Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015

Bill home page  


Download WordDownload Word


Download PDFDownload PDF

 

2013-2014-2015

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVE S

 

 

 

 

 

 

 

SAFETY, REHABILITATION AND COMPENSATION AMENDMENT (IMPROVING THE COMCARE SCHEME) BILL 2015

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Employment, Senator the Honourable Eric Abetz)





 



SAFETY, REHABILITATION AND COMPENSATION AMENDMENT

(IMPROVING THE COMCARE SCHEME) BILL 2015

OUTLINE

The Safety, Rehabilitation and Compensation Act 1988 (the Act) establishes a scheme (the Comcare scheme) to provide compensation and rehabilitation support to injured Australian Government and Australian Capital Territory Government employees. The Act also applies to deemed employees and certain members of the Australian Defence Force in relation to defence service rendered prior to 1 July 2004, as well as employees of private corporations who hold a licence under the Act (licensees).

It is important that the rules governing workers’ compensation meet the needs of employees, employers and workplaces. Since the Act was designed in 1988 there have been important changes in workplaces and working conditions, health care and rehabilitation, technology, individual and social behaviour, and community expectations.

As a result, the Comcare scheme has come under significant pressure. Return to work rates have fallen from a high of 89% in 2008-9 to around 80% in recent years. This is despite the emergence of a growing body of evidence that work is good for health and well-being. The scheme creates barriers and disincentives for injured employees to recover at work, for example, by emphasising the medical rather than vocational nature of rehabilitation services. This is out of step with prevailing community expectations that those who can work (even if part-time) should do so to their capacity. The scheme’s ratio of assets to liabilities has fallen below 70%, and the incidence of costly psychological claims has been growing. Originally designed as a public sector workers’ compensation scheme, the Comcare scheme is no longer limited to the Australian Public Service. Employees covered by the scheme have a broader and more diverse range of pay and work benefits that make it increasingly difficult to calculate the correct amount of compensation to be paid. The distinction between work and non-work related conditions has been blurred and unreasonable constraints have been placed on how employers manage the workplace, resulting in increased premiums and pressures on scheme sustainability.

The proposed changes will mean that employees will be better off in terms of access to early rehabilitation and access to provisional medical expense payments, getting back to work and quality medical treatment and attendant care. Claims and disputes will be processed more quickly and some claimants will receive higher payments than they currently receive.

The Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015 (the Bill) is an important step towards modernising a scheme that has not been comprehensively reformed since it was established in 1988. The Bill:

·          implements, in part, recommendations of the Safety, Rehabilitation and Compensation Act Review (the Review) by Mr Peter Hanks QC and Dr Allan Hawke AC commissioned by the former Government in 2012; and

·          makes other changes to the Act which will improve the efficiency, cost effectiveness and viability of the Comcare scheme, and align parts of the scheme with State schemes.



 

The Bill aims to make the Comcare scheme sustainable over time. Broadly, the Bill:

·          emphasises the vocational (rather than medical) nature of rehabilitation services and contains measures designed to improve return to work outcomes under the scheme;

·          promotes fairness and equity in outcomes of injured employees by targeting support for those who need it most; and

·          strengthens the integrity and viability of the scheme by clearly distinguishing between work and non-work related injuries, improving the quality of compensable medical treatment and support services, and limiting legal and medical costs under the scheme.

The amendments contained in the Bill are organised into 17 Schedules.

Schedule 1 amends the Act to alter eligibility requirements for compensation to align with similar requirements under some state and territory workers’ compensation schemes. The amendments:

·          distinguish more clearly between work and non-work related injuries by requiring certain matters be taken into account in determining whether an ailment or aggravation was contributed to, to a significant degree, by an employee’s employment;

·          introduce new eligibility criteria for compensation for designated injuries (such as heart attacks, strokes and spinal disc ruptures) and aggravations of designated injuries (based on recommendation 5.3 of the Review);

·          increase the threshold for perception-based disease claims (based on recommendation 5.2 of the Review); and

·          widen the scope of the ‘reasonable administrative action’ exclusion to encompass injuries suffered as a result of reasonable management action generally (including organisational or corporate restructures and operational directions) as well as the employee’s anticipation or expectation of such action being taken (based on recommendation 5.5 of the Review; aligns the Act with ‘reasonable management action’ in the bullying provisions in the Fair Work Act 2009 ).

Schedule 2 amends the rehabilitation and return to work requirements in the Act to emphasise the vocational (rather than medical) nature of rehabilitation services to align with similar requirements under some state and territory workers’ compensation schemes and to improve return to work outcomes under the Comcare scheme. The amendments:

·          clarify the rehabilitation responsibilities and duties of ‘liable employers’ to ensure the rehabilitation of an injured employee and to provide, or assist the employee to find, ‘suitable employment’ and maintain the employee in suitable employment (based on recommendation 6.1, 6.5, 6.7 and 6.8 of the Review);

·          combine the 2-step process for the development of rehabilitation programs into a single process to ensure that workplace rehabilitation is delivered on a service continuum of assessment of need, planning, active implementation, review and evaluation (based on recommendation 6.13 of the review);

·          expand the existing definition of ‘suitable employment’ to include any employment with any employer, including self-employment (based on recommendation 6.16 of the Review); and

·          provide relevant authorities with the discretion to perform work readiness  assessments.

Schedule 3 makes a number of amendments to the Act to improve the integrity and financial viability of the Comcare scheme. These amendments align with similar requirements under some state and territory workers’ compensation schemes. In particular, the amendments:

·          require third parties to indemnify compensation payers under the Act in circumstances that give rise to both an obligation to pay compensation under the Act and a liability on the part of the third party to pay damages (based on recommendation 10.1 of the Review) or State compensation;

·          provide more timely and responsive services and support for injured employees by requiring employers to forward claims to Comcare within 3 days of receipt and specifying time limits in relation to the determination and reconsideration of compensation claims (based on recommendation 9.2 of the Review);

·          improve a relevant authority’s information gathering powers in relation to both compensation claims and the administration of liabilities (based on recommendation 9.17 of the Review);

·          require licensees (and a relevant authority for a group employer licence) to notify Comcare of any proceedings they commence under the Act and empower Comcare to request documents relevant to any proceedings brought against, or instituted by, a licensee (or a relevant authority for a group employer licence);

·          require licensees (and corporations covered by a group employer licence) to comply with applicable Commonwealth, State and Territory laws with respect to the safety, health and rehabilitation of workers;

·          enable Comcare to recover overpayments of compensation that have been made to an employer by Comcare; and

·          enable Comcare to pay compensation for detriment caused by defective administration (based on recommendation 9.20 of the Review).

Schedule 4 amends the Act to enable a relevant authority to make provisional medical expense payments (capped at $5000) in respect of an alleged injury before a claim is determined (based on recommendation 6.2 of the Review). These amendments are broadly based on similar provisions in the NSW workers’ compensation scheme.  

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 (based on recommendations 7.1, 7.24 to 7.27 and 7.28 of the Review). These amendments are broadly based on similar requirements under the Victorian workers’ compensation scheme.

Schedule 6 amends Division 5 of Part II of the Act (and related provisions) which deal with the payment of compensation for household services and attendant care services. Amendments regarding household services and attendant care services for employees with catastrophic injury will comply with minimum benchmarks set for workers’ compensation schemes to align with the National Injury Insurance scheme. These amendments also align with similar requirements under some state and territory workers’ compensation schemes. In particular, these amendments:

·          establish a tiered approach to the payment of compensation for household services and attendant care services, depending on whether the employee’s injury was catastrophic, and limit the period for which compensation is payable to employees with a non-catastrophic injury (based on recommendation 7.33 of the Review);

·          require an independent assessment of an injured employee’s need for household services, attendant care services or both (based on recommendation 7.35 and 7.36 of the Review); and

·          require attendant care services to be provided by accredited, registered or approved providers (based on recommendation 7.37 of the Review).

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 and enhances the notification requirements for recipients of compensation proposing to leave Australia (based on recommendation 7.17 of the Review). These amendments align with certain provisions of the Social Security Act 1991 and some state and territory workers’ compensation schemes.

Schedule 8 amends section 116 of the Act to provide that an employee is not entitled to take or accrue any leave or absence provided by the National Employment Standards while on compensation leave consistent with proposed amendments to section 130 of the Fair Work Act 2009 .

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 to better reflect the employee’s earnings before their injury and clarify the operation of the cap on average weekly earnings (based on recommendation 7.1 and 7.2 of the Review);

·          introduce new ‘step down’ provisions to taper the amount of weekly compensation payments an injured employee is entitled to (based on recommendation 7.13 of the Review);

·          link the payment of incapacity payments to the pension age, rather than cutting off those payments at a set age (based on recommendation 7.16(a) of the Review); and

·          remove the 5% deduction on compensation payments to employees who are accessing superannuation benefits. (based on recommendation of 7.6 of the Review).

Schedule 10 amends the Act to increase the compulsory redemption threshold (based on recommendation 7.19 of the Review). These amendments align the Act with the Military Rehabilitation and Compensation Act 2004 .

Schedule 11 contains a range of amendments designed to control, and thereby reduce, costs under the Comcare scheme associated with proceedings brought before the Administrative Appeals Tribunal (AAT), noting that Comcare scheme disputes take longer to resolve than disputes in other Australian workers’ compensation schemes (based on recommendation 9.12 of the Review). These amendments align with some state and territory workers’ compensation schemes.

Schedule 12 contains amendments that align with some state and territory workers’ compensation schemes. These amendments:

·          combine the compensation payable for permanent impairment under section 24 of the Act and compensation payable for non-economic loss under section 27 of the Act into a single permanent impairment payment under section 24, and increase the maximum benefit payable under section 24 to $350,000 (based on recommendation 8.4 of the Review);

·          provide a new method for calculating permanent impairment compensation that more equitably distributes compensation based on the level of permanent impairment (based on recommendation 8.5 of the Review);

·          treat multiple injuries arising out of the same incident or state of affairs as a single injury so that the impairment resulting from that deemed single injury can be combined to achieve a whole person impairment value (based on recommendation 8.2 of the Review);

·          require relevant authorities to discount pre-existing conditions (both compensable and non-compensable) when assessing the level of permanent impairment resulting from an injury; and

·          exclude access to permanent impairment compensation for secondary psychological or psychiatric ailments and injuries.

Schedule 13 amends the Act (as it will be amended by the Safety, Rehabilitation and Compensation Amendment Bill 2014) to clarify that a single employer licence for an eligible corporation or group employer licence must authorise acceptance of liability and management of claims, and that a single employer licence for a Commonwealth authority must authorise acceptance of liability or management of claims, or both.

Schedule 14 amends the Act to clarify compensation responsibilities for gradual onset injuries (including for incapacity, impairment or death resulting from gradual onset injuries) where employment by 2 or more employers covered by the Act has contributed, to a significant degree, to the injury, and provide for apportionment of liability between employers covered by the Act. These amendments align with some state and territory workers’ compensation schemes.

Schedule 15 amends the Act to streamline and enhance the existing regime of sanctions. These amendments align with some state and territory workers’ compensation schemes. In particular, these amendments:

·          identify key requirements of the Act that an injured employee must comply with as ‘obligations of mutuality’; and

·          where obligations of mutuality have been breached, provide for the application of sanctions in stages, culminating in a cancellation of compensation, rehabilitation and review rights. 

Schedule 16 amends the Act to ensure that the amendments made by Schedules 1-15 to the Bill, with minor exceptions, do not apply to defence-related claims.

Schedule 17 amends the Act to define a number of terms that are used in the amendments contained in the various schedules to the Bill.

 



Financial Impact Statement

Nil



 

 

 

Australian Government

Safety, Rehabilitation and Compensation Amendments (Improving the Comcare Scheme) Bill 2015

Regulation Impact Statement

 

Department of Employment

March 2015

 

 



 

Table of Contents

1.      Background .. 12

2.      Description and scope of the problem ... 14

3.      Objectives . 15

4.      Overview of this Regulation Impact Statement . 15

4.1.      Other Matters . 16

5.      Income Replacement . 16

5.1.      The Problem .. 16

5.2.      Options . 19

5.2.1. Option One — Maintain the status quo .. 19

5.2.2. Option Two — The Hanks Review Recommendations - Three-level system for stepping down income replacement benefits . 19

5.2.3. Option Three — Four-level system for stepping down income replacement benefits   19

5.2.4. Option Four - ACT system - Two level system for stepping down income replacement benefits   20

5.3.      Impact Analysis . 20

5.3.1. Option Two — The Hanks Review Recommendations - Three-level system for stepping down income replacement benefits . 20

5.3.2. Option Three — Four-level system for stepping down income replacement benefits   21

5.3.3. Option Four - ACT system - Two level system for stepping down income replacement benefits   23

5.4.      Consultation . 23

5.5.      Conclusion . 24

6.      Evidence based medical treatment . 25

6.1.      The Problem .. 25

6.2.      Options . 28

6.2.1. Option One — Maintain the status quo .. 28

6.2.2. Option Two — Restrictions on compensation for prescription medicines; medical treatment must meet objective standards to be compensable, be provided by a legally qualified health practitioner or overseas equivalent or recognised and accredited by Comcare . 28

6.2.3. Option Three - Cap on the lifetime costs of a claim, adoption of the National Clinical Framework, medical treatment to be provided by an Allied Health Provider or Comcare approved medical providers (based on WA model) . 29

6.3.      Impact Analysis . 29

6.3.1. Option Two — Restrictions on compensation for prescription medicines; medical treatment must meet objective standards to be compensable, be provided by a legally qualified health practitioner or overseas equivalent or recognised and accredited by Comcare. 29

6.3.2. Option Three - Cap on the lifetime costs of a claim, adoption of the National Clinical Framework, medical treatment to be provided by an Allied Health Provider or Comcare approved medical providers (based on WA model) . 32

6.4.      Consultation . 33

6.5.      Conclusion . 34

7.      Household and attendant care services — tiered system of services and support . 34

7.1.      The Problem .. 34

7.2.      Options . 36

7.2.1. Option One — Maintain the status quo .. 36

7.2.2. Option Two — Tiered system for support services provided in the home , formal framework for in-home services assessment, accreditation system for attendant care services . 36

7.2.3. Option Three - Household and attendant care services provided at the request of a medical practitioner and with the support of an occupational therapist, for a maximum of 6 hours per week and for not longer than three months.  Attendant care services must be provided by a person or organisation approved by Comcare and an ‘attendant care program’ must be developed. 36

7.3.      Impact Analysis . 37

7.3.1. Option Two — Tiered system for support services provided in the home , formal framework for in-home services assessment, accreditation system for attendant care services . 37

7.3.1. Option Three - Household and attendant care services provided at the request of a medical practitioner and with the support of an occupational therapist, for a maximum of 6 hours per week and for not longer than three months.  Attendant care services must be provided by a person or organisation approved by Comcare and an ‘attendant care program’ must be developed. 38

7.4.      Consultation . 38

7.5.      Conclusion . 40

8.      Medical treatment and legal costs . 40

8.1.      The Problem .. 40

8.2.      Options . 43

8.2.1. Option One — Maintain the status quo .. 43

8.2.2. Option Two — Develop a schedule of costs for medical services, medical reports and legal services   44

8.2.3. Option Three — Utilise state medical services and medical report schedules where they exist and refer appeals to mediation and advocacy services . 45

8.3.      Impact Analysis . 45

8.3.1. Option Two — Develop a schedule of costs for medical services, medical reports and legal services   45

8.3.2. Option Three — Utilise state medical services and medical report schedules where they exist and refer appeals to mediation and advocacy services . 47

8.4.      Consultation . 48

8.5.      Conclusion . 48

9.      Costing .. 49

9.1.      Regulatory Burden and Cost Offset Estimate Table . 50

10.   Stakeholder Consultation .. 51

10.1.    Engagement Methods . 51

10.2.    Consultation Process . 51

10.2.1.     Consultation Stage 1 .. 51

10.2.2.     Consultation Stage 2 .. 52

10.2.3.     Consultation Stage 3 .. 52

10.2.4.     Other Consultation - Cross Agency Working Groups . 52

10.2.5.     Committee on Industrial Legislation .. 53

10.3.    Consultation Feedback . 53

10.3.1.     Licensees and Premium Payers . 53

10.3.2.     Industry Groups . 53

10.4.    Ongoing consultations . 54

11.   Implementation and Evaluation .. 54

 



 

·           Background

The Safety, Rehabilitation and Compensation Act 1988 (SRC Act) provides rehabilitation and workers’ compensation arrangements for Commonwealth and Australian Capital Territory (ACT) Government employees as well as employees of 33 licensed corporations comprising current and former Commonwealth authorities and approved private corporations.  The SRC Act also applies to members of the Australian Defence Force (ADF) who were injured before 1 July 2004 during non-operational service [1] .

Australian Government agencies and statutory authorities (excluding members of the ADF) and ACT Government agencies and authorities pay premiums to Comcare under the SRC Act (premium payers).  The SRC Act also enables current and former Commonwealth authorities, and private corporations who can demonstrate that they are in competition with a current or former Commonwealth authority, to seek a licence to self-insure for workers’ compensation purposes under the SRC Act (self-insurers or licensees).  Comcare determines and manages claims lodged by the employees of premium payers.  Licensees determine and manage claims lodged by their own employees.  Claims for ADF members under the SRC Act are managed by the Department of Veterans’ Affairs.

Comcare operates on a cost-recovery basis for premium payers and licensees and does not receive Budget funding for these services.  Comcare receives, via the Department of Employment, annual and special appropriations for pre-1989 workers’ compensation claims.  All expenses associated with post-1989 Comcare-managed workers’ compensation claims are fully cost recovered through premiums paid by Commonwealth and ACT Government agencies.

A licence provides eligible corporations the authority to manage and bear the costs and risks of workers’ compensation claims submitted by their own employees.  The arrangement for private sector corporations to have coverage for workers’ compensation under the SRC Act was introduced to provide competitive neutrality for those corporations competing in the market with government business enterprises - such as Optus competing in telecommunications business with Telstra and TNT Australia competing in the freight business with Australia Post.

For the purposes of the SRC Act, determinations, decisions or requirements under specific sections of the Act are made by Comcare, licensees and the Department of Veterans’ Affairs and they are collectively referred to as determining authorities.

As at the end of the 2012-13 financial year, about 57 per cent of all employees covered under the SRC Act were employed by premium payers, and the remaining 43 per cent by licensees. [2] The proportion of employees employed by self-insurers is significantly higher under the SRC Act than in any other jurisdiction.  The percentage of employees covered by self-insurers in New South Wales is 24 per cent; in Victoria 6.1 per cent; in Queensland 9 per cent; in Western Australia 9.3 per cent; in Tasmania 4.7 per cent; in the Northern Territory 3.7 per cent; and in the Australian Capital Territory less than 1 per cent. [3]

There have been numerous ad-hoc changes since the SRC Act was enacted in 1988.  However, it is the department’s view that it no longer reflects current best practice or community expectations.  In 2012-13, reviews of the SRC Act were undertaken by Mr Peter Hanks QC and Dr Allan Hawke AC. Mr Hanks reviewed the SRC Act’s workers’ compensation benefit structures, rehabilitation and return-to-work provisions.  Dr Hawke reviewed the performance of workers’ compensation under the SRC Act, in particular the governance and financial frameworks.  The terms of reference did not enable consideration of any reduction in existing benefits afforded to workers covered under the SRC Act.

Mr Hanks and Dr Hawke consulted extensively and engaged with participants in the workers’ compensation process under the SRC Act to assist in the development of the recommendations.  The participants consulted included employer associations and employers, employee organisations, medical practitioners, rehabilitation professionals, lawyers and other professionals, government agencies, licensees and workers’ compensation administrators.  Stakeholders were extensively involved in the identification of issues, through to the development of recommendations and consulted again post-publication of the recommendations.  The Report on the Review of the SRC Act was released in March 2013; however, no further action was taken under the previous Government.

The Government has developed a two stage process to reform the SRC Act, which includes recommendations made by Mr Hanks and Dr Hawke.  The department has also consulted widely to develop the package of reforms and reviewed state and territory workers’ compensation schemes in detail, including recent changes in New South Wales and Queensland.  The first stage of reform focussed on expanding eligibility for companies to self-insure under the SRC Act and reducing red tape as part of the application process.  This culminated in the Safety, Rehabilitation and Compensation Legislation Amendment Bill 2014 (the Bill) which was introduced into Parliament on 19 March 2014 and passed the House of Representative on 26 November 2014 and is currently before the Senate.  If passed, the amendments in the Bill will open up workers’ compensation under the SRC Act to national employers by removing the competition test and enabling corporations operating and employing in two or more states and territories to self-insure under the SRC Act and have coverage under the Commonwealth’s work health and safety regime.  The amendments will also enable group licences to be issued to an eligible group of corporations.  The amendments will exclude compensation for injuries occurring during recess breaks away from work and injuries resulting from serious and wilful misconduct.

This Regulation Impact Statement (RIS) examines the second stage of the Government’s reforms to the SRC Act.  The amendments will improve the operation of workers’ compensation under the SRC Act by improving return-to-work outcomes for injured workers; improving the focus on early intervention and health outcomes of injured workers; and improving administration of the scheme.   They will also reduce red tape and compliance costs. 

·           Description and scope of the problem

The SRC Act was designed with one employer in mind, the Australian Public Service, and it was introduced at a time when employment conditions (including the administrative arrangements around employment, superannuation conditions and other entitlements) were relatively consistent across a workforce that was engaged in generally similar types of work. [4]

This environment has changed significantly over the past 26 years.  As at 1 July 2014, there were 212 Australian and ACT Government premium payers and 30 licensed corporations covered by the SRC Act.  Of all fulltime equivalent employees covered under the SRC Act, 216 082 were employed by premium payers and 161 153 were employed by licensees. [5]

It is estimated that approximately 80 large employing businesses (with operations in five states or territories) will seek coverage under the SRC Act following the removal of the competition test.  It is further assumed that, on a yearly basis, an average 12 businesses of the 80 would seek a licence under the SRC Act.

The shift in the employment profile has already resulted in the SRC Act becoming out of step with current working conditions and best practice in rehabilitation and health issues.  Consequently, the incentives, or disincentives, currently provided to employees and employers to facilitate an early return-to-work are not always suitable for today’s workforce.

The current legislative framework for medical treatment does not align with recent changes to the regulation of health practitioners in Australia and limits Comcare’s ability to have appropriate oversight and control over the treatment it is funding.  Additionally, no formal training is required for the provision of in-home care which does not provide the injured worker the best possible chance of recovery and care is not linked to the level of impairment which can result in less injured employees being provided services that are not commensurate with the level of injury.  Furthermore the legislation does not benefit from contemporary evidence on the benefits of work.

Disputes under the Comcare scheme generally take more time to resolve than disputes in other jurisdictions. In the Comcare scheme only 13.7 per cent of disputes are resolved within three months; this compares to 85.1 per cent in Queensland, 81.9 per cent in Western Australia and 70.1 per cent in Tasmania [6] .  This is despite Comcare spending on average the same amount of its total expenditure on dispute resolution (1.2 per cent) as other jurisdictions [7] .

Compared to licensees under the SRC Act, premium paying employers are less successful with achieving early and sustained return-to-work for their employees.  Over a nine year period, return-to-work rates have fallen from the mid to high eighties (reaching 89 per cent in 2005-06) to plateau at 80-81 per cent in the last four years.  While Comcare’s 2012-13 return-to-work rate of 80 per cent is higher than or equal to other jurisdictions (New South Wales’ is 80 per cent, Tasmania’s is 79 per cent, Victoria’s is 77 per cent, Queensland and Western Australia’s is 75 per cent and South Australia’s is 70 per cent [8] ) it has been on a downward trajectory with no indications of improvement. 

The cost of all claims under the SRC Act during 2012-13 was $540 million, which is an increase of 11 per cent from 2011-12 [9] .  The types of claims lodged under the SRC Act have also changed over time, with a significant increase in time off work for mental stress claims.  This has contributed to claim costs increasing by 37 per cent in the five years to 2012-13 [10] .

Premiums charged to Commonwealth agencies have increased by more than 50 per cent over the past four years.  Comcare’s asset to liability ratio, that is, the adequacy of the scheme to meet future claim payments, was quite low at 66 per cent in 2012-13.  This compares unfavourably with Queensland at 156 per cent, Victoria at 125 per cent and New South Wales at 118 per cent [11] .

·           Objectives

The objective of this package of reforms is to modernise the SRC Act to emphasise the vocational (rather than medical) nature of rehabilitation services and improve return-to-work outcomes under the scheme; to promote fairness and equity in outcomes of injured employees by targeting support to those who need it most; and to strengthen the integrity and viability of the scheme. 

·           Overview of this Regulation Impact Statement

This RIS deals with the overall regulatory impact of the Government’s second stage of reforms.  These will modernise the SRC Act to reflect the current working environment and remuneration arrangements, promote expectations of evidence-based medical care and encourage early rehabilitation and return-to-work of injured employees.

Given the complex linkages and interdependencies of the reform package, the regulatory impact of each amendment cannot be assessed individually but is considered as a whole.  To allow for meaningful assessment, the reforms have been categorised in a manner that is consistent with the implementation of the reform package.  The categorisation of these measures follows four themes: income replacement; evidence based medical treatment; household and attendant care; and medical and legal costs.

Many of the amendments relate to government processes and will not have any regulatory impact on businesses or the not-for profit sector.  Other changes are likely to have only a minor impact on businesses.  Consistent with the Australian Government Guide to Regulation, this RIS examines those amendments that are likely to have an impact on businesses, but not those that are minor or machinery in nature or do not substantially alter existing arrangements.



Other Matters

There are a range of other matters not specifically examined in this RIS which are contained in the second stage of the government’s reforms to the SRC Act.  Most are matters with no regulatory impact and those matters that have a regulatory impact are minor or machinery in nature and therefore do not substantially alter existing regulatory arrangements.

