Following last year’s decision in Byrne v People Resourcing (Qld) Pty Ltd[1] what has changed in personal injury claims practice involving employers? In short - where there exists an indemnity by an employer in favour of a non-employer, potentially a lot!

Often in matters involving employers and non-employers there are contractual arrangements between those entities affecting the distribution of risk and loss.

Prior to Byrne it was often not worth non-employers pressing an otherwise meritorious contractual claim for its full effect, if the employer standing behind the promise was impecunious or a $2 company.

The effect of the decision in Byrne, however, is that WorkCover must stand behind an employer’s contractual promise to a non-employer.

Specifically, WorkCover must insure the employer for 100% of its joint and several liability to pay damages to the plaintiff, not just its apportionment of the culpability, there being no ‘proportionate liability’ in personal injuries litigation at common law.

Furthermore, where there exists a contractual indemnity by an employer in favour of a non-employer, WorkCover cannot rely on section 6(c) of the Law Reform Act 1994 to seek to reduce its loss by claiming contribution from a non-employer.

The starting position is that where a claim is brought against an employer and a non-employer each will be (jointly and severally) liable for 100% of the damages subject to the operation of legislation governing those claims (namely, the Workers’ Compensation and Rehabilitation Act 2003 (WCRA) and the Personal Injuries Proceedings Act 2002 (PIPA)).

Then, where an employer has promised to wholly indemnify a non-employer for the latter’s negligence, the indemnity operates to require the employer to pay its own entire share of the award of damages, and all of the non-employer’s share too.

The employer’s statutory insurer, WorkCover, is required to ‘pick up’ the loss to the extent that the employer and non-employer are co-extensively (jointly and severally) liable.


  1. In order to receive the benefit of the employer’s contractual promise (and before Byrne can operate) the party seeking its relief must prove that there exists a valid and enforceable indemnity, in its favour.

    Without this, the liability of the employer and non-employer will be apportioned in the usual fashion, and each will retain responsibility for their own culpability at law.

In other words: Byrne does not assist if the contractual indemnity does not operate to require the employer to pick up the liability of the non-employer.

  1. If there is an effective contractual indemnity but the employer has no direct liability to the plaintiff, there is no co-extensive (solidary) liability at law for WorkCover to stand behind.

    WorkCover is not required to indemnify the employer for its obligations arising only by virtue of its contractual promises to other parties.

In other words: WorkCover’s obligation to insure the employer will not exceed the extent of the employer’s liability to the plaintiff.

  1. Byrne did not decide whether WorkCover was required to insure an award of damages over and above that for which an employer would be responsible pursuant to the WCRA.

    It seems unlikely (but remains arguable) that WorkCover is liable to indemnify an employer for additional liability assumed by operation of the contractual indemnity. That issue was not adjudicated in Byrne.

In other words: It is likely that WorkCover’s obligation to insure the employer is limited to those heads of damage payable in accordance with the WCRA – thus generally excluding gratuitous care, costs and a portion of general damages and interest.

  1. If the contractual indemnity operates the non-employer is entitled to seek to enforce it to its full extent against the employer.

    There may be a difference between what WorkCover will agree to insure and the value of the total damages and costs awarded in the plaintiff’s favour.

    That portion of the damages may be insured under another policy, or may be uninsured.

In other words: The portion of damages, costs, etc., that may not be insured by WorkCover might be insured by another policy, or might be uninsured. Early enquiries ought to be made about that.

In all, Byrne is a game changer where an employer is required to indemnify a non-employer, with WorkCover now required to stand behind employers’ promises to non-employers for the entirety of their solidary liability.