THE AUSTRALIAN INDUSTRY GROUP
SUBMISSION
Response to:
Australian Government
Department of Education, Employment and
Workplace Relations
Review of the Safety, Rehabilitation and
Compensation Act
Issues Paper
October 2012
This submission is made on behalf of The Australian Industry Group (Ai Group) in response to
the Review of Safety, Rehabilitation and Compensation Act 1988 issued by the Government of
Australia, Department of Education, Employment and Workplace Relations in 2012.
The Australian Industry Group (Ai Group) is a peak industry association in Australia which along
with its affiliates represents the interests of more than 60,000 businesses in an expanding range
of sectors including: manufacturing; engineering; construction; automotive; food; transport;
information technology; telecommunications; call centres; labour hire; printing; defence; mining
equipment and supplies; airlines; and other industries. The businesses which we represent
employ more than 1 million employees.
It is an organisation committed to helping Australian industry with a focus on building
competitive and sustainable industries through global integration, skills development,
productive and flexible workplace relations, infrastructure development and innovation.
The organisation provides practical information, advice and assistance to help members run
their businesses more effectively. It ensures through policy leadership that members have a
voice at all levels of government, by representing and promoting their interests on current and
emerging issues.
Ai Group members operate small, medium and large businesses across a range of industries.
We are represented in ongoing tripartite consultative forums, and other consultative processes,
with governments, occupational health and safety and workers compensation regulators. We
have been actively involved in reviews of workers compensation schemes across Australia.
Ai Group is a member of Safe Work Australia, with representation on the Strategic Issues Group
– Workers’ Compensation.
Ai Group’s information, advisory, consulting, legal and training services brings our staff into
contact with a broad range of businesses across Australia who share with us the opportunities
and challenges that arise when running a business in the current regulatory environment. Every
day our specialist Safety and Compensation staff interact with employers who need advice or
assistance to meet their current workers compensation obligations. This practical exposure to
workers compensation issues within businesses, combined with the expert knowledge of our
experienced advisers, informs our considerations and ensures that the legal, technical and day
to day practical implication of those laws in the workplace are all taken into account.
Many of the issues being raised in this paper are relevant to all users of workers compensation
schemes, not just those within Comcare. Ai Group’s interest in the Comcare scheme stems from
a broader focus on equitable and effective workers compensation schemes, and a recognition
that any changes to one scheme may become the model for changes in other schemes.
Ai Group also has members and clients who operate as self-insurers within the Comcare scheme
and others who would like to do so in the future. It is our understanding that the Comcare
licencees association (the SRCLA) will be making a detailed submission on behalf of their
members.
This submission is made on behalf of Ai Group
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III
Rewriting the SRC Act?
A
Should the SRC Act be amended?
A number of issues are identified in this section of the Issues paper, which we have
answered below.
It is Ai Group’s view that the application, implementation and administration of any Act
which addresses workers’ compensation and rehabilitation must focus on the capacity
of an injured worker to return to work.
Legislation cannot, in itself, create a positive approach to rehabilitation and return to
work; that is achieved through the supporting guidance material that is available to
employers, employees and other relevant parties.
However, as a legislative tool that outlines the entitlements of injured employees and
the obligations of employers and employees, it is appropriate to ensure that the
terminology used in the legislation can be adequately translated into a positive return
to work focus.
It is suggested in the Issues Paper that the Act be updated to reflect the “Seven
‘Principles’ for Successful Return to Work” (2007). It is Ai Group’s view that legislation
should create basic obligations on employers and employees. Best practice approaches
should be outlined in guidance material to support implementation. This will allow
more rapid adoption of new ideas than could be achieved if these principles were
enshrined in legislation. This point is particularly illustrated by the fact that research is
currently being undertaken by ISCRR (the Institute for Safety, Compensation and
Recovery Research) with the view to update the Seven Principles.
Ai Group does not support the introduction of a dedicated return to work inspectorate,
as it duplicates the role of Comcare as either the “insuring” body or the licensing
authority in the case of self-insurers. Within the paper it is identified that the major
concern with return to work relates to government agencies and authorities; if this is
the case, any inspectorate should be focusing on these organisations. Self-insurance
audits should be sufficient to identify any issues within a self-insurer.
