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'Major Overhaul Proposed to the Safety Rehabilitation and Compensation Act 1988'

Monday March 30, 2015

The below article from 30 March 2015 has been provided by Angela Sdrnis, Angela Sdrnis Legal.

 

Major Overhaul Proposed to the Safety Rehabilitation and Compensation Act 1988.

 

A Bill amending the Safety Rehabilitation and Compensation Act (the SRCA) has been introduced in Federal Parliament ( Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015  ) following recommendations made by the “Hanks Review” which was commissioned by the then Labour Government. Whilst some of the changes are favourable to workers, it does appear that the major changes are directed towards cost cutting. Indeed, the rationale behind the Bill was explained by Workplace Relations Minister Eric Abetz as being aimed at making the Comcare system more “sustainable.” Certainly Comcare has been under pressure recently regarding the cost of the scheme and the recent loss from the system of the ACT which is moving away from Comcare to a state based system, citing cost as the major consideration for the move.

 

The Changes can be found under a number of broad headings contained in the Schedules of the amending Bill:

 

Schedule 1 amends the SRCA to alter eligibility requirements for compensation and includes a new definition for significant degree which now means a “degree that is substantially more than material”. At this stage it is hard to know how this definition will play out in practical terms. In addition, certain matters are to be taken into account in determining whether an ailment or aggravation was contributed to, to a significant degree, by an employee‘s employment and new eligibility criteria for compensation for designated injuries (such as heart attacks, strokes and spinal disc ruptures) and aggravations of designated injuries, will apply. The threshold for perception-based disease claims will be effectively raised and the scope of the “reasonable administrative action” (RAA) exclusionary provisions will be widened to encompass injuries suffered as a result of reasonable management action generally (including organisational or corporate restructures and operational directions) as well as an employee‘s anticipation or expectation of such action being taken. Effectively these proposed changes mean that it will be harder for workers to claim for a range of injuries (particularly psychological injuries) and many workers (who would presently be eligible to claim compensation under the current legislation) will be locked out of successfully claiming compensation.

 

The changes to the RAA provisions are clearly in response to the rising numbers of stress related workplace claims and the purpose of these changes is to make it even harder for workers to claim compensation for work related psychological injuries. The inclusion in the exclusionary provisions of “reasonable management action” which will include organisation or corporate restructures and operational directions is squarely aimed at reversing the effects of the decision of Commonwealth Bank of Australia v Reeve [2012] FCAFC 2 which found that the relevant exclusionary conduct must relate to the claimant’s employment and did not include operational matters.

The fact that spinal injuries are to be covered by these changes is also likely to affect workers in some of the heavier industries which are now covered by the SRCA such as transport (Linfox, Toll, K & S Freighters) and in the building industry (John Holland) and with respect to other licensees which cover industries involving manual work. All workers suffer degeneration in the spine as they age. The changes will mean that some workers with back injuries who would have been covered under the current scheme will no longer be eligible to receive compensation.

Schedule 2 amends the rehabilitation and return to work requirements in the Act. Positive changes for claimants include more emphasis on getting injured workers back to work quickly and putting pressure on employers to provide suitable duties. Notably however, there are no penalties which apply to employers who fail to provide suitable work but workers can request rehabilitation plans and under the proposed changes, decisions regarding rehabilitation can be appealed to the Administrative Appeals Tribunal (AAT).

 

At the same time however the proposed changes put more pressure on workers to return to work even where they may not believe that they are ready to return to work and/or where they do not believe the rehabilitations plan is suitable. Failure to return to work in these circumstances may mean that liability to pay incapacity payments can be suspended more readily than would occur under the current Act. Further the definition of suitable employment has been expanded “to include any employment with any employer, including self-employment”.  This means that it will be easier for employers to argue that workers have a “deemed capacity to earn” thereby more readily allowing for a reduction in incapacity payments even where the worker is not actually physically working and receiving other income.

