The Federal Government is proposing to make it easier for businesses to opt out of State and Territory specific work health and safety (WHS) laws and to join the Federal WHS system.

The case for self-insurance

Each State and Territory has its own workers compensation and WHS laws to which employers have to adhere. This can create challenges and red-tape for multi-state employers who require multiple insurance schemes and knowledge of multiple WHS laws and standards.

Self-insurance as a Comcare licensee is a way for employers to rise above State and Territory-specific laws on WHS. Comcare licensees are subject to the Federal Work Health and Safety Act 2011 and regulated by a single regulator: Comcare.

Comcare licensees avoid the premiums imposed by government-run workers' compensation schemes, and the administrative costs of insurer-run schemes, by accepting liability themselves for any workers' compensation claims which arise within their workforce.

Current restrictions on Comcare licensees

The Federal Safety, Rehabilitation and Compensation Act 1988 established the Comcare scheme, which covers Federal (and Australian Capital Territory) Government employees in relation to workers' compensation and rehabilitation.

The current rules also allow employers to apply to the Minister of Employment for a declaration of eligibility for a self-insurance licence under the Comcare scheme - only Commonwealth authorities and businesses in competition with a Commonwealth authority may be eligible to be licensed for self-insurance.

There are currently 30 Comcare licensees including the Commonwealth Bank of Australia, DHL, John Holland, Linfox, the National Australia Bank, Optus and Telstra.

There has been an extended moratorium on self-insured applications, but this was lifted on 2 December 2013 after six years.

If declared eligible by the Minister, an employer can apply to the Safety, Rehabilitation and Compensation Commission (SRCC) for a licence to self-insure. Factors which are taken into account by the SRCC when deciding whether to grant a licence include:

  • whether the employer has sufficient resources to meet all workers' compensation liabilities in the short, medium and long term
  • the attitude of employees towards the proposal
  • the employer's WHS record
  • the employer's size and resources, and its capacity to ensure that claims are properly managed, and
  • the existence of proper policies which are regularly updated and reviewed.

Proposal to further open up the Comcare licensee scheme

On 19 March 2014,  the Federal Government announced a proposal to expand eligibility for employers to join the Comcare scheme. If passed, the Safety, Rehabilitation and Compensation Legislation Amendment Bill 2014 (Bill) would extend self-insurance to all 'national companies' - ie those who operate and are subject to WHS laws in two or more States or Territories. This test would be significantly easier to meet than the current 'competition' test, and extend the self-insurance option significantly.

In addition to the changed eligibility test, the Bill proposes a number of other amendments to the current process, including:

  • the removal of the need for a declaration of eligibility from the Minister for Employment. Under the new proposals, applications would be made directly to the SRCC to reduce red tape, and
  • the ability to grant group licences where appropriate for related group companies.

Current status 

The Safety, Rehabilitation and Compensation Legislation Amendment Bill 2014 was introduced into parliament on 19 March 2014 and referred to a Senate Education and Employment Legislation Committee which recommended passing the amendments in July 2014. The Labor party and the Greens are reportedly opposed to the Bill meaning that is unlikely to be passed without the support of the minority party cross-benchers in the Senate.

If the Bill becomes law, the ability to operate under a single integrated workers' compensation and WHS regime clearly has the potential to bring significant cost savings and administrative efficiencies to employers operating in multiple states and territories.