Accident Compensation (Amendment) Bill

Introduction Print

EXPLANATORY MEMORANDUM

551319

BILL LA INTRODUCTION 17/5/2005

Clause Notes

PART 1—PRELIMINARY

Clause 1sets out the purposes of the Bill.

Clause 2is the commencement provision.

Sub-clause (1) provides that Part 1, Divisions 2, 4, 6, 7 and 8 of Part 2, Division 2 of Part 3 and Division 1 of Part 5 come into operation on the day after the day the Bill receives Royal Assent.

Sub-clause (2) provides that Division 2 of Part 5 is deemed to have come into operation on 2 December 2003, the day after the day on which the Accident Compensation and Transport Accident Acts (Amendment) Act 2003 received Royal Assent.

Sub-clause (3) provides that Division 5 of Part 2 is deemed to have come into operation on 18 November 2004.

Sub-clause (4) provides that Divisions 1 and 3 of Part 2, Division1 of Part 3 and Part 4 come into operation on 1 July 2005.

PART 2—ACCIDENT COMPENSATION ACT 1985

Division 1—Non-WorkCover Employers

The purpose of this Division is to amend the Accident Compensation Act 1985 to enable the Victorian WorkCover Authority ("the Authority") to keep the liability and management of tail claims for employers who were either (but no longer are either) insured employers under the Accident Compensation (WorkCover Insurance) Act 1993 or self-insurers or their subsidiaries under Part V of the Accident Compensation Act 1985. However, an employer who was previously insured under a WorkCover insurance policy will be liable to pay the Authority for any difference between its tail claims liabilities and the Authority's available assets immediately prior to exit. In the case of an employer who was previously a self-insurer it will be liable to pay the Authority the amount of its tail claims liabilities as assessed immediately prior to exit. They will then continue to be liable for any deterioration in the liabilities related to their tail claims for a period of six years after their exit date.

Clause 3amends sections 141, 142 and 142C of the Accident Compensation Act 1985.

Sub-clause (1) amends section 141 to provide that a body corporate which is a holding company may apply for self-insurance approval for workers employed by each of its subsidiaries unless those subsidiaries are non-WorkCover employers within the meaning of Part VIA.

Sub-clause (2) amends section 142(4) to provide that the approval of a self-insurer is subject to a deemed condition that in the event that it becomes a non-WorkCover employer it is under a contractual obligation to make payments in relation to its tail claim liabilities required to be made under Part VIA.

Sub-clause (3) amends section 142C(3) to provide that the approval of a self-insurer which is a partnership is subject to a deemed condition that in the event that it becomes a non-WorkCover employer it is under a contractual obligation to make payments in relation to its tail claim liabilities required to be made under Part VIA.

Clause 4inserts new sub-sections (aa) and (ab) into section 148(3).

Sub-section 148(3)(aa) provides that the Authority may review the approval of a body corporate which is a holding company as a self-insurer if a subsidiary of it becomes a non-WorkCover employer within the meaning of Part VIA.

Sub-section 148(3)(ab) provides that the Authority may review the approval of a body corporate which is a holding company as a self-insurer if a subsidiary to which section 148(3)(aa) applies ceases to be a non-WorkCover employer within the meaning of Part VIA.

Clause 5inserts new sections 151A and 151B into the Accident Compensation Act 1985.

Section 151A(1) provides that when the Authority conducts a review on the basis that the subsidiary of a body corporate which is a holding company has become a non-WorkCover employer, the Authority must determine whether the body corporate should retain or the Authority should assume the liability in respect of the assessed liability within the meaning of section 146. This is the liability that the body corporate would have had if the subsidiary had not become a non-WorkCover employer. Theliability is liability in relation to injuries or deaths incurred or suffered by workers employed by the subsidiary which entitled a worker or his or her dependants to compensation under the Accident Compensation Act 1985, at common law or otherwise, regardless of whether a claim for compensation has been made.

Section 151A(2) provides that if the Authority has determined to assume the liability referred to in section 151A(1) that—

  • Part VIA applies in relation to that liability;
  • The body corporate must ensure that all claims and documents relevant to the claims and liability in the possession of the body corporate are given to the Authority as soon as possible;
  • A person who would have been required to lodge a claim for compensation with the body corporate as a self-insurer but for this section, may instead lodge the claim with the Authority; and
  • Part IV of the Accident Compensation Act 1985 which deals with payment of compensation applies to the Authority as if it were a self-insurer and in relation to any proceedings to which the body corporate was a party immediately prior to the Authority assuming the liability under section 151A(1), as if the Authority were instead a party to the proceedings.

Section 151A(3) provides that a subsidiary of an approved self-insurer which becomes a non-WorkCover employer is deemed not to be a subsidiary of that self-insurer (within the meaning of PartV) for the period that it is a non-WorkCover employer.

Section 151B provides that if a body corporate becomes a non-WorkCover employer within the meaning of PartVIA, on the exit date its status as a self-insurer is revoked.

This section applies only to self-insurers not their subsidiaries which are dealt with under section 151A.