 

Schedule 5 amends the Act to impose more rigorous requirements in relation to determining the amount of compensation payable under section 16 of the Act in respect of medical expenses incurred by an injured employee including claims for household and attendant care services. This means that in some cases it will be harder for workers to successfully claim for these services. Further, a tiered approach will be introduced which will limit the periods that compensation for these services can be paid to workers with “non-catastrophic” injuries. The proposed changes also require that attendant care services to be provided by accredited, registered or approved providers and not by relatives or household members.

 

Schedule 7 amends the Act to suspend compensation payments when an injured employee is absent from Australia for non-work related purposes for a period of more than 6 weeks. Schedule 8 amends section 116 of the Act to provide that an employee is not entitled to take or accrue any leave entitlements while on compensation leave. Currently workers accrue annual and sick leave during the first 45 weeks of compensation leave and continue to accrue long service leave beyond that date. Schedule 9 contains amendments that align with some state and territory workers‘ compensation schemes. These amendments alter the method of calculating an employee‘s weekly incapacity payments  and introduce new “step down” provisions to taper the amount of weekly compensation payments an injured employee is entitled to. This means that workers will no longer be entitled to full pay for the first 45 weeks.

 

Schedule 10 amends the Act to increase the compulsory redemption threshold where weekly payments of incapacity benefits are up to  $208.91 per week. However, this figure is still  way too low to make redemptions (ie pay-outs) an attractive option for workers. Both employer and worker representatives were hoping that the redemption figure would be substantially increased by this Government to allow for pay outs to be negotiated/determined but clearly this Government was not disposed to going down this road, arguably for ideological rather than costs saving reasons.

 

Schedule 11 contains a range of amendments regarding payment of legal costs. One positive change for claimants includes that legal costs may be payable with respect to the reconsideration processes for which Comcare/licensees are not currently liable. However, under the proposed changes, workers may be ordered to pay an employer’s costs if an application before the AAT is unsuccessful. Currently, workers cannot be ordered to pay their employer’s legal costs if their application before the AAT is lost. The proposed amendments also include that Comcare can introduce a compulsory scale of costs which means that if this scale is less generous than the current 75% of Federal Court Scale which applies in AAT matters, claimants will likely end up paying more in solicitor/client costs.

 

Schedule 12 contains amendments that increase the maximum benefit payable under section 24 of the SRCA ie lump sum impairment to $350,000 (the current maximum is about $235,000). However Schedule 12 also provides for a new method for calculating permanent impairment compensation using an algorithm (a method which seems somewhat complicated) which means that less money is awarded to those who have lower impairment levels. However, multiple injuries arising out of the same incident or injury will now be able to be combined (which deals with the changes brought about by Canute v Comcare [2006] HCA 47) which means that it might be easier for worker’s impairment claims to reach the 10% threshold. On the other hand,  access to permanent impairment compensation for secondary psychological or psychiatric ailments and injuries (which would appear to be the most common type of secondary injury) will be excluded under the proposed changes.

 

Other positive changes for workers include that claims are likely to be determined more quickly and that an employer can make provisional medical expenses payments (capped at $5,000) to allow for treatment of an injury before liability has been determined. Comcare will also be able to pay compensation for detriment caused by defective administration. Further, incapacity payments will be linked to the pension age, rather than cutting off these payments at a set age which is currently age 65. The 5% deduction on compensation payments to employees who are accessing superannuation benefits will also be removed.

 

Some of the changes are retrospective whilst others will apply to injuries sustained after the Bill is passed. Whether the Bill will find its way through Parliament in its entirety is of course questionable given the make-up of the Senate and the difficulties that the Abbott Government has generally experienced in passing its legislative agenda.

 

For example, the Abbott Government introduced a Bill to amend the Safety, Rehabilitation and Compensation Act 1988 (the SRC Act) on 19 March 2014.  The Bill can be found here. The Bill includes changes aimed at easier access to companies who wish to enter the Comcare scheme and removes compensation cover for injuries which occur during off site recesses including lunch breaks. The bill passed the lower house on 26 November 2014 but is yet to pass the Senate. 

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