, at a significant cost
to the scheme (and therefore employers), as it would result in the following outcomes:
• duplication of responsibilities between the Agents and the inspectorate;
• duplication of roles between the OHS inspectorate and the Return to Work inspectorate;
• confusion amongst employers and workers about what a WorkSafe inspector does; and
• increased expense to the scheme with little, if any, benefit to injured workers or
employers.
213
4.281. Ai Group further submits that, if there is to be a separate return to work inspectorate (which
it opposes), it would appropriate that the inspectorate generally has the same processes for
workplace visits as its OHS counterparts.
214
4.282. The SIAV similarly opposes increasing the return to work inspectorate’s powers.
215
4.283. The VACC supports the strengthening of existing powers to ensure enforcement of the AC Act,
provided the powers are supplemented by an internal review process.
216
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210 VTHC, Submission, 2 May 2008, p 22.
211 VECCI, Submission, April 2008, pp 38-39.
212 Ai Group, Submission, May 2008, p 37.
213 Ai Group, Submission, May 2008, p 38.
214 Ai Group, Submission, May 2008, p 38.
215 SIAV, Submission, 2 May 2008, p 9.
216 VACC, Submission, 1 May 2008, p 9.
Provide the return to work inspectorate with broader enforcement powers
4.284. There is general support for an inspectorate that can provide guidance and advice about the
complex operations of the AC Act.
4.285. A variety of tools should be available to encourage compliance – ranging from providing support
and guidance to administrative and criminal enforcement measures.
4.286. Although the VWA has achieved a great deal by initiating a pilot inspectorate, and there are
plans for its expansion, I believe its independence and accountability must be better supported
by the AC Act.
4.287. In my view, there is a strong case for more effective compliance and enforcement activity to
support the return to work requirements in the AC Act. The need for that activity will be
amplified by the transition from prescriptive to performance-based legislation.
4.288. I recommend that the powers of the return to work inspectorate be expanded and that the
inspectorate be provided with appropriate tools to monitor and encourage compliance with the
AC Act. As suggested by stakeholders, the OHS inspectorate offers an appropriate model for
compliance and enforcement activities on return to work and for review of decisions.
4.289. In particular, inspectors should be authorised to direct employers to remedy contraventions
“on the spot”, rather than having to rely on voluntary compliance or the threat of prosecution.
4.290. Return to work inspectors should also be authorised to issue improvement notices, which
would cover failures to take reasonable steps to return a worker to work. The notices would
require that breaches of the AC Act be rectified within a timeframe specified in the notice.
Failure to comply with an improvement notice would be grounds for prosecution.
4.291. A provision of a compliance code could be cited in an improvement notice as the basis of
evidence of the employer’s failure to take reasonable steps to return a worker to work.
4.292. A person whose interests were affected by a decision to issue or not to issue an improvement
notice could request internal review of that decision.
Ensure powers and review mechanisms are consistent with the OHS Act and Government policy
4.293. The Victorian Parliamentary Law Reform Committee’s report on coercive powers indicated that
those powers should only be available where they are necessary to enforce the objects of the
relevant legislation.
217
4.294. The report made a large number of recommendations, many of which are relevant to the exercise
of power by return to work inspectors. The Government has issued a response to the report,
supporting many of its recommendations in principle. That response should inform any proposals
for further reform of the powers of the return to work inspectorate following this Review.
4.295. The OHS Act gives the VWA’s OHS inspectors powers of inspection that differ from those
provided to return to work inspectors under the AC Act.
4.296. An OHS inspector may enter any place that the inspector reasonably believes to be a workplace
at any time during working hours, or at any other time the inspector believes there is an
immediate risk to health and safety.
218
An OHS inspector who enters a workplace has a range
of powers after entry.
219
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217 Victorian Parliament Law Reform Committee, The Powers of Entry, Search, Seizure and Questioning by
Authorised Persons, 2002.
218 OHS Act, s 98.
219 OHS Act, s 99. The powers include the power to inspect, examine, and make enquiries of persons and
things; seize relevant items; take photographs, measurements or make sketches or recordings;
exercise any other power conferred on the inspector under the OHS Act or its regulations; and do any
other thing reasonably necessary for the purpose of performing the inspector’s functions or exercising
the inspector’s powers under the OHS Act or its regulations.
4.297. The powers of an authorised person under the AC Act are less specific as they were not drafted
with an inspectorate in mind.
4.298. Under the OHS Act, the inspector must take all reasonable steps after entry to the workplace
to notify the occupier, or apparent occupier, and the relevant HSR,
220
and show the inspector’s
identity card to those persons.
221
However, under the AC Act there are no legislated
requirements for the inspector to notify an occupier or produce identification.
4.299. The Victorian Parliamentary Law Reform Committee’s report recommended that all Acts
conferring relevant powers on inspectors require inspectors to produce identification
automatically.
4.300. Following an inspection, the OHS Act requires that a report about that entry must be provided
to the occupier and the relevant HSR.
222
The report must include particulars about the purpose
of entry
223
and a description of things done.
224
There is no equivalent requirement under the
AC Act.
4.301. Given that the VWA administers both inspectorates, I believe it is desirable to align the basic
processes that inspectors must follow during entry and inspections (such as showing
identification and providing a written report about the entry). Alignment would ensure a
consistent approach and improve transparency and accountability. It would also set consistent
expectations for employers.
4.302. As stakeholders have argued, it is appropriate that the AC Act contain the same provisions
about legal professional privilege and protection against self-incrimination as are found in the
OHS Act.
4.303. The Victorian Parliamentary Law Reform Committee’s report made several recommendations
about legal professional privilege and protection against self-incrimination. The Government’s
response to the recommendations should inform the drafting of the provisions in the AC Act.
4.304. There is also a strong case for a transparent means of reviewing the decisions made by
inspectors and the VWA in relation to return to work.
4.305. The OHS Act prescribes a clear process for review of inspectors’ activities by the VWA and
VCAT. The process allows workers and employers to seek a quick and informal review of a
wide range of decisions made by OHS inspectors.
4.306. Although relatively new, the mechanisms appear to be operating well. There were 686 requests
for review of an OHS inspector’s decision during 2006/2007. Seven people were not satisfied
with the outcome of the review performed by the VWA’s Internal Review Unit and sought
external review by VCAT.
4.307. There are currently no review mechanisms for decisions by return to work inspectors, and this
lack of accountability should be addressed.
4.308. I recommend that the processes for review of decisions made by the OHS and return to work
inspectorates be the same, to ensure consistency and improve transparency and accountability.
4.309. The AC Act should identify which decisions are reviewable and which parties are entitled to
request a review in respect of each decision.
225
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220 OHS Act, s 102(1).
221 The inspector is not obliged to do so if it would defeat the purpose of entry or cause unreasonable
delay, or if the person is already aware the inspector has entered the place or was notified in advance
of when the entry would occur; OHS Act, s 102(2).
222 OHS Act, s 103(1).
223 OHS Act, s 103(2)(b).
224 OHS Act, s 103(2)(c).
225 See OHS Act, s 127 for a model.
Substantially increase the size of the return to work inspectorate and provide appropriate training
4.310. The OHS inspectorate conducted 42,924 workplace inspections in 2006/2007.
226
The return
to work inspectorate, as part of the pilot program, visited 479 workplaces.
227
For 2008/2009,
1500 visits are planned. The return to work inspectorate should be expanded to the level
where the inspectorate can conduct a credible workplace intervention program.
4.311. The proposed move to a performance-based approach, which will allow employers more
flexibility in how to achieve compliance, will provide new challenges for the return to work
inspectorate.
4.312. Like the OHS inspectorate, the return to work inspectorate will require a training program
to equip it for compliance and enforcement activities directed at performance-based duties.
The inspectorate will also need expertise in the appropriate use of the new enforcement
tools that would be available to it – in particular, improvement notices and directions.
4.313. Following the proposed move to performance-based legislation and the obvious similarities
between the proposed return to work and OHS inspectorates, consideration may need to be
given to whether the two inspectorates should continue to operate as separate entities.
WORKERS’ RIGHT OF ACTION
4.314. Section 252 of the AC Act gives the VWA the exclusive power to commence prosecution
proceedings under the Act.
4.315. It has been suggested that workers should be given a right to take their own legal action,
particularly in relation to failures by employers to offer suitable employment.
4.316. The question of the right of parties other than the VWA to prosecute for breaches of legislation
was recently examined by Chris Maxwell QC (as his Honour was at that time) in his review of
the OHS Act.
228
Mr Maxwell rejected the proposition that parties other than the VWA should
be given the right to prosecute for health and safety breaches on the following grounds:
• prosecution for criminal offences is a matter of the utmost seriousness and is properly the
exclusive function of the State;
• there is no evidence of “under-prosecution” by the VWA;
• the role of the prosecutor is a specialist one and it is desirable that the relevant expertise be
concentrated in one place; and
• it is important to the integrity and consistency of the enforcement side of the scheme that
the VWA have exclusive control over prosecutions.
4.317. In New South Wales, where unions have the right to prosecute employers for breaches of their
OHS Act, prosecutions are relatively few in number.
229
4.318. Under the New South Wales scheme, if an injured worker is dismissed because the worker is
not fit for employment as a result of a work-related injury, the worker may seek reinstatement.
If the employer does not reinstate the worker, the worker may apply to the Industrial Relations
Commission for a reinstatement order. That order can be sought within two years of the injury.
Aside from that example in New South Wales, no other party has a right to bring an action in
relation to such a breach of workers’ compensation laws in any other jurisdiction.
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226 VWA, Annual Report 2006/2007, p 19.
227 Source: VWA.
228 C Maxwell, Occupational Health and Safety Act Review, March 2004, Department of Treasury and
Finance, 2004, pp 360-361.
229 Hon Paul Stein, Inquiry into Report on the Review of the Occupational Health and Safety Act 2000, April
2007, viewed 29 July 2008; <http://www.workcover.nsw.gov.au/NR/rdonlyres/2E8123F1-1505-4A4C-
AED7-23033E22595D/0/stein_inquiry_report_5625.pdf>.
Stakeholder views
4.319. The VTHC proposes that –
. . . the right to take legal action by injured workers against employers who fail to offer suitable
or pre-injury employment should be underwritten by the Regulator. This will ensure that
workers are properly protected and have genuine recourse against employers who act
unlawfully. This approach would be consistent with the fact that the costs of employer litigation
with respect to disputed claims are met by the VWA.
230
4.320. The VTHC argues that giving workers the right to take their own legal action is important, given
that the VWA has only attempted a handful of prosecutions under section 155A (or that
section’s predecessor).
231
4.321. Other stakeholders reject the proposal. Ai Group submits that it is not necessary to introduce
additional rights, because workers can apply to the ACCS if an employer fails to provide suitable
employment.
232
4.322. VECCI also opposes the introduction of a right of action for workers. VECCI notes that workers
who have been disadvantaged as a result of their injury can seek damages elsewhere.
233
4.323. Nonetheless, employer organisations submit that an efficient means of settling compliance
disputes is warranted.
4.324. The ALA is concerned at the lack of avenues for workers to seek meaningful review of any
failure to offer suitable employment: other than referral to the ACCS, the ALA says, there is no
power to direct an employer to offer suitable employment. The ALA also submits that workers
should be able to have a failure to offer suitable employment judicially considered and
determined.
234
Retain the existing arrangements
4.325. I agree with the Maxwell report (see paragraph 4.316 above) that prosecution for criminal
offences is a matter of the utmost seriousness, and that it should remain the exclusive function
of the State (through the VWA) to deal with non-compliance.
4.326. One alternative, granting a worker the right to sue for damages for a breach of the employer’s
obligations under the AC Act, would foster an adversarial culture, reducing the prospects of a
successful return to work at the workplace. To provide such a remedy would simply establish
another ground for disputation and legal action.
4.327. For those reasons, I do not consider it appropriate to allow other parties to prosecute for
breaches of the AC Act, or to permit workers to initiate legal action to recover damages for
breaches of the AC Act.
4.328. The OHS legislation
235
allows a person to request that the VWA bring a prosecution for an
offence against the Act where no prosecution has been brought within six months of the
alleged offence; and, if the VWA decides not bring the prosecution, the person may require
the VWA to refer the matter to the Director of Public Prosecutions, who is to advise in writing
whether a prosecution should be brought.
4.329. Although the VWA should retain the exclusive right to prosecute, the AC Act should be
amended to allow any person to seek of a review of the VWA’s decision not to prosecute
an offence, consistent with the OHS legislation.
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230 VTHC, Submission, 2 May 2008, p 19.
231 VTHC, Submission, 2 May 2008, p 18.
232 Ai Group, Submission, May 2008, p 30.
233 VECCI, April 2008, p 28.
234 ALA, Submission, 8 February 2008, p 14.
235 OHS Act, s 131; Dangerous Goods Act 1985, s 40A; Equipment (Public Safety) Act 1994, s 28A.
4.330. I acknowledge the importance of ensuring that employer obligations are enforced in a timely
and appropriate way. Workers who believe that suitable employment has not been provided
should be encouraged to contact the return to work inspectorate, which can intervene with
appropriate advice and guidance or, as I discuss above in paragraphs 4.284–4.292, take
enforcement action where necessary.
ROLES OF OTHER WORKPLACE PARTIES INVOLVED IN RETURN TO WORK
4.331. Although the key return to work obligations are placed on employers, the cooperation of all
workplace parties (including injured workers, occupational rehabilitation providers, healthcare
providers, the VWA and its authorised agents) is crucial.
Worker representatives
4.332. Given the number of parties who are usually involved, the return to work process can be
daunting for the injured worker, who is unlikely to be familiar with the complex requirements of
the AC Act and the range of services that may be available. It has been suggested that injured
workers may benefit from further advice and representation to assist them as part of this
process.
4.333. Under the OHS Act, employees are entitled to be represented on health and safety issues
by one or more elected HSRs.
236
HSRs are elected by members of designated workgroups
(DWGs). The composition of the DWGs is agreed between the employer and employees.
4.334. HSRs are entitled to paid time off work to attend initial and annual refresher training courses
approved by the VWA. HSRs are also entitled to paid time off work to attend other approved
training courses.
Stakeholder views
4.335. VTHC
237
and union groups such as the VIEU
238
submit that workers have a right to be
represented throughout the return to work process. VTHC also expresses the view that the
AC Act should be amended to require employers to consult elected HSRs on the content of
risk management programs.
239
4.336. The NUW suggests that the AC Act be amended to include a worker’s right to elected
representation along the same lines as the OHS Act. The NWU also submits that the
representative should be permitted to attend training on the same lines as under the
OHS Act.
240
4.337. The AMWU and the MUA submit that the AC Act should be amended to provide for worker
representatives with powers, rights and provisions similar to those found in the OHS Act.
241
They also submit that such persons could be HSRs or worker representatives elected by
workers.
242
4.338. In its submission, the APA notes that physiotherapists tend to become involved in advocacy
for their clients, due to the absence of independent, non-legal advocacy services.
243
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236 OHS Act, Part 7.
237 VTHC, Submission, 2 May 2008, p 7.
238 VIEU, Submission, May 2008, p 4.
239 VTHC, Submission, 2 May 2008, p 23.
240 NUW, Submission, 2 May 2008, p 1.
241 AMWU, Submission, 2 May 2008, p 1; MUA, Submission, 2008, p 1.
242 AMWU, Submission, 2 May 2008, p 1; MUA, Submission, 2008, p 1.
243 APA, Submission, May 2008, p 5.
Extend the role of HSRs to represent injured workers on return to work
4.339. To assist workers to participate actively in the return to work process and to understand their
rights and responsibilities, I believe that workers should have access to representation and
assistance from a worker advocate. In my view, an elected HSR is in a good position to provide
that kind of support.
4.340. HSRs could make a constructive contribution to the worker’s return to work by providing
support and information. Indeed, they are familiar with the workplace and are likely to be aware
of the suitable employment opportunities that might be available to an injured worker. Their
HSR training covers representation and negotiation skills, which would help them advocate for
an injured worker.
4.341. Where an injured worker has returned to work, the HSR could assist in achieving a smooth
transition back into the workplace.
4.342. At the same time, clear and open communication between the employer and the injured worker
is essential to good return to work outcomes; so the HSR should not be the sole intermediary
through whom all communications between the employer and the worker must pass. Nor
should HSRs exercise their role in a way that works against a culture of support and
communication by adopting an adversarial approach rather than one based on cooperation.
4.343. There is currently nothing in the AC Act to prevent a worker from obtaining the support of
another person (such as a union representative, an HSR or a relative) to assist the worker
through the return to work process.
4.344. However, it would be appropriate to provide a formal basis for that support, and I recommend
that the AC Act and the OHS Act be amended to extend the role of HSRs, so that they can also
represent workers in the return to work process.
4.345. However, I do not propose that the formal recognition of HSRs’ role should limit in any way
a worker’s right to seek support from other parties, as is currently permitted.
4.346. HSRs’ current powers
244
would need to be extended to authorise an HSR to:
• attend interviews between an injured worker who is a member of the HSR’s DWG and any
other party involved in the return to work process (if the worker agrees);
• be consulted by the employer on the establishment of an occupational rehabilitation program,
the nomination of a return to work coordinator and other relevant matters affecting the DWG;
• be informed of (and, where appropriate, be consulted about) any activity that a return to work
inspector is undertaking that is relevant to the DWG;
• issue a Provisional Improvement Notice, after consulting with the employer, to require
that a contravention or suspected contravention of return to work requirements be fixed;
• be given the facilities and assistance the HSR needs to carry out the role;
• seek the assistance of other people; and
• take time off work with pay to attend training approved by the VWA.
4.347. The matters that are currently required to be taken into account when negotiating the
establishment of DWGs
245
would also need to be expanded in relation to the HSRs’ enhanced
return to work role.
4.348. Similarly, the training of HSRs would need to be expanded to cover their new role. The training
would need to address, not only the return to work requirements of the AC Act, HSRs’ role and
the roles of others involved in the return to work process, but also how to exercise HSRs’ role
in a way that fosters the type of partnership between workplace parties that is essential for a
successful return to work process.
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244 OHS Act, s 58(1).
245 OHS Act, ss 46 and 49.
4.349. Currently, the duration of the initial HSR training course is five days, and the annual refresher
training is one day. The periods are not specified in legislation, but are determined by the VWA
following consultation with unions and employers.
4.350. The training periods would need to be extended to cover the matters outlined in paragraph
4.348 above, which would impose additional costs on employers. However, I expect that the
benefits to employers of having more injured workers return to work would outweigh the
additional costs of training.
4.351. I also recommend that HSRs be permitted to act as a worker’s representative only where the
worker consents to that representation.
4.352. As part of the expansion of the HSRs’ role, an employer will be obliged to provide the relevant
HSR with access to certain information. However, information relating to the worker’s medical
condition should only be provided with the worker’s consent.
4.353. Although I acknowledge that there may be some concerns about this approach, I believe that
the potential benefits outweigh those concerns.
Occupational rehabilitation providers
4.354. Occupational rehabilitation is one of a number of defined medical and like services in the
AC Act.
246
Currently the AC Act requires that the return to work plan for an injured worker
include any occupational rehabilitation services that are reasonably necessary to assist the
worker in returning to and remaining at work.
247
4.355. Occupational rehabilitation refers to services designed to help workers return to work, either
with their pre-injury employer or, if that is not possible, with a new employer. The AC Act
defines “occupational rehabilitation services” to include workplace assessments, advice
concerning job modification, counselling and vocational re-education, where those services
are provided by a person approved by the VWA.
248
4.356. The provision of occupational rehabilitation services is an exception to the general principle
that workers can choose their own healthcare providers.
• Under the AC Act, a worker is required to choose from a list of at least three approved
providers nominated by the VWA, employer or self-insurer.
249
• If the worker fails to choose a provider within 14 days, the VWA (or employer or self-insurer)
determines the occupational rehabilitation provider.
250
• However, if the VWA (or employer or self-insurer) does not provide a list of occupational
rehabilitation providers, the worker can choose from all VWA-approved occupational
rehabilitation providers.
251
Stakeholder views
4.357. The VTHC submits that workers should be able to choose any approved occupational
rehabilitation provider.
252
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246 I discuss the services further in Chapter 6, “Treatment expenses”, paragraph 6.5.
247 AC Act, s160(1)(b).
248 AC Act, s 5(1).
249 AC Act, s 99(3A)-(3D).
250 AC Act, s 99(3D).
251 AC Act, s 99(3A)(b).
252 VTHC, Submission, 2 May 2008, p 21.
4.358. The AEU believes that –
. . . the current practice of restricting choice of occupational rehabilitation providers to 3
nominated by the claims agent, should be replaced by the worker having a choice from
all providers on the list approved by the VWA.
253
4.359. The APA supports the right for injured workers to choose their occupational rehabilitation
providers.
254
4.360. The ARPA submits that the choice of three providers creates a layer of administration that
works against early intervention. It suggests that removing the current provision would
eliminate delays and enable earlier return to work planning.
255
4.361. Employer groups support maintaining the choice from three providers. However, some
employer groups criticise aspects of the provisions. For example, Ai Group submits that –
. . . the current 14-day delay can significantly impact on the employer’s ability to provide timely
return to work.
256
4.362. VECCI submits that when, the provision giving workers a choice from a list of three providers
was proposed as an amendment to the AC Act, it believed the change would delay the
commencement of rehabilitation services, and contends that the provision has done precisely
that.
257
VECCI also submits that it would be an improvement if the worker was required to
select a provider within four days, with the right of choice then reverting to the employer.
258
Allow workers seven days to select an occupational rehabilitation provider
4.363. There are advantages in allowing an employer some say in a worker’s choice of occupational
rehabilitation provider. The provision of occupational rehabilitation requires some knowledge of
the workplace in order to assist workers back to work effectively. Some employers therefore
establish appropriate relationships with certain providers in order to reduce the need to educate
other providers about the workplace.
4.364. The current provisions balance the aims of ensuring that injured workers have some choice in
selecting their occupational rehabilitation provider, and that employers retain some influence
over the provider that is used. I recommend that the current provision allowing workers to
choose from at least three occupational rehabilitation providers be maintained.
4.365. However, in my view it is important that the balance should not inhibit timely receipt of
occupational rehabilitation services. The current provision has the potential to sacrifice earlier
intervention. I therefore recommend reducing to seven days the time within which the worker
needs to choose a provider.
4.366. Although each employer is required to nominate an occupational rehabilitation provider as
part of the employer’s occupational rehabilitation program,
259
the AC Act does not require
that provider to be included in the list of three providers.
4.367. VWA policy indicates that the nominated provider should be included on the list where the
occupational rehabilitation service required relates to return to work.
260
It is understood that
most employers include the nominated provider on the list offered to workers. I suggest that
further guidance on this matter should be provided.
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PAGE 167
253 AEU, Submission, 2008, p 4.
254 APA, Submission, 2 May 2008, p 3.
255 ARPA, Submission, 25 April 2008, p 2.
256 Ai Group, Submission, May 2008, p 34.
257 VECCI, Submission, April 2008, p 34.
258 VECCI, Submission, April 2008, p 35.
259 AC Act, s 158(1)(a)(iii).
260 VWA Claims Manual, paragraph 8.2.9.
Healthcare providers
4.368. Communication and coordination between all parties, including the treating practitioner, have
been demonstrated as having a positive influence on health and return to work outcomes. The
evidence suggests that participation by healthcare providers is important in achieving early
return to work.
261
For example, a study commissioned by WorkCover WA confirmed that
increased liaison between the injured worker’s general practitioner and the workplace was
associated with better return to work rates and lower claim costs.
262
4.369. Employers tend to respond positively to the advice of healthcare providers about the
modification of work space and duties,
263
and workers respond well to positive
recommendations to return to work.
264
4.370. Under the AC Act, certain healthcare providers have a key role in certifying whether a worker is
fit for work via a “certificate of capacity”. The certificate of capacity is a critical document in the
return to work process and should provide timely and detailed information to assist the
development of a return to work plan.
265
4.371. A “certificate” relating to a worker’s medical condition or work capacity is raised in at least three
different situations under the AC Act.
• Section 105 covers a “medical certificate” that accompanies a worker’s claim for
compensation.
266
The certificate must be provided by a medical practitioner and is limited
to 14 days unless there are special reasons for extending that period.
267
• Section 111 covers the certification of a worker’s “capacity for work” in order for the worker
to receive weekly payments. The certificate can be provided by a medical practitioner,
registered physiotherapist, chiropractor or osteopath, and can be issued for up to 28 days
unless special reasons apply.
268
• Section 113 allows the VWA, a self-insurer or an employer (at its expense) to require a worker
to obtain a “medical certificate” from a nominated healthcare provider (a medical practitioner,
registered physiotherapist, chiropractor or osteopath). The AC Act limits the number of
requests to one every three months, and requires the nominated healthcare provider to be
accessible to the worker.
269
There are no sanctions under the AC Act for a worker who fails
to obtain a section 113 certificate.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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261 A Kosny, RL Franche, J Pole, N Krause, P Côté and C Mustard, “Early healthcare provider
communication with patients and their workplace following a lost-time claim for an occupational
musculoskeletal injury”, Journal of Occupational Rehabilitation, vol 16, no 1, 2006, pp 27-39. Source:
Return to Work Knowledge Base, Healthcare Provider Participation is Important in Achieving Early
Return to Work, viewed 13 May 2008; <www.rtwknowledge.org/browse.php?article_id=21
&view_type=insurer>.
262 D Morrison, GA Wood and D Munrowd, Management Practices, Medical Interventions and Return to
Work, 1998, viewed 13 May 2008; <www.workcover.wa.gov.au/NR/rdonlyres/41AD9216-1AA9-4450-
9320-5A167BB363F5/0/ManagementPracticesMedicalInterventionsandReturntoWork.pdf>. Source:
P Foreman, G Murphy and H Swerissen, Facilitators and Barriers to Return to Work: A Literature
Review, Australian Institute for Primary Care, 2006, p 24.
263 Return to Work Knowledge Base, Healthcare Provider Participation is Important in Achieving Early
Return to Work, viewed 13 May 2008; <www.rtwknowledge.org/browse.php?article_id=21
&view_type=insurer>.
264 Return to Work Knowledge Base, Healthcare Provider Participation is Important in Achieving Early
Return to Work, viewed 13 May 2008; <www.rtwknowledge.org/browse.php?article_id=21
&view_type=insurer>.
265 Issues relating to medical certificates and certificates of capacity are discussed further in Chapter 5,
“Better income replacement benefits” and Chapter 6, “Treatment expenses”.
266 AC Act, s 103(1)(b) states that, unless the claim is for compensation under ss 92, 92A, 92B, 98, 98A,
98C or 99, the claim must be accompanied by a certificate under s 105.
267 AC Act, s 105(1)(a) and (3). The certificate must be issued by a medical practitioner, be in a form
approved by the VWA, and specify the expected duration of the worker’s incapacity and whether the
worker has a current work capacity or has no current work capacity. The certificate is for 14 days
(unless the VWA or self-insurer is satisfied there are special reasons which require an extension).
268 AC Act, s 111(2)(a)(ii) and (b).
269 AC Act, s 113(3). The worker must obtain the medical certificate from a medical practitioner or a
person authorised under the AC Act within 14 days of being required to do so: s 113(2).
4.372. Healthcare practitioners provide workers with initial treatment and prognoses for rehabilitation
and return to work. They can also play a central role, together with the employer and the
worker, in developing injury management and return to work strategies.
270
4.373. In contrast, the New South Wales system adopts a consolidated injury management approach
that outlines the responsibilities of all parties in the return to work process. However, that
system does not impose any duties on treating health practitioners.
Stakeholder views
4.374. NewCare suggests that –
. . . the role and responsibility of the injured worker’s treating doctor [is] one of the great
deficiencies within the Act and, with further limitations on obtaining information from an
alternative source, return to work activities are sometimes restricted and delayed.
271
4.375. VECCI submits that, in the overwhelming view of employers, the biggest weakness in the
compensation system is the involvement of medical practitioners. VECCI notes that –
Successful return to work is achieved best by regular contact between the critical parties
(employer and injured employee). While treating practitioners are very relevant to the process
they do not always agree to consult with employers. Some because the doctor shortage
doesn’t allow them the time. Some because the VWA won’t pay them for the time and some
because they prefer to preserve patient confidentiality totally. It would be necessary for any
obligation to require “reasonable effort to consult” rather than have an employer non compliant
because of a [doctor’s] refusal to engage.
272
4.376. The AMA notes that the return to work sections of the AC Act –
. . . do not highlight the crucial role of the [medical practitioner] in this part of the patient
journey.
273
4.377. VECCI submits that medical practitioners should be paid for their time consulting with
employers.
274
4.378. Ai Group argues that higher payments should be available for treating practitioners who are
skilled in the return to work area. Ai Group also submits that doctors should be paid for
participation in conference calls and meetings.
275
4.379. Australian Automotive Air Pty Ltd suggests that the New South Wales and Australian Capital
Territory models should be considered, which would enable treating practitioners –
. . . to be more actively involved and committed to participate in the treatment and
rehabilitation process.
276
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CHAPTER 4 SUPPORTING WORKERS TO GET BACK TO WORK AFTER INJURY
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270 Productivity Commission, National Workers’ Compensation and Occupational Health and Safety
Frameworks, inquiry report, No. 27, 2004, p 202.
271 NewCare, Submission, 7 February 2008, p 1.
272 VECCI, Submission, April 2008, p 37.
273 AMA, Submission, 8 February 2008, p 1.
274 VECCI, Submission, April 2008, p 41.
275 Ai Group, Submission, May 2008, p 55.
276 Australian Automotive Air Pty Ltd, Submission, 7 February 2008, p 9.
Provide support for treating practitioners
4.380. Research indicates that most treating practitioners do not have specific training in work
disability or occupational medicine. Nevertheless, treating practitioners frequently evaluate how
a person’s illness or injury might affect the person’s work.
277
Treating practitioners are called
on to recommend how much time off work a worker needs, to refer workers to rehabilitation
programs, and to verify information to insurance agencies, employers, and workers’
compensation bodies.
278
4.381. Further, anecdotal evidence suggests that managing return to work and treating compensable
patients is more difficult than treating other patients.
279
4.382. A 2002 study examined the issues around the role of physicians in evaluating work ability and
managing disability.
280
The results indicated that better communication between employers and
physicians is required, as is more education for employers, workers and doctors. Physicians
also require more specific guidelines directed at when patients can safely return to work, and
require more details from employers about what tasks can be assigned to a returning worker.
281
4.383. Provision of compensation to injured workers and supporting their occupational rehabilitation
and return to work are among the primary objectives of the AC Act.
282
The framework
prescribed by the AC Act to meet those objectives focuses on the key parties involved –
that is, employers and workers. While the co-operation of treating practitioners is important
in achieving the best return to work outcomes, they are not central to the employment
relationship.
4.384. Compensable patients represent a very small proportion of medical practitioners’ caseload:
recent statistics indicate that injured workers make up approximately 2% of the patients seen
by general practitioners
.283
4.385. In my view, it would be inappropriate to impose statutory duties on treating practitioners in this
area. The imposition of duties may discourage practitioners from treating injured workers.
4.386. I recommend that additional guidance material be developed to assist and support healthcare
professionals in their treatment of injured workers.
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277 G Pransky, JN Katz, K Benjamin, J Himmelstein, “Improving the physician role in evaluating work ability
and managing disability: a survey of primary care practitioners. Disability & Rehabilitation 2002;
24(16):897-874. Return to Work Knowledge Base, The roles and Obstacles Faced by Family GP’s
Assisting Patients to Return to Work, viewed 13 May 2008; <www.rtwknowledge.org/browse.php?
article_id=87&view_type=health>.
278 G Pransky, JN Katz, K Benjamin, J Himmelstein, “Improving the physician role in evaluating work ability
and managing disability: a survey of primary care practitioners. Disability & Rehabilitation 2002;
24(16):897-874. Return to Work Knowledge Base, “The roles and obstacles faced by family GPs
assisting patients to return to work”, viewed 13 May 2008; <www.rtwknowledge.org/browse.php?
article_id=87&view_type=health>.
279 Return to Work Knowledge Base, “The issue for treaters”, viewed 13 May 2008;
<www.rtwknowledge.org/browse.php?article_id=178&view_type=health>.
280 G Pransky, JN Katz, K Benjamin, J Himmelstein, “Improving the physician role in evaluating work ability
and managing disability: a survey of primary care practitioners. Disability & Rehabilitation 2002;
24(16):897-874. Return to Work Knowledge Base, “The roles and obstacles faced by family GPs
assisting patients to return to work”, viewed 13 May 2008; <www.rtwknowledge.org/browse.php?
article_id=87&view_type=health>.
281 G Pransky, JN Katz, K Benjamin, J Himmelstein, “Improving the physician role in evaluating work ability
and managing disability: a survey of primary care practitioners. Disability & Rehabilitation 2002;
24(16):897-874. Return to Work Knowledge Base, “The roles and obstacles faced by family GPs
assisting patients to return to work”, viewed 13 May 2008; <www.rtwknowledge.org/browse.php?
article_id=87&view_type=health>.
282 AC Act, s 3(b) and (d).
283 Source: VWA.
Review remuneration arrangements for medical and allied health providers
4.387. Treating practitioners clearly play an important role in the return to work process; and I believe
that more needs to be done to ensure that practitioners are appropriately reimbursed for their
participation. I recommend that the VWA should provide appropriate incentives to encourage
healthcare providers to be part of the scheme.
4.388. A “network provider” model, which is discussed further in Chapter 6, “Treatment expenses”,
284
would deal with a number of stakeholder concerns. The advantages of such a model would
include providing increased financial incentives to a select group of skilled professionals willing
to engage with the scheme.
4.389. I also propose that the VWA should pay treating practitioners for their time in facilitating return
to work. For example, the VWA should pay for telephone consultations between a healthcare
professional and an injured worker or other related parties, including the agent, employer or
occupational rehabilitation provider.
4.390. The Review’s independent actuaries estimate that paying healthcare professionals for telephone
consulations to facilitate return to work will cost between $2 and $3.5 million a year, with a
corresponding increase in claims liabilities of between $10 million and $17 million.
4.391. An independent review of the fees payable by the VWA, covering medical and like services,
should be carried out as soon as possible. I discuss this recommendation further in Chapter 6,
“Treatment expenses”.
285
The review of fees should consider financial incentives for healthcare
professionals to achieve better return to work outcomes, taking into account market rates and
scheme viability.
Repeal section 113 relating to medical certificates
4.392. Section 113 was introduced in 1994 as part of a series of reforms that “shifted the focus of
return to work back to the workplace by creating incentives and obligations for both employers
and workers to achieve return to work outcomes”.
286
4.393. The provision appears to have been designed to offer an employer the opportunity to direct a
worker to a health professional of the employer’s choosing in order to provide a certificate
where capacity for work was in dispute.
4.394. However, the effectiveness of the process is limited by the absence of any sanction for non-
compliance.
4.395. Section 112 of the AC Act already provides for an independent medical examination. However,
only the VWA or a self-insurer can require a worker to attend an independent medical
examination.
4.396. One option would be to improve the enforcement of section 113 by attaching a sanction for
non-compliance. Another option would be to use section 112 to obtain an independent review
of the worker’s capacity.
4.397. I consider that strengthening the section 113 process would only provide another medical
opinion on the worker’s capacity, albeit by a practitioner of the employer’s choosing. In order to
resolve a dispute relating to capacity, the agent would need to obtain an independent review
under section 112. There seems to be little that a strengthened section 113 process can offer
and I therefore recommend that the section be repealed.
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284 Chapter 6, “Treatment expenses”, paragraphs 6.103-6.105.
285 Chapter 6, “Treatment expenses”, paragraphs 6.75-6.93.
286 Victoria, Legislative Assembly, Debates, 3 May 1994, p 806. Accident Compensation (Amendment) Bill, 1994.
ISSUE RESOLUTION
4.398. As discussed earlier, cooperation between the employer, injured worker and other parties
involved in the return to work process is of central importance to its success.
4.399. Cooperation should also extend to the resolution of contentious issues between parties in
relation to return to work. Resolution of such issues within the workplace fosters trust and
avoids the issues becoming barriers to the return to work process.
4.400. Currently, there is no process prescribed in the AC Act for the resolution of issues relating to
return to work.
4.401. The OHS Act
287
provides that, if an OHS issue arises at the workplace or from the employer’s
undertaking, the employer or its representative and the employees or their HSR must attempt to
resolve the issue in accordance with an agreed procedure. If there is no agreed procedure, they
must attempt to resolve the issue in accordance with the procedure set out in the OHS
Regulations.
288
4.402. The employer must ensure that its representative is appropriately senior and sufficiently
competent to act as its representative.
4.403. The VWA publishes guidance material to assist workplaces that wish to develop their own issue
resolution procedures (rather than using the procedure set out in the Regulations).
289
4.404. If an issue is not resolved within a reasonable time, any party can request an inspector to attend
the workplace to assist in resolving it.
4.405. The OHS Act model provides workplaces with a degree of flexibility and offers the workplace
parties certainty as to how issues should be raised and resolved. It also encourages resolution
of issues within the workplace in a cooperative framework that supports the maintenance of
good relations between the employer and the worker.
Prescribe an issue resolution procedure
4.406. A clear workplace-based issue resolution process can provide for timely resolution of issues
without the need to involve the inspectorate.
4.407. The issues that arise in return to work are almost always at an individual worker level, unlike the
issues that arise in the OHS context, which are generally at the workplace level. Therefore, the
resolution process will need to be tailored to the different issues that arise in the context of
return to work.