These amendments align eligibility criteria for both physical and mental injuries with state and territory schemes and community standards; ensure a stronger focus on rehabilitation and return-to-work; provide early access to rehabilitation and medical treatment; reform the process of assessment and compensation of permanent impairment; and improve the administrative efficiency of workers’ compensation under the SRC Act.

·           Income Replacement

The Problem

All Australian workers’ compensation schemes reduce the proportion of income replacement over time; this is called a ‘step-down’.  The step-down provides an incentive for employees to return-to-work as quickly as possible as well as recognising the need to manage compensation costs.  Under the SRC Act, income replacement benefits are paid at 100 per cent of pre-injury normal weekly earnings (NWE) for the first 45 weeks, after which they reduce to 75 per cent of pre-injury NWE for as long as income replacement is payable. This provides the unintended incentive for injured employees to stay at home.  The evidence is clear that the longer employees are away from work, the less likely it is they will return-to-work [12] .  This is undesirable and unintended.

In most state and territory workers’ compensation schemes, there is more than one step-down for incapacity payments, with the first occurring relatively early in the life of a claim.  In Victoria, South Australia and Western Australia, the first step-down occurs after 13 weeks.  All other states and territories initiate the first step-down after 26 weeks.  By contrast, the only step-down in the SRC Act occurs much later, at 45 weeks.





Many states providing entitlements after the first step-down do so subject to limitations on the sum of entitlement and require a stipulated degree of impairment or a cap on the total of entitlements payable.  Such restrictions do not apply under Comcare’s long-tail scheme which provides incapacity payments until age 65 and compensation for medical treatment and rehabilitation for life.

The existing late step-down in the Comcare scheme may create a disincentive for early return-to-work by injured employees and increases costs.  This is consistent with the international evidence, for example, Meyer, Viscusi and Durbin found that return-to-work rates decreased when Michigan and Kentucky increased the amount they paid higher income injured workers.  The rate was steady for other workers (whose payments did not change).  The authors found '…substantial labour-supply effects of workers' compensation benefits [13] .'

A sizeable body of empirical work has accumulated over the past 40 years (particularly over the last decade) in which epidemiologists and multi-disciplinary researchers have investigated the possible link between the recovery and health outcomes of an injured person based on whether or not they are potentially eligible to pursue compensation.  The majority of studies and, indeed, systematic reviews of such studies, find a link between various measures of an injured person’s compensation status and worse health outcomes. [14]

A 2002 actuarial study found that if an injured employee is off work for 20 days, their chance of ever getting back to work is 70 per cent, after 45 days this falls to 50 per cent and after 70 days the chance of ever returning to work is only 35 per cent [15] .

Apart from step-downs, there is a further reduction in income replacement when an employee accesses their superannuation before age 65.  At this point, the SRC Act offsets the compensation payable to an employee who has retired early and received a superannuation pension and/or a lump sum benefit in two ways:

·          reducing the amount of compensation payable to the employee by deducting the amount of superannuation that is derived from the employer’s contribution (to prevent double-dipping of benefits and ensuring that these employees do not receive a higher take-home pay than they had before their injuries); and

·          reducing the amount of compensation payable to the employee by a further 5 per cent of the employee’s pre-injury earnings, being representative of the amount the employee would have contributed to superannuation.

The 5 per cent reduction has attracted considerable criticism over a number of years on the grounds that it discriminates against the most severely injured and vulnerable employees.  At the same time, it has been ineffective as an incentive in returning people to the workforce.

Under current provisions, where an employer is undergoing a partial return-to-work, the period of the step-down varies according to the number of hours worked.  This operates to extend the 45 week period before the step-down is applied.  For example, if an injured employee is at work for 50 per cent of their pre-injury hours (rather than completely off work) then, currently, the step-down period runs for double the time it does for those employees who are completely off work (90 weeks instead of 45 weeks).

This approach is inconsistent with that taken in the states and territories, which count any incapacity in a week as a whole week of incapacity.  Under the states’ arrangements, an employee who was incapacitated for one day in, say, each of ten weeks, would have those ten days counted as ten weeks towards the next step-down.  In contrast, the SRC Act step-down arrangement would have only offset ten days against the 45 weeks and would then allow access to a further 43 weeks of incapacity entitlements at 100 per cent of NWE.  This further reduces the effectiveness of the step-down arrangements and acts as a disincentive for early return-to-work.

Options

Option One — Maintain the status quo

Under this option, incapacity payments will continue to be provided at 100 per cent of NWE for a period of 45 weeks, after which they will step down to 75 per cent for as long as income replacement is payable.  The amount of incapacity benefits paid to employees who have retired and receive a superannuation pension and/or a lump sum will continue to be reduced by a further 5 per cent of the employee’s pre-injury earnings.  The current provisions also add a layer of complexity when introducing variations to the step-down arrangements for injured employees who have made a partial return-to-work.  This is because after the step-down to 75 per cent of NWE, if an injured employee returns to work on a part-time basis their incapacity payments will be topped up by an amount commensurate with their part-time hours. 

Option Two — The Hanks Review Recommendations - Three-level system for stepping down income replacement benefits

The Hanks Review preferred recommendation proposes three step-downs:

·          100 per cent of NWE for the first 13 weeks of incapacity for work;

·          90 per cent of NWE during weeks 14-26 of incapacity for work; and

·          80 percent of NWE thereafter.

Any week when the employee is participating in a return-to-work program, or absent from work for any reason other than undergoing medical treatment of the compensable condition, will be counted for the purposes of the step-down provisions.  The 5 per cent reduction in incapacity benefits to injured employees who have retired and received their superannuation before age 65 will be removed. 

Option Three — Four-level system for stepping down income replacement benefits

This was one of the models considered in the Hanks Review.  It proposes four step-downs:

·          100 per cent of NWE during the first 13 weeks of incapacity for work;

·          90 per cent of NWE during weeks 14-26 of incapacity for work;

·          80 per cent of NWE during weeks 27-52 of incapacity for work; and

·          70 per cent of NWE thereafter.

If the employee returns to work after 26 weeks, even on a part-time basis, their income will be topped up to 90 per cent of NWE as an incentive to return-to-work.

Any week when the employee is participating in a return-to-work program, or absent from work for any reason other than undergoing medical treatment of the compensable condition, will be counted for the purposes of the step-down provisions.  The 5 per cent reduction in incapacity benefits to injured employees who have retired and received their superannuation before age 65 will be removed. 

Option Four - ACT system - Two level system for stepping down income replacement benefits

This option is based on the model used in the ACT.  It proposes two step-downs:

·          100 per cent of NWE for the first 26 weeks of incapacity for work; and

·          65 percent of NWE thereafter.

Any week when the employee is participating in a return-to-work program or absent from work for any reason other than undergoing medical treatment of the compensable condition, will be counted for the purposes of the step-down provisions.  The 5 per cent reduction in incapacity benefits to injured employees who have retired and received their superannuation before age 65 will be removed. 

Impact Analysis

This impact analysis considers the impact of the changes beyond the status quo.

Option Two — The Hanks Review Recommendations - Three-level system for stepping down income replacement benefits

This option was recommended by Hanks because it shifts the balance of expenditure on compensation from short-term to long-term incapacitated employees and better recognises the needs of that second group.  It also provides significant incentives for employees to pursue rehabilitation and return-to-work at an early stage when rehabilitation has the best prospects of success.  Under this option, injured employees with long term incapacity will receive a higher level of income replacement than is currently the case.

This option was based on the terms of reference for that Review that stipulated there be no reduction in incapacity benefits.  Consequently, this option will increase the current cost of incapacity entitlements for long-term injured employees and is opposed by employers.

Impacts on Employers

Step-down provisions will generate increased productive capacity for employers by encouraging injured employees back to work sooner, even if on a part-time basis.  Employers will also be required to increase their focus on providing suitable employment for employees able to return-to-work early.

This option will lead to a small amount of downward pressure on premiums for premium payers (a saving of $6.2 million across the Commonwealth and ACT Government per year), a nominal decrease in claims costs for licensees (a saving of $2.7 million across all licensees per year [16] ).

Impacts on Employees

There is compelling evidence that, for most individuals, working improves general health and wellbeing and reduces psychological distress.  This is better for the employee, their family, the workplace and the community [17] .

Step-down provisions are an effective incentive to encourage injured employees to return-to-work.  Increasing the number of step-downs and bringing these forward will result in a greater motivation to return-to-work earlier for many injured employees.

Although 85 per cent of employees receiving income replacement have returned to work after 13 weeks of incapacity [18] , those remaining will receive less income replacement (90 per cent, then 80 per cent after 26 weeks, rather than the current 100 per cent) as a result of this amendment.  However, injured employees who receive income replacement for longer than 45 weeks will not be worse off under this option as, after 26 weeks, they will receive 80 per cent of their income for the duration of their incapacity, compared to 75 per cent of their income which is currently paid.  This is in line with the terms of reference of the Hanks Review which stipulated that there be no reduction in benefits for injured employees.

Option Three — Four-level system for stepping down income replacement benefits

This model applies similar principles to Option Two in that it encourages injured employees with a shorter recovery time to return-to-work while still recognising the financial needs of the long-term incapacitated by providing a generous level of income replacement (70 per cent) until the employee is able to return-to-work or reaches retirement age. 

As with Option Two, the 5 per cent reduction in incapacity benefits to injured employees who have retired and received their superannuation before age 65 will be removed.  As a consequence, the final step-down to 70 per cent provides the employee with the same level of income replacement as currently applies for this cohort of injured employees (i.e. 75 per cent less 5 per cent = 70 per cent). 

Injured employees who return-to-work after 26 weeks, even on a part-time basis, will have their income topped up to 90 per cent of NWE as an added incentive to return-to-work.

In the Comcare scheme, evidence shows that injured workers who are off work for between 13 to 45 weeks are less likely to return-to-work and stay in work than other injured workers. [19]

Together, the four-level system of step-downs and counting any week when the employee is absent from work as a week of compensation will provide a significantly stronger incentive than current arrangements for employees to return-to-work as quickly as possible.

Data provided by Comcare on its return-to-work performance for the financial year 2012-13 is as follows:

Period of Absence

Less than 1 week

1 week

or more

12 weeks

or more

45 weeks

or more

52 weeks

or more

Percentage of employees receiving compensation

58%

42%

15%

4%

3%

Impacts on Employer

Step-down provisions will generate increased productivity for employers by encouraging injured employees back to work sooner, even if on a part-time basis.  Employers will also be required to increase their focus on providing suitable employment for employees able to return-to-work early.

This option will lead to downward pressure on premiums for premium payers (a saving for the Commonwealth and ACT Government of approximately $45 million per year), a reduction in claim costs for licensees (a saving of $14 million across licensees per year [20] ), and will reduce the overall cost of workers’ compensation for all employers under the SRC Act.

Impacts on Employees

There is compelling evidence that, for most individuals, working improves general health and wellbeing and reduces psychological distress.  This is better for the employee, their family, the workplace and the community [21] .

Step-down provisions are an effective incentive to encourage injured employees to return-to-work.  Increasing the number of step-downs and bringing these forward will result in a greater incentive to return-to-work earlier for many injured employees.  This incentive to return-to-work will be enhanced after 26 weeks when injured employees will have their incapacity payments topped up to 90 per cent of NWE if they return-to-work, even if on a part-time basis.

Although 85 per cent of employees receiving income replacement have returned to work after 13 weeks of incapacity, the remaining 15 per cent will receive less income replacement [22] (90 per cent, then 80 per cent after 26 weeks, rather than the current 100 per cent) as a result of this amendment.  Injured employees who are receiving income replacement for more than 52 weeks will be better off from weeks 45 to 52 as they will receive 80 per cent of the pre injury income rather than 75 per cent, as is currently the case.  However the four per cent of injured employees who receive income replacement for 52 weeks or more will receive five per cent less under this option than is currently the case.  Under current arrangements, if an injured employee accesses their superannuation before age 65, their income replacement is reduced by five per cent, resulting in income replacement equal to 75 per cent.  Therefore, these employees would receive the same amount of income replacement after 52 weeks under this option as they currently do.

 

Option Four - ACT system - Two level system for stepping down income replacement benefits

This model has a greater focus on compensation for short-term incapacitated employees who make up the vast majority of workers’ compensation claims.  However, long-term incapacitated employees will receive less under this option than is currently the case.  As these employees are generally the most severely injured, this scenario is less than ideal.

As with Options Two and Three, the five per cent reduction in incapacity benefits to injured employees who have retired and received their superannuation before age 65 will be removed. 

The two-level system of step-downs, with a significant drop in income replacement after 26 weeks, will provide a stronger incentive for employees to return-to-work as quickly as possible.

Impacts on Employer

Step-down provisions will generate increased productive capacity for employers by encouraging injured employees back to work sooner.  Employers will also be required to increase their focus on providing suitable employment for employees able to return-to-work early.

This option will lead to downward pressure on premiums for premium payers, a reduction in licencing costs for licensees and will reduce the overall cost of workers’ compensation for all employers under the SRC Act.

Impacts on Employees

There is compelling evidence that, for most individuals, working improves general health and wellbeing and reduces psychological distress.  This is better for the employee, their family, the workplace and the community [23] .

Step-down provisions are an effective incentive to encourage injured employees to return-to-work.  However, as evidence suggests that the majority of injured employees have returned to work after 26 weeks, this option does not provide an incentive for these employees. 

Approximately four to fifteen per cent of employees are receiving income replacement after 26 weeks [24] .  These employees will face a significant drop in their income replacement from 100 per cent to 65 per cent of their pre-injury earnings.  This is compared to the 100 per cent of pre-injury earnings they would receive after 26 weeks of incapacity under current arrangements.  Injured employees with a long term incapacity for work will also receive less for the duration of their incapacity; 65 per cent instead of 75 per cent, as is currently the case.

Consultation

In response to the recommendations put forward by Mr Hanks in his review of the SRC Act, stakeholders provided the following comments:

Telstra indicated its support generally but believed the final step-down should remain at 75 per cent rather than the 80 per cent proposed by Mr Hanks.  [Note: The Review’s Terms of Reference stipulated that there be no reduction in existing benefits.]

The Australian Chamber of Commerce and Industry supported the introduction of four levels of step-downs but suggested the incentive to return-to-work should commence from date of injury; that is, compensation start at 90 per cent of NWE rather than 100 per cent.

Some licensees believed that the proposed system of step-downs would not offer enough motivation for injured employees to return-to-work and believed a statutory rate should be imposed after one year of income replacement.  Other licensees believed the proposed changes (Option 3) were a significant improvement on current arrangements and would be an effective tool to encourage injured employees back to work.  Some licensees also believed that counting any period of incapacity as a week of incapacity for the purpose of step-downs could be too harsh.

Premium payers were also very supportive of the proposed changes, indicating that the new step-downs would provide a stronger incentive for injured employees to return-to-work while containing escalating claim costs.

The Australian Council of Trade Unions opposed step-down provisions generally and submitted that injured employees should be compensated with a 100 per cent replacement of lost income indefinitely.  They believed the proposal was punishing people for being injured and forcing them back to work by shifting costs from the employer to the employee.

The Australian Manufacturing Workers’ Union also opposed changes to step-down provisions, indicating they should remain at their current timing and levels.

Conclusion

The department recommends Option Three as it provides a stronger incentive for injured employees to return-to-work earlier by reducing income replacement payments sooner and more frequently than is currently the case.  This package of amendments also includes the added incentive after 26 weeks of ‘topping up’ income replacement to 90 per cent if the employee returns to work, even if on a part-time basis.  It also rectifies anomalies and outdated provisions in the SRC Act such as counting each day of absence individually so that the current 45 week step-down can be dragged out for years. 

There is compelling evidence that, for most individuals, working improves general health and wellbeing and reduces psychological distress.  This is better for the employee, their family, the workplace and the community [25] .

This option will better align income replacement provisions under the SRC Act with state and territory schemes by introducing multiple step downs at an earlier stage in the claim.  As these schemes represent the vast majority of employees, better alignment with these schemes should accord with community standards and expectations.  This option will also generate increased productivity for businesses and reduced administration for determining authorities.  It will lead to downward pressure on premiums for premium payers and will reduce the overall cost of workers’ compensation for all employers under the SRC Act.



 

·           Evidence based medical treatment

The Problem

The framework in the SRC Act for the provision and monitoring of medical treatment is not clearly defined or in alignment with current best practice across state and territory workers’ compensation schemes.  The lack of a modern framework for regulating the provision of these services under the SRC Act is producing barriers to timely and effective recovery and return-to-work, in addition to imposing increased costs.

Standard of medical treatment

Under the SRC Act, a determining authority [26] has no involvement in, or control over, an injured employee’s choice of medical or therapeutic practitioner or treatment.  Requirements need to be put in place to ensure that funds are used appropriately for the provision of medical treatment and the services provided are in line with accepted best practice.

Under the SRC Act, a determining authority is liable to pay compensation in respect of medical treatment that is ‘reasonable’ for an injured employee to obtain.  There have been many legal cases over the years that have considered ‘reasonable’ medical treatment, as this is not defined under the SRC Act.  In each case, what is ‘reasonable’ has been determined by reference to the employee’s individual circumstances and perspective.

This has resulted in case law that works against the original intent of the SRC Act such as:

·          The Administrative Appeals Tribunal (AAT) approving the continuation of massage therapy payments as part of a broader treatment plan, despite no evidence of any curative effect associated with the massage therapy in this case.  This cost $29,000 over an eight-year period.

·          The AAT finding it was reasonable for an injured employee living in Alice Springs (who had ‘generalised anxiety disorder and adjustment reaction with brief depressive reaction’) to attend a Buddhist meditation retreat in Queensland, at taxpayer expense, because he identified as a Buddhist.

  • The AAT finding it was reasonable for an employee to be flown from Canberra to Townsville to receive psychoneuroimmunology treatment after the clinical nurse psychotherapist providing the treatment relocated.  This relatively new and unique form of treatment was not offered by anyone else in Canberra.

In June 2012, Comcare, along with all state and territory workers’ compensation schemes, endorsed the National Clinical Framework, which is based on a document published in 2005 by WorkSafe Victoria and the Victorian Transport Accident Commission.  The National Clinical Framework is an

evidence-based policy framework that outlines a set of five guiding principles for the delivery of allied health services to injured employees.  The guiding principles of the Clinical Framework require:

·          measurement and demonstration of the effectiveness of treatment;

  • adoption of a bio-psycho-social approach - this approach explains how, in general, work is good for health and wellbeing.  ‘Bio’ describes the impairment, body structure and function elements; ‘psycho’ describes the activity, support and relationship elements; and ‘social’ describes  the participation elements;

·          empowering the injured person to manage their own injury;

·          implementing goals focused on optimising function, participation and return-to-work; and

·          basing treatment on best available research evidence.

A full adoption of the National Clinical Framework and the resulting benefits of timely and effective return-to-work are being undermined by the current provisions in the SRC Act.  The SRC Act does not define standards of medical treatment, whether provided in Australia or overseas, nor does it require that health providers’ qualifications be accredited by the appropriate professional body or by Comcare.

Medical treatment provided by ‘legally qualified health practitioners’

According to the Australian and New Zealand Consensus Statement on the Health Benefits of Work, employees attempting to return-to-work after a period of injury face a complex situation with many variables.  Good outcomes are more likely when employees understand the health benefits of work and are empowered to take responsibility for their own recovery.  Health practitioners exert a significant influence on work absence and in promoting the health benefits of work [27] .

Other state and territory workers’ compensation schemes maintain a level of oversight and control over the medical treatment they are funding in different ways:

·          In Victoria, service providers such as chiropractors, dentists, psychologists and physiotherapists, must be registered with WorkSafe Victoria to provide services to injured employees.  Providers must complete a ‘WorkSafe Application for Registration to Provide Services to Workers’ form and must satisfy the relevant provider eligibility requirements.  Medical practitioners registered under Medicare are not required to register separately with WorkSafe.

·          In New South Wales, allied health providers must be approved as WorkCover providers and follow administrative procedures developed by WorkCover in conjunction with the relevant professional association.

Registration standards, such as those in Victoria and New South Wales, provide an extra layer of risk control that is currently lacking under the SRC Act.

Although the definition of ‘medical treatment’ under the SRC Act refers to eight types of treatment, it does not prescribe a level of national accreditation required for these practitioners in line with current protocols under the National Accreditation and Registration Scheme for health providers.

In its current form, the SRC Act’s definition of medical treatment does not enable Comcare to maintain a level of oversight and control over the medical treatment it is funding thereby exposing injured employees to treatment, both within Australia and overseas, that is not evidence based or provided by trained health professionals.

The SRC Act is also out of step with current regulatory practice in the states and territories as it does not recognise the ‘National Registration and Accreditation Scheme’ and its registration and regulation requirements.

The ‘National Registration and Accreditation Scheme’ for registered health practitioners was established by the Council of Australian Governments in 2008.  Under the ‘National Registration and Accreditation Scheme’, 14 health professions are regulated by National Boards and must meet set standards in order to be registered to practise in Australia.  The 14 National Boards are supported by the Australian Practitioner Regulation Agency.

For those injured employees who are required to seek medical treatment whilst overseas, there is no provision in the SRC Act for relevant determining authorities to review the qualifications of overseas health care providers or the standard of treatment provided.  Compensation for these costs must be paid if the need for the treatment is considered reasonable, no matter the standard of treatment provided or the qualifications of those providing it.

The SRC Act also has no provisions to enable determining authorities to refer health practitioners to the appropriate professional regulatory body where treatment is provided outside the Clinical Framework, or where there are concerns about the adequacy, appropriateness or frequency of treatment.

Provision of medicines

The definition of ‘medical treatment’ under section 4(1) of the SRC Act allows for the provision of ‘medicines … whether in a hospital or otherwise’.  The definition of what constitutes ‘medicine’ under the SRC Act has been compromised beyond the common understanding of that term by court decisions between 1996 and 2006, where ‘medicine’ has been deemed to include packaged dietary foods, vitamin and mineral supplements and non-prescription medicines such as analgesics.  Compensation for the cost of ‘medicines’ under state and territory schemes is restricted to medicines recommended or prescribed by a medical practitioner or dentist.

Some prescription medicines, such as drugs that are addictive (schedule 8 opioids and schedule 4 sedatives), are subject to misuse and abuse that may result in death or serious damage to health.  In addition, there is a risk that some injured employees may visit multiple general practitioners in order to obtain more prescription medicines than is clinically necessary or safe for the treatment of their condition (doctor shopping).  Unregulated payment of compensation for these treatments and prescriptions finances these behaviours. 

Comcare’s Clinical Panel pharmacist reviews all pharmacy billed items (invoices).  Pharmacy or supermarket receipts (injured employee reimbursement) are not currently reviewed.  The pharmacist pays particular attention to drugs of concern, including that they have one prescriber and one dispenser. 

The pharmacist estimates the following:

  • Schedule 8 (opioids) comprise about 25-30 per cent of the invoices reviewed. 
  • Including schedule 4 sedatives (benzos), the estimate is increased to around 40 per cent of invoices that contain both opioids and/or sedatives. 

Since the establishment of Comcare’s Pharmacy Policy on 1 February 2012, Comcare has identified 87 claims of concern and written to the treating doctors of those injured employees.

Other workers’ compensation schemes in Australia, such as Victoria, require prescription medicines to be dispensed by a registered pharmacist on the request of a legally qualified medical practitioner or legally qualified dentist.

Options

Option One — Maintain the status quo

As demonstrated, retaining the status quo will continue to pose additional costs as a result of non-evidence based treatments that are provided by untrained health practitioners, or by health practitioners who are not meeting accepted standards in their treatments, with little recourse for restricting compensation for that treatment.  The current approach does not focus on return-to-work and its benefits for injured employees.

Currently, under the SRC Act, there is no recourse to refer health practitioners to their professional regulatory bodies if a practitioner is found not to be adhering to standards set by the Clinical Framework in the provision of treatment.  Additionally, for those injured employees who are overseas, treatment providers and the provision of treatment will continue to be compensated no matter the standard of treatment provided or the qualifications of those providing it.

Determining authorities are also currently required to individually assess each claim to determine whether medical treatment provided is reasonable.  As each determination is influenced by the employee’s individual circumstances, this process is administratively inefficient and poses additional costs.

Retaining the status quo will therefore inhibit access to effective evidence based medical treatment.

Option Two — Restrictions on compensation for prescription medicines; medical treatment must meet objective standards to be compensable, be provided by a legally qualified health practitioner or overseas equivalent or recognised and accredited by Comcare

Under this option, the definition of ‘medical treatment’ in the SRC Act will be amended so that, in order to be compensable, medical treatment must meet objective standards, such as those in the Clinical Framework, and must be provided by health practitioners who are accredited and registered under the ‘National Registration and Accreditation Scheme’.  This option will also enable Comcare to consider and accredit those not registered under the Accreditation Scheme for eligibility to provide medical treatment under the SRC Act.  This will ensure that medical treatment obtained is measurable and outcome focussed.

In addition, the SRC Act will be amended to include treatment provided outside Australia only where the determining authority is satisfied that the quality and cost of that treatment is comparable with treatment available in Australia provided by a health practitioner registered under the National Registration and Accreditation Scheme or recognised and accredited by Comcare.

Amendments to the SRC Act will provide for the referral of practitioners to the appropriate professional regulatory bodies where treatment falls outside the principles of the Clinical Framework, or where there are concerns about the adequacy, appropriateness or frequency of treatment.

This option will also amend the definition of ‘medical treatment’ in the SRC Act to restrict compensation for ‘medicines’ to medicines recommended or prescribed by legally qualified medical practitioners or dentists (or under some circumstances a legally qualified optometrist or nurse) and provided by a legally qualified pharmacist.  In addition, compensation for drugs of addiction will be restricted to those prescribed by the employee’s nominated ‘legally qualified medical practitioner’.

The employee will nominate a specific legally qualified medical practitioner at the outset of their claim and will be able to change the nomination throughout the life of the claim.  An employee will only be able to have one nominated legally qualified medical practitioner at any one time.

