There was general agreement amongst almost all submitters that the bill
represented the most fundamental reform of the Safety Rehabilitation and
Compensation Act 1988 (SRC Act) since its introduction.
The key issues and points of contention are summarised in the
introduction. The remainder of the chapter sets out the issues in greater
detail on a schedule by schedule basis.
Key points made by the government included the need to modernise the SRC
Act in keeping with significant changes in health care and rehabilitation
practices, recent research on the benefits for employees of returning to work
after rehabilitation, prevailing community expectations about encouraging
people to work and return to work, and the overarching importance of
maintaining the integrity and financial viability of the scheme on an ongoing
The Department of Employment (the department) noted that the Comcare
scheme (the scheme) was established in an era with low expectations of recovery
and return to work after illness or injury. As a consequence, the scheme was designed
to compensate people for injury, but it 'had no focus on return to work'.
The department further noted that decisions by the Administrative
Appeals Tribunal (AAT) and courts have skewed the application of the SRC Act
away from the original intention of compensating for work-related activities by
extending the scheme to compensate employees for non-work related injuries.
The department stated that the focus on compensation and the extension
of the scheme into non-work related injuries have had unfortunate consequences.
The first consequence has been a tendency to entrench low expectations for
recovery and return to work. This has deprived injured workers of the support
and encouragement to recover and return to work. In turn, injured workers (and
their families) have been denied the mental, social and health benefits
associated with returning to work.
The second consequence has been a decline in return to work rates from
89 per cent in 2008-09 to around 80 per cent in recent years. Studies indicate
that the longer an injured worker is off work, the chances of them
rehabilitating successfully and returning to work reduce dramatically. In turn,
this decline in return to work rates has placed an increasing burden on the
scheme finances (see figures 2.1 and 2.2 below).
Figure 2.1: Decline in return to
work rates over last five years (Source: Department of Employment, Submission 22,
Figure 2.2: Medical and
Rehabilitation costs from 2008-09 to 2012-13 (Source: Department of Employment,
Submission 22, p. 5).
Claim costs under the SRC Act have risen by 37 per cent in the five
years to 2012-13 and the premiums charged to Commonwealth agencies have
increased by more than 50 per cent over the four years to 2013-14.
The department noted that steadily increasing medical and rehabilitation costs
had contributed to the rise in claim costs and that Comcare's 'limited ability to
determine the reasonableness or the appropriateness of medical treatment and
rehabilitation' prescribed by doctors had resulted in payments for 'questionable
treatments' (see figure 2.3 below).
Figure 2.3: Total Payment for
claims under the Comcare scheme from 2009-10 to 2013-14 (Source: Department of
Employment, Submission 22, p. 6).
The points outlined above by the department were endorsed by the
Australian Public Service Commission (APSC). The APSC noted that the Australian
Public Service was of the view that the scheme provided 'a generous set of
entitlements for injured public service employees'. However, the APSC pointed
out that there was 'general agreement amongst Secretaries and Chief Executive
Officers that the current legislation focuses on administrative decision making
rather than injury management and supporting staff to get back to work'.
Consequently, the APSC stated that the senior leadership of the Australian
Public Service welcomed the reforms to the scheme.
The committee notes that this is a unique situation whereby the senior
leadership across the Australian Public Service is united in support of the
changes embodied in the bill.
Several submitters, particularly employers, employer groups, and
licensee associations agreed with the key elements set out in the bill. These
submitters noted that the SRC Act was outdated and did not take account of
modern trends in business and employer/employee expectations. Employers were
also gratified that the bill rectified certain anomalies introduced by case
law. Employers considered that the bill was balanced, fair and equitable for
both employees and employers, that it would lead to greater business confidence
and employment opportunities, and that the bill should be passed either in its
or with minor amendments.
Some submitters recommended that certain proposals be amended or
omitted, and considered that, whilst undertaking such fundamental reform of the
SRC Act, Parliament should include provisions for access to common law.
Other submitters recommended that the bill not be passed without substantial
Opponents of the bill disagreed with the fundamental premise of the
proposed legislation and argued that the bill would dramatically reduce the
rights and entitlements of workers and would make it even harder for genuine
claimants to gain urgent and necessary access to benefits. Noting that the
primary objective of reform should be to achieve safe and healthy workplaces, these
submitters pointed out that the bill failed to give effect to most of the
recommendations made in the Hanks/Hawke Review, especially those which would be
advantageous to injured workers. Opponents also argued that the bill put the
considerations of big business ahead of those of injured workers. Opponents
therefore considered the bill to be unbalanced, unfair, and punitive and
recommended that the bill be rejected in its entirety.
Many submitters also stated that the bill should be seen in a broader
context, and expressed concerns about the combined effect of the three Comcare
bills before Parliament. These submitters argued that the cumulative impact of
the changes would be to remove rights that workers currently enjoy under State
workers' compensation laws and enable employers to join a cheaper scheme with
minimal health and safety regulations that was not designed for blue collar
workers who often perform high risk work in remote locations.
Other submitters stated that the bill, in combination with the Safety,
Rehabilitation and Compensation Legislation Amendment Bill 2014, would
seriously damage every state and territory workers' compensation and work
health and safety arrangements.
In addition, several submitters drew attention to the extensive number
of new rules to be established or altered by legislative instruments under the
ACTU noted that several of the legislative instruments will 'provide for the
removal or alteration of rights and exclusions from compensation'. ACTU
therefore noted that the full impacts of the bill might not be known when the
bill is voted on.
Finally, a connection was drawn between the Seafarers Rehabilitation
and Compensation Act 1993 (Seafarers Act) covering Australian seafarers and
the SRC Act including that the Seacare and Comcare schemes were both founded on
the no-fault principle. In this regard, concerns were raised about the
potential for shipping employers to exit the Seafarers scheme and join the
Comcare scheme should the Safety, Rehabilitation and Compensation Legislation
Amendment Bill 2014 pass the Parliament.
Schedule 1: Tightening eligibility requirements for compensation and
The bill tightens the eligibility requirements for workers compensation
by distinguishing between work and non-work related injuries. The department sets
out the rationale behind these changes:
There is little justification for workers' compensation to be
paid where an injury or disease is not caused by work but occurred at work.
Similarly, workers' compensation should only be available where either an underlying
condition, or the culmination of that condition (such as a heart attack or
stroke), is contributed to, to a significant degree, by the employee's
The department noted that in 2002, the Federal Court decided in Wiegand
that an employee's perception that their illness or injury was caused by work
was sufficient to enable them to claim and receive workers' compensation,
irrespective of the reasonableness or reality of that perception:
In 2013 a CSIRO employee received workers' compensation under
the Comcare scheme for migraines that he claimed were caused by the
electromagnetic frequency (EMF) emitted from his work computer even though
there was no medical evidence to support his claim. For recreation, this
employee flew a light aircraft from his rural property. Experts considered that
in-flight EMF would be considerably higher than in an office environment. Based
on the Federal Court judgement in Wiegand v Comcare  the
Administrative Appeals Tribunal found that the employee's perception that the
disorder from which he suffered was caused by exposure to EMF was sufficient to
accept his claim, even though the perception was not reasonable or based in
The department also noted that a 61 per cent increase in the incidence
of mental stress claims under the scheme between 2009-10 and 2013-14 'is
significantly higher than the average cost of other claims' (see figures 2.4
and 2.5 below).
Figure 2.4: Incidence of mental
stress claims (Source: Department of Employment, Submission 22, p. 7).
Figure 2.5: Average total cost of
mental stress claims (premium payers)( Source: Department of Employment, Submission 22,
In order to address the consequences of the decision in Wiegand v
Comcare, the bill therefore requires 'reasonable grounds' for an employee's
perception that an injury 'was contributed to, to a significant degree, by an
The APSC welcomed the differentiation between work and non-work related
injuries. The APSC pointed out that:
By requiring an increased causal connection between the
injury and the employee's employment, employers in the Comcare scheme will no
longer be required to insure against the costs of injuries, like strokes and
degenerative spinal conditions, over which they have little control or
The APSC also welcomed the increased threshold for perception-based
claims because it 'will introduce further rigour into the scheme when
determining liability for psychological injury claims'.
The APSC gave the following example of how the findings in Wiegand v
Comcare had been applied in a work related stress claim:
In 2012, an Australian Government employee submitted a claim
for workers compensation for 'work related stress'.
In her claim, the employee alleged that when she requested a
fellow colleague assist her to move a table on a trolley, the colleague did so
by moving the table 'wildly from side to side' and 'banging on glass and metal'.
The employee further stated that the colleague's behaviour was 'volatile and
extremely pressured' and she could 'feel the intensity of his anger and rage'.
Whilst CCTV footage shows the employee and her colleague
moving a table together, it did not reveal any behaviour which may be construed
as aggressive or violent.
Comcare applied the Federal Court decision of Wiegand v
Comcare in finding that the employee's perception of the events
significantly contributed to her condition.
The claim was therefore eligible and compensation was paid.
The APSC noted that as a result of successful claims based on the
decision in Wiegand v Comcare, 'managers in the APS regularly report
that some employees covered by the Commonwealth scheme see Comcare as a 'soft
touch'. The APSC stated that 'such an attitude is not healthy for the
individual concerned, undermines the majority of hard working and ethical
public servants and is not fair on agencies and taxpayers'.
The APSC saw the tightening of the eligibility requirements as vital for
arresting the substantial increase in workers' compensation premiums over the
last four financial years.
Furthermore, the APSC noted that fraud notifications had increased by 15
per cent during 2013-14 compared to the previous year, and that injured worker
fraud accounted for more than 95 per cent of all allegation types. The two most
significant fraud allegations were embellishment of an injury and injured
workers earning an undisclosed income or working without notifying Comcare or
The APSC stated that spurious and fraudulent claims not only undermined
the viability of the scheme, but also unfairly tarnished the reputation of the
majority of public servants:
The APS believes in providing support to employees who are
injured and genuinely need support. Doing so requires a viable and sustainable
workers' compensation scheme. The APS cannot afford to continue paying for a
scheme that accepts claims that are unrelated to work, and provides treatment
and services to employees that are not evidence-based.