The Issues Paper identifies that there would be benefit in a degree of consistency
between the SRC Act and the WHS Act. It is Ai Group’s view that the two pieces of
legislation, whilst dealing with opposite ends of the same issue, exist for different
purposes. The Acts should not contradict each other, but we cannot identify any areas
where consistency would be of benefit.
This submission is made on behalf of Ai Group
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It is also identified in the paper that the definition of “reasonable” varies between the
SRC Act, the Fair Work Act and the Social Security Act. Ai Group is particularly
concerned about any variations of “reasonable” employer action between the Fair Work
Act and the SRC Act. As an organisation that advises employers on both issues, it is
particularly difficult when employers apply a “fair” process which withstands the
scrutiny of relevant bodies under the Fair Work Act, only to fall foul of workers
compensation legislation.
As a minimum, it should be clear that, if an employer handles an issue appropriately
under the Fair Work Act, the exclusion related to mental injury should be applicable.
See our further comments on this issue later in our submission.
B
What principles should guide any amendments to the SRC Act?
What key principles do you suggest should guide the design and drafting of
amendments to the SRC Act? What do you suggest the objects and purposes of the
SRC Act should be?
Ai Group supports a focus on rehabilitation and return to work, for the principles,
objects and purposes of the Act. The Act also needs to have within its principles, objects
and purposes a reference to “fair and equitable” compensation and a financially stable
operating environment.
It is appropriate to acknowledge the importance of prevention. However much of the
workers’ compensation legislation across Australia that includes prevention as part of its
objectives was created prior to the very comprehensive legislation that is now in place
for Work Health and Safety. Hence, prevention should not be a significant focus.
It is particularly inappropriate to highlight prevention of mental stress claims, as
proposed in paragraph 55.3 of the Issues Paper.
This submission is made on behalf of Ai Group
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IV
Specific issues for consideration based on 24 years’ experience with the SRC Act
A
Eligibility issues
1
Definition of “employee”
Are there particular categories of employees, currently not covered under the Comcare
scheme, who should be covered?
Ai Group is not aware of any such categories of employees.
Would the definition of “worker” in s7 of the Work Health and Safety Act 2011 be an
appropriate definition of “employee” under the SRC Act?
It is Ai Group’s strong view that it would not be appropriate to use the definition of
worker in s7 of the Work Health and Safety (WHS) Act 2011 for the purposes of the SRC
Act.
The WHS Act recognises that the health and safety of a worker can often be influenced
by a number of duty holders, and that each of those duty holders have a responsibility
to eliminate or minimise risk, so far as is reasonably practicable. If there is a breach of
the law, each of those duty holders can be required to rectify the breach, and may also
be the subject of a prosecution which would in each case consider their culpability
based on the level of control each of them had over the circumstances.
Workers compensation has always been, and must continue to be, linked to an
employment relationship, whether through direct employment, or through the
application of provisions which allow for persons to be declared to be employees
(deeming provisions).
Our position is best illustrated in the following example:
An organisation is covered by the Comcare jurisdiction and engages a bona fide
contractor (covered by state legislation) whose three workers carry out repairs
on the roof of a building over the course of one week. Under current laws the
workers of the contractor would be covered by the state legislation, and the
state-based employer would be responsible for premium, claims management
and rehabilitation.
If the WHS definition was applied, some hybrid arrangement would be created in
which the workers would be covered by both schemes and both employers
would have responsibility for premiums, claims management and rehabilitation.
This submission is made on behalf of Ai Group
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Over the course of a twelve month period, this could result in these three
workers having workers compensation arrangements with a very large number
of employers. Clearly, this would be an unworkable situation.
2
Coverage of injuries suffered during home to work travel
Should home-to-work travel be covered under the Comcare scheme? Why?
Generally, travel between home and work should not be covered by workers
compensation schemes. The Comcare scheme is funded by employers to compensate
for work-related injuries. Travelling to and from work is not connected to work, and
therefore should not be compensated.
Should travel undertaken as a result of being “on-call” be covered under the Comcare
Scheme? Why?