This option is consistent with the recommendations put forward by Mr Hanks in his review of the SRC Act in 2012.

Option Three - Cap on the lifetime costs of a claim, adoption of the National Clinical Framework, medical treatment to be provided by an Allied Health Provider or Comcare approved medical providers (based on WA model)

This option is based on current practice in Western Australia and has several similarities to Option Two presented above.  Like Option Two, this option will require medical treatment to be provided by health practitioners who are accredited and registered under the ‘National Registration and Accreditation Scheme’ in order to be compensable.  Comcare will also have the ability to consider and accredit those not registered under the Accreditation Scheme for eligibility to provide medical treatment under the SRC Act. 

The National Clinical Framework will also be adopted to provide an evidence-based policy framework for the delivery of health services to injured employees and compensation for ‘medicines’ will be restricted to prescription medicines only.

A cap on the lifetime costs of a claim will also be implemented which will help to reduce and/or stabilise rising costs.

Impact Analysis

This impact analysis considers the impact of the changes beyond the status quo.

Option Two — Restrictions on compensation for prescription medicines; medical treatment must meet objective standards to be compensable, be provided by a legally qualified health practitioner or overseas equivalent or recognised and accredited by Comcare .

Impacts on Employers

Determining authorities, including licensees, will notice a minor reduction in regulatory burden as they will no longer be required to interpret whether medical treatment is reasonable in every situation.  Instead, they will be required to ensure that medical treatment is provided by legally qualified health practitioners and in accordance with objective standards such as those in the Clinical Framework.  Each determining authority will be able to determine how they assess whether medical treatment meets objective standards; for example, by requiring the provision of a treatment plan.  Where treatment is provided outside the principles of the Clinical Framework, or where there are concerns about the adequacy, appropriateness or frequency of treatment, determining authorities will be able to refer practitioners to the appropriate professional regulatory body.

Health providers which are not registered under the ‘National Registration and Accreditation Scheme’ will be assessed and accredited by Comcare on a national basis rather than as individuals.  This will impose no additional regulatory burden on premium payers or licensees.

As the party responsible for reimbursing the cost of medications, determining authorities are exposed to risks, such as injured employees doctor shopping, illegally selling or overusing medications, exacerbated injuries or even potential fatalities of employees.  Legislating the conditions relating to the SRC Act’s reimbursement of medications will reduce risk to both injured employees and determining authorities.

Under this option, an employee will be required to nominate a legally qualified medical practitioner for the purpose of prescribing medications classified as drugs of addiction.  Determining authorities will need to ensure that compensation is only paid for drugs of addiction prescribed by the employee’s nominated legally qualified medical practitioner.

Impacts on health providers

Health providers registered under the National Registration and Accreditation Scheme are regulated by 14 National Boards that set the standards that practitioners must meet and manage complaints about the health, conduct or performance of practitioners.  Each National Board has also set a code of conduct and ethics that seek to assist and support practitioners to deliver appropriate, effective services within an ethical framework.  Practitioners have a professional responsibility to be familiar with their relevant code and to apply the guidance it contains.

The ability of determining authorities to improve accountability in regards to treatment outcomes, for example, by requiring the development of a treatment plan, will place an additional reporting burden on health professionals.  The referral of those professionals not meeting appropriate standards to the relevant National Board or professional regulatory body will also place an additional reporting burden on health professionals.  However, any additional reporting burden should be minimal for providers registered under the National Registration and Accreditation Scheme due to existing responsibilities under their relevant code of conduct.

Health providers who are not registered under the ‘National Registration and Accreditation Scheme’ will need to apply to Comcare to be assessed and accredited on a national basis rather than as individuals.  For example, the national body of masseurs (not subject to the National Registration and Accreditation Scheme) will need to seek accreditation from Comcare rather than individual massage therapy providers. 

Medical treatment costs totalling $37 million were incurred by injured employees of premium payers during 2012-13.  Legally qualified medical practitioners provided 54 per cent of this treatment, 29 per cent was provided by allied health professionals and 17 per cent by other service providers such as masseurs etc.  It is estimated that the practitioners providing 90 per cent of acupuncture, health and fitness and massage services, as well as 50 per cent of practitioners providing diet/nutrition, hypnotherapy and pain management services, may need to seek accreditation.

As a minimum, this would mean that practitioners who were paid 13 per cent of treatment costs ($4.8 million) during 2012/2013 will need to seek accreditation from Comcare.

Those health providers, for whom Comcare is required to independently assess the nature and standard of their qualifications and the treatments they provide, will experience an additional administrative burden during the accreditation process.  However, this is a once-off activity and any burden will not be significant.  This will be more than offset by reduced claim costs as injured employees benefit from evidence based treatment and therefore a more timely return-to-work.

Legally qualified medical practitioners nominated for the purpose of prescribing medications classified as drugs of addiction should not experience additional work as they are already required to monitor any prescription of drugs of addiction medications.

Any additional regulatory burden for health providers is justified in that it is part of ensuring best practice in treatment standards.  Costs will be reduced over time as higher standards are met and injured employees return-to-work more quickly.

Impacts on Injured Employees

Amending the definition of ‘medical treatment’ will ensure that injured employees will receive evidence based, effective treatment which meets the standards established by the Clinical Framework by legally qualified health practitioners.  This will result in an improvement in the health and return-to-work outcomes of injured employees, ensure that treatment standards are met and provide value for taxpayer money.

Employees will be required to ensure that medical treatment is obtained from legally qualified health practitioners or by health providers recognised and accredited by Comcare if the treatment is to be compensable.

In addition, employees will be required to nominate a l egally qualified medical practitioner for the purpose of prescribing medications classified as drugs of addiction, if required.

 



 

1.1.1.       Option Three - Cap on the lifetime costs of a claim, adoption of the National Clinical Framework, medical treatment to be provided by an Allied Health Provider or Comcare approved medical providers (based on WA model)

Impacts on Employer

Determining authorities, including licensees, will be required to ensure that medical treatment is provided by health practitioners who are accredited and registered under the ‘National Registration and Accreditation Scheme’ and in accordance with objective standards such as those in the Clinical Framework.  Where treatment is provided outside the principles of the Clinical Framework, or where there are concerns about the adequacy, appropriateness or frequency of treatment, determining authorities will be able to refer practitioners to the appropriate professional regulatory bodies.

Determining authorities will only be liable to compensate injured employees for prescription medicines; however, they will continue to be exposed to risks of unlegislated boundaries around the funding of prescription medications.  This may include injured employees doctor shopping, illegally selling or overusing medications, exacerbated injuries or even potential fatalities of employees.

Determining authorities will benefit from decreased medical costs through the use of a cap on lifetime medical costs.  This figure will be indexed for inflation and can be reconsidered in cases where the whole person permanent impairment ratio is greater than 15 per cent, or if the worker’s social or financial circumstances justify it, or both.  This will reduce employer costs and give employers security regarding their workers’ compensation liabilities.

Impacts on Health Providers

Health providers will be subject to the same impacts under both Options Two and Three: those who are registered under the National Registration and Accreditation Scheme will be able to continue to provide services to injured employees with a workers’ compensation claim.  Health providers who are not registered under the Scheme will need to apply to Comcare to be assessed and accredited (as a profession rather than as individuals). 

Health providers seeking accreditation will experience an additional administrative burden during the accreditation process.  However, this is a once-off activity and any burden will not be significant.  Health providers that do not meet the criteria of evidence based medical treatment due to the nature and standard of their qualifications will likely face a reduction in their income.

In addition, the lifetime cap on claim costs will likely result in injured employees forgoing non-essential treatment which will have flow on effect to some health providers.

Impacts on Injured Employees

Limiting compensation to the services of medical providers registered under the National Registration and Accreditation Scheme, or accredited by Comcare, will ensure that injured employees receive evidence based, effective treatment which meets the standards established by the Clinical Framework.  This will result in an improvement in the health and return-to-work outcomes of injured employees, ensure that community standards are met and provide value for taxpayer money.

Employees will no longer have access to unlimited compensable medical treatment over the life of their claim and consequently may need to rationalise non-essential treatment.

Consultation

In response to the recommendations put forward by Mr Hanks in his review of the SRC Act, stakeholders provided the following comments.

The Australian Psychological Society commented: [28]

‘The definition of therapeutic treatment (s 4) should be updated to ensure it is producing an outcome for employees. This will require a new clinical framework to be implemented addressing the issue of long term “maintenance” treatment within the scheme and also provide a nexus with “mental injury” (s 5A). The new framework will require an active partnership between the scheme, its providers and employers. The scheme should have access to a panel of expert clinicians reflective of its new bio-psycho-social focus, backed up with new guidelines on evidence-based clinical assessment and interventions. These expert clinicians have the responsibility to educate providers and employers on the new treatment framework and powers to direct providers to resubmit their treatment plans that do not comply. Employers on the other hand will be supported by expert clinicians who can assist them with early identification and intervention of claims (as well as prevention programs). Providers will be accessed in an appropriate and timely manner based on their training and qualifications and willingness to provide goal-oriented and evidence-based interventions.’

Comcare’s submission to the Review noted that revising the definition of ‘medical treatment’ so that the effectiveness of the treatment could be measured: [29]

‘… would allow injured employees, their medical providers and determining authorities to assess whether the treatment is improving, worsening or not changing the effects of the compensable injury. This informs and justifies medical treatment decisions and prevents the development of dependence on ineffective treatment which may worsen the health outcomes of injured employees. Measurement of outcomes to determine clinical effectiveness is considered best practice. Measures should be related to the functional goals of treatment and relevant to the [injured employee’s] injury.’

One of the medical experts consulted by the Review (who asked for anonymity) submitted [30] :

‘Evidence indicates that compensation patients have a worse clinical outcome when matched for injury. Although not fully understood why, research indicates that a closer monitoring approach of treatment delivery by providers is required to drive best treatment outcomes in the compensation population.

One factor that is understood in the compensation patient cohort is the unique three way value transaction. The compensation client receives treatment and services, but makes no financial outlay and has reduced outcome leverage in the service provision. This results in a low financial risk for the patient and potentially reduces the tension over the cost benefit or cost effectiveness of treatment. The consequence is reduced accountability in the client - provider relationship for measurable health improvement and outcomes….’

Conclusion

The department recommends implementing Option Two on the basis that it introduces an evidence based, higher quality integrated framework for the provision and monitoring of medical treatment by appropriately qualified health practitioners, both in Australia and overseas.  Option Two is anticipated to produce a significant improvement in treatment outcomes and reduce the cost of medical treatment under the SRC Act.  Key benefits of Option Two are as follows:

·          Ensuring all medical treatment is provided by legally qualified health practitioners or by health practitioners whose qualifications and experience have been accredited by Comcare.

·          Ensuring that treatment provided adheres to the Clinical Framework and where is does not, enabling determining authorities to refer to the appropriate professional regulatory body to query the standard of the provided treatment.

·          Providing that all medications compensated for under the SRC Act are recommended or prescribed medications only - and where they are classified as drugs of addiction in particular - they are prescribed only by a ‘nominated legally qualified medical practitioner’ to ensure their use is monitored.

This package of reforms was recommended by Mr Hanks in his 2012 review of the SRC Act.

The majority of those who responded to the Review agreed that if these recommendations were implemented there would be significant improvements in treatment outcomes.

The regulatory cost impact of these amendments is minimal for licensees and health providers.  However, the improvement in treatment outcomes should produce savings in claims costs for licensees.  The overall budgetary impact for the Government is nil.

·                    Household and attendant care services — tiered system of services and support

The Problem

There is no clear framework in the SRC Act for the provision and monitoring of support services provided in the home (household and attendant care services), nor any means to ensure that those providing these services are appropriately qualified; in particular, attendant care service providers.

Under the SRC Act, household services are defined to mean services of a domestic nature (including cooking, house cleaning, laundry and gardening services) that are required for the proper running and maintenance of the injured employee’s household.  Attendant care services are services that are required for the essential and regular personal care of an injured employee (other than household services, medical or surgical services or nursing care) and may include assistance with mobility, personal hygiene (bathing and toileting), grooming, dressing and feeding.

At present, the SRC Act provides insufficient mechanisms for the assessment and equitable provision of household and attendant care needs to injured employees.

In 2012-13, determining authorities paid $4.9 million for 1300 accepted claims for household and attendant care services.  This is an increase of 34 per cent from 2008-09, when $3.2 million was paid by determining authorities for 900 accepted claims.

Compensation for support services provided in the home

Compensation for support services provided in the home is currently available to all injured employees, regardless of the nature or extent of the impairment sustained.  There is also no limit on the period and total cost for which compensation for household and attendant care services is payable.  This is imposing increased costs on employers and is not producing optimal outcomes for those most in need.

Attendant care services

In 2012-13, determining authorities paid $720,000 for attendant care services.  This is an increase of 35 per cent from 2008-09.

Comcare data indicates that since 1989, of the 751 accepted claims for attendant care services, 70 per cent of claims were made within three years of the injured employees’ date of injury; 25 per cent were made five or more years after the injured employees’ date of injury; 13 per cent were made ten or more years after the injured employees’ date of injury; and five per cent had been compensated for attendant care services twenty or more years after the injured employees’ date of injury.

In addition, 23 per cent of injured employees did not make their first claim for attendant care services until after three years from the date of their injury.

Household services

There have been sustained increases in household services over the last five years.  In 2012-13, determining authorities paid $4.2 million for household support services, compared to $2.7 million in 2008-09.

Comcare data indicates that since 1989, of the 5807 accepted claims for household services, 60 per cent of claims were made within three years of the injured employees’ date of injury; 33 per cent were made five or more years after the injured employees’ date of injury; 17 per cent were made ten or more years after the injured employees’ date of injury; and four per cent had been compensated for household services twenty or more years after the injured employees’ date of injury.

In addition, 19 per cent of injured employees did not make their first claim for household services until after three years from the date of their injury.

Providers of support services provided in the home

Currently the engagement of household or attendant care services is the prerogative of the injured employee.  This limits any control on costs, the quality of the care and the development of formal care plans.  There is no requirement for attendant carers to have any level of training to ensure the injured employee is receiving appropriate care.  These issues can mean that an injured employee may not be correctly assisted to recover from their injuries or learn the coping strategies that they need to manage any residual impairment. 

Determining authorities have a responsibility to protect the health and wellbeing of injured employees receiving compensation and to ensure appropriate usage of employer funds.  However, the mechanisms provided by the SRC Act are insufficient to allow for the effective management and regulation of attendant care services funded under the SRC Act. 

Options

Option One — Maintain the status quo

Maintaining the status quo will result in injured employees receiving compensation for unlimited support servicesprovided in the home regardless of the nature or extent of the injuries sustained.  Injured employees will continue to be responsible for the engagement (though costs are borne by determining authorities) of household or attendant care service providers.  Combined, this cost determining authorities $4.9 million in 2012-13.

Option Two — Tiered system for support services provided in the home, formal framework for in-home services assessment, accreditation system for attendant care services

This option proposes a tiered system for the provision of support services provided in the home, as well as restricting long-term access to these services.  Under this option, household services will be provided for three years from the date of injury.  Attendant care services will be provided for three years from the date of injury and for an additional six months after specific events, such as the employee is admitted into hospital.  An exception will be made in circumstances where an employee has sustained a severe (catastrophic) injury.  Household and attendant care services will be provided on an ongoing basis for the severely injured with no cap on costs.  A new definition of ‘catastrophic injury’ will be introduced into the SRC Act to accommodate this provision.

Under this option, Comcare will establish a formal framework for the assessment of need for support servicesprovided in the home.  Any need for these services will be assessed by an independent party such as a registered occupational therapist.

Comcare will also be empowered to prepare and issue a list of approved attendant care providers recognised under the SRC Act.  Other entities such as the Department of Veterans’ Affairs have already established lists for ex-service men and women that could be used as the basis for the Comcare list.

There are situations in which it may be appropriate for a family member to provide attendant care services.  In these situations, the family member should be registered with an attendant care provider and required to meet all qualifying requirements.

This issue was considered by Mr Hanks in his 2012 review of the SRC Act and this option is consistent with recommendations from that review.

Option Three - Household and attendant care services provided at the request of a medical practitioner and with the support of an occupational therapist, for a maximum of 6 hours per week and for not longer than three months.  Attendant care services must be provided by a person or organisation approved by Comcare and an ‘attendant care program’ must be developed.

This option is a hybrid of the household and attendant care services provided in New South Wales and Victoria.  In order to be compensable, household and attendant care services must be requested by a medical practitioner and supported by an occupational therapist after completing an in-home assessment of the injured worker. 

Attendant care must be provided by a person or organisation certified by Comcare as an approved attendant care provider.  Paid attendant care services cannot be provided by friends or family members unless under exceptional circumstances.

An attendant care program must be developed for each injured employee specifying the goals of the program; description of the care and services to be provided; specific duties of the attendant carer; other support services to be involved; hours recommended; regular review intervals; and program duration.

Household and attendant care services will be provided on a temporary basis for not more than 6 hours per week and for a period that is not longer than, or during periods that together are not longer than 3 months.

Impact Analysis

The impact analysis considers the impact of the changes beyond the status quo.

Option Two — Tiered system for support services provided in the home, formal framework for in-home services assessment, accreditation system for attendant care services

By introducing a tiered model for the provision of support services provided in the home and a formal framework to assess the need for services, the integrity of the SRC Act is improved and funding is utilised where it is most needed.  Payments to the less injured are carefully controlled, while payments to the severely injured may be increased to provide better support.

Impacts on Attendant Care Providers

This option should not place a regulatory burden on attendant care providers as Comcare could use an already established list of approved attendant care providers.  If an established list is not utilised, attendant care providers will be required to produce documents and show evidence of experience in order to provide services under the SRC Act.  This would result in a medium regulatory burden.

Impacts on Employers

This option will impose an additional compliance burden on determining authorities, which will be more than offset by the resulting fall in claim costs.

Impacts on injured employees

Comcare data indicates that 19 per cent of injured employees did not make their first claim for household services until after three years from the date of their injury; and 23 per cent of injured employees did not make their first claim for attendant care services until after three years from the date of their injury.  Under this option, i njured employees who do not have a severe injury will not be able to claim household services or attendant care services after three years from the date of their injury, unless they claim attendant care services as a result of a specific event.

Limiting compensation for household and attendant care services to a maximum period of three years (and attendant care to a maximum of six months following a specific event) should provide sufficient time for employees to recover from most injuries, be rehabilitated for return to the workforce and learn any coping strategies that they need to manage any residual impairment.

Payments for attendant care services for employees with catastrophic injuries will be uncapped under this option, from a maximum weekly rate of $442.40 (as at 1 July 2014), thus providing better support where required.

Injured employees will not be able to continue to receive compensation for attendant care services if those services are provided by family members not recognised by Comcare as approved providers.  This may limit injured employees choice in regards to selecting providers of those services.

 

Option Three - Household and attendant care services provided at the request of a medical practitioner and with the support of an occupational therapist, for a maximum of 6 hours per week and for not longer than three months.  Attendant care services must be provided by a person or organisation approved by Comcare and an ‘attendant care program’ must be developed.

Impacts on Attendant Care Providers

As with Option two, this option should not place a regulatory burden on attendant care providers as Comcare could use an already established list of approved attendant care providers.  If an established list is not utilised, attendant care providers will be required to produce documents and show evidence of experience specified by Comcare in order to provide services under the SRC Act.  This would result in a medium regulatory burden.

Impacts on Employers

This option will impose a sightly additional compliance burden on determining authorities to monitor the use of household and attendant care services.  However, this will be more than offset by the resulting fall in claim costs.

Impacts on injured employees

This option may be administratively burdensome to employees, as they will be required to prove that they are entitled to household and attendant care services. 

Limiting compensation for household and attendant care services to a maximum period of three months may significantly reduce the time available for injured employees to recover from their injuries. 

Injured employees will receive better targeted and effective services as a result of the ‘attendant care program’.  They will also benefit from programs delivered by qualified professionals who are trained to teach them long-term coping mechanisms.

Injured employees will not continue to receive compensation for ongoing attendant care services if those services are provided by family members not recognised by Comcare as approved providers.  This may limit injured employees choice in regards to selecting providers of those services.

Consultation

In response to the recommendations put forward by Mr Hanks in his 2012 review of the SRC Act, stakeholders provided the following comments:

The previous Department of Finance and Deregulation supported all recommendations for household and attendant care services.   However, it believed that an independent medical (panel) assessment should be conducted where the severe injury falls into the category of ‘ other injury’ and includes a secondary psychological condition [31] .

Telstra supported the implementation of a tiered system of household and attendant care services and support. However, it advised that compensation for household and attendant care services for the severely injured should be subject to ongoing reviews, particularly for the severely injured. Telstra supported the establishment of a formal framework for the assessment of need for household and attendant care services but believed that physiotherapists should only be required to complete this assessment in limited circumstances [32] .

Assessments Australia strongly agreed with the Review recommendations in relation to a framework for assessment of need for services provided in the home and that any need is assessed by an independent third party [33] .

Australia Post agreed with the recommendations with a clarification that household services are payable for ‘up to’ three years.  This would avoid an expectation that household services would be paid beyond when they are required [34] .

The Australian Council of Trade Unions did not support the introduction of the new term ‘severe injury’ as it believed ‘injury’ is currently sufficiently defined [35] .

The Australian Manufacturing Workers’ Union supported a three-tiered approach for home services.  However, it did not believe this should be time-limited.  It opposes the proposed definition of ‘severe injury ‘as too narrow and opposes capping of household care and attendant services at 40 hours per week at a cost of $1700 [36] .

The Australian Lawyers Alliance believed some discretion should be allowed, in appropriate cases, to exceed the maximum 40 hours per week for attendant care services [37] .

The Law Council of Australia agreed that it is reasonable for household services and attendant care to be reviewed periodically and more critical scrutiny placed on its provision, but did not support the recommendations.  Specifically, it believed that the definition proposed for ‘severe injury’ is too restrictive and does not, for example, include psychological injuries.  The test to determine the severity of the injury does not take into account the injury circumstances of the employee; the amount of non-paid, family assistance that may be available to them; and the cut- off point of three years for household and post-acute service seems arbitrary and without merit.  The Law Council of Australia believed the problem has been the lack of regular review of these services rather than the model of delivery itself [38] .



Conclusion

Option Two is the recommended option for the provision of support services under the SRC Act.  This option will ensure that services are targeted at those injured employees most in need and provided at the time the services are most needed.  This option also ensures that support services are provided by appropriately qualified persons.  For those who suffer a temporary impairment, services are provided only as needed, while those with more severe injuries and impairments are able to access increased and ongoing support. 

The increased regulatory impact on attendant care providers and determining authorities is outweighed by more equitable, effective, transparent, evidence-based and targeted provision of services and the savings in claims costs.

Option Two will ensure more cost effective provision of support services and ensure improved care and service standards.

·           Medical treatment and legal costs

The Problem

The department, in reviewing the costs and operation of the SRC Act, has identified the potential for better operational efficiency and consistency in the areas of medical service fees, medical report costs and legal costs arising from disputation.

Comcare has a responsibility to ensure that health and legal practitioners are held accountable for their conduct and do not take advantage of the SRC Act, or injured employees, by over-charging, over-servicing or providing services that do not meet basic professional standards.  Comcare’s current inability to exert any form of regulatory oversight over the cost of medical and legal services affects the financial integrity of the SRC Act’s workers’ compensation scheme.  Additionally the party that receives the services does not bear the cost which creates the potential for over-servicing (a ‘principle-agent problem’).

Workers’ compensation schemes in other jurisdictions control medical and legal costs.  The lack of regulation of medical and legal costs under the SRC Act makes it vulnerable to providers willing to take advantage of the fact that they will be reimbursed for whatever services and fees they see fit to impose.

[39]

[40]

*This refers to costs of both premium payers and licensees.

Medical Treatment Costs

Medical and rehabilitation costs currently represent 23.4 per cent of the total costs of claims liabilities under the SRC Act.  This figure has been increasing at a consistent rate over the past three years.  The SRC Act currently allows for compensation of medical treatment costs ‘of such amount as Comcare determines is appropriate for that medical treatment’.  In practice, Comcare has limited ability to determine the ‘reasonableness’ or the ‘appropriateness’ of the treatment.  Comcare is not permitted, under the SRC Act, to have any involvement in, or control over, an injured employee’s choice of medical or therapeutic practitioner or treatment.  Medical costs are approved on a case-by-case basis, with appeals to the Administrative Appeals Tribunal (AAT) further varying the amounts paid.  In some cases, this creates inequitable outcomes.



Medical Report Costs

One of the most immediate and pertinent increases in medical costs relate to the provision of medical reports by legally qualified medical practitioners.  A workers’ compensation medical report will generally relate to events or injuries that occur in relation to causation, capacity for work, or treatment or assessment of permanent impairment.  These reports provide detailed information about an injured employee’s condition and are not only used to determine liability, but may also be requested to assist decision-making at any stage of the claims process where existing information is inadequate.

In 2012-13, medical reports cost $6.8 million; an increase of 22.1 per cent since 2008-09.  In addition, the cost of medical reports not resulting from section 57 medical examinations [41] was $3.7 million; an increase of 43.2 per cent since 2008-09.  The issue, in this instance, is not that medical reports are considered surplus, but that the cost of medical reports does not accurately reflect the required reporting complexity.  A standard report will involve assessment of a single event or injury, or a simple permanent impairment assessment.  A complex report requires more complex methods of permanent impairment assessment, including assessment of multiple injuries.  In instances where the report is being prepared a by an independent medical professional, the need to examine the employee and consider documentation from other sources will contribute to the cost.

Currently, there is nothing to prevent a practitioner producing an overly complex report where a standard report is required, or a standard report where a more complex report is needed.  The determining authority is then obliged to pay for either sub-standard or over-priced reports, depending on the complexity of the injury.