4.408. Despite those differences, I believe that the framework provided under the OHS Act provides
a suitable model for the resolution of issues relating to return to work in the workplace.
4.409. I propose that a similar framework be adopted for resolving issues that arise in the context of
return to work under the AC Act. The framework should allow for issues to be resolved using an
agreed workplace procedure or, if no such procedure has been agreed, a prescribed procedure
set out in AC regulations.
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287 OHS Act, s 73.
288 OHS Regulations, part 2.2.
289 WorkSafe Victoria, Employee Representation, 2006.
RETURN TO WORK INCENTIVES
Returning to work with a new employer
4.410. Although the large majority of Victorian injured workers return to their pre-injury employers,
290
the limited availability of alternative duties and return to work options with some employers
can frustrate the return to work process.
291
Finding alternative duties for an injured worker with
capacity to work can be particularly difficult for smaller employers and for labour hire firms.
4.411. The issues surrounding incentives for new employers to employ workers with earlier injuries
are broadly similar to the incentives for employers to support the return to work of their injured
workers, with the following exceptions:
• where a worker is returning to work with the worker’s current employer, the employer has
a legal obligation to support return to work, and has a direct financial incentive through the
premium system; and
• where an injured worker with some work capacity is taking a job with a new employer, the
new employer may be eligible for wage subsidies and premium protection against new and
recurring injuries for up to 12 months during the Worksafe Incentive Scheme for Employers
(WISE) program.
4.412. Claims are generally classified as one of the following:
• a new injury;
• a continuation of an earlier injury; or
• a further injury (either a “recurrence, aggravation, acceleration, exacerbation or deterioration
of any pre-existing injury or disease”).
4.413. For the purposes of premium calculation, particularly where the worker has returned to work
with a new employer, there is an important distinction between a continuing injury and a further
injury. New injuries and further injuries are considered as new claims, and affect the premium of
the current employer. Continuing injuries are considered as part of the original claim and affect
the premium of the employer with whom the injury originally occurred.
4.414. In addition, where a worker has “a recurrence, aggravation, acceleration, exacerbation or
deterioration of any pre-existing injury or disease”, compensation is only payable if the worker’s
employment was a significant contributing factor to the injury.
292
4.415. There are also obligations on a worker, when requested, to disclose a pre-existing injury or
disease to the worker’s employer. A worker is not entitled to compensation if the worker has
failed to respond to a request that the worker advise the employer of a pre-existing injury or
disease that the worker was aware of before commencing employment or has made a false
or misleading disclosure.
293
4.416. Whether an injury is considered to be a further injury or a continuation of a prior injury is a
liability decision that is influenced by:
• the circumstances of the injury – for example was there a separate incident that caused the
recurrence, etc.? and
• medical information – for example is the current injury a recurrence, aggravation, acceleration,
exacerbation or deterioration of the same pre-existing injury?
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290 According to the Return to Work Monitor 2006/2007, in Victoria of those workers who returned to
work 86% of injured workers returned to work with the employer for whom they were working when
they suffered their injury. The RTW Sustainability Survey 2008 indicated that, 68.3% were with their
pre-injury employer (even if they had not returned to work).
291 According to the RTW Sustainability Survey 2008, small employers had a return to work rate of 75.5%
compared with Government (typically larger employers) of 82.5% and large employers of 79.9%.
292 AC Act, s 82(2C)(c).
293 AC Act, s 82(7) and (8).
4.417. The VWA’s functions include developing programs to meet the special needs of target groups,
including injured workers who are unable to return to their pre-injury occupation.
294
4.418. The VWA has a number of programs to assist workers to return to work where their employers
are unable to offer suitable employment or are no longer obliged to do so.
4.419. The Job Seeking Assistance (JSA) program is a 16-26 week service designed to equip workers
with the competencies and skills to become independent job seekers and return to work. The
VWA may also fund the cost of vocational re-education where a worker’s employability would
be enhanced by gaining particular competencies.
4.420. The WISE program is aimed at securing suitable employment for workers who are ready, fit and
motivated to return to work, but do not have the option of returning to work with their previous
employers.
4.421. The WISE program offers incentives for employers to employ such workers through wage
subsidies as well as premium protection against the costs of new or recurring injuries.
4.422. The current WISE incentives include payments up to $14,860, depending on the number of
hours offered by the employer to the worker (15 hours is the minimum requirement). The
payments are structured into three areas designed to encourage sustainable jobs. The three
types of payment are:
• a work commencement payment covering the first four weeks, payable as variable lump
sums as follows:
– less than 20 hours per week – $1000
– 20-30 hours per week – $1500
– more than 30 hours per week – $2000
• wage subsidies in the form of two payments covering weeks 5-12 and 13-24 respectively,
payable at 50% of the worker’s verified gross weekly earnings (excluding any compensation
payments) to a maximum of $443 per week (that is, a maximum total of $8860); and
• work stability payments made at weeks 45 and 52 as variable lump sums as follows:
– less than 20 hours per week – $1000
– 20-30 hours per week – $1500
– more than 30 hours per week – $2000
4.423. Where an employer has hired a worker through the WISE program, the employer’s premium is
unaffected by the workers’ compensation costs of any new injuries and recurring injuries that
may occur during the WISE placement.
4.424. All employers are eligible to participate in the WISE program except employers that are
on-hiring workers to other businesses, such as labour hire agencies, employment agencies or
group training organisations. However, if those types of employers intend to employ directly
and pay workers, they are eligible for the WISE program.
4.425. Other jurisdictions have similar kinds of programs, such as JobCover in New South Wales and
RISE in South Australia. The incentives that they provide include wage subsidies and
indemnification against costs arising from an aggravation of a pre-existing injury or a new claim
during a specific program.
4.426. All of the programs provide a wage subsidy as well as protection to employers from liability
if a worker aggravates a pre-existing injury. The WISE program compares favourably to the
programs offered in other States.
4.427. It is possible that such subsidy programs provide a signal to some employers that the
subsidised workers are less capable, or are more prone to injury. On the other hand, the
programs are of great benefit to the worker by improving their skills and preserving contact with
the workforce, so as to provide an important stepping stone towards permanent employment.
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294 AC Act, s 20(1)(s).
4.428. However, recent figures indicate that the uptake of the programs in Victoria is low. Each year,
approximately 200 employers participate in WISE and approximately 1800 workers commence
the JSA program.
295
4.429. The JSA program currently accounts for $4.9 million in annual expenditure; however, a
proportion of workers whose entitlements to benefits have ceased for reasons other than return
to work have not received the services that the program provides.
4.430. WISE participation has declined by 50% since 2004 to approximately 200 placements a year.
296
4.431. The VWA is in the process of establishing a host employer program. The aim of the program
will be to improve access to “work hardening” in the workplace for workers who are unable to
return to their pre-injury employer. Work hardening includes rehabilitation activity that builds the
specific strength and stamina required for a particular job. Work hardening rehabilitation
activities are conducted at the workplace. The proposed program will allow workers to build up
fitness for work in a safe environment, with minimal risk to themselves and the host employer.
4.432. Host employer programs currently operate in the New South Wales, Queensland and
Commonwealth schemes as well as the Victorian transport accident scheme.
Stakeholder views
4.433. VECCI supports the introduction of greater incentives and protections for employers to employ
workers with prior injuries, or who have subsequent claims.
297
4.434. VECCI also suggests –
Such protections could take the form of work trials before a formal engagement of the worker,
a supported wage based on the productivity of the worker and some form of premium
protection for the new employer from new compensation claims due to recurrence or
aggravation of the pre-existing injury.
298
4.435. Ai Group cites concerns among employers that a recurrence or aggravation of a prior injury will
have an adverse premium impact and also create a range of obligations.
299
4.436. Freehills expresses the view that –
Premium liability for an injury should lie with the employer who caused the injury. For
instance, if an employee aggravates or further injures their back but the injury is significantly
still associated with the contribution by former employment, the claims cost and experience
factor should be noted according to contribution . . .
300
4.437. VECCI specifically recommends –
. . . the system used by the TAC in encouraging employers to return injured workers to suitable
employment. The TAC cannot rely on compliance. They offer wage subsidies based on the
productivity of the worker and they offer that any aggravation etc. workers compensation claim
will be financed through the TAC’s WorkCover policy and not the employers. TAC also offer a
work trial system which is a try before you buy arrangement that is not offered by
WorkCover.
301
4.438. Some stakeholders consider that there are other areas of improvement that could supplement
the programs.
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295 Source: VWA.
296 Source: VWA.
297 VECCI, Submission, April 2008, p 32.
298 VECCI, Submission, April 2008, p 32.
299 Ai Group, Submission, May 2008, p 32.
300 Freehills, Submission, 11 February 2008, p 17.
301 VECCI, Submission, April 2008, p 31.
4.439. Ai Group submits that –
One area of improvement would be the early identification of circumstances where workers
are unlikely to return to sustainable long-term employment with their current employer. This
would overcome the difficulties experienced by injured workers and their employers when
repeated failed attempts at return to work are made in order to meet the legislated obligations,
even when all parties are confident that the return to work will be unsuccessful.
302
Expand and improve the JSA and WISE programs
4.440. Although both the JSA
303
and WISE programs contain important protections and incentives to
encourage employers to hire previously injured workers, it is my view that further reforms
should be considered in order to improve their uptake by employers. While the design of these
programs seems sound, improvements could be made to improve their effectiveness.
4.441. I understand the VWA is currently making the following changes:
• introducing a new service for workers with capacity for work who have not returned to work
and are nearing the end of their entitlements to weekly benefits; and
• increasing the subsidy that can be paid to employers under WISE – to $26,000 for a 12-month
WISE placement.
4.442. A lack of awareness among employers may be one reason for the low uptake of the programs,
and I recommend that this should be addressed by promoting their advantages more widely.
4.443. I also recommend that more should be done to identify eligible workers as early as possible in
order to promote access to the programs and services.
4.444. I believe that the VWA should review the improvements proposed for the programs and take
further steps if necessary to improve uptake by employers. The performance of the programs
should continue to be assessed regularly and greater incentives should be provided where
appropriate.
4.445. I am also aware that the VWA is exploring opportunities to link the WISE program to host
employer programs. That linkage would provide greater options for workers who have difficulty
returning to their pre-injury employer. The AC Act should be amended as necessary to support
host employer programs.
Premium protection for subsequent injuries
4.446. Before July 1993, the AC Act provided employers with premium protection if a worker suffered
any injury during the first 12 months after having resumed work. Employers also received
ongoing premium protection for recurrences of pre-existing injuries. The protective provisions
were progressively tightened and now employers do not receive premium protection for
subsequent compensable injuries suffered by their workers. However, a recurrence,
aggravation, acceleration, exacerbation or deterioration of a pre-existing injury is only
compensable if employment was a significant contributing factor to the injury.
304
4.447. The original provisions gave employers an incentive to return injured workers to work, in
addition to their legal responsibility to re-employ injured workers and the incentives provided by
the experience-rated premium system. However, those provisions did not provide an incentive
to improve OHS.
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302 Ai Group, Submission, May 2008, p 31.
303 JSA to be known as New Employer Services from 28 July 2008.
304 AC Act, s 82(2C)(c).
4.448. The original provisions were also difficult to administer, with employers claiming that many
injuries were recurrences of pre-existing injuries, rather than new injuries, to avoid premium
impacts. With the costs of those injuries being allocated across the scheme, rather than
attributed to individual employers, the provisions undermined the premium system’s incentives
for OHS and return to work.
4.449. The transition towards an experience-based premium system was clearly intended to support
and encourage employers to return injured workers to work safely and in a timely manner
following injury.
Stakeholder views
4.450. MAV suggests that –
. . . no employer should be worse off for providing suitable employment than they would have
been if they had not provided such employment.
305
4.451. VECCI recommends that –
. . . employers who provide a return to work be protected from second injury new claims as
section 125 (1AA) claims used to provide by excluding any second claim from premium
inclusion. This is particularly important with incapacity caused by underlying conditions which
were very likely to reoccur.
306
4.452. Freehills submits that –
• Secondary injuries (e.g. injuries sustained in obtaining treatment for a compensable
condition) should not result in a second claim or inflation in claims estimates.
• An employer should have the option of lifting the excess on a claim to a specified upper
limit . . . Such a scheme would give greater flexibility over premium setting.
307
Continue to include subsequent compensable injuries in an employer’s claims costs where workers
return to work
4.453. There appears to be a perception that workers who have been injured once are more likely to
sustain injuries. The Return to Work Monitor for 2006/2007 provides a picture of the proportion
of workers who have made previous claims. In Victoria, 36% of injured workers who made a
claim of 10 days or more in duration reported making a previous claim.
308
However, the Review
was unable to obtain reliable data on whether workers who have made a previous claim are
more likely or less likely than other workers to make another claim.
4.454. There may also be a perception that an employer’s premium is impacted more severely by a
worker who suffers a subsequent injury compared with a worker who does not return to work
at all.
4.455. The impact of an injury on premium is determined by the cost of the claim, measured by the
claim’s statistical case estimate (SCE), described in Chapter 11, “Employer premiums”.
309
The SCE for a claim falls when a worker returns to work, and continues to fall the longer a
worker remains at work.
4.456. If an injury is a continuing injury, the claims costs of that injury will attach to the original claim
and affect the original employer’s premium. The SCE on the original claim will increase as a
result of the subsequent injury, but will fall again once the worker returns to work.
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305 MAV, Submission, 7 February 2008, p 6.
306 VECCI, Submission, April 2008, p 40.
307 Freehills, Submission, 11 February 2008, p 17.
308 Campbell Research & Consulting, Return to Work Monitor 2006/2007, HWCA, p 21.
309 Chapter 11, “Employer premiums”, paragraphs 11.14-11.33.
4.457. If the worker’s subsequent injury is a further injury (that is, a recurrence, aggravation,
acceleration, exacerbation or deterioration of a pre-existing injury), then it will be treated as a
new claim with its own SCE. This will lead to two SCEs – one SCE for the first injury, which will
continue to fall as no payments are recorded against it, and a second SCE for the “new injury”.
It will depend on the circumstances of the case whether the sum of the two SCEs will be less
than the SCE for the first injury would have been had the worker not returned to work. However,
when the worker returns to work following the recurrence of the injury, the SCE of the second
claim will fall, making the employer clearly better off from a premium perspective than if the
worker had stayed off work continuously.
4.458. Where the worker returns to work with a new employer and suffers a subsequent injury, that
employer’s premium is only affected if the injury is a new injury or a further injury. Clearly, for
premium purposes it is more attractive to the new employer for any subsequent injuries to be
seen as a continuation of a pre-existing injury, rather than as a further injury – that is, a “new
claim”.
4.459. One option would be to retain the current provisions where new and further injuries are
included in the current employer’s claims costs for the purpose of calculating premiums. That
option would provide incentives for the current employer to protect workers from subsequent
injury, and would be easy to administer.
4.460. Another option would be to provide all employers with indefinite premium protection against
recurrences etc. of injuries. That option would address employers’ concerns about the potential
impact on premium of recurrences of an injury, and strengthen employers’ incentives to
facilitate return to work. However, the option would remove incentives for all employers to
protect workers from subsequent injury, and weaken the premium incentives for OHS and
return to work to the extent that claims were incorrectly classified as further injuries (that is,
recurrences etc.) of previous injuries. Incorrect classification may occur because of the fine
distinction between continuing injuries and further injuries and the commercial pressures on
agents to satisfy their employer customers, who have an interest in a claim being classified
as continuing injuries, so that the claim’s cost is borne by the worker’s previous employer.
4.461. There is also an option of providing all employers with premium protection for any subsequent
injuries for one year. That option would have similar costs and benefits to the second option
although, by putting a time limit on premium protection, there would be a lower risk of the
incorrect classification of claims, maintaining the integrity of the premium system.
4.462. In my view, the preferred option is to retain the current provisions, where new and further
injuries are included in the current employer’s claims costs for the purpose of calculating
premiums.
4.463. It is important to retain incentives for employers to protect workers from subsequent injury by
modifying the workplace or by accommodating restrictions included in the workers’ certificate
of capacity. It is also appropriate that employers’ claims costs are affected if these control
measures break down and a worker is re-injured.
4.464. Of the various options, the current provisions provide the clearest incentives to reduce the risk
of subsequent injuries, which ties in with the employer’s obligations under both the AC and
OHS Acts. New employers will benefit from the improvements to WISE that are discussed in
paragraphs 4.440–4.445 above.
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Premium discounts for return to work programs
4.465. Some workers’ compensation schemes offer premium discounts for employers who implement
OHS and return to work improvement programs.
4.466. The New Zealand compensation scheme, for example, launched the Workplace Safety Levy
Discount Program in June 2006. The program has initially been made available to self-employed
people and small and medium-sized businesses,
310
operating in the six industry sectors with the
highest number of work-related injuries (agriculture, construction, forestry, motor trades, road
freight transport and fishing). The scheme offers a reduction
311
to an employer’s premium if the
employer has an established health and safety system.
312
The program recognises employers
who have established health and safety systems and good practices in injury prevention.
However, the employer needs to pass an independent safety audit. Ministerial approval is being
sought to expand the program.
4.467. Discount schemes raise the issue whether employers should be rewarded for outcomes
through their claims experience (as is currently the case), or for good workplace practices,
regardless of outcomes.
Stakeholder views
4.468. The Ai Group submits –
The role of the premium system should be to provide tangible incentives for employers to
improve OHS and return to work activities with a view to reducing their premium.
313
4.469. Freehills states that there should be provision in the premium system for an immediate and
meaningful discount or rebate for good safety and workplace rehabilitation systems and
initiatives (as audited by the VWA).
314
Retain the current arrangements
4.470. There is only anecdotal evidence to suggest that discount schemes have led to behavioural
change. Nor does there appear to be any compelling research to demonstrate a relationship
between discount schemes and OHS outcomes warranting a shift towards such a model. There
is a risk of mere “paper compliance” with the requirements needed to obtain the discount, and
there are monitoring and compliance issues.
4.471. New South Wales introduced a premium discount scheme in 2001 as part of the reform of the
workers’ compensation system, but subsequently abandoned the scheme. Employers who
participated in the scheme could receive a discount on their premiums for up to three years if
they met performance standards for OHS and injury management. In 2005, New South Wales
discontinued the premium discount scheme because of the “mixed reaction from stakeholders
regarding its ongoing value”.
315
At the same time, the premium system was reformed to
provide longer-term incentives for employers to improve workplace safety and injury
management.
316
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310 Self-employed people and small to medium-sized businesses that have up to $380,000 per annum in
liable earnings, or employ the equivalent of up to 10 full-time employees.
311 Discounts on the levy are awarded on three levels, to recognise how comprehensive and effective the
workplace safety management practices are. The ACC decides whether a discount is awarded, and at
what level, on the basis of an independent audit of the employer’s workplace safety systems and
procedures. Discounts apply for 24 months.
312 ACC website, viewed 3 July 2008; <www.acc.co.nz/levies-and-cover/employers/how-to-pay-less/
workplace-safety-management-practices-programme/index.htm>.
313 Ai Group, Submission, May 2008, p 95.
314 Freehills, Submission, 11 February 2008, pp 16-17.
315 WorkCover NSW, viewed 3 July 2008; <www.workcover.nsw.gov.au/WorkersCompensation/
ReducingPremiums/DiscountScheme/default.htm>.
316 WorkCover NSW, viewed 3 July 2008; <www.workcover.nsw.gov.au/WorkersCompensation/
ReducingPremiums/DiscountScheme/default.htm>.
4.472. The VWA has a range of other programs to encourage better OHS and return to work
outcomes, including the proposed host employer program and free safety consultation sessions
for small employers with up to 50 employees. The sessions involve a free three-hour session
with an independent health and safety consultant.
317
4.473. In light of the New South Wales experience and the VWA’s initiatives, I do not believe that there
is a compelling argument for the introduction of a premium discount program.
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317 WorkSafe Victoria, viewed 3 July 2008; <www.workcover.vic.gov.au/wps/wcm/connect/WorkSafe/
Home/Safety+and+Prevention/Small+Business/>.
APPENDIX 4.1 – OVERVIEW OF RETURN TO WORK OBLIGATIONS ACROSS
JURISDICTIONS
318
a in NSW and ACT, employers are required to comply with the obligations imposed by the insurer’s injury
management program. A return to work program must also be prepared by the employer consistent with the
injury management program.
b in NSW and ACT, employers are required to take part and cooperate in the establishment of an injury management
plan (NSW) or personal injury plan (ACT) for workers with significant injuries.
c large employers (rateable remuneration greater than $1M) must maintain the appointment of a coordinator;
319
all
other employers must appoint a coordinator within 10 days of acceptance of a claim for weekly payments.
320
d the employer must provide work that is, “so far as reasonably practical” [sic] suitable or the same as or equivalent
to the worker’s pre-injury employment and otherwise suitable;
321
the requirement only applies if the worker asks
the employer to provide employment within six months after he or she became entitled to weekly compensation.
e the employer is required to take reasonable steps to provide the worker with suitable employment or assist the
worker to find such employment; because benefits continue to 65, there is a strong financial incentive for the
employer to provide, or assist the worker to find, such employment.
322
f large employers (employing 30 or more workers at a workplace in a high-risk industry; or paying wages of more
than $4.9 million, subject to variation by notice in the industrial gazette).
g large employers (an employer with a base premium exceeding $50,000, or who is self-insured, or who is insured
by a specialised insurer, and who employs more than 20 workers).
h all employers are required to prepare a return to work program. However large employers (an employer with a
base premium exceeding $50,000, or who is self-insured, or who is insured by a specialised insurer, and who
employs more than 20 workers) must develop a customised return to work program.
i the employer is required instead to assist the injured worker find suitable employment by taking all reasonable
steps to provide the worker with suitable employment and, so far as practicable, participate in efforts to retrain
the worker. Where the employer is unable to provide suitable employment, the employer must refer the worker to
an alternative incentive scheme developed by the Authority.
323
j the recent SA review recommended that return to work coordinators be appointed for any workplace with 30 or more
workers, to be reduced to 20 or more workers in the future.
324
The recommendation was accepted by Government
and is to be implemented on 1 January 2009: Workers Rehabilitation and Compensation (Scheme Review)
Amendment Act 2008 (SA), s 9, inserting s 28D in the Workers Rehabilitation and Compensation Act 1986 (SA).
k large employers (employing more than 50 workers).
l large employers (employing more than 20 workers).
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318 Productivity Commission, National Workers’ Compensation and Occupational Health and Safety
Frameworks, inquiry report, no. 27, 2004, p 199. Modified and updated from HWCA Comparison of
Workers’ Compensation Arrangements in Australia and New Zealand, October 2006, available at
<www.ascc.gov.au/ascc/WorkersComp/WorkersCompInformation/>.
319 AC Act, ss 156(1)(a), 158(1)(a)(ii).
320 AC Act, s 156(2)(a)(ii).
321 Workers Compensation Act 1951 (ACT), s 105(1) and (2).
322 Australian Safety and Compensation Council, Comparison of Workers’ Compensation Arrangements,
2006, p 78.
323 Work Health Act (NT), s75A.
324 Bracton Consulting Services Pty Ltd and PricewaterhouseCoopers, Review of the South Australian
Workers’ Compensation System Report, 2007, p 179.
Jurisdiction
Provide suitable
duties
Provide for
pre-injury
employment
(months)
Appoint rehab/
return to work
coordinator
Develop
rehabilitation
policy
a
Develop return
to work plan
b
Victoria Y 12 Y
c
Y
c
Y
ACT Y 6
d
N Y Y
Comcare Y Indefinitely
e
N Y Y
Queensland Y 12 Y
f
Y N
NSW Y 6 Y
g
Y
h
Y
NT Y Not stated
i
N N N
SA Y Indefinitely Y
j
Y Y
Tasmania Y 12 Y
k
Y
l
Y
WA Y 12 N N Y
APPENDIX 4.2 – RETURN TO WORK INITIATIVES
Triage System
1. The development of a Triage System is being undertaken and piloted over two years (to 2009).
The Triage System aims to assist agents to focus their most skilled resources on claims that are
most likely to exceed expected time off work.
• The Analytical Triage Tool, utilising demographic, employer and injury and claim data, will
identify high-priority claims at registration.
• For those cases where return to work has not occurred within a specified timeframe, the
Psycho-Social Questionnaire will identify any potential psychosocial barriers to return to work.
Workplace Issues Resolution
2. The Workplace Issues Resolution Service is also being developed and piloted over 2007-2009.
The aim is to provide a clearly defined service to address interpersonal conflict when it is the
major barrier to return to work. The service would utilise qualified mediators, at the workplace,
for a fixed fee. The initial pilot will be run within the Government sector.
325
Host Employer Program
3. The development and implementation of a Host Employer Program over two years (to 2009) is
intended to provide workers with “work conditioning” opportunities before their return to work,
when this is not possible through their pre-injury employers. The program will give injured
workers an opportunity to test their capacity for work when they no longer have an employer
to return to. It will include a host employer placement, which seeks to provide supported
workplace based rehabilitation opportunities.
Occupational Rehabilitation – Original Employer Service
4. The Original Employer Service’s objective is to optimise conditions under which injured workers
can return to work with their original employers. The model provides incentives to occupational
rehabilitation providers for achievement such outcomes as partial and full return to work, and
return to sustainable/productive duties. Implementation is to commence in 2008.
326
Occupational Rehabilitation – JSA/WISE
5. The Job Seeking Assistance (JSA) and Workplace Incentive Scheme for Employers (WISE) are
programs designed to support injured workers who are unable to return to the workplace where
their injury was sustained.
327
Refinements of both programs are currently taking place with a
view to enhancing the support available for those workers.
Employer Engagement Initiatives
6. This suite of initiatives has been designed to raise awareness, educate and provide incentives
to employers with a view to improving return to work outcomes. Key initiatives include:
• Return to Work Coordinator Training Program, designed to ensure return to work coordinators
have access to high-quality training to equip them with skills to undertake their role;
• Return to Work Networks, providing a forum and opportunity to share knowledge and
experience with the intention of fostering and promoting best practice amongst return to
work coordinators; and
• Return to Work e-comms, which provides a mechanism through which return to work
coordinators receive regular updates on return to work to assist employers to understand
their obligations whilst supporting safe and sustainable return to work.
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325 HWCA Jurisdictional Scan April 2008 pp 37-38. Available at http://www.hwca.org.au/projects.php.
326 HWCA Jurisdictional Scan April 2008 pp 37-38. Available at http://www.hwca.org.au/projects.php.
327 HWCA Jurisdictional Scan April 2008 pp 37-38. Available at http://www.hwca.org.au/projects.php.
Return to Work Fund
7. The Return to Work Fund was created to support initiatives that focus on improving
opportunities for injured Victorian workers to successfully return to work. The Return to Work
Fund encourages and supports collaboration between employer and worker groups and other
workplace parties to increase return to work opportunities. South Australia is planning to
establish a return to work fund following a review of its scheme in 2007.
328
8. The following projects are an example of those which have been approved for funding, and are
of particular interest in the context of this Review:
• Victorian Trades Hall Council: More durable return to work outcomes through awareness.
The central aims of this project are to raise awareness by workplace parties of their rights and
obligations on return to work issues; improve capabilities among workers and employers; and
provide tools (ground level support and training) to improve return to work.
• St Vincent’s and Mercy Private Hospitals – Changing the culture: An integrated workplace
health management approach to improve return to work outcomes. The purpose of this
project is to test the hypothesis that, by creating a positive and supportive workplace culture
in the hospital, it is possible to reduce injury claims and achieve more timely, effective and
sustainable return to work outcomes.
• National Union of Workers – A collaborative approach to improving durability of
employer/employee return to work. This initiative will develop and trial a tailored return to
work training program targeted at health and safety representatives. In addition to the
training, the NUW will provide assistance to employers and employees to facilitate the
integration of the trained representatives into their workplaces.
• Recruitment and Consulting Services Association – Alternative return to work model research
project. The purpose of this initiative is to assist “job ready” injured workers to return to work,
when they are unable to return to their pre-injury “host employer”. The initiative will research
a complementary model that establishes a collaborative return to work solution with existing
return to work services.
• ResWorks – Return to Work Knowledge Base. This initiative will develop and pilot a research
database, to translate landmark return to work research into transparent practical knowledge
for all stakeholders. Access portals will allow access to information specific to the needs of
workers, employers, treating practitioners and insurers.
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328 Bracton Consulting Services Pty Ltd and PricewaterhouseCoopers, Review of the South Australian
Workers’ Compensation System Report, December 2007.
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BETTER INCOME
REPLACEMENT
Pre-Injury Average Weekly Earnings
Step-downs and entitlement periods
Weekly benefits after 130 weeks for
partially incapacitated workers
Weekly benefits for workers
who undergo medical procedures
after 130 weeks
Payments pending receipt of funds
from common law settlements
The relationship between annual and
long service leave and weekly benefits
Accrual of leave while in receipt of
weekly benefits
Notional earnings
Superannuation
Section 96
The method of calculating
entitlement periods
Redemption of weekly benefits
5.1 If a worker is incapacitated for work because of a work-related injury, the worker may be entitled
to weekly benefits intended to compensate the worker for lost income during periods of
incapacity for work.
5.2 Weekly benefits make up a significant proportion of scheme costs. In 2006/2007, the VWA paid
almost $460 million in weekly benefits.
1
5.3 All Australian workers’ compensation schemes link compensation for lost income to a worker’s
pre-injury earnings and impose limits on eligibility for, and the level and duration of, weekly
benefits.
5.4 The approach taken by each of the schemes varies considerably and represents each
jurisdiction’s attempt to strike the most effective balance between –
• adequate and fair compensation of injured workers for lost income;
• the fair allocation of scarce scheme resources between the severely disabled and those
sustaining less serious injuries;
• reinforcing incentives for employers and workers, including incentives –
– for employers and workers to create safer workplaces;
– for workers to participate in rehabilitation and return to work;
– for employers to facilitate return to work;
• ensuring that the costs of workplace injury and illness are funded by employer contributions
and not shifted elsewhere and ensuring that other costs are not inappropriately shifted to the
workers’ compensation scheme; and
• scheme viability and affordability.
5.5 As noted by the Productivity Commission, “trade-offs” are necessarily involved in striking the
balance referred to in the paragraph above:
A generous benefit structure may provide poor incentives for rehabilitation and return to work.
Conversely, benefits that impose limits in income replacement (as a means of encouraging
return to work) may be regarded as inequitable for workers with serious injuries which
respond slowly (or not at all) to rehabilitation.
Similarly, if benefits are reduced to provide incentives to employees to participate in
rehabilitation and return to work, this may encourage claimants to seek other forms of
compensation (shift costs away from the workers’ compensation scheme). If benefits are
increased, cost-shifting on to the workers’ compensation scheme can be encouraged.
2
5.6 It is also clear that the level and availability of weekly benefits, and the manner in which those
benefits are paid, can provide incentives for particular behaviours on the part of participants in
the scheme. However, the incentive effects of weekly benefits are complex and depend on
other scheme features (such as access to common law and dispute resolution mechanisms)
and the level and availability of financial support outside the workers’ compensation scheme
(for example, accident “make-up” pay and social security benefits).
5.7 In considering weekly benefits, the 2007 review of the South Australian workers’ compensation
scheme articulated the vexed question of incentive effects in the following way:
Most workers return to work as soon as their injuries have healed regardless of any issue of
the economic incentive articulated through the benefit system. However, for some workers
in unsatisfactory employment a high income replacement ratio from workers compensation
benefits is likely to increase benefit duration . . .
. . . the Review needs to balance two competing considerations. The first is the equity principle
that the benefit structure should, as a far as possible in monetary terms, replace the losses
brought about by a compensable injury or illness. The second is to be cognisant of the overall
general message of the economic literature in relation to return-to-work incentives associated
with levels of income replacement.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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PAGE 186
1 VWA Annual Report 2006/2007, p 63.
2 “National Workers’ Compensation and Occupational Health and Safety Frameworks”, Productivity
Commission Inquiry Report, 6 March 2004, p 259.
There are further nuanced elements in relation to balancing principle and operational
coherence in relation to each of these considerations. As some prominent American
researchers have written, if the amount paid by way of income replacement was to attempt
to provide some measure of full indemnity it would probably be expressed in terms of 100
percent of after-tax losses, net of job-related expenses, plus any loss of fringe benefits and any
earnings lost by other family members because of the injury. Such a full measure of indemnity
would, if credence is to be given to the incentive effects of the pricing system for injury
prevention, increase employer efforts to control workplace hazards. However, these same
researchers recognise that resort to the fulcrum of economic theory may provide powerful
countervailing arguments for a lowering of income replacement rates.
First, providing full replacement reduces the incentive to return to work and thus may increase
the overall cost of injuries. In addition, employers worry that the resulting high costs may affect
their competitive position. Finally, although employers generally pay workers’ compensation
premiums, high premiums will reduce the demand for labour and may lead to lower wages.
3
5.8 In 1997, the HWCA recommended to the Labour Ministers’ Council a set of “best practice”
principles for consideration in the design of workers’ compensation schemes and
recommended that the following principles should guide policy development with respect
to weekly benefits:
4
• Specified monetary limits should not be imposed on liability for compensation payable – it
was thought that schemes that impose such monetary caps on liability have greater reliance
on common law and lump sum claims. Such lump sum claims are not seen to encourage
return to work and have a higher proportion of resources allocated to legal costs.
• An ideal system would not limit all claimants to the same amount of time for which they can
be paid compensation, because such time limits do not recognise the more seriously injured
workers’ need for extended access to support and care.
• There should be no “floor” on weekly compensation benefits – that is, there should be no
minimum weekly payment, as this may act as a disincentive to return to work for lower paid
workers and also unfairly benefit part-time workers.
• There should be step-downs in benefits and “ceilings” (upper limits). The following structure
was thought to provide adequate compensation for injured workers at various stages of injury
and recovery, while also providing the necessary incentive to encourage workers to return to
employment when appropriate:
– first 5 days: 100% of pre-injury earnings;
– day 6 – 13 weeks: 100% of pre-injury earnings;
– 14 – 26 weeks: 85% of pre-injury earnings (capped at 200% AWE);
– 27 – 260 weeks: 70% of pre-injury earnings (capped at 150% AWE).
5
• Schemes should maintain measures to prohibit “double-dipping” by workers in receipt of
weekly benefits, in addition to other forms of compensation such as superannuation-based
disability payments.
• Employers should be required to maintain statutory superannuation contributions for as long
as they are required to hold a job open for an injured worker. The contributions should be
made in addition to the benefits paid directly to the worker.
5.9 The Review’s terms of reference call for an examination of the fairness and effectiveness of
the current weekly benefit scheme and directs the Review to resolve anomalies and improve
employer and employee understanding of the Act.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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3 Review of the South Australian Workers’ Compensation System Report, Bracton Consulting Services
Pty Ltd and PriceWaterhouseCoopers, December 2007, pp 97–98.
4 HWCA, “Promoting Excellence: National Consistency in Australian Workers’ Compensation”, Final
Report to Labour Ministers’ Council, May 1997, pp 22–24.
5 HWCA, “Promoting Excellence: National Consistency in Australian Workers’ Compensation”, Final
Report to Labour Ministers’ Council, May 1997, p 94.
5.10 In this chapter, I:
• examine the adequacy of the definition of pre-injury average weekly earnings used as
the basis for calculating weekly benefits;
• recommend an increase in the level of income replacement for injured workers after
the first 13 weeks of incapacity;
• make recommendations to improve understanding and remove anomalies, so that more
partially incapacitated workers will be encouraged to seek part-time work after spending
130 weeks on benefits, and be supported to do so through ongoing weekly benefits;
• recommend that workers be entitled to weekly benefits after 130 weeks where they are
off work while undergoing surgery for their work-related injuries;
• recommend clarifying the taking and accrual of annual, long service and sick leave – areas
where the Act is currently silent, leading to misunderstanding by workers and employers;
• recommend reform of the provisions for terminating and suspending weekly payments, so
that workers’ obligations are explicit and they have the opportunity to rectify non-compliance;
• recommend the provision of superannuation for long-term injured workers; and
• propose reforms to remove harsh and anomalous clawing back of benefits where injured
workers have access to other sources of income, such as superannuation pensions and
lump sums.
Overview
5.11 Under the AC Act, weekly benefits are calculated and paid to an injured worker based on the
worker’s PIAWE and the worker’s level of capacity. Weekly benefits also reduce (“step down”)
over time.
5.12 Under section 5A(1) of the AC Act, a worker’s PIAWE is defined as:
• the worker’s average weekly earnings during the 12 months preceding the injury if the worker
was continuously employed by the same employer for that period; or
• the worker’s average weekly earnings for the period less than 12 months preceding the injury
during which the worker has been continuously employed by the same employer.
5.13 Average weekly earnings are calculated using the worker’s ordinary rate of pay and the number
of hours normally worked each week, which are usually fixed by an award or industrial
agreement. Historically, this calculation was based on the notion that PIAWE represented basic
pay and not actual earnings.
5.14 The AC Act also provides specifically for the calculation of PIAWE for particular kinds of workers
who do not have regular or normal work patterns or wages, including students, apprentices,
contractors and occasional workers.
6
The changing nature of the workforce and the shift
towards casual employment
7
mean that an increasing proportion of workers is likely to fall into
this category. Although the nature and level of casual employment in Australia continues to be
debated, it is widely agreed that casual employment has increased over the last decade and will
continue to increase. In 2004, 26% of employees were casual, compared with 20% in 1994.
8
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6 AC Act, s 5A(1)–(12). These provisions set out the different methods of calculating PIAWE for different
types of workers and apply to different employment arrangements, including apprentices and full-time
students.