It is Ai Group’s view that travel associated with being “on-call” is different to normal
processes of travelling between work and home. “On-call” arrangements are usually
put in place to deal with out-of-hours emergencies/response; they are in addition to
normal work hours and involve responding to a situation at short notice. For this
reason, it would be appropriate to cover these journeys; however, it would be essential
that “on-call” was appropriately defined to ensure that it only applied in the
circumstances described above.
3
Appropriate coverage for heart attacks, strokes and similar injuries
Should an employment contribution test apply to heart attacks, strokes and similar
events in order for workers compensation to apply? If so, what should that test be?
Or should there be automatic coverage when events of that kind occur at the work
place?
Workers compensation schemes are designed to compensate a person for injuries that
occur out of or in the course of employment. For compensation to be appropriate there
must be a significant connection between work and the occurrence of an injury or
illness. In the case of heart attacks, strokes and similar injuries, there is often an
underlying condition which will result in the specific event occurring.
This submission is made on behalf of Ai Group
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It is not appropriate for the employer to bear the cost of the claim and responsibilities
for rehabilitation simply because the heart attack, stroke or similar occurred at work.
Similarly, it is not appropriate for a worker to be denied access to compensation for a
heart attack or stroke where work was the significant contributing factor, but the
incident occurred outside work.
It is Ai Group’s view that the provisions of the Victorian Accident Compensation Act
(section 82 (2B) and (2C)) provide a good model for appropriate provisions.
4
The definition of “reasonable administrative action”
Has the Reeve decision created an outcome inconsistent with the intent of “reasonable
administrative action” provision in the Act? If so, what could be done to return the
provision to its original intent? Are there examples of concepts similar to “reasonable
administrative action” outside the Comcare scheme that could inform the definition in
the SRC Act?
Ai Group is very concerned about the implications of the Reeve decision, and other
possible flow on effects. Similar provisions in state-based legislation have also caused
difficulties in their application from time to time.
A major reason for these difficulties is that such an exclusion does not fit comfortably
within a no fault insurance scheme. However, in spite of this, the exclusion must be
present and it must be effective.
It is crucial that a worker is not able to claim compensation for a mental injury when an
employer is taking “reasonable action in a reasonable manner”. As indicated earlier in
this submission, as a minimum, exclusions should apply where the employer has taken
action that is appropriate under the Fair Work Act.
Employers must be able to make the necessary decisions to manage the business
effectively, respond to poor performance and investigate concerns/complaints about an
employee’s behavior (including complaints about harassment or bullying). If the action
of the employer relates to complaints about harassment or bullying, they not only have
the right to manage the issue, they have a legal obligation to manage the issue. They
must be able to do so in an appropriate manner, without the result of a successful
workers compensation claim.
Any worker who is being told that they are not performing, there are going to be
redundancies, or they are the subject of a complaint, will be experiencing a level of
stress. However, they should not be compensated for it, provided the employer has
taken reasonable action in a reasonable manner.
This submission is made on behalf of Ai Group
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The Victorian Accident Compensation Act 1985 was amended in 2010 to broaden the
exclusionary provisions for such injuries, which are located in s.82(2A) of that Act.
These changes included the introduction of a non-limiting section at 82(10) which
outlines a range of management actions (rather than administrative actions) that would
be included in the exclusion; this list covers more circumstances than are currently in
the SRC Act.
It appears that this may go part way to dealing with the current concerns, however, as
this is a relatively new provision it may be too early to measure its effectiveness in
achieving the appropriate outcome.
It is hoped that this review identifies an appropriate set of words which can achieve the
necessary balance between compensating people who suffer a workplace injury, and
maintaining the employers rights and obligations to take appropriate management
action and make appropriate management decisions.
B
Incapacity payments
1
Normal weekly earnings for the purpose of calculating incapacity payments.
Does the current formula for calculating NWE fairly represent lost earnings? If not,
what changes should be made to the existing formula? What formula would you
suggest (which may or may not be based on a “week”)?
It is extremely difficult to calculate NWE in circumstances where the working
arrangements are “non-traditional”, and it is something that employers would like to
see resolved.
However, it is an issue that has been canvassed in many previous reviews, including the
Hanks review of the Victorian Accident Compensation Act in 2008-2009.