The taxpaying public expects the Comcare scheme to be fair
and comparable to other schemes. The cost associated with defending spurious
claims has been increasing. If unchecked, this has implications for the
scheme’s viability. In addition, a prevalence of spurious claims invokes a
broader impact of undermining respect for APS employees.
Employers and employer groups generally welcomed the changes to
eligibility requirements proposed in Schedule 1. Ai Group viewed the amendment
as important because it 'should ensure that employers are not required to make
workers' compensation payments for injuries which are not closely connected to
Transpacific Industries (TPI) supported both the proposal to exclude designated
injuries such as heart attacks, strokes and spinal disc ruptures where there is
no significant employment contribution, and the increase to the threshold for
perception-based disease claims. Noting that the changes would align the scheme
with State based workers compensation legislation, TPI stated that the
amendments 'will greatly assist employers in reducing the burden of cost for
lifestyle and age related disease processes over which they have limited
Ai Group also welcomed clauses 10 to 13 and new section 7A that enables
Comcare to determine, by legislative instrument, a Compensation standard. Ai
Group was of the view that:
these combined amendments will allow for a transparent
assessment to be undertaken in relation to the very difficult scenarios that
arise when there is a potential combination of work related and non-work
related factors associated with an ailment or aggravation. Employers
continually raise this issue across all schemes and it will only become more
important as the ageing workforce continues to work into years where it would
generally be expected that such ailments or aggravations would occur as part of
the ageing process.
Concerns about Schedule 1 went to both the form and the substance of the
changes. The Law Council of Australia (Law Council) was concerned about the
basis upon which decisions are to be made. The Law Council proposed safeguards around
the provision for a decision-maker to assess the probability that an injury was
employment-related to a significant degree. The Law Council recommended the
decision be based on appropriate medical evidence:
The Law Council recommends that Parliament impose a safeguard
in Schedule 1, Part 1, Clause 11 of the Bill, requiring that, in the assessment
of the probability that an employee would have suffered an ailment or
aggravation, or a similar ailment or aggravation, at or about the same time or
stage of an employee's life, a decision-maker must base his/her/its decision on
medical evidence from an appropriately qualified specialist.
Concerns were also raised about making substantive changes to the law by
regulation. The Law Council, Slater and Gordon Lawyers (Slater and Gordon), and
the Australian Council of Trade Unions (ACTU) were of the view that substantive
legislative change should be effected by amending the SRC Act rather than by
using delegated legislation:
The Law Council is also concerned that further conditions
could be added by regulation rather than amending the Act itself (Schedule 1,
Item 15 - Clause 5C(1)(g)). Additional injuries should be added to the
legislation only by legislative amendment, not regulation, which should only be
used for non-substantive changes.
Several submitters disagreed with the basic premise of the legislation.
The Australian Lawyers Alliance (ALA) claimed that the changes to the
assessment that an injury was employment-related to a significant degree might
provide an avenue for an employer to 'shirk responsibility' for an injury by
contending that, because of an employee's age,' they probably would have
suffered the injury anyway'.
Angela Sdrinis Legal (Angela Sdrinis) expressed disappointment that the
bill will reduce the costs of the scheme by cutting the benefits currently
available to workers, rather than reducing costs by focusing on reducing
injuries in the first place and getting injured workers back to work more
There is no doubt workplace injuries do cost too much both in
monetary terms and in terms of human suffering. Work injuries cost employers
and they cost workers. The SRCA has never provided common law type damages the
aim of which is to put a worker in the position they would have been had they
not been injured. Increasingly, with limits on and reduction of benefits,
workers who are in receipt of compensation under the Comcare scheme, find that
they struggle to make ends meet. Many workers with long term injuries go so far
backwards after a work injury that they never recover, either psychologically
or financially. Of course the effects are worse for those workers whose claims
are denied altogether and the proposed changes to the SRCA will mean that some
workers will lose the right to receive compensation at all or their benefits
under the scheme will be substantially reduced.
If the Government and employers want to save money in the
long term the emphasis should be on health and safety and not on trying to
reduce benefits once an injury occurs. In the area of mental health in
particular, where we are seeing an increasing incidence of psychological injury
because of bullying in the workplace, the changes proposed in the Bill will
make it even harder for these workers to successfully claim compensation. This
means that there will be even less pressure on employers to provide a safe
workplace and injured workers will end up on the scrap heap at the cost of tax
payers rather than employers.
Angela Sdrinis stated that, overall, the bill 'is very hard on workers
who develop psychiatric injuries' and might even be counter-productive:
Instead of reducing benefits available to workers, the
Government should be asking what is making workers sick and how to decrease the
incidence of work place bullying and stress. There is no incentive for
employers to deal with bullies in the workplace, or indeed with injuries generally,
if they do not have to deal with the consequences and someone else has to pay
for the damage done.
Slater and Gordon stated that:
The Bill will dramatically reduce the rights and entitlements
of workers currently in the Comcare scheme. Many more thousands of injured
workers will lose rights to compensation if the 2014 bill is passed as the 2014
bill proposes opening up the Comcare scheme for major expansion nationally.
The Bill fails to give effect to most of the recommendations
made in the Hanks/Hawke Review, especially those which would be advantageous to
injured workers. It contains a series of devices to remove injured workers from
the scheme and other provisions that reduce quantum of compensation. We believe
that almost all provisions in the Bill are unfair to injured workers and that
some of the provisions can be characterized as grossly unfair and inhumane.
Several submitters found the introduction of a 'reasonable basis' test
for psychological injuries deeply troubling.
The ALA noted that the test had 'the potential to drastically restrict
legitimate access to compensation' by unfairly judging workers' actions:
Many people faced with difficult, urgent and threatening
situations at work are likely to be judged by decision makers with the benefit
of hindsight. Decision makers are essentially asked to retrospectively analyse
a situation and form a judgement concerning how someone should have reacted
Slater and Gordon stated that:
The current test for psychiatric injury is known as the Weigand
test. Whilst this test requires there to be a significant work event that
contributed to the condition for liability to be accepted, it is not necessary
to establish the worker's response was reasonable. The bill removes this test and
introduces an objective test that requires a worker to demonstrate there were
reasonable grounds for the belief or interpretation of the incident or state of
This is at odds with the fact that psychological conditions
may of their nature not be rational. The Courts define a psychological
condition as one that is 'outside the bounds of normal mental functioning'. Consequently,
this proposed test is flawed and inappropriate.
Noting that 'many workers never recover from the effects of work place
stress/bullying and some actually take their lives', Angela Sdrinis found the
further restrictions placed on claims for psychological injuries 'particularly
The implications for workers engaged in manual work, of excluding spinal
injuries from compensation, were of concern to several submitters. Angela
Sdrinis noted that since the expansion of the scheme to include licensees, the
scheme no longer just covered white collar workers. Consequently, with many
workers under the scheme now employed in industries where the work is largely
manual, 'there are many more workers suffering serious spinal injuries', and
those injuries will not be compensable under the changes proposed in the bill:
We all suffer degeneration in the spine as we age. The law to
date has essentially been that provided that a worker with degenerative changes
had been asymptomatic, where an injury at work renders the conditions
symptomatic, workers are entitled to compensation. The proposed changes will
mean that many workers with back injuries will no longer be eligible to receive
compensation and employers will be under less pressure to ensure safe work
places in terms of lifting and other manual handling arrangements.
The Communication Workers Union (CWU) noted that many of its members
worked for self-insurers in the Comcare scheme such as Telstra and Australia
Post. The CWU noted that motorcycle crashes and manual handling formed a
significant component of all injuries amongst workers at Australia Post:
Truck drivers and posties recorded the highest number of
deaths on the job in 2012. Transport workers accounted for nearly one-third of
all workplace deaths that year. Vehicle collisions caused most fatalities.
Motorcycle crashes occur in significant numbers accounting for about 30 per
cent of all workers' compensation claims within Australia Post
Muscular stress while lifting, carrying or putting down
objects (manual handling) is the most common cause of serious injury across the
postal industry. Manual handling is about 43 per cent of all workers'
compensations claims within Australia Post. Machinery hazards persist in
causing injury and being struck by moving objects such as mail handling
Our postal members also work in the retail trade. The retail
trade is in the top 10 most dangerous line of work. The most common cause of
serious injury for retail workers within Australia Post is manual handling,
slips, trips and falls, being struck by objects, verbal abuse and threats from
customers and armed hold ups. The system of work itself contributes to
musculoskeletal injury because of the burden of standing all day upon the body.
Our field workforce members continue to suffer muscular
injuries associated with work in confined spaces (pits, ceilings, spaces under
houses), work which also involves potential exposure to hazardous substances,
including (but by no means limited to) asbestos.
Given the prevalence of musculoskeletal conditions within this sector of
the workforce, the CWU therefore expressed grave concern that 'the changes to
eligibility requirements ('designated injury') potentially rule out any or
every musculoskeletal injury from workers' compensation'.
Likewise, the CFMEU pointed out that the proposal to disallow musculoskeletal
claims would be particularly unfair on manual workers whose 'vulnerability and
susceptibility invariably arises from the simple fact of doing hard manual work
all their lives'. The CFMEU was therefore of the view that workers are:
...entitled to expect that their employer will make financial
provision so that if an accident happens they will be properly paid until they
are able to come back to work. If that is expensive for employers the way a
First World country should seek to limit those costs is by paying even more
attention to safety and eliminating, to the maximum extent possible, injury and
illness at work.
The method proposed in the 'Improving Comcare' Bill is to do
it in the way of a Third World country, by reducing the cost of each claim, or
making it impossible for claims to be made.