7 Australian Bureau of Statistics 2004 “Changes in types of employment, 1992–2003”, Australian Labour
Market Statistics, October 2004, (6105.0), pp 10-17, ABS, Canberra.
8 Australian Bureau of Statistics, “Year Book Australia 2006”, 1301.0: “Casual employees”, ABS,
Canberra.
5.15 Shift and overtime allowances are included in the calculation of PIAWE for the first 26 weeks of
weekly compensation if it is likely that the worker would have worked paid overtime or carried
out shift work during that period.
9
Superannuation contributions are excluded when calculating
PIAWE,
10
an exclusion that is also imposed by all other Australian jurisdictions.
5.16 Table 5.1 summarises the current weekly benefit entitlements.
TABLE 5.1: WEEKLY BENEFIT ENTITLEMENTS
5.17 The AC Act provides limited scope for the redemption of weekly benefits. (Redemption refers
to the process by which entitlements to weekly benefits are redeemed or settled for a lump
sum payment).
5.18 Section 114 of the AC Act sets out the processes for termination or alteration of weekly
payments. The section includes the form of the notice and time for notice, time for payment,
interest on outstanding weekly payments and recovery of payments.
5.19 The notice periods for termination of weekly benefits vary from no notice to 13 weeks notice,
depending on the reason for ceasing payment.
5.20 It should also be noted that many workers may be entitled to “accident make-up pay” for a set
period of time under industrial instruments and agreements.
5.21 Accident make-up pay may entitle a worker to any or all of the following for a specified period
of incapacity caused by a work-related injury:
• an amount to make up the difference between the worker’s pre-injury average wage and her
or his workers’ compensation payment;
• continuing accrual of annual leave; and
• continuing superannuation contributions.
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9 For injuries occurring on or after 1 February 2004 only: AC Act, ss 5A (1A)–(1D). See also AC Act,
ss 93CA and 93CB. See paragraphs 5.32 to 5.45 below for discussion of overtime and shift
allowances.
10 AC Act, s 5A(1A), inserted in s 5A by s 24(1) of the Transport Accident and Accident Compensation
Acts Amendment Act 2007 (not to be confused with the other s 5(1A), which was added to s 5A with
effect from 1 February 2004: refer to Chapter 1: “Improving understanding and clarity of the
legislation”).
11 AC Act, s 93CC.
12 AC Act, s 93CD.
13 AC Act, s 93DA.
14 AC Act, s 96.
15 AC Act, ss 93F, 93E, 93EA. Retirement age is defined in s 5(1) of the AC Act as either the normal
retiring age for workers in a particular job, or 65 years of age, whichever is earlier.
16 AC Act, s 93CA(3) and (4), s 93CB(2)(b) and (c), s 93CB(3) and (4), s 93CC(3) and (5), s 93CD(6),
s 96, s 97.
Initial
income
replacement Step-down to at Limits
95% PIAWE 75% PIAWE 13 weeks Weekly benefits limited to $1250 (indexed).
Payments cease after 130 weeks unless the worker has no current work
capacity and is likely to continue so indefinitely,
11
or the worker has
returned to work for at least 15 hours per week and is earning at least
$146.
12
For workers with a capacity for work, payments are reduced by the
worker’s notional earnings.
13
Payments can be offset by any income received by the worker from
retirement, disability or superannuation pensions or
redundancy/severance payments.
14
Payments generally cease at retirement age (normally age 65).
15
Payments may cease or be reduced in certain circumstances, including
where the worker fails to make reasonable efforts to return to work.
16
5.22 Research commissioned by the Review suggests that roughly half of the Victorian workforce
is covered by some form of accident make-up pay arrangement.
17
The research indicates that
approximately 60% of Victorians rely on awards to set their employment conditions. A survey
of 48 awards that apply to Victorian workers (across various industries) revealed that 47 awards
contained accident make-up pay provisions, although the type and the duration of the
entitlements differed. In addition, almost 300,000 Victorian workers are covered by collective
agreements that include accident make-up pay provisions.
5.23 The obligation to make up a worker’s pay usually applies for a limited period. Research
commissioned by the Review suggests that most awards allow make-up pay for a period
of 39 weeks, although some allow up to 52 weeks.
5.24 Accident make-up pay can reduce incentives for workers to return to work. However, because
make-up pay is paid for directly by employers, it may strengthen employers’ incentives to
prevent illness/injury and facilitate return to work.
5.25 The extent and level of make-up pay provided in the labour market is also relevant when
considering any increase in weekly benefit rates, because increases in benefit rates will
shift to the scheme compensation that is currently borne directly by employers.
PRE-INJURY AVERAGE WEEKLY EARNINGS
5.26 Weekly benefits are calculated by reference to two separate components –
• an income component; and
• “step downs” and other measures to increase the incentive for injured workers to return to
work in a timely manner (these incentives are applied by paying injured workers only a portion
of the amount calculated in the income component).
5.27 The income component lies at the heart of the calculation of weekly benefits. The fairness and
equity of the weekly benefits scheme depends on an accurate prediction of an injured worker’s
lost earnings during periods of incapacity.
5.28 The most obvious way of predicting forgone earnings is to use the worker’s income over the
recent past as a proxy for the worker’s income in the near future.
5.29 The AC Act aims to predict forgone earnings through the definition of PIAWE. It sets out how
adjustments should be made for earnings from shift work and overtime to produce a forecast
of earnings.
5.30 At present PIAWE is generally calculated by one of the following methods:
• using the worker’s average weekly earnings during the 12 months preceding the injury if the
worker was continuously employed by the same employer for that period; or
• using the worker’s average weekly earnings for the period less than 12 months preceding the
injury for which the worker has been continuously employed by the same employer.
18
5.31 Average weekly earnings are calculated using the worker’s ordinary rate of pay and the number
of hours normally worked each week, which is usually fixed by an award or industrial
agreement.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
CHAPTER 5 BETTER INCOME REPLACEMENT
PAGE 190
17 Workplace Research Centre, “Accident Compensation and Make-Up pay in Awards covering Victorian
employees.” June 2008, p 6.
18 AC Act, s5A.
5.32 In 2000, a provision allowing the inclusion of overtime and shift allowances in the calculation
of PIAWE was inserted in the AC Act. However, the provision was found to be unwieldy and
restrictive, and a new provision was introduced for injuries occurring on or after 1 February
2004.
19
The provision allows for the inclusion of overtime and shift allowances in the calculation
of PIAWE for the first 26 weeks of weekly payments.
5.33 The inclusion of overtime and shift allowances in the calculation of PIAWE attempts to
compensate for the loss of those types of earnings. The limited period during which the
allowances are included in the calculation of PIAWE recognises that shift and overtime
allowances, by their very nature, are not likely to remain stable or available in the longer term.
20
5.34 In 2007, 15,070 workers
21
claimed weekly compensation under the Victorian scheme. Of those
workers, 7435 workers
22
(that is, almost half) had overtime and/or shift allowances taken into
account in the calculation of their weekly benefits for the first 26 weeks of payments. Those
figures indicate that, for a significant proportion (nearly 50%) of workers, regular overtime and
shift allowances form part of their pre-injury remuneration.
5.35 The inclusion of regular overtime and shift allowances in the calculation of PIAWE effectively
increases the weekly benefits payable to almost half those who receive weekly payments.
5.36 Adjustments are also made if it can reasonably be expected that a worker’s earnings would
have changed over the period of injury or where a worker’s past earnings are not likely to be
reflective of future earnings. For example, provision is made for students or apprentices who
could have been expected to receive qualifications over the period of injury.
5.37 Although the current method for calculating PIAWE is suitable for “standard” work
arrangements, the method does not adequately accommodate more complicated remuneration
arrangements, including the use of salary packages, in kind benefits, provisions for overtime
and shift work, superannuation and so on.
5.38 Modern workplace arrangements mean that work is frequently no longer remunerated by
reference to the number of hours worked. For example, remuneration may be based on
piecework or commission, or a substantial allowance may be included in a salary package
arrangement. Common salary arrangements, such as the use of a company vehicle, or
reimbursement of telephone and computer expenses, are not taken into account in the
calculation of PIAWE.
5.39 The current provision may under-compensate workers –
• whose annual income is salary packaged;
• who are promoted within the 12-month period before injury, especially those who
are promoted immediately before injury;
• who receive fringe benefits;
• who rely largely on regular overtime and shift allowances to make up their weekly income;
• whose annual wage increases, as set out in the relevant award or agreement, are greater than
the indexation rate applied by VWA to weekly payments; and
• who have more than one employer at the date of injury, and thus may work more hours than
a standard working week.
5.40 In addition, the PIAWE provisions in the AC Act are complex, and identifying which payment
arrangements apply to a particular worker can be difficult.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
CHAPTER 5 BETTER INCOME REPLACEMENT
PAGE 191
19 AC Act, s 5A(1A)–(1D). This subsection (1A), added to s 5A with effect from 1 February 2004, should
not be confused with the subsection (1A) added to s 5A by s 24(1) of the Transport Accident and
Accident Compensation Acts Amendment Act 2007: see footnote 9 above.
20 Workers who suffer a “serious injury” may also be able to issue proceedings under common law to
recover an amount for financial loss that will include amounts for regular overtime and shift
allowances. Refer to Chapter 8, “Access to justice for seriously injured workers: common law
Common Law”, for further information on this topic.
21 Source: VWA.
22 Source: VWA.
Stakeholder views
5.41 VECCI proposes that the calculation of PIAWE should be amended to take into account modern
pay arrangements.
23
5.42 VECCI also submits that any amendment to PIAWE should be based on thorough actuarial
testing of the options and consultation with stakeholders. VECCI is concerned that a hurried
response may produce more problems than it solves.
24
5.43 The VACC submits that –
. . . the current weekly payment entitlements are fair and should not be altered in any way.
25
5.44 MGA support the inclusion of regular shift allowances but not bonuses, meal and other
allowances, or overtime (unless it is regular overtime) in the calculation of PIAWE.
26
This view
is shared by Victoria Police, which submits that “ad hoc” overtime, or overtime not provided
on a regular basis, should not be included in the calculation of PIAWE.
27
5.45 The VTHC,
28
the AWU
29
and the ALA
30
submit that overtime, penalties and shift allowances
should be included in the calculation of PIAWE on a permanent ongoing basis. They submit that
many workers are in lower paid employment and rely on regular overtime and shift allowances
to increase their wages. As a result, a calculation of PIAWE that excludes those allowances
disadvantages lower paid workers.
The need for caution
5.46 The definition of PIAWE is central to the level of compensation received by injured workers,
and I acknowledge that the current definition leads to the under-compensation of some injured
workers. I agree with stakeholders that there is a pressing need to explore whether the
definition should be broadened to encompass the greater variety of remuneration practices
now in place.
5.47 However, to address the definition of PIAWE adequately it would be necessary to:
• examine Victoria’s workforce and the variety of remuneration practices that need to be
accommodated;
• conduct industry-specific consultations, because working and remuneration practices differ
markedly between industries;
• distinguish employee benefits from employee reimbursements – for example, whether meal
allowances, computers and cars should be considered as remuneration or reimbursements
for costs incurred in working;
• decide how to compensate for lost earnings, in circumstances where past earnings may not
be an accurate predictor of future earnings; and
• draft a definition of PIAWE that is comprehensive, but not overly complex.
5.48 I am not prepared to recommend an immediate resolution of the PIAWE issue because there
is little to be gained and potentially much to be lost by a hasty and ill-considered approach.
Weekly benefits are the most significant proportion of scheme costs. In November 2007 alone,
around $40 million was paid in weekly benefits. Even small changes in the calculation of PIAWE
could have significant effects on benefit levels for individual workers and scheme viability.
5.49 Furthermore, considerable further research would be necessary to estimate accurately the cost
of any changes in the definition of PIAWE.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
CHAPTER 5 BETTER INCOME REPLACEMENT
PAGE 192
23 VECCI, Submission, April 2008, p 45.
24 VECCI, Submission, April 2008, p 45.
25 VACC, Submission, 1 May 2008, p 10.
26 MGA, Submission, 7 February 2008, p 6.
27 Victoria Police, Submission, 12 February 2008, p 4.
28 VTHC, Submission, 2 May 2008, p 27.
29 AWU, Submission, 21 January 2008, p 2.
30 ALA, Submission, 8 February 2008, p 11.
5.50 The timeframe set for the completion of this Review does not allow for completion of the work
necessary to review PIAWE. Therefore, I propose that a further comprehensive review of PIAWE
be conducted as a matter of priority once the Government considers its response to the report
of this Review.
5.51 The proposed PIAWE review should examine the frequency of different employment
arrangements. Any proposed changes to the method of calculating PIAWE should be analysed
to assess whether they would improve equity and remove anomalies, rather than simply add
complexity.
5.52 Whatever amendments are made to PIAWE must ensure that:
• as many current and foreseeable working arrangements are covered as possible; and
• PIAWE calculation accurately reflects the earnings to which workers would ordinarily be
entitled but for injury; and
• there is minimal confusion in the minds of employers and agents about how PIAWE is
to be calculated.
STEP-DOWNS AND ENTITLEMENT PERIODS
5.53 The AC Act currently provides for weekly payments at the rate of 95% of PIAWE for the first
13 weeks of incapacity and 75% of PIAWE between 14 and 130 weeks. Limitations on access
to weekly payments are imposed after 130 weeks.
5.54 The structured reductions in weekly benefits depending on the period of incapacity are
commonly referred to as “step-downs”. The current step-downs have been in place since 2003.
5.55 Step-downs in weekly benefits provide an incentive for workers to return to work as quickly as
possible. Step-downs also allow for the “savings” that an injured worker can make by avoiding
certain expenses, such as work-related travel expenses, while incapacitated for work.
5.56 All jurisdictions have some form of step-down arrangement in their weekly benefits scheme.
The differences are found in the stage of incapacity at which step-downs take effect and the
percentage of PIAWE involved in the step-downs. The differences need to be viewed in the
context of each scheme’s overall weekly benefit structure, such as statutory maximums, the
definition of PIAWE, the duration for which benefits are payable and access to other benefits,
such as common law.
5.57 Table 5.2 compares the step-down arrangements in all Australian jurisdictions. The table reveals
that, with the exception of Queensland, Victoria has a lower percentage of income replacement
in the first 52 weeks. However, each scheme’s step-downs should also be considered in the
context of any ceiling that the scheme imposes on the level of weekly benefits, and the
consequent relative level of income replacement. For example, the low ceiling in New South
Wales ($375 plus allowances a week) means that in practice many injured workers would be
receiving lower compensation in that State than in Victoria (where the ceiling is $1250 a week).
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
CHAPTER 5 BETTER INCOME REPLACEMENT
PAGE 193
TABLE 5.2 – COMPARISON OF AUSTRALIAN WEEKLY BENEFITS SCHEMES
Stakeholder views
5.58 The VTHC submits that –
. . . there should be an increase in the level of entitlements for weekly payments to 100% of
PIAWE for the first 12 months following injury.
31
5.59 VECCI states that the current weekly benefits scheme strikes an appropriate balance and should
not be altered.
32
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
CHAPTER 5 BETTER INCOME REPLACEMENT
PAGE 194
31 VTHC, Submission, 2 May 2008, p 25.
32 VECCI, Submission, April 2008, p 43.
Weeks Vic NSW Qld WA SA Tas ACT NT Comcare
0-13 95%
Up to $1250
100% if
worker
employed
under an
award
80% of AWE
if not
Up to $1594
85% 100%
Up to $1904
100%
Up to
$2159
100% 100%
Up to
150% of
average
weekly
earnings
100% 100%
14-26 75%
Up to $1250
100% if
worker
employed
under an
award
80% of AWE
if not
Up to $1594
85% 85% if
worker
employed
under an
award
85% of AWE
if not
Up to $1904
90%
Up to
$1943
85% 65%
Up to
150% of
average
weekly
earnings
100% 100%
27-51 75%
Up to $1250
90% AWE
up to $375
plus
allowances
for
dependants
75% 85% if
worker
employed
under an
award
85% of
AWE if not
Up to $1904
80%
Up to
$1727
85% 65%
Up to
150% of
average
weekly
earnings
75%
Up to
$1558
100%
Up to
45 weeks
75%
46 weeks
onwards
Up to
$1685
52-104 75%
Up to $1250
90% AWE
up to $375
plus
allowances
for
dependants
75% 85% if
worker
employed
under an
award
85% of
AWE if not
Up to $1904
80%
Up to
$1727
85%
52-78
weeks
80%
79-104
weeks
65%
Up to
150% of
average
weekly
earnings
75%
Up to
$1558
75%
Up to
$1685
104+ 75%
Up to $1250
90% AWE up
to $375 plus
allowances
for
dependants
75% 85%
Up to $1904
80%
Up to
$1727
80% 65%
Up to
150% of
average
weekly
earnings
75%
Up to
$1558
75%
Up to
$1685
Endpoint 130 weeks,
unless
exceptions
apply in
which case
benefits may
continue to
retirement.
Benefits may
continue to
retirement
under certain
conditions
$227,565
maximum
cap or 5
years
$168,499
maximum
cap
130 weeks
unless
exceptions
apply in
which case
benefits
may
continue to
retirement
9 years Retirement Retirement Retirement
5.60 Ai Group has stated that it –
. . . believes that the current weekly payment structure is mostly appropriate. However, there is
some concern that the payment levels early in the claim do not provide sufficient incentive for
injured workers to return to work.
33
5.61 The SIAV agrees that –
. . . the present entitlements to weekly benefits under the AC Act provide the right balance
between compensating workers adequately for injuries suffered during the course of their
employment and also providing an incentive for workers to attempt to return to work and
rehabilitate . . . Increases in the medium term are not supported.
34
5.62 The AEU submits that –
The vulnerability of household budgets to any unpredicted change in income or expenditure is
reported daily in the news. It is extremely difficult for injured workers and their families to stay
focused on the recovery and rehabilitation process, which is needed for a successful return to
work, when they are suffering financial disadvantage, through no fault of their own at the
same time. For workers suffering from stress-related injury this added burden can seriously
impede and sometimes reverse their recovery.
35
5.63 The VIEU submits that –
. . . the reduction in anticipated income resulting from the current benefit reductions presents
unjustifiable hardship and disadvantage to workers injured at work.
36
5.64 The VFF submits –
The current weekly payment entitlements should not change as the way the scheme operates
seems to be structured sufficiently [and] any change would lead to significant cost increases.
37
Improve the level of income replacement after the first 13 weeks
5.65 The 2007 review of the South Australian workers’ compensation system recommended that
weekly payments should be paid at the rate of 100% of the worker’s PIAWE for 13 weeks from
the commencement of the claim.
38
5.66 The South Australian review noted that most injuries heal within 13 weeks; and that providing
100% of PIAWE for the first 13 weeks would mean that most workers would not suffer financial
disruption that could interfere with or otherwise jeopardise their medical and vocational
rehabilitation and return to work after injury or illness.
39
Some employers in South Australia
favoured this approach. Those employers were concerned that an immediate step-down would
antagonise workers and complicate both the employment relationship and efforts at
rehabilitation and return to work.
40
5.67 Providing benefits at 100% of PIAWE for the first 13 weeks of incapacity is consistent with the
“best practice” principles recommended by the HWCA to the Labour Minister’s Council in 1997
(see paragraph 5.8).
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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PAGE 195
33 Ai Group, Submission, May 2008, p 43.
34 SIAV, Submission, May 2008, p 12.
35 AEU, Submission, 2 May 2008, p 4–5.
36 VIEU, Submission, 2 May 2008, p 2.
37 VFF, Submission, 2 May 2008, p 12.
38 Review of the South Australian Workers’ Compensation System Report, Bracton Consulting Services
Pty Ltd and PricewaterhouseCoopers, December 2007, pp 99–100.
39 Review of the South Australian Workers’ Compensation System Report, Bracton Consulting Services
Pty Ltd and PricewaterhouseCoopers, December 2007, p 99.
40 Review of the South Australian Workers’ Compensation System Report, Bracton Consulting Services
Pty Ltd and PricewaterhouseCoopers, December 2007, pp 99–100.
5.68 The HWCA concluded that the payment of full wage replacement for the first 13 weeks of
incapacity accorded with a number of recognised scheme design principles. In their 1996
Interim Report, the HWCA had observed:
41
The continuation of earnings without interruption avoids the injustice of a worker being
financially penalised as a result of an occupational injury or illness and avoids anxiety over an
ability to meet personal commitments which may otherwise deleteriously affect rehabilitation
and return-to-work initiatives. Continuation of payments at this level avoids the need to change
payroll system arrangements and also provides the correct economic message to employers
as to the cost of occupational injury and illness. Since the overwhelming majority of workers in
receipt of workers’ compensation benefits are back at work well within this period, this level
of payment does not present problems in relation to dependency issues. It also avoids
pressures for such injuries to be funded through sick pay arrangements.
5.69 The 2007 South Australian review went on to recommend the introduction of a step-down
following 13 weeks to 80% of the worker’s PIAWE for the following reasons:
• This was the level that already existed in the South Australian scheme for longer term claims
(that is, claims where benefits were being paid after one year).
• This level maintains the return to work incentive without going beyond what has been
referred to as the “invisible affordability threshold”. The 2004 Rutherford Review of Workers
Compensation in Tasmania concluded:
. . . by and large, it is possible for workers and their families to adjust to a reduction in income
of around 15–20 per cent through curtailing discretionary expenditure. However, when there is
a significantly larger decrease in income, this is no longer the case. In particular, there is a risk
that a significant proportion of the relatively small percentage of workers who end up exposed
to the second step-down are facing the prospect of selling the family home.
42
5.70 Adjusting the Victorian scheme to pay workers 100% of PIAWE for the first 13 weeks and 80%
for the remainder of the period of 130 weeks would improve wage replacement rates for those
with pre-injury gross earnings of $500 and $1000 per week by 5% (up from 77% to 82%); but
rates for workers with pre-injury gross earnings of $2000 per week would not improve because
of the statutory maximum on weekly benefits (currently $1250 a week). The projected annual
cost of altering the Victorian scheme in this way would be in the range of $25 to $115 million,
depending on the impact on continuance rates.
43
5.71 After reviewing the evidence and considering the views of stakeholders, I am convinced that the
first step down should remain at 95% of PIAWE. Workers who are unable to work because of
incapacity can achieve at least marginal savings in expenditure. In addition, any increase in
weekly benefits in the initial period of incapacity is likely to be made at the cost of extending
other benefits for incapacitated workers (such as, for example, payment of superannuation
contributions, or increased benefits for longer-term incapacitated workers).
5.72 I recommend an increase in the second step-down from 75% to 80% of PIAWE. The new step-
down rate would also apply to workers who continued to be eligible for weekly benefits after
130 weeks.
5.73 Adjusting the Victorian scheme in this way would improve wage replacement rates over 130
weeks for those with pre-injury gross earnings of $500 and $1000 per week by about 4.5%
(up from 77% to 81.5%) whereas rates for workers with pre-injury gross earnings of $2000 per
week would remain the same, again because of the statutory cap on weekly benefits (currently
$1250 a week).
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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PAGE 196
41 “Promoting Excellence: National Consistency in Australian Workers’ Compensation”, Interim Report to
Labour Ministers’ Council, May 1996, pp 94–95.
42 Quoted in the Review of the South Australian Workers’ Compensation System Report, Bracton
Consulting Services Pty Ltd and PricewaterhouseCoopers, December 2007, pp 99–100.
43 Source: advice from the Review’s independent actuaries.
5.74 Making that adjustment would represent an immediate modest increase in weekly benefits for
lower and middle income earners pending the comprehensive review of PIAWE, as
recommended in paragraph 5.50 above.
5.75 I consider that the modest increase is warranted, given that the current step-down results in a
25% decrease in injured workers’ income after 13 weeks.
5.76 For some workers, the decrease may be greater than 25% because of the calculation of PIAWE.
For example, workers whose fringe benefits are not included in the PIAWE calculation and
workers who cannot access overtime or shift allowances after 26 weeks would suffer a
reduction in earnings of more than 25%.
5.77 My proposal will lead to an increase in income for injured workers who are not eligible for
make-up pay. For workers who are eligible for make-up pay, my proposal will lead to an increase
in income after 39 weeks when make-up pay ceases under the majority of awards.
44
For those
workers, in the period on weekly payments between week 14 and week 39, my proposal will
reduce the make-up pay payable by employers. That is, where make-up pay applies, my
proposal will mean that the scheme will bear costs currently borne by employers.
5.78 Although I appreciate that any improvement in the level of weekly benefits may have an adverse
impact on return to work incentives, I do not think that my proposal will act as a disincentive.
The recommended increase will occur only after the first 13 weeks and a payment of 80% of
PIAWE effect is unlikely to be seen by injured workers as more attractive than employment and
a full wage.
5.79 The Review’s actuaries have estimated that the increase to 80% of PIAWE after the first
13 weeks on benefits will cost approximately $25 million annually, assuming there is no change
in continuance rates. That appears to be a reasonable assumption, because it seems unlikely
that workers’ motivation to return to work would be significantly affected by increasing weekly
compensation from 75% to 80%, especially in the context of make-up pay provisions in awards.
5.80 However, if the change were to affect workers’ motivation to return to work to the extent that
continuance rates deteriorated, the cost of my proposal would increase to $37 million annually
(if continuance rates up to 130 weeks deteriorated), or $99 million annually (if continuance rates
after 130 weeks also deteriorated).
5.81 In summary, I consider that an increase in the step-down for the second entitlement period
from 75% to 80% – the first increase in five years – would deliver a modest increase in benefits
to injured workers while maintaining the financial viability of the scheme.
Continue to limit entitlements to 130 weeks
5.82 Entitlement to weekly benefits ends after 130 weeks of incapacity, except in certain
circumstances.
45
5.83 The second entitlement period was extended from 104 weeks to 130 weeks in June 2006 as
part of a package of improved benefits for injured workers.
46
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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PAGE 197
44 According to the research undertaken for the Review: Workplace Research Centre, “Accident
Compensation and Make-Up pay in Awards covering Victorian employees”, June 2008, discussed
in the context of superannuation contributions in paragraph 5.166 below.
45 AC Act, s 93CC, 93CD, 93E and 93EA.
46 For claims made on or after 1 January 2005.
5.84 Other jurisdictions apply different monetary or time caps on the payment of weekly benefits.
For instance, Western Australia terminates benefits after a worker has received $159,091,
regardless of the worker’s age or level of injury. Although Victoria generally terminates
entitlement to benefits at 130 weeks, if a worker is incapacitated for work on an ongoing basis
the worker may receive benefits after that period until retirement. New South Wales continues
benefits for workers with partial incapacity at 104 weeks only under specific conditions.
47
5.85 The VTHC,
48
the ALA
49
and the AWU
50
submit that the 130-week limit should be extended. The
VTHC submits that the second entitlement period should be extended to 260 weeks (five years),
consistent with the 1997 HWCA report (referred to in paragraph 5.8 above).
51
The ALA submits
that the second entitlement period should be extended to at least three years.
52
5.86 The AWU submits that entitlements should be ongoing while incapacity continues to affect
an injured worker, and argue that weekly payments should be paid until –
• the claim is settled at common law;
• the worker is no longer incapacitated; or
• the worker turns 65.
53
5.87 Although I appreciate that partially incapacitated workers are placed in a difficult situation
after 130 weeks, the provision of weekly benefits under the scheme must balance competing
interests, including encouraging return to work and maintaining the financial viability of the
scheme.
5.88 I do not consider that an extension of the second entitlement period is warranted at this time.
Weekly benefits were extended from 104 weeks to 130 weeks only two years ago. Victoria’s
130-week limit on payments is more generous than the limit in some other jurisdictions, and
provides for payments after 130 weeks in certain circumstances (see paragraph 5.90 below).
The cost of extending weekly benefits to 156 weeks (three years) is estimated to be in the
range of $20 to $25 million a year, depending on continuance rates, and the cost of extending
weekly benefits to five years would cost some $90 to $120 million a year.
54
Extending
payments to three years or longer would place significant cost pressures on the scheme,
and could deprive the scheme of funds to implement other higher priority reforms that
I have proposed, notably –
• increasing the step-down after 13 weeks from 75% to 80% (see paragraphs 5.72–5.81
above);
• clarifying entitlements for permanently partially incapacitated workers who have returned to
work to the full extent of their capacity after 130 weeks (see paragraphs 5.90–5.96 below);
• providing weekly benefits for medical procedures after 130 weeks (see paragraphs
5.110–5.116 below); and
• providing superannuation contributions for long-term injured workers (see paragraphs
5.166–5.193 below).
5.89 I consider those measures are a higher priority because, at the same cost, they will have
a positive (or at worst neutral) impact on return to work incentives, whereas substantially
increasing entitlement periods may have the opposite effect.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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PAGE 198
47 Workers Compensation Act 1987 (NSW), s 52A.
48 VTHC, Submission, 2 May 2008, pp 24-25.
49 ALA, Submission, 8 February 2008, p 10.
50 AWU, Submission, 21 January 2008, p 2.
51 VTHC, Submission, 2 May 2008, p 25.
52 ALA, Submission, 8 February 2008, p 10.
53 AWU, Submission, 21 January 2008, p 2.
54 Source: advice from the Review’s independent actuaries.
WEEKLY BENEFITS AFTER 130 WEEKS FOR PARTIALLY INCAPACITATED WORKERS
5.90 Under the AC Act, entitlements to weekly benefits cease after 130 weeks unless –
• the worker has no capacity for work and that incapacity is likely to continue indefinitely (in
which case the worker continues to be entitled to weekly benefits at second entitlement
period rates);
55
or
• the worker has a partial capacity for work and –
– has returned to work for not less than 15 hours per week and is receiving earnings of at
least $146 a week; and
- – because of the injury, is likely to be indefinitely incapable of undertaking further or additional
employment that would increase the worker’s weekly earnings;
56
(in which case the worker continues to be entitled to weekly benefits at second entitlement
period rates, reduced by 75% of the worker’s current weekly earnings).
57
5.91 The ongoing entitlement for workers with a partial incapacity recognises that some injured
workers, even after treatment and rehabilitation, may have a residual level of incapacity that
prevents them returning to pre-injury employment but they may be able to engage in
employment to some extent and should be encouraged to do so.
5.92 The design of the entitlement also reflects the notion that, although employers should
compensate workers’ ongoing losses as a result of injury or illness, the obligation to
compensate should be limited to losses arising from the injury/illness and should not extend to
losses arising from a worker’s inability to secure employment to the extent of the worker’s
capacity for work.
5.93 In 2007, only 208
58
partially incapacitated workers accessed weekly benefits after 130 weeks.
Given that 34,289
59
workers received weekly payments in 2007, this is not a significant number.
5.94 The process for approving benefits for workers with a partial capacity who have returned to
work after 130 weeks is as follows –
• the worker applies for the benefit and provides relevant information to the agent;
• the agent must accept or reject the worker’s application within 90 days; and
• if the agent fails to make a determination, then the matter must be referred to a Medical
Panel.
5.95 In practice, agents refer most applications for partial capacity benefits to a Medical Panel.
5.96 The Claims Manual
60
instructs claims agents to review the eligibility of workers who receive
partial capacity benefits at six-monthly intervals.
Stakeholder views
5.97 The VTHC submits that workers who have returned to work for at least 10 hours a week should
be entitled to access this benefit.
61
5.98 The ACCS has sought clarification of the entitlement when a worker has a period of incapacity
or a brief change in the hours that he or she works.
62
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55 AC Act, s 93CC.
56 AC Act, s 93CD(3).
57 AC Act, s 93CD(5).
58 Source: VWA.
59 Source: VWA.
60 Claims Manual 9.4.4.4 “Ongoing management of s 93CD claims”.
61 VTHC, Submission, 2 May 2008, p 30.
62 ACCS, Submission, 6 February 2008, p 2.
5.99 The ALA suggests that there is potential for unfairness where a worker has qualified for the
partial incapacity benefit and –
The problem arises in circumstances where a worker has already qualified for the entitlement
and the employer subsequently reduces the worker’s number of hours or otherwise withdraws
or terminates the offer of employment. These actions of the employer result in the termination
of the benefits leading to an unjust outcome for the injured worker.
63
5.100 To address that situation, the ALA submits that section 93CD –
. . . be amended to include a penalty for employers seeking to abuse the section and a
provision that once a worker qualifies for a benefit pursuant to the section their entitlement
remains notwithstanding a reduction in hours [or] termination of employment.
64
5.101 The LIV submits that the VWA should make determinations in response to applications for
continuing weekly payments within 28 days.
65
Clarify the operation of section 93CD
5.102 The AC Act and the Claims Manual are silent on several important aspects relating to the
administration of weekly benefits for partially incapacitated workers after 130 weeks. It is
unclear whether:
• a worker can apply for this benefit at any time after returning to work (there is no time limit
imposed by the AC Act);
• an employer can withdraw an offer of suitable employment, effectively removing the worker’s
entitlement; and
• fluctuations in the worker’s capacity or the availability of work disentitle a worker from
receiving top-up payments; for instance, if a worker is temporarily unable to work to the
required threshold of 15 hours in any given week, it is unclear whether the worker’s payments
cease and whether any cessation will be permanent or temporary.
5.103 To address the above issues, I recommend that the AC Act should be amended to –
• clarify that benefits under section 93CD can be accessed at any time that the worker returns
to work;
– there is no compelling reason to treat workers who have returned to work to the extent
of their capacity after the expiry of the 130 weeks less favourably than those who have
returned to work before that time;
• ensure that, where a worker is receiving the benefit and the worker’s suitable employment
is withdrawn, the worker is given 13 weeks’ notice of termination of the benefit;
– a notice period of 13 weeks would assist workers to find alternative employment or
organise other forms of income support; and 13 weeks is consistent with the notice period
for the termination of benefits at the expiry of the second entitlement period;
66
and
• clarify that temporary fluctuations in capacity or the availability of work do not impact on
the worker’s entitlement;
– however, the VWA should consider directing claims agents to review the payment of the
benefit on a more regular basis – for instance, every three months (rather than every six
months) – to assist in determining whether fluctuations are temporary or are in fact more
permanent changes that impact on the worker’s entitlement.
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63 ALA, Submission, 8 February 2008, p 11.
64 ALA, Submission, 8 February 2008, p 11.
65 LIV, Submission, 8 February 2008, p 3.
66 AC Act, s 114(13)(c).
5.104 The VWA currently has 90 days to decide whether to accept or reject an injured worker’s
application for the benefit.
67
This is considerably longer than the 28-day time limit that is
prescribed for the VWA to decide a worker’s initial claim for weekly payments.
68
I recommend
that the time limit should be reduced from 90 days to 28 days.
5.105 It has been argued that 90 days is required to access information about the worker’s claim,
especially where a worker has not been receiving benefits for some time and there may be
limited up-to-date medical information about the worker. However, this situation does not differ
from the situation where initial liability must be determined and the claims agent must access
information, arrange a medico-legal examination if required, and make a determination within
28 days.
5.106 Where a worker returns to work with partial capacity at the end of the second entitlement
period, agents should obtain a medical examination addressing the issue or work capacity,
so that updated medical material is at hand.
5.107 Applications should be accepted or rejected within 28 days. Disputes relating to section 93CD
should follow the same procedure as other statutory benefit disputes, which is lodgement with
the ACCS. Where the dispute is purely on a medical question, the ACCS would refer the dispute
to a Medical Panel.
5.108 I consider that the changes I have recommended to section 93CD can deliver significant
benefits to one of the most disadvantaged groups of injured workers in the scheme, namely
workers whose injury impacts on their ability to work long-term but who have a partial capacity
to work, and therefore are not eligible for ongoing weekly benefits after 130 weeks. For those
workers, the section 93CD entitlement is a lifeline. It provides an opportunity to return to their
pre-injury income levels, if they can secure employment that utilises their current, albeit limited,
work capacity.
5.109 Currently, only 208 workers are accessing that opportunity. The relatively small number of
workers may be due, in part, to the reduced employment opportunities for workers with
impairments and disabilities. It may also reflect a lack of awareness of the entitlement. Given
that the section 93CD entitlement creates a positive incentive to return to work, any lack of
awareness should be addressed by the VWA and its agents.
WEEKLY BENEFITS FOR WORKERS WHO UNDERGO MEDICAL PROCEDURES
AFTER 130 WEEKS
5.110 A worker who has ceased to receive weekly benefits at the end of the second entitlement
period (130 weeks) may not receive subsequent weekly benefits, even if the worker is required
to cease work while recovering from surgical treatment for a work-related injury.
5.111 Recent amendments to the AC Act allow workers aged 65 and over to receive weekly payments
for a maximum period of 13 weeks in limited circumstances, including where they have become
incapacitated for work as a consequence of surgical treatment for a work-related injury.
69
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67 AC Act, s 93CD(4)(a).
68 AC Act, s 109(1).
69 AC Act, s 93EA. Benefits are calculated at the rate specified in s 93CB(2)(a) or (b). The worker must
have continued to work past “retirement age”, have lodged a claim in the previous 10 years, received
weekly benefits in the period 10 years before turning 65 and be incapacitated for work due to
“treatment received after retirement age as an inpatient at hospital for that injury”.
5.112 Both the VTHC
70
and ALA
71
submit that weekly benefit payments should be extended to
workers who require surgical treatment after 130 weeks. To guard against the provision being
used to extend the period in which workers receive weekly benefits, the VTHC has suggested
that the following criteria should apply –
• there should be a three-month “buffer period” after 130 weeks in which the worker may not
apply for the extended weekly payments;
• the weekly payments would apply only in respect of prescribed surgical procedures;
• payments should be made from the date of admission to hospital; and
• the period during which payments could be made would be determined by reference to the
surgical procedure to be undertaken.