There does not appear to be any simple system to address anomalies that might occur
from time to time. We do not support a move from “weekly” calculations as the count
of weeks is a crucial part of the compensation model.
It has been our experience that anomalies associated with non-traditional work
arrangements can create payments that are either more or less than what would seem
to be fair; and this is likely to be determined by the point in the employment period
cycle at which an injury occurs. In most cases the anomalies only impact on short term
absences, as longer absences take into account an “average” employment arrangement.
This submission is made on behalf of Ai Group
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Given that the impact is on short term absences, it may be appropriate to apply a
balancing test which ensures that over the particular period in which the pay cycle
occurs, a person does not receive either more or less than they would have received if
working. Whilst this may address the issue of fairness, it is likely to be a significant
administrative burden which could result in a worker having to reimburse an
overpayment at a later stage.
2
Calculating incapacity benefits after the first 45 weeks of incapacity according
to hours worked
Should “normal weekly hours” be referable to the hours worked pre-injury or in postinjury employment? Does the existing formula for adjusting normal weekly earnings
post 45 weeks produce unfair and inappropriate outcomes? If so, what changes
should be made to the existing formula?
It is Ai Group’s view that weekly compensation payments must be structured in such a
way that injured workers are encouraged to return to work. They must also encourage
workers to maximise their return to work; both the number of hours worked and the
duties undertaken. This is for the benefit of the injured worker, as much as it is for the
employer.
One approach to apply an “adjustment” is to do so according the earnings in the
employment, rather than being based on the hours of work. Section 93B(3) of the
Victorian Accident Compensation Act 1985 provides a model for this approach, in which
compensation is reduced by 80% of the earnings.
An alternative approach has recently been included in the section 37(2) of the NSW
Worker Compensation Act 1987 which increases the compensation rate from 80% to
95% (less earnings) if the person is working more than 15 hours per week.
It should be noted that both of these approaches only apply after the worker has
received 13 weeks compensation.
This submission is made on behalf of Ai Group
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3
Earnings from additional employment for full time injured employees and
actual earnings
Should full time employees have all earning they receive from additional employment
taken into account when calculating their NWE and NWH? Should there be
consistency in the earnings taken into account when calculating NWE and “actual
earnings”?
The crucial issue appears to be the inconsistent application of the calculations for NWE
and actual earnings. As full-time employees do not have their income from additional
employment included in the NWE it is not appropriate to deduct earnings from
additional employment to determine the compensation that is payable.
It may be possible to address this by stating that “only those earnings included in NWE
can be considered in relation to actual earnings for the purpose of calculating weekly
compensation payments”.
It is important to recognise that this approach would create a risk that an injured fulltime employee would be more motivated to return to their second job (which gives
them additional income) than they would be to return to their employment within the
Comcare scheme (the income of which would be used to reduce their compensation).
Other measures would need to be introduced to address this.
4
“Deeming ability to earn”
Should there be greater clarity in relation to calculating “ability to earn” for injured
employees? If so, what should be included in the calculation?
The provisions in section 19(4) of the Act are comprehensive and appear to encompass
the full range of circumstances in which the “ability to earn” may need to be considered.
Each situation will be different and, for this reason, it is difficult to establish a consistent
approach to determining “ability to earn”.
Ai Group does not believe there is any need to modify the provisions in the Act, but it
may be necessary to provide additional guidance and/or utilise a peer review process
before finalising decisions.
This submission is made on behalf of Ai Group
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5
Injured employees who receive incapacity and superannuation benefits
Should the superannuation-offset provisions be modernised and simplified? If so,
how? Should the entitlement to weekly benefits for an employee who is also in receipt
of superannuation benefits be altered in any way? Should the 5% deduction remain?
Ai Group does not have a view on this question.
6
Redeeming weekly incapacity compensation through lump sum payments
Should the weekly amount in s30 be increased? Should there be a limit? Should the
Comcare scheme provide for the redemption of medical or rehabilitation costs?
Should redemption be compulsory or at the election of (a) the employee or (b)
Comcare (or the licensee)? Should there be any conditions attached?