That is not something that the Parliament should be involved
Reasonable management action
Mental stress claims related to 'reasonable administrative action' was a
particular area of contention. Some submitters argued that the balance had
tilted too far in favour of employees and that this shift had had a detrimental
impact on the ability of employers to effectively manage employees in the
workplace. The department noted that as a result of recent rulings by the AAT and
courts, even appropriate action by employers and managers can lead to
successful claims for mental stress injury, with unfortunate consequences for
management practices, professional reputations and staff morale:
Employers have argued that if they and their managers behaved
appropriately when an employee claims to have suffered a mental stress injury,
they should not be liable for workers’ compensation. The AAT and courts have
ruled that the only areas that are exempt from employee mental stress claims are
those where managers are undertaking formal performance appraisals, counselling
action, suspension action or disciplinary action. In practice, this means that
a stress claim can be successful in every other circumstance, even where a
manager was behaving appropriately. For example, stress claims can be
successful where the workplace undertook a reasonable and appropriate
restructure and the employee did not like it; or where a manager has asked an
employee to work in another location that is reasonable; or where a manager is
working one on one with an employee to improve their performance.
Most Commonwealth agencies have reported they are concerned
that if they encourage assertive and accountable management practices they risk
mental stress claims being lodged. Managers are understandably concerned about
the impact of this on their professional reputations, and on the morale of the
rest of their staff.
The department argued that by broadening the definition of 'reasonable
administrative action' to include any reasonable management action, the bill
would remove impediments to effective workplace management. Furthermore, the
bill would close a loophole that had allowed employees to 'make a claim in anticipation
of reasonable management action being taken'. The department noted these
changes were necessary to ensure that 'employers and taxpayers are not held
financially responsible for certain injuries and illnesses (including stress)
that have no causal connection to the workplace or to a manager's behaviour'.
The APSC provided the following example to demonstrate the narrowness of
the current 'reasonable administrative action' exclusions:
An Australian Government employee's manager had a discussion
with her about aspects of her performance, and a failure to follow direction.
The employee filed a workers' compensation claim for
psychiatric symptoms she claims arose out of that discussion. The employee
claimed her manager was ineffective, subjected her to bullying and harassment,
and socially isolated her from the rest of the team when she complained.
The employee's claim progressed to the Administrative Appeals
Tribunal, where Comcare agreed that the employee had been properly diagnosed as
suffering from adjustment disorder with symptoms of anxiety and that her
employment made a significant contribution to the condition.
However, Comcare denied liability for the claim on the basis
that the manager took reasonable administrative action in a reasonable manner.
In 2014, the Tribunal found that the discussion between the
employee and her manager did not constitute administrative action and was not
action taken in respect of the employee's employment. It ruled in favour of the
employee and ordered Comcare to pay compensation.
The APSC pointed out that the ability to manage employee
underperformance is a critical and legitimate aspect of successful management.
However, the threat of potential stress claims can impede reasonable management
action with negative impacts on the organisation, co-workers, and every supervisor
in the APS:
The reasonable administrative action provisions were
introduced to protect an employer's capacity to manage their staff through
legitimate human resource management actions undertaken in a reasonable manner.
This means that when an employer has exercised a legitimate human resource
action, which was reasonable in the circumstances and done in a reasonable
manner, an employee should not be eligible for workers' compensation for an
ailment that arises from that action.
However, over time, the Courts have adopted a narrow
interpretation of the definition of reasonable administrative action. This has
resulted in unintended consequences. Anecdotal evidence suggests that APS
managers are often apprehensive of workers' compensation claims or allegations
of bullying and harassment when they are being pro-active and responsible
Failure to manage underperformance is a drain on resources
and productivity, which also has a negative impact on co-workers, and must be
The APSC therefore welcomed the proposed amendments because they would 'empower
managers to better manage underperformance and workplace change without fear of
reprisal through a workers' compensation stress claim, if they manage their
workers in a reasonable manner'.
Within the context of reasonable management action, it is important to
note that employers in the APS are governed by a stringent set of rules:
Employers in the APS are subject to a strict framework of
rules and regulations when managing employees and workplace change including
under the Public Service Act 1999, the Fair Work Act 2009 and the
Work Health and Safety Act 2011.
Employer responsibility also extends to preventing and, where required,
managing workplace bullying:
The APS acknowledges that it has a responsibility to prevent
bullying. Also, they are committed to engendering a workplace culture that does
not tolerate bullying. In circumstances where bullying does occur, employers
have an important role under the Act to manage early intervention and
rehabilitation. The amendments strengthen and clarify this role and the mutual
obligations of employers and employees.
Both Ai Group and TPI supported the proposal to exclude reasonable
management action (including anticipated actions and organisational and
corporate restructures). Ai Group stated that it was 'totally inappropriate for
a person to be able have a claim accepted simply because they lodged the claim
before the employer commenced reasonable management action in a reasonable
TPI noted that the change would align with State based workers compensation
The degree to which the bill accurately reflected the recommendations of
the Hanks Review with respect to the definition of 'reasonable administrative
action' was questioned by several submitters.
The Law Council argued that contrary to recommendation 5.6 from the
Hanks Review, 'the bill expands the notion of 'reasonable administrative action'
to virtually any management action by an employer'.
Angela Sdrinis stated that widening the scope of 'reasonable
administrative action' while ignoring other relevant elements of the Hanks
Review amounted to 'cherry-picking' the Review recommendations.
Slater and Gordon (and ACTU) pointed out that a further consequence of
broadening the concept of 'reasonable administrative action' to 'management
action' (and thereby include any operational direction) would be to not only
exclude most workplace injuries, but also reverse the existing burden of proof,
contrary to the original purpose of the scheme:
Hence, an injury which has been contributed to by a system of
work may be excluded from compensation unless the worker can establish that the
system of work was not reasonable. This introduces the concept of fault into a
no-fault scheme and a perverse onus of proof upon a faultless injured worker.
The injured worker may be completely faultless and merely following an employer
direction when injured, but unless the worker is prepared to take legal action
to prove unreasonableness on the part of the employer, they will be excluded
We submit that such a proposition is at odds with the history
and purpose of all Australian workers' compensation schemes.
Furthermore, the Law Council warned that the failure to qualify the
meaning of 'management action' could lead to protracted litigation:
...the absence of a limitation or qualification of what is
meant by the phrase 'management action' is likely to lead to uncertainty and
complex litigation, such as in Commonwealth Bank of Australia v Reeve
(2012) 199 FCR 463, in order to determine the distinction between an employee's
usual duties and 'management action'.
The Law Council also pointed to an inconsistency between the SRC Act and
the Fair Work Act 2009 (Fair Work Act) regarding the definition of
'management action', noting that the effect of the inconsistency could be
The effect is particularly significant given the decision of Hart
v Comcare, that if just one of the factors leading to the development of a
condition was 'reasonable administrative action', then the claim will be
excluded, even if that factor was a minor or insignificant one.
The Law Council and Angela Sdrinis both noted that the Hanks Review had suggested
amending the SRC Act to make the operation of the provisions fairer by ensuring
that 'reasonable administrative action' must be a significant contributing factor
in the injury in order for a psychological injury claim to fail.
The Law Council recommended that 'Parliament adopt an exhaustive
definition of 'management action' and harmonise the definition' between the SRC
Act and the Fair Work Act.
Noting that broadening the definition of 'reasonable management action'
would make 'it much easier to disqualify claims', the ALA argued that the
change was a complete reversal of what paragraph 5.123 of the Hanks Review
The Finance Sector Union (FSU) and the ALA pointed out that the Full
Federal Court judgment in Reeve
distinguished between the 'administrative' and 'operational' actions of an
employer. The distinction meant that an instruction to an employee to perform
work at a particular location was an operational and not an administrative action
and would not therefore trigger the exclusionary provision. This meant that any
injury to an employee resulting from an operational action would still be
The ALA argued that 'the Court came to this conclusion because otherwise
it would be difficult to see how 'anyone would have an entitlement to workers'
The Court gave the example of injury incurred to an employee
in falling down stairs at his or her workplace being the result of
administrative action in directing that employee to work at that workplace. If
a truck driver became injured as a result of a motor vehicle collision, it
could be asserted that the injury was the result of the administrative action
in directing the driver to drive a particular route on that day.
The FSU noted that many of their members work in financial services
organisations that undertake regular organisational and corporate restructures,
including off-shoring' jobs. Given the uncertainty regarding ongoing
employment, employees are especially vulnerable to stress-related injuries at
this time. The FSU was concerned that the bill would absolve the employer from
any responsibility for their workforce's mental well-being resulting from the
The CFMEU pointed out that many of their members work in FIFO operations
and that the bill would serve to exclude those workers from advancing a claim
for psychiatric illness:
Those workers are not FIFO because it suits them. They are
FIFO because employers choose to structure their operations in that way. This Committee
will be well aware of the issues to psychiatric health posed by that lifestyle.
As a result of the amendments proposed in the 'Improving' Bill, it will be
almost impossible to advance a claim. It will no doubt be said by employers
that all rostering, accommodation, messing, travel and other decisions
affecting the health and well-being of FIFO workers are simply 'Management
Actions' and therefore squarely caught by the exclusionary provisions. This is
not an improvement.
The ALA argued that by circumventing the decision made by the Court in Reeve,
the bill would 'make it far more difficult for anyone to receive compensation
for accidents and injuries arising in the workplace'.
The ALA gave the following example of the dangers in the new approach:
Michael works as an Agent for the Australian Federal Police.
As part of his duties, he was directed by his Superior Officer to investigate a
suspected drug lab that was located in a residential home.
Michael goes to the location and sees the drug lab through
the back window. He knocks on the front door and out jumps a stranger and stabs
him in the chest multiple times, causing severe puncture wounds to his heart
and lungs. He is put in a critical condition and is fighting for his life in
A compensation claim was lodged. However, under the new laws,
the claim can be rejected because the injury resulted from the reasonable
operational direction given by Michael's superior officer to investigate the
suspected drug lab.
The committee recognises that difficult decisions will need to be made
regarding situations that involve a combination of work related and non-work
related injuries or ailments, and that this situation will be exacerbated by
both an ageing population and people working till later in life.
However, decisions made under the current SRC Act have placed employers in
an invidious position by lumbering them with responsibility for injuries that
have scant connection to the workplace. The committee is of the view that the
amendments will bring a greater degree of clarity and transparency to the
decision-making process around eligibility for compensation. The committee is
also of the view that the bill strikes the right balance between fair and
reasonable compensation for employees and ensuring scheme viability by enabling
employers to fund work-related claims.