72
5.113 Employer groups are generally supportive of the proposal; however they urge caution to ensure
that it is not abused.
5.114 In my opinion, workers who have returned to work should be supported through temporary
periods of incapacity when they require medical treatment, even where that treatment is
required outside the existing entitlement period.
5.115 I generally agree with the conditions proposed by the VTHC. However, given that workers will
have different levels of injury and may have different rates of recovery, overly prescriptive
provisions relating to timeframes may not be appropriate (other than requiring the passage of
13 weeks between expiry of the 130th week on benefits and the medical procedure). I consider
that claims agents should have the discretion to determine whether the period of weekly
benefits during recovery is reasonable in the circumstances.
5.116 The Review’s independent actuaries estimate that the cost of providing this benefit would be
between $2 and $5 million annually.
PAYMENTS PENDING RECEIPT OF FUNDS FROM COMMON LAW SETTLEMENTS
5.117 When a common law claim is settled between a worker and the VWA, the usual practice is for
an agreement to be executed by the parties, and for the VWA to pay the settlement amount to
the worker’s solicitors within 28 days.
5.118 If the worker has been in receipt of weekly benefits, the benefits will cease at the date of
settlement, if the settlement encompasses loss of earnings. Thus, in the 28 days between
settlement and payment, workers can suffer temporary financial hardship.
5.119 I agree with the LIV that the AC Act should be amended to allow for some ongoing weekly
payments between the date of settlement and the date when a worker receives the settlement
payment.
73
Those weekly payments should be offset against the ultimate settlement figure. For
instance, if a worker receives $1000 in weekly benefits from the date of settlement to the date
of payment, that amount would be deducted from the worker’s overall settlement amount. As a
result, this proposal would be cost neutral.
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70 VTHC, Submission, 2 May 2008, p 32.
71 ALA, Submission, 8 February 2008, p 12.
72 VTHC, Submission, 25 January 2008, p 5.
73 LIV, Submission, 8 February 2008, p 2.
THE RELATIONSHIP BETWEEN ANNUAL AND LONG SERVICE LEAVE AND
WEEKLY BENEFITS
5.120 The AC Act does not directly address the question whether weekly payments are payable in
addition to annual leave and long service leave. Instead, this issue has been considered and
largely settled by judicial decisions.
5.121 Payments for annual leave or long service leave, received by an injured worker during the
worker’s incapacity, are not regarded as current weekly earnings and therefore do not preclude
the worker from receiving weekly compensation payments at the same time.
74
5.122 Allowing workers to receive weekly compensation payments and annual and long service leave
payments at the same time reflects the notion that annual leave and long service leave are
payments based on an accrued right, rather than a wage.
5.123 On the other hand, sick leave payments are not regarded as based on an accrued right, but as
only arising in the event of a worker’s injury or illness. Accordingly, a worker is not entitled to
receive sick leave payments at the same time as weekly compensation.
75
5.124 The issue of leave is dealt with in various ways in Australian workers’ compensation schemes.
In Tasmania, workers who choose to take annual leave or long service leave during a period of
incapacity cannot receive weekly payments for compensation at the same time.
76
On the other
hand, in South Australia
77
and New South Wales
78
, a payment for annual leave or long service
leave, to which a worker is entitled in respect of a period when the worker is incapacitated,
does not affect a worker’s entitlement to weekly payments.
5.125 The Commonwealth Government recently released National Employment Standards (the NES)
which it intends to implement by 1 January 2010. The NES includes a provision restricting
workers from taking annual leave where they are in receipt of workers’ compensation, unless
the relevant workers’ compensation legislation allows for the taking of leave.
79
Stakeholder views
5.126 The Compensation Law Bar Association submits that –
There is considerable uncertainty surrounding benefits paid by employers in such
circumstances including annual leave, sick leave, ex gratia payments and disability insurance.
80
5.127 JobWatch submits that –
. . . the common law position as to annual leave and long service leave should be codified in
the AC Act so as to make it clear to employers and workers that injured workers can access
these entitlements without losing their weekly WorkCover payments.
81
5.128 Ai Group submits that the case,
82
which examined the issue whether annual leave or long
service leave preclude the receipt of weekly payments of compensation (see paragraph 5.121
above) is not “recent law” and is not relevant to the current working environment.
83
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74 Nicolson v The Victorian Railway Commission 3 WCBD 77.
75 Workplace Relations Act 1996 (Cth), s 248(1).
76 Workers Rehabilitation and Compensation Act 1988 (Tas), s 84(2). However, an employer cannot require
a worker to take annual recreational leave or long service leave that falls due during a period of
incapacity for which compensation is payable: s 84(3); and a worker may elect to take that leave after
her or his return to work or after the termination of the right to compensation if the worker does not
return to work: s 84(1).
77 Workers Rehabilitation and Compensation Act 1986 (SA), s 40(1).
78 Workers Compensation Act 1987 (NSW), s 49.
79 Australian Government, “The National Employment Standards”, June 2008, s 8, p 8.
80 Compensation Law Bar Association, Submission, 2 May 2008, p 11.
81 JobWatch, Submission, 16 May 2008, p 10.
82 Nicolson v The Victorian Railway Commission 3 WCBD 77.
83 Ai Group, Submission, May 2008, p 43.
Allow annual/long service leave to be taken concurrently with weekly benefits
5.129 Annual and long service leave are an accrued benefit – similar to an asset. A worker should
be able to access the entitlement, accrued before being injured, without affecting his or her
entitlement to weekly payments. Step-downs and upper limits on the level of weekly benefits
mean that many injured workers receive less income after their injuries than before, causing
varying degrees of financial hardship. Access to previously accrued entitlements may assist
workers in this situation.
5.130 I therefore recommend that the AC Act should clarify that annual and long service leave can
be taken in addition to weekly benefits.
ACCRUAL OF LEAVE WHILE IN RECEIPT OF WEEKLY BENEFITS
5.131 The Long Service Leave Act 1992 (Vic)
84
provides that workers continue to accrue long service
leave for the first 48 weeks of weekly benefits.
5.132 In Victoria, any entitlement to accrue annual leave while in receipt of benefits only arises where
specifically provided for under an industrial award or agreement.
5.133 With the exception of the South Australia and the Commonwealth schemes, accident
compensation legislation in all other jurisdictions is silent on the accrual of annual leave while
a worker is in receipt of weekly payments.
• In South Australia, workers receiving weekly payments continue to accrue annual leave.
85
However, if the worker receives weekly payments in respect of total incapacity over a period
of 52 weeks, the employer’s liability to grant annual leave is deemed to have been satisfied.
86
• Under the Commonwealth scheme, workers continue to accrue sick leave and recreation
leave entitlements for the first 45 weeks while they are absent from work and entitled to
weekly payments of compensation (referred to in the legislation as “compensation leave”),
87
and continue to accrue long service leave entitlements during the whole period of their
“compensation leave”.
88
5.134 Current Federal industrial relations legislation does not prohibit accrual of entitlements while
a worker is receiving workers’ compensation benefits, nor does it create an entitlement.
89
The
NES
90
(which, as noted in paragraph 5.125 above, are to be implemented by 1 January 2010)
provide that a worker should not accrue annual leave while in receipt of a workers’
compensation benefit, unless the relevant workers’ compensation legislation allows for the
accrual of leave.
Stakeholder views
5.135 MGA
91
and the AHEIA
92
have submitted that the AC Act should be amended to provide clarity
on this issue.
5.136 Ai Group submits that, if workers continued to accrue annual leave, they could effectively
receive 56 weeks worth of pay in one year, which would act as a disincentive to engage in any
rehabilitation or take up employment opportunities.
93
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84 Long Service Leave Act 1992 (Vic), s 63(2).
85 Workers Rehabilitation and Compensation Act 1986 (SA), s 40(2).
86 Workers Rehabilitation and Compensation Act 1986 (SA), s 40(3).
87 Safety, Rehabilitation and Compensation Act 1998 (Cth), s 116(a).
88 Safety, Rehabilitation and Compensation Act 1998 (Cth), s 116(b).
89 Workplace Relations Act 1996 (Cth), s 237.
90 Australian Government, “The National Employment Standards”, June 2008, s 8, p 8.
91 MGA, Submission, 2 May 2008, p 7.
92 AHEIA, Submission, 2 May 2008, p 5.
93 Ai Group, Submission, May 2008, p 44.
Maintain the status quo
5.137 I do not recommend any amendment to allow accrual of entitlements while a worker is
receiving weekly benefits. The accrual of leave is essentially an industrial issue and has
long been treated as such in Victoria.
5.138 When the NES become effective in 2010, there will be a presumption that workers will not
accrue annual leave while in receipt of workers’ compensation benefits. Although it would be
possible for the AC Act to legislate to the contrary, there are no compelling policy reasons to
do so.
5.139 I agree with Ai Group’s observation that, if workers are paid weekly benefits and permitted to
accrue annual leave at the same time, workers could effectively be paid for 56 weeks a year
while not working.
NOTIONAL EARNINGS
5.140 Under the AC Act, the term “notional earnings” means the current weekly earnings of a worker,
or the weekly earnings that the VWA or a self-insurer determines that the worker could earn,
whichever is the greater.
94
5.141 Where a worker has a partial capacity for work, the worker’s weekly benefits may be reduced
by her or his notional earnings.
95
5.142 If a worker has in fact returned to work and is earning income, a consequent reduction in
weekly benefits is understandable and appropriate.
5.143 However, under the notional earnings provisions,
96
hypothetical (that is, notional) earnings may
also be used as a basis for reducing or terminating a worker’s weekly benefit payments. The
provisions effectively allow the VWA’s agents to determine the level of weekly earnings that a
worker could receive in employment, even when the worker has not returned to work.
5.144 The AC Act prevents such hypothetical earnings being applied to reduce or terminate weekly
benefits during the first and second entitlement periods in two situations:
• where the employer has failed to provide suitable employment and the worker is complying
with the worker’s return to work obligations under the AC Act; or
• where the worker is participating in an occupational rehabilitation service or return to work
plan.
97
5.145 The notional earnings provisions were intended to motivate workers who have a capacity for
work to return to a more active lifestyle.
98
They were also designed to be a measure of last
resort and to be used sparingly.
99
Data indicates that notional earnings were applied to less
than 1% of workers in 2007,
100
suggesting that the provisions are only used in exceptional
circumstances.
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94 AC Act, s 5(1).
95 AC Act, ss 93CA(2)(b) and 93CB(2)(b).
96 AC Act, ss 93CA(2)(b) and 93CB(2)(b).
97 AC Act, s 93DA.
98 Victoria, Legislative Council, Debates, 10 December 1996, p 1249.
99 Victoria, Legislative Council, Debates, 10 December 1996, p 1256.
100 Source: VWA.
5.146 The VWA instructs its agents through the Claims Manual to apply the notional earnings
provisions in the following situations:
101
• where the worker does not accept an offer of suitable employment for reasons not related
to the worker’s capacity for work;
• where the worker ceases suitable employment for reasons not related to the worker’s
capacity for work; or
• where the worker has returned to work in suitable employment and that employment has
been terminated for reasons not related to the worker’s capacity for work.
5.147 The appendix to the Claims Manual also suggests that it might be appropriate to apply notional
earnings to reduce or stop weekly benefits in the following situations:
• where the worker is undertaking suitable employment and subsequently decides to move
to another State for personal reasons;
• where a suitable employment offer has been made to the worker and the worker refuses
the offer on the ground that she is pregnant; and
• where the worker is undertaking suitable employment and the employer terminates the
employment for serious misconduct in accordance with the applicable industrial
agreement.
102
Stakeholder views
5.148 The VTHC endorses the removal of notional earnings from the AC Act.
103
5.149 The AMIEU provided the following example of the operation or application of notional earnings
in its submission:
A worker was injured; his claim was accepted, after 6 weeks he returned to work in suitable
employment. He continued on suitable alternative duties for more than 3 years. Then he was
dismissed. There was no warning given, verbally or written, the worker was not allowed to
have the Union present in the meeting. It was impossible to take the issue to the IRC as harsh,
unfair and unjust because it was a workplace where there are fewer than 100 employees.
The claims agent applied Notional Earnings. After 3 months in which the worker had no wages
the claims agent withdrew the notice.
104
5.150 Employer groups, including Ai Group
105
and VECCI,
106
maintain that notional earnings should be
retained to reduce payments to workers in the following situations:
• where the worker moves interstate and removes herself or himself from suitable employment
opportunities;
• where the worker resigns from employment;
• where the worker’s employment is terminated due to misconduct or disciplinary reasons;
• where the worker becomes redundant; and
• where the employer has no suitable duties and the worker has unreasonably not sought,
obtained or accepted suitable employment.
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101 Claims Manual 9.1.3.3: “Notional Earnings”. The notional earnings provision is not to be invoked unless
reviewed and approved by a Senior Legal Manager.
102 Claims Manual 9.1.3.3: “Notional Earnings”.
103 VTHC, Submission, 25 January 2008, p 4.
104 AMIEU, Submission, 2 May 2008, p 17.
105 Ai Group, Submission, May 2008, p 49.
106 VECCI, Submission, April 2008, p 51.
Remove the second limb of the notional earnings provision
5.151 I consider that, in the interests of transparency, a worker should only have weekly benefits
reduced or terminated where the AC Act makes specific provision for the reduction or
termination.
5.152 I am concerned that the notional earnings provisions give agents a broad discretion to reduce
weekly payments, and that the provisions could be used capriciously or unpredictably in
situations that fall outside the current termination provisions.
5.153 If it is thought necessary to deal with difficult claims management situations that fall outside
the current termination provisions, the AC Act should identify the types of situations that would
warrant termination, suspension or reduction of payments, and make specific provision for
dealing with those situations.
5.154 I am not convinced that the circumstances in which weekly benefits should be terminated,
suspended or reduced need to be expanded. However, I am concerned that the AC Act does
not provide a workable framework for the VWA’s agents to encourage workers to return to
work. Where an agent considers that a worker is not complying with her or his return to work
obligations, the agent has limited options – either to terminate the worker’s benefits or to apply
notional earnings (where permitted) to reduce or stop payments.
Enhance the ability of agents to encourage return to work and rehabilitation through the weekly
benefits system
5.155 A worker’s entitlement to weekly payments may be terminated, suspended or reduced pursuant
to various provisions in the AC Act. In addition, a worker’s entitlement to payments may cease
as a result of the passage of time or recovery of the worker’s work capacity.
5.156 A worker no longer has an entitlement where:
• the worker reaches the age of 65 and has been receiving payments for 130 weeks;
107
or
• the worker has returned to work full time within the first or second entitlement periods;
108
or
• the worker ceases to reside in Australia and cannot provide evidence that he or she has no
current work capacity and is likely to continue to have no current work capacity indefinitely;
109
or
• the worker is temporarily absent from Australia for a period of longer than 28 days;
110
or
• the worker is imprisoned;
111
or
• the second entitlement period has ended and the worker has a current work capacity
112
(that does not fit within s 93CD: see paragraph 5.102 above).
5.157 A worker’s entitlement will be terminated before the entitlement ceases (as outlined in
paragraph 5.156 above) where the worker has not made reasonable efforts to return to work –
in particular, where:
• the worker has not made every reasonable effort to participate in an occupational
rehabilitation service or a return to work plan;
113
or
• the worker has not made every reasonable effort to return to work in suitable employment;
114
or
• the worker has not participated in assessments of the worker’s capacity, rehabilitation
progress and future employment prospects when requested to do so.
115
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107 AC Act, s 93F, read with ss 93E and 93EA.
108 AC Act, s 93CA (2) or 93CB (2).
109 AC Act, ss 97(2) and (2AA).
110 AC Act s 97(2A).
111 AC Act, s 97(7).
112 AC Act, s 93CC(1).
113 AC Act, s 93CA(3)(a)(i) and (4); s 93CB(3)(a)(i) and (4); s 93CB(3)(b)(i), (3)(c)(i) and (4).
114 AC Act, s 93CA(3)(a)(ii) and (4); s 93CB(3)(a)(ii) and (4), and s 93CB(3)(b)(ii), (3)(b)(iii), (3)(c)(ii), (3)(c)(iii)
and (4).
115 AC Act, s 93CA(3)(a)(iii) and (4); s 93CB(3)(a)(iii) and (4); s 93CB(3)(b)(iv) and (3)(c)(iv).
5.158 A worker’s entitlement to weekly payments will be suspended where the worker unreasonably
refuses to submit to or unreasonably obstructs a medical examination or a Medical Panel.
Payments are suspended until the worker does submit to an examination, and the missed
payments are forfeited.
116
5.159 Consistent with the approach taken in New South Wales
117
and Queensland,
118
agents should
be able to adopt a “staged” approach to motivating a worker to comply with return to work and
rehabilitation obligations. Accordingly, I propose the following hierarchy of sanctions depending
on the seriousness of the non-compliance (in descending order):
• immediate termination without notice;
• notice of intention to cease or reduce payments unless the worker rectifies non-compliance
within a certain period, followed by suspension of benefits for 28 days, after which benefits
would be terminated if the worker has not rectified non-compliance; and
• notice of intention to cease or reduce payments unless the worker rectifies compliance within
a certain period, followed by suspension of benefits until the worker rectifies
non-compliance.
5.160 Where an agent suspends benefits, I propose that the suspension period should count towards
the time counted for entitlement periods, as currently applies. If a worker wishes to dispute a
suspension, the worker may use the applicable dispute resolution process. Payments will
remain suspended while that process is under way, but will not be terminated while the matter
is under consideration. If the suspension is set aside, payments for the suspended period will
be restored.
5.161 I consider that immediate termination of benefits without notice should apply where a worker
has failed to notify the VWA or self-insurer that the worker has returned to work while receiving
benefits.
5.162 I consider that notice of intention to cease or reduce payments, followed by suspension of
benefits for 28 days, and ultimately termination if the worker has not rectified non-compliance,
should apply where:
• the worker has not made every reasonable effort to participate in an occupational
rehabilitation service or a return to work plan;
• the worker has not made every reasonable effort to return to work in suitable employment;
• the worker has not participated in assessments of the worker’s capacity, rehabilitation
progress and future employment prospects when requested to do so;
• a worker with partial capacity has not made every reasonable effort to return to suitable
employment with the worker’s place of employment or another place of employment; or
• a worker has failed to attend an interview to discuss employment opportunities.
5.163 Benefits should be suspended until the worker complies with the relevant obligation in the
following circumstances:
• where a worker has failed to attend or unreasonably obstructed a medical examination;
119
or
• where a worker has refused to comply with or hindered a Medical Panel examination.
120
5.164 I consider the reforms outlined in paragraphs 5.159–5.163 above will provide appropriate
consequences for non-compliance with worker obligations, but will give workers adequate
opportunity to address non-compliance where it is fair to afford such an opportunity.
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116 AC Act, s 65(5), 67(4) and (5); s 112.
117 Workplace Injury Management and Workers Compensation Act 1998 (NSW), s 57.
118 Workers’ Compensation and Rehabilitation Act 2003 (Qld), s 232(2).
119 AC Act, s 112(2).
120 AC Act, s 67(4) and (5).
5.165 If the recommended changes are implemented, the current criminal offences relating to
workers failing to:
• attend an interview to discuss employment opportunities (sections 162(2) and 242(8) of the
AC Act); and
• notify the VWA or a self-insurer of their return to work whilst in receipt of benefits (sections
123(2) and (3) and 242(5) of the AC Act);
will be unnecessary and, in my view, should be repealed.
SUPERANNUATION
5.166 Consistent with the approach taken by all other Australian schemes, superannuation
contributions lost because of incapacity caused by work-related injury or illness are not
compensated under the AC Act.
5.167 Further, the national superannuation guarantee scheme does not require employers to make
superannuation contributions during periods of incapacity caused by work-related injury or
illness.
121
This is because superannuation contributions are calculated on the basis of “ordinary
time earnings”, and workers’ compensation payments are not classified as ordinary time
earnings.
5.168 Some workers continue to receive superannuation contributions during periods of incapacity
because the make-up pay provisions in their industrial awards or agreements require employers
to continue to make superannuation contributions for a specified period.
5.169 Research commissioned by the Review shows that, of 48 awards (with Victorian coverage)
surveyed, 27 contained an obligation for employers to continue superannuation contributions
for a period (generally the same period for which workers are entitled to receive accident
make-up pay). The survey found that the maximum length of the superannuation entitlement
was 52 weeks, with most awards allowing 39 weeks.
122
5.170 The omission from other awards of any reference to superannuation contributions as part of
accident make-up pay does not mean that those contributions are not paid. Employer groups
suggest that many employers continue to pay superannuation contributions for a period after
weekly benefits commence, regardless of whether this is required under industrial awards or
agreements.
5.171 The question whether (and if so how) lost superannuation caused by work-related incapacity
should be addressed has been debated for more than a decade without resolution.
5.172 Most jurisdictions (including Victoria) recently moved to ensure that superannuation was not
included in the calculation of a worker’s PIAWE for the purpose of calculating weekly benefits,
following a contrary decision by the Northern Territory Court of Appeals in relation to the
Northern Territory scheme.
123
5.173 In its 1994 report on “Workers Compensation in Australia”, the Industry Commission expressed
concern that, when superannuation contributions are not made while a worker is on
compensation:
• the worker will be disadvantaged on retirement relative to others;
• the employer has less incentive to prevent work-related injury or illness; and
• the costs of supporting injured workers in retirement will be shifted to the community
(through the social security system) or to the worker.
124
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121 Australian Taxation Office, Superannuation Guarantee Ruling 94/5.
122 Workplace Research Centre, “Accident Compensation and Make-Up pay in Awards covering
Victorian employees”, June 2008, p 7.
123 Hastings Deering (Australia) Ltd v Smith [2004] NTCA 13. For Victoria, see AC Act, s 5A(1A), added by
s 24(1) of the Transport Accident and Accident Compensation Acts Amendment Act 2007.
124 “Workers Compensation in Australia”, Industry Commission Report No 36, 4 February 1994,
pp 117–118.
5.174 In 1997, the HWCA recommended to the Labour Ministers’ Council that employers should be
required to maintain statutory superannuation contributions on behalf of injured workers who
have not returned to work for the period that employers are required to hold a job open.
125
The
Productivity Commission observed in 2003 that the inclusion of superannuation contributions in
compensation could provide for some of the needs of injured workers in retirement and that, in
assessing the adequacy of compensation arrangements, consideration should be given to
future income needs.
126
5.175 If a worker does not have adequate superannuation in retirement, the worker may need to rely
on the age pension under the Social Security Act 1991 (Cth), which is currently $547 a fortnight
for singles and $457 a fortnight each for members of a couple.
127
Stakeholder views
5.176 The ALA submits that –
Injured workers should be entitled to superannuation payments in addition to weekly
payments benefits.
128
5.177 The AWU submits that –
The insurer should have an obligation to continue the statutory rate of Superannuation
contributions (9% of PIAWE) directly to the nominated Super fund, adjusted by CPI.
129
5.178 The AEU submits that ongoing contributions should be made to a complying fund, with the
contributions based on normal weekly earnings.
130
5.179 VECCI does not believe that workers should receive two superannuation contributions and have
submitted that they –
. . . oppose any inclusion of superannuation contributions in either PIAWE or as an additional
weekly payment over and above the current compensation rates.
131
5.180 MGA submits that a requirement to continue paying superannuation would impose a significant
administrative and financial burden on employers.
132
Compensate lost superannuation for the long-term injured
5.181 It is my view that the workers’ compensation scheme should provide superannuation
contributions for long-term injured workers, to address the disadvantage that could be suffered
by those workers in retirement.
5.182 Long-term injured workers are disadvantaged in retirement because injury has not only reduced
their income during their working life, but injury has also removed the superannuation
contributions that their employers would have otherwise have been required to make. Many
injured workers may be forced to rely on the age pension, which provides a subsistence level
of income support.
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125 HWCA, “Promoting Excellence: National Consistency in Australian Workers’ Compensation”, Final
Report to Labour Ministers’ Council, May 1997, p 24.
126 “National Workers’ Compensation and Occupational Health and Safety Frameworks”, Productivity
Commission Inquiry Report, 6 March 2004, p 262.
127 Centrelink “Retirement payment rates”, 20 March to 30 June 2008.
128 ALA, Submission, 8 February 2008, p 12.
129 AWU, Submission, 31 January 2008, p 2.
130 AEU, Submission, 2 May 2008, p 5.
131 VECCI, Submission, April 2008, p 47.
132 MGA, Submission, May 2008, p 8.
5.183 The provision of superannuation for long-term injured workers would be an increase in benefits
targeted at the most disadvantaged in the scheme – workers off work for long periods. At the
same time, because it is a benefit that workers receive in retirement, it should not negatively
affect workers’ incentives to return to work.
5.184 I recommend that the VWA make superannuation contributions for injured workers who
continue to receive weekly compensation after 52 weeks of payments. Superannuation is
accrued over a working lifetime, so that the loss of superannuation through injury affects
long-term injured workers more than those who are injured for a limited time. Short periods of
non-accrual of superannuation (for example, through changing jobs or taking maternity leave)
are relatively common. However longer periods of non-accrual can have a material impact on
superannuation savings. In addition, the provision of superannuation by employers through
make-up pay provisions does not extend beyond 52 weeks (see paragraph 5.169 above),
avoiding the risk of the double payment of superannuation by employers and the VWA.
5.185 I considered the alternative of limiting the provision of superannuation to workers in receipt of
benefits for 130 weeks. However, that approach would leave workers without superannuation
contributions for two-and-a-half years – significantly reducing retirement savings.
5.186 I recommend that superannuation contributions be based on the superannuation guarantee rate
(currently 9%), applied to the worker’s benefit, for the period while workers remain entitled to
weekly benefits. Contributions should be set at the guarantee rate, because that will reflect the
community standard from time to time: the level of contributions would increase if the
guarantee rate increased.
5.187 The cost of paying an additional 9% of weekly benefits into a superannuation fund for workers
who continue to receive payments after 52 weeks is estimated to be $24 million a year.
133
That
cost compares with $38 million a year if contributions were made from the date of injury, and
$19 million a year if contributions were made after 130 weeks of benefits.
134
5.188 I recommend that the VWA pay contributions directly into each worker’s superannuation fund,
rather than requiring employers to pay superannuation into workers’ funds and the VWA
reimbursing employers.
5.189 That approach will remove the potential for any further administrative burden on employers in
addition to the existing requirement to pay wages to the worker. That approach would also
overcome the impediment posed by some industrial awards and agreements which prohibit
employers from making superannuation contributions where workers are on accident leave.
There is no statutory bar to the VWA making superannuation contributions on workers’ behalf.
5.190 I note that direct payment is a departure from the usual methods for paying weekly benefits
(by way of reimbursement to the employer). However superannuation can be an “invisible” form
of income – one that workers do not see being paid and may not monitor. Direct payments by
the VWA will ensure that workers receive the contribution.
5.191 I have considered whether the VWA should establish a special superannuation fund for injured
workers with special rules preventing portability and requiring preservation of benefits, or pay
superannuation into each worker’s complying superannuation fund, so that injured workers have
the same rights to choice and competition between superannuation funds as all other workers.
5.192 Given the Federal Government’s rules for complying superannuation funds, giving workers
a choice of fund would mean that injured workers could access their VWA provided
superannuation before retirement – because most complying funds allow members access
to their superannuation if they are temporarily or permanently incapacitated.
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133 Source: advice from the Review’s independent actuaries.
134 Source: advice from the Review’s independent actuaries.
5.193 However, the generous taxation treatment of savings through superannuation is likely to
encourage most injured workers to preserve their superannuation savings, and therefore the
objective of the proposed reform – to provide retirement income for long-term injured workers –
would be realised.
SECTION 96
5.194 Under section 96 of the AC Act a worker is not entitled to receive weekly benefits in
conjunction with certain other income benefits.
5.195 Section 96 applies to:
• any disability, retirement or superannuation pension;
• any superannuation or retirement benefit lump sum amount; or
• any redundancy or severance payment;
that relates to the cessation of the employment in which the injury arose.
5.196 If workers receive any of the above payments, they will either have their weekly payments
reduced, or be precluded from receiving weekly benefits for a specified period.
135
There are
certain exceptions to that proposition, such as where a worker draws down a lump sum from
their superannuation to use for an “approved capital expenditure”.
136
5.197 Under section 96A of the AC Act, a worker claiming weekly payments must notify the worker’s
employer, who in turn must notify the VWA, when the worker receives one of the payments
referred to in section 96. Failure to notify the VWA is an offence and results in a penalty of 10
penalty units.
137
An employer will attract the same penalty for failing to notify the VWA when
a worker becomes entitled to one of the specified payments.
138
The level of compliance with
section 96A is not known.
5.198 In 2007, section 96 was invoked to reduce payments to 233 workers,
139
155 of whom received
a severance or redundancy payment and 88 of whom received a benefit from a superannuation
fund. Two of the workers received both types of payment.
Stakeholder views
5.199 The VTHC submits that “the offset [for a disability payment from a superannuation fund] should
only occur [to] the extent that is necessary to reduce the payment to the extent of the
claimant’s actual (not defined) pre-injury earnings”.
140
The VTHC also submits that no account
should be taken of lump-sum superannuation payments, because those payments are no
different in principle to other assets that are unrelated to the injury, such as an investment
property.
141
5.200 The ALA submits that section 96 should be removed because it is harsh and unfair.
142
Victoria
Police submits that the section requires clarification because it is difficult for employers and
workers to interpret.
143
5.201 The ACCS has requested clarification on the question whether a worker is required to submit
“WorkCover medical certificates . . . during the suspension or non-entitlement period”, because
the existence of such a requirement is unclear.
144
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135 AC Act, s 96(2). Again, the payment must relate to the employment out of which or in the course
of which the work-related injury arose.
136 AC Act, s 96(4).
137 AC Act, s 96A(1) ,(2), (3) and (7).
138 AC Act, s 96A(4), (5) and (7).
139 Source: VWA.
140 VTHC, Submission, 25 January 2008, p 5.
141 VTHC, Submission, 25 January 2008, p 5.
142 ALA, Submission, 8 February 2008, p 12.
143 Victoria Police, Submission, 12 February 2008, p 4.
144 ACCS, Submission, 6 February 2008, p 2.
5.202 Freehills submits that section 96 should be broadened in its scope to include all payments
made to or for the benefit of the worker that are referable to a loss of income that might
otherwise be earned. Freehills submits that –
The section should be amended to make it clear that it is a disentitlement, not merely a
suspension of entitlement . . . This could be achieved by a “catch all” section (similar to Qld)
which allows an insurer to take into account any other form of benefit, income or insurance,
when deciding whether compensation is payable or what amount is payable.
145
5.203 The Compensation Law Bar Association is of the view that section 96 operates unfairly for
workers who are pursuing their benefits through litigation.
146
5.204 Ms Anthea MacTiernan, a member of the Victorian Bar, provides an example of the way in
which section 96 can work in the case of a worker who suffers an injury and lodges a claim for
compensation which is denied. The worker proceeds to litigation, however in the meantime the
worker has no income and therefore must draw down funds from her or his superannuation.
Even if the litigation is ultimately successful, the worker will be precluded from weekly
payments for a period through the application of section 96 because the worker has accessed
the worker’s superannuation fund. However, if the worker had accessed other assets, such as
shares, there would be no impact.
147
Modernise section 96
5.205 Section 96 was introduced in 1992 to prevent “double-dipping”, that is, workers being
compensated for the same injury from multiple sources, and receiving more from those sources
than they would have from employment.
5.206 Weekly benefits do not fully compensate injured workers for lost income. It seems reasonable
that workers should be able to access income from other sources to make up the shortfall. It
also seems reasonable that, where workers are in a dire financial situation, they should be able
to access their own assets without affecting their weekly benefits.
5.207 However, I consider there is a sound policy basis for adjusting a worker’s entitlement to weekly
benefits where the worker receives income or another benefit as a result of injury and the
benefit places the worker in a better position than before the injury.
5.208 Workers can generally access the following sorts of benefits from their superannuation funds:
• benefits from an “extra cover” disability pension for which a worker voluntarily pays
premiums, and for which the worker qualifies in the event of disability;
• a pension drawn from the worker’s own superannuation contributions, which the trustee of
the superannuation scheme allows the worker to access before retirement because of the
worker’s incapacity for work; or
• a lump sum drawn down from the worker’s own superannuation contributions, which the
trustee allows the worker to access before retirement because of the worker’s incapacity
for work.
5.209 At present, all of the benefits identified in paragraph 5.208 above are captured by section 96
if the benefits are related to the cessation or termination of the worker’s employment with
the employer with whom the worker was injured.
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145 Freehills, Submission, 11 February 2008, p 11.
146 Compensation Law Bar Association, Submission, 2 May 2008, p 10.
147 Anthea MacTiernan, Submission, 2 May 2008, p 4.
5.210 That operation of section 96 seems inappropriate in two ways:
• It is too broad because it punishes workers who access their assets – workers who have
access to only one form of asset (the accrued superannuation contributions from their injury
employer) are penalised, whereas workers who have access to other assets or sources of
income are not.
• It is too narrow because it fails to capture workers who access disability pensions that are
unrelated to their injury employment.
5.211 I consider that section 96 should be narrowed to exclude a worker’s receipt of the worker’s
superannuation funds in the form of either a lump sum or a pension.
5.212 However, section 96 should have a broader impact on disability pensions. Where a workplace
injury creates an entitlement in a worker to a disability pension from an income insurance policy
or insured component of a superannuation fund, the worker’s weekly benefits should be
reduced once the worker’s combined income from workers’ compensation and disability
pensions exceeded the worker’s pre-injury earnings. That impact should apply to all disability
pensions whatever their source, and not just those that relate to the cessation of the injury
employment.
5.213 Section 96 also currently applies to workers who receive a severance, termination or
redundancy payment. Those payments are received for a cessation of employment, not as
compensation for a workplace injury, and it therefore does not seem appropriate that they
should impact on weekly benefits.
5.214 In addition, there are aspects of section 96 that are no longer relevant, such as the reference to
“eligible termination payments”. As a result of legislative amendment in 2007,
148
all references
to eligible termination payments were removed from the Income Tax Assessment Act 1936 (Cth)
and the Income Tax Assessment Act 1997 (Cth), and they no longer exist. The reference to
“annuities” is also outmoded.
5.215 I am also concerned at the method for ensuring compliance with section 96. It is appropriate
that workers have an obligation to report access to benefits, and be penalised for not doing so.
However, workers may not be aware of the obligation and the penalty may not be adequate to
ensure that workers comply with their reporting obligation. In order to increase compliance, the
VWA should explore the scope for sharing information with superannuation funds and private
insurers.
5.216 In summary, I propose that section 96 be amended to reflect the following:
• workers may access additional insured benefits for loss of earnings or disability up to 100%
of their pre-injury actual earnings;
• if workers access additional insured benefits for loss of earnings or disability beyond 100%
of their pre-injury actual earnings, the VWA may offset the excess against the workers’ weekly
benefits;
• the scope of section 96 should be broadened to include all disability pensions, including
pensions paid out of income protection insurance, irrespective of whether they are related
to the injury employment;
• offsets are not to apply where a worker accesses the worker’s superannuation fund in the
form of a pension or a lump sum payment; and
• offsets are not to apply where a worker receives a redundancy, severance or termination
package.
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148 Superannuation Legislation Amendment (Simplification) Act 2007 (Cth).
5.217 I consider that the reform of section 96 will benefit injured workers while also protecting the
financial viability of the scheme. It will allow workers to access assets without penalty, and
to access other sources of disability insurance, as long as these do not exceed a worker’s
pre-injury earnings. At the same time, my recommendations will protect the financial viability of
the scheme by ensuring that all sources of insurance-based disability payments are considered
in the calculation of weekly benefits. My recommendations will also bring the workers’
compensation scheme up to date with superannuation reforms ensuring that injured workers
can participate equally in the new opportunities being provided by those reforms.
THE METHOD OF CALCULATING ENTITLEMENT PERIODS
5.218 The current weekly benefits scheme is based on “entitlement periods”.
5.219 The first entitlement period is an aggregate period (whether consecutive or not) not exceeding
13 weeks, in respect of which a weekly payment has been paid or is payable to the worker.
149
5.220 The second entitlement period is an aggregate period (whether consecutive or not) of 130
weeks (including the first entitlement period), in respect of which a weekly payment has been
paid or is payable to the worker.
150
5.221 For the purposes of calculating entitlement periods, the AC Act does not distinguish between
weekly payments paid or payable in the case of total incapacity and those paid or payable in the
case of partial incapacity.
5.222 The absence of distinction makes sense, given that income replacement is paid on a weekly
basis and it is only the amount of benefit payable that differs depending on the extent of the
worker’s incapacity.
5.223 The AC Act does not define what constitutes a “week”; nor is that term defined in the
Interpretation of Legislation Act 1984. The Oxford English Dictionary defines a week as “the
period of seven days reckoned usually from midnight on Saturday”; and the Macquarie
Dictionary defines a week as “a period of seven successive days, commonly understood as
beginning . . . with Sunday . . .”.
5.224 The VWA Claims Manual currently instructs claims agents to calculate entitlement periods as
follows:
151
• A week count as opposed to a day count is required when calculating a worker’s entitlement
to weekly payments. For the purposes of counting weeks, a “week” is deemed to be the
period Sunday to Saturday.
• Each week in which weekly payments are paid or payable, whether consecutive or not,
should be counted as one week for the purpose of calculating 13 weeks, 26 weeks, 104
weeks and 130 weeks.
