Western Australian workers’ compensation scheme set for major changes

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By Mark Civitella, Partner and Zilke Wright, Lawyer

Draft legislation has been released for stakeholder consultation in Western Australia that proposes a complete re-write of the current Workers’ Compensation & Injury Management Act 1981 and will bring about several major changes to the scheme of workers’ compensation in Western Australia. It seeks to implement the recommendations canvassed by WorkCover WA in its 2014 Review of the Workers’ Compensation and Injury Management Act 1981: Final Report as well as several election promises of the current State government.

The Workers Compensation and Injury Management Bill 2021 (“the Bill”) is open for stakeholder consultation, with submissions invited by 10 November 2021. The Bill is intended to modernize the 1981 Act and provide for a scheme that is simplified, streamlined and more workable for all involved.

The Bill introduces a raft of changes to the current scheme of compensation which will have far reaching implications for workers, employers, insurers and other stakeholders. We discuss below some of the more significant of the many changes that are proposed.

The definition of ‘worker’ has been simplified so that the Act will only cover those who are an ‘employee’ for Pay-As-You-Go (PAYG) tax withholding purposes under Commonwealth taxation law. Regulations may be added to include or exclude other specific work arrangements. This new definition is similar in form to the wording adopted in Queensland in 2013.  The equivalent provision in Queensland has been the subject of litigation on the question of whether an individual is an ‘employee’, requiring application of the test in Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16.

Key terms including ‘return to work’ and ‘suitable employment’ have been re-defined and clarified. Notably, the new definition of “return to work” has the effect that, if the pre-incapacity position is not available, an employer is obliged to return a worker to ‘suitable employment’.  What is considered ‘suitable employment’ is determined according to a range of factors, including the nature of the worker’s incapacity, the work the worker was employed in prior to the injury and the worker’s age, education, skills and work experience. In what is likely to cause some consternation for employers, suitable employment includes work in a position that has been modified or created to accommodate a worker’s incapacity. ‘Suitable duties’ excludes duties that are of a token nature or do not involve useful work, having regard to the nature of the employer’s trade or business.

These new definitions of ‘return to work’ and ‘suitable employment’ have the potential to fundamentally change the current scheme for workers who are attempting to return to work and increase the burden on employers of long duration claims. Workers who are currently considered to be involved in a return to work program and receiving weekly compensation for performing restricted duties will under the new scheme be construed as engaged in ‘suitable employment’ and entitled to be paid wages rather than ‘income compensation’ (the new term for weekly payments).

New provisions have been added which deal with decision-making with respect to liability, provisional payments and deemed acceptance by insurers. Insurers and self-insurers will be required to give a worker a liability decision notice or a deferred decision notice within 14 days, failing which they are deemed to have accepted the claim. If a deferred decision notice was given indicating more time was needed to make a decision, a decision must be notified to the worker by the “deemed liability acceptance day” (time frame to be prescribed in Regulations), otherwise liability is deemed to be accepted. If an insurer or self-insurer gives a worker a deferred decision notice, the insurer or self-insurer must begin making “provisional payments” to the worker if a decision on liability is not made by the day prescribed by Regulations as the “provisional payments day”.These provisions are intended to simplify the claims process and treat all claims the same procedurally, whether they are for medical / health expenses only or for income compensation.

The industrial exclusions for stress claims have been expanded by the Bill. The proposed changes would see the expansion of the current section 5(4) of the Act to include situations where the ‘disease’ results wholly or predominantly from “administrative action” which will include performance appraisal, formal or informal counselling action, suspension action and disciplinary action which is “informal” in nature.

While these changes are certainly a welcome attempt to clarify and address a current grey area that still exists around stress conditions resulting from reasonable management decisions, the wording of this provision will need some further adjustments in our opinion to offer employers sufficient protection against claims of this nature which are increasing in prevalence.  The proposed changes will include an increase in medical and health expense entitlements. For example, the medical and health expenses compensation cap will be increased to 60% of the general maximum amount. This will in effect see the previous prescribed amount for medical & hospital expenses more than doubled.

Further, these increased entitlements will apply not only to future claims but also retrospectively to existing claims under the current scheme unless the prescribed amount for medical expenses is exhausted prior to the commencement day of the new Act, or such liability was otherwise extinguished.

Changes have also been proposed to the methods by which claims can be settled. The settlement pathway for a workers’ compensation claim via a lump sum to discharge an employer’s liability is to be constrained, removing the current s.92(f) method. Further limitations upon settlement include requirements that 6 months must have elapsed from the injury date and liability must have been accepted, deemed to be accepted or determined.  There will be exceptions in prescribed circumstances to be contained in the Regulations.  Common law settlement agreements will still be allowed, but only if the WPI threshold requirements for a common law claim are met.

In summary, the proposed legislative changes to the current scheme of workers’ compensation in WA will undoubtably bring into effect significant changes to the way workers’ compensation claims are managed and resolved. Some of the changes do have the potential to add to the cost of the scheme and place additional burdens on employers. The vast range of new obligations, timeframes and entitlements brought about by this planned modernization requires careful consideration at this consultation stage. Affected stakeholders are recommended to make a submission to WorkCover WA by the due date of 10 November 2021.

Should you have any queries or require any assistance with making a submission on behalf of your organisation, please do not hesitate to contact our Perth Insurance team to discuss.

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    Redemption and Schedule 2 payments recoverable under the WA Workers’ Compensation Scheme