The committee takes very seriously the evidence provided by the Australian
Public Service Commission concerning the increasing incidence of allegations of
injured worker fraud. The committee regards it as imperative that greater
rigour is introduced into the assessment of compensation claims and is
confident that the changes brought in by the bill are both necessary and
sufficient to accomplish this vital task.
Schedule 2: Enhancing rehabilitation and return to work outcomes
A key facet of the bill is the focus on the vocational (rather than
medical) nature of rehabilitation services. The bill amends the rehabilitation
and return to work requirements in the SRC Act in order to improve return to work
Comcare noted that early intervention programs benefit both employees
Early intervention programs have been found to have a
positive effect not only in terms of improving employee outcomes (recovery),
but also in terms of their capacity to remain at work, reducing the length of
time they are away from work, reducing the likelihood of further sickness absences,
and ultimately, improving their longer term perceptions of the workplace.
Similarly, workplaces using early intervention programs have found that they
reduced the number of days employees are absent from work, their costs, and the
amount of lost productivity.
Comcare also pointed to 'compelling international and Australasian
evidence that work is generally good for health and wellbeing, and that
long-term absence, disability and unemployment generally have a negative impact
on health and wellbeing'. Comcare noted these views are endorsed by Australian
medical experts led by The Royal Australasian College of Physicians and the
Royal Australian College of General Practitioners.
The APSC supported the moves to improve return to work outcomes and agreed
with the evidence on the benefits to employees of returning to work in some
capacity as soon as possible:
The APS believes that the Comcare scheme provides a generous
set of entitlements for injured public service employees. However, there is
general agreement amongst Secretaries and Chief Executive Officers that the
current legislation focuses on administrative decision making rather than
injury management and supporting staff to get back to work.
There is strong international evidence that injured workers
will get sicker if they remain at home. Historical thinking was that injured
employees should be at home until they are 100 per cent job ready. Current
evidence is that the interests of employees are best served if they return to
work as soon as possible, with workplace adjustments to support their return.
The Safety Rehabilitation and Compensation Licensees Association (SRCLA)
noted that licensees 'have a proven history of effective rehabilitation of
injured employees and the SRCLA welcomes the proposed introduction of change
that will provide further opportunity to improve rehabilitation effectiveness'.
However, the Australian Manufacturing Workers' Union (AMWU) argued that
the department was using the research on the benefits of work selectively:
Research on the benefits of work is selectively used to
justify the changes. Being employed in good work is much better than being
unemployed and it is also better than being employed in bad work. The evidence
is strong – there are health benefits of being involved in good work. Work that
kills or maims – physically or psychologically – is not beneficial.
The bill expands the definition of what is considered suitable
employment by enabling an employee to 'look beyond their current employer while
they are returning to work without losing the right to employment with their
employer'. Consequently, authorities can maximise the opportunities for
vocational rehabilitation by using the return to work hierarchy set out below:
Same job/same employer: the first goal is to return the injured
employee to the original employer in the original job.
Modified job/same employer: to encourage the employer to modify
the original job or to provide employment in a different job at that employer.
New job/same employer: to enable continuity of employer when the
employee is no longer able to undertake their original job.
Same job/new employer: to assist the injured worker in finding
employment with a different employer in a related industry.
Modified job/new employer: to assist the injured employee in
finding employment in a modified role with a different employer in a related
New Job/new employer: to assist the injured worker in finding a
job in another industry.
TPI welcomed the simplification and streamlining of the administrative process
relating to the provision of rehabilitation services as well as 'the focus on
work readiness and assessment in line with vocational capability rather than
Comcare noted that the bill will engender greater cooperation between
employers, employees and the relevant authority to improve return to work
outcomes for employees, and will provide Comcare with the ability under the SRC
Act to support employees to find suitable employment in all employment sectors.
The APSC noted that under the bill, Comcare would be empowered to take a
more active role in determining which agency has rehabilitation
responsibilities following a machinery of government change.
Angela Sdrinis welcomed the emphasis on return to work requirements, but
expressed disappointment employers will face no penalties if they 'fail to
provide suitable duties in circumstances where there is evidence that
alternative work could be made readily available'.
Furthermore, Angela Sdrinis pointed out that the Hanks Review had made
specific recommendations with regard to return to work and job replacement
Hanks recommended that the SRCA be amended to provide for a
requirement that all reasonable steps be undertaken to return an injured employee
to work (6.14) and to provide for the power to impose penalties where this does
not occur (6.17). Further, Hanks recommended the establishment of a scheme wide
job placement program (6.18). This could work particularly well with respect to
workers with work related psychological injuries where the barriers to ever
returning to the workplace where their injuries occurred are in many cases
It is very disappointing that this approach has not been
adopted by the Government. There would be a certain reciprocity involved in a
scheme wide job placement program i.e. employers would be a lot more willing to
take on a worker injured in another workplace if they knew that other employers
would be under pressure to take on 'their' injured workers.
Likewise, Slater and Gordon (and ACTU) argued that the new workplace
rehabilitation plans in the bill put the interests of employers ahead of the
needs of workers:
The bill allows the 'liable' employer unfettered discretion
to impose workplace rehabilitation requirements, whether or not the
requirements could in fact be harmful. This will put many workers in an
impossible position whereby they must either disobey the advice of their
qualified medical practitioner or face sanctions and further financial penalty.
Their right to challenge the reasonableness of directions given to them by their
employer is removed by the bill.
On the one hand, workers are faced with financial penalty and
sanctions for failure (in the opinion of the employer) to adhere to their
obligations, however, on the other hand, employers are to be provided with
financial incentives to meet their obligations. Again, this is a further illustration
of putting the interests of employers before the needs of injured workers and
UnionsWA and ACTU expressed concern that the changes imposed greater
responsibilities and penalties on workers while at the same weakening the
responsibilities of liable employers:
The proposed Schedule 2 of the bill on Rehabilitation would
weaken the responsibility of the liable employer to assist workers to return to
work, yet it also provides those same employers with extraordinary powers to
direct injured workers on what health providers they must see and what tasks
they must under-take. The proposals take rehabilitation out of the hands of
qualified health practitioners and into the hand of employers.
Despite these new powers for employers, the bill provides for
no penalties on employers if they fail genuinely to engage in the
rehabilitation process. The bill ensures that a Workplace Rehabilitation Plan
remains valid even when a worker is not consulted. Employers also need only
consult with medical practitioners as far as 'reasonably practicable' when
constituting a plan.
The FSU recounted several instances of injured workers either being
pressured to return to work too early or not being provided with adequate
equipment (such as a seat and footstool), or appropriate breaks to accommodate
posture changes, despite the recommendations in certificates of capacity
provided by treating doctors and specialists.
Schedule 3: Improving the scheme's integrity and financial viability
Provision of medical information
The ALA asserted that requirements dealing with the provision of medical
information lacked any privacy protections and effectively undermined the
The bill's proposal to compel workers to provide all medical
information from treating medical providers is highly inappropriate. No other
workers' compensation scheme provides for such a broad and unrestrictive
provision of private medical information. The private rights of individuals to
consultation and treatment are being eroded by these provisions without
justification. Workers may be obliged to disclose highly confidential and
sensitive information irrelevant to the workers compensation issues in dispute.
That information can be used for a variety of purposes to the detriment of the
injured worker without adequate protection checks and balances.
S 58, 58A, 120A and 120B all represent changes that now
enable Comcare and licensees to force an injured worker or claimants to obtain
their doctor's private clinical notes. A worker must obtain 'relevant
information' or risk draconian sanctions being applied which, in this case,
extends to a refusal to deal with a claim.
These changes represent an erosion of the doctor-patient
relationship of confidentiality.
Such a proposal is deeply concerning and attacks the
fundamental rights of individuals to engage in meaningful and confidential
consultations with their medical practitioners.
Slater and Gordon agreed with the above assessment and also made the
following observations. First, there is no appeal mechanism 'where there is a
genuine dispute in relation to whether certain information or a certain
document is actually relevant to a claim'. Second, 'there is no obligation
enshrined in the bill that requires an employer to use the information for the
purpose for which it was obtained'. And third:
The new section 58A takes the breach of privacy one step
further in that it enables Comcare or the relevant authority to obtain
documents about an injured worker from a third party. The bill also enables the
gathering of information without the permission of the injured worker from
UnionsWA and ACTU also expressed concern that the bill invaded the
privacy of injured workers backed up with the force of sanctions:
If it is passed Comcare or an employer can demand that an
injured worker provide documents in not less than 14 days. A failure or refusal
to do so would be a breach of an obligation of mutuality. Comcare or a relevant
authority would also be able to obtain third party documents about injured
ACTU welcomed the introduction of statutory time limits on
decision-making, but noted that the timeframes 'are the least beneficial by far
for injured workers of any scheme in Australia (except for other Commonwealth
schemes that like Comcare, don't have time frames)'.
Furthermore, ACTU pointed out that:
There are no sanctions or penalties placed on Comcare, the
employer, or the relevant insurer if self-insured, if these time frames are not
If these time frames are not met, the worker's claim is
automatically deemed to be rejected, even if their claim is in fact valid.
Although the worker has access to an appeals process, they may not always be
aware of this and as a result, may not receive compensation to which they are
entitled, due to lack of knowledge of the proper processes.
Compensation for detriment caused
by defective administration
The department noted that the bill will rectify this matter and improve
the integrity of the scheme 'by creating an avenue for reparation' through 'empowering
Comcare to make discretionary payments to people who have suffered detriment
due to defective administration on Comcare's part'.
These changes were welcomed by Angela Sdrinis.
Schedule 4: Provisional medical expense payments
Medical expense payments
The bill introduces provisional medical expenditure payments capped at
$5 000 without the need for an employee to lodge a formal workers'
The APSC supported this change as being complementary to the focus on
early intervention by ensuring that injured or unwell employees gain assistance
as soon as it is required, leading to improved health outcomes.
Several submitters made suggestions for improving the schedule of fees.