• Example: A worker ceases work on a Thursday and remains incapacitated throughout the next
week, and returns to full pre-injury duties the following Tuesday.
– Week 1 – Thursday and Friday
– Week 2 – Monday to Friday
– Week 3 – Monday
• For the purposes of calculating the entitlement period, the worker has received 3 weeks of
weekly benefits.
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149 AC Act, s 93CA(1).
150 AC Act, s 93CB(1).
151 Claims Manual 9.4.1: “Counting weekly payments”.
5.225 If days of incapacity are counted, unintended consequences may follow, as demonstrated by
the following example:
Prior to their injury, two workers performed duties for 25 hours a week, five hours a day.
Following their injury, both workers can only work 20 hours a week at the same hourly rate as
before the injury. Worker A works 20 hours over five days. Worker B works 20 hours over four
days and does not work one particular day each week.
5.226 In the case of worker A, the second entitlement period would expire after 130 weeks. In the
case of worker B, if calculated by reference to days of incapacity, the second entitlement period
would not expire until 650 weeks had elapsed.
5.227 As demonstrated in the example, if entitlement periods were calculated by reference to days
rather than weeks of incapacity, workers could be entitled to 650 individual days of payments.
It would also mean that, in the example referred to in the Claims Manual (see paragraph 5.225
above), the worker would only have accessed eight days rather than three weeks of payments.
Stakeholder views
5.228 The VTHC
152
and the AWU
153
consider that individual days of incapacity rather than weeks of
payments should be counted. The AWU submits that the current method is particularly unfair on
injured workers who have a series of brief absences early in their claim.
154
The VTHC submits
that –
Under the VWA’s present policy . . . a worker who is incapacitated for one day of work per
week over a two year period will be deemed to have accessed 104 weeks worth of weekly
payments, despite only receiving payments effectively for a fraction of this period.
Such a method unfairly discriminates against those workers who have a partial incapacity for
work only.
155
5.229 The RCSA –
. . . opposes [VTHC’s] approach on the grounds that it unfairly penalises the employer in terms
of calculation of SCE’s and premium increase, potentially militates against a return to work
strategy and impacts financially upon the WorkCover regime as a whole.
156
Maintain the status quo
5.230 Although the drafting of the legislation is far from clear, the current scheme is based on
calculating entitlement periods by reference to weeks for which weekly payments have been
paid or are payable, regardless of the extent of the worker’s incapacity during a particular week.
5.231 Because calculation by days of incapacity rather than weeks of payments would have the effect
of extending entitlement to weekly payments over a longer period (in some cases over a
significantly longer period), that form of calculation may discourage return to work.
5.232 I therefore consider that the current method of calculating entitlement periods should be
maintained.
5.233 A worker with a partial incapacity is entitled to ongoing weekly payments after 130 weeks
where the worker has returned to work to some extent,
157
which lessens any potential
disadvantage associated with the current approach to calculating weeks of entitlement.
5.234 Making provision for the payment of weekly payments to workers who require surgery
after 130 weeks
158
should also lessen any potential disadvantage.
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152 VTHC, Submission, 2 May 2008, p 30.
153 AWU, Submission, 21 January 2008, p 2.
154 AWU, Submission, 21 January 2008, p 2.
155 VTHC, Submission, 2 May 2008, p 30.
156 RCSA, Submission, 2 May 2008, p 9.
157 AC Act, s 93CD. See paragraphs 5.90–5.109 above.
158 See paragraphs 5.110–5.116 above.
REDEMPTION OF WEEKLY BENEFITS
5.235 A redemption of weekly benefits involves the payment of a lump sum to settle all future weekly
benefit entitlements. The AC Act provides limited scope for the redemption of weekly benefits
through a process described as “voluntary settlements”.
159
The limited scope for redemption is
said to be consistent with the long-term pension-based nature of the scheme.
5.236 There are concerns that redemption of weekly benefits can encourage behaviour contrary to the
objectives of the scheme, including a failure to engage in rehabilitation or return to work and an
exaggeration of incapacity. A lump sum may also be dissipated, causing the worker to resort to
social security payments for income support.
5.237 Despite those concerns, redemptions can be an expedient way to finalise claims enabling
workers to “move on” with their lives following injury.
5.238 Access to redemptions in Victoria has varied over time. Voluntary settlements are currently only
available to:
160
• workers injured between 12 November 1997 and 19 October 1999 (who do not have access
to common law), who have no current work capacity, which is likely to continue indefinitely,
and have an impairment of 30% or more;
• workers injured before 1 December 1992, who were in receipt of weekly benefits as at
3 September 2001 and who submitted an expression of interest for a settlement; and
• workers previously covered by older provisions.
5.239 In the last year, five
161
workers accessed a voluntary settlement under the Victorian scheme.
5.240 There is some attraction in the argument that facilitating access to a voluntary settlement would
reduce the scheme’s long-term liabilities and thus improve its financial position. However, that
consideration must be balanced against the overarching objective of encouraging return to work
by all injured workers who are able to do so, and providing income support for workers whose
injury prevents them from working. Expanding access to lump sum payments would undermine
that objective.
5.241 For these reasons I recommend that access to voluntary settlements not be broadened.
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159 AC Act, Part IV, Division 3A.
160 AC Act, ss 115–119.
161 Source: VWA.
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TREATMENT
EXPENSES
Timeframes for determining liability
Notice of termination of claim
Reasonable costs
Prior approval of expenses
Fee setting
Gap payments
Duration of benefits
Coordinated care programs
Ordinary daily living costs
Regulation of medical and
like providers
6.1. An injured worker is entitled to compensation for the reasonable costs of medical services, and
other services, such as physiotherapy, occupational rehabilitation, and personal services, such
as attendant care, where those services are received because of the injury. The services are
generally known as “medical and like services”.
6.2. In this chapter, I:
• examine the claims process and, in particular, the processes for determining liability for the
cost of medical and like services and termination of a claim for medical and like services;
• discuss issues associated with limits on the extent and duration of medical and like services,
including the determination of the “reasonable costs” of services, the prior approval of
services (that is, determining whether a cost is reasonable before the service is provided),
the setting of fees for services and “gap” payments;
• examine coordinated care programs and contributions for ordinary daily living costs for certain
injured workers; and
• consider regulatory issues related to providers of medical and like services.
The current scheme
6.3. In addition to other compensation such as impairment benefits and weekly benefits, injured
workers are entitled to the reasonable costs of medical and like services incurred as a result
of a work-related injury.
6.4. As the Productivity Commission’s 2004 Inquiry into the national workers’ compensation and
occupational health and safety framework identified, where injury prevention fails, the
associated human and economic costs must be minimised through injury management.
1
6.5. The AC Act provides that, if a worker suffers a compensable injury, the VWA (or a self-insurer,
or an employer in respect of the employer’s excess) is liable to pay as compensation the
reasonable costs of any medical and like services received because of the injury.
2
The
compensation payable includes the reasonable costs of:
• road accident rescue services;
• medical services, including certain allied health services (for example, physiotherapy) and
other approved health services on the request of a medical practitioner;
• hospital services;
• nursing services;
• personal and household services (for example, attendant care and transportation costs);
• occupational rehabilitation services (for example, rehabilitation and workplace assessments,
preparation of return to work plans and modifications to workstations to facilitate return to
work);
• ambulance services;
• family counselling services,
3
if the injury is severe or the worker has died; and
• burial or cremation services, where death results from the injury.
6.6. In addition, the AC Act was recently amended
4
to provide that, where a worker, as a result of
his or her injury, reasonably requires a car or a home to be modified, the VWA is liable to pay –
• the reasonable costs of modifying the car or home; or
• if the car is not capable of being modified, a reasonable amount by way of contribution to the
purchase cost of a suitably modified car selected by the VWA; or
• if the home is not capable of being reasonably modified, a reasonable amount by way of
contribution to the purchase of a semi-detached portable unit or to the costs of relocating the
worker to another home that is suitable for the worker or that is capable of being reasonably
modified.
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1 Productivity Commission, National Workers’ Compensation and Occupational Health and Safety
Frameworks (Inquiry Report No 27), 16 March 2004, p 189.
2 AC Act, s 99(1).
3 AC Act, s 99(aa): up to a prescribed (indexed) limit, currently $5,160.
4 AC Act, s 99(5A)-(5H) inserted by State Taxation and Accident Compensation Amendment Act 2007,
Part 4.
6.7. Injured workers have the right to receive medical and like services from a provider of the
worker’s choice: although an employer, the VWA or a self-insurer can offer or provide a health
service for the worker’s use, the choice of provider is ultimately a matter for the worker.
5
6.8. Compensation for the reasonable costs of medical and like services ceases 52 weeks after the
entitlement arises,
6
or 52 weeks after the worker stops receiving weekly benefits,
7
unless:
(a) the worker has returned to work but:
(i) could not remain at work if a [medical or like] service was not provided; or
(ii) surgery is required for the worker; or
(iii) the worker has a serious injury . . . ; or
(b) the worker requires modification of a prosthesis; or
(c) the [medical or like] service is essential to ensuring that the worker’s health or ability to
undertake the necessary activities of daily living does not significantly deteriorate.
8
6.9. Approximately 35% of claims under the AC Act are claims for medical and like benefits only
and approximately 25,000 workers receive some form of medical and like service each year.
9
6.10. $1.427 billion in scheme liabilities
10
is associated with the payment of medical and like
expenses, as follows:
• $219 million in hospitalisation costs;
• $483 million in paramedical services (such as physiotherapy and psychology);
• $112 million in medical reports;
• $297 million in medical practitioner fees associated with the treatment of injured workers;
• $270 million in personal and household services (such as home help and attendant care); and
• $46 million in occupational rehabilitation.
11
6.11. The VWA’s experience has been that, by themselves, tighter controls and amendments to the
fee schedules have not provided an adequate means of limiting expenditure growth. Rather,
influencing the use of medical and like services through promoting evidence-based practice
and peer reviews, in conjunction with fee schedule changes, has been more effective.
6.12. The essential principles underlying the provision of medical and like services have previously
been explored in national forums. For example, the HWCA’s “Promoting Excellence” report
in 1997 sets out the following principles for the provision of medical services in workers’
compensation schemes:
12
• providing access to needed care which is of high quality;
• providing care at a reasonable cost; and
• providing treatment which is focused on return to work.
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5 AC Act, s 99(3). The provision of occupational rehabilitation services is an exception to this principle:
ss 99(3A)-(3D) of the AC Act provide that a worker has a choice from (at least) three approved
providers nominated by the VWA, employer or self-insurer.
6 AC Act, s 99(12).
7 AC Act, s 99(11).
8 AC Act, s 99(14).
9 Source: advice from the Review’s independent actuaries.
10 The term “scheme liabilities” refers to the present capital cost, as estimated by actuaries, of meeting
all claims (in this case, for medical and like benefits) as those claims are made and fall due.
11 Source: VWA.
12 Heads of Workers’ Compensation Authorities, Promoting Excellence: National consistency in Australian
workers’ compensation, Final Report to the Labour Ministers’ Council, May 1997, p 29.
Stakeholder views
6.13. The VTHC contends that decisions about liability should be made more speedily, so that the
injured worker’s chances of rehabilitation can be optimised. The VTHC submits that the fact that
there are no legislated timeframes for determination of medical and like claims –
. . . can result in inordinate delays to requests for reasonable and necessary medical treatment
for injured workers.
These delays can jeopardise a worker’s recovery from injury and significantly delay
rehabilitation and return to work processes. This is not in the interests of the injured worker,
the employer or the scheme . ..
13
6.14. However, the Chiropractic and Osteopathic College of Australasia counsels caution in amending
the AC Act “to introduce legislated timeframes for the determination of medical and like claims,
including notice periods for termination”, because many workers receive care for injuries that
can be complex and “do not fit an algorithm or formulae of care”.
14
6.15. Some stakeholders have expressed the view that there should be no time limit on the duration
of compensation for medical and like services, and that benefits for which those services
should be paid for as long as the treatment is reasonably required by an injured worker.
6.16. In particular, AMIEU submits:
The AC Act is social legislation to ensure that injured workers are assisted with rehabilitation.
. . .
The only grounds for decisions, about medical and like expenses is whether the
treatment/facilities are appropriate for the injury and their reasonableness.
15
6.17. VECCI considers that duration should not be the only basis on which medical and like services
are terminated and submits that –
. . . the Act be amended to allow termination or refusal of medical and like payments on the
grounds that no measurable improvement is resulting from the treatment. Further grounds
would be that there is no medical evidence that the treatment or service has any likelihood
of producing a medical improvement.
16
6.18. The fee schedule for medical and like services has been raised as a concern. The APA submits
that the rationale for the scheduled fee offered by the VWA is unexplained, in view of the
independently established market rate, and supports a transparent process for determining
reasonable costs.
17
6.19. The AMA has a similar view that –
. . . no robust and transparent process currently exists for the setting of the level of such
rebates. . . . the level of rebate is unacceptably low, and that low rebates have the effect
of providing inferior health outcomes for workers.
18
6.20. Ai Group has highlighted the critical role of health providers in the scheme and suggests –
• Making higher payments to treating practitioners who participate in specific training aimed
at increasing their knowledge and skills in relation to work-related injury schemes; and/or
• Making payments to doctors for participating in conference calls, meetings or on-site visits
which are aimed at facilitating a more effective return to work.
19
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13 VTHC, Submission, 2 May 2008, p 33.
14 Chiropractic and Osteopathic College of Australasia, Submission, 2 May 2008, p 1.
15 AMEIU, Submission, 2 May 2008, p 18.
16 VECCI, Submission, April 2008, p 54.
17 APA, Submission 2 May 2008, p 3.
18 AMA, Submission, 8 February 2008, p 2.
19 Ai Group, Submission, 2 May 2008, p 55.
6.21. Opportunities for greater alignment with other schemes have been identified by stakeholders.
Both the VBIRA
20
and the Compensation Law Bar Association
21
have noted that, as a matter
of equity, there should be parity between the TAC and Workcover schemes.
6.22. The regulation of health providers has raised significant comment. The VACC,
22
VECCI
23
and
NewCare
24
have expressed the view that additional regulatory powers should be available to
ensure that health service providers deliver the appropriate quality and level of service.
TIMEFRAMES FOR DETERMINING LIABILITY
6.23. The AC Act requires that a claim for compensation for medical and like services be lodged
within six months after the date of the relevant service.
25
The provision appears to be designed
to encourage workers to submit invoices for medical and like services relatively promptly.
6.24. The AC Act prescribes no time within which the VWA and its claims agents must make a
decision on liability on a claim for medical and like services. Current VWA policy requires those
decisions to be made within 60 days.
26
The policy is not binding on self-insurers.
6.25. Of the 8000 or so claims for medical and like services submitted each year, liability is accepted
in 73% of cases within the 60-day time limit currently prescribed under VWA policy.
27
Stakeholder views
6.26. There is broad support for the introduction of legislated timeframes for determining claims for
medical and like services.
6.27. The VTHC submits that –
There are currently no legislated time frames for determinations of issues in relation to medical
and like claims. It is our experience that this can result in inordinate delays to requests for
reasonable and necessary medical treatment for injured workers.
. . .
. . . we believe that a timeframe should be introduced of 28 days for determining medical and
like claims. This would be consistent with the time frames presently contained in the AC Act in
relation to claims for weekly payments.
28
6.28. The VTHC,
29
the AMIEU
30
and the Compensation Law Bar Association
31
recommend that claims
for medical and like services be determined within 28 days, rather than the 60 days stipulated in
current VWA policy.
6.29. The SIAV does not oppose a requirement that liability be determined within 60 days.
32
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20 VBIRA, Submission, 2 May 2008, p 2.
21 Compensation Law Bar Association, Submission, 2 May 2008, p 16.
22 VACC, Submission, 2 May 2008, p 11.
23 VECCI, Submission, 2 May 2008, p 56.
24 NewCare Group, Submission, 2 May 2008, p 4.
25 AC Act, s 103(7)(d).
26 VWA, Claims Manual, paragraph 1.6.2, http://www.worksafe.vic.gov.au/wps/wcm/connect/WorkSafe/
Home/Injury+and+Claims/Online+Claims+Manual/.
27 Source: VWA.
28 VTHC, Submission, 2 May 2008, p 33.
29 VTHC, Submission, 2 May 2008, p 33.
30 AMIEU, Submission, 2 May 2008, p 17.
31 Compensation Law Bar Association, Submission, 2 May 2008, p 16.
32 SIAV, Submission, May 2008, p 17.
6.30. VECCI supports legislated timeframes for determination of medical and like claims, but submits
that the time period should commence from the date when all requested materials are
provided.
33
6.31. I believe that the AC Act should stipulate the time within which liability in response to claims for
medical and like services must be determined in cases where provisional liability
34
is not
applied.
6.32. The prospects for an injured worker returning to work are improved if any necessary treatment
is commenced without delay; and, for treatment to commence, there needs to be certainty
about liability for the cost of treatment.
6.33. Apart from giving certainty to all parties, a legislated timeline will ensure that the same time
limits apply to the claims of all injured workers, whether they are covered by the scheme or
by self-insurers.
6.34. On average, claims for weekly benefits are determined within 14 days and claims for medical
and like expenses are determined within 26 days.
35
6.35. It may be that claims for medical and like expenses are more complex than claims for weekly
benefits; or it may be that the time currently available (60 days) encourages a longer
determination period.
6.36. I am not convinced that the majority of claims for medical and like services are more complex
than claims for weekly benefits.
6.37. Consequently, I recommend that the time for deciding claims for medical and like services
should be fixed in line with the time for determining weekly benefits claims (28 days).
NOTICE OF TERMINATION OF CLAIM
6.38. The AC Act does not prescribe the procedure to be followed for terminating entitlement to
compensation for medical and like services, including the period of notice that must be given
to the worker before terminating entitlement. This is consistent with other Australian schemes.
6.39. However, current VWA policy requires that 28 days’ notice must be given.
36
6.40. Section 114 of the AC Act prescribes a notice period for the termination, or alteration, of weekly
benefits. That period is 14 days or 28 days, depending on the length of time for which the
worker has received weekly payments,
37
or 13 weeks if the termination is solely on the grounds
of the expiry of the second entitlement period (at 130 weeks).
38
In some instances, no notice is
required.
39
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33 VECCI, Submission, 2 May 2008, p 53.
34 See chapter 3 “Ensuring timely access to benefits and support,” paragraphs 3.128-3.150.
35 Source: VWA.
36 VWA, Claims Manual, section 10.6.1 “Termination of Medical and Like Services”,
http://www1.worksafe.vic.gov.au/vwa/claimsmanual/default.htm.
37 14 days’ notice is required where the worker has received weekly payments for between 12 weeks
and one year: AC Act, s 114(13)(a). 28 days’ notice is required where the worker has received
payments for more than one year: AC Act, s 114(13)(b).
38 AC Act, s 114(13)(c). This applies to claims lodged after 1 January 2005.
39 No notice is required where the worker has returned to work, has received less than 12 weeks of
weekly benefits, or is no longer entitled to receive payments pursuant to the AC Act: ss 93E, 93EA,
93F, 96, 97(2) or 97(7). No notice is required where the worker has obtained payments fraudulently:
AC Act, s 114(6).
6.41. Statistics available from the VWA indicate that, in 2007, 8563 disputes were lodged in relation
to medical and like claims and expenses. The median length of time between the ACCS
receiving a request for conciliation and the outcome of the conciliation process is 53 days;
40
the
time taken is the same for disputes over medical and like compensation claims, and disputes
over payment of medical and like expenses.
Stakeholder views
6.42. The VTHC submits that a termination period of at least 28 days should be stipulated in the AC
Act, with the reasons for termination provided in writing.
41
VECCI submits that the notice period
should be 13 weeks, for consistency with the notice of termination of weekly benefits at the
expiry of 130 weeks.
42
6.43. The VTHC raises a concern that, for some workers, the cessation of treatment pending review
of a termination decision at the ACCS disrupts necessary treatment and may result in
regression in the worker’s condition.
43
6.44. Prescribing the procedure to be followed in terminating a claim for medical and like expenses
would ensure a common experience for workers and providers, whether the employer is
insured or a self-insurer. In my view, 28 days’ notice would provide sufficient time in most cases
for workers to consider their options, including any rights to seek review of the termination
decision.
REASONABLE COSTS
6.45. Under the AC Act, compensation for medical and like services is limited to the payment of
“reasonable” costs. Most other Australian jurisdictions use a similar concept of reasonableness
as the basis for defining the extent of entitlement to medical and like expenses. However, the
total amount paid that can be paid, or the total period for which expenses can be paid, differs
between jurisdictions.
6.46. In determining what costs are reasonable, the AC Act
44
obliges the VWA to consider the
following:
• an amount that is determined by the VWA as reasonable in relation to the service;
• an amount that does not exceed the amount (if any) specified in, or an amount determined in
accordance with a method specified in, an Order of the Governor in Council published in the
Government Gazette;
45
and
• an amount that is determined by the VWA as reasonable having regard to:
– the service actually provided;
– its necessity; and
– any guidelines issued by the VWA in respect of that service.
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40 Source: VWA.
41 VTHC, Submission, 2 May 2008, p 33.
42 VECCI, Submission, 2 May 2008, p 53.
43 VTHC, Submission, 8 February 2008, p 2.
44 AC Act, s 99(2).
45 That maximum amount, in the case of a service, must not be less than the amount of the fee specified
in a table within the meaning of the Health Insurance Act 1973 (Cth) applicable in respect of a service
of that kind provided in Victoria.
6.47. The VWA, at least in recent times, has not used the power in section 99(2)(b) to gazette fees.
Instead, the VWA indicates that it will pay the reasonable costs of some medical and like
services up to the maximum amount detailed in various fee schedules available on the VWA’s
website.
46
The schedules published by the VWA list maximum fees for most medical and like
services (such as physiotherapy) that can be paid under the AC Act.
6.48. In addition, the VWA has policies (available on the VWA’s website) to indicate how it will apply
the AC Act when making decisions on whether to pay the costs of certain services such as
home exercise equipment or elective surgery. The policies are said to have been developed in
line with the AC Act “on the basis of the best available clinical evidence and recognised clinical
practice”.
47
6.49. The reasonableness of medical and like services has been tested in the courts a number of
times, with the result that:
• the costs of medical treatment are not reasonable if there is no prospect of the treatment
being successful in curing or alleviating the state of the injury;
48
and
• in determining whether medical or like costs are reasonable under section 99(1), the VWA
must have regard to whether both the cost of the service and the service itself are
reasonable.
49
6.50. In Russell v TAC,
50
Harper J refused to interfere with VCAT’s finding that the costs of continuing
treatment by an osteopath and a psychologist should not be regarded as reasonable, within the
meaning of s 60 of the TA Act (which is comparable to s 99 of the AC Act). Harper J observed:
51
In assessing what expenditure is reasonable, one must . . . consider the necessity of the
service upon which the expenditure is proposed to be effected. In this context the word
“necessity” is, I think, of some importance. That word is somewhat flexible in its scope. It does
not, as I apprehend it, include only services which are vital for the continued reasonable
existence of the victim as a functioning member of the community. What is necessary would
include treatment that is of a much lower urgency than that. On the other hand, when one
reaches the other point of the scale, one must presumably exclude as not being necessary
treatment which is of merely temporary palliative effect, especially where that effect is not
measurable.
6.51. The largest proportion of referrals to conciliation relates to medical and like services. In
2006/2007, for instance, 37.5% of all referrals to the ACCS related to disputes about medical
and like expenses.
52
Although the high proportion may reflect the high number of decisions
made about medical and like expenses, it appears that most of the disputes relate to denial
of specific medical and like expenses.
6.52. Greater clarity about the “amount that is determined by the VWA as reasonable” should help
to reduce the number of disputes. It appears to me that the required clarity could be achieved
through the making of guidelines, as is already contemplated by the AC Act,
53
and that no
legislative change is required.
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46 For example, the fee schedule that applies to physiotherapy services is available in “Information for
Physiotherapists” at http://www.workcover.vic.gov.au/wps/wcm/resources/file/eb05634ef778f5e/
information_physiotherapist.pdf
47 WorkSafe Victoria, Reasonable Medical and Like Services, viewed 10 July 2008.
48 Matthews v Campbell & Sons (1955) 3 WCBD (Vic) 112; Brous v Port Phillip Mills (1968) 4 WCBD (Vic).
49 Re VWA (Vulcan Australia Ltd) and Joyce (1993) 6 VAR 81 at 89. (VCAT was considering the
predecessor to s 99(2)(c) of the AC Act.)
50 [2004] VSC 442.
51 [2004] VSC 442 at [10].
52 ACCS, Annual Report 2006/2007, p 3.
53 AC Act, s 99(2)(c)(iii).
6.53. The VWA currently provides a range of policies designed for healthcare providers, agents and
workers about the provision of the medical and like services that the VWA reimburses.
However, the policies are available to injured workers through various sources, including the
VWA’s website and its Claims Manual, and the information provided in each source differs and
is difficult to navigate.
6.54. Providing consistent information (in the form of guidelines) on the determination of reasonable
costs, being information that is easily available to each party, would provide greater clarity and
could reduce disputes.
6.55. In drafting guidelines, I recommend that the VWA take into account the judicial observations
on the provisions (and their TA Act equivalent), such as the observations in Russell, quoted in
paragraph 6.50 above.
PRIOR APPROVAL OF EXPENSES
6.56. Except in limited circumstances,
54
there is no requirement for prior approval of medical and like
expenses. However, in practice, service providers and workers often request prior approval in
order to avoid a dispute as to whether a service and the associated fees are not “reasonable”
and therefore compensable after the service has been delivered.
6.57. The VWA’s online policy recommends that injured workers or service providers seek prior
written approval for the payment of certain procedures or services such as hearing aids, home
exercise equipment or implantable pain therapies.
55
6.58. The Claims Manual instructs the VWA’s claims agents to handle requests for prior approval as
follows:
• if there is enough information on file to determine liability:
– the decision must be made as soon as possible; and
– the agent must inform the worker and service provider of the decision, in writing.
• if there is not enough information on file:
– the agent must inform the worker and service provider, within 14 days of receiving the
request, that the decision on liability is pending; and
– the agent must inform the worker and service provider of the decision in writing, within
28 days of receiving the request.
6.59. Specific provision is made for the prior approval of elective surgery. The VWA’s online policy
indicates that a request for prior approval of elective surgery will be acknowledged within five
days, and a decision made within 10 days of receiving all required information.
6.60. Any delays in responding to requests for prior approval will lead to delays in providing the service.
Delays can affect a worker’s recovery, given that the provision of medical and rehabilitation
services as soon as possible after injury is strongly correlated with early return to work.
6.61. The New Zealand accident compensation scheme generally requires prior approval of
expenditure, except in certain cases (such as where the treatment is acute or of a type
specified in regulations).
56
No timeframes for decision making are prescribed. Rather, the
NZ Act relies on a general provision that requires the NZACC to make every decision on a
claim on “reasonable grounds, and in a timely manner”.
57
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54 AC Act, ss 99(2B) and (2D) stipulate that prior approval is required where services are provided or
carried out outside Australia. This process is subject to some qualification – prior approval is not
required where the service had to be provided immediately and it was not reasonably practicable
to obtain approval beforehand. Section 99(2C) specifies that for the purposes of providing that prior
approval, the VWA must have regard to the matters normally required when considering whether
a cost is reasonable – that is, the matters specified in ss 99 (2)(c) and (12)-(14).
55 WorkSafe Victoria, Reasonable Medical and Like Services, viewed 10 July 2008.
56 Injury Prevention, Rehabilitation, and Compensation Act 2001 (NZ), schedule 1, part 1, cl 4.
57 Injury Prevention, Rehabilitation, and Compensation Act 2001 (NZ), s 54.
Stakeholder views
6.62. Some stakeholders support the requirement of prior approval for medical and like services.
Ai Group considers it important that the AC Act or another legislative instrument address the
process for prior approval.
58
CFA also recommends a prior approval process.
59
The APA
supports a prior approval process, provided that the mechanisms for establishing the criteria
do not usurp proper clinical decision making practices.
60
6.63. However, others such as VECCI and the SIAV oppose such a provision. VECCI considers that
the problem is administrative rather than legislative. It considers that the AC Act is not an
impediment to quick approvals.
61
6.64. The SIAV submits that the current VWA policy requirement that decisions on prior approval
be made within a reasonable period should be maintained.
62
6.65. The VTHC submits that treating practitioners should determine what treatment and services
are required for an injured worker, therefore approval of the VWA is not necessary.
63
6.66. The VWA policies on prior approval appear inconsistent; there should be clarity about which
services require prior approval, and which do not; and the VWA should be clear and
accountable in responding to requests for prior approval.
6.67. On the basis of my consultation with stakeholders, I believe that some services would benefit
from prior approval, in particular those services and procedures set out in the VWA’s online
policies. Prior approval would assist in the consistent management of service provision.
However, I believe that prior approval is not necessary for the large majority of medical and like
services (for example, physiotherapy).
6.68. As medical technology continues to develop, I expect that the VWA will increasingly be called
on to consider whether the cost of additional medical and like services can be considered a
“reasonable cost”.
6.69. I anticipate that the VWA may need specialist advice before it can determine whether the cost
of a new service is a reasonable cost. The process by which decisions about those services are
made should be clear and transparent.
6.70. One option would be for the AC Act to authorise the making of regulations that prescribe the
services that require prior approval, creating consistency and certainty for providers about
particular services. However, this approach would be relatively inflexible, as new services which
are considered to need prior approval would require amendments to the regulations.
6.71. A discretionary power permitting the VWA to require that approval be sought prior to the
provision of services determined by the VWA could provide equal certainty for stakeholders and
would enable the VWA to respond to changing technologies more rapidly.
6.72. Such a power could be accompanied by a requirement to publish guidelines detailing the
current services for which prior approval is required together with the decision-making process
to be followed. (Section 99(2)(c)(iii) currently provides for the issuing of guidelines on the
reasonable cost of services.)
6.73. The approach outlined in paragraphs 6.71 and 6.72 above would allow the list of services to
be changed from time to time to reflect changes in treatment practice, while ensuring the
necessary transparency and accountability.
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58 Ai Group, Submission, 1 May 2008, p 53.
59 CFA, Submission, 2 May 2008, p 3.
60 APA, Submission, 2 May 2008, p 3.
61 VECCI, Submission, 2 May 2008, p 55.
62 SIAV, Submission, 2 May 2008, p 18.
63 VTHC, Submission, 2 May 2008, p 34.
6.74. To support administrative alignment between the VWA and TAC, I recommend that the TAC
be consulted on the services for which prior approval is to be required.
FEE SETTING
6.75. On the issue of the setting of fees for medical and like services, the HWCA 1997 report
“Promoting Excellence” recommended that jurisdictions:
• enact legislative provisions giving the power to establish service and fee schedules;
• set limits on the fees for traditional items which are equivalent to that which a private
patient would pay for the same service item; and
• incorporate a supplementary service list for non-traditional services useful for workers’
compensation purposes which attract an appropriate hourly fee.
64
6.76. The AC Act’s provisions are broadly in line with those recommendations.
6.77. In 1990, a Compensable Patients’ Fees Review Committee chaired by Dr Ian Siggins was
established in response to continuing disputes over fees between the then WorkCare and
medical groups, including the AMA.
65
6.78. Following the Review Committee’s report, the Government agreed to pay medical fees from
1 January 1991 based on the then Commonwealth Medical Benefits Schedule (the MBS), with
a loading of 24%–49%.
66
6.79. The loadings were included for two reasons: first, the treatment of workers’ compensation
cases imposed additional costs on providers; and, secondly, the MBS permitted balance
billing.
67
(Balance billing refers to the practice where the patient pays the difference between
the scheduled fee and the fee charged by the doctor.)
6.80. The VWA-approved medical items are normally indexed annually, although they are not subject
to indexation under the AC Act.
68
The indexation methodology is identical to that used by the
TAC.
6.81. I understand there have been no independent reviews of the schedule of fees since 1990.
The fees for medical and like services that are not covered in the MBS, such as fees for
physiotherapy services, are also normally indexed. There have been variations to the schedule
of fees for some allied health provider groups over time, but no wholesale independent review
has been conducted.
6.82. No Australian workers’ compensation scheme provides for independent fee setting. In most
jurisdictions, fees are set in consultation with professional bodies by the scheme administrator
(Victoria, New South Wales and the Commonwealth), or through principal legislation
(Queensland) or subordinate legislation (South Australia and Western Australia). Fee schedules
vary across jurisdictions.
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64 HWCA, Promoting Excellence: National consistency in Australian workers’ compensation, Final Report
to the Labour Ministers’ Council, May 1997, pp 29–30.
65 W E Upjohn Institute for Employment Research, Victorian Worker’s Compensation System: Review and
analysis, 29 August 1997, p 5–26.
66 W E Upjohn Institute for Employment Research, Victorian Worker’s Compensation System: Review and
analysis, 29 August 1997, p 5–26.
67 W E Upjohn Institute for Employment Research, Victorian Worker’s Compensation System: Review and
analysis, 29 August 1997, p 5–26.
68 Section 100(2B)(d) of the AC Act provides that any amount of dollars referred to in s 99 is subject to
the indexation formulae prescribed in s 100(2A). The VWA’s schedule of recommended fees does not
answer that description: it does not contain “any amount of dollars referred to in . . . section 99”.
6.83. The second reading speech on the amendments that introduced section 99(2)(b) into the
AC Act, authorising the gazettal of medical and like fees, stated:
69
[T]he bill provides that any . . . maximum level cannot be less than any fee for the relevant kind
of service specified in a table within the meaning of the Commonwealth Health Insurance Act
1973. This will permit the reasonable costs for these services to be limited to an insurable
amount that reflects market realities while encouraging competition among providers in the
provision of medical and like services.
Stakeholder views
6.84. A number of submissions received by the Review relate the VWA’s setting of fees for medical
and like services.
6.85. The APA submits that the rationale for the scheduled fee offered by the VWA is unexplained, in
view of the independently established market rate. The APA supports a transparent process for
determining reasonable costs.
70
6.86. The APA also submits –
There must be a transparent process for determining reasonable costs. This issue has been a
longstanding source of frustration, friction and disillusionment between WorkSafe and peak
bodies representing highly qualified professionals.
71
6.87. The AMA submits that there is –
. . . no robust and transparent process currently exists for the setting of the level of such
rebates.
72
6.88. The AMA also suggests that an independent body should determine rebate levels for medical
and like expenses and in its 2005 Victorian survey:
. . . only 8% of respondents indicated that the current VWA rebates to workers adequately
recognise the additional time and effort required to treat such patients. 73% of respondents
indicated that higher rebates to workers were more appropriate. 76% of respondents
highlighted that the current rate of rebate increase is not keeping pace with practice overhead
costs.
73
6.89. The AMA expresses its concern that –
. . . should rebates continue to be paid at current rates, a diminishing number of doctors will
be prepared to treat injured workers.
74
6.90. Similarly, a submission from Dr Anthony Buzzard noted that there is evidence that an increasing
number of doctors are declining to treat WorkCover patients –
. . . because of the considerable workload involved and because of the relatively poor
remuneration.
75
6.91. The Melbourne Audiology Centre
76
raises concerns about the cost of supplying hearing aids.
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69 Victoria Legislative Assembly Debates, 14 November 1996, p 1228: Accident Compensation
(Further Amendment) Bill, second reading.
70 APA, Submission, 2 May 2008, p 3.
71 APA, Submission, 2 May 2008, p 3.
72 AMA, Submission, 8 February 2008, p 2.
73 AMA, Submission, 8 February 2008, p 2.
74 AMA, Submission, 8 February 2008, p 3.
75 Anthony Buzzard, Submission, 8 January 2008, p 2.
76 Melbourne Audiology Centre, Submission, 2 May 2008, p 1.
6.92. Other stakeholders
77
submit that the reimbursement rate for travel at 28 cents per kilometre
78
is too low and should be adjusted to reflect changing costs.
6.93. I consider that an independent review, covering both medical and non-medical fees payable
under section 99 of the AC Act, should be conducted as soon as possible. It should provide
an opportunity for input from bodies representing providers of medical and like services.
6.94. Consistent with my recommendations in Chapter 4 “Supporting workers to get back to work
after injury”,
79
the independent review should also consider how to provide appropriate financial
incentives for service providers to treat injured workers in a timely and appropriate manner and
support return to work, in order to improve rehabilitation and return to work outcomes. It should
consider market rates for services, and the impact of its recommendations on the financial
viability of the scheme.
6.95. In relation to travel reimbursements, the VWA conducts an annual review of the rate of
reimbursement. The VWA engaged NRMA in 2006 to review the impact of petrol prices
to determine whether the reimbursement rate was reasonable. The rate is currently under
review again.
GAP PAYMENTS
6.96. In some instances, a healthcare provider requires an injured worker to pay the “gap” between
the cost of the healthcare provider’s services and the VWA’s payment in accordance with its fee
schedule.
6.97. The VWA’s current position is that, if a provider wishes to charge more than the scheduled rate,
the provider should advise workers that the VWA will not reimburse workers for the additional
cost. The VWA’s guide for healthcare providers states:
Whilst you are entitled to charge any amount for your service, the Agent will only pay the
reasonable cost as specified in the WorkSafe fee schedule. You should advise the injured
worker that any additional costs cannot be reimbursed by the Agent.
80
6.98. No information is available about the prevalence of “gap” charges.
6.99. A requirement by a provider that a worker pay the “gap” component of a fee would form part
of the contract for service between the worker and provider if the provider had disclosed that
“gap” component before the worker agreed to receive the service; and, if there had been that
disclosure, the provider would be able to recover the “gap” from the worker.