Legal Costs

Following an initial determination of a claim, either party to the claim may apply for an internal ‘reconsideration’ by the determining authority.  Up to this point, legal representation is not envisaged and therefore not payable by the determining authority.   If either party disagrees with the reconsideration, they can have the matter reviewed externally by the AAT.  Matters may then be progressed to the Federal Court of Australia or the Federal Magistrates Court on questions of law only. 

Determining authorities are liable for their own legal costs in all matters brought before a court or tribunal; in addition, if the matter is found in favour of the employee, the determining authority is also liable for the employee’s legal costs.

In the last year alone, legal, administrative and regulatory costs paid under the SRC Act have increased by 11 per cent.  Legal costs are directly correlated to dispute resolution timeframes and disputes under the SRC Act have, at 44.8 per cent, the lowest resolution rate - for disputes resolved within nine months - of all Australian workers’ compensation schemes.  The more protracted a matter in the AAT, the greater the legal costs.  By comparison, New South Wales resolves 97.3 per cent of disputes within nine months.  In the last financial year, reconsiderations under the SRC Act have increased five per cent, with a four per cent decline in the number of matters proceeding to the AAT.  The corresponding and disproportionate 11 per cent increase in scheme legal costs underscores the fact that the current protracted dispute resolution timeframes under the SRC Act are highly undesirable.

There is limited provision under the SRC Act by which to curtail payment of excessive legal costs arising from disputation of claim decisions.  Once a case has proceeded to the AAT, the Tribunal cannot order an employee to pay the respondent’s costs; that is, the costs incurred by Comcare, licensees or DVA.  In practice, and in the current legal climate of ‘no win no pay’, there is little to discourage the employee progressing a claim to the AAT when they are not required to meet the respondent’s costs.  This is not the case for the respondent who is required to meet the employee’s costs, no matter how trivial the issue or how unnecessarily protracted the proceedings.

Taxation of legal costs is the only strategy currently available under the SRC Act to recover legal costs.  Taxation of legal costs refers to the process by which a court may fix the amount of costs it orders one party to pay to the other.  Alternatively, a taxing officer may assess the amount of costs by reference to the relevant scale of costs.  Taxation is generally designed to regulate the level of legal costs and shield participants from excessive charging.  However, parties are generally reluctant to proceed to taxation as it incurs a cost in itself and is typically seen only as a tool for managing costs in extreme circumstances.

In limited circumstances, determining authorities can also employ Calderbank offers.  A Calderbank offer refers to the process by which an employee refuses a pre-trial offer, proceeds to trial and then receives a trial offer that is not more favourable than the terms of the original offer.  In this case, the determining authority can then apply to the AAT to exercise its discretion not to award all or parts of the costs to the injured employee.  However, because the AAT cannot order an employee to pay a respondent’s costs, Calderbank offers have only a limited impact on workers’ compensation cases, particularly as relevant authorities must still pay their own costs, regardless of whether or not the matter may have settled pre-trial. 

Options

Option One — Maintain the status quo

Medical service fees and medical report costs

Retaining the status quo will result in the continuation of existing problems identified by Mr Hanks and annual Comcare financial reports.  These include rising medical compensation costs, provision of inconsistent medical treatment for injured employees and financial unsustainability of workers’ compensation under the SRC Act in the long-term.  Determining authorities will continue to lack any enforceable instrument that will permit effective regulation of medical compensation costs and services.  As such, they will continue to be liable for medical treatment costs that result from treatment prescribed without regard to consistency, suitability and the financial sustainability of a workers’ compensation body.  Given that medical compensation costs under the SRC Act have increased considerably over the last three years, there is little doubt that retention of the status quo will see similar, if not greater, increases in medical compensation costs and related problems in the coming years.



Legal Costs

Under this option, determining authorities will continue to pay inflated legal costs without the means to moderate them or to discourage protracted disputation.

Option Two — Develop a schedule of costs for medical services, medical reports and legal services

Medical service fees and medical report costs

Under this option, the SRC Act will be amended to allow   Comcare to develop a Schedule of Medical Service Fees.  This list of regulated fees will be used to pay medical practitioners and suppliers for medical and rehabilitation services under the SRC Act.  These fees will be set by Comcare, in consultation with relevant professional associations, and will have legislative authority as the rates at which determining authorities are liable to pay compensation for medical treatment under the SRC Act.  This amendment was recommended by Mr Hanks.

Pricing levels for medical reports will also be set by Comcare and will have legislative authority as the rates at which determining authorities are liable to pay for medical reports under the SRC Act.

Legal costs

Under this option, the SRC Act will be amended to enable the development and enforcement of a Schedule of Legal Costs, similar to those that apply in the states and territories.  This will be a list of legal services that are compensated on the basis of time (Western Australia) or cost (New South Wales), or a combination of both.  The schedule will provide guidance for determining authorities, injured employees, employers and legal representatives as to what constitutes reasonable amounts of time and/or expenditure on prescribed workers’ compensation issues.  The schedule of legal costs will have legislative authority as the rates at which determining authorities are liable to pay for legal costs under the SRC Act.

 



Option Three — Utilise state medical services and medical report schedules where they exist and refer appeals to mediation and advocacy services

Medical service fees and medical report costs

Comcare will use the relevant state or territory medical fee and medical report schedules, where they exist, to reimburse medical expenses in the state or territory in which they were incurred.  New South Wales, Victoria, Queensland, Western Australia and South Australia currently have fees schedules which could be utilised.  These could also be applied to the remaining jurisdictions (Tasmania, Northern Territory and the Australian Capital Territory) based on a combination of proximity and similar economies.  For example, Western Australia’s cost schedules could be applied to the Northern Territory as they both have similar cost pressures of remoteness; and South Australia’s cost schedules could be applied to Tasmania and the ACT as they have similar cost pressures of a relatively small economy.

Legal Costs

Comcare will establish an alternative dispute resolution service, in the form of mediation or an advocacy service, that could be accessed following a reconsideration and as an alternative to legal proceedings through the AAT.  If mediation or advocacy was unsuccessful, the claim would proceed to the AAT on appeal.

Impact Analysis

This impact analysis considers the impact of the changes beyond the status quo.

Option Two — Develop a schedule of costs for medical services, medical reports and legal services

Medical Service Fees and Medical Report Costs

The implementation of a structured pricing approach to the provision of medical compensation services under the SRC Act will ensure accountability for tax payer and employer costs and be an important legislative recognition of Comcare’s right to more effectively manage medical costs and pursue more sustainable financial outcomes.  The regulation of medical report costs will ensure medical reports more accurately reflect the complexity of an employee’s injury. 

This option is consistent with the approach in state and territory workers’ compensation jurisdictions and creates certainty for both providers and employees as to what medical compensation amounts will be paid under the SRC Act.

Impacts on Employers

Under this option, there will be a decrease in the time and compensation costs associated with disputation of medical compensation payments and unnecessary or excessive medical reporting .  This option will also provide a disincentive to over-charging and over-servicing of injured employees.

There will be associated establishment and enforcement costs for Comcare to prepare and issue a table of medical service rates.  This amendment may also result in minor changes to the regulatory burden for determining authorities, as they will need to crosscheck payments against the medical service rates.  However, as t his option will be implemented in tandem with schedules of medical service fees and legal costs, it will avoid duplication of consultation, implementation and administrative costs.  It will also result in improved administrative processes through consistent reporting and defined standards.

Impacts on Injured Employees

Injured employees will retain the right to a treating practitioner of their choice.  However, where treatment costs are in excess of the prescribed schedule, these costs will no longer be borne by the determining authority.  In practice, employees may be less likely to retain treating practitioners whose costs are above the pricing schedule in order to minimise their own out of pocket expenses.

Firmer guidelines for medical reports will allow for a standard of consistency and accuracy that will enable more effective investment in an injured employee’s treatment, recovery and rehabilitation. 

This amendment, implemented in isolation, may be seen by employees as a reduction in benefits under the scheme.  However, the package of proposed reforms will improve the delivery of medical services and outcomes under the SRC Act.  The adoption of clinical justification principles (in the Clinical Framework) will ensure that treatment is reasonable, transparent and cost effective, and highlights the need for the provider to deliver value (or a functional outcome) to the injured worker.  In addition, research also indicates that when treatment is provided by experts in compensation care and in an environment of high accountability, health outcomes for compensation patients are vastly improved [42] .

Impact on Health Providers

Practitioners have the legal right to charge in excess of schedule rates, regardless of whether the rates are prescribed by workers’ compensation bodies or the Australian Medical Association (AMA).  This reflects general medical practice and is not limited to patients presenting with work-related conditions. 

The department has consulted with health practitioners in regard to scheduling medical treatment costs.  While there is general support for costs schedules, this support is predicated on the assumption that costs schedules reflect market pricing. 

Legal Costs

Several state and territory jurisdictions have legislated legal costs, fixing maximum costs or number of hours, for legal services provided in connection with workers’ compensation matters.  The main objective of having a schedule of legal costs is to ensure that legal costs are proportionate to the importance and complexity of the subject matter in dispute.

Impacts on Employers

There will be cost implications for the development of a legal costs schedule.  However, legal costs schedules have precedent in other Australian workers’ compensation schemes and it is expected these schedules will be referenced in order to mitigate initial implementation costs.

Additional administrative and resource costs are likely for a transitional period as determining authorities and the AAT adopt and adapt their systems to legislative change.

Medium-term post-implementation costs would include regular review of the fees prescribed in the schedule by Comcare to ensure currency.  These would be borne by premium payers and licensees through regulatory costs paid to Comcare.

Impacts on Injured Employees

In workers’ compensation matters, the personal nature of the subject matter can sometimes lead to excessive time and money being spent on relatively unimportant or simple legal issues.  A formalised schedule of legal costs will limit the potential for over-charging and over-servicing and may reduce the incentive for individuals and their lawyers to litigate weak and unlikely claims.

Introducing a schedule of fees would not limit an employee’s right to pursue legal action but it would limit determining authorities’ financial liability for such actions.

A schedule of fees would set parameters as to compensable costs for all parties to a dispute, providing certainty about what would and would not be paid.  In turn, placing limits on legal costs would provide further incentive to resolve disputes in a timely manner.

Option Three — Utilise state medical services and medical report schedules where they exist and refer appeals to mediation and advocacy services

Medical service fees and medical report costs

The main benefit of using state service fee schedules is that Comcare would avoid the costs associated with establishing its own schedule.  State schedules would also be more closely aligned to the living costs and standards of each state and avoid the standardisation of medical costs that must arise from a national fee schedule.

  Impacts on Employers

The use of established fee schedules could possibly minimise implementation costs.  However, this option does not offer national consistency and multiple fee schedules would be administratively inefficient, with claims staff required to reference and check payments against multiple state schedules and payment systems. 

Impacts on Injured Employees

Injured employees will retain the right to a treating practitioner of their choice.  However, where treatment costs are in excess of the prescribed schedule, these costs will no longer be borne by the determining authority.  In practice, employees may be less likely to retain treating practitioners whose costs are above the pricing schedule in order to minimise their own out of pocket expenses.

This amendment, implemented in isolation, may be seen by employees as a reduction in benefits under the scheme.  In addition, varying levels of reimbursement between jurisdictions for employees employed by the same organisation may be perceived as unfair.

Impact on Health Providers

Practitioners have the legal right to charge in excess of schedule rates, regardless of whether the rates are prescribed by workers’ compensation bodies or the AMA.  This reflects general medical practice and is not limited to patients presenting with work-related conditions. 

Health practitioners would also be familiar with compensation amounts and would require little adjustment to pricing under the SRC Act.

Legal Costs

Impacts on Employers

An effective alternative dispute resolution service could positively influence disputation rates and lower associated legal costs.  The provision of a less adversarial approach to dispute resolution could be sufficient to avoid progression of many disputes to the AAT and avoid the resulting legal costs.

There would be establishment and ongoing resourcing and maintenance costs for a mediation service.  If the service is offered as a free service to disputing parties, it would require access to funding - either from government appropriations or from premiums and regulatory contributions - which may prove prohibitive for a comparatively small workers’ compensation scheme.

Impacts on injured employees

An unsuccessful mediation would add another layer to the dispute resolution process, impose additional costs and increase the time taken to resolve disputes.

Consultation

In response to the recommendations put forward by Mr Hanks in his 2012 review of the SRC Act, stakeholders were generally supportive of setting medical service rates.

Capping medical report or legal report costs was not considered by Mr Hanks in his review of the SRC Act.  However, the Safety, Rehabilitation and Compensation Licensees Association (SRCLA) first raised the issue of medical report costs noting that there is strong support amongst self-insurers and premium payers for this amendment.

During the most recent consultation process, health practitioners noted that AMA’s list of fees could be used to guide the Comcare’s fee schedule.  However, the list should not be published on Comcare’s website as this would reduce AMA’s commercial interests.  It was also noted that ‘you get what you pay for’; for example, there are currently only two neurosurgeons in South Australia who accept the rate paid by WorkCover.  There was also concern as to how the rates would reflect qualifications; for example, in New South Wales, payment rates are linked to course completion rather than the level of qualification of the health professional.

Licensees strongly supported the introduction of a fee schedule for medical costs, particularly medical report costs.  However, it was suggested that the legal fee schedule should not apply to licensees.

Legal practitioners indicated they were not prepared to reduce their fees, which they said would result in injured employees paying the gap, forgoing the service or ‘bottom feeders’ entering the market. 

Recent departmental consultations with the Australian Public Service Commission, the Department of Veterans’ Affairs and Comcare indicate there is support for this amendment.

Conclusion

In compensation matters, the insurer, as the third party payer, takes on a greater accountability for outcomes by the provider as it manages the financial transaction.  Contemporary compensation legislation needs to take into account the financial risks of treatments and the subsequent impact on scheme viability.

The use of fee schedules to regulate workers’ compensation medical treatment costs is current practice for some state and territory jurisdictions.  In addition, the AMA also prescribes suggested rates for health practitioners. 

The department recommends Option Two, the introduction of Schedules of Costs for medical service fees, medical report costs and legal costs developed by Comcare.  The regulation of medical and legal costs would give Comcare the authority to implement measures necessary to ensure the long-term financial sustainability of workers’ compensation under the SRC Act, reduce overall disputation rates and improve certainty, for all parties, as to the SRC Act’s compensatory limits.  A national legislated Schedule of Costs under the SRC Act would reduce the regulatory burden for employers and prevent perceived inequity between jurisdictions.

·           Costing

The Office of Best Practice Regulation requires the calculation of costs associated with the regulatory burden of each option to be tabled in a Regulation Impact Statement (RIS).  However, the regulatory costs of all options provided in this RIS relate mostly to updating IT systems and training staff on new methodology.  As these costs relate to the fact there is a change rather than the quantum of the change, the regulatory burden is the same across all options.

Most claim management functions are completed with the use of specialised software and any significant changes to claims management processes, such as those that are analysed in this RIS, will require a re-design of system software.  There are five IT companies - SBC, Figtree, SAP Cnet, Marsh CS Stars and SAI Global/Cintellate - who provide IT systems to all licensees.  Therefore, the cost of updating IT systems will be limited to these companies only.

Claims management staff will also require training on new systems .  There are currently 17 organisations that perform claims management services for the 33 licensees.  This is because:

  • two insurance companies share eight licensees' contracts for claims management and training for those companies will apply to all their licensees in their contract (i.e. the training will not be for each licensee but for each insurance company's claims managers). 
  • four  corporate groups provide claims management for 11 licensees (five with Commonwealth Bank, two with National Bank, three with John Holland and one with Gallagher Bassett) and would only require one set of training per corporate group.
  • the remaining 11 licensees do their own claims management in-house.

IT and training costs have been applied to current licensees only as costs for new licensees entering the scheme after the introduction of these amendments are considered to be establishment costs.

Where regulatory costs go beyond updating IT systems and training staff on new methodology - for example, accreditation costs for attendant care providers and health practitioners not registered under the ‘National Registration and Accreditation Scheme’ -  they are a feature of both options  and, therefore, they do not change regulatory costs between options.  Accreditation costs for attendant care providers include undertaking a course with a tertiary institution, while health practitioners’ costs are associated with the time it takes to complete application requirements.

Taylor Fry Actuaries conducted costings on the proposed package of changes in July 2014.  As a result of the improved return-to-work outcomes as well as changes to the benefit structure, the Government’s package of changes will save both premium payers and licensees between 12 per cent and 21 per cent annually.  This equates to between $62 million and $105 million for premium payers and between $19 million and $32 million for licensees.

Regulatory Burden and Cost Offset Estimate Table

Average Annual Regulatory Costs (from Business as usual)

Change in costs ($million)

Business

Community Organisations

Individuals

Total change in cost

Income replacement

$0.037

 

 

$0.037

Evidence based medical treatment

$0.024

 

 

$0.024

Household and attendant care services

$0.027

 

 

$0.027

Accreditation of attendant care providers

 

 

$0.010

$0.010

Medical treatment and legal costs

$0.014

 

 

$0.014

Other changes in submission

- $0.256

 

 

- $0.256

Total by Sector

- $0.154

$0.010

- $0.144

Are all new costs offset?

1 yes, costs are offset    1 no, costs are not offset    R deregulatory, no offsets required

Total (Change in costs - Cost offset) ($million)          -$0.144

 



·           Stakeholder Consultation

The department considers that the issues raised in this RIS have been discussed, reviewed and consulted on extensively over the last two years.

An early assessment RIS was initially prepared and submitted to Cabinet for its consideration of the proposed policy.  It was not considered necessary to publish a RIS for consultation due to the detailed and lengthy consultation that occurred from 2012 to 2015.  The RIS was finalised and published upon the introduction of the Safety, Rehabilitation and Compensation Amendments (Improving the Comcare Scheme) Bill 2015

Engagement Methods

The department has engaged in extensive and ongoing consultation with participants in the Scheme to:

  • inform the content of the SRC Act Review and its recommendations;
  • gauge stakeholder responses to the SRC Act Review recommendations; and
  • inform the second stage of the proposed reforms to the SRC Act.

Engagement methods included:

  • targeted consultation groups
  • meetings
  • public submissions tenders
  • workshops
  • cross agency working groups

Consultation Process

The Department of Employment conducted the following stakeholder consultation sessions between July 2012 and June 2014.

Consultation Stage 1

The review of the SRC Act in 2012-13 was a broad review that looked at a range of legislative and operational areas, including scheme governance, performance and access to self-insurance.

Consultation was conducted in three stages by Mr Peter Hanks QC and Dr Allan Hawke AC and consisted of:

  1. initial meetings with targeted participants to develop a preliminary list of issues and possible recommendations;
  2. publication of an issues paper to stimulate and encourage public submissions to the review;
  3. focus workshops with select participants and participant groups to explore particular issues and matters arising in the submissions; and
  4. acceptance of written submissions.

Approximately 44 workshops, meetings and other consultations were held between July and November 2012.  Written submissions for the Issues Paper closed on 25 October 2012 and 45 submissions were received.



Consultation Stage 2

On publication of the SRC Act Review report in March 2013, a series of consultations were conducted in April 2013 with key stakeholder groups in Canberra, Sydney and Melbourne.  The purpose of the consultations was to gauge stakeholder response to the SRC Act Review and to inform future implementation of the recommendations.

The consultations included feedback sessions held by the department and written submissions regarding the recommendations in the final report.  Forty written submissions were received by the department during April and May 2013.  Stakeholders who made submissions and participated in workshops and consultations included workers, employer organisations, unions, insurers, Comcare, Commonwealth government agencies, current licensees, premium payers under the scheme, health practitioner bodies and legal practitioners.

Consultation Stage 3

The purpose of the consultations was to inform the second stage of proposed reforms to the SRC Act and advise stakeholder groups of the proposed content of the SRC Act reform package.

A series of confidential consultations were conducted with key stakeholder groups in Canberra, Sydney and Melbourne during May to June 2014.

Details regarding the stakeholders involved in the consultations are detailed in the table below.

 

Key Stakeholder Group

Number of consultation sessions

Number of Stakeholders

Unions

2

10

Licensees

3

18

Legal Practitioners

2

11

Rehabilitation Providers

1

5

Health Service Providers

1

9

Commonwealth Agencies

Including Comcare, Military and Rehabilitation Compensation Commission, Department of Veteran Affairs

6

14

ACT Government

1

1

Total

16

68

Confidential consultations were conducted to assist in the development of the Government’s response to the Review’s recommendations and the proposed reforms not addressed by the Review.  Participants were also invited to submit written responses to the recommendations.

Other Consultation - Cross Agency Working Groups

The purpose of the consultations was to inform the second stage of proposed reforms to the SRC Act and stimulate policy discussion.

During December 2013 to May 2014, representatives from Australian Government Agencies, Comcare and the Department of Veteran’s Affairs were invited to attend a series of workshops conducted in Canberra.  Meetings were held on a fortnightly basis to present research on issues pertinent to the recommendations.  Participants were encouraged to provide comment or written feedback, including presentation of their own research.

The following Australian Government Agencies were represented at the working group meetings:

  • Department of the Prime Minister and Cabinet
  • Australian Public Service Commission
  • Department of Finance
  • Treasury

Committee on Industrial Legislation

The purpose of this consultation was to identify any unintended consequences in the Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015.

The Committee on Industrial Legislation (CoIL) is a subcommittee of the National Workplace Relations Consultative Council and meets when required to provide technical input on draft workplace relations legislation.  It is common practice to convene the CoIL to consider workplace relations and work health and safety legislation.

A CoIL like process was held in Canberra on 19 February 2015 where representatives from employer and employee peak bodies were provided with a draft of the Bill in confidence to review and provide feedback. 

Consultation Feedback

Stakeholder groups, despite varying motivations, have generally been supportive of many of the proposed amendments, recognising the need to modernise a piece of legislation that has remained largely unchanged since its introduction in 1988.

A summary of the feedback received from various stakeholder groups is outlined below.

Licensees and Premium Payers

Both groups are supportive of amendments that streamline operational procedures and reduce upward pressure on premiums and claims costs, in particular proposed step-down arrangements which will provide organisations with a tool to better manage claims. 

Industry Groups

Legal Practitioners:

Legal Practitioners have mixed opinions of the recommendations, but are generally supportive of amendments that seek to clarify difficult or controversial case law.  They are concerned about recommendations that they perceive as tightening eligibility requirements, particularly for mental stress claims, as well as the potential reduction in benefits for injured employees.

Health Practitioners:

Health practitioners are generally supportive of amendments that improve the health and return-to-work outcomes of injured workers.  They require that any intended medical costs schedules accurately reflect market costs.

 

Rehabilitation Providers:

Rehabilitation Providers have been supportive of the rehabilitation amendments and the reform package’s emphasis on improving return-to-work outcomes, including compliance measures.

Trade Unions and Employees :

Trade unions recognise the benefits of improving return-to-work arrangements for injured employees.  However they are not supportive of any amendments that they perceive as reducing monetary compensation or access to the broadest range of rehabilitation support services. 

Ongoing consultations

Ongoing consultation with Comcare, the Department of Veteran Affairs, Australian Public Service departments, licensees and other determining authorities will continue during implementation of the operational requirements of the proposed reforms.

                                                                                

·           Implementation and Evaluation

The Government will introduce a Bill to legislate the amendments in early 2015.  The department will monitor the impact of these legislative changes on employers and employees to ensure they meet their intended objectives.  A key aspect of this monitoring will be whether the amendments reduce claim costs for employers and increase return-to-work rates for injured employees and whether the predicted savings in compliance costs to businesses have been realised.

Work is also being undertaken by some public service departments to better manage work health and safety, early intervention and return-to-work outcomes through trialling a range of ‘best practice’ initiatives.  These efforts will be monitored and learnings applied to the public service more broadly.



NOTES ON CLAUSES

In these notes on clauses, the following abbreviations are used:

 

AAT

Administrative Appeals Tribunal

the Act

Safety, Rehabilitation and Compensation Act 1988

the Bill

Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015

the Commission

Safety, Rehabilitation and Compensation Commission

the Exit Arrangements Bill

Safety, Rehabilitation and Compensation Legislation Amendment (Exit Arrangements) Bill 2015

the Fair Work Act

Fair Work Act 2009

the Review

Safety, Rehabilitation and Compensation Act Review by Mr Peter Hanks QC and Dr Alan Hawke AC (Report - February 2013)

 

Clause 1 - Short title

1.              This is a formal provision specifying the short title.

Clause 2 - Commencement 

2.              The table in this clause sets out when the provisions of the Bill commence.

Clause 3 - Schedule(s)

3.              Clause 3 of the Bill provides that an Act that is specified in a Schedule is amended as set out in that Schedule, and any other item in a Schedule operates according to its terms.

4.              The Bill comprises 17 schedules which principally amend the Safety, Rehabilitation and Compensation Act 1988 with consequential amendments to the Military Rehabilitation and Compensation Act 2004 , the Seafarers Rehabilitation and Compensation Act 1992 and the Administrative Decisions (Judicial Review) Act 1977 .



Schedule 1 - ELIGIBILITY FOR COMPENSATION AND REHABILITATION



Overview

5.              Schedule 1 to the Bill amends the Act to make a number of changes to eligibility requirements for compensation which, in part, give effect to recommendations made by the Review. The amendments:

·                 provide an expanded list of matters that may be taken into account in determining whether an ailment or aggravation was contributed to, to a significant degree, by an employee’s employment;

·                 enable Comcare to determine a Compensation Standard in relation to a specified ailment that sets out the factors that must, as a minimum, exist before it can be said that an employee is suffering from the specified ailment - those factors must then be taken into account in determining whether the specified ailment or an aggravation of the specified ailment was contributed to, to a significant degree, by the employee’s employment;

·                 introduce new eligibility criteria for ‘designated injuries’ (defined to include heart attacks, strokes and spinal disc ruptures) and aggravations of ‘designated injuries’, and require the degree of contribution from employment or a pre-existing compensable disease to be significant before compensation is payable (recommendation 5.3 of the Review);

·                 increase the threshold for perception-based disease claims (that is, claims for a psychological or psychiatric ailment or aggravation) by requiring an employee to have reasonable grounds for the belief or interpretation of the incident or state of affairs (recommendation 5.2 of the Review); and

·                 widen the scope of the ‘reasonable administrative action’ exclusion to encompass injuries suffered as a result of reasonable management action generally (including organisational or corporate restructures and operational directions) as well as the employee’s anticipation or expectation of such action being taken.