TPI did not fully support the provision in Schedule 4 to enable a relevant
authority to make provisional medical expense payments capped at $5 000 in
respect of an alleged injury before a claim is determined. While supporting the
current medical expense process, TPI recommended that the capped amount be at
the discretion of the relevant authority rather than legislated:
TPI does not fully support the amendments proposed under
Schedule 4. TPI strongly agrees with the provisional medical expense process as
it already allows an ability to pay provisional expenses under an Early
Intervention program. This is currently working well with the goal of employees
receiving and having access to medical assessment and treatment post injury
without a need for liability determination. Treatment then follows from this,
but it is time and cost limited to enable management and control. It also
ensures that claims are moved to determination of liability outside of the set
parameters. This sets an expectation that if the nature of the injury is
ongoing then the claim liability determination process is important to ensure
the appropriate expertise in its management. The ability to recover payments
being made as a result of false or misleading statements is an important
protection in this process. TPI’s primary concern with the proposed change is
the legislated amount of $5 000 as an upper limit. This will potentially
present an extra burden in relation to management of this process, potentially
delay employees submitting claims as they will be keen to utilize the full
(new) amount available under provisional medical treatment. TPI proposes that
the capped amount is not legislated but at the discretion of the relevant
John Holland did not support a mandated schedule of medical fees and
recommended greater flexibility in the development of any fee schedule:
John Holland considers that the mandated schedule of fees for
medical treatment, examination and reports will negatively impact on our
employee's ability to access appropriate care in a timely manner. Mandating
schedule fees for independent medical examinations may also restrict the number
of bookings doctors are willing to take which may also delay decisions
regarding claimed entitlements or treatment options such as surgery requests.
John Holland considers that treatment outcomes as well as managing costs associated
with it, can be better achieved through initiatives such as clinical
frameworks. We strongly suggest that any schedule of fees that is developed, be
developed in a manner providing for flexibility to account for changes in
location; urgency; particular; and peculiar circumstances. Our people are often
working in remote and rural settings where choice of treatment is limited and
we do not support legislation that may result in them needing to seek treatment
in alternate locations purely due to cost; or situations where our employees
themselves will be required to contribute to their own medical treatment as a
result of the introduction of a mandated schedule of fees.
Ai Group was similarly cautious about the proposal:
...there is scope, unless the scheme has specific protections,
for employees to obtain multiple short periods of weekly compensation without
claims ever being determined. This is of particular concern to employers when
liability would generally be contested, i.e. psychological injury or aggravations
of pre-existing injuries.
On balance, however, Ai Group believed 'that the granting of provisional
liability for medical costs establishes a workable compromise that enables an
employee to seek timely medical treatment which could enable them to stay at
work, or return to work in a timely manner'.
Angela Sdrinis welcomed the introduction of the provisional medical
expense payments because early medical intervention can often assist in quick
recovery. However, Angela Sdrinis noted that the Hanks review also recommended
the introduction of provisional acceptance of liability:
Hanks also recommended provisional acceptance of liability so
that an injured worker may access up to 12 weeks in incapacity payments
(recommendation 6.1). Interim liability to pay incapacity payments mean that
workers can survive financially whilst claims are being investigated. The
capacity to be paid and to have treatment also means that some of the 'heat'
would be taken out of claims during the investigation phase and this in turn
generally means that workers are better disposed to trust an employer and be
more willing to give early return to work a go.
Slater and Gordon, the FSU, and ACTU all noted that 'the bill includes
no appeal mechanism in the event an employer refuses to pay provisional medical
Schedule 5: Ensuring compensated medical expenses are evidence-based
Medical treatment based on evidence
The department stated that medical treatment under the SRC Act is
ill-defined and lacks objective standards, resulting in potentially poor
outcomes for employees, excessive costs for employers, and sub-optimal return
to work outcomes:
...medical treatment under the SRC Act is currently broadly
defined, not based on objective standards, and not required to be provided by
medical practitioners who meet a level of national accreditation. This puts
injured employees at risk, increases costs for employers, and delays recovery
and return to work.
The department (and the APSC) noted that current practices have led to
questionable claims for treatments and potential damage to the professional
reputation of the Commonwealth public service:
There have been many legal cases over the years that have considered
'reasonable' medical treatment and compensation has been awarded for what are
arguably questionable claims. These have received media attention and
potentially undermined the professional reputation of the public service. For
The AAT approved the continuation
of massage therapy payments as part of a broader treatment plan, despite no
evidence of any curative effect associated with the massage therapy in this
case. This cost $29,000 over an eight-year period.
The AAT found it was reasonable
for an injured employee living in Alice Springs (who had 'generalised anxiety
disorder and adjustment reaction with brief depressive reaction') to attend a
Buddhist meditation retreat in Queensland as part of their workers'
The AAT found it was reasonable
for an employee to be funded through Comcare to be flown from Canberra to
Townsville to receive psychoneuroimmunology treatment after the clinical nurse
psychotherapist providing the treatment relocated. This relatively new form of
treatment was not offered by anyone else in Canberra.
The department argued that the bill addresses the issues outlined above
by ensuring that 'compensable medical treatment is based on evidence and
provided by appropriately qualified health practitioners'.
The APSC agreed with the department's views on these matters and noted
that, as a result of the changes in the bill, agencies would 'no longer be
liable through premiums for the cost of treatments with little to no curative
TPI was of the view that the requirement to ensure medical treatment was
performed by an appropriately qualified health would 'enhance clinical
standards and controls of treatment delivery'. TPI also stated that the
requirement to consider the Clinical Framework principles would be of benefit
to the scheme.
Both Angela Sdrinis and Slater and Gordon raised concerns about the
Clinical Framework Principles (prepared by Comcare and defined by legislative
instrument) stating that the attempt to codify reasonable medical treatment
might unduly impinge on an individual's choice of medical practitioner.
The CWU noted the increasing use of Facility Nominated Doctors (FNDs)
doctors by Australia Post and expressed concern about the discrepancies between
the recommendations of the injured worker's treating doctor and those of the
FND. Furthermore, by empowering employers to make the final decision on return
to work, backed up by the sanctions regime (see Schedule 15), 'the rights of
workers to follow the advice of their own doctors in relation to treatment and
rehabilitation' will be undermined.
ACTU warned that a situation where injured workers are 'being managed by
employer and Comcare-funded practitioners ... will create a significant conflict
Medical services table
Several submitters raised concerns about the level at which Comcare will
set the reasonable costs of medical treatment in the new Medical Services
The risk is that there may be a significant gap between what
Comcare will pay and what treatment providers will charge. This may lead to
some injured workers being unable to afford to subsidise their treatment.
The Law Council therefore recommended either that the medical services
table and related provisions be excised from the bill and that 'Comcare
continue to consider and pay reasonable costs for medical treatment required by
injured workers on a case by case basis', or:
Alternatively, if a medical services table is to be included
then it should be subject to:
- an overriding requirement that standard fees set are
reasonable, having regard to the reasonable market rates for the relevant
- consultation with the medical profession;
- regular review by Comcare to ensure that the fees rates
remain fair; and
- regular review by the Office of the Auditor-General to
ensure that the fees rates remain fair and unintended consequences do not
Schedule 6: Household/attendant care services
The department pointed to anomalies in the provision of household and
attendant care services such that 'employees with relatively minor injuries are
entitled to the same level of compensation for household and attendant care
services as those with the most severe injuries'.
The department stated that the bill addressed these anomalies by
establishing 'a tiered approach' to the payment of compensation for household
and attendant care services. Accordingly, 'there will be no time limit or cap
on the amount of compensation payable for household and attendant care services
for employees with a catastrophic injury'. By contrast, there is a three year
limit to compensation for household and attendant care services payable to
employees with a non-catastrophic injury.
TPI supported the tiered approach to catastrophic and non-catastrophic cases.
However, TPI reserved judgment on the setting of the three year limit for
non-catastrophic cases (with payment beyond three years extended only if there
is hospitalization for a further 6 months) stating that it would need to be evaluated
against outcomes over time.
The Law Council raised serious concerns about the extent of
parliamentary scrutiny that would be applied to substantive changes in the
definition of 'catastrophic injury' given that the bill proposes to effect
definitional changes by delegated rather than primary legislation:
...the definition of catastrophic injury in section 4(1) should
be specified in the Act not by Regulation, to promote consistency and certainty
in the law. It is unclear why potentially lesser Parliamentary scrutiny should
be required to amend the definition of catastrophic injury given the
significant consequences that the amendments might have for the treatment of
those with very serious injuries.
Several submitters also voiced concerns about cutting the provision of
services after three years for injured workers with non-catastrophic injuries
given that the definition of non-catastrophic injury is to be specified by
legislative instrument at a future date. The FSU, Angela Sdrinis, and Slater
and Gordon noted that workers with very severe injuries (such as amputation)
could be defined as non-catastrophic and therefore denied services after the
initial three year period.
Slater and Gordon and ACTU also observed that the formal system of
accreditation introduced by the bill will prevent family members from being
paid to provide such services (unless they become accredited, approved and
registered). While 'fully support[ing] the goal of a trained and professionally
recognised attendant care workforce,' Slater and Gordon noted that in cases
where family members are appropriate as attendant carers, 'removing family
members from the field of compensation will be detrimental to the care of many long-term
Schedule 7: Compensation for absences from Australia for non-work purposes
Given the nature of modern workforces and work requirements, ACTU noted a
worker may have valid reasons for leaving the country:
Many FIFO [fly in fly out] workers, working in high risk
industries such as mining or offshore oil and gas industries, are based in
nearby countries and fly in to work in Australia. This means that their family
base and support network may be located in a country other than Australia.
These workers would be negatively impacted by this proposal, and may be forced
to relocate their entire family in order to access compensation.
ACTU also noted that the amendments would impact on temporary visa
Many 457 and 417 visa workers are forced to return to their
country if they no longer have employment in Australia. This leads to a
catch-22 situation in instances where a migrant worker is injured at work, in
that they will be forced to return to their home country once their employment
ceases, and thereby would be ineligible for workers' compensation.
Schedule 8: Accrual of leave or absence entitlements while on compensation
The National Electrical and Communications Association (NECA) supported
the move to align the SRC Act with the end of accrual of leave entitlements
under National Employment Standards within the Fair Work Act. 