6.100. New Zealand’s ACC has attempted to deal with the prevalence of “gaps” in the cost of the
service provided. As part of the ACC’s endorsed provider network, accredited physiotherapy
clinics provide services subject to the terms of their contract with the ACC. The effect is that
the ACC pays the clinics an increased fee, but in return the clinics cannot charge claimants a
“gap” fee (subject to some exceptions).
Stakeholder views
6.101. The VTHC submits that, where a worker is subject to a “gap” charge, the VWA should reimburse
the worker for the additional cost.
81
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77 Robert Kernohan, Submission, 26 April 2008; Injured Nurses Support Group, Submission, 30 April 2008.
78 WorkSafe 2006, Travel Reimbursement Rate for injured workers, viewed 27 June 2008,
http://www.worksafe.vic.gov.au/wps/wcm/resources/file/ebc8b9435b34347/travel_rates.pdf
79 See Chapter 4 “Supporting workers to get back to work after injury”, paragraphs 4.387-4.391.
80 WorkSafe Victoria, 1 July 2007, Introducing WorkSafe: A guide for allied healthcare professionals, p 7;
www.worksafe.vic.gov.au/wps/wcm/resources/file/eb7222406767914/Introducing%20WorkSafe%20A
%20guide%20for%20allied%20healthcare%20professionals.pdf.
81 VTHC, Submission, 2 May 2008, p 47.
6.102. Although one of the objectives of the medical and like payments regime is to ensure that
workers are not left without necessary medical care for a compensable injury, I accept that it is
appropriate for the VWA to maintain control over what it considers to be a reasonable cost, as
otherwise liabilities could be significantly affected.
6.103. There may be other measures that the VWA could explore to reduce the incidence of “gap”
charges, including developing contracts with providers or groups of providers with particular
expertise in compensable medical or health services in areas where gap charges are prevalent.
Under such arrangements, the VWA could agree to pay higher than usual rates reflecting the
specialised nature of the services and participating providers would be prohibited from charging
“gap” fees.
6.104. That kind of measure would have the advantages of creating incentives for practitioners to
specialise in compensable health services and reducing the extent to which workers are out
of pocket for services.
6.105. I understand that the VWA is considering moving towards such an arrangement through its
network provider initiative.
DURATION OF BENEFITS
6.106. A worker’s entitlement to receive compensation for the reasonable costs of medical and like
services is limited to a prescribed period of time, unless particular circumstances apply.
6.107. The AC Act limits a worker’s entitlement to medical and like benefits to the period of 52 weeks
after the worker has ceased receiving weekly benefits,
82
or to the period of 52 weeks after the
entitlement arose (if no weekly benefits were claimed).
83
6.108. Amendments in 1994
84
introduced a number of exemptions, so that the entitlement to medical
and like benefits does not cease where:
• the worker has returned to work but:
– could not remain at work if a medical or like service was not provided; or
– requires surgery; or
– has a serious injury within the meaning of section 93B(5) of the AC Act; or
• the worker requires modification of a prosthesis; or
• the medical or like service is essential to ensure that the worker’s health or ability
to undertake the necessary activities of daily living does not significantly deteriorate.
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82 AC Act, s 99(11).
83 AC Act, s 99(12).
84 AC Act, s 99(14).
6.109. As indicated in paragraph 6.45 above, while most other jurisdictions use a similar concept of
reasonableness as the basis for controlling entitlement, the amount paid or the total period for
which expenses can be paid can differ between jurisdictions. The Comcare, Seacare, South
Australia, Queensland, Northern Territory and Australian Capital Territory schemes do not set
a limit on the duration or amount of compensation paid for medical and like services. In
jurisdictions where a limit does apply, the limit is either imposed on the amount (as in New
South Wales
85
and Western Australia)
86
or duration (as in Victoria and Tasmania)
87
.
Stakeholder views
6.110. The VTHC
88
and the AMIEU submit that it is inappropriate to limit an entitlement to reasonable
medical and like expenses on any grounds other than the reasonableness of the treatment
provided.
6.111. VECCI submits that –
Some medical services have a history of no significant outcomes. Some services continue
because the worker has become dependent on them despite no beneficial outcomes.
89
6.112. VECCI recommends –
. . . the Act be amended to allow termination or refusal of medical and like payments on the
grounds that no measurable improvement is resulting from the treatment. Further grounds
would be that there is no medical evidence that the treatment or service has any likelihood
of producing a medical improvement.
VECCI recommends that provision to deny payment for services extend to rehabilitation
providers who achieve negative results or who appear to be providing services not focused
on return to work.
90
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85 In New South Wales, the total amount payable for medical and like expenses is limited to $7500
initially (under provisional liability). In New South Wales, there are also prescribed monetary limits for
various medical and other services. For example, for medical and like treatment the limit is $50,000;
for hospital treatment the amount is limited to $50,000; for ambulance the amount is limited to
$10,000 and for occupational rehabilitation the amount is limited to $2391.10 (indexed and increased
each 6 months). There is recourse to extension of these limits. In relation to medical or related
treatment, hospital treatment and ambulance services, where matters are before the Workers
Compensation Commission, the Commission may direct that higher amounts be paid. The New South
Wales WorkCover Authority may approve individual requests to exceed the various maxima as an
alternative to a direction by the Workers Compensation Commission, and may also approve an
extension to the limits upon occupational rehabilitation service costs.
86 In Western Australia, medical and like expenses are limited to 30% of a prescribed amount ($50,550)
and $11,795 for vocational rehabilitation expenses. A general extension to the limits to medical and
hospital services may be ordered by an arbitrator where a worker’s social and financial circumstances
justify it and there is also a further, more significant extension to more seriously injured workers in
stipulated circumstances. An additional $50,000, or up to $250,000 for seriously injured workers, can
be approved.
87 Section 75(2) of the Workers Rehabilitation and Compensation Act 1988 (Tas) provides that the
employer’s liability to make payments for medical and other services expires 10 years after the date
on which the claim for compensation was given to the employer. The recent review of the Tasmanian
scheme recommended that a discretion be vested in the Workers Rehabilitation and Compensation
Tribunal to extend payments beyond 10 years for persons with a WPI of 15% or greater in cases of
demonstrated need: A Clayton, Review of the Tasmanian Workers Compensation System: Report,
September 2007, p 97.
88 VTHC, Submission, 2 May 2008, p 34.
89 VECCI, Submission, April 2008, p 53.
90 VECCI, Submission, April 2008, p 54.
6.113. I believe that the current approach linking the duration of compensation for medical and like
services to return to work (that is, to weekly benefits) is fair, because it ensures that the
limitation operates on the basis of need, not cost. There is a case for no formal limit to the
duration of the compensation (making it only subject to the concept of “reasonableness”, as is
the case in the Commonwealth scheme). However, as noted by both of the recent reviews of
the Tasmanian
91
and South Australian schemes,
92
such an approach is would create a
significant potential for uncontrolled liabilities, and I cannot recommend it.
6.114. The exceptions identified in the AC Act
93
recognise that some workers require ongoing medical
and like services. I consider that the exceptions adequately support those workers.
COORDINATED CARE PROGRAMS
6.115. Section 99AAA of the AC Act allows the VWA (or a self-insurer) to require an injured worker to
submit a written proposal for a coordinated care program (CCP) for the purpose of coordinating
and managing the provision of compensable medical and like services to the worker.
6.116. Once approved, the CCP will govern the provision of medical and like services under section 99
of the AC Act.
94
6.117. When section 99AAA was introduced in 1996, the responsible Minister said that it was intended
that workers could be required to submit coordinated care programs where:
95
• the worker has not recovered sufficiently to return to work within the normal recovery period
and the current treatment is considered inappropriate or ineffective;
• there are additional treatment complications caused by non-compensable factors, such as
drug addiction, mental disorders or acquired brain impairment;
• treatment has involved an excessive number of services by one or more practitioners; and
• there is evidence of “doctor shopping”.
6.118. The AC Act requires the CCP proposal to be drafted by a doctor nominated by the worker (or
failing that, one appointed by the VWA). The proposal must outline the medical and like services
required by the worker because of the injury.
96
The proposal must specify any details that the
VWA requests, including the type, frequency or extent of the services, and the providers who
are to provide the services.
97
6.119. The VWA can generally only approve or refuse to approve a CCP.
98
An approved CCP can only
be altered if the VWA is satisfied that alteration is “necessary to improve the care and
treatment” of the injured worker.
99
Similarly, an approved CCP can only be cancelled if the VWA
is “satisfied that services are no longer required”.
100
It follows that the threshold for terminating
medical and like services being provided under a CCP is much higher than the threshold
applicable under section 99(11)–(14) discussed in paragraphs 6.107–6.108 above.
6.120. It follows that, once a CCP is approved, the VWA (or a self-insurer) is not liable to pay any
compensation for medical and like services unless the service is provided in accordance with
the CCP.
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91 A Clayton, Review of the Tasmanian Workers Compensation System: Report, September 2007, p 95.
92 Bracton Consulting Services Pty Ltd and PricewaterhouseCoopers, Review of the South Australian
Workers’ Compensation System: Report, December 2007, p 117.
93 AC Act, s 99(14).
94 AC Act, s 99AAA(10).
95 Accident Compensation (Further Amendment) Bill 1996, second reading: Victoria, Legislative
Assembly, Debates, 14 November 1996, p 1227.
96 AC Act, s 99AAA(2)(a), (b).
97 AC Act, s 99AAA(2)(c), (d).
98 AC Act, s 99AAA(7). A proposal for a CCP can only be refused on the recommendation of another
medical practitioner, after consulting with the practitioner who prepared the plan for the worker.
99 AC Act, s 99AAA(11)(a).
100 AC Act, s 99AAA(11)(b).
6.121. When introduced, the CCP process was to be trialled for two years, followed by an evaluation
of its effectiveness. A “sunset” clause, which would have ended the operation of section
99AAA, was removed in 1998, because the evaluation had not been conducted. A number of
evaluations were later conducted to examine the effectiveness of the CCP pilot.
6.122. An independent evaluation by the University of Melbourne in June 2000 found that coordinated
care programs appeared to generate positive outcomes for most workers involved. It also found
that, across the stakeholders, there was near unanimous in-principle support for the CCP
provision, but that every stakeholder raised some problems.
6.123. In 2001, the Victorian Auditor-General considered whether the VWA had adequately managed
the CCP, and made the following findings:
[T]he Authority has failed to adequately oversee the management by agents of injured workers
placed on the co-ordinated care program. Information relating to the operation of, and
outcomes achieved by, the co-ordinated care program is not compiled, nor is the Authority
able to ensure that those workers who would benefit from a co-ordinated care program are
actually receiving such care. Concerted attention to this high cost area of claims management
is likely to yield improved rehabilitation for workers.
101
6.124. The VWA’s response to the Auditor-General’s report reflected the difficulties faced by the VWA
in managing CCPs:
The Authority also notes that since the co-ordinated care evaluation was released, it has
become evident that efforts to implement co-ordinated care within the health sector more
broadly has in many case [sic] proved to be much more difficult to implement than anticipated.
This broader experience has also raised doubts about the extent to which this tool is one that
should be widely used, rather than offered to a narrow set of claimants as it is currently. Audit
has observed that only a small proportion of long-term claimants are on co-ordinated care
programs, but the Authority is not aware of evidence that significant numbers of claimants
who would currently benefit from the co-ordinated care program are unable to access it.
102
6.125. At the time of the Auditor-General’s report, only 70 injured workers were managed on a CCP.
103
6.126. Following the release of the Auditor-General’s report, the VWA changed its focus on the
management of the kind of claims originally intended to be dealt with through the CCP process.
6.127. In 2002 “Multi Disciplinary Teams” (MDTs) were introduced within claims agents, and claims
were segmented into appropriate “streams”, which offered more specialised involvement
depending on the nature of the claim.
6.128. The introduction of MDTs within agents was intended to replace the CCP program through the
introduction of case management and specialist input from a range of disciplines.
6.129. However, both section 99 and section 99AAA continue to govern the operation of medical and
like expenses. The parallel operation of those provisions means that some workers, particularly
the more seriously injured, are being managed inconsistently.
6.130. The recent introduction of the Community Integration Program (the CIP) has transferred the
management of many seriously injured workers to the TAC, and has introduced external case
management
104
for those seriously injured workers who are still managed by the VWA. There
are approximately 10–15 CCP claims being managed by the TAC under the CIP model.
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101 Auditor-General Victoria, November 2001, “Management of Claims by the Victorian WorkCover
Authority”, http://archive.audit.vic.gov.au/reports_par/agp75cv.html.
102 Auditor-General Victoria, November 2001, “Management of Claims by the Victorian WorkCover
Authority”, paragraph 5.10; http://archive.audit.vic.gov.au/reports_par/agp75cv.html.
103 As at October 2001.
6.131. The transfer of the management of seriously injured workers to the TAC and the introduction of
external case management for seriously injured workers who are still managed by the VWA’s
agents has further refined the management of complex claims, without the need to use a CCP.
Stakeholder views
6.132. Most stakeholder submissions referred to the lack of clarity and to complexities in the
administration of CCPs under the AC Act.
6.133. Submissions from the Compensation Law Bar Association
105
and Ms Anthea MacTiernan note
that the provision seems to have been under utilised and, where utilised, has not been properly
implemented.
6.134. VECCI notes that the CPPs were established for good reasons. VECCI broadly supports their
removal if the situations for which CCPs were intended are being adequately addressed through
other means; but they should be retained if that is not the case.
106
6.135. The VTHC and the AMIEU support removal of section 99AAA from the AC Act.
107
6.136. The ARPA submits that, in view of the minimal usage of CCPs and the TAC’s management of
the more severe and profound work-related injuries, section 99AAA is no longer required.
108
6.137. Other groups suggest that CCPs may maximise positive outcomes. The VBIRA notes:
Focussed and deliverable care plans for brain injured workers result in better outcomes.
The shift of support co-ordination to TAC, and concomitant in-house case management there
should assist for long term disabled workers. This system is still in its infancy and it is to
be noted that case management is not being provided “independently”.
109
6.138. The VBIRA advocates the provision of both CCPs and case management services to brain
injured workers in the early stages of recovery, to maximise positive outcomes.
6.139. Ai Group acknowledges that, while there is only a limited need to apply CCPs, it is prudent
to keep them in the AC Act.
110
6.140. The original intention of section 99AAA has not been reflected in its subsequent application and
in the ongoing administration of the relevant claims. The question is whether, if the provision
were retained, it would be used for its intended purpose or whether it has become redundant.
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104 The VWA describes external case management as “a collaborative process which may include an
assessment, planning, facilitation and advocacy for options and services to meet an individual’s health
needs through communication and the utilisation of available resources to promote quality cost-
effective outcomes”. See VWA, “External Case Management Policy”,
http://www.worksafe.vic.gov.au/wps/wcm/connect/WorkSafe/Home/Health+Care+Providers/Personal+
and+Household+Services/External+Case+Management+Policy/
105 Compensation Law Bar Association, Submission, 2 May 2008, p 16; Ms Anthea MacTiernan,
Submission, p 10.
106 VECCI, Submission, 2 May 2008, p 58.
107 VTHC, Submission, 2 May 2008, p 35; AMIEU, Submission, 2 May 2008, p 18.
108 ARPA, Submission, 25 April 2008, p 6.
109 VBIRA, Submission, 2 May 2008, p 2.
110 Ai Group, Submission, May 2008, p 57.
6.141. While significant success factors have been noted by stakeholders, those factors seem to be
associated with the positive outcomes achieved mainly as a consequence of the focus on case
management and specialist input, rather than because of the success of the few CCPs that
have been initiated.
6.142. The evidence suggests to me that a specialised consolidated case management approach is
preferable for the management of complex claims. Further, the evidence suggests that complex
claims are better managed with a dedicated and focussed internal team or through specialised
case management.
6.143. The AC Act supports the provision of case management services, and there is no apparent need
for additional legislative levers to give effect to that approach.
6.144. I believe that, with appropriate claims oversight and sound application of the concept of
reasonable costs, section 99AAA is not necessary. It appears to me to be redundant, and I
recommend its repeal.
6.145. The Review’s independent actuaries estimate that the removal of this provision will not
materially affect the scheme’s outstanding claims liabilities.
111
ORDINARY DAILY LIVING COSTS
6.146. The AC Act limits the VWA’s liability for the payment of ordinary living costs, such as
accommodation, food, personal items and utilities for an injured worker residing in supported
care (for example, a nursing home).
112
6.147. The limitation applies to claims for compensation made after 3 December 2003, and does not
apply during the first 18 months after the worker is first discharged from hospital following a
work-related injury. Comparable provisions are found in the transport accident legislation.
113
6.148. The number of injured workers residing in supported accommodation because of work-related
injuries is small (approximately 30).
6.149. The TA Act was amended in 2007 to authorise the Governor in Council, by Order published in
the Government Gazette, to fix limits for the contributions to be made by a person towards the
cost of supported accommodation.
114
The current TAC approach is that an injured person can
be required to contribute to those costs, and there is a power to fix the limits of those
contributions. The TAC has not yet gazetted limits for the contributions.
6.150. Given that the AC Act effects a significant exclusion of liability,
115
it is desirable to provide
workers with some certainty about what contribution may be sought.
Stakeholder views
6.151. A number of stakeholders, including VECCI and Ai Group, support providing certainty for this
group of injured workers.
6.152. The VTHC submits that workers requiring supported care should not be made to contribute to
the cost of that care.
116
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111 Source: advice from the Review’s independent actuaries.
112 AC Act, s 99(15)–(18).
113 TA Act, s 60(7)–(11).
114 TA Act, s 60(11A).
115 AC Act, s 99(15).
116 VTHC, Submission, 2 May 2008, p 35.
6.153. I understand that contributions from injured workers in supported care towards their living costs
are intended to cover the costs that they would have incurred anyway had they not been
injured. In principle this seems fair to me.
6.154. However, this group of workers is entitled to certainty about the extent of the contribution
required; and I recommend that the AC Act be amended to provide this certainty.
6.155. In line with the TAC amendments, I consider it appropriate to amend the AC to authorise the
Governor in Council, by Order published in the Government Gazette, to fix limits for the
contributions to be made by a person towards the cost of supported accommodation.
6.156. The Review’s independent actuaries estimate that the impact on the scheme’s outstanding
claims liabilities will be small, with a potential saving of around $2 million.
117
REGULATION OF MEDICAL AND LIKE PROVIDERS
6.157. Certain healthcare providers can treat injured workers and be paid for the provision of a
“medical service”,
118
provided that those professionals are registered under the Health
Professions Registration Act 2005.
119
As long as they remain registered, those professionals can
continue to be paid for providing services to injured workers under the WorkCover scheme.
6.158. In addition to those registered healthcare providers, the VWA can also approve providers of
other health services (as long as those other health services are provided at the request of a
medical practitioner).
120
Such services include, for example, remedial massage and
acupuncture.
6.159. If the VWA is concerned about the adequacy, appropriateness or frequency of services provided
to an injured worker by any service provider,
121
and there is a professional body regulating the
conduct of persons in the provider’s trade or profession, the VWA may in its discretion:
122
• refer the provider’s conduct to that professional body for review
123
; and
• suspend payments to the provider.
124
6.160. If the professional body considers that the provider has not acted properly, the VWA can direct
that payments for services provided during the period of suspension be forfeited.
125
6.161. However, the suspension of payments only starts when the VWA refers the provider’s conduct
to the relevant professional body and only continues until the provider’s conduct has been
reviewed, or the expiry of 6 months – whichever occurs first.
126
6.162. Similar provisions are found in section 131A of the TA Act.
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117 Source: advice from the Review’s independent actuaries
118 Defined in s 5(1) of the AC Act.
119 Those healthcare professionals are medical practitioners, physiotherapists, chiropractors, osteopaths,
psychologists, podiatrists and pharmacists: see the definitions of those terms in s 5(1) of the AC Act.
Apart from psychology, any attendance, examination or treatment of any kind by those providers is
defined as a medical service.
120 Paragraph (d) of the definition of “medical service” in s 5(1) of the AC Act.
121 This can include healthcare professionals.
122 AC Act, s 249B(2).
123 AC Act, s 249B(2)(a).
124 AC Act, s 249B(2)(b).
125 AC Act, s 249B(2)(c).
126 AC Act, s 249B(4).
6.163. A different process applies if there is no professional body regulating the conduct of persons in
the provider’s trade or profession. In that case, the VWA can review the provider’s conduct and
determine whether the provider has acted properly.
127
6.164. The section 249B process is designed to operate as a final option in support other strategies
that deal with instances of inappropriate provider servicing behaviour, such as peer reviews.
6.165. In relation to the regulation of healthcare providers, the HWCA’s 1997 report “Promoting
Excellence” recommended that each jurisdiction enact provisions giving administrators power
(after appropriate counselling) to remove from the scheme a provider with aberrant performance
patterns which continue after review.
128
6.166. Although the AC Act currently contains provisions that enable the VWA to refer providers for
review by their professional bodies, it does not permit the VWA to remove a registered
healthcare provider from practising within the scheme.
6.167. In the past, the VWA has suspended payments to specific providers in relation to specific
claims, and has referred healthcare providers to relevant professional bodies (including the
statutory registration boards). For example, the VWA referred a small number of
physiotherapists to the Physiotherapy Registration Board of Victoria when there was concern
about over-servicing of some injured workers. Despite adverse findings, the physiotherapists’
registration, and therefore their ability to continue to practise within the scheme, remained
unaffected.
6.168. The VWA is aware of medical practitioners who are prevented from participating in the
Medicare scheme by Medicare Australia (formerly the Health Insurance Commission), but
whose Victorian registration, and ability to continue to practise within the scheme, remain
unaffected.
6.169. An analysis of other jurisdictions reveals some differences in approach. For example, Medicare
Australia has one of the most rigorous outlier management programs, supported by the most
prescriptive legislation. The Health Insurance Act 1973 (Cth), which governs the administration
of Medicare, defines “inappropriate practice”,
129
and details a process for peer review of
healthcare providers (particularly medical practitioners) leading to a range of sanctions, from
reprimand to suspension from the Medicare scheme.
130
That Act provides that a medical
practitioner is deemed to have practised inappropriately if the provider has rendered more than
a certain number of services over a set period of time during a 12 month period.
131
Stakeholder views
6.170. VECCI refers to a number of relevant examples, including that of -
A doctor who was banned from operating at a regional public hospital for incompetence was
able to perform carpal tunnel operations for WorkCover at a private hospital.
132
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127 AC Act, s 249B(3): If there is no professional body regulating the conduct of persons in the trade or
profession of the person who has provided the services, the VWA may:
• warn the person that the Authority is concerned about the conduct and if it continues the Authority
will, by further notice, suspend payment of costs by self-insurers and the Authority for the services
provided by that person;
• if the conduct continues, suspend payment of costs for services provided by that person; and
• if the Authority considers that the person has not acted properly, by notice to that person, direct that
payments for services provided during the period of suspension will be forfeited.
128 HWCA, Promoting Excellence: National consistency in Australian workers’ compensation, Final Report
to the Labour Ministers’ Council, May 1997, p 30.
129 Defined in s 82 of the Health Insurance Act 1973 (Cth) as conduct that a committee formed from the
practitioner’s peers could reasonably find is unacceptable to the general body of practitioners.
130 Health Insurance Act 1973 (Cth), s 106U(1).
131 Regulation 7 of the Health Insurance (Professional Services Review) Regulations 1999.
132 VECCI, Submission, April 2008, p 56.
6.171. VECCI supports an amendment to the Act which gives the Authority additional protective
powers, but warns that any decisions should be subject to peer review and a broader process
of review.
133
6.172. Similarly, the VACC recommends an amendment to the AC Act to prescribe clearly the approval,
and revocation of approval, of prescribed health providers. The VACC submits –
. . . the AC Act should provide additional penalties following any adverse finding against any
medical provider by the relevant health professional body. Furthermore, the sanction should be
extended to provide the VWA or relevant health professional body with the power to suspend
or revoke a healthcare professional’s registration to act as a medical provider for injured
workers.
134
6.173. NewCare supports a structured and defined approach to approving and sanctioning healthcare
providers.
135
6.174. The AMIEU notes that the professional registration bodies already provide a gate keeping
mechanism, and submits that it is not appropriate for the VWA to usurp that role.
136
6.175. The APA considers that –
. . . the relevant registration body should be the decision maker regarding appropriate sanctions
against a treating practitioner. As part of this role, it may be appropriate for the relevant
registration body to impose payment suspension sanctions, where recommended by WorkSafe.
Where, however, no independent registration authority has been established under legislation,
WorkSafe should be responsible for determining sanctions against a treating practitioner.
137
6.176. In my view, the current approach does not provide an adequate supervisory regime for
reviewing the servicing behaviour of healthcare and other service providers and dealing
with inappropriate behaviour, including over-servicing, inadequate care and dishonesty.
6.177. The current scheme relies heavily on professional bodies to determine whether service
providers should be able to continue being paid for treating injured workers.
6.178. I note that, when the VWA referred several physiotherapists to the Physiotherapy Registration
Board (see paragraph 6.167 above), between 18 and 24 months elapsed between making the
referral and any formal outcome.
6.179. It is clear to me that delays of that magnitude limit the effectiveness of the power available to
the VWA under section 249B to suspend and/or forfeit payment of costs for services provided
by healthcare and other service providers. Delays of that nature diminish the protective value
of the section 249B process where the VWA has concerns about the adequacy, appropriateness
or frequency of services provided to an injured worker by a provider. Any real protective value
is undermined because the possibility of suspension or forfeiture of payments is limited by the
efficiency, resources and priorities of an external body.
6.180. The registration boards (and other professional bodies) have a role in protecting the public and
providing a reassurance that registered health professionals are well qualified. In the event of
poor performance or unprofessional conduct, registration boards are responsible for
investigating the performance or conduct of practitioners, imposing sanctions and assisting
practitioners to retrain or address any difficulties affecting their ability to practise.
138
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PAGE 240
133 VECCI, Submission, April 2008, p 56.
134 VACC, Submission, 1 May 2008, p 11.
135 NewCare, Submission, 1 May 2008, p 4.
136 AMIEU, Submission, 2 May 2008, p 18.
137 APA, Submission, 2 May 2008, p 4.
138 Department of Human Services, October 2003, “Regulation of the Health Professions in Victoria:
A discussion paper”, p 9, viewed 3 June 2008.
6.181. Thus, the main functions of the relevant professional body include protecting the public from
harm. However, the VWA has much broader concerns to consider. The impacts of too frequent,
inappropriate or inadequate treatment on the scheme can be significant due to the impacts that
growth in paramedical costs can have on scheme viability, notwithstanding the intangible
impacts on the health of injured workers.
6.182. One option might be to restrict payment of compensation for healthcare services to those
healthcare professionals who have been approved by the VWA for participation in the scheme;
and provide the VWA with the power to revoke approvals in certain circumstances
independently of any review and discipline by professional bodies.
6.183. That option would effectively require the VWA to assume the role of a quasi-professional body,
assessing the clinical competence and performance of healthcare providers. It might be argued
that the VWA has the capacity to perform that function, because the VWA currently approves
independent medical examiners under section 112(5) of the AC Act. However, there would be
considerable administrative difficulties and costs associated with establishing a comprehensive
approval system.
6.184. In my opinion, where there are clear concerns about the behaviour of a healthcare service
provider, the professional bodies are best suited to reviewing that behaviour.
6.185. I therefore recommend the maintenance of the referral process to professional bodies.
However, the sanctions available to the VWA should be strengthened, so that the VWA can
retain some control over payments to those providers who depart from appropriate standards of
behaviour. In particular, the VWA should have the power to suspend future payments to service
providers who are found to have engaged in unprofessional conduct by their professional body
or to have engaged in inappropriate practice by Medicare Australia. This would provide the VWA
with improved regulatory and protective powers.
6.186. Of course, before any such action was taken to suspend service providers from participation in
the scheme, the provider would need to be given a reasonable opportunity to present a case
against suspension and providers should have the right to seek a review by VCAT of a decision
to suspend payments.
6.187. The VWA must also provide healthcare practitioners with clear expectations about the standard
of their services, and the action that the VWA will take against inappropriate practice. In my
view, providing those clear expectations is essential to ensure transparency and discourage
inappropriate practices. It may also be appropriate for the VWA to provide health practitioners
with regular feedback about their performance in comparison to their peers.
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LUMP SUM BENEFITS
FOR SIGNIFICANTLY
INJURED WORKERS
The adequacy of current
impairment benefits
Hearing loss injuries
Gradual process injuries
Multiple injuries
Two separate systems
Delays in lodging claims
Delays in processing claims
Impairment benefit assessment
process
Overview
7.1. Lump sum benefits are designed to provide no fault, efficient and fair compensation for workers
who sustain permanent significant impairments, including a measure of compensation for the
pain and suffering associated with impairment. Lump sum benefits provide “much needed”
1
funds following a work-related injury without requiring the worker to pursue costly and lengthy
common law proceedings.
7.2. Victorian workers have had access to no-fault lump sum benefits for work-related permanent
injuries or disabilities since 1914.
2
7.3. Today, statutory lump sum benefits make up approximately $667 million dollars in scheme
liabilities.
3
Impairment benefits alone comprise around 8% of scheme liabilities.
4
7.4. The way in which lump sum benefits are determined has undergone substantial change
over time.
7.5. The version of the “table of maims”
5
introduced in 1985 aimed to compensate workers for the
degree of “industrial loss”
6
and the consequential pain and suffering sustained as a result of a
permanent disability.
7.6. The table of maims was based on earlier workers’ compensation legislation,
7
and continued the
tradition of not providing compensation for internal injuries (such as respiratory dysfunction).
7.7. In 1997, there was a major shift in the type of injuries that were compensable, the entitlements
payable and the way in which claims were processed. The change was a result of the
Government’s decision to abolish a worker’s right to pursue common law damages. A major
aspect of the change was the introduction of impairment benefit payments for injuries
sustained on or after 12 November 1997.
7.8. Even though the right to pursue common law damages has since been reinstated (with effect
from 20 October 1999), lump sum benefits continue to ensure that an injured worker is
provided with fast access to compensation regardless of whether the employer was negligent.
7.9. In this chapter, I:
• examine whether impairment benefits adequately compensate particular injuries, such as
spinal injuries;
• discuss how impairment benefits should be calculated and administered for hearing loss
injuries;
• address lump sum compensation for gradual process injuries;
• discuss the issues associated with multiple injuries and impairment benefits;
• examine some of the differences between the maims payments and impairment benefits
schemes and whether the two schemes could be harmonised or combined into one system;
• propose solutions to the current delays in lodging lump sum benefit claims and address
delays in processing these kinds of claims; and
• consider restrictions on second and subsequent maims payment claims.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
CHAPTER 7 LUMP SUM BENEFITS FOR SIGNIFICANTLY INJURED WORKERS
PAGE 244
1 Victoria, Legislative Assembly, Debates, 1 June 2006, p1542.
2 Workers Compensation Act 1914.
3 Source: advice from the Review’s independent actuaries.
4 The term “scheme liabilities” refers to the present capital cost, as estimated by actuaries,
of meeting all claims (in this case, for impairment benefits) as those claims are made and fall due.
5 AC Act, s 98.
6 Aspland v ACC (1988) Vic ACR 402; Fry v Jenkins [1955] VLR 184.
7 WC Act, s 11.
The current scheme
7.10. Lump sum benefits are paid in addition to weekly benefits and medical and like benefits.
However, lump sum benefits can affect an award of common law damages. For example, when
common law damages are awarded for pain and suffering, any impairment benefit paid to the
worker for the same injury is deducted from the damages award.
8
7.11. There are two separate schemes for lump sum benefits: impairment benefits and maims
payments. The date of injury will determine which type of lump sum benefit an injured worker
may be eligible for.
• for injuries sustained between 1 September 1985 and 11 November 1997, compensation is
payable according to the “table of maims” (maims payments);
9
and
• for injuries sustained on or after 12 November 1997, compensation is payable according to
the “impairment benefit” scheme, based on the worker’s WPI (impairment benefits).
10
7.12. There are also different application and dispute resolution processes for each type of lump sum
benefit.
7.13. In order to receive a maims payment, the injured worker’s level of permanent impairment must
be assessed using the concept of “loss of use”. AMA-2 is used in this assessment where
relevant (for back, neck and pelvic injuries sustained after 1 December 1992).
11
The medical
examiner makes a judgement on the WPI of the injured body part and expresses this as a
percentage. The percentage is then used to calculate the amount of compensation payable by
reference to a scale of payments set out in section 98(1) of the AC Act.
12
7.14. Access to impairment benefits is assessed using AMA-4
13
or other relevant guidelines required
by the AC Act.
14
7.15. An injured worker will only receive an impairment benefit if the worker’s impairment
assessment exceeds a 10% WPI threshold for physical injuries
15
or a 30% WPI threshold for
psychiatric injuries
16
that do not arise as a consequence of, or are not secondary to, a physical
injury.
17
7.16. Impairment benefits were introduced in 1997 to replace maims payments and an injured
worker’s right to sue at common law (which was abolished at that time). When the right to sue
at common law was reinstated (in limited terms) from 20 October 1999, impairment benefits
were maintained.
7.17. The maintenance of lump sum impairment benefits after the reintroduction of common law
rights ensures that a worker can receive a lump sum benefit for his or her permanent injury as
soon as is practicable, regardless of whether the worker’s employer was negligent.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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8 AC Act, s 134AB(25)(b).
9 AC Act, ss 98, 98A.
10 AC Act, s 98C.
11 AC Act, ss 98(1)(e) and 255(2).
12 For injuries sustained between 1 July 1997 and 11 November 1997. For injuries sustained before 1 July
1997, the maximum amount differs depending on the date of injury, because benefit levels are
indexed. For example, for injuries sustained between 1 July 1996 and 30 June 1997 the maximum
amount is $102,460.
13 AC Act, s 91(1)(a)(i).
14 Psychiatric impairment is assessed in accordance with the Guides to the Evaluation of Psychiatric
Impairment for Clinicians. Industrial asthma is assessed in accordance with Impairment Assessment in
Workers with Occupational Asthma. Occupational infectious diseases may be assessed in accordance
with Clinical Guidelines to the Rating of Impairments arising from Infectious Occupational Diseases.
15 AC Act, s 98C(2)(a).
16 AC Act, s 98C(3)(a).
17 AC Act, s 91(2).
7.18. Table 7.1 compares the maims payments and impairment benefits schemes.
TABLE 7.1: COMPARISON OF MAIMS PAYMENTS AND IMPAIRMENT BENEFITS
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
CHAPTER 7 LUMP SUM BENEFITS FOR SIGNIFICANTLY INJURED WORKERS
PAGE 246
18 AC Act, ss 91, 91(4)(b), 91(6), 91(6A) and 91(6B). Hearing loss injuries are assessed in accordance with
the Improved Procedure for Determination of Percentage Loss of Hearing (1988 Edition or a later
prescribed edition) published by the National Acoustic Laboratory. Psychiatric injuries are assessed in
accordance with The Guide to the Evaluation of Psychiatric Impairment for Clinicians. Infectious
occupational diseases are assessed in accordance with the Clinical Guidelines to the Rating of
Impairments arising from Infectious Occupational Diseases. Occupational asthma injuries are assessed
in accordance with the Impairment Assessment in Workers with Occupational Asthma.
19 Where a work related injury has occurred before 1 December 1992, compensation may be available
for a “loss of mental powers”.
20 AC Act, s 98E. A typical example of a total loss injury is amputation of a finger or fingers.
Maims payments Impairment benefits
Injury dates 1 September 1985 to 11 November 1997. 12 November 1997 onwards.
How a claim is made? A Claim for Compensation for Permanent
Disability form is submitted either to the
employer (if the employer is still operating)
or to the VWA.
When seeking additional compensation for pain
and suffering, the worker must also provide an
affidavit and material supporting the claim.
A Worker’s Claim for Impairment Benefits form
is submitted, with any additional supporting
medical evidence, to either the employer
(if still in operation) or the VWA.
How soon after the
injury can a claim be
made?
No specified timeframes. 12 months post the injury date, or when the
injury has stabilised (if before 12 months).
Who considers the
claim?
A VWA approved legal representative, known as
a “Panel firm”.
A VWA authorised agent.
What initial timeframes
apply to process the
claim?
The Panel firm has 90 days to determine liability
and the offer of compensation that is to be
made to the worker (if any).
The authorised agent has 120 days to determine
liability and the compensation amount (if any).
How are the claimed
injuries assessed and
determined?
Injuries are assessed by a qualified medical
practitioner in accordance with:
• AMA-2; or
• The table of maims.
Injuries are assessed by an accredited medical
practitioner in accordance with:
• AMA-4; or
• any other method prescribed by the AC Act.
18
What injuries are
compensable?
Physical injury (including hearing loss).
Psychiatric or internal injuries like gastrointestinal
or respiratory dysfunction are not
compensable.
19
Physical injury (including hearing loss and
internal injuries)
Psychiatric injury.
What is the minimum
threshold to receive an
entitlement?
>0% for physical injury (excluding hearing loss);
and
7% for hearing loss injuries
10% whole person impairment for physical
injuries; and
30% whole person impairment for psychiatric
injuries.
How is the entitlement
calculated?
The entitlement is calculated by multiplying the
amount of compensation payable as at the date
of the injury by the percentage set out opposite
the injury in the table under the AC Act. This
amount is then multiplied by the percentage loss
of the relevant injury suffered by the worker.
The amount of compensation for impairment
benefits is calculated by applying the assessed
percentage of impairment to a mathematical
formula set out in the AC Act.
