The report was tabled in Parliament on 26 June 2014 by the Honourable Michael Mischin MLC, Attorney General and Minister for Commerce. The State Government will respond following a short period of consultation with stakeholders. Feedback on the Final Report can be provided until 31 July 2014 to corporatecommunications@workcover.wa.gov.au.

Earlier this year, we discussed the proposed amendments to and the discussion paper released by WorkCover WA seeking stakeholders’ views on the proposed amendments.  The consultation period expired on 7 February 2014 and since then WorkCover WA has compiled the results and released the “Review of the Workers’ Compensation and Injury Management Act 1981: Final Report” which was drafted after extensive consultation with industry stakeholders and legislative review.

Proposed changes

A summary of the key proposed changes to the Act are as follows.

New definition of worker:

The definition of “worker” needs to be amended - a clear definition of “worker” is a fundamental threshold requirement for claimants seeking access to entitlements and for employers ensuring they have the appropriate level of insurance.

The new definition should be based on the interpretation of “employee” for the purpose of assessment for the Pay As You Go (PAYG) withholding under the Commonwealth Taxation Administration Act 1953 as it is well established and understood by industry participants and provides a high level of certainty to employers and workers about coverage under the scheme. The majority of workers who work under a contract of service will not be affected by the change in the definition of “worker”. The main impact will be on contractors under a contract for service who provide personal manual labour or services to someone else but may operate in partnership, have the ability to sub-contract, employ other labour or work for a fixed price up front.  

Claims processes:

The claims process be streamlined with common requirements imposed regardless of whether a claim is made for medical expenses and/or weekly payments or is made against an insurer, self-insurer or uninsured employer.

Calculation of weekly payments:

There are currently two different systems for calculating weekly payments for workers with award and non-award based workers being treated differently. The complexity and subjectivity of calculating earnings for award workers has been consistently raised as an area of concern, particularly in relation to the treatment of over award and service payments payable after week 13.

The report recommends the new statute treat all workers on the same basis with earnings calculated by reference to pre-injury earnings and common step down provisions to 85% of pre-injury earnings after week 13. To minimise the impact on certain award workers who would be disadvantaged by the step down provision, a minimum protection should apply so that after week 13, award workers receive the greater of:

  • 85% of pre-injury earnings; and
  • The base award rate of pay under the relevant award, exclusive of over award payments such as service payments, allowances and overtime.

Noise induced hearing loss:

As noted in our earlier post, there are various changes proposed to the framework for noise induced hearing loss (NIHL).

Standards should continue to be required for audiometric testing processes although changes should be made to the level of technical oversight by WorkCover WA. A subsequent audiometric test indicating 10% or more hearing loss should be deemed prima facie evidence of the worker sustaining NIHL with NIHL liability will be apportioned between employers that have contributed to the NIHL proportionate to the period of employment over a ten year period.

Asbestos related diseases:

The provisions relating to asbestos disease claims will be located in the compensation part of the Act and a number of changes are proposed to clarify the status of the asbestos diseases lump sum entitlement.

The new statute should consolidate and simplify the claim procedure and determinations required for asbestos diseases for statutory and common law purposes.   

The Final Report also recommends that asbestos liabilities of mining employers be integrated into conventional insurance policies and the special insurance arrangement with the Insurance Commission of Western Australia being discontinued.

Settlement pathways:

There are currently two settlement pathways under the Act – a statutory settlement pathway and a common law settlement pathway. The common law pathway is used more often.

The common law settlement pathway should be restricted to genuine common law claims where a worker has an assessed level of whole person impairment of at least 15% and has registered an election to pursue damages.

The statutory settlement pathway should be available:

  • If a period of 6 months has elapsed after the claim was first accepted or determined; or
  • If a period of 6 months has not elapsed or the claim has not been accepted or determined, if the settlement meets “special circumstances” criteria prescribed in regulations.

The special circumstances criteria for statutory settlements should include complex cases identified through the stakeholder consultation process, including psychological injury claims and disputed claims which have been conciliated.

Dismissal of injured worker:

The report maintains the earlier proposal to amend the Act to make it clear that the obligation to provide a worker with his or her pre-injury position or suitable alternate duties if they regain capacity within 12 months after the first day they became totally or partially incapacitated will not apply if the worker has been lawfully dismissed or it is unreasonable or impracticable for the employer to comply with the requirement.  The report notes that the recommended dismissal provision is not intended to replace or modify existing industrial relations legislation.

Contractual indemnities:

There should be a prohibition on workers’ compensation policies or endorsements covering contractual indemnities in respect of an insured employer’s undertaking to indemnify a third party for the third party’s liability to pay damages. This prohibition should not affect insurance arrangements between a principal and contractor where the principal extends its statutory indemnity provided under the Act to cover common law damages.

Common Law – Discontinuation of the termination day:

The termination day applicable to common law damages be discontinued. The existing procedural requirement to elect on the basis of a 15% whole person impairment should continue to ensure the common law pathway is reserved for the more significant injuries.

Adoption of the changes

The recommendations represent the findings of WorkCover WA’s review after its public consultation and are not expressed as the views of the State Government. Any new legislation will need to take into account these recommendations. Any further stakeholder comments are invited before 31 July 2014 and should be submitted to corporatecommunications@workcover.wa.gov.au.