NECA also strongly endorsed the changes in the bill and was of the view
that the current arrangements imposed an unfair impost on small business:
The accrual of leave during an employee's absence, away from
the workplace is a significant impost on the business community and typically
places an unfair burden on small and medium enterprises with the least capacity
to manage workplace disruption and the costs of accrued leave through injury
downtime. As the average electrical contracting business employs 13 staff, with
92 per cent employing less than 25 staff, we support the concerns of our
members who believe that leave accrual whilst on compensation leave is an
unfair cost to bear, particularly for a small business.
Ai Group raised a concern about a potential inconsistency between the
SRC Act and the Fair Work Act with regard to the taking and accruing of leave
during a period of workers' compensation. Ai Group was of the view that:
the insertion of section 116(1A) creates unnecessary
confusion. This will be exacerbated once the amendments to the Fair Work Act
are in place, with employers and employees having to refer to two pieces of
legislation in order to understand that leave is not to accrue, and cannot be
taken. It would be much clearer if section 116 was repealed altogether,
effective on the date of Royal Assent.
If it is not appropriate to do so before the amendments to
the Fair Work Act are passed, clarity could be achieved inserting an effective
date written in the same manner as is currently the case for the proposed
introduction of clause 116(1A).
Noting the government proposal to end the accrual of leave entitlements
under National Employment Standards within the Fair Work Act for all workers'
compensation schemes, Slater and Gordon (and UnionsWA) were of the view that
the changes to the accrual of leave during a period of incapacity would place
an injured worker at a significant disadvantage:
The bill also proposes to prevent those who are unable to
work as a result of a work injury from accruing leave entitlements under their
workplace agreement. Under the current scheme, such accruals are permitted for
the first 45 weeks of a worker's incapacity. This cut places injured workers'
at a significant disadvantage compared with their uninjured colleagues who are
able to accrue sick leave, long service leave and annual leave in the same
period. There is no justification for this financial penalty against workers.
This amendment effectively punishes workers for sustaining an injury.
Schedule 9: Calculating incapacity payments
The bill uses incentives to improve return to work outcomes by
restructuring the incapacity payments for injured employees. Currently,
employees receive 100 per cent of their normal weekly earnings for the first 45
weeks and 75 per cent thereafter. Under the bill, four 'step-downs' are
introduced such that employees will receive:
100 per cent of their average weekly remuneration (AWR) for the
first 13 weeks of incapacity;
90 per cent of AWR for 14–26 weeks;
80 per cent of AWR for 27–52 weeks; and
70 per cent of AWR thereafter.
The department noted that using 'step-downs' to 'encourage return to
work is consistent with the international evidence',
and that the restructured incapacity payments 'are in line or are more generous
than those schemes that operate in all states and territories'.
Moreover, the new 'step-down' provisions will only affect 15 per cent of
injured employees because '85 per cent of employees receiving income
replacement have returned to work after 13 weeks' (see figures 2.6 below).
Figure 2.6: Percentage of employees
receiving compensation in the Comcare Scheme at defined periods (Source: Department
of Employment, Submission 22, p. 11).
The criteria for suitable employment (see Schedule 2) are integrated
with the restructured return to work incentives. This means that 'an employee's
ability to earn in suitable employment (either actual or deemed) is regularly
assessed', and that at each 'step-down', the income replacement that an
employee receives 'may be reduced if the employee has a deemed ability to earn
that they are not utilising'.
Protection for low income earners is retained, however, because 'low
income earners will continue to receive 90 per cent of their average weekly
remuneration, less their actual or deemed ability to earn, after 26 weeks'.
In addition, 'employees who return to work after 26 weeks may increase
their take-home pay (a combination of income replacement and salary from their
employer) to up to 90 per cent of their average weekly remuneration.
The department argued that allowances should not be paid to employees
that no longer perform the tasks that attract an allowance. However,
recognising that employees may require time to adjust their expenditure if they
are unable to return to work, the bill includes a two year transition period
during which injured employees are able to receive the overtime and allowance
they had prior to injury. The department gave the following example to
illustrate the arrangement:
Gary, an Australian Federal Police officer, suffered an
injury in the course of employment which has left him with no capacity for work
and an 18 per cent permanent impairment. Gary has been receiving incapacity
payments for over two years therefore under the amended Comcare scheme,
allowances and overtime are no longer included in the calculation of his
incapacity payments. Gary will continue to receive incapacity payments for all
other aspects of his pre-injury total earnings (salary, commissions, fringe
benefits, and reportable employer superannuation contributions) until
retirement age or as long as required. If Gary was covered under the New South
Wales workers' compensation scheme all Gary's incapacity benefits would cease
after five years.
The department also noted that 'all states and territories utilise 'step-downs'
of incapacity payments to encourage injured employees to return to work and to
remove disincentives to stay at home and become sicker'. Furthermore, the
department pointed out:
The Comcare scheme is one of the few workers' compensation
schemes in Australia that remains long-tail, that is, it provides income
replacement until retirement age or as long as is required, for all levels of
incapacity. Western Australia and Queensland place caps on the amount of
compensation payable per claim while New South Wales, Victoria and Tasmania
only provide incapacity payments long term if the injured employee has a severe
incapacity or has partially returned to work.
A comparison of incapacity payments across Australian jurisdictions is provided
in figure 2.7 below.
Figure 2.7: Comparison of workers'
compensation after two years (Note that the state and territory schemes allow
more access to common law damages than Comcare)(Source: Department of
Employment, Submission 22, p. 14).
NECA stated that 'step-down' provisions in the bill were 'justified by
evidence of claims within the scheme that suggest that injured workers who are
off work for between 13 and 45 weeks are less likely to return to and stay in
Furthermore, NECA noted that the four level 'step-down' 'puts downward
pressure on premiums, reduces claims costs for licensees and decreases burdens
for employers under the Act'.
Ai Group supported the new approach to accruing weeks as it aligned the
scheme with most other jurisdictions, ensured 'a relatively easy approach to
counting weeks', and provided 'an incentive, through more timely step-downs,
for injured employees to return to full time duties'.
TPI supported all of the changes to:
...the concept of normal weekly earnings to average weekly
remuneration, the change in calculation method, the proposed incapacity step
down arrangements, the amendment addressing the Comcare v Simmons and Comcare
v Burgess decisions, changes to minimum earnings arrangements and AWOTEFA reduction
provisions and the increase in statutory amount for compulsory redemptions.
Nonetheless, while supporting the 'step-downs', TPI would have preferred
the inclusion of 'a 104 week capacity test as per the Victorian legislation'.
TPI also raised concerns about aligning the retirement age to the
pension age and the greater flexibility in determining the 'relevant period':
With the relevant period remaining flexible this leaves a
greater opportunity for cases being disputed. If the relevant period was set at
12 months this would potentially provide a set process that if applied would
not result in dispute. When flexibility is offered it can lead to disputes and
challenges as to what the relevant period should be.
The Law Council noted that the 'step down' provisions contained in
Schedule 9 were 'an easier test to apply and understand', but remained of
the view, consistent with the Hanks Review, that the final 'step-down' should
be to 80 per cent of AWR.
However, Slater and Gordon pointed out that for those injured employees
deemed totally incapacitated for work, the new provisions (including the
earlier and deeper 'step downs'; the cap on incapacity payments based on 150
per cent of Average Weekly Ordinary Time Earnings of Full-time Adults (AWOTEFA)
at 13 weeks rather than the current 45 weeks; and the cuts to eligible
allowances after 104 weeks) represented a significant reduction in cumulative
payments that would 'have a disproportionate financial impact on the seriously
and permanently injured'.
Both Slater and Gordon and ACTU produced a range of graphs based on
information contained in the Hanks/Hawke Review. The graphs demonstrated that a
majority of seriously and permanently incapacitated workers stood to lose tens
of thousands of dollars in compensation as a result of the changes in the bill.
With regard to the effectiveness of an incentive based scheme, the AMWU
disputed the assertion that there was evidence to support the claim that
'step-downs' operate as an incentive for injured workers to return to work:
Although oft quoted there is a dearth of reliable evidence to
support the assumption that step downs provide the necessary incentive for
injured workers to return to work.
Instead, the AMWU noted a series of steps that contribute to sustainable
return to work outcomes:
Focus on a safe workplace and injury prevention;
Promote workers' wellbeing, including support for both
physical and emotional problems;
Build and maintain relationships with treatment and
rehabilitation services and insurance agents; and
Train all managers and workers in workplace safety and return
to work procedures.
Best-practice organisations have well established procedures
for injury prevention and occupational rehabilitation, including provision of
health treatments for workers, return to work co-ordinators of staff, and
regular contact with insurers and other key stakeholders.
Liability to pay compensation during
a period of suspension without pay
The bill addresses the issue of liability to pay compensation during a
period of suspension without pay. However, the Law Council was of the view that
proposed section 8(11) was unnecessary:
The proposed s 8(11) attempts to overcome the decision in Comcare
v Burgess  FCA 1663 (1 November 2007), which held that Comcare was
liable to pay compensation to an employee during a period of suspension without
pay. However, the provision is unnecessary given the rewording of the earlier
provisions and should be deleted on this basis.
Calculation of normal weekly
Section 9(1) of the SRC Act provides that for the purposes of
calculating the normal weekly earnings of an employee before an injury, the
relevant period is the latest period of two weeks before the date of the injury
during which the employee was continuously employed by the Commonwealth or a
The Law Council noted that 'a significant amount of unnecessary
litigation' resulted from the two week rule and, therefore, recommended that
the basic rule be amended to six weeks.
Schedule 10: Redemption of compensation
Several submitters argued that the sustainability of the scheme could be
addressed in substantial measure by tackling the twin matters of redemptions
('pay outs') and access to common law.
The Law Council considered that amending the SRC Act to allow for
redemptions in agreed circumstances would provide a cost-effective means of
managing Comcare's finances:
A major disadvantage of the SRC Act compared to other
legislative schemes is that it does not afford employees and employers the
opportunity to resolve disputes through lump sum settlements that reflect
future entitlements, in circumstances where the employee has received
independent financial and legal advice as to the reasonableness and
consequences of a lump sum settlement.