What is the maximum
amount payable
For injuries which occur on 1 July 1997 to
11 November 1997: $104,990 (indexed annually)
For injuries which occur on or after 1 July 2008
to 30 June 2009: $396,690 (indexed annually)
What additional
payments are awarded?
In some circumstances there may be an
additional entitlement awarded for pain and
suffering.
The maximum amount awarded for pain and
suffering for injuries between 1 July 1997 to
11 November 1997: $56,400
Where there is a “total loss” or “total loss of use
of” type injury, compensation may be payable for
that injury.
20
7.19. Table 7.2 sets out the scale of payments under the current impairment benefit regime.
TABLE 7.2: SCALE OF IMPAIRMENT BENEFITS
Other jurisdictions
7.20. All other Australian jurisdictions provide some form of lump sum benefits for significantly
injured workers, although the threshold tests and methods of assessment differ considerably.
7.21. Table 7.3 compares the lump sum benefits paid under each of the Australian schemes,
excluding payments made for total loss injuries, and demonstrates that Victoria remains one of
the more generous schemes.
TABLE 7.3: OVERVIEW OF ACCESS TO IMPAIRMENT BENEFITS IN OTHER AUSTRALIAN
JURISDICTIONS
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
CHAPTER 7 LUMP SUM BENEFITS FOR SIGNIFICANTLY INJURED WORKERS
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Level of impairment Physical entitlement Psychiatric entitlement
0% – 9% WPI (non spinal, UEX or LEX) $Nil $Nil
5% – 9% WPI (for spinal, UEX or LEX injuries only) $10,250 min (5% WPI)
$17,234 max (9% WPI)
$Nil
10% – 30% WPI $16,250 min (10% WPI)
$66,120 max (30% WPI)
$13,230 min and max (30%)
31% – 70% WPI $70,200 min (31% WPI)
$230,880 max (70% WPI)
$17,540 min (31%WPI)
$231,400 max (70% WPI)
71% – 80% WPI $247,930 min (71% WPI)
$396,700 max (80% WPI)
$247,930 min (71% WPI)
$396,700 max (80% WPI)
81%+ $396,690 min & max $396,690 min & max
Jurisdiction Assessment method Threshold Maximum award
Tasmania AMA-4 and Tasmanian Workers
Compensation Guidelines for the
Assessment of Permanent Impairment.
>0% WPI; or
10% WPI for psychological
injury
>5% binaural hearing
impairment
$208,370.61
Comcare Guide to the assessment of the Degree of
Permanent Impairment (2nd Edition)
based on AMA-5.
10% WPI; or
5% WPI hearing loss
$150,396.21
NSW WorkCover Guides for the Evaluation of
Permanent Impairment, based on AMA-5.
1% WPI; or
15% WPI for psychiatric
impairment; or
6% binaural loss of hearing
$231,000 for back injuries, or
$220,000 for (multiple) other
injuries
Vic AMA-4 or any other prescribed method. 10% WPI for physical injuries;
30% WPI psychiatric injuries.
$396,690
QLD AMA-4. >0% WPI $218,400
WA WorkCover WA Guides for Evaluation of
Permanent Impairment and AMA-5.
>0% WPI $168,499
SA Table of maims, or AMA (3rd Edition). 5% for hearing loss $230,982
NT AMA-4. 5% WPI $220,147.20
ACT AMA-5 and the New South Wales
WorkCover Guides for the Evaluation of
Permanent Impairment (1st Edition).
>0% WPI $178,354.27
Stakeholder views
7.22. I have received many submissions on the thresholds that an injured worker must meet before
lump sum benefits are payable, with particular criticism directed at the thresholds for
psychiatric injuries compared to those for physical injuries.
7.23. The VTHC submits that the current 30% WPI threshold for psychiatric injuries is the toughest in
Australia, discriminatory in nature and does not reflect modern attitudes to mental illness.
21
7.24. The VTHC also submits that the modification of an assessment score which applies to
musculoskeletal injuries should extend to all other physical assessments under AMA-4.
22
7.25. Echoing those concerns, the ALA submits that –
. . . the TAC scheme does not make a distinction between thresholds for psychiatric and
physical injuries . . . and there are no sound public policy reasons for the Workcover system
to continue to perpetuate this discriminatory approach.
23
7.26. The ALA also argues for parity in the amounts payable for psychiatric injuries with the amounts
payable for physical injuries.
24
7.27. On the other hand, VECCI submits that –
. . . psychiatric injuries cannot be treated in the same way as physical injuries.
VECCI also oppose reducing the 30% threshold for psychiatric injuries based on the inexact
nature of assessment and the potential threat to scheme viability.
25
7.28. I have also received many submissions arguing that the level of compensation for serious spinal
injuries is inadequate.
7.29. I have been urged to remove the requirement that a worker satisfy the threshold for
compensation for each distinct episode causing injury, so as to make the AC Act consistent
with the TA Act. The SIAV opposes such a change, submitting that –
. . . the entitlement threshold must be satisfied for every injury as it clearly encourages workers
to report injuries and make claims in a timely manner rather than waiting for the accumulation
of various injuries to reach an applicable threshold.
. . .
The TAC model offered in support of the accumulation model is not comparable. The TAC as
a monopoly insurer has only one interest to defend rather than the risks of many different
employers.
26
7.30. I have received comments on lump sum compensation for gradual onset and hearing loss
injuries. Those comments have particularly focused on the complications involved in
determining the date of injury for the purposes of compensating those kinds of injury, and
on the manner in which the costs of those injuries are apportioned between employers.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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21 VTHC, Submission, 2 May 2008, p 37.
22 VTHC, Submission, 25 January 2008, p 5.
23 ALA, Submission, 2 May 2008, p 5.
24 ALA, Submission, 2 May 2008, p 6.
25 VECCI, Submission, April 2008, p 61.
7.31. It has also been suggested that the amount of lump sum compensation payable should be
calculated at the time when the claim for compensation is determined, rather than at the date
of injury. A member of the Victorian Bar, Ms Anthea MacTiernan, submits that –
The current system of compensating injured workers on the date of their injury is unduly harsh,
as the scale as at the date of injury might be significantly less than the scale as at the date of
settlement.
27
7.32. The current use of AMA-4 in assessing levels of impairment has been questioned on the basis
of consistency and adequacy. In particular, the Compensation Law Bar Association submits that
AMA-4 –
. . . is not an appropriate vehicle for assessing permanent impairment. . . .[it] tends to under-
assess the impairment because it pays no heed to the “industrial loss of use of” and nor does
it take into consideration “pain” . . .
28
7.33. Overall, I have been struck by the consistent view that the current lump sum benefits are
inadequate. For example, in its submission the Compensation Law Bar Association contends
that the current lump sum benefits are –
. . . inadequate and uncompensatory [sic], thereby prompting (indeed, impliedly forcing)
aggrieved and under compensated workers to seek redress by way of common law
damages.
29
THE ADEQUACY OF CURRENT IMPAIRMENT BENEFITS
7.34. To qualify for an impairment benefit, a worker must have a whole-person physical impairment of
not less than 10%,
30
or a whole-person psychiatric impairment of not less than 30%.
31
7.35. Compensation for a “secondary” psychiatric injury (that is, a psychiatric injury that is a
consequence of a physical injury) is excluded.
32
For example, a worker’s depression that is a
consequence of the worker’s inability to undertake daily activities, caused by the effects of a
physical injury, would be classed as a secondary psychiatric injury, and would not be assessed.
7.36. Different levels of payment apply to psychiatric impairments. For example, if a worker suffers
a physical injury on or after 1 July 2008 and is assessed as having a 30% WPI, the worker is
entitled to an impairment benefit of $66,120. In contrast, if a worker suffers a psychiatric injury
on or after 1 July 2008 and is assessed as having a 30% WPI, the worker is only entitled to an
impairment benefit of $13,230.
7.37. Changes made in 2003 expanded the availability and the levels of impairment benefits for
workers with musculoskeletal injuries. The 2003 changes:
• provided workers with musculoskeletal injuries assessed with a WPI of between 5% and 9%
with an entitlement to impairment benefits; the entitlement was achieved by modifying the
worker’s WPI (as assessed under Chapter 3 of AMA-4) to a figure equal to or exceeding the
10% WPI threshold; and
• provided workers with musculoskeletal injuries assessed with a WPI of between 10 and 29%
with increased impairment benefits; again the entitlement achieved by modifying the worker’s
WPI (as assessed under Chapter 3 of AMA-4) to a slightly higher WPI.
ACCIDENT COMPENSATION ACT REVIEW FINAL REPORT
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PAGE 249
26 SIAV, Submission, May 2008, p 19-20.
27 Anthea MacTiernan, Submission, p 11.
28 Compensation Law Bar Association, Submission, 2 May 2008, p 17.
29 Compensation Law Bar Association, Submission, 2 May 2008, p 17.
30 AC Act, s 98C(2)(a).
31 AC Act, s 98C(3)(a).
32 AC Act, s 91(2).
7.38. When introducing the 2003 changes, the responsible Minister indicated that the changes were
made to provide impairment benefits to workers thought to be “harshly excluded” when
impairment benefits were introduced in 1997.
33
7.39. Amendments were also made to the AC Act
34
in 2007, confirming that spinal impairment
assessments are to be based on the extent of loss of function in the spine after any spinal
surgery.
7.40. Impairment benefits are indexed annually.
35
However, the amount awarded to a worker will
depend on the date when the work-related injury was sustained. For example, a worker who
sustained an injury in 2000 and lodged an impairment benefit claim in 2007 will receive an
entitlement calculated as at the date of injury in 2000, regardless of any increase in, or
indexation of, the benefit between 2000 and 2007.
Stakeholder views
7.41. The VTHC submits that:
• the threshold for access to impairment benefits should be lowered to a consistent threshold
of 5% WPI for both physical and psychiatric impairment;
• the exclusion of secondary psychiatric injuries should be removed;
• the current level of compensation for spinal injuries is “extremely inadequate” (the VTHC
contends that workers with soft tissue injuries often receive the same amount of
compensation as those forced to undergo spinal surgery); and
• workers with serious spinal injuries have been disadvantaged by the 2007 amendments.
36
7.42. The ALA supports the removal of the exclusion of secondary psychiatric injuries and calls for an
increase in payments for psychiatric impairments to the same level as payments for equivalent
physical impairments.
37
7.43. The Compensation Law Bar Association submits that:
• the level of compensation provided by impairment benefits is inadequate;
38
• impairment benefits should be paid at the rate amount applicable at the date of the resolving
[the] claim, rather than the date on which the injury was suffered;
39
and
• the AC Act should discard as a yardstick the obsolete 4
th
Edition of the AMA guides, and
move to the up to date current edition, if it is an appropriate vehicle at all.
40
7.44. In relation to the assessment of permanent impairment, the AMIEU submits –
The total reliance on the AMA Guides means that the compensation for pain and suffering
is exactly the same no matter the impact of the injury on the worker.
41
7.45. To support its submission, the AMIEU provides the following example –
The loss of full use of the dominant hand may not have a serious effect on an intellectual
labourer, however the pain and suffering for a boner or a slaughterer from such an injury
is extremely significant.
42
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PAGE 250
33 Victoria, Legislative Assembly, Debates, 16 October 2003, pp 1154-1158.
34 AC Act, ss 91(1A), 91(1B).
35 AC Act, s 100(2B).
36 VTHC, Submission, 2 May 2008, pp 36-38.
37 ALA, Submission, 2 May 2008, p 6.
38 Compensation Law Bar Association, Submission, 2 May 2008, p 17.
39 Compensation Law Bar Association, Submission, 2 May 2008, p 18.
40 Compensation Law Bar Association, Submission, 2 May 2008, p 17.
41 AMIEU, Submission, 2 May 2008, p 20.
42 AMIEU, Submission, 2 May 2008, p 20.
7.46. The AMIEU also submits that –
. . . further work needs to be carried out on developing an appropriate method of measuring
pain and suffering from disability and impairment.
Until such measures have been developed and agreed on the AMIEU supports the VTHC on
their submission that the threshold for all injuries including psychiatric, should be a consistent
threshold of 5%.
43
7.47. VECCI opposes changes which would treat psychiatric injuries in the same way as physical
injuries, submitting that –
Diagnosis is less objective, the permanency of such injuries is difficult to establish and or
defend.
44
7.48. VECCI also supports the retention of the exclusion of secondary psychiatric injuries and a
different threshold for psychiatric impairments.
45
7.49. The ANF and the INSG submit (respectively) that –
. . . spinal injury impairment assessment should be conducted in accordance with the workers’
pre-surgery status . . .
. . . the assessment of spinal injury for lump sum impairment benefits should reflect impacts on
a worker beyond medically assessed impairment.
46
7.50. The AMA submits that the method used to determine the appropriate WPI for spine injuries
“does not adequately deal with post-operative situations”.
47
It submits that –
There would be a strong argument for a spinal injury expert group (eg the spinal reference
group from the training system) to be contracted to produce a definitive guideline to be
incorporated in the legislation.
48
7.51. The SIAV submits that –
. . . deeming musculoskeletal injuries in excess of 5% upwards, unnecessarily complicate the
application of the impairment benefits process. The 10% threshold should be restored for all
injuries with the exception of psychiatric impairments which should be maintained at a level of
30% whole person impairment. Any change in the opposite direction would expose self
insurers significantly, particularly at a time where there is an expected and significant
economic downturn.
49
Increase impairment benefits for very seriously injured workers
7.52. Impairment benefits compensate a worker for permanent impairment of a body part or system,
and for the pain and suffering resulting from the impairment.
7.53. Compensation for pain and suffering is also available (in the form of damages) through common
law actions for workers who have suffered a “serious” injury.
50
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43 AMIEU, Submission, 2 May 2008, p 20.
44 VECCI, Submission, April 2008, p 61.
45 VECCI, Submission, April 2008, p 61.
46 ANF, Submission, 2 May 2008, p 6; INSG, Submission, 30 April 2008, p 3.
47 Chapter 3 of the AMA-4 refers the examiner to the use of the Diagnosis-Related Estimates Model
(DRE) to determine the level of impairment. The DRE model places workers into specific categories of
impairment dependant upon the verification of the injury or identification of a structural compromise.
48 AMA, Submission, 29 April 2008, p 1.
49 SIAV, Submission, May 2008, p 20.
50 Chapter 8, “Access to justice for seriously injured workers: common law” discusses who may access
common law damages.
7.54. Under section 134AB(25) of the AC Act, any damages awarded for pain and suffering must be
reduced by the amount of compensation paid by way of impairment benefits. That is, a worker
may receive a lump sum payment under the impairment benefit scheme and also seek common
law damages for pain and suffering. However, the pain and suffering damages will be paid only
to the extent that they exceed the impairment benefit received by the worker, ensuring that the
worker is not compensated twice for the pain and suffering experienced as a result of a work-
related injury.
7.55. The maximum benefit available under the impairment benefit system is more than $85,000
below the maximum damages available for pain and suffering under common law. The
maximum impairment benefit payable is now $396,690 for physical or psychiatric injuries
assessed at 81% WPI or greater;
51
and the maximum amount payable by way of common law
damages for pain and suffering is currently $484,830.
52
7.56. Although impairment benefits are not paid for the principal purpose of compensating a worker
for pain and suffering, there is a substantial degree of overlap between those benefits and
common law damages for pain and suffering, as section 134AB(25) of the AC Act makes clear.
53
The differential between the maximum amount of impairment benefits and the maximum
damages recoverable for pain and suffering provides a substantial incentive for the most
severely injured workers to pursue compensation for pain and suffering through common law
proceedings, incurring the costs and bearing the delays associated with the common law
process in order to secure the maximum compensation.
7.57. The impairment benefits system is a faster and more efficient method of delivering lump sum
compensation (including for pain and suffering). That system should be enhanced to reduce the
need for severely injured workers to pursue further compensation through common law actions.
7.58. Impairment benefit claims typically resolve (on average) 190 days faster than common law
claims. The average time taken to resolve a common law claim, from lodgement of the serious
injury application to the date when damages are determined, is 421 days.
54
The average time
taken to resolve an impairment benefit claim, from lodgement of the application to acceptance
of the determination of the entitlement, is 230 days.
55
7.59. I recommend that the maximum benefit awarded for a permanent injury under the impairment
benefit regime be increased to the equivalent of the maximum common law damages payable
for pain and suffering. The maximum benefit should be indexed annually. I propose that those
workers assessed at 81% WPI or greater be awarded an impairment benefit equal to the
maximum amount of common law damages paid for pain and suffering. I consider that it is
appropriate to increase proportionately the amount paid to workers assessed between 71%
WPI and 80% WPI. Impairment levels of that percentage involve severe injuries, and would
also be likely to be awarded significant common law damages for pain and suffering.
7.60. Increasing the impairment benefit entitlement for significantly injured workers would have a
minimal financial impact. Increasing the entitlement paid for impairments assessed at equal
to or greater than 71% WPI, and providing an increased maximum benefit for those workers
assessed equal to or greater than 81% WPI, is estimated by the Review’s independent
actuaries to cost the scheme approximately $0.6 million a year and add approximately $2 million
to outstanding claims liabilities.
7.61. The proposed scale of benefits is shown in table 7.4 (see paragraph 7.105 below).
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51 AC Act, ss 98C(2)(f), (3)(e).
52 AC Act, s 135A(7)(b)(ii), adjusted in accordance with the indexation provisions in s 100 of the AC Act.
53 See paragraph 7.54 above.
54 Source: VWA. Common law applications lodged on or after January 2005 through to 14 May 2008.
55 Source: VWA. Claims lodged on or after 18 November 2004 that have resolved as at 30 April 2008.
Consistent thresholds for physical and psychiatric impairments
7.62. As I noted in paragraph 7.34 above, a worker will only receive an impairment benefit if the
worker meets a threshold of 10% WPI for a physical injury or 30% WPI for a psychiatric injury.
7.63. Many stakeholders have submitted that the threshold for physical and psychiatric impairments
should be reduced to 5% WPI, or that the modifier used to assess musculoskeletal injuries
should apply to all physical injuries.
7.64. For the reasons outlined below,
56
I recommend against such a change at this time.
7.65. The Review’s independent actuaries have estimated that reducing the threshold for both
physical and psychiatric impairments to 5% WPI would cost the scheme approximately a
minimum of $125 million annually; and that reducing the threshold for physical impairments
to 5% WPI would cost approximately $30 million to $65 million a year.
57
Payments for serious spinal injuries
7.66. The 2003 amendments to the provisions on WPI of the spine, upper extremity, lower extremity
and the pelvis
58
will cease to operate on 3 December 2008, five years after they commenced,
unless the amendments are extended by legislation.
7.67. As noted in paragraph 7.51 above, the SIAV submits that –
. . . the deeming provisions, deeming musculoskeletal in excess of 5% upwards, unnecessarily
complicate the application of the impairment benefits process. The 10% threshold should be
restored for all injuries with the exception of psychiatric impairments.
59
7.68. In line with the recommendations of the Common Law Working Party’s 2000 report,
60
the
AC Act was amended in 2003 to provide increased lump sum compensation and to enable
workers with musculoskeletal injuries, excluded by changes to the method of impairment
assessment in 1997, to qualify for statutory non-economic loss benefits.
7.69. The 2003 amendments restored access to lump sum compensation for certain musculoskeletal
injuries and provided compensation for those musculoskeletal injuries thought by the
Government to have been “harshly” disadvantaged by the introduction of the lump sum benefit
assessment tool, AMA-4, when impairment benefits replaced maims payments.
61
The 2003
amendments also increased the benefits payable for musculoskeletal injuries assessed
between 5% WPI and 29% WPI.
7.70. I therefore recommend that the 2003 amendments remain as a permanent adjustment to
the method of assessing musculoskeletal injuries for the purpose of calculating impairment
benefits.
7.71. There is also scope for further improvement in the level of impairment benefits for
musculoskeletal spinal injuries.
7.72. As noted in paragraph 7.69 above, the 2003 amendments provided compensation for those
musculoskeletal injuries thought by the Government to have been “harshly” disadvantaged by
the introduction of AMA-4 as the lump sum benefit assessment tool when impairment benefits
replaced maims payments.
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56 See paragraphs 7.66 to 7.105 below.
57 The range considers the impact if impairment benefit psychiatric claim lodgements remained stable
and an estimate if there was an increased number of psychiatric impairment benefit claims lodged.
58 AC Act, s 98C(2A).
59 SIAV, Submission, May 2008, p 20.
60 Victoria, Legislative Assembly, Debates, 16 October 2003, p 1154.
61 Victoria, Legislative Assembly, Debates, 16 October 2003, pp 1154-1158.
7.73. Despite the 2003 amendments, some stakeholders are concerned that the level of
compensation paid for impairment from spinal injuries does not adequately address the severity
of such injuries. In particular, the ANF is concerned that the current assessment process does
not adequately consider the impacts of a spinal injury on a worker beyond the worker’s
medically assessed impairment.
62
7.74. Medical research confirms that low back injuries cause a great deal of pain and lost activity.
63
Further, prolonged low back pain can lead to a combination of physical, psychological,
occupational and social impairments.
64
7.75. AMA-4 assesses a worker’s impairment and not the disability
65
arising from a work-related
injury. AMA-4 does not require that the examiner, when assessing a spinal impairment, consider
the impacts on the worker’s daily life.
7.76. In contrast, AMA-5 requires the examiner to consider the effect of an impairment on an
individual’s ability to perform activities of daily living.
66
7.77. WorkCover NSW recently introduced the WorkCover Guides for the Evaluation of Permanent
Impairment (the NSW Guides). The NSW Guides rely heavily on AMA-5 for assessing permanent
impairment, with some modifications. On spinal injuries, the NSW Guides indicate that
practitioners should consider the extent to which impairment affects an individual’s ability to
perform activities of daily living. The NSW Guides allow practitioners to recognise these effects
by adjusting an impairment assessment by up to 3%.
67
7.78. In addition, the New South Wales legislation provides for spinal impairments to receive
compensation that is 5% higher than the compensation for other physical injuries assessed at
the same impairment level.
7.79. To address the perceived deficiencies in the assessment of spinal injuries, I have considered
whether Victoria should adopt AMA-5 or any other updated edition of the AMA Guides. For the
reasons outlined below,
68
I recommend against such a change at this time.
7.80. However, I have recommended an inter-scheme review of the method of assessing permanent
impairments.
69
Any review of the method of assessing permanent impairments will include a
review of the current method of assessing permanent spine injuries.
7.81. I believe it would be premature to increase the entitlement amount awarded for spine injuries
permanently before completing the review of the use of the AMA-4. In addition, a permanent
increase in the compensation payable for spine impairments in Victoria would lead to greater
disparity across lump sum benefits paid to injured workers.
7.82. Nevertheless, while waiting on the completion of the review of the use of the AMA-4, I consider
it appropriate to increase, by a specific percentage, the entitlement awarded to an injured
worker with a spinal injury. I envisage an approach similar to the approach adopted under the
New South Wales workers’ compensation scheme.
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62 ANF, Submission, 2 May 2008, p 6.
63 A Engers, P Jellema, M Wensing, DAWM van der Windt, R Grol, MW van Tulder, “Individual patient
education for low back pain”, Cochrane Database of Systematic Reviews 2008, Issue 1; Art No:
CD004057.
64 K Karjalainen, A Malmivaara, M van Tulder, R Roine, M Jauhiainen, H Hurri, B Koes, “Multidisciplinary
biopsychosocial rehabilitation for subacute low-back pain among working age adults”, Cochrane
Database of Systematic Reviews 2000, Issue 3; Art No: CD002193.
65 The AMA-4 describes that “disability refers to an activity or task the individual can not accomplish”,
American Medical Association Guide to the Evaluation of Permanent Impairment, pp 1-2.
66 AMA-5, p 373.
67 WorkCover Guides for the Evaluation of Permanent Impairment – New South Wales Government
Gazette, No 129.
68 See paragraphs 7.114-7.124 below.
69 See paragraph 7.124 below.
7.83. The increase will ensure that all spinal injuries receive an enhanced level of compensation more
commensurate with the severity and complexity of the injury, whilst maintaining the integrity of
the current assessment process based on AMA-4.
7.84. The Review’s independent actuaries estimate that the recommended increase will cost the
scheme around $5 million per year and add approximately $10 million
70
to the scheme’s
outstanding claims liabilities. Those figures are in addition to the financial impact of maintaining
the legislative amendments introduced in 2003.
7.85. The proposed scale of benefits is shown in Table 7.4 (see paragraph 7.105 below).
No change to thresholds for psychiatric impairments
7.86. Of all claims lodged since the introduction of impairment benefits, only a small proportion relate
solely to a psychiatric impairment, whether secondary or non-secondary.
7.87. Of the approximately 34,000
71
impairment benefit claims lodged since 2000, about 440
72
non-secondary psychiatric claims
73
have achieved a WPI rating of 30% or more.
7.88. The VTHC submits that the threshold for all injuries, including psychiatric, should be a
consistent threshold of 5%, given that –
. . . the thresholds for eligibility for psychiatric impairment are the highest of any workers
compensation system in Australia.
. . . under the TAC scheme, no such distinction is drawn between thresholds for psychiatric
and physical injuries when determining entitlements to compensation and there are no sound
public policy reasons for the Workcover system to continue to perpetuate such an outdated
and discriminatory division.
74
7.89. VECCI opposes any reduction of the 30% threshold for psychiatric injuries, due to –
. . . the inexact nature of assessment and the potential threat to scheme viability.
75
7.90. Psychiatric impairments resulting from transport accidents are more likely to involve post-
traumatic stress disorder. Psychiatric disorders resulting from day-to-day work activities are
more likely to develop over a period of time, such as repeated exposure to trauma, or result
from circumstances such as workplace bullying. The costs associated with compensating
psychiatric impairment are more likely to impact on the WorkCover scheme than on the TAC
scheme.
7.91. In January 2007, parts of the Charter of Human Rights and Responsibilities Act 2006 (Vic)
(the Charter) commenced operation in Victoria.
76
The purpose of the Charter is to protect and
promote human rights in Victoria. One of the rights identified by the Charter is the right to
recognition and equality before the law. The different treatment of psychiatric and physical
impairment in relation to impairment benefit claims arguably affects a worker’s right to equality
before the law.
7.92. Under the AC Act, psychological or psychiatric injuries are treated differently from physical
injuries. As identified in Chapter 2, “Workers’ entitlements to compensation”, the nature of
psychiatric claims makes them difficult for all compensation schemes to administer. The
difficulty arises predominantly from the problems involved in diagnosing psychological illnesses,
and the multiplicity of factors that can contribute to those conditions.
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70 Source: advice from the Review’s independent actuaries. Based on a 10% increase.
71 Source: VWA.
72 Source: VWA.
73 Assessed in accordance with either the Clinical Guidelines to the Rating of Psychiatric Impairment
(CGRPI) or the Guides to the Evaluation of Psychiatric Impairment for Clinicians (GEPIC).
74 VTHC, Submission, 2 May 2008, p 37.
75 VECCI, Submission, April 2008, p 61.
76 The Charter became fully operational on 1 January 2008.
7.93. Psychiatric injuries are rarely caused by a single event – they frequently involve additional causal
factors, such as a worker’s personal life, interpersonal relationships and personality factors.
77
Psychiatric injuries often involve an interaction between work-related and non-work-related
factors, and that interaction can present difficulties for determining whether an injury is
compensable.
78
7.94. The justification for different impairment thresholds for psychiatric and physical impairment lies
in the subjective nature of psychiatric injuries, the difficulty associated with assessing such
injuries, the cost of managing and compensating psychiatric injuries and the impact of that
management and compensation on scheme viability.
7.95. The subjectivity of the assessment of psychiatric impairment could also result in an escalation
of disputes and associated legal costs.
7.96. Since 2000, there have been approximately:
• 440
79
impairment benefit claims lodged where the primary psychiatric impairment was
greater than or equal to 20% WPI, but less than 30% WPI;
• 370
80
impairment benefit claims lodged where the primary psychiatric impairment was
greater than or equal to 15% WPI, but less than 20% WPI; and
• 720
81
impairment claims lodged where the primary psychiatric impairment was greater than
or equal to 10% WPI, but less than 15% WPI.
7.97. The Review’s independent actuaries have estimated the financial impact of reducing the
psychiatric threshold as follows:
• If the threshold were reduced to 10% WPI, with the same entitlement amount provided for
psychiatric and physical injuries, it is estimated that the annual cost to the scheme would be
$75 million.
82
• If the threshold were reduced to 15% WPI, with the same entitlement provided for psychiatric
and physical injuries, the annual scheme cost is estimated to be approximately $55 million.
83
• If the threshold were reduced to 20% WPI, with the same entitlement provided for psychiatric
and physical injuries, the annual scheme cost is estimated to be approximately $40 million.
84
7.98. Reducing the psychiatric impairment threshold below the current 30% WPI threshold would
present a considerable risk to the ongoing viability of the scheme. I believe that the reduction
cannot be justified at this time.
Ensure parity of payments for physical and psychiatric impairments
7.99. In addition to the different methods of assessment and thresholds for psychiatric and physical
impairment claims, lower entitlement amounts are provided for psychiatric impairments
compared with physical impairments.
7.100. For example, if a worker suffers a physical injury on or after 1 July 2008 and is assessed as
having a 30% WPI, the worker is entitled to an impairment benefit of $66,120. But, if a worker
suffers a psychiatric injury on or after 1 July 2008, the worker would only be entitled to an
impairment benefit of $13,230.
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77 Dr R Gutierrez, Injury Management Solutions, “Psychological Injury Claims – Why do we keep missing
the boat?”, presented at the WorkCover WA Injury Management Conference, October 2007.
78 Dr R Gutierrez, Injury Management Solutions, “Psychological Injury Claims – Why Do We Keep Missing
the Boat?”, presented at the WorkCover WA Injury Management Conference, October 2007.
79 Source: VWA.
80 Source: VWA.
81 Source: VWA.
82 Source: advice from the Review’s independent actuaries.
83 Source: advice from the Review’s independent actuaries.
84 Source: advice from the Review’s independent actuaries.
7.101. Under the TAC and WorkCover NSW Schemes, a psychiatric impairment assessed at or above
the applicable threshold will be awarded the same entitlement as physical impairment assessed
at an equal WPI.
85
7.102. As discussed in paragraphs 7.92-7.95 above, there are sound reasons for the continuation of
different thresholds for accessing impairment benefits for psychiatric and physical injuries.
However, lower levels of payment for psychiatric impairment, once the relevant threshold has
been met, are not justifiable and must be remedied.
7.103. I recommend that the impairment benefit awarded for a 30% psychiatric impairment be
increased to the level of impairment benefit awarded for a 30% physical impairment. Similar
adjustments should also be made to the payments for psychiatric impairments assessed
between 31% and 70% WPI to address the inequity.
7.104. The increase is estimated by the Review’s independent actuaries to cost the scheme
approximately $3 million a year.
86
7.105. The proposed scale of benefits is shown in table 7.4 below.
TABLE 7.4: PROPOSED SCALE OF IMPAIRMENT BENEFITS
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85 WorkCover NSW, Workers Compensation Benefits Guide, p 55.
86 Source: advice from the Review’s independent actuaries.
0%–9% WPI
(non spinal,
UEX or LEX)
5%–9% WPI
(for spinal,
UEX or LEX
injuries only) 10%–30% WPI
31% to
70% WPI 71%–80% WPI 81% + WPI
Physical injury entitlement
Current
physical
entitlement
Nil $10,250 min
(5% WPI)
$17,234 max
(9% WPI)
$16,250 min
(10% WPI)
$66,120 max
(30% WPI)
$70,200 min
(31% WPI)
$230,880 max
(70% WPI)
$247,930 min
(71% WPI)
$396,700 max
(80% WPI)
$396,690
Proposed
physical
entitlement
No increase No increase No increase No increase $254,400 min
(71% WPI)
$484,830 max
(80% WPI)
$484,830
Spine injury (only) entitlement
Proposed
Spine injury
entitlement
No increase Calculated
entitlement +
10%
Calculated
entitlement +
10%
No increase $254,400 min
(71% WPI)
$484,830 max
(80% WPI)
$484,830
Psychiatric injury entitlement
Current
psychiatric
entitlement
Nil Nil $13,230
(30% WPI)
$17,540 min
(31% WPI)
$231,400 max
(70% WPI)
$247,930 min
(71% WPI)
$396,700 max
(80% WPI)
$396,690
Proposed
psychiatric
entitlement
No increase No increase $66,120 (30%
Psych)
$70,200 min
(31% WPI)
$230,880 max
(70% WPI)
$254,400 min
(71% WPI)
$484,830 max
(80% WPI)
$484,830
No change to the treatment of secondary psychiatric impairments
7.106. Impairment benefits are not payable for psychiatric injuries that are secondary to a physical
injury.
87
The exclusion was initially justified on the basis that impairment benefit payments
contain a component for pain and suffering
88
and, in most circumstances, secondary psychiatric
injury relates to pain and suffering as a consequence of a primary physical injury.
7.107. The AC Act
89
also prevents the psychiatric and physical consequences of an injury being
combined when determining whether a worker suffers from a serious injury and is therefore
entitled to commence common law proceedings. However, once it is determined that a worker
has suffered a serious injury, any damages awarded for pain and suffering do not distinguish
between secondary and non-secondary impairment.
7.108. The entitlement to lump sum compensation for secondary psychiatric injuries was removed
from the AC Act and the TA Act in 1996. The change was made because of the potential for
double assessment of a component of a psychiatric injury. It was thought that, because
impairment benefit payments contain a component for pain and suffering, emotional distress
arising from a work-related injury was already compensated by that benefit.
7.109. The method of assessing psychiatric impairments
90
does not distinguish between secondary
and non-secondary psychiatric impairments. However, the medical practitioner assessing
impairment must determine the level of impairment attributed to the work-related injury and
then reduce that impairment by excluding any psychiatric injury that is secondary to the physical
injury, as well as any injuries that arise from unrelated circumstances.
91
7.110. Removing the exclusion of secondary psychiatric injuries when assessing compensation for
impairment raises two major concerns:
• In many circumstances, the scheme could compensate a worker twice for the same injury.
Compensation would be paid for the physical injury (including a component for pain and
suffering) as well as for the secondary psychiatric injury arising as a consequence of the
physical injury.
• The scheme’s liabilities would significantly increase because of the number of workers who
would be able to access a benefit by combining secondary and non-secondary psychiatric
impairment.
7.111. The VWA does not currently collect data about levels of secondary psychiatric impairment.
However, most (if not all) workers who sustain a significant physical injury will have some level
of emotional distress, consequent on suffering the physical injury.
7.112. If secondary psychiatric impairments were to be included in the calculation of entitlement to
impairment benefits, it is estimated by the Review’s independent actuaries that the increased
cost to the scheme would be between $65 million and $150 million a year.
92
7.113. I therefore propose to retain the current exclusion of compensation for secondary psychiatric
impairments.
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87 AC Act, s 91(2).
88 Victoria, Legislative Assembly, Debates, 12 November 1997, p 1076: Accident Compensation
(Miscellaneous Amendment) Bill 1997.
89 AC Act, s 134AB(38)(h).
90 MWN Epstein, G Mendelson, NHM Strauss, The Guide to the Evaluation of Psychiatric Impairment For
Clinicians, Self-published, Melbourne, Revised December 2005.
91 AC Act, ss 91(2), 91(7).
92 Source: advice from the Review’s independent actuaries. The estimate incorporates the cost if claim
numbers were to remain static ($65 million), and the cost if claim numbers were to increase because
of easier access to benefits ($150 million).
Use of the AMA Guides
7.114. The AMA Guides are used by medical practitioners to evaluate the impairment of any human
organ system
93
and provide a standard framework and method of analysis. The current edition
of the AMA Guides used to assess permanent impairments in accordance with the AC Act, the
TA Act and the Wrongs Act 1958 (the Wrongs Act) is AMA-4.
7.115. The Compensation Law Bar Association has submitted that AMA-4 is not an appropriate vehicle
for assessing permanent impairment and that AMA-4 –
. . . tends to under-assess the impairment because it pays no heed to the “industrial loss of use
of” and nor does it take into consideration “pain” because practitioners are not permitted to
include any impairment under Chapter 15.
94
7.116. The AMIEU submits that further work is required to develop an appropriate method of
measuring the pain and suffering from disability and impairment.
95
7.117. AMA-4 was adopted by the AC Act in 1998
96
for the assessment of permanent injuries that
occurred on or after 12 November 1997. At that time, AMA-4 would have been considered the
most relevant guidelines available for the scientific assessment of permanent impairments.
97
7.118. Since 2000, two further editions of the AMA Guides have been published.
98
To date, the AC Act,
the TA Act and the Wrongs Act have not been updated to a more recent edition of the AMA
Guides.
7.119. The AMA Guides are a complex tool written by and for medical practitioners. They provide an
assessment tool for a multitude of injuries, from spinal impairments through to cardiac
impairments.
7.120. Reviewing AMA-4 and changing its use for the purpose of assessing work-related permanent
injuries may lead to inconsistent assessments of permanent impairments across all current
Victorian compensation schemes.
7.121. Given the complexity of the AMA Guides and the extensive range of permanent injuries
assessed, any change to the method of assessing permanent injuries could affect thousands of
assessments and the entitlements paid.
7.122. Any review of the use of AMA-4 would require the involvement of the administrators of the
TA Act and Wrongs Act and relevant medical specialists.
7.123. For those reasons, I believe that a review of the current method of assessing permanent
impairments is outside the Review’s scope.
7.124. Rather, I propose that the VWA initiate a review of the method of assessing permanent
impairment, with all relevant stakeholders across the Victorian compensation schemes
participating in the review.
