Red tape and the injured worker

7th Apr 2014

In the wake of the Federal government’s ‘Repeal Day’ and campaign to ‘cut the red tape’, clearly, ‘red tape’ is the current pejorative for any form of disliked regulation.

The term itself arises from the red tape/ribbon used to bind government (and papal) documents and is complemented by the pink tape of legal documents (still sometimes used to wrap briefs to Counsel).

As part of its his war on ‘red tape’, the Abbott Government have announced the expansion of the Comcare scheme to all national employers, plus some additional minor tinkering with the Safety, Rehabilitation and Compensation Act 1988 which administers the Comcare scheme, via the Safety, Rehabilitation and Compensation Amendment Bill 2014.

This logically follows on from the 2013 ending of the moratorium on issuing self insurance licences to employers wishing to enter the scheme (introduced by the Labor government in December 2007).

One person's ‘red tape’ may be another's safety regulation and it is necessary to go beyond the rhetoric to analyse the impact of proposed changes on injured workers nationwide.

Government estimates suggest that one in five national employers may move to the Comcare scheme as self-insurers.

Those figures are based on a Productivity Commission study in 2004.

I suspect the numbers and savings will be less as there has been greater uniformity in the OH&S area since that date. There would also be administrative costs in applying for licences, setting up systems and, frankly, there are more worker unfriendly systems (take a bow, NSW).

The big beneficiaries are apparently going to be national labour hire companies.

The Commonwealth says this will not affect State/Territory workers compensation schemes. This assumes that those who move are already self-insurers, otherwise it has to affect premium pools.

Although employees won't have a say in it, the outcome for them in joining the scheme will be mixed.

The good news for injured workers is:

  • up to 45 weeks compensation on full-pay (and then 75% of full pay);

  • incapacity entitlements to 65 (and perhaps 67, although I suspect this is not a priority of the Abbott Government);

  • medical expenses from injury;

  • a 10% threshold for access to permanent impairment payouts for all injuries;

  • attendant care services including house modifications and associated costs.

The downside is:

  • effectively no access to common law against the employer;

  • no real capacity to commute entitlements;

  • a system with high levels of disputation;

  • fault-based provisions regarding diseases slanted to the employer (see the effect of the draconian decision of Hart v Comcare);

  • a much lower amount for permanent impairment where successful.

The expansion will produce the anomalous situation where employees working at the same site and injured in similar circumstances might have very different entitlements and rights as a result of a matter incidental to employment rather than place.

Surely if this scheme is to really go national it would be better to amend the Act to allow common law rights as at the place of injury. This would at least provide some greater consistency. Call it the principle in Pfeiffer v Rogerson.

The most troubling aspect of the amendments, is that the real problems within the Comcare scheme have not been addressed.

Last year, the review of the Comcare scheme by Peter Hanks SC provided a starting point for necessary reform.

Mr Hanks has represented both sides in many of the big cases in the Comcare scheme and is considered a ‘straight shooter.’

The next step might have been a Government response to the Hanks recommendations with subsequent consultations with stakeholders.

The proposed ‘red tape’ reforms fail to address the real problem of the Comcare scheme which is that it is a long-tail scheme.

We know historically (for example, NSW workers compensation scheme; South Australian workers compensation scheme; the NZ Accident and Compensation Scheme) that long-tail, pension style schemes inevitably run into financial difficulties with projected shortfalls in reserves.

This leads to further cutting of entitlements.

Schemes find themselves ‘chasing their own tails’ as cuts to entitlements delays, but does not overcome, projected shortfalls in the future.

Good scheme design requires a safety valve in the form of a fair means for the commutation of rights and the access to common law. This produces a resolution that crystallises rights and ends ongoing liability in the scheme.

This would produce a fairer outcome and real administrative savings for all.

Other minor changes introduced by the Safety, Rehabilitation and Compensation Amendment Bill 2014 also reveal this Government's limited world view.

The first is the abolition of recess claims. These are injuries that occur during breaks at work such as lunch where an employee might cross the road to get a sandwich.

Recess claims under the Comcare scheme have a chequered history. They were abolished by Labor in 2007, reinstated by Labor in 2011 and are set to be returned to the pre-2011 position.

Clearly employees in the Comcare scheme will need to pack their own lunch.

The second change is in respect of injuries arising from ‘serious and wilful misconduct’.

Workers compensation legislation in all states and territories provides that workers compensation is not payable in such circumstances unless it leads to 'death or serious injury.'

This recognises the no-fault nature of the legislation that ultimately family and relatives ought not to be punished in the circumstances (a bit like the NDIS perhaps).

The Commonwealth proposed to remove the proviso to make serious and wilful misconduct an absolute bar. This is not reflected in any other workers compensation scheme in Australia.

However, the government rationale for these changes is 'community expectations'.

I suspect that if you want to blame anyone for this change it is Godwin Gretch. (You may remember Mr Gretch as the Liberal leaker who came unstuck over the Ute-gate/Oz car affair.)

Mr Gretch developed a significant psychological condition out of these events but was successful in obtaining ongoing incapacity payments under the Comcare scheme because his condition was sufficiently grave to overcome the misconduct barrier.

What is immediately striking is the petty and vindictive nature of these changes.

More importantly, by moving further away from a no-fault scheme, (for example through making judgements about serious wilful misconduct; and about at what point an individual is on a break), the Government is creating more confusion and discretion as to its operation.

In fact, it sounds like more red tape!

Bill Redpath is the ACT Director of the Australian Lawyers Alliance. He specialises in personal injury law, is a former President of the ACT Law Society and until recently the Chair of the Law Council Personal Injuries and Compensation Committee. He practices in Canberra. 

The views and opinions expressed in these articles are the authors' and do not necessarily represent the views and opinions of the Australian Lawyers Alliance (ALA).

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