Clause 6Inserts new Part VIA, entitled "Non-WorkCover Employers" into the Accident Compensation Act 1985.

Section 164 defines key terms used in Part VIA.

Section 165 provides that on the exit date the Authority—

  • In the case of a non-WorkCover employer who prior to exit was insured under a WorkCover insurance policy, retains the liability and management responsibility for the tail claims;
  • In the case of a non-WorkCover employer who prior to exit was a self-insurer, assumes the liability and management responsibility for the tail claims;
  • In the case of a non-WorkCover employerwho prior toexit was a subsidiary of a self-insurer and the Authority has determined to assume its liability under section 151A, assumes the liability and management responsibility for the tail claims.

Section 166(1) provides that an actuary appointed by the Authority must, for non-WorkCover employers who were previously insured under a WorkCover insurance policy, undertake an assessment of—

  • the tail claims liabilities of that non-WorkCover employer; and
  • the available assets.

Section 166(2) provides that an actuary appointed by the Authority must, for non-WorkCover employers who were previously self-insurers or subsidiaries of self-insurers to which Part VIA applies, must assess the tail claims liabilities of that non-WorkCover employer.

Section 166(3) provides that in the event that a non-WorkCover employer referred to in sub-section (2) does not allow the actuary to inspect its books to allow the assessment to be made, the tail claims liabilities are deemed to be the amount that the actuary determines them to be.

Section 166(4) provides that the cost of the assessment is borne by the non-WorkCover employer.

Section 166(5) provides that the non-WorkCover employer is provided with a copy of the actuary's proposed assessment.

Section 166(6) provides that the non-WorkCover employer may provide comments to the actuary on his or her proposed assessment within 28 days (or a further period if agreed by the Authority) of receiving the proposed assessment.

Section 166(7) provides that the actuary must make a final assessment after considering comments, if any, received under sub-section (6).

Section 167(1) provides that if the non-WorkCover employer was previously insured under a WorkCover insurance policy and the initial assessment under section 166(1) indicates that that employer's tail claims liabilities exceed the available assets, the non-WorkCover employer must pay the amount of the difference to the Authority.

Section 167(2) provides that the non-WorkCover employer must pay the amount referred to in sub-section (1) within 28 days (or a further period if agreed with the Authority) of receipt of the notice of initial assessment.

Section 167(3) provides that if the non-WorkCover employer does not pay the amount referred to in sub-section (1) to the Authority, that that amount plus interest at the prescribed rate may be recovered by the Authority as a civil debt.

Section 168(1) provides that if the non-WorkCover employer was previously a self-insurer or the subsidiary of a self-insurer to which Part VIA applies, that employer must pay the amount of the tail claims liabilities asinitially assessed under section 166(2) to the Authority.

Section 168(2) provides that the non-WorkCover employer must pay the amount referred to in sub-section(1) within 28 days (or a further period if agreed with the Authority) of receipt of the notice of initial assessment.

Section 168(3) provides that if the non-WorkCover employer does not pay the amount referred to in sub-section (1) to the Authority, that that amount plus interest at the prescribed rate may be recovered by the Authority as a civil debt.

Section 169(1) provides that the Authority must have an actuary appointed to conduct a revised assessment of the tail claims liabilities at the end of each year, as at the anniversary of the exit date, during the liability period to determine the amount of the tail claims liabilities.

Section 169(2) provides that the cost of the revised assessment is borne by the non-WorkCover employer.

Section 169(3) provides that the non-WorkCover employer is provided with a copy of the actuary's proposed revised assessment.

Section 169(4) provides that the non-WorkCover employer may provide comments to the actuary on his or her proposed revised assessment within 28 days (or a further period if agreed by the Authority) of receiving the proposed revised assessment.

Section 169(5) provides that the actuary must make a finalrevised assessment after considering comments, if any, received under sub-section (4).

Section 170(1) provides that if the revised assessment made at the end of the third year in the liability period of the tail claims liabilities exceeds the initial assessment of the tail claims liabilities, the non-WorkCover employer must pay that difference to the Authority.

Section 170(2) provides that the non-WorkCover employer must pay the amount referred to in sub-section(1) within 28 days (or a further period if agreed with the Authority) of receipt of the notice of revised assessment.

Section 170(3) provides that if the non-WorkCover employer does not pay the amount referred to in sub-section (1) to the Authority in accordance with sub-section (2), that that amount plus interest at the prescribed rate may be recovered by the Authority as a civil debt.

Section 170(4) provides that if the revised assessment made at the end of the third year in the liability period of the tail claims liabilities is less than the initial assessment of the tail claims liabilities, the Authority must make a refund of that amount to the non-WorkCover employer.

Section 171(1) provides that if the revised assessment made at the end of the sixth year in the liability period of the tail claims liabilities exceeds the revised assessment of the tail claims liabilities as assessed at the end of the third year, the non-WorkCover employer must pay that difference to the Authority.

Section 171(2) provides that the non-WorkCover employer must pay the amount referred to in sub-section (1) within 28 days (or a further period if agreed with the Authority) of receipt of the notice of revised assessment.