Commencement

6.              The amendments in Schedule 1 to the Bill commence on the day after Royal Assent.

Part 1 - Amendments

Safety, Rehabilitation and Compensation Act 1988

Item 1 - Subsection 4(1)

7.              This item inserts a number of new definitions into subsection 4(1) of the Act.

·                 The terms ‘designated injury’ and ‘relevant pre-existing ailment’ are further defined in new section 5C (see item 15 below). These provisions, together with amendments to the definition of ‘injury’ in section 5A of the Act (see items 5-7 below), give effect to recommendation 5.3 of the Review.

Item 2 - Subsection 4(1) (definition of significant degree )

8.   This item substitutes a definition of ‘significant degree’. This is a technical amendment which relocates the current definition contained in subsection 5B(3) of the Act.

Item 3 - Subsection 4(10)

Item 4 - Subsection 4(10A)

9.   These items make technical amendments to subsections 4(10) and (10A) of the Act as a consequence of the enactment of new section 7A (see item 16 below). The amendments ensure that only Comcare can determine a Compensation Standard under new section 7A.

Item 5 - Subsection 5A(1) (paragraphs (b) and (c) of the definition of injury )

Item 6 - Subsection 5A(1) (at the end of paragraph (c) of the definition of injury )

Item 7 - Subsection 5A(1) (after paragraph (c) of the definition of injury )

10.          These items amend the definition of ‘injury’ in subsection 5A(1) of the Act to include four new categories of injury based on the concept of a ‘designated injury’. The term ‘designated injury’ is defined in new subsection 5C(1) to include specified heart, brain and spinal injuries consisting of, caused by, resulting from, or associated with a pre-existing ailment. The effect of these amendments is to ensure that incidents that are a manifestation of an underlying disease (such as heart attacks, strokes and spinal disc ruptures caused by degenerative diseases and lifestyle factors) will be covered in the same manner as ‘diseases’ - that is, they will only be compensable if contributed to, to a significant degree, by:

·                 the employee’s employment; or

·                 a pre-existing ailment where that ailment is a ‘disease’, that is, the ailment was contributed to, to a significant degree, by the employee’s employment.

11.          Courts have treated such conditions under the current provisions of the Act as ‘injuries’ rather than ‘diseases’, with the effect that they are compensable if they occur at work, regardless of whether employment contributed to the condition - see, for example, Australian Postal Corporation v Burch [1998] FCA 944.

12.          These amendments, together with the related amendments in items 1 and 15 below, give effect to recommendation 5.3 of the Review.

13.          There is little justification for employers having to insure against the costs of heart attacks, strokes and similar incidents that occur at the workplace, where those conditions are manifestations of underlying genetic, lifestyle-based or age-related disease processes without any significant contribution from employment. Workers’ compensation should only be available for such conditions if they are contributed to, to a significant degree, by a pre-existing compensable disease or by the employee’s employment.

14.          Victoria, New South Wales, Queensland, Tasmania and the Australian Capital Territory have all excluded incidents such as heart attacks and strokes from workers’ compensation coverage where there is no significant employment contribution.

Item 8 - Subsection 5A(1) (definition of injury )

Item 9 - Subsection 5A(2)

15.          These items expand the scope of the ‘reasonable administrative action’ exclusion currently in section 5A of the Act in 2 ways:

·                 firstly, the exclusion will apply to ‘reasonable management action’ more generally; and

·                 secondly, the exclusion will extend to an employee’s anticipation or expectation of such action being taken.

16.          The Act currently aims to prevent compensation claims from being used to obstruct legitimate and reasonable management action by excluding from the definition of ‘injury’ any condition (usually a psychological or psychiatric injury or disease) that has arisen as a result of such action. To this end, subsection 5A(1) of the Act currently provides that the definition of ‘injury’ does not include a disease, injury or aggravation suffered as a result of reasonable administrative action taken in a reasonable manner in respect of the employee’s employment. Subsection 5A(2) of the Act provides a non-exhaustive list of matters that are ‘administrative action’.

17.          This exclusion has been the subject of a considerable volume of litigation, for the most part in the AAT but also in the Federal Court. In Commonwealth Bank of Australia v Reeve [2012] FCAFC 21; (2012) 199 FCR 463 the Full Court drew a distinction between ‘administrative’ and ‘operational’ actions of an employer. The effect of this decision is that, in some cases, operational decisions of employers, such as corporate restructures or instructions to employees to perform work at a particular location, or to perform particular duties, are not administrative action and do not trigger the exclusionary provision, so that any injury to an employee resulting from such actions is compensable.

18.          Item 8 amends subsection 5A(1) of the Act to widen the scope of the exclusion to encompass injuries resulting from reasonable management action taken in a reasonable manner as well as the employee’s anticipation or expectation of such action being taken. This amendment is consistent with a similar exclusion from the bullying provisions of the Fair Work Act - in particular, subsection 789FD(2) of that Act. Both section 789FD of the Fair Work Act and new paragraph 5A(1)(h) of the Act recognise that employers have rights and obligations to take appropriate management action and make appropriate management decisions.

19.          Item 9 substitutes a new subsection 5A(2) to provide a non-exhaustive list of matters that are ‘management action’. The effect of this amendment is to expand the scope of the exclusion to include organisational or corporate restructures and operational directions as well as anything done in connection with these actions. These actions are in addition to the administrative actions previously encompassed within the exclusion.

20.          Item 9 also inserts a new subsection 5A(3) which provides a test for determining when a ‘designated injury’ (or aggravation thereof) will be compensable. For such injuries to be compensable, the employee’s employment must have contributed to the injury to a significant degree. New subsection 5A(3) also contains a list of factors that may be taken into account in determining whether a ‘designated injury’ (or aggravation thereof) was contributed to, to a significant degree, by an employee’s employment. The list is consistent with the factors set out in subsection 5B(2) of the Act (as amended by Schedule 1 to the Bill (see items 10 to 13 below) that must be taken into account in determining whether an ailment or aggravation was contributed to, to a significant degree, by an employee’s employment. This amendment gives effect to recommendation 5.3 of the Review.

Item 10 - After paragraph 5B(2)(b)

Item 11 - After paragraph 5B(2)(c)

Item 12 - After paragraph 5B(2)(d)

Item 13 - Paragraph 5B(2)(e)

21.          These items amend subsection 5B(2) of the Act to enable certain matters be taken into account in determining whether an ailment or aggravation was contributed to, to a significant degree, by an employee’s employment.

22.          Under the Act, an ailment falls within the definition of ‘disease’ in subsection 5B(1) of the Act - and is therefore compensable - only if it was contributed to, to a significant degree, by the employee’s employment. It was the original intention of the Act that an employee’s eligibility for compensation payments for a disease should require a close causal connection between the employee’s work and the contraction or aggravation of the disease. Subsection 5B(2) of the Act currently provides a non-exhaustive list of matters that may be taken into account in determining whether an ailment or aggravation was contributed to, to a significant degree, by an employee’s employment. The amendments provide an expanded list of matters that may be taken into account in making this determination. The effect of these amendments is to strengthen the causal connection between the employee’s employment and the ailment or aggravation required before compensation is payable in respect of a disease.

23.          Item 10 inserts a new paragraph 5B(2)(ba) requiring that the state of the employee’s physical and psychological health before the ailment or aggravation is to be taken into account. A similar requirement exists under State and Territory workers’ compensation legislation - for example, paragraph 9A(2)(e) of the Workers Compensation Act 1987 (NSW).

24.          Item 11 inserts a new paragraph 5B(2)(ca) requiring consideration of the probability that, if the employee had not been employed in the employment, the ailment or aggravation (or a similar ailment or similar aggravation) would have been suffered by the employee at or about the same time in the employee’s life (or at the same stage of the employee’s life). In assessing the contribution of the employment, this would require consideration of issues such as genetic predisposition, prior traumatic events, and personal and social factors which influence how a person perceives or experiences events to which they are exposed, whether that be in their employment or everyday life. Similar considerations exist under State and Territory workers’ compensation legislation - for example, paragraph 9A(2)(d) of the Workers Compensation Act 1987 (NSW).

25.          Item 12 inserts a new paragraph 5B(2)(da) that applies to an ailment or aggravation that is, to a significant degree, attributable to the employee’s belief about or interpretation of an incident or state of affairs. In determining whether the employee’s employment contributed to the ailment or aggravation to a significant degree, new paragraph 5B(2)(da) requires consideration of whether the employee had reasonable grounds for the belief or interpretation. The expression ‘reasonable grounds’ has been the subject of a considerable body of case law. In McKenna v Secretary, Department of Treasury [2006] HCA 45; (2006) 228 CLR 423, the High Court accepted that ‘reasonable grounds’ means grounds based on reason, as distinct from something irrational, absurd or ridiculous.

26.          This amendment negates the effect of the Federal Court’s decision in Wiegand v Comcare [2002] FCA 1464; (2002) 72 ALD 795 where the Federal Court held that an employee’s perception about something related to his or her employment would be a sufficient basis to connect the employee’s psychological reaction to his or her employment, provided that the perception was a perception about an incident or state of affairs that actually happened and regardless of whether the perception was reasonable or itself reflected reality. It is an unfair burden on employers to make them liable to pay compensation for a psychological or psychiatric ailment that is caused by an employee’s unreasonable perception rather than by an aspect of employment. This amendment gives effect to recommendation 5.2 of the Review.

27.          Item 13 substitutes a new paragraph 5B(2)(e) requiring consideration of any other matters affecting the employee’s physical or psychological health. The amendment makes clear that health includes both physical and psychological health. Item 13 also inserts a new paragraph 5B(2)(f) requiring consideration of any other relevant matters in assessing the contribution of employment to an ailment or aggravation.

Item 14 - Subsection 5B(3)

28.          This item repeals subsection 5B(3) which defined ‘significant degree’. That definition has been relocated into section 4 of the Act (see item 2 above).

29.          This item also inserts new subsections 5B(3), (4) and (5) which require that any matters included in a Compensation Standard in force under new section 7A (see item 16 below) also be taken into account in determining whether a specified ailment (or the aggravation of a specified ailment) was contributed to, to a significant degree, by the employee’s employment.

Item 15 - After section 5B

New section 5C - Definition of designated injury

30.          This item inserts a new section 5C which contains new definitions of ‘designated injury’ and ‘relevant pre-existing ailment’. This amendment, together with amendments to the definition of ‘injury’ in section 5A of the Act (see items 5 to 7 above), gives effect to recommendation 5.3 of the Review.

31.          In order for an injury (in its ordinary sense) to be a ‘designated injury’, it must be one that consists of, is caused by, results from, or is associated with, a pre-existing ‘ailment’. The term ‘ailment’ is defined in subsection 4(1) of the Act as ‘any physical or mental ailment, disorder, defect or morbid condition (whether of sudden onset or gradual development)’. This means that not all injuries to the heart, brain or spine will be ‘designated injuries’. For example, a traumatic brain injury sustained as a result of a falling object in the workplace will be a compensable ‘injury’ (as defined in section 5A of the Act) if the injury arose out of, or in the course of, the employee’s employment.



 

Item 16 - After section 7

New section 7A - Compensation Standards relating to ailments

32.          This item inserts a new section 7A which empowers Comcare to determine a Compensation Standard that relates to a specified ailment and sets out the factors that must, as a minimum, exist before it can be said that an employee is suffering from the ailment. A Compensation Standard can also set out matters that must be taken into account in determining whether an aggravation of the ailment was contributed to, to a significant degree, by the employee’s employment.

33.          If a Compensation Standard is in force and an employee is taken not to have suffered, or be suffering, from a specified ailment as a consequence of new subsection 7A(2), or if the specified ailment or aggravation of that ailment is taken not to have been contributed to, to a significant degree, by the employee’s employment as a consequence of new subsections 5B(3) or (4), then the employee’s claimed condition is not an ‘injury’ in respect of which compensation is payable under the Act.

34.          A Compensation Standard will be a legislative instrument for the purposes of the Legislative Instruments Act 2003 .

Part 2 - Application provisions

Item 17 - Application of amendments

35.          This item provides that the amendments made by Schedule 1 to the Bill only apply to injuries sustained by an employee after commencement of this item, being the day after the Royal Assent.

 



Schedule 2 - REHABILITATION

Overview

36.          Schedule 2 to the Bill amends the rehabilitation and return to work requirements in the Act to emphasise the vocational (rather than medical) nature of rehabilitation services and improve return to work outcomes under the scheme. The amendments:

·                 combine the current 2-step process for the development of rehabilitation programs into a single process to ensure that workplace rehabilitation is delivered on a service continuum of assessment of need, planning, active implementation, review and evaluation (recommendation 6.13 of the Review);

·                 clarify rehabilitation responsibilities by combining the roles of ‘rehabilitation authority’ and ‘employer’ into one concept, the ‘liable employer’ - a liable employer will have a duty to ensure the rehabilitation of an injured employee and to provide the employee (or assist the employee to find) suitable employment and maintain the employee in suitable employment;

·                 expand the existing definition of ‘suitable employment’ to include any employment with any employer, including self-employment (recommendation 6.16 of the Review); and

·                 provide relevant authorities with the discretion to perform work readiness  assessments.

Commencement

37.          The amendments in Parts 1 and 4 of Schedule 2 to the Bill commence on a day to be fixed by Proclamation, but no later than 12 months after Royal Assent. The extended period for Proclamation is necessary to enable Comcare and licensees to establish systems and processes to give effect to the new rehabilitation requirements.

38.          The amendments in Part 2 of Schedule 2 to the Bill commence immediately after the commencement of Parts 1 and 4 or immediately after the commencement of Schedule 2 to the Safety, Rehabilitation and Compensation Legislation Amendment Act 2015 , whichever is the later.

39.          The amendments in Part 3 of Schedule 2 to the Bill commence immediately after the commencement of Parts 1 and 4 or immediately after the commencement of Part 1 of Schedule 1 to the Exit Arrangements Bill, whichever is the later.

Part 1 - General Amendments

Military Rehabilitation and Compensation Act 2004

Item 1 - Subsection 41(1) (paragraph (a) of the definition of approved program provider )

40.          This item makes a consequential amendment to the Military Rehabilitation and Compensation Act 2004 as a result of amendments made to the Act by Schedule 2 to the Bill, in particular, the change of name from ‘approved program provider’ to ‘approved workplace rehabilitation provider’.

Safety, Rehabilitation and Compensation Act 1988

Item 2 - Subsection 4(1) (definition of approved program provider )

Item 3 - Subsection 4(1)

Item 4 - Subsection 4(1)

Item 5 - Subsection 4(1) (definition of exempt authority )

Item 6 - Subsection 4(1)

Item 7 - Subsection 4(1) (definition of rehabilitation authority )

Item 8 - Subsection 4(1) (definition of rehabilitation program )

Item 9 - Subsection 4(1) (definition of suitable employment )

Item 10 - Subsection 4(1)

41.          These items amend section 4 of the Act to provide definitions for new terms, repeal obsolete terms and make consequential amendments to defined terms. The new terms will be explained in the context of the provisions within which they appear.

Item 11 - Subparagraph 6(1)(f)(iii)

Item 12 - Subparagraph 6(1)(f)(v)

Item 13 - Subparagraph 6(1)(f)

Item 14 - Subparagraph 6(1)(g)(iii)

Item 15 - Subparagraph 6(1)(g)(iv)

Item 16 - At the end of paragraph 6(1)(g)

42.          These items make a number of minor consequential amendments to section 6 of the Act to reflect the new terms ‘workplace rehabilitation plan’ (defined in new section 36 - see item 52 below) and ‘work readiness assessment’ (defined in new section 38B - see item 64 below).

Item 17 - Paragraph 19(4)(d)

Item 18 - Paragraph 19(4)(f)

43.          These items make minor consequential amendments to section 19 of the Act to reflect the new term ‘workplace rehabilitation plan’ (defined in new section 36 - see item 52 below).

Item 19 - Section 34 (definition of principal )

Item 20 - Division 2 of Part III (heading)

Item 21 - Subsection 34A(1)

Item 22 - Paragraph 34A(2)(b)

Item 23 - Subsections 34A(3) to (6)

Item 24 - Paragraph 34A(7)(a)

Item 25 - Paragraph 34A(7)(b)

Item 26 - Section 34B (heading)

Item 27 - Section 34B

Item 28 - Subsection 34C(1)

Item 29 - Section 34D (heading)

Item 30 - Paragraph 34D(1)(a)

Item 31 - Paragraph 34E (heading)

Item 32 - Subsection 34E(1)

Item 33 - Paragraphs 34E(2)(a) and (b)

Item 34 - Subsection 34F(1)

Item 35 - Paragraph 34F(2)(a)

Item 36 - Section 34G

Item 37 - Section 34H (heading)

Item 38 - Subsection 34H(1)

Item 39 - Paragraphs 34H(2)(a) and (b)

Item 40 - Subsection 34H(5)

Item 41 - Section 34J (heading)

Item 42 - Subsection 34J(1)

Item 43 - Subsection 34K(1)

Item 44 - Subsection 34L(1)(d)

Item 45 - Subsection 34M

Item 46 - Section 34P

Item 47 - Subparagraph 34P(b)(ii)

Item 48 - Section 34Q

Item 49 - Subsection 34R(1)

44.          These items make consequential amendments to sections 34 to 34R of the Act substituting references to ‘rehabilitation program provider’ with ‘workplace rehabilitation provider’.

Item 50 - After Division 2 of Part III

45.          This item inserts new Divisions 2A and 2B after Division 2 of Part III of the Act. New Division 2A introduces the concept of a ‘liable employer’ to replace the concept of ‘rehabilitation authority’. New Division 2B sets out the duties of liable employers.

New Division 2A - Liable employers

New section 35 - Liable employer - basic rule

46.          New section 35 sets out the rules for determining who is the ‘liable employer’ in relation to an injured employee in the case of:

·                 an injury (other than a disease, a designated injury or an aggravation of a designated injury) (new subsection 35(1));

·                 an injury that is a disease (new subsection 35(2));

·                 an injury that is a designated injury where the designated injury was contributed to, to a significant degree, by the employee’s employment (new subsection 35(3));

·                 an injury that is a designated injury arising from or associated with a pre-existing ailment that was contributed to, to a significant degree, by the employee’s employment (new subsection 35(4));

·                 an injury that is an aggravation of a designated injury where the aggravation was contributed to, to a significant degree, by the employee’s employment (new subsection 35(5)); and

·                 an injury that is an aggravation of a designated injury arising from or associated with a pre-existing ailment that was contributed to, to a significant degree, by the employee’s employment by the Commonwealth or a licensee (new subsection 35(6)).

47.          Generally, the ‘liable employer’ is the employer at the time the injury occurred. Where the injury is a disease, designated injury, aggravation of a designated injury or relevant pre-existing ailment, the ‘liable employer’ is the employer at the time the employment contributed to the disease, designated injury, aggravation of a designated injury or the relevant pre-existing ailment to a significant degree. This will be the case regardless of where or by whom the employee may later be employed. The ‘liable employer’ may, but need not be, the employee’s current employer. Where the employee was employed by an exempt authority, Comcare will be the ‘liable employer’. The word ‘liable’ is only used in the context of rehabilitation, and is not meant to imply that the ‘liable employer’ has liability in any other context.

48.          New subsections 35(7) and (8) deal with the situation where 2 or more employments contributed (to a significant degree) to the disease, designated injury, aggravation of the designated injury or the relevant pre-existing disease. In this situation, the most recent contributory employment will determine who is to be the ‘liable employer’.

49.          These amendments address uncertainty, confusion and duplication of responsibilities under the current scheme, in particular for Commonwealth employees. The identity of the rehabilitation authority can be difficult to establish for employees who have changed employers, been affected by machinery of government changes or where the ‘liable employer’ no longer exists. This can result in difficulty for employees in accessing rehabilitation benefits or workplace programs. The amendments clarify that the ‘liable employer’ will always be responsible for providing suitable employment and rehabilitation to injured employees. This gives effect to recommendation 6.5 of the Review.

New section 35A - Liable employer ceases to exist

50.          New section 35A deals with the situation where a ‘liable employer’ ceases to exist, for example where an Entity or Commonwealth authority (as those terms are defined in the Act) is abolished. In this situation, new section 35A provides that Comcare will be the liable employer of the employee in relation to the injury unless another Entity or Commonwealth authority is ascertained to be the ‘liable employer’ in accordance with the regulations.

New section 35B - Liable employer ceases to perform a function

51.          New section 35B deals with the situation where a person was injured while employed for the purposes of performing a particular function and the ‘liable employer’ subsequently ceases to perform that function, for example following a machinery of government change. In this situation, new section 35B provides that Comcare will be the liable employer of the employee in relation to the injury unless another Entity or Commonwealth authority (as those terms are defined in the Act) is ascertained to be the ‘liable employer’ in accordance with the regulations.

New section 35C - Deemed liable employer

52.          New section 35C enables Comcare to make a written determination specifying the principal officer of a specified Entity or Commonwealth authority (as those terms are defined in the Act) to be the liable employer. Comcare may also revoke a determination. Neither the written determination nor the revocation is a legislative instrument. For the avoidance of doubt, new subsection 35C(3) clarifies that a determination under new subsection 35C(1) is not a legislative instrument within the meaning of section 5 of the Legislative Instruments Act 2003 .  This provision is declaratory of the law and does not amount to an exemption from the Legislative Instruments Act 2003 .

New section 35D - Transitional - change of liable employer

53.          New section 35D provides that the regulations may provide for transitional matters arising out of a change from a former liable employer to a new liable employer as a result of the operation of new sections 35A, 35B or 35C.

New section 35E - Delegation by liable employer

54.          New section 35E enables the delegation of liable employer powers (including powers under a workplace rehabilitation plan), subject to directions to the delegate.

New section 35F - Deemed delegation by liable employer

55.          New section 35F enables Comcare to intervene in the rehabilitation of an injured employee if satisfied that a liable employer has either failed to fulfil or has contravened the liable employer’s obligations in relation to the employee. In this situation, Comcare can determine that the liable employer is taken to have delegated all or specified liable employer powers relating to workplace rehabilitation plans to Comcare staff.

New section 35G - Arrangements for the provision of rehabilitation services

56.          New section 35G enables a liable employer to enter into an arrangement with an approved workplace rehabilitation provider for the provision of rehabilitation services.

New section 35H - Compensation for acquisition of property

57.          New section 35H makes clear that if the operation of new Division 2A or regulations made for the purposes of Division 2A results in an acquisition of property from a person otherwise than on just terms, the Commonwealth is liable to pay a reasonable amount of compensation to that person. The person may institute proceedings against the Commonwealth if the person and the Commonwealth do not agree on the amount of compensation.

58.          New Division 2B sets out the duties of liable employers.

Division 2B - Duties of liable employers

New section 35J - Liable employer’s duty to take all reasonably practicable steps to ensure rehabilitation of employee

59.          New section 35J requires a liable employer who has been formally notified of an injury to take all reasonably practicable steps to ensure the rehabilitation of the injured employee. Any reasonable costs incurred by a liable employer may be reimbursed by the relevant authority.

New section 35K - Liable employer’s duty to provide suitable employment etc.

60.          New section 35K requires a liable employer who has been formally notified of an injury to take all reasonably practicable steps to provide the employee with suitable employment or assist the employee to find such employment. Where an injured employee is in suitable employment the liable employer is required to take all reasonably practicable steps to maintain the employee in suitable employment. In performing these duties the liable employer is required to consult the employee concerned and any medical practitioner who is providing medical treatment for the injury. A medical practitioner who is consulted by a liable employer may be paid in relation to the consultation.

61.          The Review observed that ensuring accessibility of suitable employment to injured employees is a cornerstone requirement for any framework to ensure employees are engaged to their full capacity, and to achieve an equitable and cost-effective compensation system. 

62.          Currently, under section 40 of the Act the relevant employer has a duty to take all reasonable steps to provide suitable employment to employees who are eligible for compensation and who are undertaking, or have completed, a rehabilitation program, or to assist the employee to find such employment. The term ‘suitable employment’ is defined in subsection 4(1) of the Act: for employees who were permanent employees and remain so, suitable employment is employment by that same employer ; for all other employees, suitable employment may be any employment (including self-employment). In both situations, suitable employment is employment to which the particular employee is suited, having regard to a number of factors, including the personal circumstances of the employee, the employee’s suitability for rehabilitation or vocational retraining, whether it is reasonable to require the employee to change his or her place of residence, and any other relevant matter. 

63.          The Act currently provides no sanction or consequence for an employer who fails to provide suitable employment. As a result, employees with a capacity to work remain on incapacity benefits for longer than necessary.

64.          Schedule 2 to the Bill makes a number of amendments to the ‘suitable employment’ provisions currently in the Act.

65.          Firstly, item 9 expands the existing definition of ‘suitable employment’ in subsection 4(1) of the Act so that any employment (including self-employment) to which the employee is suited, can be considered as suitable. This gives effect to recommendation 6.16 of the Review.

66.          Secondly, new section 35K requires the liable employer to take all reasonably practicable steps to provide an injured employee with suitable employment or assist the employee to find such employment and maintain the employee in suitable employment. This replaces and expands on the obligation currently provided in section 40 of the Act. The obligation now applies to the ‘liable employer’ rather than the ‘relevant employer’. In the case of Commonwealth employees, this means that duty falls on the actual employer of the employee at the time of the injury (rather than the Commonwealth at large). This amendment addresses an identified barrier to an effective return to work under the current Act. The obligation to provide ‘suitable employment’ will apply when the employer is formally notified of the injury rather than when an employee is undertaking, or has completed, a rehabilitation program as is currently the case. A failure by a liable employer to fulfil these obligations may result in a deemed delegation of liable employer functions and powers to Comcare under new section 35F.

