Comparison of Workers' Compensation Arrangements in Australia and New Zealand

Comparison of workers’ compensation arrangements in Australia and New Zealand

July 2015

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Disclaimer

The information provided in this document can only assist you in the most general way. This document does not replace any statutory requirements under any relevant state and territory legislation. Safe Work Australia is not liable for any loss resulting from any action taken or reliance made by you on the information or material contained on this document. Before relying on the material, users should carefully make their own assessment as to its accuracy, currency, completeness and relevance for their purposes, and should obtain any appropriate professional advice relevant to their particular circumstances. The views in this report should not be taken to represent the views of Safe Work Australia unless otherwise expressly stated.

Foreword

The Comparison of Workers’ Compensation Arrangements in Australia and New Zealand (the Comparison) provides information on the operation of workers’ compensation schemes in each of the jurisdictions in Australia and New Zealand.

The Comparison provides background information onworkers’ compensation arrangements in Australia and New Zealand and discusses the way each scheme deals with key aspects likecoverage, benefits, return to work provisions, self-insurance, common law, dispute resolution and cross-border arrangements.

The majority of tables in this report provide a snapshot of workers’ compensation arrangements as at 30 September 2014. However, it must be noted that the information for the ACT was currentat 30 June 2014. Information taken from the 16th edition of the Comparative Performance Monitoring report covers the 2012–13 financial year and some jurisdictions have reported recent developments to the end of December 2014. As each jurisdiction may vary its arrangements from time to time and there may be some exceptions to the arrangements described in this edition, readers wanting more up to date information should check with the relevant authority.

On behalf of the Heads of Workers’ Compensation Authorities (HWCA), the Victorian WorkCover Authority producedthis publication from 1993 to 2005. The Australian Safety and Compensation Council took over responsibility for the report in 2006 and produced it in 2006 and 2007. Safe Work Australia has been producing the report since 2008. The work of the Victorian WorkCover Authority and the Australian Safety and Compensation Council is acknowledged. Safe Work Australia thanks representatives from each jurisdiction for the valuable assistance they have provided in producing this edition of the Comparison of Workers’ Compensation Arrangements in Australia and New Zealand.

COMPARISON OF WORKERS’ COMPENSATION ARRANGEMENTS 20151

Foreword...... iii

Chapter 1: Recent developments in workers’ compensation schemes in Australia and
New Zealand...... 1

Chapter 2: Schemes at a glance

Table 2.1: Jurisdictional contacts

Table 2.2: Agencies responsible for overseeing workers’ compensation in each
jurisdiction

Table 2.3: Key features of schemes

Table 2.4a: Summary of coverage (see Table 3.1a for more information)

Table 2.4b: Guidelines and information for determining coverage of workers

Table 2.4c: Coverage of journeys and breaks...... 19

Table 2.4d: Definition of injury and employment contribution

Table 2.4e: Coverage of retirement provisions

Table 2.5: Summary of entitlements as at 30 September 2014

Table 2.6: Prescribed time periods for injury notification

Table 2.7: Prescribed time periods for claim submission

Table 2.8: Prescribed time periods for payments

Table 2.9: Dispute resolution process

Table 2.10: Definition of remuneration for the purpose of premium calculation

Table 2.11: Employer excess

Table 2.12: Uninsured employer provisions...... 38

Table 2.13: Leave while on workers’ compensation

Table 2.14: Superannuation and workers’ compensation

Chapter 3: Coverage and eligibility for benefits

Table 3.1a: Definition of worker
(see Table 2.4a for summary of coverage of worker)

Table 3.1b: Coverage of contractors and labour hire workers
(see Table 2.4a for summary of coverage of workers)...... 46

Table 3.2: Deemed workers...... 47

Table 3.3: Workers’ Compensation coverage for volunteers

Table 3.4: Treatment of sportspersons and sporting injuries

Table 3.5: Workers’ compensation arrangements for government employers

Table 3.6: Workers’ compensation arrangements for judges and
members of parliament...... 56

Table 3.7: Industrial deafness thresholds...... 58

Table 3.8: Definition of work — journeys and breaks...... 59

Table 3.9: Definition of injury and relationship to employment — detailed...... 61