Angela Sdrinis also stated that an appropriate redemption scheme should
be implemented. She noted that this was recommended in the Hanks Review, would
be of benefit to workers, and would contribute to the viability of the scheme:
Whilst there is always a lot of debate about 'pay outs'
versus ongoing benefits in statutory compensation schemes, it is the case that
workers inevitably want 'out' of the system and a process which allows this to
occur so that workers are not disadvantaged and with significant savings to the
system should be implemented and was recommended by Hanks.
Access to common law
The Law Council was of the view that 'the fundamental problem with the
Comcare scheme is its long-tail nature' and that this 'inevitably leads to
projections of liabilities exceeding assets and the call for benefits to be
reduced in response'. The Law Council noted that this experience was common to
other schemes, such as the previous South Australian WorkCover scheme, that did
not allow recourse to common law.
In contrast, the Law Council drew attention to Queensland Workcover as
an example of a well-preforming scheme in terms of financial sustainability and
return to work outcomes that did allow access to common law:
...Queensland WorkCover, which allows virtually unrestricted
access to common law, is among the best performing schemes in the country, with
the second-lowest premiums, the lowest disputation rate, highest assets to
liabilities ratio and is among the better performing schemes in terms of return
to work outcomes.
The Law Council was of the view that the failure to address the twin
matters of redemption and access to common law remedies was a 'wasted
opportunity'. The Law Council therefore recommended that Parliament take 'the
opportunity to remove existing restrictions on redemptions and common law
payments to ensure the long-term viability of the Comcare scheme'.
Angela Sdrinis also pointed out that the availability of a common law
remedy for negligence would provide an appropriate incentive for employers to
improve workplace safety:
This is particularly so under the Comcare scheme where there
is effectively no common law right to sue. In other words, the decision to set
the maximum payment for pain and suffering damages with respect to a negligence
action at $110,000 (which has not been indexed since the SRCA was introduced in
1988) means that no matter how bad the employer’s negligent conduct, it is not
in a workers’ interests to sue given the limited nature of the damages
available under the Act. However common law or negligence actions have been a
powerful tool for change and improvement of safety in workplaces. This bill does
very little to put pressure on employers to improve safety in the workplace.
Given that Queensland WorkCover provides access to common law while the
scheme does not, the Queensland government voiced grave concerns about the
impact that the bill, in combination with the Safety, Rehabilitation and
Compensation Legislation Amendment Bill 2014, would have on Queensland
WorkCover and on small business in particular:
Queensland has around 8,000 non-government employers with
annual wages in excess of $1.5 million. Around one third of these employers
employ in two or more states, meaning more than 2, 500 employers would be
eligible to move to the Comcare scheme. Based on the 2014-15 projected premium,
this would result in a reduction in premium income of over $250 million (18 per
cent of $1.4 billion premium pool). This reduction would invariably result in
greater premium rate volatility and a higher average premium rate.
This will have significant impacts on business generally and
small business in particular. In Queensland there are an estimated 138,000
private sector non-agricultural small businesses (employing fewer than 20
workers). Many of these small businesses may not be in a position to absorb
premium fluctuations that would necessarily result from a reduced premium pool caused
by exiting employers.
By contrast, the Maritime Union of Australia stated that it:
...does not consider it appropriate to introduce a common law
damages entitlement into the SRC Act, nor by implication into the Seafarers Act,
given our strong support for no-fault Commonwealth compensation schemes. We
strongly favour the no-fault basis of the compensation arrangements established
in the Seafarers Act, based on the five principles that underpin no-fault
Real compensation; and
Schedule 11: Legal costs
The department noted that under the SRC Act, legal costs had increased
significantly over the last year while dispute resolution rates were much lower
than in other jurisdictions:
In the last year, legal, administrative and regulatory costs
paid under the SRC Act increased by 25 per cent. The Comcare scheme has the
worst resolution rate for disputes resolved within nine months of all
Australian workers' compensation schemes at 47.7 per cent. By comparison, New
South Wales resolves 89.7 per cent of disputes within nine months. The more
protracted a matter in the AAT, the greater the legal costs.
The department noted the bill addresses the issue of legal costs by
enabling Comcare 'to develop a Schedule of Legal Costs that provides for the
maximum amount that may be awarded or reimbursed to a claimant in certain
The SRCLA supported the set schedules for legal costs noting that the
change would address the excessive fees charged by some providers, align the
scheme with many State schemes, and would not be expected to impact on
Furthermore, Comcare has been burdened with protracted and costly merits
Over the last five years a claimant under the Comcare scheme
has made five unsuccessful applications for merits review to the AAT, and
judicial review to the Federal Court. To date, the claimant has been
unsuccessful in all matters that have proceeded to hearing. Despite this,
Comcare's legal costs of the AAT proceedings alone exceed $176,000, with the
total bill exceeding $277,000 (to date).
Under the proposed changes the amount of legal costs that may
be reimbursed or awarded to a claimant would be capped, and the AAT would be
able to order costs against the claimant for a frivolous and vexatious claim.
This would act as both a penalty and as a disincentive against future
The department noted the bill addresses issues arising from merits
review proceedings by introducing a mechanism to resolve claims before
proceedings are commenced:
The bill empowers relevant authorities to reimburse costs
incurred by a claimant in connection with the reconsideration of a
determination, subject to the claimant undertaking not to apply for review to
the AAT. The claimant must repay the amount if he or she subsequently decided
to escalate the matter to the AAT.
TPI supported the proposed amendments under Schedule 11 as measures 'designed
to reduce unnecessary legal costs in relation to AAT matters' and 'to expedite
AAT cases' including:
The ability for Comcare to set a Schedule of Legal Costs, the
payment of legal costs at reconsideration stage under specified conditions and
the AAT carrying the discretion to make cost orders against a claimant in
limited circumstances and setting limits on the timeframes for the admission of
new evidence prior to a Hearing (but with the AAT being able to grant leave to
admit evidence) are all measures that are designed to reduce unnecessary legal
costs in relation to AAT matters.
The Law Council disagreed 'with the prospect of unsuccessful litigants
having to pay Comcare's legal costs as proposed by clause 7 because it can be
difficult to determine whether a claim is actually frivolous or vexatious'. Noting
this was particularly difficult when an injured worker is self-represented, the
Law Council recommended, instead, that 'costs be payable by an employee if the
claim is fraudulent or dishonestly made'.
The Law Council also noted that the AAT 'already has power to dismiss
claims that are frivolous or vexatious' and that this power is 'sufficient'.
The ALA strongly opposed the establishment of a Schedule of Legal Costs
(proposed section 67A) arguing that it would perpetuate an asymmetry in favour
of employers and insurers who are able access experienced legal representation
as opposed to the limits being imposed on the legal representation available to
The Law Council agreed that the Schedule of Legal Costs 'will lead to
workers being unable to afford legal representation'. This will result in
institutional parties gaining 'an even greater litigation advantage if injured
workers are unable to have their legal costs met on an equal footing'.
The FSU described the difficulties that an injured worker, often without
income, already faces in trying to appeal a decision made by an employer under
With decisions about granting workers compensation to injured
workers being made by the liable employer in the Comcare scheme, access to a
timely, affordable and independent review process is critical for injured
workers. The current process for appealing decisions made by the employer under
the SRC Act is stacked against workers. It is lengthy, complex and expensive.
Many workers do not have the legal, financial and emotional resources to effectively
dispute a decision by their employer.
At present if an employer declines a claim, the worker goes
through a process of review, this starts with appealing the decision to the
employer. Workers are not eligible to receive any assistance with legal costs
at this stage to pursue their claim.
Appealing a disputed claim is a very complex technical
process. Employers can of course pay for legal advice at this stage, with many
employers in the finance industry directly employing legal specialists to head
up their workers compensation areas. One of the finance sector licensees
employs a Head of Health, Safety and Wellbeing who is a former Special Counsel
at Minter Ellison. She has run workers compensation litigation at all levels including
the Supreme Court and the High Court, specialising in matters involving
statutory interpretation and administrative law. Reporting to her is the Manager
for Workers Compensation who was also a workers compensation lawyer for Minter
Ellison. Clearly an unrepresented worker with no understanding of the law in
this area is in a very unequal position in this situation.
The FSU argued that the changes compound the difficulties that an
injured worker already faces by empowering 'the AAT to require that the costs
incurred by the employer in running the matter must be paid by the worker if
they are unsuccessful in their appeal.
Schedule 12: Permanent impairment compensation
The department stated that the new method for calculating permanent
impairment compensation would reduce anomalies and introduce greater fairness
into the way that injuries are compensated under the scheme.
First, the bill targets compensation to those employees with a more
serious permanent impairment and a greater need for support. The bill increases
the maximum amount payable to those with a serious permanent impairment from
$243 329 (as at July 2014) to $350 000, and reduces the amounts payable to
those with lesser impairments.
Second, because injured employees must meet an impairment threshold of
10 per cent before a lump sum payment for permanent impairment is payable,
employees with multiple injuries each resulting in less than 10 per cent
impairment are unable to access lump sum compensation. The bill changes this by
allowing the threshold to be met through combining multiple injuries:
Injured employees must meet an impairment threshold of 10 per
cent before a lump sum payment for permanent impairment is payable.
Consequently, employees with multiple injuries each resulting in less than 10
per cent impairment are unable to access lump sum compensation.
The bill provides that permanent impairment resulting from
multiple injuries attributable to the same incident or state of affairs
(including secondary injuries, other than secondary psychological or
psychiatric injuries) will be combined to allow more injured employees to meet
the 10 per cent threshold before a lump sum payment is payable.
The APSC supported the proposed changes to the permanent impairment
provisions as improving employee access to permanent impairment compensation.
The department also noted that while primary psychological or
psychiatric injuries will still attract compensation for permanent impairment, 'the
bill will exclude access to permanent impairment compensation for secondary
psychological or psychiatric conditions'. However, 'all other forms of
compensation, including incapacity payments, and access to rehabilitation, will
continue to be available for secondary psychological or psychiatric injuries'.
While agreeing with most of the changes in Schedule 12, including
raising the maximum lump sum payment and excluding secondary psychiatric impairment
from compensation, TPI did not support the combination of two or more injuries being
treated as a single injury.
