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NSW changes to workers compensation

03/07/2012

The NSW parliament has passed the Workers Compensation Legislation Amendment Bill 2012 and the Safety, Return to Work and Support Board Bill 2012. These bills establish the Safety, Return to Work and Support Board which has been charged with consolidating the governance arrangements for the WorkCover Authority, the Motor Accidents Authority and the Lifetime Care and Support Authority.  The amending legislation also modifies the benefits available under the NSW workers compensation scheme to reduce the burden on insurers and reduce employer premiums

The overarching reason for the reforms is that the NSW scheme has a deficit of over $4 billion, and has premiums 20-60% higher than other states (and rising). Reform of the scheme is necessary to ensure its long term viability.

Some of the most relevant changes to entitlements are summarised within the table below. The ostensible reasons for the various changes are drawn from the NSW Workers Compensation Scheme Issues Paper released on 23/4/12 by the Minister for Finance and Services and the Report of the Joint Select Committee on the NSW Workers Compensation Scheme published on 13/6/2012.

Provision

Change

Rationale

Calculation of weekly payments

Award workers and non-award workers will now be subject to the same method of calculating weekly payments (previously 2 different methods). Workers will now receive 95 per cent average weekly earnings, taking into account overtime, shift loading etc.

No rational reason to treat award and non-award workers differently. Measure of earnings now more closely aligned to actual earnings.

Step down

Injured worker’s benefits are currently “stepped down” after 26 weeks. This will be reduced to 13 weeks, at which point the entitlements will be 80% of average weekly earnings.

Provide financial incentive for workers to return to work.

Cap on weekly benefits

Currently in NSW there is no cap on the length of time that an injured worker can receive weekly benefits. A 5 year cap will be introduced for workers who have less than a 21% whole person impairment.

Encourage less seriously injured workers to re-enter the workforce.

Cap on medical expenses

Currently there is no cap on cost or duration of medical treatment which must be paid for by the employer. A cap will be introduced so that medical expenses will be paid for the 12 months following the injury, or following the cessation of weekly payments (whichever is more beneficial). This does not apply to workers with more than a 30% whole person impairment

A reasonable level of coverage should be provided. Injured workers retain access to the general Medicare safety net.

Lump sum compensation

There will no longer be a separate component for pain and suffering; the minimum impairment threshold to access a lump sum will be increased from 1% to 10%; injured workers can make one claim only, no ‘top ups’

Reduce disputation and reduce administration costs. Damages for pain and suffering available under a common law claim. 

Heart attacks & strokes

No compensation unless work caused significantly greater risk of injury.

Causation of strokes and heart attacks are not normally associated

with workplace injuries and the factors that impact upon rehabilitation and return to work are not typically workplace issues

Journey claims

Scope to make journey claims is reduced; there must be a real and substantial connection between the employment and the accident or incident out of which the personal injury arose.

Employers do not have control over most employee journeys; inconsistent with the aims of the scheme for them to be liable in most circumstances.

Nervous shock to family

No claims for common law damages for nervous shock suffered by a relative or dependent of a deceased/injured worker

Provide a closer connection between work, health and safety responsibilities and workers compensation premiums through eliminating workers compensation costs arising in circumstances over which employers have limited control.

Commutation

Increased scope to pay out compensation (incl weekly benefits) to an injured worker as a lump sum.

Business, insurance and employer groups support increased ability to “target” commutations. Brings ‘tail claims’ under control; lessens administrative.

Employer compliance

New offence of failing to provide suitable work; WorkCover will be able to issue improvement notices to employers

Promotes the purposes of the scheme by enforcing rights to return to work

 

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One Comment leave one →
  1. Peter Johnson permalink
    08/07/2012 9:39 pm

    You may need to check the validity of the assertions in this article – for example, this article suggests that the rationale for removing section 67 pain and suffering lump sum compensation is because of the availaility to recover pain and suffering in a common law claim. This is not right. Common Law claims for many years now have precluded recovery for anything other than pure wage loss.

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