Compensation Law Review

June 2008

Review of the Victorian Accident Compensation Act 1985

In December 2007 the Minister for WorkSafe, Tim Holding, announced an inquiry into the Accident Compensation Act.  The State Government appointed Mr Peter Hanks QC to conduct the review. The report goes to the government in July.

A little history
In 1985 the Accident Compensation Act (WorkCare) was introduced by the Cain Labor Government.

This had a focus on providing rehabilitation services as soon as possible after injury to return injured workers to gainful employment and also to enable the worker to return to normal community life. WorkCare gave weekly payments (80% of pre injury average), quickly and ongoing until return to work or retirement age. The premiums for employers in the meat industry were reduced dramatically with the introduction of WorkCare.

In 1992 when the Kennett Government got in WorkCare was changed to WorkCover and there were numerous changes.

The first widespread changes were to throw more than six thousand long term injured workers off compensation; limited workers’ rights to claim compensation; reduced access to rehabilitation and abolished union representation in policy making.

Approximately every 6 months for the next 7 years there were changes to the Accident Compensation Act. Most of these changes reduced worker’s entitlements to compensation.

By October 1999 (when Labor got back in) entitlements for workers had dropped dramatically. Specific reductions included:

  • a requirement to prove that employment was a significant contributing factor;
  • the exclusion of a significant proportion of stress claims;
  • the exclusion of compensation claims if workers had not told potential employers that they had (in the dim and distant past) suffered illness or injury;
  • removed compensation rights unless an injury report has been made within 30 days;
  • the removal of the specialist appeals structures - replaced with conciliation and the magistrate/county court;
  • the exclusion of injuries that occurred on the way to or from work;
  • reduced weekly payments to:
    • 95% of PIAWE (excluding penalties and overtime) for 13 weeks;
    • then after 13 weeks and up to 104 weeks:
    • payments dropped to 75% for people who had no capacity to do anything at all;
    • payments dropped to 60% for people who had a capacity to do anything other than pre-injury work (whether a job was provided or not);
  • after 104 weeks:
    • workers who could still do absolutely nothing, forever, continued to receive 75%; and
    • workers who could theoretically do something, either now or in the future, get NO WEEKLY PAYMENTS;
  • medical expenses were terminated 12 months after weekly payments were stopped.
  • common law (the right to sue negligent employers) was abolished since 1997;
  • compensation for permanent injury had been taken away from or reduced because they had established new ways of measuring impairment - American Medical Association Guides to the Evaluation of Permanent Impairment - with a 10% whole person impairment as a threshold for physical injuries. These guides state that they should not be used for this purpose. Psychological Impairment had to meet a threshold of 30% before any payment. Psychological injuries that come from being permanently physically injured don’t count at all. The impact of these changes meant that many workers with permanent injuries did not get any lump sums for compensation;
  • rehabilitation was reduced so that it was only available for return to work, workers had no choice of who was the rehabilitation provider and no there was no rehabilitation to improve quality of life or participation in the community.

After Labor got back into government
There have been minimal improvements for workers since Labor returned to government.

  • After October 1999, Common Law was reintroduced for some workers (fewer than before November 1997). People who were seriously injured through negligence between November 11, 1997 and October 20, 1999 were left in the black hole.
  • Calculation of pre injury average weekly payments was changed so that regular overtime and shift penalties were counted in for calculating weekly payments in the first 26 weeks. That improvement cuts out after 26 weeks so the workers who have serious injuries and can’t work at anything are still as badly off as they were under Kennett. For example a supermarket butcher who worked Thursday to Monday earning $1000 a week before injury, who is too badly injured to do any work receives $555 from WorkCover after 26 weeks.
  • In 2004 the threshold for a lump sum payment for permanent impairment from musculoskeletal injuries (backs and limbs) was reduced from 10% to 5% and the minimum payment went from $5000 to $9190.
  • By 2006 the weekly payments for workers who have a capacity to do something went from 60% to 75%.
  • In 2006 the cut off for weekly payments for most workers was changed from 104 weeks to 130 weeks. 

Gifts for employers - Premium Reductions
After Labor got back into government the employers have been rewarded handsomely and repeatedly.

  • 2004 - premium reduction of10% that is $180 million a year.
  • 2005 - a further 10% premium reduction of $170 million per annum.
  • 2006 - another 10% reduction in the average premium rate that is $170.00 million per year.
  • 2007 - this time 10% premium reductions gave employers around $167 million per year.
  • 2008 - a further saving  of 5% for employers of $88 million was announced during the review process i.e. pre-empting any recommendations from the review.

In 4 years employers have been given a 45% average premium cut! Across the board employers have been saved $1,984 million.