Section 171(3) provides that if the non-WorkCover employer does not pay the amount referred to in sub-section (1) to the Authority in accordance with sub-section (2), that that amount plus interest at the prescribed rate may be recovered by the Authority as a civil debt.

Section 171(4) provides that if the revised assessment made at the end of the sixth year in the liability period of the tail claims liabilities is less than the revised assessment of the tail claims liabilities as assessed at the end of the third year, the Authority must make a refund of that amount to the non-WorkCover employer.

Section 172(1) provides that the non-WorkCover employer must have in place a guarantee given by an authorised deposit taking institution to or in favour of the Authority and in a form approved by the Authority. The guarantee is against—

  • insolvency risk in respect of 50% of—
  • for the first year of the liability period, the initial assessment of the tail claims liabilities as assessed at the exit date until the end of the first year after the exit date;
  • for the second and subsequent years of the liability period, the revised assessment of tail claims liabilities still outstanding as assessed at the end of each subsequent year for the duration of the next year until a payment is made pursuant to section 171 (if any);
  • claims deterioration—
  • in respect of the specified period, for the amount by which the revised assessment of the tail claims liabilities at the end of each year exceeds the initial assessment of the tail claims liabilities;
  • in respect of the specified period, for the amount by which the revised assessment of tail claims liabilities at the end of each year exceeds the revised assessment of tail claims liabilities as assessed at the end of the third year.

Section 172(2) provides for some circumstances in which the Authority may recover any amounts under a guarantee. TheAuthority may recover where it has suffered a loss as a resultof—

  • a failure by the non-WorkCover employer to make a payment required under section 170 or 171; or
  • if any of the following applies to the non-WorkCover employer—
  • it is under official management, is being wound up or is no longer carrying on business;
  • a receiver or receiver and manager has been appointed in respect of its property or part thereof under the Corporations Law or the corresponding law of another State or Territory;
  • it has entered into a compromise or a scheme of arrangement with its creditors.

Section 173(1) provides that if the non-WorkCover employer disputes the final revised assessment conducted at the end of the liability period, the non-WorkCover employer may appoint an actuary to review that final revised assessment.

Section 173(2) provides that the cost of conducting that review is to be borne by the non-WorkCover employer.

Section 173(3) provides that the actuary appointed under sub-section (1) must provide comments to the actuary who made the final revised assessment within 28 days of the non-WorkCover employer receiving a copy of the final revised assessment.

Section 173(4) provides that if the actuary who conducted the final assessment and the actuary appointed by the non-WorkCover employer are unable to reach agreement on the final revised assessment, the non-WorkCover employer and the Authority may agree to appoint a third actuary to review the final revised assessment and to be bound by that third actuary's decision.

Section 173(5) provides that the costs of a review under sub-section (4) are to be borne equally by the non-WorkCover Authority and the VWA.

Section 173(6) provides that if the non-WorkCover employer andthe actuary who made the final revised assessment are unable to reach agreement and, if they fail to enter into an agreement under sub-section (4), then the final revised assessment under section 169 is binding on the non-WorkCover employer and the Authority.

Section 174 provides that, except where expressly stated in this Part, the Authority is not liable to make payments or repayments to a non-WorkCover employer.

Section 175 provides that no proceedings seeking an administrative law remedy may be brought against the Authority, an actuary or any person in respect of any assessments undertaken under Part VIA, or any proceedings relating to an assessment or any act, matter or thing incidental to the conduct of an assessment.

Section 176 provides that Part VIA will continue to apply until the end of the liability period in respect of the tail claims of a non-WorkCover employer who—

  • becomes insured under a WorkCover insurance policy;
  • becomes a self-insurer within the meaning of Part V of the Accident Compensation Act 1985;
  • becomes a subsidiary of a self-insurer within the meaning of Part V of the Accident Compensation Act 1985.

Division 2—Provisions relating to the Crown

Clause 7inserts new section 14A.

Section 14A provides that the Accident Compensation Act 1985 binds the Crown in right of the State of Victoria and, to the extent that the legislative power of the Parliament permits, in all its other capacities. It also provides, for the avoidance of doubt, that the Crown is a body corporate for the purposes of the Bill and the regulations. This ensures consistency with the Occupational Health and Safety Act 2004.

Clause 8inserts new sections 250B and 250C. These sections deal with proceedings against the Crown and successor bodies.

Sub-clause (1) of section 250B provides that if proceedings are to be brought against the Crown under either the Accident Compensation Act1985 or the Accident Compensation (WorkCover Insurance) Act1993, the responsible agency in respect of the offence may be specified.

For the purposes of section 250B, sub-clause (2) provides that the responsible agency in respect of an offence is the agency of the Crown—

  • whose acts or omissions are alleged to constitute the offence; or
  • if that agency has ceased to exist, the successor of that agency; or
  • if that agency has ceased to exist and there is no clear successor, the agency that the court declares to be the responsible body.

Sub-clause (3) of section 250B clarifies that the responsible agency is entitled to act in proceedings and, subject to any relevant rules of court, the procedural rights and obligations of the Crown as accused are conferred or imposed on the responsible agency.