Table 3.10: Statutory definitions of permanent and impairment and
criteria for determining whether impairment is permanent

Table 3.11: Permanent impairment guides...... 67

Table 3.12: Discounting of prior conditions

Table 3.13: Exclusionary provisions (general)

Table 3.14: Exclusionary provisions for psychological injuries...... 78

Table 3.15: Cross-border provisions

Chapter 4: Benefits

Table 4.1: Income replacement

Table 4.2: Medical, hospital and other costs

Table 4.3: Permanent impairment payments

Table 4.4: Death entitlements

Table 4.5: Definitions of dependants/ spouse for death benefits

Table 4.6: Common law provisions

Table 4.7: Suspension and cessation of benefits

Table 4.8: Incapacity benefits settlements

Chapter 5: Return to work

Table 5.1: Sections of workers’ compensation Acts and guidance
material relating to return to work

Table 5.2a: Requirement to have a workplace rehabilitation/return
to work program or policy

Table 5.2b: Return to work plans — Individual return to work plans

Table 5.2c: Suitable duties

Table 5.2d: Other requirements of employers

Table 5.3: Responsibilities of workers

Table 5.4: Injured worker placement incentives

Table 5.5: Responsibilities of authority/ insurer

Table 5.6: Functions and training of workplace rehabilitation coordinators

Table 5.7a: Responsibilities of workplace rehabilitation provider

Table 5.7b: Rehabilitation provider qualifications and fee structure

Table 5.8: Prescribed time periods to establish a return to work plan

Chapter 6: Self-insurer arrangements

Table 6.1: Workers’ compensation and self-insurance coverage

Table 6.2: Criteria for becoming a self-insurer

Table 6.3: Approval process, application and ongoing costs and
duration of licence

Table 6.4: Work health and safety requirements and auditing

Table 6.5: Bank guarantees/ prudential margins and excess of loss
requirements

Table 6.6: Self-insurance restraints on company structure

Table 6.7: Outsourcing of Case Management

Table 6.8: Other ongoing licence requirements

Table 6.9: Reporting requirements

Table 6.10: Requirements for surrendering a self-insurance licence
and penalties for exiting the scheme

Chapter 7: Scheme administrative and funding arrangements

Table 7.1: Applicable workers’ compensation legislation

Table 7.2: Transitional legislation provisions as at 30 September 2014

Table 7.3a: Minor schemes — New South Wales

Table 7.3b: Minor schemes — Victoria

Table 7.3c: Minor schemes — Western Australia

Table 7.3d: Minor schemes — South Australia

Table 7.3e: Minor schemes — Tasmania

Table 7.3f: Minor schemes — Commonwealth

Table 7.3g: Minor schemes — New Zealand

Table 7.4: Schemes’ funding positions as at 30 June 2014 and 30 June 2013...196

Table 7.5: Standardised average premium rates 2007–08 to
2011–12 (% of payroll)...... 197

Table 7.6: Selected industry premium rates as at
30 September 2014 (% of payroll)...... 199

Appendix 1

Appendix 2

Appendix Table 1: Occupational diseases as prescribed at
30 September 2014 — Occupational diseases caused by agents
arising from work activities

Appendix Table 2: Occupational diseases as prescribed at
30 September 2014 — Occupational cancer

Glossary

Acronyms and abbreviations

Index

1SAFE WORK AUSTRALIA

Chapter 1: Recent developments in workers’ compensation schemes in Australia and New Zealand

There are 11 main workers’ compensation systems in Australia. Each of the eight Australian states and territories has developed their own workers’ compensation scheme and there are three Commonwealth schemes: the first is for Australian Government employees, Australian Defence Force personnel with service before 1 July 2004 and the employees of licensed self insurers under the Safety, Rehabilitation and Compensation Act 1988 (SRC Act); the second is for certain seafarers under the Seafarers Rehabilitation and Compensation Act 1992; and the third is for Australian Defence Force personnel with service on or after 1 July 2004 under the Military Rehabilitation and Compensation Act 2004 (MRCA).