It is time for improvements to WorkCover for workers.
Workers are the people who suffer from injuries and illnesses that we get in the course of, or arising from, work. We want a system that provides adequate and just compensation to injured workers.

The AMIEU has participated in the review. Graham Bird and Gwynnyth Evans have co-operated with the Victorian Trades Hall Council and participated in a Stakeholder Review Group with Peter Hanks. The AMIEU has supported the VTHC submission and made a detailed submission of our own.

What do we want?
Compensation must be paid for workers with injuries or illnesses arising out of, or in the course of employment. It should not be harder to get compensation for some injuries and illnesses such as psychological conditions, heart attacks and strokes. We argued to repeal sections 82(2A), 82(2B), and 82(2C) of the Act in order to have “adequate and just compensation”.

Some changes that we asked for to simplify the system and make it fairer for injured workers, are:

  • a WorkCover Certificate of Capacity, requiring time off work; limited hours of work or medical treatment should serve as the lodging of a claim;
  • failing to put injuries in a register within 30 days should not be grounds to reject a claim;
  • claims for injuries that are made worse by work should not be rejected because the worker did not disclose some previous injury or illness to a company when they applied for a job;
  • it should be illegal to threaten, discriminate against or sack anybody for claiming workers’ compensation, assisting another worker to claim or reporting risks.

Improved weekly payments
The AMIEU recommended that payments should start within 7 days of a claim being made (not waiting for 45 days which is what happens now with most claims). This was called ‘provisional payment’. It is not a new idea. Payments start that soon in NSW.

The AMIEU strongly recommended that weekly payments should be based on “normal weekly earnings” (NWE) that includes piece rates, penalty rates, overtime, allowances, commissions, bonuses, salary packaging and the like. We also argued that superannuation should continue to be paid.

The AMIEU strongly supported the VTHC recommendation that weekly payments be 100% of the NWE for the first 52 weeks and then 80% of NWE.

We also supported VTHC recommendation that the period of entitlement to weekly benefits for workers with a capacity for employment suited to the worker (meaning employment for which the worker is currently suited and work that is available) should be increased to 260 weeks.

Rehabilitation - Return to Work
The AMIEU strongly supported the VTHC proposal that the AC Act be amended to require the employers to consult and reach agreement with the injured workers and their treating practitioners on offers of employment suited to the worker.

The AMIEU recommended that the AC Act should be amended to recognise the health and safety representatives elected under the Occupational Health and Safety Act 2004 and recognise their powers.

We also recommended that the AC Act should state that the injured workers have the right to be represented by HSRs, Job Delegates or Union Officials.

The AMIEU strongly supported the VTHC recommendation that the employers’ obligation to provide pre-injury employment (when the worker is fit to perform them) or suitable employment (if the worker has a capacity to work but is not fit for pre-injury employment) should be extended to be the period of the weekly payments.

We also supported the development of a Compensation/Return to Work Inspectorate who had similar powers and responsibilities to inspectors appointed under the Occupational Health and Safety Act.

Dispute Resolution
We argued that Conciliation Officers have limited powers to resolve disputes when the agent/employer maintain their position and will not consider any alternative. The employers’ freedom of choice of claims agent (from the VWA list) can result in the claims agents being unwilling to contradict employers, for fear of losing the account.

These claims go to Conciliation where they are not resolved and usually go on to be settled on the steps of the Court because the powers of the Conciliation Officers are so limited.

The worker does not get paid for months or years, does not get essential treatment and work relationships break down.

The AMIEU supported the VTHC recommendations that:

  • The powers of the Conciliation Officers at the Accident Compensation Conciliation Service (ACCS) be amended to provide for a full Administrative Review of any dispute relating to a claim for compensation, with the right to appeal to the Court. The AC Act should provide that Conciliation Officers can affirm, amend, or replace a decision of an agent/employer/self insurer that has created the dispute.
  • The AC Act be amended to unequivocally provide that a worker be represented throughout the dispute the process.
  • The Conciliation Officers be given the powers to issue directions with respect to return to work obligations.

Permanent Impairment
The AMIEU does not accept that the AMA Impairment Guides are the appropriate way of evaluating the impact of permanent injuries. We also argued that stress, anxiety and depression that come from having pain, not being able to do the work that you want to or live a normal life should be compensable. We argued that further work needs to be carried out on developing an appropriate method of measuring the pain and suffering from disability and impairment.

Until appropriate measures have been developed and agreed on the AMIEU supports the threshold of 5% for all injuries including psychiatric.

These are not all of our arguments and recommendations, but it gives you some idea of what the AMIEU has said about the Accident Compensation Act. You can find a copy of the AMIEU submission here.

The AMIEU believes that employers should be made to provide workplaces that are safe and without risk to workers’ health, but if we are injured or made ill by work it is important to fight for a compensation system that is adequate and just for workers.