Background

Western Australia’s workers’ compensation scheme commenced operation in 1981. The Workers’ Compensation and Injury Management Act 1981 (Act) which established the scheme has been amended on a piecemeal basis many times since its introduction resulting in a complex and highly prescriptive statute which is difficult to understand and apply.

Efforts to address these concerns began in 2009 when the government approved a two stage review of the Act and has been partially achieved with amendments made in 2011.

The focus of the second stage of the review is to address inconsistencies, improve the language and structure of the Act and the administration and decision making processes. The review will not involve a broad ranging examination of benefits and entitlements, or other fundamental aspects of the design of the scheme, which have in the main, been operating well. What has been needed for some time is a more ‘flexible, responsive and modern’ workers’ compensation and injury management regime.

Discussion Paper

To assist with this ‘major undertaking’, WorkCover WA has now published a discussion paper that is designed as a basis for consultation with stakeholders. The discussion paper contains a summary of the current provisions and WorkCover WA’s internal review and position on what is working well and not so well and the options for change.

Some of the proposed changes

Although the fundamental principles and entitlements are not being reviewed, almost all other aspects of the regime are open to scrutiny. If you have workers who use personal hearing protection or may have worked with asbestos or the business is going through a restructure and you have injured workers receiving compensation, keep reading to see some of the changes that are proposed that may affect you. The way claims are resolved and formalised is also set to change so a close look at the proposals around settlements and contractual insurance terms and indemnities is a must for principals, contractors and insurers.

One of the more significant proposed changes is the introduction of a clearer definition of ‘worker’ based on a ‘results test’ which the paper says is a more contemporary and familiar test for distinguishing between workers and independent contractors. Under the ‘results test’, a person who performs work under a contract or agreement is considered to be a ‘worker’ unless that person:

  1. is paid to achieve a specific result or outcome;
  2. has to supply the plant or equipment or tools of trade needed to perform the work; and
  3. is, or would be, liable for the cost of rectifying any defect in the work performed.

The ‘results test’ has been adopted in recent years by the Australian Capital Territory and Northern Territory.

Various changes are also proposed to the framework for noise induced hearing loss (NIHL). Presently, employers are required to arrange and pay for audiometric testing for employees working in a ‘prescribed workplace’, which exists where workers receive, or are likely to receive, a personal noise dose of 90 decibels or above during an eight hour day, or 140 decibels on one or more occasion. It is proposed, under the new framework, to align employers’ testing obligations with criteria that do not involve a formal assessment of noise exposure levels in the workplace by requiring employers to arrange and pay for testing where workers are required to wear personal hearing protection equipment. This is consistent with the approach under consideration in Western Australia for nationally consistent workplace safety and health legislation.

Important also is the proposal to maintain the current requirement for a worker to recover compensation for NIHL from the employer who last employed the worker in a relevant environment but to limit that last employer’s ability to seek a contribution to other relevant employers who employed the worker in the 5 year period prior to the date of the claim acceptance or determination.

In relation to asbestos related diseases, changes are proposed to clarify and streamline the relevant process for claiming weekly payments and the eligibility for an asbestos diseases lump sum payment. The receipt of a lump sum payment will finalise statutory payments but not constrain the right to pursue and receive common law damages.

Reliance on the process for settlement of claims under s92(f) of the Act is likely to be greatly restricted if the proposal to confine that option to ‘genuine common law claims where a worker’s whole person impairment has been recorded and common law election has been made’ is introduced. The basis for this proposal is the proposed introduction of simplified settlement pathways including a primary pathway that is intended to cover the majority of settlements, including many of those that are presently dealt with under s92(f). Settlements under the primary pathway will be subject to approval by the Director of WorkCover WA.

A source of confusion for a long time, section 84AA, is proposed to be replaced with two new provisions although the general intent of s84AA is intended to be retained. The new provisions will 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 reach of contractual indemnities is also proposed to be restricted Although it is not proposed to prohibit the current practice of principals seeking an indemnity from a contractor for the principal’s liability to pay damages to a contractor’s worker under s175(2) of the Act, new provisions are proposed to void any term of a contract which requires an employer to indemnify a third party in respect of the third party’s liability to pay personal injury damages and to prohibit a third party from requiring an employer to obtain an insurance policy extending cover to a third party for its liability to pay personal injury damages. These proposals are specifically designed to address the undesired risks and consequences that follow from ‘sideways’ indemnity arrangements that have been demanded by principal contractors in large scale projects. These proposed restrictions will sit alongside the existing prohibition against a principal seeking a contractual indemnity against the statutory indemnity provided by s93 established in Delron Cleaning Pty Ltd v Public Transport Authority [2008] WASCA 68.

The matters we have focused on are just a snapshot of the wide range of proposed changes to the Act. This is a golden opportunity for businesses to have their say on reshaping the workers’ compensation regime. Submissions can be made until 7 February 2014 consideration of all the issues and proposals contained in the discussion paper should be a priority in January not only for all employers and insurers but also principal contractors and employment law professionals.

How to make a submission:

  1. Submissions can be made by any person or organisation and there is no set format or template for responses. Submissions may follow the chapter structure of the discussion paper, or address particular issues and/or recommendations.
  2. Submissions may be presented (Word or PDF formats) in hard copy although electronic submissions are preferred and must include a contact name and address.
  3. All submissions will remain confidential.
  4. Submissions can be made via post or in person to:

Kevin Gillingham
WorkCover WA
2 Bedbrook Place
Shenton Park WA 6008
or via email at:review@workcover.wa.gov.au