This chapter will focus on recent developments that came into effect between July 2013 and September 2014 or which will come into effect after that time. The historical section on the evolution of the workers’ compensation schemes can be found in Appendix 1.

New South Wales (NSW)

Review of Legislative Change

TheWorkers Compensation Legislation Amendment Act 2012included the requirement for the Minister to conduct a review of the legislative changes to workers compensation twoyears after their implementation, unless the Scheme returned to surplus before this time.The statutory requirement for the review was triggered earlier than expected when the Minister announced a Scheme surplus in October 2013.

In early 2014, the NSW Office of Finance and Services commissioned the Centre for International Economics to report on whether the policy objectives of the 2012 amendments remain valid, and whether the terms of the Workers Compensation Acts remain appropriate for securing those objectives. The review determined:

there are early signs of financial success. However, it is too early to assess whether the improvements in the financial position of the Nominal Insurer are sustainable
there are some gaps in coverage and some inconsistencies in the application of the legislative amendments, and some unintended barriers to return to work appear to have been created
more needs to be done to address barriers to return to work, reduce the administrative burden and improve the ease of navigation through the system, and
more work is required to improve the fairness and equity of benefits and the process for review.

In 2014, the NSW Parliament’s Legislative Council Standing Committee on Law and Justice conducted its first Review of the Exercise of the Functions of the WorkCover Authority. The Committee made a number of recommendations to improve the performance of WorkCover, provide enhanced support to injured workers and preserve the ongoing financial sustainability of the Scheme, including:

considering separation of the roles of regulator and Nominal Insurer
restoring lifetime medical benefits for hearing aids, prostheses, home and vehicle modifications for all injured workers, and reviewing the viability of restoring all medical benefit changes, and
allowing legal practitioners to be paid for work in connection with a work capacity decision, subject to an analysis of its financial impact.

Enhancement to workers compensation laws

On 26 June 2014, the Minister announced a number of enhancements to workers’ compensation benefits to be initially introduced by regulation and completed with legislation in the future. The enhancements apply to workers who made a claim for compensation before 1October 2012. The changes allow:

for the insurer to meet the cost of any secondary surgery
for workers to continue to receive weekly payments while a work capacity decision is being reviewed
workers with whole person impairment of 21 to 30 per cent to have access to medical and related expenses until retiring age
workers to continue to receive certain medical and related expenses until retiring age, and
entitlement to weekly payments for up to one year after retiring age.

The regulatory enhancements are set out in the Workers’ Compensation Amendment (Existing Claims) Regulation 2014 made on 3 September 2014.

Premium Design

WorkCover NSW has introduced a range of initiatives that provide incentives and support to small employers, including:

a 10 per cent premium discount upfront for each policy period, which small employers retain if they have no injured worker off work for more than four weeks
a return to work incentive for employers who have an injured worker, allowing them to still earn a 10 per cent reduction on their premium if the injured worker returns to work within 13 weeks
a five per cent discount for the annual payment of premiums, and
eliminating the requirement to estimate wages, increasing the time to report actual wages, and aligning all renewal dates to a calendar month end.

WorkCover NSW is developing and has introduced Stage 1 of an incentive package for experience-rated employers to encourage the delivery of strong health and safety practices and to support recovery and return to work. The package will provide experience-rated employers with a better understanding of how their premiums are calculated. The package includes:

incentives and rewards that focus on prevention of injury strategies and behavioural change for employers
a focus on genuine recovery at work opportunities for workers with injuries, and
individual performance targets for employers at each renewal.

Victoria

The Workplace Injury Rehabilitation and Compensation Act 2013 (the WIRC Act) became operational on 1 July 2014.

The WIRC Act recasts the Accident Compensation Act 1985 and the Accident Compensation (WorkCover Insurance) Act 1993 into a single Act that is simpler and easier to use. The WIRC Act does not change the benefits available, nor does it change the way that premiums are calculated. The WIRC Act can be found on theVictorian Legislation and Parliamentary Documents website.

WorkSafe Victoria has prepared two comparison tables that list the clauses in the Accident Compensation Act 1985 and Accident Compensation (WorkCover Insurance) Act 1993, and the equivalent clauses in the Workplace Injury Rehabilitation and Compensation Act 2013.