Date of injury vs date of finalisation of claim
7.125. Under section 100(2A) and (2B) of the AC Act, impairment benefit entitlements are indexed
annually by reference to any change in the all groups consumer price index (the CPI) over the
preceding financial year.
99
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93 AMA-4, p 1.
94 Compensation Law Bar Association, Submission, 2 May 2008, p 17.
95 AMIEU, Submission, 2 May 2008, p 20.
96 AC Act, s 91(1)(a)(i) and (8).
97 AMA-4 was first published in 1993.
98 AMA-5 and AMA-6.
99 The impairment entitlements are indexed by the CPI.
7.126. The AC Act provides for the calculation of entitlement to impairment benefit as at the date of
the injury,
100
ensuring that all workers injured in a particular financial year and having the same
level of WPI will receive the same amount of compensation, regardless of when their claims are
lodged or determined.
7.127. The Compensation Law Bar Association submits that –
The current system of compensating injured workers on the date of their injury is unduly harsh,
as the scale as at the date of injury might be significantly less than the scale as at the date of
settlement.
101
7.128. Because the amount of impairment benefit paid will be fixed as at the time the worker was
injured, the amount paid is likely to be less than amount payable for the same injury at the time
when the benefit is determined (on the reasonable assumption that any movement in the CPI
will be up).
7.129. The TAC scheme, as a matter of practice, calculates lump sum benefits for permanent injuries
as at the date of the determination of those benefits.
7.130. It might be said that calculating lump sum benefits as at the date of injury creates an incentive
for the prompt lodging of claims. However, any measures required to reduce delays in the
lodgement of impairment benefit claims should be addressed directly and not through the
calculation of a worker’s entitlements.
102
Delays in lodging or determining claims may not be
caused by the worker; and it is not appropriate to require a worker to bear the financial cost of
any such delay in the form of the deflated value of any impairment benefit paid.
7.131. Directing that impairment benefits be calculated as at the date of the relevant determination,
as opposed to the date of the relevant injury, is likely to have a modest impact on the scheme.
The Review’s independent actuaries have estimated that the annual cost to the scheme will be
between $5 million and $15 million.
7.132. I recommend that the time at which impairment benefits are calculated be brought into line
with the current practice of the TAC.
HEARING LOSS INJURIES
7.133. A hearing loss injury can include: binaural hearing loss (both ears), monaural hearing loss (one
ear), industrial deafness (from exposure to industrial noise), noise-induced hearing loss, and a
further noise-induced loss of hearing.
7.134. The AC Act uses many of these descriptors to identify a hearing loss injury.
103
However, there
is no consistency in the description of this type of injury.
7.135. For compensation of hearing loss injuries,
104
the date of injury is deemed to be either:
• the last day of the worker’s employment, out of which or in the course of which the injury
arose, or
• the date of the claim (if the worker is still employed in that employment on that date).
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100 AC Act, s 98C(2) and (3).
101 Compensation Law Bar Association, Submission, 2 May, p 18. See also the submission from Anthea
MacTiernan, quoted in paragraph 7.31 above.
102 AC Act, s 98C(2).
103 See AC Act, ss 88, 89. 90, 91.
104 AC Act, s 88(4).
7.136. In addition to the inconsistent description of the injury, there are several sections in the
AC Act
105
that instruct the VWA and self-insurers on how to:
• determine the date of injury for a hearing loss injury and further injury hearing loss;
• assess permanent impairment from hearing loss injuries (including monaural and binaural
hearing loss and further injury hearing loss claims);
106
and
• calculate the entitlement to compensation, if any.
7.137. The current provisions for determining the date of injury and assessing the extent of initial and
further loss of hearing injuries are confusing, and require clarification.
7.138. There is particular confusion about whether a monaural hearing loss injury is a form of industrial
deafness or is encompassed by binaural hearing loss. If a monaural hearing loss injury does not
fall within either of those descriptors, it may be necessary to clarify the method of assessment
that is to be applied for monaural hearing loss injuries. There is also confusion about whether it
matters that a hearing loss injury occurs gradually or is caused by a traumatic event.
7.139. Amendments to the AC Act
107
relating to further loss of hearing injuries were introduced on
18 November 2004. The amendments resulted from the Supreme Court judgment in the matter
of Del Borgo v Victorian WorkCover Authority (Del Borgo),
108
which was affirmed by the Court of
Appeal.
109
7.140. The legislative amendments were designed to ensure that workers were not unfairly
disadvantaged or overcompensated for further hearing loss injury claims as a result of the Del
Borgo case. The amendments introduced new sections and also amended existing sections of
the AC Act.
110
In my view, the amendments further complicated the hearing loss provisions.
7.141. Since 18 November 2004, there have been approximately 1650 hearing loss claims. In addition,
approximately 600 further hearing loss injury claims have been made by workers who had
previously claimed a lump sum benefit for a hearing loss.
111
7.142. I recommend that the AC Act be amended to introduce consistent terminology for hearing loss
claims and injuries and that the provisions relating to hearing loss injuries be simplified and
rationalised.
Hearing loss impairment benefits
7.143. Initial hearing loss injuries and further hearing loss injuries are assessed and compensated
differently under the impairment benefits scheme.
7.144. An initial hearing loss injury is any hearing loss injury that occurs as a result of a work-related
incident or circumstance, where the worker has not previously received lump sum
compensation for a work-related hearing loss injury.
7.145. A further hearing loss injury is any work-related hearing loss injury where the worker has
previously received lump sum compensation for a work-related hearing loss injury (on one
or more occasions) under any compensation scheme in Australia.
112
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105 AC Act, ss 88, 89, 90, 91(3), (3AA), (3A), (4), (5), 98C(3A).
106 NAL Determination of Percentage Loss of Hearing (1988 edition or later prescribed edition), Australian
Government Publishing Service, Canberra, 1988.
107 AC Act, s 89.
108 [2002] VSC 368.
109 [2004] VSCA 108. The Supreme Court found that the VWA was not entitled to deduct the earlier
impairment assessment of an initial hearing loss from the impairment assessment made after a
worker suffered a further hearing loss injury. The VWA was only entitled to deduct the earlier monetary
award given to the worker when calculating the worker’s entitlement to compensation in relation to
the further hearing loss injury.
110 AC Act, ss 98C(3A), 89.
111 Source: VWA.
112 AC Act, s 89(1).
7.146. As a consequence of the Del Borgo case, the method of determining and calculating the
entitlement to compensation for further injury hearing loss claims was changed. A new
calculation method was introduced to ensure that a worker is only awarded compensation for
the diminution of hearing resulting from the further hearing loss injury.
7.147. Initial hearing loss impairments are assessed and determined as follows:
• the injury is assessed by a specialised medical practitioner in accordance with the National
Acoustic Laboratory (NAL) Improved Procedure for Determination of Percentage Loss of
Hearing;
113
• the NAL assessment is then converted to a WPI percentage in accordance with section 91 of
the AC Act;
114
• the WPI is then used to calculate the entitlement to lump sum compensation in accordance
with section 98C of the AC Act.
7.148. Initial hearing loss injuries are awarded the same level of impairment benefit as all other
physical injuries. For example, if a worker is assessed at 10% WPI for a hearing loss injury, the
worker will be awarded the same impairment benefit as a person assessed at 10% WPI for any
other physical injury ($16,520).
115
7.149. As noted in paragraph 7.143 above, there is a separate and distinct method for determining the
benefit awarded for workers who suffer a further hearing loss injury. Further hearing loss
impairments are assessed and determined as follows:
• the authorised agent must determine the initial hearing loss impairment by reference to the
prior NAL assessment (or assessments);
116
where there is no prior NAL assessment, the
authorised agent must determine the initial hearing loss impairment by reference to the
available medical evidence and convert that assessment to an NAL assessment;
117
• the further injury is then assessed in accordance with the NAL;
• both the initial and the further NAL assessments are then converted to separate WPI
percentages in accordance with section 91 of the AC Act;
118
• both WPI percentages are used to determine the difference between the initial and further
hearing loss and to calculate the entitlement to lump sum compensation in accordance with
section 98C(3A) of the AC Act.
7.150. Further injury hearing loss claims are compensated incrementally. For each percentage lost
above the initial hearing loss percentage, a worker will receive a set dollar amount. For example,
for hearing loss injuries that occur on or after 1 July 2008, each percentage point of hearing loss
is worth $2480.
119
7.151. The incremental amount awarded for a percentage point in a hearing loss claim is the same as
the incremental amount awarded for each percentage point for any other physical injury.
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113 AC Act, s 91(4). NAL Determination of Percentage Loss of Hearing (1988 edition or later prescribed
edition), Australian Government Publishing Service, Canberra, 1988.
114 AC Act, s 91(3).
115 WorkSafe on line claims manual, section 12.11.1 “Benefits – injuries from 1 July 2007”.
116 AC Act, s 89(3C)(a).
117 AC Act, s 89(3C)(b).
118 AC Act, ss 91(3), (3A).
119 WorkSafe on line claims manual, section 12.11.1 “Benefits – injuries from 1 July 2007”.
7.152. Holding Redlich submits that current compensation for workers making a second claim for
hearing loss is inadequate and provide the following example to illustrate their concerns –
If a person has . . . a 12% loss of hearing caused by noise and has not made a previous claim,
that person would be entitled to $18,400 ($16,000 for the first 10% of hearing loss which is
treated as equating to a 10% Whole Person Impairment. An additional $2,400 is paid for the
remaining 2% loss which is treated as causing an additional 1% impairment, giving a total
impairment of 11%).
Assume however the claimant has already been paid compensation for a 12% loss in the past
and has since suffered a further 12% loss. Under section 97C(3A)(a) . . . that person has a
further Whole Person Impairment of 12 x .278 = 3.336. This figure is treated as a 4% Whole
Person Impairment. The compensation paid to that person is 4 x $2,400 = $9,600, slightly
more than half the amount they would receive for an initial 12% loss. Arguably a second 12%
loss has more serious consequences than an initial 12% loss.
120
7.153. According to Holding Redlich, the amount available to workers who make a second successful
claim for hearing loss should be more than doubled.
121
7.154. The example provided by Holding Redlich is not a true representation of the manner in which
hearing loss entitlements are calculated.
7.155. As noted in paragraph 7.147 above, hearing loss entitlements are calculated by converting the
NAL assessment to a WPI figure in accordance with the AC Act. For example, a worker, whose
hearing loss is assessed at between 13.6% and 17.1% in accordance with the NAL, would have
a WPI of 12%. The following formula is used to convert the NAL assessment to a WPI figure:
10 + [0.278 (NAL – 10)]
122
7.156. Once the NAL assessment is converted to a WPI, the entitlement to an impairment benefit is
calculated using one of the formulae in section 98C of the AC Act. In the example provided by
Holding Redlich, the worker is assessed as having a 12% WPI. Therefore, the worker’s
entitlement to impairment benefit would be calculated according to the following formula:
$16,520 + [(12 – 10) x $2480] = $21,480.
123
7.157. The formula above is the same as the formula used to calculate the entitlement to impairment
benefit for any other physical injury.
7.158. If the worker sustained a further hearing loss injury and was assessed as having a 24% WPI,
using the conversion formula under the AC Act, the worker would be assessed at between
56.8% and 60.3% in accordance with the NAL guides. The worker would be assumed to have
a 24% WPI which would be derived from the assumption that the worker had an “additional”
12% WPI and the original injury being confirmed as 12% WPI (12% WPI + 12% WPI).
7.159. The further injury hearing loss entitlement would be calculated as follows:
[(24 – 12) x $2480 = $29,760.
124
7.160. The method of calculating the entitlement to compensation for initial and further injury hearing
loss claims ensures that hearing loss injuries are calculated using the same formula.
7.161. The AC Act must maintain a consistent lump sum benefit for all physical injuries. Therefore,
I do not believe that any change to the impairment benefit entitlement for hearing loss injuries
is warranted.
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120 Holding Redlich, Submission, 2008, p 1.
121 Holding Redlich, Submission, 2008, p 2.
122 AC Act, s 91(3).
123 AC Act, s 98C(2)(c) for injuries on or after 1 July 2008.
124 AC Act, s 98C(3A)(b) for injuries on or after 1 July 2008.
GRADUAL PROCESS INJURIES
7.162. A worker who suffers an injury that occurs gradually over time (or incrementally) because of the
nature of the worker’s employment may be entitled to compensation.
125
An injury of this type is
known as a gradual process injury.
7.163. Gradual process and hearing loss injuries usually do not result from a specific event or
circumstance that can be identified as the cause of the injury or illness. Instead, they arise from
the nature of the duties or the environment of the worker’s employment.
126
It follows that no
identifiable date of injury can be nominated for the purpose of calculating any entitlement to
lump sum compensation, as currently required by section 98C(2) and (3) of the AC Act.
7.164. Where a worker suffers an injury as a result of a discrete incident on a specific date, and also
suffers a gradual process injury as a result of a different event or circumstance, the two injuries
will be assessed separately.
7.165. The AC Act provides that, if a worker presents for an assessment of permanent impairment for
injuries that occurred on different dates, the impairments are to be assessed chronologically by
date of injury.
127
7.166. Nevertheless, it is increasingly common for workers to make a claim for a specific incident and
to include in that claim any injury that occurred “throughout the course of employment”. That
type of claim needs to be addressed to ensure the consistent and efficient administration of the
scheme and the delivery of appropriate benefits.
7.167. To achieve those objectives, the date on which all gradual process injuries are deemed to have
occurred should be prescribed in the AC Act or in regulations. Given the similarities between
hearing loss and gradual process injuries, the deemed date of injury for all gradual process
injuries should replicate the deemed date for hearing loss injuries.
7.168. I recommend that the AC Act be amended to define the date of injury for gradual process
injuries as:
• the last day of the worker’s employment out of which, or in the course of which, the injury
arose, or
• the date of the claim if the worker is still employed in that employment at the date of the
claim.
MULTIPLE INJURIES
7.169. An injured worker will only receive an impairment benefit if the worker’s impairment
assessment in respect of a particular event or circumstance is at least 10% WPI for physical
injuries or 30% WPI for psychiatric injuries.
128
The minimum thresholds are not applied
cumulatively.
129
7.170. It follows that workers who sustain multiple injuries because of different incidents or
circumstances (unless the incidents or circumstances occurred on the same date) are not
entitled to compensation unless the injuries arising from each incident or circumstance meet
the required threshold.
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125 AC Act, s 82(6).
126 The exception being noise-induced hearing loss resulting from a traumatic event.
127 AC Act, s 91(7)(b).
128 AC Act, s 91(7), 98C(2) and (3).
129 AC Act, s 91(7).
7.171. The AC Act requires that:
• multiple injuries “which arose out of the same incident or occurred on the same date are to
be assessed together”;
130
and
• in the case of multiple injuries which “occurred on different dates”,
131
the impairments are to
be assessed separately in chronological order by date of injury.
7.172. The operation of section 91(7) can be illustrated by considering two different workers with
identical injuries.
• Worker “A” was injured as a result of a single incident; and worker “B” was injured as a result
of two separate incidents.
• Worker “A” has an impairment assessed at 10% WPI as a result of multiple injuries to different
body parts arising from the one incident.
• Worker “B” has an impairment assessed at 7% WPI to one body part from the first incident
and 3% WPI to another body part from the second incident (under AMA-4, 3% and 7% WPI
would combine to a 10% WPI).
• Worker “A” will be an entitled to an impairment benefit because the minimum threshold for
compensation, in section 98C(2)(a) of the AC Act, has been met.
• Worker “B” will not be entitled to an impairment benefit because neither impairment meets
the minimum threshold in section 98C(2)(a) of the AC Act.
• Although the injuries arising from the two incidents would create a combined WPI of 10%,
the two impairment assessments are not combined, because they resulted from two separate
incidents.
7.173. In comparison, the TA Act requires that an injured person have a combined impairment
assessment of 11% overall before taking into account the person’s total impairment arising
from separate transport accidents.
132
Once a person has met the threshold of 11% for an initial
impairment benefit claim, an additional 1% permanent impairment from a later injury will entitle
the person to a further lump sum benefit.
133
7.174. Under the TA Act, where a plaintiff obtains common law damages after receiving an impairment
benefit, the impairment benefit amount is deducted from the pain and suffering component of
the common law damages. Where there are multiple injuries from separate incidents, only the
amount of impairment benefit paid for the injury to which the common law damages relate will
be deducted from the damages award.
7.175. I assume that the method adopted by the TAC was introduced because of the inequity of
requiring an injured person to meet a specific threshold for each additional injury caused by any
further transport accident.
7.176. The VTHC contends that –
. . . the current system of requiring the threshold to be met for every separate injury leads to
distorted and unfair outcomes for injured workers.
It is very common for workers to suffer a range of injuries during their working lives, the
cumulative effect of which can be very debilitating. By requiring each injury to be addressed
as a separate matter, the reality of the overall limitations of a worker’s injuries are ignored.
134
7.177. The SIAV argues that –
The TAC model offered in support of the accumulation model is not comparable. The TAC as
a monopoly insurer has only one interest to defend rather than the risks of many different
employers.
135
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130 AC Act, s 91(7)(a).
131 AC Act, s 91(7)(b).
132 TA Act, s 48.
133 The further injury hearing loss provisions found in the AC Act mirror this provision in the TA Act:
see paragraphs 7.149-7.150 above.
134 VTHC, Submission, 2 May 2008, p 36.
135 SIAV, Submission, May 2008, p 20.
7.178. The SIAV is also concerned that “the potential for the combination of impairments poses a
significant risk that a self-insurer may be liable for a condition to which it has made less than
a significant or material contribution”.
136
(Unlike the TAC, the VWA must apportion the level of
injury attributable to each employer involved in each incident for the purposes of premiums).
7.179. Ai Group has noted that there may be “difficulties” associated with managing multiple injuries
from multiple incidents, given the potential premium disadvantage.
137
7.180. Combining multiple injuries and paying impairment benefits for the combined WPI caused by
those injuries carries the risk that an injury will be attributed an employer, when the injury did
not occur during or as a result of that specific employment.
7.181. For example, a worker may suffer a physical injury with one employer and, as a result of that
injury, be assessed as having an 8% WPI. The worker might then suffer a further injury with a
second employer, and the two injuries are combined for a 10% WPI. Only the second
employer’s premium liability would reflect the entire cost of the two injuries.
7.182. Allowing separate injuries to be combined in that way is likely to create a disincentive for
employers to employ workers who have previously suffered a work-related injury.
7.183. Another issue is that a worker may be paid compensation twice, in error, for the same injury
(against separate employers), if the system does not recognise that both combined lump sum
payment relate to the same injuries.
7.184. To ensure that “double-dipping” does not occur in those circumstances, a method of allocating
an entitlement amount for each injury would be required, which is likely to add complexity to
the system.
7.185. As noted in paragraph 7.29 above, the SIAV has also submitted that –
. . . the entitlement threshold must be satisfied for every injury as it clearly encourages workers
to report injuries and make claims in a timely manner rather than waiting for the accumulation
of various injuries to reach an applicable threshold.
138
7.186. Allowing for multiple injuries to be combined for the purpose of compensating permanent
impairments may provide an incentive for workers to delay notification or assessment of an
impairment benefit claim, because delay might increase the entitlement awarded.
7.187. The risk of workers delaying notification of an injury appears to be small. Most workers who
lodge an impairment benefit claim would already have notified the employer or authorised agent
of the injury to obtain payment for medical services or weekly benefits. Nevertheless, a
potential incentive to delay assessment contradicts one of the objectives of the AC Act –
to identify and compensate injuries as early as practicable.
7.188. Common law damages may also be affected by changes to the assessment of multiple injuries.
When common law damages are awarded for pain and suffering, any payment of impairment
benefit for the same injury is deducted from the award.
139
Combining multiple injuries, each of
which would not entitle the worker to compensation, may impact on the deduction of the
impairment benefit payment from common law damages.
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136 SIAV, Submission, May 2008, pp 19-20.
137 Ai Group, Submission, May 2008, p 59.
138 SIAV, Submission, May 2008, p 19.
139 AC Act, s 134AB(25)(b).
7.189. Assume that a worker suffers an injury as a result of one incident, and is assessed as having an
8% WPI. The same worker then suffers an injury as a result of a separate incident and the
resulting WPI is assessed at 4%.
• If the TAC regime was adopted, the worker would be entitled to a combined 12% WPI and
paid compensation accordingly.
• If the worker then successfully sought common law damages based on the cause of action
arising from the second incident, the benefit entitlement awarded for the second injury would
be nil (only the “combined” injury would have been awarded a benefit entitlement), and there
would be no deduction under section 134AB(25)(b) of the AC Act.
7.190. Combining multiple injuries would also have the effect of reducing the physical or psychiatric
impairment thresholds required for any future injuries that occur as a result of separate
incidents. The 10% threshold for physical impairments would become more attainable where
multiple injuries have been sustained, each of which resulted in a “minor” impairment when
assessed in accordance with AMA-4.
7.191. Reducing the threshold for all impairments to 5% WPI could achieve a similar outcome.
However, where multiple minor injuries result from multiple incidents, there may still be no
entitlement to compensation.
7.192. The Review’s independent actuaries anticipate that adopting the TA Act approach to
assessment and entitlement for multiple injuries arising from separate incidents would cost the
WorkCover scheme $100 million or more a year.
140
7.193. Each impairment benefit claim incurs costs associated with managing the claim. Although it
might be more efficient administratively to manage multiple claims as one claim, rather than as
a series of separate claims, the combination of multiple injuries is likely to increase the average
cost associated with lump sum payments and increase the number of claims lodged under the
AC Act.
7.194. A further consideration, that of consistency of approach to entitlements, is relevant.
• If the approach of combining were adopted for impairments below 10%, it should also be
adopted for impairments above 10%.
• The former course would allow some workers to qualify for compensation; the latter course
would reduce the amount of compensation payable to workers (because the formula for
combining impairments generally leads to a combined impairment that is less than the
arithmetic sum of the individual impairments).
• I doubt that any worker would support a regime that required impairments of 10% or more,
resulting from injuries arising out of different incidents (occurring months or years apart), to
be combined before assessing the amount of compensation.
• However, if that approach were to be adopted for individual impairments below 10%, a
rational and consistent approach would require that approach to be adopted for individual
impairments of 10% and above.
7.195. Despite the potential administrative efficiencies and savings that might result from combining
impairments from multiple injuries, there are persuasive arguments against changing the
approach to multiple injuries. Those arguments include the substantial impact on scheme
liabilities, the increased complexity associated with managing a multiple injury impairment
determination system and the importance of a consistent approach to questions of entitlement.
7.196. For the above reasons, I do not recommend a change to the assessment and determination of
multiple injuries.
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140 Source: advice from the Review’s independent actuaries.
TWO SEPARATE SYSTEMS
7.197. As noted in table 7.1 (see paragraph 7.18), the maims payment and impairment benefit systems
involve different principles and processes for determining entitlement to compensation.
Different dispute resolution processes also apply under the two systems.
141
7.198. When a claim is made for a maims payment, the VWA has 90 days in which to accept or reject
the claim. If the claim is accepted, the VWA will offer to settle the claim for a particular amount.
If the worker does not accept the offer, the worker can take the dispute to the ACCS, but only
after he or she has taken reasonable steps to resolve the matter. The process effectively
requires the worker to make a counter offer to the VWA in an effort to settle the claim.
7.199. If the matter proceeds to the ACCS, the VWA is required to make a further formal “statutory
offer” and the worker is required either to accept the VWA’s statutory offer or to make a
“statutory counter offer” before the dispute proceeds to conciliation.
7.200. A more streamlined process applies to disputes about impairment benefits. If the VWA rejects a
claim for an impairment benefit, or the injured worker disputes the VWA’s calculation of an
entitlement, the dispute goes directly to the ACCS.
142
If a dispute arises about the assessment
of the worker’s level of impairment, the dispute is referred directly to a Medical Panel for an
opinion.
143
7.201. Although the maims payment system was abandoned in 1997, maims claims continue to be
lodged each year for injuries sustained between 1 September 1985 and 11 November 1997,
albeit in diminishing numbers as table 7.5 demonstrates.
TABLE 7.5: MAIMS CLAIMS LODGED PER CALENDAR YEAR FROM 1992 TO 30 NOVEMBER 2007
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141 The process for maims payments is set out in the AC Act, s 104. The process for impairment benefit
claims is set out in the AC Act, s 104B.
142 AC Act, s 104B(3).
143 AC Act, s 104(9).
0
2000
4000
6000
8000
10000
12000
14000
2
0
0
7
2
0
0
6
2
0
0
5
2
0
0
4
2
0
0
3
2
0
0
2
2
0
0
1
2
0
0
0
1
9
9
9
1
9
9
8
1
9
9
7
1
9
9
6
1
9
9
5
1
9
9
4
1
9
9
3
1
9
9
2
7.202. In 2006/2007, approximately 400 maims claims were lodged. In the same year, approximately
4600 impairment benefit claims were lodged.
7.203. Although the number of maims claim lodgements is reducing, there is a range of issues
associated with maintaining two different lump benefit schemes, including –
• potential confusion for workers about the benefit they may be entitled to claim and the
process that should be followed in making a claim;
• inconsistencies in outcomes for workers – whether a worker is entitled to lump sum benefits
and the amount of any compensation payable will depend on the date of the worker’s injury;
• inconsistency in the processes to be followed to resolve disputes that arise under each system;
• administrative burdens and inefficiencies caused by the need for the VWA to administer two
different systems; and
• difficulties in assessing gradual onset injuries that may span the two different benefit systems.
7.204. In an effort to reduce confusion about the lump sum benefit system, the VWA website
144
provides information relating to impairment benefit eligibility and claims processes.
Unfortunately, the website does not provide the same detail for maims payments.
7.205. It is essential, while the maims payment system remains in place, that the VWA update its
website with details about maims payments, so as to reduce confusion about the differences
between the two lump sum benefit systems.
7.206. In order to remove inconsistencies in processes and entitlements and reduce the administrative
burden of managing two systems, one option would be to replace the maims system with the
impairment benefit system.
7.207. However, the VTHC has submitted that, due to the decreasing number of maims claims lodged –
Any attempt to incorporate the two systems is unnecessary and potentially confusing.
145
7.208. Ai Group has also submitted that –
There do not appear to be any major benefits associated with merging the two schemes.
146
7.209. If the maims system was abolished and replaced by the impairment benefits system, it is likely
that some workers would benefit from the reform. For example, workers with psychiatric
injuries could qualify for impairment benefits, whereas compensation for such injuries has not
been available under the maims system since 1992.
7.210. However, workers with back, neck or hearing loss injuries sustained between 1 September 1985
and 11 November 1997 might be disadvantaged by the reform. Those workers are more likely to
receive an entitlement, and may receive a more generous entitlement, under the maims system
than under the impairment benefit system.
7.211. Over time, at least 2000 workers might be disadvantaged by abolishing the maims system and
replacing it with the current impairment benefit system.
7.212. To minimise those negative effects, it might be possible to adjust some of the thresholds for
access to impairment benefits, so as to bring them closer to the thresholds under the maims
system.
7.213. For example, the threshold for all spine injuries could be reduced (to 1% WPI) and hearing loss
injuries (to 7% WPI), regardless of when the injury was sustained. For all other injuries, the
current thresholds could be maintained. The current thresholds for access to impairment
benefits for back, neck and pelvis claims could also be lowered to align with the lesser maims
thresholds for these injuries.
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144 WorkSafe Victoria 2008, viewed 21 May 2008, <www.worksafe.vic.gov.au>.
145 VTHC, Submission, 2 May 2008, p 35.
146 Ai Group, Submission, May 2008, p 59.
7.214. The Review’s independent actuaries anticipate that reducing the threshold in that way
would increase scheme costs by approximately $40 million to $45 million a year (or 2% of
the break-even premium).
7.215. Of course, replacing the maims payment system with the impairment benefit system would
streamline the administrative processes, and reduce the inconsistency in the assessment of
permanent injuries.
7.216. However, although streamlining the two systems would be beneficial for the VWA and some
workers, the benefits do not outweigh the costs.
7.217. Given the high cost to the WorkCover scheme of replacing maims benefits with impairment
benefits and the detrimental effect on some workers of loss of entitlement, I consider it
sensible to maintain the two separate systems at this time.
DELAYS IN LODGING CLAIMS
7.218. A claim for impairment benefits can be lodged with the worker’s employer by an injured
worker,
147
or initiated by the VWA or a self-insurer on the injured worker’s behalf.
148
7.219. A claim for impairment benefits
149
lodged by an injured worker cannot be made until 12 months
after the date of the relevant injury.
150
Earlier lodgement can be accepted by an authorised
agent if the injury is considered to have stabilised. Even if there is a delay in the stabilisation
of the injury, the claim can still be made 12 months after the date of injury; however, the
assessment of the injury is likely to be postponed until the injury has stabilised.
151
7.220. The current average delay from the date of injury to the date of impairment benefit claim
lodgement is approximately 900 days.
152
A delay of that kind obviously will delay a worker’s
receipt of the compensation to which the worker is entitled. Delays are due to:
• workers (particularly those who are not legally represented) being unaware of their
entitlements;
• instability or presumed instability of work-related injuries; and
• workers waiting for all injuries to manifest.
7.221. Some delay due to the instability of a worker’s injury or illness is unavoidable. It is important
that an injury has stabilised to ensure that the “permanent” impairment resulting from the injury
is appropriately assessed and the entitlement to compensation accurately calculated.
7.222. However, in some circumstances unnecessary delay is caused by confusion about whether a
condition has stabilised: an injured worker may not know when her or his condition is stable
enough to be assessed to allow determination of the level of permanent impairment.
7.223. The AC Act
153
permits initiation of an impairment benefit claim by the VWA or self-insurer. In
practice, however, the VWA does not initiate impairment benefit claims for compensation.
7.224. The provision allowing the VWA to initiate impairment benefit claims was introduced into the
AC Act in 2000. The VWA must wait for 18 months after the date of the relevant injury before
initiating an impairment benefit claim.
154
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147 AC Act, s 103(1)(c).
148 AC Act, s 104B(1C), (1CA) and (2AA).
149 Apart from hearing loss claims.
150 AC Act, s 104B(1A).
151 AC Act, s 104B(1B).
152 Source: VWA.
153 AC Act, s 104B(1C).
154 AC Act, s 104B(1C).
7.225. In 2006, a “statement of rights”
155
was developed by the VWA in conjunction with stakeholder
representatives. The statement of rights is intended to ensure workers are made aware of their
rights and responsibilities should the VWA initiate an impairment benefit claim. As the VWA
does not currently initiate impairment benefit claims, the effectiveness of the statement of
rights cannot be evaluated.
7.226. VWA initiation of lump sum claims has the potential to reduce the number of workers who
require a legal representative in order to start the impairment benefit process. (At present, 90%
of all injured workers pursuing an impairment benefit claim are legally represented.)
156
Workers
still have the option to engage legal representation if desired.
7.227. With or without legal representation, the statement of rights legislated in 2006 aims to protect
the rights of injured workers where the impairment benefit process is initiated by the VWA.
7.228. Some authorised agents do advise injured workers of their right to pursue a permanent
impairment once the injury has stabilised. However, the VWA generally does not individually
notify injured workers of the ability to claim for a lump sum benefit.
7.229. The VTHC submits that –
. . . it is not appropriate for the VWA to commence the impairment claim process.
157
7.230. VECCI believes that –
. . . it is not up to an insurer to declare a liability but up to a worker to claim.
158
7.231. Despite those points of view, the VWA is sometimes better placed to decide whether an injury
or multiple injuries have stabilised for the purpose of conducting an impairment examination.
This is especially true where the worker remains off work and continues to seek medical
intervention to improve the condition of the illness or injury.
7.232. In the majority of such cases, the VWA will obtain medical reports from the treating specialist
on the up-to-date status of the injury, and the reports will often indicate whether any
improvement or deterioration of the injury is expected.
7.233. Unlike the VWA, the TAC initiates impairment benefit claims. The TA Act requires the TAC to
determine the impairment of a person injured as a result of a transport accident either “when
the injury stabilises”,
159
or “three years after the accident, or three years after the injury first
manifests itself”.
160
7.234. If the TAC determines that the level of impairment is more than 10%, it must then calculate
the impairment benefit, using a formula in the TA Act.
161
7.235. Given that the TAC has been able to initiate impairment benefit claims successfully, the VWA
should also consider initiating impairment benefit claims in order to provide faster delivery of
lump sum benefits.
7.236. The VWA would be able to identify those claims where there is a potential lump sum benefit by
considering the initial injury notification lodged by the worker with the VWA and any up-to-date
medical reports.
7.237. Identification of those workers who are likely to achieve the threshold will ensure that injured
workers do not unnecessarily attend medical examinations.
7.238. I recommend that the VWA should use the provision in the AC Act that allows it to initiate
impairment benefit claims on behalf of injured workers.
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155 AC Act, s 104B(5C).
156 Source: VWA.
157 VTHC, Submission, 2 May 2008, p 38.
158 VECCI, Submission, April 2008, p 62.
159 Although not before three months after the date of the accident: TA Act, s 46A(1AA).
160 TA Act, s 46A(1)(a).
161 TA Act, s 47(2).
DELAYS IN PROCESSING CLAIMS
7.239. On receipt of an impairment benefit claim, the VWA or a self-insurer has a maximum of
120 days to:
• accept or reject liability for each injury included in the claim;
• obtain an independent impairment assessment by an approved medical practitioner;
• determine any entitlement to compensation; and
• advise the worker of the determination.
162
7.240. A number of factors delay the VWA’s decision-making processes.
7.241. In the case of impairment benefits, there maybe delays in issuing the determination of
entitlement and delays in receiving a response to that determination.
7.242. In the case of maims payments, delays can be caused by the lodging of incomplete claims,
non-attendance at medical examinations by a worker or a medical practitioner, delays in the
VWA issuing an offer and delays in the worker responding to an offer.
7.243. As at 30 April 2008, the average time taken to determine an impairment benefit claim lodged on
or after 18 November 2004 was approximately 230 days.
163
By comparison, in 2007 the time
from receipt of a maims claim to benefit delivery (with no disputes) was approximately 360
days.
164
If a maims claim is disputed and referred to the ACCS for resolution, the time to
resolution increases to an average of approximately 825 days.
165
7.244. It is unsatisfactory from the perspective of the worker and the VWA that the average time taken
to process a maims claim is almost one year and the average time taken to process an
impairment benefit claim is almost two-thirds of a year.
7.245. I accept that there are inherent difficulties with the processing of maims claims. For any maims
claim lodged in 2008, the relevant injury will already be 10 years old and may have occurred as
long as 22 years ago.
7.246. Delays in lodging claims can affect the speed with which claims are processed. Delays can also
affect the availability and quality of evidence to support a claim, and create difficulties for the
VWA in determining the extent to which a permanent impairment is work-related.
7.247. The SIAV favours an amendment to the impairment benefit provisions to prevent the making
of claims for impairment benefits more than six years after injury, in line with the Limitations of
Actions Act 1958,
166
after which time the injured worker would need to apply for an extension
of time.
167
The SIAV submits that –
There should be a requirement that impairment benefits claims be commenced within no
more than 6 years of the occurrence or manifestation [of] the alleged injury, (indicated by an
incident report) failing which, the extension provisions of the Limitation Act should apply.
168
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162 AC Act, s 104B(2).
163 For claims lodged on or after 18 November 2004 that have resolved as at 30 April 2008. Data obtained
from the VWA, 30 April 2008.
164 Source: VWA.
165 Source: VWA.
166 The limitation period for commencing actions for damages for workplace injuries is six years from the
date when the cause of action arises: Limitation of Actions Act 1958, s 5(1), as preserved by s 40(a).
167 As provided, for example, by the Limitation of Actions Act 1958, s 27K.
168 SIAV, Submission, May 2008, p 22.
7.248. Imposing a limitation period for the lodging of maims and impairment benefit claims might be
justified. However, provisions identifying circumstances in which a worker could lodge a claim
after the prescribed limitation period would also be required. Such a provision would be
required for workers who suffer a delayed onset injury (such as an industrial disease), and who
may not become aware of the injury for an extended period of time. It would also be necessary
to take account of the requirement that an injury must stabilise before the injury is assessed
and the worker’s entitlement to any lump sum benefit is determined.
169
7.249. Although the average time between the date of injury and lodging an impairment benefit claim
is 900 days, some injuries may take longer to stabilise. For that reason, any limitation period
would need to allow for the situation where a worker’s injury does not stabilise.
7.250. For example, claims that have been lodged recently under the maims benefit system (that is,
claims that relate to injuries occurring before 12 November 1997) generally relate to those
injuries which may take time to manifest or stabilise such as musculoskeletal gradual process
back injuries, neck injuries or hearing loss injuries.
7.251. The Queensland WorkCover scheme requires claims for compensation, including claims for
permanent injury, to be lodged within six months after the entitlement to compensation
arises.
170
7.252. Under the Queensland legislation, an insurer must waive the requirement for lodgement of
a claim within six months if the insurer is satisfied that special circumstances of a medical
nature, decided by a medical assessment tribunal, exist;
171
and the insurer may waive that
requirement if the insurer is satisfied that a claimant’s failure to lodge the application was
due to –
• mistake; or
• the claimant’s absence from the state; or
• a reasonable cause.
172
7.253. Presumably, if a limitation period was introduced for permanent impairment claims, there would
be exceptions similar to those in the Queensland legislation, to allow for cases where a claim
could not be made within the limitation period.
7.254. If a limitation period for lodging claims was introduced, the necessary exceptions would permi