WorkCover WA – Abolition of the ‘Termination Day’ in Western Australia

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By Mark Civitella, Partner 

The Workers’ Compensation Injury Management Amendment (Covid-19 response) Bill 2020 was introduced to the Western Australian Parliament Legislative Assembly on 24 June 2020 and has had its second reading.

While ostensibly to address a small number of issues in response to the COVID-19 pandemic, the Bill has the potential to significantly impact on common law damages claims in Western Australia.

While WorkCover WA has announced that a complete rewrite of the Workers’ Compensation and Injury Management Act 1981 is currently underway, it has seen fit to include within the current Bill provisions that will abolish the existing common law ‘termination day’.

The ‘termination day’ is the date by which a worker must elect whether or not to pursue a claim for damages against their employer. It is set at one year from the date on which weekly payments are claimed and can be extended in prescribed circumstances by up to a further year.

To pursue common law damages against an employer an injured worker is required to register an election by providing WorkCover WA with an Approved Medical Specialist’s assessment that certifies that the worker has a permanent whole of person impairment of at least 15%. The Act currently requires the election to be made before the termination day and unless that occurs the worker loses the right to pursue common law damages.

An Explanatory Memorandum to the Bill suggests that the ‘termination day’ is a limitation which “unfairly impacts on the common law rights of workers and is an additional and more restrictive statutory timeframe to the general limitation period that applies to common law claims for personal injury”.

Leaving aside the issue of whether it is fair to have a ‘termination day’ (which constraint was introduced in 2004), the removal of that provision as currently drafted by the Bill will have the following effects that employers and insurers in the WA scheme should be aware of:

  1. The time period by which an injured worker must bring a claim for common law damages will default to the three-year limitation period for commencement of an action established in the Limitation Act 2005 for other kinds of personal injury. In other words, it will take significantly longer post-injury for insurers and employers to become aware of whether they face a common law exposure or whether that potential has passed. This will impact on claims reserves.
  2. The drafting of section 93T(2) is such as to give the removal of the termination day retrospective effect. Where a worker’s termination day has already passed and they failed to elect, if they are still within time under the Limitation Act 2005 to pursue damages they will be able to elect to do so.  It therefore gives a lifeline to workers who have the necessary level of permanent whole of person impairment but missed their termination day. This too impacts on claims reserves and insurers and self-insurers will need to examine their claims that are under 3 years old, where there hasn’t been an election made, as they may now face a revived common law exposure.
  3. An election to pursue a common law claim by workers with a permanent whole of person impairment of less than 25% results in their statutory benefits for medical expenses ceasing immediately and weekly payments discontinuing over the course of 6 months. While those “step down” provisions will still exist, the effect of removal of the termination day will be that workers delay their election for as long as possible so as to not extinguish statutory rights. In other words, elections are unlikely to be filed until shortly before the three year limitation period expires. The impact for insurers and self-insurers is increased statutory expenses and longer claim duration.

While WorkCover WA has not formally invited stakeholders submissions, stakeholders on behalf of injured workers are reportedly agitating for additional changes to the Bill that will see the compulsory ‘termination day’ notices under section 93O replaced by a new wording that warns injured workers of the time frame that will apply to pursuing damages under the Limitation Act 2005.

Please contact Mark Civitella or his team in Perth if you would like to discuss the proposed changes, for updates on the progress of the Bill or for any assistance in the preparation of a submission to WorkCover WA.

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