67.          Finally, amendments made in Schedule 15 to the Bill introduce an obligation of mutuality in relation to suitable employment. Breaches of obligations of mutuality may be subject to a sanctions regime and result in the cancellation of compensation rights (see item 14 of Schedule 15 to the Bill below).

Item 51 - Division 3 of Part III (heading)

68.          This item renames Division 3 of Part III of the Act as ‘Workplace rehabilitation plans’ to place more emphasis on the vocational - rather than medical - nature of rehabilitation services.

Item 52 - Sections 35, 36 and 37

69.          This item repeals existing sections 35, 36 and 37 and substitutes those sections with new provisions, relating to workplace rehabilitation plans.

70.          Currently there is a 2-stage process for the development of rehabilitation programs:

·                 first, an assessment of whether an injured employee is capable of undertaking a rehabilitation program (section 36 of the Act); and

·                 second, a determination made about whether the employee should undertake a rehabilitation program (section 37 of the Act).

71.          The amendments combine these processes into a single process and ensure that workplace rehabilitation is delivered on a service continuum of assessment of need, planning, active implementation, review and evaluation. This gives effect to recommendation 6.13 of the Review.

New section 36 - Workplace rehabilitation plan

72.          New section 36 defines ‘workplace rehabilitation plan’ which replaces the current ‘rehabilitation program’ (repealed by item 8). The new term emphasises the vocational nature of the services, and removes references to other treatment forms. This gives effect to recommendation 6.3 of the Review.

73.          For the avoidance of doubt, new subsection 36(5) clarifies that a ‘workplace rehabilitation plan’ is not a legislative instrument within the meaning of section 5 of the Legislative Instruments Act 2003 .  This provision is declaratory of the law and does not amount to an exemption from the Legislative Instruments Act 2003 .

New section 36A - Employee’s responsibilities under a workplace rehabilitation plan

74.          New section 36A provides that a ‘workplace rehabilitation plan’ may require an employee to carry out specified activities, and that the obligation to do so becomes part of the employee’s responsibilities under the plan.

75.          New section 29R (see item 14 of Schedule 15 to the Bill below) provides that an employee’s refusal or failure to fulfil his or her responsibilities under a workplace rehabilitation plan is a breach of an obligation of mutuality. Breaches of obligations of mutuality are subject to the sanctions regime in new Subdivision B of Division 5A of Part II of the Act and may result in the cancellation of compensation rights (see item 14 of Schedule 15 to the Bill below).

New section 36B - Obligations of liable employer under a workplace rehabilitation plan

76.          New section 36B provides that a workplace rehabilitation plan may require a liable employer to carry out specified activities, and that the employer is required to comply with the plan.

New section 36C - When liable employer is formally notified of an injury etc.

77.          New section 36C provides for the manner in which a liable employer is formally notified of an injury or an alleged injury. Formal notification of an injury or an alleged injury will result in the liable employer assuming responsibility under amended Part III of the Act for the rehabilitation of the employee.

New section 36D - Liable employer must consider the need for a workplace rehabilitation plan

78.          New section 36D requires a liable employer who has been formally notified of an injury to consider whether there should be a workplace rehabilitation plan for the employee in relation to the injury and, if so, the content of the plan.

New section 36E - Employee may request workplace rehabilitation plan

79.          New section 36E empowers an employee who has sustained a workplace injury to request that the liable employer formulate a workplace rehabilitation plan in relation to the injury. The liable employer is obliged to consider the request.

New section 36F - Formulation of workplace rehabilitation plan

80.          New section 36F empowers (but does not require) a liable employer to formulate a workplace rehabilitation plan for an injured employee either in response to an employee request or on the employer’s own initiative.

New section 36G - Variation or revocation of workplace rehabilitation plan

81.          New section 36G provides for the variation or revocation of a workplace rehabilitation plan by a liable employer.

New section 36H - Consultation about workplace rehabilitation plan

82.          New section 36H imposes consultation obligations on a liable employer when formulating a workplace rehabilitation plan. The liable employer is obliged to consult with the employee, any treating medical practitioner and the current employer (if the employee is not employed by the liable employer). New subsection 36H(2) requires the employee to participate in consultations with the liable employer; however, a failure to do so does not affect the validity of the plan. New subsection 36H(4) entitles a treating medical practitioner to be paid in respect of any consultation. New subsections 36H(5) and (6) clarify that a medical practitioner and current employer may give employee information to the liable employer without breaching the Privacy Act 1988 .

New section 36J - Notification of workplace rehabilitation plan etc.

83.          New section 36J requires a liable employer to notify an employee of any workplace rehabilitation plan formulated for the employee as well as any variation to or revocation of the plan. If the employee is not employed by the liable employer, the liable employer is required to provide a copy of the plan (including any variation or revocation of the plan) to the current employer. If the liable employer is not the relevant authority, the liable employer is required to provide a copy of the plan (including any variation or revocation of the plan) to the relevant authority.

New section 36K - Costs associated with workplace rehabilitation plan

84.          New section 36K provides that any costs associated with carrying out a workplace rehabilitation plan and any costs incurred by the liable employer in relation to a plan are to be paid by the relevant authority. 

New section 36L - Current employer must facilitate workplace rehabilitation plan

85.          New section 36L deals with the case where the liable employer is not the current employer of the employee. New section 36L requires the current employer, as far as reasonably practicable, to cooperate with the liable employer in relation to a workplace rehabilitation plan and allow the employee to fulfil the employee’s responsibilities under the plan.

New section 36M - Notification of circumstances that affect employee’s ability to carry out a job-seeking activity under a workplace rehabilitation plan

86.          New section 36M deals with the case where a workplace rehabilitation plan requires an employee to carry out one or more job-seeking activities. New section 36M specifies time limits within which an employee is required to notify the liable employer of any change to the employee’s circumstances that affects the employee’s ability to carry out those activities.

Item 53 - Section 38 (heading)

Item 54 - Before subsection 38(1)

Item 55 - Subsection 38(1)

Item 56 - Subsection 38(1)

Item 57 - Subsection 38(1)

Item 58 - Subsection 38(1)

Item 59 - Subsection 38(2)

Item 60 - Subsection 38(2)

Item 61 - subsection 38(2)

87.          These items make consequential amendments to section 38 of the Act by substituting ‘liable employer’ for ‘rehabilitation authority’ and removing references to sections 36 and 37, which have been repealed and replaced with new provisions.

Item 62 - At the end of section 38

88.          This item inserts new subsections 38(5) to (9) which enable the relevant authority to review workplace rehabilitation plan determinations made under section 36F by a liable employer who is the principal officer of a licensed corporation.

Item 63 - After section 38

89.          This item re-enacts repealed section 35 (exempt authorities) as new section 38A.

90.          For the avoidance of doubt, new subsection 38A(2) clarifies that a written declaration under subsection 38A(1) is not a legislative instrument within the meaning of section 5 of the Legislative Instruments Act 2003 .  This provision is declaratory of the law and does not amount to an exemption from the Legislative Instruments Act 2003 .

Item 64 - Before section 39

91.          This item inserts a new Division 4, dealing with work readiness assessments, and a new heading ‘Division 5 - Miscellaneous’ before section 39 of the Act.

Division 4 - Work readiness assessment

New section 38B - Assessment of capacity to undertake suitable employment

92.          New section 38B empowers the relevant authority to require an injured employee to undergo a work readiness assessment or examination by a nominated medical practitioner or other suitably qualified person or by a panel comprising both. Subsection 33(1) of the Acts Interpretation Act 1901 enables this power to be exercised from time to time as occasion requires.

New section 38C - Report of work readiness assessment

93.          New section 38C requires a report of the work readiness assessment to be given to the relevant authority. Comcare can make rules in relation to the form and content of work readiness assessment reports. The rules will be a legislative instrument for the purposes of the Legislative Instruments Act 2003 .

New section 38D - Cost of carrying out work readiness assessment

94.          New section 38D provides that certain costs in relation to a work readiness assessment are to be met by the relevant authority.

New section 38E - Relevant authority to comply with rules

95.          New section 38E empowers Comcare to make rules for the purposes of new Division 4 of Part III of the Act. The rules will be a legislative instrument for the purposes of the Legislative Instruments Act 2003 . Relevant authorities are required to comply with the rules.

Item 65 - Paragraph 39(1)(b)

Item 66 - Subsection 39(1)

Item 67 - Sections 40, 41 and 41A

96.          These items amend subsection 39(1) and repeal sections 40, 41 and 41A as a consequence of the workplace rehabilitation plan and liable employer amendments.

Item 68 - At the end of Division 3 of Part III

New section 41E - Liable employers to comply with rules

97.          This item inserts new section 41E that empowers Comcare to make rules for the purposes of Part III of the Act with which liable employers must comply. The rules are to be legislative instruments for the purposes of the Legislative Instruments Act 2003 .



 

Item 69 - Part V (heading)

98.          This item amends the title of Part V of the Act as a consequence of amendments made to Part V by Schedule 2 to the Bill.

Item 70 - Subsection 53(1)

Item 71 - After subsection 53(2)

Item 72 - At the end of paragraph 53(3)(a)

Item 73 - At the end of section 53

99.          These items amend section 53 of the Act to enable notification of a workplace injury be given to either the relevant authority or the liable employer.

100.      New subsection 53(2A) deals with the situation where notice is given to a relevant authority that is not the liable employer. The relevant authority is required to inform the liable employer of the contents of the notice within 3 working days, and may give the liable employer information about the employee that is relevant to the injury.

101.      New subsection 53(2B) deals with the situation where notice is given to the liable employer that is not the relevant authority. The liable employer is required to inform the relevant authority of the contents of the notice within 3 working days, and may give the relevant authority information about the employee that is relevant to the injury.

102.      New subsection 53(2C) deems a provisional medical expense payment request to a relevant authority - see amendments made in Schedule 4 to the Bill - to be a notice of the injury provided to the relevant authority under subsection 53(1) of the Act.

103.      New subsection 53(4) deems written notice to have been given to a liable employer under subsection 53(1) in certain situations, including where a notice fails to comply with the requirements of section 53 because of a mistake, ignorance or any reasonable cause.

Item 74 - Subsection 54(4)

104.      This item inserts a new subsection 54(4A) that deals with the situation where a claim for compensation is given to a relevant authority that is not the liable employer. In this case, the relevant authority must give a copy of the claim to the liable employer together with any information about the employee that is relevant to the claim.

Item 75 - Subsection 57(1)

Item 76 - At the end of section 57

105.      These items amend section 57 of the Act which empowers a relevant authority to require a claimant to undergo a medical examination.

106.      Item 75 substitutes new subsection 57(1) to enable the relevant authority to require an injured employee to undergo an examination by a nominated medical practitioner or other suitably qualified person, or a nominated panel. Subsection 57(1) currently empowers the relevant authority to require an injured employee to undergo an examination by a nominated medical practitioner only.

107.      Item 76 inserts new subsections 57(7) and 57(8). New subsection 57(7) empowers the relevant authority to require an employee to undergo an examination in order to assist the liable employer to make a decision about a workplace rehabilitation plan for the employee. New subsection 57(8) makes it clear that this does not limit the circumstances in which the relevant authority may require an examination.

Item 77 - After section 57

New section 57A - Report of medical examination etc.

108.      This item inserts a new section 57A requiring the person or persons who conducted an examination under section 57 of the Act to provide a report of the examination to the relevant authority. The relevant authority may provide a copy of the report to the liable employer who may then use the report for the purposes of performing the liable employer functions under Part III of the Act.

Item 78 - Subsection 60(1) (definition of determination )

Item 79 - Subsection 60(1) (definition of determination )

Item 80 - Subsection 60(1) (definition of reviewable decision)

Item 81 - At the end of section 60

109.      These items amend section 60 of the Act to provide that the employee’s responsibilities and the obligations of a liable employer under a workplace rehabilitation plan are not reviewable under the Act. The formulation (and any variation of) a workplace rehabilitation plan will be reviewable. In practice this means that the objectives of a workplace rehabilitation plan will be reviewable. However, review of the content of a rehabilitation plan is considered inappropriate for the following reasons:

·                 the content of rehabilitation plans are developed in consultation with the employee and their medical professionals; and

·                 review would frustrate the purpose of these provisions which is to promote compliance with rehabilitation plans rather than arguments regarding particular employee responsibilities and obligations of a liable employer.

Item 82 - Paragraph 69(b)

Item 83 - Paragraph 69(f)

110.      These items amend Comcare’s functions in section 69 of the Act to reflect the amendments made by Schedule 2 to the Bill.

111.      Item 82 repeals paragraph 69(b), as these functions are now conferred on Comcare under new Division 2A and 2B of Part III of the Act (see item 50 above).

112.      Item 83 substitutes new paragraph 69(f) to empower Comcare to take steps directed towards ensuring that each liable employer is complying with the liable employer’s obligations under Part III.

Item 84 - Before section 71

New section 70D - Comcare Incentive Scheme for Employers

113.      This item inserts a new section 70D to empower Comcare to formulate the Comcare Incentive Scheme for Employers to provide financial incentives to employers to provide suitable employment for employees who have suffered an injury, are unemployed and seeking paid work. This allows Comcare to provide financial incentives authorised by subsection 51(xxiiiA) of the Constitution. The Scheme will be a legislative instrument for the purposes of the Legislative Instruments Act 2003 .

Item 85 - Before section 122

New section 121C - Variation or revocation of instruments

114.      This item inserts a new section 121C dealing with the variation or revocation of instruments. This is a technical amendment that ensures that subsection 33(3) of the Acts Interpretation Act 1901 - which provides that a power to make an instrument includes a power to vary or revoke that instrument - continues to operate despite the inclusion of express provisions dealing with the variation or revocation of instruments.

Seafarers Rehabilitation and Compensation Act 1992

Item 86 - Section 48 (definition of approved program provider )

115.      This item substitutes a new definition of ‘approved program provider’ into the Seafarers Rehabilitation and Compensation Act 1992 . The effect of this amendment is to align terminology used in both Acts. 

Part 2 - Amendments contingent on the commencement of Schedule 2 to the Safety, Rehabilitation and Compensation Legislation Amendment Act 2015

Safety, Rehabilitation and Compensation Act 1988

Item 87 - After subsection 35E(1)

116.      This item amends new section 35E  (see item 50) by inserting new subsection 35E(1A) to enable the delegation of liable employer powers (including powers under a workplace rehabilitation plan) by corporations covered by a group employer licence.

Part 3 - Amendments contingent on the commencement of Part 1 of Schedule 1 to the Safety, Rehabilitation and Compensation Legislation Amendment (Exit Arrangements) Act 2015

117.      Part 3 of Schedule 2 to the Bill makes consequential amendments to provisions to be inserted by the Exit Arrangements Bill currently before Parliament.

118.      The Exit Arrangements Bill will amend the Act to provide for financial and other arrangements for a Commonwealth authority to exit the Comcare scheme. The framework will:

·                 enable Comcare to determine and collect ‘exit contributions’ from former Commonwealth authorities and successors of former Commonwealth authorities to ensure that an exited employer does not leave the Comcare scheme without contributing an appropriate amount to cover any current or prospective liabilities that are not funded by premiums the employer has paid before exit; and

·                 ensure that employees injured before the employer’s exit continue to be supported by an appropriate rehabilitation authority.

119.      The consequential amendments in Schedule 2 to the Bill retain the approach in the Exit Arrangements Bill as far as possible but make appropriate amendments. For example the concept of rehabilitation authority in relevant sections is replaced with concept of liable employer.

Safety, Rehabilitation and Compensation Act 1988

Item 88 - Subsection 4(1) (at the end of the definition of liable employer )

120.      This item amends the definition of ‘liable employer’ inserted by item 6 (see above) as a consequence of the amendments made by items 92, 93, and 94 (see below).

Item 89 - At the end of paragraph 35A(d)

Item 90 - At the end of paragraph 35A(d)

121.      These items amend new section 35A (inserted by item 50 above) by including a reference to new section 41C.

Item 91 - After paragraph 35H(1)(a)

122.      This item amends new section 35H (inserted by item 50 above) by including references to new sections 41B, 41C and 41D. The effect of this amendment is that the safeguards in new section 35H against a possible acquisition of property will also apply to the operation of those sections.

Item 92 - Section 41B

Item 93 - Section 41B

Item 94 - Paragraphs 41B(d) and (e)

Item 95 - At the end of section 41B

123.      These items amend new section 41B which will be inserted by the Exit Arrangements Bill and apply when a Commonwealth authority ceases to be covered by the Comcare scheme but continues in existence.

124.      Items 92, 93 and 94 amend new section 41B to provide that the principal officer of the former Commonwealth authority is deemed to be the liable employer of an employee who was injured before the employer exited the Comcare scheme.

125.      Item 95 inserts a new subsection 41B(2) to provide that, for the purposes of this section, the principal officer of a body corporate is the principal executive officer of the body corporate.

Item 96 - Subsection 41C(1)

Item 97 - Paragraphs 41C(1)(e) and (f)

Item 98 - Subsection 41C(2)

Item 99 - Paragraphs 41C(2)(f) and (g)

Item 100 - At the end of section 41C

126.      These items amend new section 41C which will be inserted by the Exit Arrangements Bill and apply when a Commonwealth authority ceases to exist.

127.      Items 96, 97, 98 and 99 amend new section 41C to identify the principal officer of a successor, or another appropriate body, as the liable employer for an employee of the former Commonwealth authority who was injured before the Commonwealth authority ceased to exist. 

128.      Item 100 inserts a new subsection 41C(3) to provide that, for the purposes of this section, the principal officer of a body corporate who is not a Commonwealth authority or a licensed corporation is the principal executive officer of the body corporate.

Item 101 - Section 41D

Item 102 - Paragraphs 41D(c) and (d)

129.      These items amend new section 41D which will be inserted by the Exit Arrangements Bill and apply if the Australian Capital Territory ceases to be a Commonwealth authority. These items amend section 41D to identify the principal officer of the Australian Capital Territory as the liable employer for employees who were injured before the Australian Capital Territory exited the Comcare scheme.

Part 4 - Application and transitional provisions

Item 103 - Application of amendments

130.      This item provides that the amendments made by Schedule 2 to the Bill apply to an employee who sustained an injury before, at or after commencement of this item. This will enable a liable employer to formulate a workplace rehabilitation plan in respect of a current recipient of compensation. It will also enable a relevant authority to require a current recipient of compensation to undergo a work readiness assessment or a medical examination.



 

Item 104 - Transitional - formal notification of an injury

131.      This item deems the notification of an injury under section 53 of the Act prior to commencement of this item to comply with the formal notification requirements of new section 36C of the Act (see item 52. This will enable a liable employer to assume responsibility under amended Part III of the Act for the rehabilitation of employees injured prior to commencement of this item and to consider the need for a workplace rehabilitation plan in respect of those employees.

Item 105 - Transitional - rehabilitation programs

132.      This item provides that, despite the repeal of section 37 of the Act, a rehabilitation program determined prior to commencement of this item continues in force as if it were a workplace rehabilitation plan formulated under new section 36F (see item 52).

Item 106 - Transitional - approval of person or body as a workplace rehabilitation provider

Item 107 - Transitional - renewal of approval of a person or body as a workplace rehabilitation provider

133.      These items provide that persons or bodies approved as rehabilitation program providers prior to the commencement of this item are taken to be approved workplace rehabilitation providers after commencement of this item.

Item 108 - Transitional - exempt authority

134.      This item provides that exempt authorities declared under section 35 of the Act prior to the commencement of this item are taken to be exempt authorities declared under section 38A of the Act after commencement of this item.

Item 109 - Transitional - medical examination

135.      This item provides that a requirement to undergo a medical examination under subsection 57(1) of the Act given before commencement of this item continues to apply notwithstanding the repeal of that section. 

Item 110 - Transitional rules

136.      This item empowers the Minister to make rules in relation to transitional matters arising out of the amendments and repeals made by Part 1 of Schedule 2 to the Bill. The rules will be a legislative instrument for the purposes of the Legislative Instruments Act 2003 .

137.      Subitem 110(2) limits the matters that may be dealt with in the transitional rules.

 



Schedule 3 - SCHEME INTEGRITY

Overview

138.      Schedule 3 to the Bill amends the Act to improve the integrity of the Comcare scheme, as recommended by the Review. In particular, the amendments:

·                 require third parties to indemnify compensation payers under the Act in circumstances that give rise to both an obligation to pay compensation under the Act and a liability on the part of the third party to pay damages (recommendation 10.1 of the Review) or State compensation;

·                 provide more timely and responsive services and support for injured employees by requiring employers to forward claims to Comcare within 3 days of receipt (recommendation 9.2 of the Review) and specifying time limits in relation to the determination of compensation claims (recommendation 9.3 of the Review) and the reconsideration of claims (recommendation 9.6 of the Review);

·                 improve a relevant authority’s information gathering powers in relation to both a claim for compensation and the ongoing management of that claim (recommendation 9.17 of the Review) and impose a general obligation on claimants to notify their relevant authority of any change to the employee’s circumstances (recommendation 9.18 of the Review);

·                 require licensees (and a relevant authority for a group employer licence) to notify Comcare of any proceedings they commence under the Act and empower Comcare to request documents relevant to any proceedings brought against, or instituted by, a licensee (or a relevant authority for a group employer licence);

·                 require licensees (and corporations covered by a group employer licence) to comply with applicable Commonwealth, State and Territory laws with respect to the safety, health and rehabilitation of workers;

·                 enable Comcare to pay compensation for detriment caused by defective administration (recommendation 9.20 of the Review); and

·                 enable Comcare to recover overpayments of compensation that have been made to an employer by Comcare (recommendation 9.19 of the Review).

Commencement

139.      The amendments in Part 1 of Schedule 3 to the Bill commence on the day after Royal Assent.

140.      The amendments in Part 2 of Schedule 3 to the Bill commence immediately after the day after Royal Assent or immediately after the commencement of Schedule 2 to the Safety, Rehabilitation and Compensation Legislation Amendment Act 2015 , whichever is the later. Part 3 of Schedule 3 to the Bill commences on the day of after Royal Assent.

 

Part 1 - General Amendments

Administrative Decisions (Judicial Review) Act 1977

Item 1 - After paragraph (hf) of Schedule 1

141.      This item amends Schedule 1 to the Administrative Decisions (Judicial Review) Act 1977 to provide that decisions under new section 70C of the Act are not subject to review under that Act.

142.      New section 70C of the Act provides that Comcare can pay compensation for detriment caused by defective administration. This provision replicates, in statutory form, the Scheme for Compensation for Detriment caused by Defective Administration (the CDDA scheme) which is generally available to non-corporate Commonwealth entities under the Public Governance, Performance and Accountability Act 2013 . The CDDA scheme is an administrative scheme that provides Commonwealth authorities with discretionary authority to compensate individuals or bodies that have suffered loss or damage as a result of defective administration and who cannot be compensated through other avenues, such as the settlement of a legal claim. Decisions to compensate under the CDDA scheme are approved on the basis that there is a moral as distinct from a legal obligation to pay compensation to a claimant. The CDDA scheme is discretionary and permissive, and does not oblige the decision-maker to approve a payment in any particular case.

143.      The amendment places Comcare in the same position as other non-corporate Commonwealth entities. As decisions under the CDDA scheme are not subject to review under the Administrative Decisions (Judicial Review) Act 1977 , it would be anomalous to provide for judicial review of Comcare’s decisions under a CDDA-like scheme.

144.      In its report ‘Putting Things Right: Compensating for Defective Administration’ (August 2009) the Commonwealth Ombudsman set out the following reasons why review of decisions under the CDDA scheme (and, by necessary implication, a CDDA-like scheme such as that established by new section 70C) by a tribunal or court may not be appropriate:

·                 a court or tribunal might interpret the CDDA criteria more expansively and be more generous in awarding compensation, resulting in unpredictable and inflationary costs to government;

·                 the spirit of legalism and legal doctrine in a court or tribunal would blur the current distinction between ‘moral’ and ‘legal’ obligation that is central to the CDDA scheme; and

·                 the CDDA scheme could become mired in adversarial disputes and legal principles, which are fundamentally inconsistent with the purpose of the scheme as an avenue of last resort.

145.      As is the case with decisions under the CDDA scheme, Comcare’s decisions under the proposed amendments will be reviewable by the Commonwealth Ombudsman and may be subject to judicial review under section 75 of the Constitution or section 39B(1) of the Judiciary Act 1903 , noting the limitations of judicial review of decisions made under a scheme that does not impose legal duties on decision-makers.

Safety, Rehabilitation and Compensation Act 1988

Item 2 - Subsections 4(10) and (10A)

146.      This item makes technical amendments to subsections 4(10) and 4(10A) as a consequence of the amendments to section 114 (see item 24 below). The amendments ensure that only Comcare can recover overpayments of compensation that have been made to an employer by Comcare.

Item 3 - After section 50

New section 50A - Indemnification by third parties

147.      This item inserts a new section 50A, which replaces current section 51 of the Act with a broader statutory indemnification provision by requiring third parties to indemnify compensation payers under the Act in circumstances that give rise to both an obligation to pay compensation under the Act and an undischarged liability on the part of the third party (or parties) to pay damages (recommendation 10.1 of the Review) or State compensation.

148.      Under current section 50 of the Act, a compensation payer can only recover damages from a liable third party where the injured employee (or a dependant) can recover damages. In other words, it is the employee’s (or dependant’s) right to recover which defines the right of recovery of Comcare and licensees.

149.      New subsection 50A(2) requires a liable third party (or parties) to indemnify the compensation payer under the Act, thereby enabling the compensation payer to recover some or all of the compensation paid in respect of the injury, loss or damage directly from the liable third party (or parties) rather than by subrogation of an employee’s (or dependant’s) right to recovery. The entitlement to be indemnified may arise on more than one occasion, for example, where a compensation payer makes further compensation payments under the Act for incapacity or permanent impairment or the employee dies and compensation is paid to the employee’s dependants.

