Safety, Rehabilitation and Compensation Act review released
On 30 March 2013, Mr Peter Hanks QC's report on his review of the Safety, Rehabilitation and Compensation Act 1988 (the SRC Act) was released. A copy of the report is available on the Department of Education, Employment and Workplace Relations' website.
The review proposes some positive amendments but also recommends amendments that, if they come into effect, are likely to significantly add to claims costs.
One of the recommendations is that the "moratorium and competition test should be lifted, allowing national employers to join the Comcare scheme". This would allow for a greater number of employers to be eligible for a license under the SRC Act and would simplify the application process for a licence.
It is also recommended that Comcare takes a much greater role in the process of rehabilitation and return to work of employees, including employees of licensees. This includes the proposal that Comcare has a "supervisory function and information-gathering and sanctioning powers in relation to the activities of employers with rehabilitation obligations, to ensure compliance with those obligations".
Recommended amendments to the SRC Act
The proposals for amendment to the SRC Act include the following recommendations.
Employee's perception of state of affairs
An employee's perception of a state of affairs will only provide a connection with employment where that perception has a reasonable basis (to negate the effect of the Federal Court decision in Wiegand v Comcare).
Underlying disease compensable similar to "disease"
Incidents that are a manifestation of an underlying disease (such as heart attacks, strokes, spinal disc ruptures caused by degenerative disease and similar phenomena) will be compensable on the same basis as a "disease"— that is, where the incident was contributed to, to a significant degree, by the employee's employment. It is estimated that this amendment, if implemented, would result in savings in claims costs to licensees of $3.7 million annually.
Reasonable administrative action exclusion in s 5A
Regarding the reasonable administrative action exclusion in s 5A of the SRC Act, it is proposed that:
- the exclusion will operate only where the reasonable administrative action taken in a reasonable manner in respect of the employee's employment has contributed, to a significant degree, to the disease, injury or aggravation, and
- section 5A(2) will be amended by removing the words "and without limiting that subsection", to make it clear that the list in s 5A(2) is a complete list of the actions that are taken to be "reasonable administrative action".
Journey claims for employees on call
Where an employee is "on call", their journey to work is to be compensable, but only when the journey is between home, or the place where the employee receives the message to attend work, and the place of work itself.
A system of provisional liability is proposed to be provided that allows an injured employee access to a maximum of 12 weeks of incapacity payments and medical costs of up to $3,000.
It is proposed that:
- Comcare will have power to commence or take over rehabilitation when the employer fails to meet its obligations or ceases to exist
- an "injury management plan" is to be developed for each injured employee who is either totally or partially incapacitated for 28 days or more
- an inspectorate will be developed within Comcare with a supervisory function and information-gathering and sanctioning powers to ensure compliance with rehabilitation obligations
- Comcare be given the power to issue improvement notices and to accept undertakings from employers about the contravention of employer rehabilitation obligations, including the duty to provide suitable employment, and
- section 37(5) be repealed so compensation payments while an employee is undertaking a rehabilitation will be paid pursuant to ss 19 or 31.
Regarding suitable employment, it is proposed that:
- the definition is amended to provide that employment with any employer can be considered "suitable employment", and
- where the employer's obligation to provide suitable duties under s 40 is not met, penalty units may apply.
It is proposed that:
- section 9 is repealed and replaced with a provision that fixes the relevant period at 13 weeks for calculating pre-injury earnings, with the flexibility to account for employment and remuneration arrangements where a 13 week period does not produce a fair outcome
- the concept of Normal Weekly Earnings (NWE) is renamed "average remuneration", being the average amount paid to the employee in each week of the relevant period. This is to allow for the many different remuneration arrangements that exist for employees now covered by the scheme and who presently do not fit neatly within the current NWE definition
- weekly compensation will be paid at 100% of an employee's NWE during the first 13 weeks of incapacity for work, at 90 % of the NWE during weeks 14 to 26 of incapacity for work and thereafter at 80 % of the NWE while the employee remains incapacitated for work
- sections 20, 21, 21A are repealed so that there are to be no superannuation offset provisions. It is estimated that, if implemented, this amendment would cost licensees $9.9 million annually in further claims costs, and
- amendments are made to ss 23(1) and (1A) so that the cut-off age is tied to the qualifying age for the age pension and employees injured in the five years prior to the age pension qualifying age can receive incapacity payments for 260 weeks. If implemented, this is likely to cost licensees approximately a further $3 million annually.
