Due to changes introduced by the New South Wales (NSW) State
Government, the anticipated surge in workers compensation premiums
has been avoided. The Workers Compensation Legislation
Amendment Act 2012 (Act), which received assent on 27 June
2012, was designed to reduce WorkCover NSW's deficit, lower
insurance premiums for NSW employers and fix some inequities in the
system, in particular for seriously injured workers. The amendments
drastically change the face of the NSW Workers Compensation Scheme
and are likely to significantly impact key players within the
scheme, including employers, workers and insurers.
An independent investigation into WorkCover's ailing
financial position revealed a AU$4.1 billion deficit, which was
increasing at a reported AU$9 million a day. NSW employers'
premiums were 20% to 60% higher than competitive states (including
Queensland and Victoria). As a result of the reforms, the expected
28% rise in premiums will not be implemented.
How have the savings been achieved?
The key reforms include:
Schedule 9 of the Act permits the entry of "new
insurers" into the NSW Workers Compensation Scheme. While not
expressly stated, these "new insurers" could include
specialised insurers to underwrite specific industry classes, who
will take all of the risk in an industry (eg Coal Mines
Based on the Victorian model, the Act aims to reduce
significantly entitlements to weekly payments so that all but
"seriously injured workers" have a closed period of
entitlements to either two years or five years.
The Act seeks to increase benefits for "seriously injured
workers" who are totally unfit for work, up to the
Commonwealth retirement age.
Based on the South Australian model, the Act intends to
restrict journey claims to very limited circumstances where there
is a real and substantial connection between the employment and the
accident or incident.
The Act will limit payment of medical expenses to 12 months
after the date of claim for an injury, or 12 months after the
cessation of weekly payments (previously afforded a lifetime
The Act has also introduced a new process to assess a
worker's capacity (thereby entitlements to weekly benefits) by
way of Work Capacity Assessments.
Other important changes include:
Restricting a worker's ability to dispute an insurer's
decision to reduce weekly payments
Abandoning a worker's entitlement to compensation for pain
Restricting entitlements to lump sum compensation to one claim
only, thus abandoning deterioration claims
Abandoning common law claims in negligence for nervous shock to
Reducing a worker's right to claim for heart attack and
stroke injuries, unless work significantly increased the risk of
Relaxing the criteria to commute a claim.
It is important to recognise that the Act will not apply to
police officers, paramedics and firefighters.
KEY IMPACT ON EMPLOYERS/INSURERS
One would expect that, with the implementation of the reductions
in entitlements, workers compensation premiums will remain static
with only marginal increases. Employers will still need to comply
with the various requirements relating to procedural matters
– reports of injury, notices of claim and the like.
The new laws, while controversial and unpopular amongst some
groups, have gone a long way to align NSW with competitive states,
including South Australia, Queensland and Victoria, and help to
provide a scheme that is affordable, efficient and financially
This publication is intended as a general overview and
discussion of the subjects dealt with. It is not intended to be,
and should not used as, a substitute for taking legal advice in any
specific situation. DLA Piper Australia will accept no
responsibility for any actions taken or not taken on the basis of
DLA Piper Australia is part of DLA Piper, a global law firm,
operating through various separate and distinct legal entities. For
further information, please refer to www.dlapiper.com
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