It is Ai Group’s view that redemptions under the Comcare scheme are too limited and
that there should be greater flexibility for the employee and Comcare licensees to
initiate and/or accept redemptions, subject to the employee receiving appropriate
financial and legal advice.
7
Appropriate coverage arrangements when the pension age is increased to 67
Should the weekly benefit cut-off age be increased to 67? If so, should that increase
mirror the changes in the age pension age?
The weekly benefit cut-off age should be increased to 67 at the same pace that access
to the age pension is introduced. Rather than attempting to tie this to particular claim
dates, this would be best achieved by applying the date of birth tests that will be applied
to pension eligibility.
Provisions which allow for a worker injured after retirement age to have time-limited
access to weekly benefits should also be retained.
Note: In paragraph 114 of the Issues paper, the current situation in New South Wales has been misrepresented.
Section 52(2)(b) provides for 12 months compensation if a worker is injured after retirement age; section 52(2)(a)
states that entitlements to weekly compensation for a worker injured before retirement age, cease at retirement age.
It is Ai Group’s view that the anomaly created by the recent amendments, by the interaction of these two sections
was an unintended consequence and subsequent legislative change will result in both provisions allowing for weekly
compensation to be paid for twelve months
This submission is made on behalf of Ai Group
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C
Rehabilitation issues
Should the SRC Act be amended to include access to early intervention? Should early
intervention be contingent on the acceptance of liability?
It is Ai Group’s view that early intervention can be facilitated without the need to
amend the Act.
The Issues paper identifies that government agencies and authorities that pay a
premium to Comcare are not initiating early intervention because there is little incentive
to do so. This is not a reason to increase the legislative burden for large employers who
are self-insured under Comcare.
These issues should be addressed through other forms of interaction with government
agencies and authorities, which may include a greater premium incentive to return
injured employees to work more effectively.
If changes are made to the Act to increase obligations for early intervention, they can
only be contingent on acceptance of liability. An employer cannot be obliged to meet
obligations of the Safety, Compensation and Rehabilitation Act if a claim is being
disputed.
1
Obligations on employers and employees to participate in rehabilitation
Should the regulatory tools of the SRC Act relating to rehabilitation obligations be
strengthened? What should those legislated obligations be? Where claims are
managed by Comcare, should Comcare be able to initiate rehabilitation for injured
employees who have separated from their employers?
Ai Group does not believe there is any need to strengthen the obligation on employers
to provide duties; these are clearly articulated in section 40 of the Act. However, there
does not appear to be any “mutuality”, i.e. there are no specific requirements in the Act
for the injured employee to cooperate with rehabilitation and comply with return to
work efforts. It is acknowledged that benefits can be reduced in line with section 19(4)
of the Act, however, as indicated earlier in the Issues Paper, these provisions can be
difficult to apply.
Ai Group would recommend the inclusion of specific obligations on injured employees;
models for this approach appear in most state-based legislation. In those states,
information for injured workers is generally very clear about these obligations and the
risk that benefits will be terminated if the worker does not meet their obligations.
This submission is made on behalf of Ai Group
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2
Obligation on employers of injured workers to provide “suitable employment”
In cases where an injured employee is unable to return to the employer’s pre-injury
employment, but has a capacity to work, are the obligations on employers to provide,
and injured workers to accept, suitable employment sufficient? If not, how can those
obligations be strengthened? Should the definition of “suitable employment” be
amended to enable an injured employee to be provided with employment with a
different employer? Should a scheme-wide employment incentive scheme be
established?
We repeat our answer to the preceding question. The definition of “suitable
employment” should include work with a different employer. The injured worker
should be obligated to seek work with an alternative employer if appropriate; however,
the current employer cannot be held accountable for the provision of those duties.
3
Identifying rehabilitation authorities
Should the SRC Act be amended to identify clearly the rehabilitation authority for an
injured employee, in the case of employees who have separated from their employers?
Who should be the rehabilitation authority for employees who are no longer employed
by the liable employer?
This is clearly an issue that only applies to government agencies and authorities and is
not relevant to self-insured employers in the scheme.
For this reason our only comment is that public servants should be afforded the same
opportunities for rehabilitation and return to work as that which is expected in the
private sector.
This submission is made on behalf of Ai Group
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