More information can be found at and in the following documents:

Accident Compensation Act 1985 comparison table
Accident Compensation (WorkCover Insurance) Act 1993 comparison table

Note: the Victorian Act references currently used in this document refer to the Workplace Injury Rehabilitation and Compensation Act 2013 as at 31 December 2014.

During 2014, WorkSafe Victoria implemented a number of improvements to the way employers pay premium, including:

the issuance of premium notices was brought forward (they were previously issued after the start of the premium period), and
the option of paying their full 2014/15 WorkCover Insurance Premium by 1 August 2014 with a 5 per cent discount, or paying the full amount by 1 October 2014 and receiving a 3 per cent discount.

The changes required premiums to be calculated earlier and adjustments to be made to both the claims experience and remuneration experience periods.

Queensland

The Workers’ Compensation and Rehabilitation Regulation 2003 (the 2003 Regulation) automatically expired on 1 September 2014. The Workers’ Compensation and Rehabilitation Regulation 2014 (the 2014 Regulation) replaced the 2003 Regulation.

The 2014 Regulation retains the existing policy intent, protections of injured workers’ rights and entitlements, and efficient processes for insurers and employers. The 2014 Regulation streamlines these protections and requirements by removing any obsolete processes, requirements and unnecessary duplication.

Western Australia (WA)

Legislative Review - Second Stage

In 2010 the Government approved a two stage legislative review process. Stage one of the review has been completed with the passage of amendments to the Act in 2011 and 2012.

This second stage involves a complete redraft of the Workers’ Compensation and Injury Management Act 1981(WCIM Act) with the objectives of introducing contemporary language and drafting conventions and a logical and coherent structure while preserving the current intent of the legislation.

The second stage also addresses:

outstanding recommendations from the 2009 legislative review
technical and process issues identified with the current legislation, and
the need to enhance readability and consistency and introduce contemporary language and drafting conventions.

The second stage does not involve a broad ranging examination of benefits and entitlements or other fundamental design aspects of the scheme. These areas will be impacted only in relation to structural and process improvements to the WCIM Act.

The Review of Workers’ Compensation and Injury Management Act 1981 Final Report was tabled in Parliament on 26 June 2014. The final report contains 171 recommendations for inclusion in the new statute.

Since an earlier discussion paper was released in October 2013, WorkCover WA has taken a consultative approach in finalising its recommendations.

In October 2014 the Government approved the drafting of a bill which is expected to take several months to complete. The consultative approach on the legislative review will continue, with the release of a draft of the bill for public comment before it is introduced into Parliament.

A copy of the Final Report can be accessed here:

Review of Medical Certificates / Guidance for Medical Practitioners

WorkCover WA undertook a review of workers’ compensation medical certificates in 2013/14 following stakeholder feedback on the effectiveness of the existing certificates in communicating critical information about a worker’s injury and return to work. Feedback included comments that the design and layout was congested and the language used on the certificates reinforced avoidance of activity, rather than a focus on work capacity.

The key objectives were to

redevelop the medical certificates to be user friendly, better promote workers’ capacity to stay in or return to work; trigger early identification and management of psychosocial factors that may risk timely recovery and return to work; and meet legislative requirements
provide guidance, clarify expectations about information required to be completed on the form, and
support GPs in fulfilling their role in injury management.

In the latter half of 2013 WorkCover WA progressed the revision of the medical certificates through an injury management technical group and developed new certificates of capacity. The technical group comprised representatives from the:

Australian Medical Association (WA) (Council of General Practice)
Royal Australasian College of Physicians (WA)
Australasian Faculty of Occupational and Environmental Medicine (WA)
Law Society of Western Australia
Chamber of Commerce and Industry (WA)
UnionsWA
Insurance Council of Australia (WA), and
Insurance Commission of Western Australia (RiskCover)

Regulatory amendments to effect the changes to the medical certificates were progressed in the first half of 2014. The new certificates of capacity were launched at a stakeholder event on 8May 2014, followed by a GP workshop and two webinars to promote the changes and WorkCover WA’s new online website for GPs, gpsupport. The new medical certificates came into effect on 1 July 2014.