Weekly compensation when overseas
Entitlement to weekly compensation is proposed to be suspended during any period of more than 60 days when an employee is absent from Australia—subject to exceptions where the employee's employment or "suitable employment" requires them to leave Australia.
Redeeming compensation payments
An employee may redeem compensation payments on a voluntary basis and it is proposed that the threshold for the operation of s 30 be increased to $150 per week, indexed by reference to the CPI.
It is proposed that:
- the definition of "medical treatment' in s 4(1) is amended to provide that "medicines" are limited to those prescribed by a legally qualified medical practitioner or dentist and dispensed by a registered pharmacist, or provided to a patient at a hospital or resident in a nursing home, and
- in order to be compensable, medical treatment must meet objective standards, such as those in Clinical Framework Guidelines to be prepared by Comcare relating to the management of an injury.
It is recommended that s 29 be repealed and a new provision made for household services based on a tiered system to provide for compensation for three types of services.
It is proposed that:
- Comcare adopts the proposed National Guide as the Approved Guide
- separate impairments arising from a single injury occurrence are combined to achieve a combined impairment value. If implemented, this is estimated to cost licensees a further $900,000 annually
- following payment of permanent impairment compensation, the permanent impairment threshold for any worsening of the original or secondary condition (other than a hearing loss) be reduced to 5%, and
- the maximum benefit payable for permanent impairment under ss 24 and 27 is the same amount as the lump sum compensation payable under s 17 for a death that results from an injury (which is currently $475,962.79), with the maximum s 24 payment being 72.72% of the death benefit and the maximum s 27 payment being 27.27% of the death benefit. If implemented, it is estimated that this will cost licensees a further $800,000 annually. We suspect, however, that if amendments are made so that separate impairments arising from a single injury occurrence are combined to achieve a combined impairment value, the additional claims costs will be well in excess of that estimated by the actuaries.
Compensation for psychological injury
It is proposed that, for liability to continue to pay compensation for a psychological injury after 12 weeks from the date of a claim, the diagnosis must be confirmed by a psychiatrist, a clinical psychologist or a general practitioner who has completed mental health training to a standard approved by Comcare.
Statutory timeframes are provided for:
- the determination of claims and that where there is a failure to meet those timeframes, the claim is deemed to be rejected, and
- reviewable decision to be made within 60 days of the request for reconsideration.
Payment of employee's costs
It is recommended that the SRC Act provide for payment of an employee's costs at the reconsideration stage, including the cost of obtaining medical support (capped at the cost of obtaining one report, including incidental diagnostic costs) and legal costs (capped at $1,500, indexed).
Model litigant requirements
It is proposed that licensees follow the model litigant requirements in the Legal Services Directions.
Authorities working with Comcare
It is recommended that all determining authorities are prohibited from making submissions against the wishes of Comcare and are obliged to advise Comcare of any proceedings brought against them. On Comcare's request, they must also provide Comcare with any documents relating to those proceedings.
To avoid jurisdictional issues, it is proposed that the AAT be given the power to determine matters that are not the subject of a reviewable decision, with the consent of the parties.
It is also recommend that consideration be given to the Fair Work Commission, rather than the AAT, being able to review reviewable decisions under the SRC Act that involve workplace issues and relate to rehabilitation programs.
Recovery of compensation
Regarding the recovery of compensation from a negligent third party, it is proposed that Comcare and licensees have a statutory right of recovery in their own name, similar to the right in s 151Z of the Workers Compensation Act 1987 (NSW).
It was hoped that there would be recommendations that allowed for redemptions to be more readily available. What is proposed, if adopted, will still mean that most employees will not be able to access the redemption provisions.
The changes, if adopted, are likely to result in many more psychological injuries being eligible for compensation and a significant uplift in compensation payable for incapacity and permanent impairment. Without any meaningful change in the redemption provisions, the adoption of these proposed changes will probably lead to substantial increases in the cost of claims and the administration of claims and, therefore, premiums.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.