Australia: Sweeping changes to the Safety, Rehabilitation & Compensation Act recommended following the review

Insurance Update (Australia)
Last Updated: 7 April 2013
Article by Norman Abrams and Brendan O'Brien

The Federal Workplace Relations Minister has released a report on the Review of the Safety, Rehabilitation & Compensation Act 1988 (SRC Act) in which sweeping and significant changes have been recommended to the Act.

The report on the Review, undertaken by Peter Hanks QC, was submitted to the Minister in February 2013 followed a 'detailed examination of the operation of the SRC Act and the Comcare Scheme.'

In making his recommendations, Mr Hanks identified the following 'principles and priorities:'

  • Rehabilitation should be 'the number one priority.'
  • Improvement in the assessment of permanent impairment will provide national consistency and ensure employees' entitlement to compensation based on their whole person impairment.
  • Modernisation of arrangements for payment of incapacity benefits will provide consistently fairer remuneration.
  • Dispute resolution processes should be flexible and focus on the issues and outcomes rather than the process and ensure equity for all injured employees.

Mr Hanks's comprehensive recommendations range from changes to the design and structure of the SRC Act and scheme governance arrangements, changes to reflect the priority of rehabilitation under the Act and to changes that affect an injured employee's eligibility for and entitlement to compensation under the Act. Some of the more significant recommendations made include:

  • Amendment to the definition of 'employee' to introduce a deeming provision in relation to contractors.
  • Amendments to the definition of 'injury:'
    • To overcome the effect of Wiegand v Comcare [2002] FCA 1464; (2002) 72 ALD 297 so that a psychological injury based on a perception of a state of affairs will only be connected to employment if the perception has a reasonable basis.
    • To ensure that more than a temporal work connection is required in relation to heart attacks, strokes, aneurisms and similar phenomena suffered at work, and instead require that there be significant contribution by employment before liability is accepted to pay compensation under the Act.
    • To ensure that the exclusionary provision relating to reasonable administrative action only operates if the action was a significant contributing factor and to also limit actions taken to be reasonable administrative actions to those listed in the definition.
  • Amendments to the rehabilitation provisions to provide for early intervention as the primary form of rehabilitation, to focus on occupational or vocational rehabilitation, and for development of injury management plans and structured claims reviews for injured employees.
  • Acceptance of provisional liability to pay compensation for incapacity for work up to a maximum of 12 weeks and for medical costs up to $3,000.
  • Changes to the provisions relating to compensation for incapacity, including the calculation of 'average remuneration' (replacing 'normal weekly earnings') to fairly and reasonably represent an injured employee's pre-injury remuneration, particularly having regard to the broad range of industries in which employees covered by the Comcare scheme work and the alternative terms and conditions of employment and complicated systems of remuneration.
  • Changes to the step-down arrangements for payment of compensation for incapacity.
  • Consideration to amendment to the Superannuation Guarantee (Administration) Act 1992 the aim of which would be to ensure payment by a determining authority of an injured employee's superannuation contributions during periods of incapacity.
  • Amendment to the SRC Act to allow voluntary redemption of compensation for incapacity, medical treatment costs and household and attendant care services.
  • Inclusion of a definition of 'severe injury' to regulate payment of compensation for household and attendant care services.
  • Adoption of the proposed national permanent impairment assessment guide as the approved guide.
  • Amendment of provisions relating to compensation for permanent impairment to overcome the unfairness arising from the decision in Canute v Comcare [2006] HCA 47; (2006) 226 CLR 535 so as to ensure compensation for impairments from injuries arising from a single work incident.
  • Amendment to give Comcare and licensees a statutory right of recovery of compensation payments from liable third parties.
  • Requirement that licensees follow the model litigant requirements in the Legal Services Directions 2005.
  • Amendment to permit the Administrative Appeals Tribunal, with the consent of the parties, to hear matters not the subject of a reviewable decision.
  • Consideration to defining a jurisdiction for the Fair Work Commission to review reviewable decisions under the SRC Act that involve workplace issues, with priority given to defining a jurisdiction to review decisions relating to rehabilitation.
  • Lifting the moratorium on employers entering the Comcare scheme in place since December 2007 and removal of the 'competition test' to allow 'national employers' to enter the scheme.

Feedback on the recommendations can be given until 3 May 2013.

Click here for more information about the report.

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