150.      New subsection 50A(3) provides that where a payment is made under the indemnity before the employee has obtained a judgment or an award, the payment is, to the extent of the amount of the payment, a discharge of the liability of the third party (or parties) to pay damages or State compensation, as the case may be, to the employee (or the dependant), in respect of the injury, loss or damage.

151.      New subsection 50A(4) provides that where a payment is made under the indemnity after the employee has obtained a judgment or an award, the payment, to the extent of the amount of the payment, satisfies the judgment or award.

152.      New subsections 50A(5) and (6) provide that if a payment is made under the indemnity and, at the time of the payment, the employee (or the dependant) is liable to pay an amount to Comcare due to the operation of section 48, 49 or 119 of the Act in respect of the injury, loss or damage, the payment under the indemnity, to the extent of the amount of the payment, satisfies that liability of the employee (or the dependant).

153.      New subsections 50A(7) and (8) confirm that new section 50A only has effect to the extent to which it is authorised by a constitutional head of power.

154.      New subsection 50A(9) inserts a new definition, for the purpose of section 50A, for ‘award’ and provides that the term ‘State compensation’ has the same meaning as in section 119 of the Act. The term ‘damages’ is also used in new section 50A. It is defined in subsection 4(1) of the Act to include ‘any amount paid under a compromise or settlement of a claim for damages, whether or not legal proceedings have been instituted, but does not include an amount paid in respect of costs incurred in connection with legal proceedings’.

Illustrative example

Alex works for a licensed corporation. Alex is directed to meet with a client for the purposes of his employment and to travel to the meeting in a company vehicle. Whilst stationary at traffic lights, another vehicle collides with the rear of the company vehicle causing Alex to suffer a serious neck injury. The accident is reported to police and Alex is treated in hospital for several days.

Alex submits a claim for workers’ compensation and a claim for compensation with the other driver’s compulsory third party insurer. Both the relevant authority and the other driver’s insurer accept liability for Alex’s injury. Alex decides to pursue his claim under the Act and the relevant authority pays compensation to Alex for incapacity, permanent impairment and medical treatment expenses, totalling $30,000.

Since compensation is payable under the Act in respect of Alex’s injury, and the injury occurred in circumstances that create an undischarged legal liability in a third party, the relevant authority is entitled to be indemnified by the third party and/or the third party’s insurer. Under the relevant State compensation scheme, Alex is entitled to no-fault compensation of up to $5000, after which a claim for damages must be pursued for further amounts to be paid. Accordingly, the third party insurer is liable to pay $5000 to the relevant authority.

The relevant authority writes to Alex to enquire whether he intends to pursue a claim for damages against the other driver. The relevant authority also advises Alex that it will make a claim for damages against the other driver under section 50 of the Act if Alex decides not to pursue such a claim.

Alex subsequently decides to pursue a claim for damages against the other driver and notifies the relevant authority of the claim in accordance with the obligation in section 46 of the Act. The relevant authority writes to the other driver’s insurer to confirm that it will be entitled to further indemnification of up to $25,000 (the balance of the compensation it has paid to Alex under the Act) if liability to pay damages is accepted or judgment for damages is obtained against the other driver. The other driver’s insurer subsequently agrees to settle the claim for damages and pay an amount of $100,000 plus costs, less the amount of $5,000 already paid in respect of the indemnity. At the time of the settlement:

·                 the other party’s insurer is liable to pay the relevant authority $25,000 in accordance with new section 50A of the Act;

·                 the other party’s insurer is liable to pay $70,000 plus costs to Alex in accordance with the settlement agreement; and

·                 Alex’s liability to pay $30,000 to the relevant authority under section 48 of the Act is discharged by the payments made by the other driver’s insurer in accordance with new section 50A.

Compensation ceases to be payable under the Act in respect of the injury after the amount of $70,000 is paid to Alex in accordance with sections 10 and 48 of the Act.

Item 4 - Section 51

155.      This item repeals section 51 of the Act as a consequence of the enactment of new section 50A (see item 3 above).

Item 5 - At the end of section 54

156.      This item adds new subsection 54(6) which provides that when an employee gives a claim for compensation to his or her employer on the understanding that the employer will forward that claim to Comcare, the employer must ensure the claim is given to Comcare within 3 working days after the day on which the claim was received.

157.      Section 54 of the Act provides compensation is not payable to a person under the Act unless a claim for compensation is made, and that the claim must be given to the relevant authority. In the case of Commonwealth employees, the relevant authority is Comcare. The claim form contains sections that must be completed by both the injured employee and the employer. In practice, injured employees typically give their claim to their employer who then completes the employer information section before forwarding the claim to Comcare. The amendment imposes a timeframe on employers to forward claims to Comcare to avoid unnecessary delays in the determination of claims.

158.      This item does not have any effect on employees of licensees.

159.      This amendment gives effect to recommendation 9.2 of the Review.

Item 6 - Section 58

160.      This item substitutes a new section 58 and inserts new section 58A which enhance a relevant authority’s information gathering powers.

161.      Currently, relevant authorities can request information from claimants under section 58 of the Act and from employers under section 71 of the Act. Different time frames apply to these requests: section 58 of the Act requires a claimant to provide information within 28 days while section 71 of the Act requires employers to provide information within a specified period. Relevant authorities cannot request information or documents that are relevant to a claim from third parties.

New section 58 - Relevant authority may obtain information or documents from claimant

162.      New section 58 enables a relevant authority to request a claimant to provide information or documents relevant to the claim within a specified period not less than 14 days. This aligns the time frames with those in section 71 of the Act.

163.      New section 29T (see item 14 of Schedule 15 to the Bill) provides that an employee’s refusal or failure, without reasonable excuse, to comply with a notice under new subsection 58(1) is a breach of an obligation of mutuality. Breaches of obligations of mutuality are subject to the sanctions regime in new Subdivision B of Division 5A of Part II of the Act and may result in the cancellation of compensation rights (see item 14 of Schedule 15 to the Bill).

New section 58A - Relevant authority may obtain information or documents from third party

164.      New section 58A enables a relevant authority to request a third party to provide information or documents relevant to a claim within a specified period not less than 14 days. A third party may, but is not required to, comply with the request and may be paid for compliance.

165.      These provisions only apply to compensation claims prior to their determination. New sections 120A and 120B (see item 26 below) contain similar provisions in relation to the administration of liabilities under the Act, that is, after a compensation claim has been determined and liability accepted.

166.      These amendments give effect to recommendation 9.17 of the Review.

Item 7 - Subsection 60(1) (at the end of the definition of reviewable decision )

167.      This item inserts a note which draws the reader’s attention to new subsection 64(2) - see item 11 - which allows the parties to a review to agree to related matters being co-joined in AAT proceedings.

Item 8 - Subsection 61(1A)

168.      This item repeals subsection 61(1A) and inserts new subsections 61(1A) to (1D) which specify time limits in relation to the determination of liability under section 14 of the Act in respect of claims for compensation.

169.      Currently, subsection 61(1A) of the Act allows time limits for the determination of liability under section 14 to be set by regulation; however, to date no regulation has been made. New subsections 61(1A) to (1D) specify the following statutory time limits:

·                 liability for any injury that is not a disease or a designated injury, or an aggravation of a designated injury, must be determined within 30 days; and

·                 liability for any injury that is a disease or designated injury, or an aggravation of a designated injury, must be determined within 70 days.

170.      Any claim for compensation in respect of which liability is not determined within these time limits is taken to have been rejected at the end of the specified time limit. The benefit of a deemed rejection is that it provides certainty and then immediate access to the next decision-making layer, that is, reconsideration.

171.      These amendments give effect to recommendation 9.3 of the Review.

Item 9 - Subsection 61(2)

172.      The effect of this amendment to subsection 61(2) of the Act is to provide that a determining authority is not required to make a written determination in relation to the full amount of the payment of medical costs under subsection 16(1) of the Act.

Item 10 - Subsection 62(6)

173.      This item repeals subsection 62(6) of the Act and inserts new subsections 62(6) and 62(6A) which specify time limits in relation to the reconsideration of compensation claims.

174.      Currently, subsection 62(6) of the Act allows time limits for the reconsideration of claims to be set by regulation; however, to date no regulation has been made. New subsections 62(6) and 62(6A) specify that a reconsideration must be made within 60 days.

175.      A reconsideration that is not made within this time limit is taken to have affirmed the original determination at the end of the specified time limit. The benefit of a deemed rejection is that it provides certainty and then immediate access to the next decision-making layer, that is, review by the AAT.

176.      These amendments give effect to recommendation 9.6 of the Review.

Item 11 - After subsection 64(1)

177.      This item inserts new subsection 64(2) which provides that where an application has been made to the AAT for review of a reviewable decision (the first application), the parties to the review may agree, in writing, that a specified determination should be treated as a reviewable decision if the determination and reviewable decision relate to the same employee, and directly or indirectly relate to either the same issue or the same incident or state of affairs. An application to the AAT for review of the deemed reviewable decision (the second application) is taken to have been made on the day on which the applicant lodged the agreement with the AAT. The AAT may then deal with the first and second applications together.

Item 12 - After section 70B

New section 70C - Compensation for detriment caused by defective administration

178.      This item inserts new section 70C that provides that Comcare can make, but is not required to make, payments for detriment caused by defective administration in connection with the payment of compensation under its claims management functions or powers. In making payments under this section Comcare must comply with principles determined by the Minister. The Ministerial principles will be a legislative instrument for the purposes of the Legislative Instruments Act 2003 . Comcare will be required to include particulars of each payment made under this section in its annual report.

179.      This provision, and the Ministerial principles, replicate, in statutory form, the Scheme for Compensation for Detriment caused by Defective Administration (the CDDA scheme) which is generally available to non-corporate Commonwealth entities under the Public Governance, Performance and Accountability Act 2013 . The CDDA scheme is an administrative scheme established under the executive power of the Commonwealth. However, it does not currently apply to Comcare because the Act provides a comprehensive regime in relation to the payment of compensation. As a result, Comcare currently has no means of lawfully making discretionary payments to people who have suffered detriment due to defective administration on Comcare’s part. The amendment places Comcare in the same position as other non-corporate Commonwealth entities.

180.      This amendment gives effect to recommendation 9.20 of the Review.

Item 13 - Section 71 (heading)

Item 14 - Subsection 71(1)

181.      These items make technical amendments which clarify that Comcare may obtain information from licensed corporations as well as Entities and Commonwealth authorities. This corrects an error in the current provision.

Item 15 - Section 99

182.      This item inserts a new definition of ‘worker’ into section 99 of the Act. That term will have the same meaning as in the Work Health and Safety Act 2011 .

Item 16 - Paragraph 104(2)(d)

Item 17 - Paragraph 104(2A)(a)

Item 18 - Paragraph 104(2A)(a)

Item 19 - At the end of section 104

183.      These items amend section 104 of the Act which deals with decisions by the Commission to grant self-insurance licences to Commonwealth authorities and eligible corporations. The amendments replace references to ‘occupational health and safety’ with ‘work health and safety’ and references to ‘employees’ with ‘workers’. These amendments align terminology in the Act with the Work Health and Safety Act 2011.

Item 20 - After subsection 108C(8)

Item 21 - Subsection 108C(9)

Item 22 - At the end of section 108C

184.      These items amend section 108C of the Act to require licensees to notify Comcare of any proceedings they commence under the Act.

185.      Section 108C of the Act currently requires licensees to inform Comcare when legal proceedings are brought against them and entitles Comcare to be joined as a party to these proceedings. Comcare uses these provisions, together with licence conditions, to ensure that proceedings involving licensees do not establish precedents which undermine the integrity of the Comcare scheme as a whole.

186.      However, there is currently no obligation on licensees to inform Comcare of when they bring proceedings themselves. As such, Comcare may not be informed of these proceedings and may not be able to intervene. New subsection 108C(8A) requires licensees to notify Comcare of any proceedings they commence and entitles Comcare to be joined as a party to those proceedings.

187.      New subsection 108C(11) empowers Comcare to request documents relevant to any proceedings brought against, or instituted by, a licensee.



Item 23 - paragraph 108D(1)(e)

 

188.      This item amends paragraph 108D(1)(e) to require a licensee to comply with applicable Commonwealth, State and Territory laws with respect to the safety, health and rehabilitation of workers.

Item 24 - At the end of section 114

189.      This item adds new subsections 114(3) and (4) which enable Comcare to recover overpayments of compensation that have been made to an employer by Comcare.

190.      Section 114 of the Act provides Comcare with powers to recover amounts of compensation from a person who has received compensation:

·                 that has been paid because of a false or misleading statement or representation or a failure or omission to comply with a provision of the Act; or

·                 that should not have been paid.

191.      Sections 23A, 112A and 112B of the Act facilitate payments by Comcare to employers for the benefit of an injured employee. These provisions were introduced in 2005 by the Financial Framework Legislation Amendment Act (No. 2) 2005 to provide legislative authorisation for the existing administrative practice of employers paying compensation on behalf of Comcare.

192.      While the 2005 amendments facilitated payments by Comcare to employers for the benefit of an injured employee, no provision was made for amounts to be returned to Comcare where a payment (or part payment) is made in error. In practice, this is an issue for departments and agencies subject to the Public Governance, Performance and Accountability Act 2013 because there is no apparent legislative authority to return amounts that have been overpaid.

193.      New subsection 114(3) requires an employer who receives an overpayment from Comcare pursuant to sections 23A, 112A or 112B of the Act to repay the amount to Comcare.

194.      New subsection 114(4) provides that where an employer has paid a corresponding equal amount to an employee, the employee must repay that amount to the employer.

195.      This amendment gives effect to recommendation 9.19 of the Review.

Item 25 - After section 119

New section 119A - Notification of change of circumstances

196.      This item inserts a new section 119A that imposes a general obligation on claimants to notify their relevant authority of any change to the employee’s circumstances.

197.      The Act creates limited obligations on claimants to provide information to their relevant authority:

·                 sections 46 and 47 of the Act require employees and dependants to notify Comcare of any common law claims;

·                 section 48 of the Act requires employees and dependants to notify Comcare of any damages recovered; and

·                 section 120 of the Act requires certain employees to notify their relevant authority if they leave Australia.

198.      Each of these requirements is supported by an offence of strict liability.

199.      In addition to these sections, section 58 of the Act requires claimants to comply with a request for information.

200.      Where a legal duty exists to provide information, an omission to provide that information which results in the overpayment of compensation will constitute an offence against the Criminal Code. However, there is no general obligation under the Act for claimants to notify their relevant authority of changes in circumstances which alter the claimant’s entitlement to compensation, in particular, where the claimant’s employment status changes. Consequently, it is difficult to identify criminal conduct which could form the basis of a charge under the Criminal Code where an individual has dishonestly withheld information that affected their eligibility for compensation: see Commonwealth Director of Public Prosecutions v Poniatowska [2011] HCA 43; (2011) 244 CLR 408.

201.      New section 119A imposes such an obligation.

202.      This amendment gives effect to recommendation 9.18 of the Review.

Item 26 - Before section 121A

203.      This item inserts new sections 120A and 120B which enhance a relevant authority’s information gathering powers. These provisions complement new sections 58 and 58A (see item 6 above) by enabling a relevant authority to obtain information or documents from an employee or a third party in relation to the administration of liabilities under the Act, that is, after a compensation claim has been determined and liability accepted.

New section 120A - Relevant authority may obtain information or documents from employee

204.      New section 120A enables a relevant authority to request a claimant to provide information or documents relevant to the payment of compensation within a specified period not less than 14 days.

205.      New section 29T (see item 14 of Schedule 15 to the Bill) provides that an employee’s refusal or failure, without reasonable excuse, to comply with a notice under new subsection 120A(1) is a breach of an obligation of mutuality. Breaches of obligations of mutuality are subject to the sanctions regime in new Subdivision B of Division 5A of Part II of the Act and may result in the cancellation of compensation rights (see item 14 of Schedule 15 to the Bill).

206.      New section 120B enables a relevant authority to request a third party to provide information or documents relevant to the payment of compensation within a specified period not less than 14 days. A third party may, but is not required to, comply with the request and may be paid for compliance.

207.      These amendments give effect to recommendation 9.17 of the Review with some modifications.

Part 2 - Amendments contingent on the commencement of Schedule 2 to the Safety, Rehabilitation and Compensation Legislation Amendment Act 2015

Safety, Rehabilitation and Compensation Act 1988

Item 27 Paragraph 107D(4)(e)

Item 28 - Paragraph 107D(4)(e)

Item 29 - Subsection 107D(7)

Item 30 - Subsection 107D(7)

Item 31 - At the end of section 107D

208.      These items amend section 107D of the Act. Section 107D - which will be inserted into the Act by the Safety, Rehabilitation and Compensation Legislation Amendment Bill 2015 currently before Parliament - deals with decisions by the Commission to grant group employer licences. The amendments replace references to ‘occupational health and safety’ with ‘work health and safety’ and references to ‘employees’ with ‘workers’.

Item 32 - Paragraph 108C(8A)(a)

Item 33 - Paragraphs 108C(8A)(b), (c) and (d)

Item 34 - Subparagraphs 108C(11)(a)(i) and (ii)

Item 35 - Paragraphs 108C(11)(b) and (c)

Item 36 - Subsection 108C(11)

209.      These items amend section 108C of the Act to replace references to ‘licensee’ with references to ‘the licence holder of a single employer licence’. These amendments are consequential on amendments that will be made by the Safety, Rehabilitation and Compensation Legislation Amendment Bill 2014 currently before the Parliament.

Item 37 - After subsection 108CB(4)

Item 38 - Subsection 108CB(5)

Item 39 - At the end of section 108CB

210.      These items amend section 108CB of the Act to require a relevant authority for a group employer licence to notify Comcare of any proceedings the relevant authority may commence under the Act.

211.      Section 108CB - which will be inserted into the Act by the Safety, Rehabilitation and Compensation Legislation Amendment Bill 2015 currently before Parliament - deals with the management of claims by a relevant authority for a group employer licence. As currently drafted, section 108CB of the Act requires a relevant authority to inform Comcare when legal proceedings are brought against them and entitles Comcare to be joined as a party to these proceedings. It is intended that Comcare use these provisions, together with group licence conditions, to ensure that proceedings involving group licensees do not establish precedents which undermine the integrity of the Comcare scheme as a whole.

212.      However, there is currently no obligation on group licensees to inform Comcare of when they bring proceedings themselves. As such, Comcare may not be informed of these proceedings and may not be able to intervene. New subsection 108CB(4A) requires licensees to notify Comcare of any proceedings they commence  and entitles Comcare to be joined as a party to those proceedings.

213.      New subsection 108CB(7) empowers Comcare to request documents relevant to any proceedings brought against, or instituted by, a group licensee.

Item 40 - Paragraph 108DA(2)(e)

214.      This item amends paragraph 108DA(2)(e) of the Act - which will be inserted into the Act by the Safety, Rehabilitation and Compensation Legislation Amendment Bill 2015 currently before Parliament - to require each corporation covered by a group employer licence to comply with applicable Commonwealth, State and Territory laws with respect to the safety, health and rehabilitation of workers.

Item 41 - Transitional - licences

215.      This item:

·                 provides that the amendments made by this Part apply to licensing decisions under section 107D of the Act;

·                 provides for the continuity of licence conditions notwithstanding amendments to paragraph 108DA(2)(e) of the Act made by item 40 above; and

·                 empowers the Commission to vary a licence condition in order to comply with the amendments.

Part 3 - General application and transitional provisions

Item 42 - Application of amendments

216.      This item provides for the application of the amendments made in Part 1 of Schedule 3 to the Bill. In general, the amendments will apply to events occurring after commencement.

Item 43 - Transitional - damages

217.      This item provides that, despite the repeal of section 51 of the Act (see item 4 above), a notice given under that provision before commencement continues to apply.

Item 44 - Transitional - provision of information

218.      This item provides that, despite the repeal of section 58 of the Act (see item 6 above), an information request made under that provision before commencement continues to apply.



 

Item 45 - Transitional - licence condition

219.      This item provides for the continuity of licence conditions notwithstanding amendments to paragraph 108D(1)(e) of the Act made by item 23 above.

220.      This item also empowers the Commission to vary a licence condition in order to comply with the amendments.



Schedule 4 - PROVISIONAL MEDICAL EXPENSE PAYMENTS

Overview

221.      Schedule 4 to the Bill amends the Act to enable a relevant authority to make provisional medical expense payments (capped at $5000 and indexed annually) in respect of an alleged injury before a claim for compensation is determined. This will allow injured employees to obtain medical treatment in the critical early stages of an injury.

222.      This amendment gives partial effect to recommendation 6.2 of the Review.

Commencement

223.      The amendments in Schedule 4 to the Bill commence on a day to be fixed by Proclamation, but no later than 12 months after Royal Assent. The extended period for Proclamation is necessary to enable Comcare and licensees to establish systems and processes to enable them to make provisional medical expense payments.

Part 1 - Amendments

Safety, Rehabilitation and Compensation Act 1988

Item 1 - Subsection 4(1)

224.      This item inserts a number of definitions of terms used in new Part IVA (see item 2 below).

Item 2 - Subsections 4(10) and (10A)

225.      These items make technical amendments to subsections 4(10) and (10A) as a consequence of new Part IVA (see item 4 below). The amendments ensure that only Comcare can approve forms requesting provisional medical expense payments.

Item 3 - Subsection 13(1) (definition of relevant amount )

226.      This item amends the definition of ‘relevant amount’ in subsection 13(1) of the Act as a consequence of amendments made by Schedule 3 to the Bill. The amendment ensures that the $5000 cap on provisional medical expense payments is indexed annually.

Item 4 - Before Part V

227.       This item inserts new Part IVA which will provide for provisional medical expense payments in respect of an alleged injury to allow injured employees to access up to $5000 in medical costs before his or her claim for compensation is determined by the relevant authority. This amendment gives partial effect to recommendation 6.2 of the Review which recommended provisional medical expense payments of up to $3000.

New Part IVA - Provisional medical expense payments

New section 52B - Simplified outline of this Part

228.      New section 52B contains a simplified outline of Part IVA.

New section 52C - Provisional medical expense payment request

229.      New section 52C enables an employee (or a person acting on behalf of the employee) to request a provisional medical expense payment in respect of costs incurred by the employee in the medical treatment of an alleged injury. The request is to be given to the relevant authority. If the request is given to an employer (other than a licensee or a corporation covered by a group licence) on the understanding that the employer will give the request to the relevant authority, the employer must do so within 2 working days.

230.      Only one request under new section 52C need be made in respect of an injury; the employee may then request payment for one or more items of medical treatment from the relevant authority, and the employee will be deemed to have made those requests under new section 52C.

New section 52D - Provisional medical expense payment

231.      New section 52D provides that where a request is made within 40 working days after the alleged injury was sustained the relevant authority is liable to pay medical expenses in accordance with section 16 of the Act (as if the alleged injury was an injury) up to a maximum of $5000 (indexed annually under section 13 of the Act). This cap applies to medical treatment obtained for the injury and any associated injuries.

232.      A relevant authority will not be liable to make a payment if:

·                 the relevant authority refuses to do so within 7 working days after the request is made on any of the reasonable grounds specified in new subsection 52D(7) - the reasonable grounds exception; or

·                 the claim is determined within 7 working days after the request is made.

233.      If the relevant authority refuses to make a payment under the reasonable grounds exception, the relevant authority must inform the employee in writing. New subsection 52D(8) specifies the requirements of the notice.

New section 52E - Notice of provisional medical expense payment

234.      New section 52E provides that the relevant authority must notify the employee in writing that a provisional medical expense is payable. The notice must also set out the effect of new section 52F (that payment will be counted towards any compensation that later becomes payable under section 16 of the Act after a claim is made and accepted), new section 52H (that the payment is not acceptance of a claim) and section 54 of the Act as amended (if the person wishes to make a claim, that must be done under section 54).

New section 52F - Provisional medical expense payment discharges liability to pay compensation

235.      New section 52F provides that if a provisional medical expense payment is made, and compensation subsequently becomes payable in respect of those costs, the payment is taken to have discharged so much of the relevant authority’s liability to pay the total amount of the compensation and the payment is not recoverable from the employee.

New section 52G - Cost of medical treatment

236.      New section 52G applies subsections 16(2) and (3) of the Act, and new subsections 16(3A), (3B) and (3C), to a provisional medical expense payment. That is, provisional medical expense payments are subject to the same criteria as compensation for medical treatment under subsection 16(1) of the Act.

New section 52H - Making a provisional medical expense payment does not constitute an acceptance of a claim

237.      New section 52H provides that the making of a provisional medical expense payment does not constitute acceptance of a claim.

New section 52J - Certain documents to be supplied on request

238.      New section 52J requires a relevant authority, when requested to do so, to provide documents relating to provisional medical expense payment requests to:

·                 the employee;

·                 the Commonwealth or a Commonwealth authority; or

·                 a licensed corporation.

New section 52K - Provisional medical expense payment to be treated as compensation for certain purposes

239.      New section 52K provides that a provisional medical expense payment is taken to be compensation for specified purposes, that is, the provisions dealing with:

·                 compensation not payable where damages recovered (section 48 of the Act);

·                 common law claims against third parties (section 50 of the Act);

·                 third party indemnities (new section 50A);

·                 the use of Comcare-retained funds (section 90C of the Act); and

·                 compensation payable under a State workers’ compensation scheme (sections 118 and 119 of the Act).

Item 5 - Subsection 97A(2) (at the end of the definition of bonus amount )

Item 6 - Subsection 97A(2) (at the end of the definition of penalty amount )

Item 7 - Subsection 97A(3) (at the end of the definition of estimated liability component )

Item 8 - subsection 97A(3) (at the end of the definition of estimated management component )

240.      These items amend subsections 97A(2) and (3) of the Act so that Comcare must have regard to the number of provisional medical expense payment requests made by employees of an employer and the amount of provisional medical expense payments paid to such employees in determining the amount of the premium payable by that employer.

