The bitter taste of WorkCover SA
17th Jul 2014
If WorkCover South Australia was a car, it would be a lemon. Renowned nationally for its battered financial status, inadequate benefits to workers and long delays, it’s time to consider a new scheme: one that is sustainable, balanced and clear.
Initially sold in 1987 as the perfect answer for injured South Australian workers, WorkCover SA has failed to live up to the hype and cannot run the distance.
Throughout its life, it has required constant modification and re-building and has still failed to live up to its promise of being a better scheme.
Commentators agree that WorkCover is in desperate need of review. Deputy Premier John Rau has acknowledged the scheme as 'buggered' and has said it’s time to build a new scheme.
However, to avoid the pitfalls of the current scheme, we need to consider what the foundations of a strong scheme will look like. In my view, any new scheme must be sustainable, balanced and clear.
A scheme must be able to deliver an appropriate level of benefits to the injured and appropriate cover to the employer, into the long term. Sadly, the WorkCover average premium levy rate has for many years been below the break-even premium levy rate. This is not sustainable in the long-term.
Promising a scheme to the injured that cannot be afforded in the medium to long-term does not help anyone, as over promising and under delivering always results in friction and unhappiness.
The premium levy rate must firstly be set at a commercial rate and the scheme built and managed to achieve a match over the medium and long-term between the actual levy rate and the break-even levy rate.
Balancing the best interests of the injured worker
A one size fits all scheme won’t fit for everyone.
The predecessor to the current WorkCover scheme, the Workers Compensation Act 1971 (SA), had only a token regard for rehabilitation for injured workers. That Act provided for the establishment of the Workers Rehabilitation Advisory Unit (WRAU).
Unfortunately, the WRAU had power to do little more than provide advice on rehabilitation and helping injured workers get their lives back on track. There was no compulsion on employers or insurers to provide rehabilitation services to injured workers: clearly a large gap.
The 1971 Act therefore had only a token regard for rehabilitation. However, the Workers Rehabilitation and Compensation Act 1986 (SA) swung the other way, and saw rehabilitation as being the ultimate answer. In doing so, it failed to recognize that not every injured worker can return to work. It was based on the false premise that if you focused on rehabilitation, all but the seriously injured would return to paid work and there would be no need for ongoing payments or lump sums. The experience of the last 27 years shows that this is not the case. Furthermore, in some cases, poorly focused rehabilitation has contributed to ineffective rehabilitation, thus increasing numbers of people staying within the scheme.
In this regard the current act, like the 1971 Act, lacks balance and has inevitably failed.
In my view, a balanced scheme must have the following basic functions:
- Lifetime support for the catastrophically injured;
- Medical expenses to be covered at an appropriate level;
- Rehabilitation: assistance with recovery, return to work and if required, re-training;
- Income support during the recovery, return to work and re-training phases;
- A recognition that although injured workers may return to work, some injuries have ongoing effects and that compensation is required for both present and future economic loss and non-economic effects;
- Reintroduction of access to sue at common law for those who can demonstrate negligence by the employer or third party and who meet fair thresholds;
- An appropriate exit from the scheme - people need to have the ability to opt to leave the scheme to do so with dignity; and
- An accessible and efficient dispute resolution scheme.
A new WorkCover scheme must clearly set out the entitlements and the obligations of the injured worker and the employer. To illustrate this point, in 2009, new provisions came into effect regarding injured workers’ entitlement to weekly payments after 130 weeks out of work. These provisions are so unclear that, five years after they came into effect and despite a number of decisions, it is still not clear for the majority of injured workers with some reduced work capacity whether they continue to be entitled to weekly payments of compensation and, if so, at what level.
Further, the failure of WorkCover to allow for the redemption of potential future entitlements to weekly payments, and the adoption of poor dispute resolution practices (including a perceived binary stance of: agree-with-WorkCover/fight-WorkCover), has led to a surge in the number of disputes. It is noteworthy that this has not been a problem for self insured employers.
Injured workers in South Australia trying to access WorkCover are constantly left with a bitter taste in their mouth. Moving forward, there must be a new scheme that is sustainable, balanced and clear to ensure that workers are not sold another lemon.
Patrick Boylen is SA President of the Australian Lawyers Alliance and partner at Duncan Basheer Hannon in Adelaide.
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).