Slater and Gordon provided some historical background to the discussion
on the lump sum impairment, noting that:
When the Comcare scheme was introduced in 1988, the
Parliament increased workers' entitlement to a lump sum impairment payment in
part to offset their relinquishment of common law rights. This should not be
forgotten when reviewing the benefits available to injured workers under the
ACTU noted that the bill represented 'a major departure from the 'compensation
bargain' in the 1980s that saw workers under Comcare give up common law rights
in return for statutory no-fault benefits'.
Given this historical trade-off, both Slater and Gordon and ACTU were of the
view that simplistic comparisons between workers' compensation schemes were
The Government has sought to justify this Bill by making a
simple comparison between the benefits across all workers' compensation
jurisdictions without consideration of the relinquishment of common law rights
under Comcare. All State and Territory schemes continue to include common law
rights albeit with differing thresholds.
The Law Council welcomed the increase to the permanent impairment cap
and the amendments to allow impairments to be combined. However, the Law
Council did not accept the reasons set out by the government for reducing the
entitlements to the majority of claimants. Furthermore, the Law Council warned that
the changes might have unintended consequences:
The Law Council believes an unintended consequence of this
will be for injured employees meeting the 10 per cent threshold to, where
possible, opt for common law action. This is likely to lead to further
litigation, contrary to the original intention of the SRC Act.
Several submitters disputed the claim that the bill makes the system
fairer by delivering more compensation to workers with significant injuries.
These submitters noted that a large number of workers are already excluded from
compensation under the scheme due to the tough criteria needed to reach a 10
per cent Whole Person Impairment. Slater and Gordon and the ALA provided
several examples to demonstrate how a large number of workers with severe
injuries would face significant reductions in the compensation payable to them
under the bill.
The ALA stated that the proposed algorithmic model for calculating
entitlements was inequitable and unfair to injured employees, arguing that the
practical effect would be that 'a huge number of workers would be significantly
worse off, with a small number of workers being moderately better compensated'.
The ALA recommended that the linear model currently used in the calculation of
benefits should be retained.
Several submitters noted that the bill eliminated any lump sum payments
for permanent impairment and non-economic loss for those suffering from a
secondary psychological condition. The ALA, Slater and Gordon, and ACTU were concerned
about the exclusion of secondary psychological injuries noting that this 'will
disproportionally harm workers with the most significant and longstanding
physical injuries who subsequently develop accepted secondary psychiatric
Schedule 15: Sanctions for employee non-compliance
The bill imposes obligations on both employees and employers, similar to
the scheme operating in South Australia. The obligations are set out below:
An employee must:
seek and accept offers of suitable employment and actively engage
in that employment;
provide any required documentation or information (including
medical certificates) within the specified period;
follow reasonable medical advice provided by a qualified medical
practitioner or dentist, including undertaking reasonable medical treatment;
fulfil their responsibilities under a rehabilitation plan;
undergo a work readiness assessment as required;
undergo a medical examination as required by the relevant
undergo an assessment of need for household and attendant care
services as required; and
comply with reasonable requests from Comcare if it pursues a
common law claim.
An employer must:
take all reasonably practicable steps to ensure the
rehabilitation of the employee including the provision of rehabilitation
take all reasonably practicable steps to comply with the employee's
workplace rehabilitation plan;
provide the employee with suitable employment or assist them to
find suitable employment;
maintain the employee in suitable employment; and
comply with the WHS Act.
A relevant authority,
on behalf of an employer, must:
pay workers' compensation payments including income replacement;
make provisional medical expense payments including before a
claim is accepted;
pay an injured workers' ongoing medical treatment expenses; and
pay for household and attendant care services as required.
The obligations are accompanied by a sanctions regime for employee
non-compliance that 'will be applied in three stages, escalating from
suspension or reduction of benefits at stages one and two, to cancellation of
benefits at stage three'. The department noted that the sanctions are
reviewable at each stage and that a similar regime already exists in Western
Australia, South Australia and the Northern Territory.
The department argued that the amendments will achieve the twin aims of
improving health and return to work outcomes through active participation in
rehabilitation and also improving system integrity 'by discouraging misuse of
TPI welcomed the mutual obligations proposals and new sanctions regime
as significant improvements that would improve the rehabilitation and return to
The introduction of the concept of obligations of mutuality
will improve compliance with the key requirements of the Act. The breakdown of
the breaches of obligation into (remediable and non-remediable) and the
three-stage sanctions regime appears to provide a 'weighting' to the importance
of the breach and the sanctions applied looks to give an opportunity to remedy
the breach or face a greater level of sanction. The breaches as listed are
typically the breaches that slow/reduce the effectiveness and outcomes of the
rehabilitation process therefore these changes should improve rehabilitation
processes. This is a marked improvement to the current suspension provisions
which are difficult to enact and largely ineffective. The requirement for a
diagnosis for a psychological or psychiatric ailment or injury (or aggravation
of same) to be confirmed by a mental health practitioner (psychiatrist,
clinical psychologist or general practitioner who has completed mental health
training that has been Comcare approved) in order for weekly incapacity
payments to be made beyond an initial 12 week period is welcomed as will
enhance the process of ensuring that there is specialized support and review
for these cases in the early stages. This supports early return to work and
facilitated and effective rehabilitation.
Ai Group supported 'the policy intent of including specific obligations
of mutuality and supporting them with an escalating series of sanctions'.
However, Ai Group was concerned about the clarity and scope of the
sanctions provisions, including the relationship between clauses 29L and 29R,
and made specific recommendations to address these issues:
The inclusion of the clause 29L sanctions within the general
sanctions provisions makes it very difficult to follow and clearly interpret.
Clarity would be greatly improved if the sanctions associated with clause 29L
were separated out from clauses 29W and 29X, and written in a stand-alone
In attempting to understand the intended application of
clause 29L, we referred to paragraph 561 of the EM [explanatory memorandum].
The reference to a third party created a level of confusion and, specifically,
caused us to ask the question 'is clause 29L intended to apply to all offers of
suitable employment (including those by the liable employer), or only those
made by alternative employers?'
If interpreted as applying only to third party offers (as
indicated in the EM), it could be argued that a failure to participate in
suitable employment with the current employer would be covered by clause 29R;
this would then be seen as a breach that could be remedied by the employee and
a different set of sanctions would apply.
It is essential that there is no uncertainty about the scope
of clause 29L; this needs to be addressed through either amending the bill or
the EM and/or providing clear guidance.
Ai Group also raised concerns about the application of the sanctions in
clause 29L and about potential unintended consequences, again suggesting that
specific guidance be provided to clarify matters:
Ai Group is also concerned about the manner in which the
clause 29L sanctions would be applied, particularly as they apply to both
failing to accept or engage in specific suitable employment, and a more general
provision related to failing to seek suitable employment. It is relatively easy
to identify when a person fails to accept or engage in suitable employment; it is
also relatively easy to identify the quantum reduction of benefits if a
specific offer of suitable employment has been rejected or not complied with.
However, it is not so clear in relation to a failure to seek suitable
employment; it will need to be identified when breach occurs and what potential
earnings have been forfeited?
A potential unintended consequence of the clause 29L
sanctions may be a reduction in the incentive for employees to seek, or
participate in, suitable employment in the future when the sanction is designed
around a concept that an employee is unable to 'repair' this type of breach (as
indicated in the EM). This would particularly be the case if the notice to the
employee included such words.
It will be essential that there is clear guidance for
employees and employers about the importance of pursuing suitable employment
options, even if sanctions have been applied under clause 29L. Such guidance
Requirements on the liable
employer to provide information within, or supporting, an offer of suitable
employment, regarding the potential financial impact of not accepting the
Information within the breach
advice provided to the employee about how they can minimise the impact of the
sanction, e.g. by actively seeking suitable employment and/or actively
considering any future offers of suitable employment.
Several submitters found the provisions in Schedule 15 to be harsh.
While strongly supporting 'initiatives to encourage rehabilitation and return
to work', the Law Council disagreed with the new sanctions regime arguing that
it was unnecessary and overly punitive 'given a lack of evidence of anything
more than isolated instances of non-compliance' which can be dealt with through
payment suspension during periods of non-compliance under the present scheme.
Describing the sanction scheme as 'draconian', the ALA stated that it
would undermine 'any meaningful concept of collaboration between injured
employer and employee'.
Slater and Gordon also noted that common law rights are extinguished by
new section 29G with adverse consequences for injured workers:
This means that a permanently and seriously incapacitated
worker — injured as consequence of the unlawful wrong doing of others — can
lose the rights that every other citizen has to hold the corporation or
individual that has harmed them to account. In our submission this is highly discriminatory
The weight of evidence presented to the committee during this inquiry
clearly indicates that the integrity of the Comcare scheme has been compromised
and that, as a result, to continue with the scheme on its current trajectory is
The committee notes a number of concerns raised by submitters about the
nature of the reforms contained in the bill. Nonetheless, the committee
recognises that all worthwhile legislative reform requires, at times, that difficult
decisions be taken. However, the committee is convinced that the changes made
in the bill will restore the integrity of the scheme and realign the scheme
with what was intended at its inception. Moreover, the committee notes that a
number of the proposed amendments are based on the recommendations of the
Hawke/Hanks Review commissioned by the former government.
The committee is of the view that the enhanced focus on vocational
rehabilitation will improve return to work rates with consequent benefits for
injured employees. The committee also commends the timely and targeted support
for injured employees, and in particular, the increase to the permanent
impairment lump sum payment.
The committee notes that several important features of the scheme remain
unaltered, including that injured employees will continue to receive income
replacement, medical treatment, and rehabilitation, for as long as it is
required. In addition, appeal rights for injured employees who disagree with a
decision that affects them will continue to be available, and most significantly,
the scheme remains a 'no fault' scheme.
The committee is therefore persuaded that, on balance, the legislative
response is both necessary in terms of ensuring the financial sustainability of
the scheme, and equitable in terms of balancing the needs of injured employees
with the requirements of employers to fund work-related claims.
The committee recommends that the Senate pass the bill.
Senator Bridget McKenzie
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