Workplace injuries can be problematic for employers to deal with, especially where there are two or more defendants joined to the action. This can be common in workplaces that involve labour hire, apprenticeships, construction sites, or the transport industry.
Historically, Queensland plaintiffs have had full common law rights across the public liability, workers' compensation and motor accident/ CTP regimes. But following amendments to the Workers' Compensation and Rehabilitation Act 2003 (WCRA) in October 2013 (the Newman amendments), a threshold of more than 5% degree of permanent impairment (DPI) was introduced for a worker to be able to make a common law claim against their employer.
After a change of Government last year, the threshold was repealed in September 2015, with the repeal being made partially retrospective to 31 January 2015 (the day after the election outcome). However, as a result of the repeal, workers injured in Queensland have no recourse to common law damages against their employers for the period on or after 15 October 2013 to 30 January 2015. It is worth noting that no such threshold applies to the injured worker for claims of negligence against other parties involved in the accident under the Personal Injuries Proceedings Act 2002 (PIPA) or CTP regime. Workers are thus free to pursue any other identifiable respondent for damages, regardless of whether they meet the workers' compensation threshold.
It's important for insurers, brokers and employers to understand how the Newman amendments and consequent repeal have affected workers seeking common law claims and claims in negligence against employers.
What's the impact?
The ramifications of the threshold introduced in 2013 have been manifold for PIPA respondents and their insurers and brokers:
- PIPA claims have increased against host employers, principal contractors, occupiers and other parties who may have some exposure in a work accident
- contractual indemnity claims have been more robustly agitated, and
- PIPA respondents were more likely to be precluded from seeking contribution from the employer or WorkCover Queensland.
The consequent legislative amendments have further increased the burden on the PIPA regime and non-employer respondents, including:
- increased claim numbers
- increased damages exposure, due to the absence of the employer contribution to claims and contractual claims by other respondents
- significant delays to claims while workers wait to establish whether they will satisfy the threshold
- the potential for uninsured liability in circumstances where worker exclusion clauses or contractual indemnity exclusion clauses apply, denying the respondent indemnity from their public liability insurer for the claim by the worker or by another respondent
- the inability to seek contribution from the employer and WorkCover Queensland, and
- increased claims costs associated with complex contractual indemnity claims.
How has the case law affected claims?
In the matter of Bonser v Melnacis (Bonser), the Queensland Court of Appeal restricted the joinder of an employer in negligence. The injured worker in this case was precluded from claiming common law damages from the employer because they had not exercised their election to either accept lump sum compensation or to seek damages.
This reasoning can be applied where an injured worker cannot claim common law damages from an employer due to the worker being awarded a DPI of 5% or less.
For claims in negligence, if Bonser applies, third parties will be precluded from joining an employer to an action unless the injured worker has obtained a DPI of greater than 5%.
A principal contractor who may not have been joined to an action by a worker and who may otherwise have been exposed for 5% to 10% of the total damages, may therefore find itself exposed to pay 100% of the claimant's damages, with no recourse against the employer or WorkCover unless a contractual indemnity claim can be maintained.
Byrne v People Resourcing (Qld) (Byrne) involved an all too common scenario: an injury to an employee of a labour hire company that occurred while the employee was working at the site of a customer (the host employer). The employee sued the host employer for the injury. The host employer in turn sued the employer, People Resourcing, and relied on a contractual indemnity. Chief Justice Carmody considered whether People Resourcing was covered by WorkCover for its liability to the host employer under that indemnity. Relying in part on the decision of the High Court in SGIO (Qld) v Brisbane Stevedoring, his Honour determined that People Resourcing's liability to the host employer was in substance a legal liability to pay damages for an injury to an employee suffered in the course of employment. As a result, his Honour held that WorkCover was obliged to cover People Resourcing's liability to the host employer, even though as a matter of legal form that liability was under a contractual indemnity.
Unresolved issues arising in case law
- Whether the contractual indemnity extends to heads of damage, which WorkCover is not obliged to pay due to the interplay between the WCRA and the PIPA regimes, including gratuitous assistance, common law general damages and costs.
- Whether the interplay between the decisions in Byrne and Bonser preclude a PIPA respondent from seeking a contractual indemnity from an employer, in circumstances where an injured worker does not meet the common law threshold.
- If a PIPA respondent can seek a contractual indemnity from an employer, whether WorkCover Queensland is obliged to indemnify the employer for that claim pursuant to the WCRA.
If the reasoning in Byrne is applied, WorkCover may now be required to cover an employer for a contractual indemnity claim, even if the employer has no direct liability to pay damages to the injured worker.
The decisions in Nigel Watts Fashion Agencies Pty Ltd v GIO General Insurance Ltd and Multiplex Constructions Pty Limited v Irving and Ors involved matters where judgment hadn't been entered against the employer in favour of the worker. It is possible that the same reasoning could be applied to cases (where the principle in Bonser applies) and that a different conclusion from that in Byrne could be reached in cases where an injured worker is not entitled to seek common law damages from the employer.
Back to the future
Following the repeal of the Newman amendments in September 2015, all workers who sustain injury at work on or after 31 January 2015 have had their full common law rights restored, regardless of the assessment of impairment. The Statutory Adjustment Scheme has been introduced to partially compensate workers who were unable to pursue common law rights during the application of the threshold. WorkCover and self-insurers in Queensland are now obliged to pay additional lump sum compensation to certain workers. It is unclear how this payment will impact on damages payable in a PIPA claim relating to the same injury, but it should at least reduce any award for interest on damages recovered.
For injuries on or after 31 January 2015, PIPA respondents are also restored to a position where they can seek contribution from employers where a worker has sought damages against the employer and employers can seek indemnity from WorkCover for contractual indemnity claims by other parties.
It remains to be seen the extent to which WorkCover resists claims for contractual indemnity, and the extent of the indemnity, so this issue will remain a focus for insurers and brokers for the foreseeable future. To date, no legislative amendments have been contemplated to address the unresolved issues arising from the Byrne decision.
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.