Item 9 - At the end of paragraph 114A(1)(a)

Item 10 - After paragraph 114(1)(a)

241.      These items amend subsection 114(1) of the Act so that provisional medical expense payments paid as a result of a false or misleading statement are recoverable by the relevant authority from the person in a court of competent jurisdiction as a debt due to the relevant authority.

Part 2 - Application and transitional provisions

Item 11 - Application of amendments

242.      This item provides a provisional medical expense payment is available for injuries sustained after the commencement of this item.

Item 12 - Transitional - indexation

243.      This item ensures that indexation of the $5000 cap on a provisional medical expense payment does not commence until at least 6 months after commencement.

 

 



Schedule 5 - MEDICAL EXPENSES

Overview

244.      Schedule 5 to the Bill 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. In particular, the amendments:

·                 require that medical treatment be carried out by, or under the supervision of, a registered or accredited health practitioner and impose requirements in relation to which medical practitioners can prescribe schedule 8 medicines (recommendations 7.21, 7.24-7.27 of the Review);

·                 specify the matters that a relevant authority must have regard to in determining whether medical treatment was reasonably obtained (recommendation 7.28 of the Review);

·                 limit the amount of compensation payable by a relevant authority in respect of medical treatment and medical examinations to the amounts specified in the medical services table and the medical examination rates determination, respectively;

·                 empower Comcare, by legislative instrument, to identify accredited healthcare practitioners for the purposes of the Act;

·                 enable Comcare to disclose information relating to medical treatment obtained in relation to an injury suffered by an employee to a professional disciplinary authority; and

·                 enable legislative rules to empower Comcare to approve specified types of medical treatment obtained by an employee outside Australia.

Commencement

245.      The amendments in Part 1 and Division 2 of Part 2 of Schedule 5 to the Bill commence on a day to be fixed by Proclamation, but no later than 12 months after Royal Assent. The extended period for Proclamation is necessary to enable Comcare to make the Clinical Framework Principles under new section 16A and the medical services table under new section 16B.

246.      The amendments in Division 1 of Part 2 of Schedule 5 to the Bill commence on the day after Royal Assent. This will enable an injured employee to designate a medical practitioner or a medical clinic under new section 54A (see item 9 below).

Part 1 - Amendments

Safety, Rehabilitation and Compensation Act 1988

Item 1 - Subsection 4(1)

Item 2 - Subsection 4(1) (paragraph (b) of the definition of medical treatment )

Item 3 - Subsection 4(1) (paragraph (d) of the definition of medical treatment )

Item 4 - Subsection 4(1) (paragraph (h) of the definition of medical treatment )

Item 5 - Subsection 4(1)

247.      These items amend the definition of ‘medical treatment’ in subsection 4(1) of the Act and insert a number of new definitions.

248.      The amendments made by item 3 ensure that ‘therapeutic treatment’ will only be compensable if it is provided by a ‘registered health practitioner’ - defined as a practitioner registered (other than as a student) under a Health Practitioner Regulation National Law in one of the listed professions or occupations - or under the supervision of an ‘accredited health practitioner’ as defined in new section 71B. These changes are based on recommendation 7.21 of the Review.

249.      The amendments made by item 4 expand on the requirements currently contained in paragraph (h) of the definition of ‘medical treatment’ in subsection 4(1) of the Act:

·                 new paragraph (h), in conjunction with the new definitions of ‘nursing care’ and ‘registered nurse’ give effect to recommendation 7.27 of the Review;

·                 new paragraph (ha) includes ‘treatment and maintenance as a resident in a nursing home’ - this gives effect to recommendation 7.24 of the Review;

·                 new subsections (hb) to (hc) impose additional requirements in relation to the compensability of prescription medicines, ‘schedule 8 medicines’ and medicines which are a ‘registered good’ under the Therapeutic Goods Act 1989 - this gives effect to recommendations 7.25 and 7.26 of the Review.

Item 6 - Subsections 4(10) and (10A)

250.      This item makes technical amendments to subsections 4(10) and (10A) of the Act as a consequence of new sections 16A and 16B (see item 8 below). The amendments ensure that only Comcare can formulate Clinical Framework Principles and prescribe a medical services table.

Item 7 - After subsection 16(3)

251.      This item amends section 16 by inserting new subsections 16(3A), (3B) and (3C).

252.      New subsection 16(3A) specifies that Comcare must have regard to the Clinical Framework Principles (made by Comcare under new section 16A - see item 8 below) and such other matters as Comcare considers relevant, in determining whether it was reasonable for an employee to obtain medical treatment. Similar requirements are contained in subsection 223(2) of the Workplace Injury and Compensation Act 2013 (Vic).

253.      This amendment - together with new section 16A (see item 8 below) - gives effect to recommendation 7.28 of the Review.

254.      New subsection 16(3B) specifies the matters that Comcare must have regard to in determining the amount of compensation appropriate to the medical treatment in the circumstances.

255.      New subsection 16(3C) limits the amount of compensation payable by Comcare in respect of medical treatment to the amounts specified in the medical services table prescribed under new section 16B (see item 8 below).

Item 8 - At the end of Division 1 of Part II

256.      This item adds new sections 16A and 16B.

New section 16A - Clinical Framework Principles

257.      New section 16A empowers Comcare to determine Clinical Framework Principles that are to be taken into account under new subsection 16(3A) (see item 7 above) in determining whether medical treatment was reasonably obtained. The Clinical Framework Principles will be a legislative instrument for the purposes of the Legislative Instruments Act 2003 .

258.      The Clinical Framework Principles will be based on principles issued in 2005 by Worksafe Victoria and the Victorian Transport Accident Commission.

New section 16B - Medical services table

259.      New section 16B empowers Comcare to prescribe a medical services table that sets out items of medical treatment and specifies the amount of compensation payable by Comcare in respect of each item. The table can also include interpretation rules. The medical services table will be a legislative instrument for the purposes of the Legislative Instruments Act 2003 .

260.      This amendment gives effect to recommendation 7.30 of the Review.

Item 9 - After section 54

New section 54A - Designated medical practitioner

261.      This item inserts new section 54A which enables compensation claims to designate a medical practitioner and medical clinic who can prescribe a schedule 8 medicine to an injured employee. Schedule 8 medicines prescribed other than by a designated medical practitioner or a medical practitioner who practices in a designated medical clinic are not compensable under section 16 of the Act.

262.      New subsections 54A(3) and (4) enable designations to be revoked and new designations to be made.

Item 10 - Before subsection 57(6)

263.      This item inserts a new subsection 57(5A) that limits compensation payable in respect of a medical examination required under section 57 of the Act to the amount specified in the medical examination rates determination made under new subsection 57B.

Item 11 - Before section 58

New section 57B - Medical Examination Rates Determination

264.      This item inserts new section 57B which empowers Comcare to make a Medical Examination Rates Determination that sets out the amount of compensation payable by Comcare in respect of specified medical examinations. The determination will be a legislative instrument for the purposes of the Legislative Instruments Act 2003 .

Item 12 - Subsection 60(1) (definition of determination )

265.      This item amends the definition of ‘determination’ in subsection 60(1) to enable decisions made by a relevant authority under new section 115B (see item 14 below) about treatment outside Australia to be reviewable under Part VI of the Act. 

266.      Subsection 60(1) will also be amended by Schedule 6 to the Bill with effect from the day after Royal Assent. The amendment made by this item amends subsection 60(1) as amended by Schedule 6 to the Bill.

Item 13 - After section 71

267.      This item inserts new sections 71A and 71B into the Act.

New section 71A - Disclosure of information to disciplinary bodies

268.      New section 71A enables Comcare to disclose information relating to medical treatment obtained in relation to an injury suffered by an employee to a professional disciplinary authority specified in new subsection 71A(6). Subsection 71A(3) enables Comcare to impose conditions to be complied with in relation to information disclosed. Conditions can relate to individual disclosures or a class of disclosures. Any condition imposed in respect of a class of disclosures will be a legislative instrument for the purposes of the Legislative Instruments Act 2003 .

269.      For the avoidance of doubt, new subsection 71A(4) clarifies that a written declaration under subsection 71A(3) that imposes conditions relating to one particular disclosure identified in the instrument is not a legislative instrument within the meaning of section 5 of the Legislative Instruments Act 2003 . This provision is declaratory of the law and does not amount to an exemption from the Legislative Instruments Act 2003 .

270.      This amendment gives effect to recommendation 7.29 of the Review.

New section 71B - Accredited healthcare practitioners

271.      New section 71B empowers Comcare, by legislative instrument, to identify accredited healthcare practitioners by reference to a specified class of persons. Accredited healthcare practitioners may provide (or supervise the provision of) therapeutic treatment - see amendments to ‘medical treatment’ in item 3 above.

Item 14 - Before section 116

272.      This item inserts new sections 115A and 115B into the Act.

New section 115A - Relevant authority may request medical report

273.      New section 115A enables a relevant authority to request a written medical report from a provider of medical treatment to an injured employee. The relevant authority is required to pay the cost of the medical report as specified in a Medical Treatment Reports Determination made by Comcare. The Medical Treatment Reports Determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003 .

New section 115B - Approval of treatment obtained outside Australia

274.      New section 115B enables a relevant authority to approve specified types of medical treatment obtained by an employee outside Australia.

Part 2 - Application and transitional provisions

Division 1 - Transitional provisions commencing on the day after Royal Assent

Item 15 - Pre-commencement designations

275.      This item provides that an employee can designate a medical practitioner or a medical clinic, or vary a designation previously given before the commencement of those provisions, and that the designation will take effect from commencement. This is to ensure a smooth transition for both claimants and relevant authorities.

Division 2 - Application provisions commencing on Proclamation

Item 16 - Application of amendments

276.      This item provides that the amendments made by items 1 to 9 apply in relation to medical treatment obtained after the commencement of Schedule 5 to the Bill.

 



 



Schedule 6 - HOUSEHOLD SERVICES AND ATTENDANT CARE SERVICES

Overview

277.      Schedule 6 to the Bill amends Division 5 of Part II of the Act (and related provisions) which deal with the payment of compensation for household and attendant care services.

278.      Compensation is payable for household services and attendant care services under section 29 of the Act. These terms are defined in subsection 4(1) of the Act:

·                 ‘household services’ are services of a domestic nature (including cooking, house cleaning, laundry and gardening services) that are required for the proper running and maintenance of the employee’s household; and

·                 ‘attendant care services’ are services that are required for the essential and regular personal care of the employee (other than household services, medical or surgical services or nursing care - for example, attendant care services could include help with bathing and dressing.

279.      Although there are different considerations for determining whether compensation is payable for either household services or attendant care services, the amount of compensation payable for both is the same. The Review identified a number of shortcomings in the current provisions, namely:

·                 there is no management or regulation of the provision of those services;

·                 there is no distinction between services required by employees with injuries with varying degrees of severity; and

·                 there is no limit on the duration for which compensation for household or attendant care services is payable as long as the services continue to be ‘reasonably required’ during the life of the claim.

280.      The amendments in Schedule 6 to the Bill address these shortcomings and give partial effect to recommendations contained in the Review. The amendments:

·                 establish a tiered approach to the payment of compensation for household services and attendant care services, depending on whether the employee’s injury was ‘catastrophic’, and limit the period for which compensation for attendant care services and household care services is payable to employees with a non-catastrophic injury (recommendation 7.33 of the Review);

·                 allow for a relevant authority to require an independent assessment of an injured employee’s need for household services, attendant care services or both (recommendations 7.35 and 7.36 of the Review); and

·                 require attendant care services to be provided by accredited, registered or approved providers, and provide for the accreditation, registration and approval of providers of attendant care services (recommendation 7.37 of the Review).

Commencement

281.      The amendments in Part 1 of Schedule 6 to the Bill commence on the day after Royal Assent. This will allow for the accreditation, registration and approval of providers of attendant care services before the commencement of the substantive amendments in Part 2 of Schedule 6 to the Bill.

282.      The amendments in Part 2 of Schedule 6 to the Bill commence on a day to be fixed by Proclamation, but no later than 12 months after Royal Assent. The extended period for Proclamation is necessary to enable Comcare and licensees to establish systems and processes to give effect to the new requirements.

Part 1 - Amendments commencing on the day after Royal Assent

Safety, Rehabilitation and Compensation Act 1988

Item 1 - Subsection 4(1)

283.      This item inserts a number of new defined terms into subsection 4(1) of the Act relating to the accreditation, registration and approval of providers of attendant care services.

Item 2 - Subsections 4(10) and (10A)

284.      These items make technical amendments to subsections 4(10) and (10A) of the Act as a consequence of new section 29D (see item 3 below). The amendments ensure that only Comcare can accredit providers of attendant care services.

Item 3 - At the end of Division 5 of Part II

285.      This item amends Division 5 of Part II of the Act by adding new sections 29D, 29E and 29F. These amendments give effect to recommendation 7.37 of the Review.

New section 29D - Accredited providers of attendant care services

286.      New section 29D enables regulations to be made about the accreditation of persons (including bodies corporate) as providers of attendant care services.

New section 29E - Registered providers of attendant care services

287.      New section 29E enables regulations to be made about the registration of individuals as registered providers of attendant care services.

New section 29F - Approved attendant care service providers

288.      New section 29F enables regulations to be made about the approval of persons (including bodies corporate) as attendant care service providers. 

Item 4 - Subsection 60(1) (at the end of the definition of determination )

289.      This item amends the definition of ‘determination’ in subsection 60(1) of the Act to enable decisions made under regulations made under new sections 29D, 29E and 29F about the accreditation, registration and approval of attendant care services providers to be reviewable under Part VI of the Act. 

Part 2 - Amendments commencing on Proclamation

Division 1 - Amendments

Safety, Rehabilitation and Compensation Act 1988

Item 5 - Subsection 4(1)

290.      This item inserts a number of new defined terms into subsection 4(1) of the Act.

291.      The term ‘catastrophic injury’, which will govern the amount and duration of compensation payable for household services and attendant care, will be defined by the regulations. It is intended to base the definition on that in the National Injury Insurance Scheme.

Item 6 - Subsection 29 (heading)

Item 7 - Subsection 29(1)

Item 8 - Subsection 29(1)

Item 9 - Subsections 29(1) and (2)

Item 10 - After paragraph 29(2)(a)

Item 11 - Subsection 29(3)

Item 12 - Subsection 29(4)

Item 13 - After paragraph 29(4)(e)

Item 14 - Subsection 29(5)

Item 15 - Subsections 29(6) and (7)

292.      These items amend section 29 of the Act to provide for the payment of compensation for household services and attendant care services obtained as a result of a non-catastrophic injury. New section 29A (see item 16 below) provides for the payment of compensation for household services and attendant care services obtained as a result of a catastrophic injury.

293.      Items 6, 7 and 8 contain technical amendments that clarify that section 29 of the Act applies to compensation for household services and attendant care services obtained as a result of a non-catastrophic injury. These amendments are consequential on the bifurcation of compensation payable for household services and attendant care services between catastrophic and non-catastrophic injuries. 

294.      Item 10 inserts new paragraph 29(2)(aa) requiring the relevant authority to have regard to any assessment under new section 29B relating to the employee’s need for household services in determining the household services that are reasonably required.

295.      Item 11 substitutes new subsections 29(3) and (3A) of the Act requiring attendant care services to be provided by an accredited, registered or approved provider in order to be compensable. If satisfied that there are special circumstances, the relevant authority can authorise an individual to provide attendant care services. Special circumstances could include the remoteness of the employee’s place of residence, or a reasonable requirement of the employee for the attendant care provider to have particular skills, such as ability in a particular language, etc.

296.      Item 13 inserts new paragraph 29(4)(ea) requiring the relevant authority to have regard to any assessment under new section 29B relating to the employee’s need for attendant care services in determining the attendant care services that are reasonably required.

297.      Item 14 substitutes new subsections 29(5) and (5A) of the Act which limit the relevant authority’s liability to pay compensation for household services and attendant care services obtained as a result of a non-catastrophic injury for 3 years from the date of injury or, if the injury was sustained before commencement, for 3 years from the date of commencement. Notwithstanding the 3-year limit, if the injured employee is hospitalised as a consequence of the non-catastrophic injury, the relevant authority will be liable to pay compensation for attendant care services and household services for 6 months after discharge.

298.      If an injured employee is hospitalised during the last 6 months of the 3-year limit, the 6-month timeframe will be instead of, rather than additional to, the rest of the 3-year limit. For example, if an employee is hospitalised and then discharged 2 years and 9 months after the date of injury, the employee would have access to household services and attendant care services for a continual period of 3 years and 3 months.

299.      Items 9, 12 and 15 are consequential amendments.

Item 16 - After section 29

300.      This item inserts new sections 29A, 29B and 29C.

New section 29A - Compensation for household services and attendant care services obtained as a result of a catastrophic injury

301.      New section 29A provides for the payment of weekly compensation for household services and attendant care services obtained as a result of a catastrophic injury. The criteria are the same as those under section 29 of the Act except that the amount of compensation payable is such amount as the relevant authority considers reasonable in the circumstances. There is also no limit for how long household services and attendant care services will remain compensable.

New section 29B - Assessment of need for household services and attendant care services

302.      New section 29B provides that the relevant authority may require an injured employee to undergo an assessment of the employee’s need for either household services, attendant care services or both. The assessment must be conducted by a registered occupational therapist or a registered physiotherapist nominated by the relevant authority. The terms ‘registered occupational therapist’ and ‘registered physiotherapist’ are defined in subsection 4(1) of the Act (see item 5 above). The relevant authority is liable to pay the costs (including reasonable travel costs) associated with an assessment.

303.      New section 29Q (see item 14 of Schedule 15 to the Bill) provides that an employee’s refusal or failure to undergo an assessment, or obstruction of an assessment, is a breach of an obligation of mutuality. Breaches of obligations of mutuality are subject to the sanctions regime in new Subdivision B of Division 5A of Part II of the Act and may result in the cancellation of compensation rights (see item 14 of Schedule 15 to the Bill).

New section 29C - Reimbursement of costs incurred in relation to accompanying an employee

304.      New section 29C provides for the reimbursement by Comcare of certain costs incurred by an individual attendant care provider who accompanies an employee to undertake an activity outside the employee’s place of residence.

Item 17 - Subsection 60(1) (definition of determination )

305.      This item amends the definition of ‘determination’ in subsection 60(1) of the Act to enable  decisions made under new section 29A about the compensation payable for household services and attendant care services obtained as a result of a catastrophic injury to be reviewable under Part VI of the Act. 

Division 2 - Application and transitional provisions

Item 18 - Application of amendments

306.      This item provides that the amendments to section 29 of the Act (compensation for household services and attendant care services obtained as a result of a non-catastrophic injury) and new section 29A (compensation for household services and attendant care services obtained as a result of a catastrophic injury) apply in relation to compensation in respect of a week beginning after commencement.

Item 19 - Transitional - indexation

307.      This item ensures that indexation of the weekly compensation payments for household services and attendant care services obtained as a result of a non-catastrophic injury specified in new subsection 29(3) does not commence until after commencement.

 

 



Schedule 7 - ABSENCES FROM AUSTRALIA

Overview

308.      Schedule 7 to the Bill amends the Act to:

·                 suspend compensation payments when an injured employee is absent from Australia for private purposes (that is, not for work purposes) for a period of more than 6 weeks; and

·                 enhance the notification requirements in section 120 of the Act.

309.      At present, there is no limitation on payment of compensation to a person outside Australia. A person who is receiving compensation payments for incapacity is required under section 120 of the Act to inform the relevant authority of any overseas travel; however, the person remains eligible to receive compensation while outside Australia, regardless of the length of absence. Extended absences from Australia by an injured employee may negatively impact on the employee’s access to medical treatment and rehabilitation programs which would assist them in their return to work.

There are strong arguments in favour of restricting payment of compensation while an employee is outside Australia. In particular:

·                 the prospect of effective assessment of an employee’s continuing incapacity for work, of the amount that the employee is able to earn in suitable employment and of the efficacy of medical treatment is very much diminished if the employee is outside Australia; and

·                 there are significant barriers to an employer arranging an effective rehabilitation program while the employee is outside Australia.

310.      The amendments in Schedule 7 to the Bill suspend compensation payments when an injured employee is absent from Australia for private purposes for a period of more than 6 weeks. This amendment is based on recommendation 7.17 of the Review, with the modification that compensation will not be paid after 6 weeks of absence from Australia. The Review recommended that compensation cease after 60 days. However, the 6-week period is in line with the capped portability period under the Social Security Act 1991 .

Commencement

311.      The amendments in Schedule 7 to the Bill commence immediately after Part 1 of Schedule 15 to the Bill which commences on the day after Royal Assent.

Part 1 - Amendments

Safety, Rehabilitation and Compensation Act 1988

Item 1 - At the end of Division 5A of Part II

312.      This item inserts new section 29K dealing with extended absences from Australia.



 

New section 29K - Extended absences from Australia

313.      New subsection 29K(1) provides for the suspension of an employee’s compensation rights if the employee is absent from Australia for ‘private purposes’ (that is, not for ‘work purposes’) for a period of more than 6 weeks. These terms are defined in new subsections 29K(7) and (8). The suspension will take effect at the end of the 6-week period and will cease either when the employee returns to Australia or the absence for private purposes becomes an absence for work purposes.

314.      New subsections 29K(2) to (6) contain provisions that deal with the following situations:

·                 where an employee returns to Australia for a period of less than 6 weeks but whose subsequent departure was for work purposes;

·                 where an employee is initially absent from Australia for work purposes and, subsequently the absence becomes an absence for private purposes; and

·                 where an employee was absent from Australia at commencement time.

315.      New subsections 29K(9) and (10) enable the relevant authority to extend the period of absence in limited situations. The situations in which an absence may be extended are modelled on section 1218C of the Social Security Act 1991 .

316.      New subsections 29K(13) to (15) provide that any compensation payments made following a suspension under this section are conditional on the employee remaining in Australia for a 6-week period. These are anti-avoidance provisions.

317.      New subsection 29K(16) enables a relevant authority to exempt an employee from this section where there are special circumstances.

Illustrative example 1

Tom leaves Australia for 8 weeks to visit Venezuela for private purposes. Before he leaves, he notifies his relevant authority of his departure date (1 January) and his intended date of return (25 February of that year). His compensation rights are suspended after 6 weeks (12 February). When he returns to Australia on 25 February, his compensation rights and payments recommence. Because he returned to Australia on his notified intended date of return, Tom does not need to notify his relevant authority of his return.

Illustrative example 2

Howard leaves Australia to visit Bali for 6 weeks. His compensation rights remain during that time. On the last day of Howard’s 6-week trip, he flies back to Perth, Australia, for one week. His compensation rights and payments recommence from Howard’s date of return to Australia. After Howard has been in Perth for one week, he leaves again for Bali for another 5 weeks. Because the period of Howard’s return to Australia was less than 6 weeks, he is deemed not to have returned to Australia. The one week of compensation paid to Howard is recoverable from him, as it was conditional upon his return being for longer than 6 weeks. Compensation is also not payable for the subsequent 5 weeks that Howard is away in Bali, as he will be deemed to have been absent for a total of 12 weeks.

 

Item 2 - Subsection 60(1) (definition of determination )

318.      This item amends the definition of ‘determination’ in subsection 60(1) of the Act to enable decisions made under new section 29K about the suspension of compensation rights to be reviewable under Part VI of the Act. 

Item 3 - Subsection 120 (heading)

Item 4 - Subsection 120(1)

Item 5 - At the end of subsection 120(2)

Item 6 - At the end of subsection 120(3)

Item 7 - Subsections 120(4) and (5)

319.      These items amend section 120 of the Act to enhance the existing notice requirements that apply to a compensation recipient who proposes to leave Australia.

320.      Section 120 of the Act currently requires a person who has been receiving incapacity payments under section 19 of the Act for more than 3 months to notify the relevant authority if he or she has left Australia or proposes to do so. The amendments to section 120 of the Act will:

·                 extend the notification requirements to persons in receipt of any compensation payments made under sections 19 to 22 and 31 of the Act, regardless of how long they have been made;

·                 require the person to notify the relevant authority of any proposed return to Australia;

·                 require the person to notify the relevant authority of changes to information previously given under a notice under section 120 of the Act; and

·                 provide that any breach of the notification requirements is an offence of strict liability with a penalty of 10 penalty units. However, the offences do not apply if the person has a reasonable excuse.

Part 2 - Application and transitional provisions

Item 8 - Application of amendments

321.      This item provides that the amended notification requirements in section 120 of the Act apply in relation to a person who leaves Australia after commencement.

Item 9 - Transitional - notification of absence from Australia

322.      This item contains transitional provisions that require an injured employee who is absent from Australia at the time of commencement to notify the relevant authority of their absence. Failure to do so, without reasonable excuse, is an offence of strict liability.



Schedule 8 - ACCRUAL OF LEAVE WHILE RECEIVING COMPENSATION

Overview

323.      Schedule 8 to the Bill amends section 116 of the Act to provide that an employee is not entitled to take or accrue any leave or absence as provided for by the National Employment Standards while on compensation leave. This amendment is consistent with proposed amendments to section 130 of the Fair Work Act.

Commencement

324.      The amendments in Schedule 8 to the Bill commence on the day after Royal Assent or the commencement of item 5 of Schedule 1 to the Fair Work Amendment Act 2015 , whichever is the later.

Safety, Rehabilitation and Compensation Act 1988

Item 1 - After subsection 116(1)

325.      This item inserts new subsection 116(1A) which provides that subsection 116(1) of the Act has no effect to the extent to which it is inconsistent with section 130 of the Fair Work Act. This amendment is consequential on an amendment to section 130 of the Fair Work Act that will be made the day after the Fair Work Amendment Bill 2014 (currently before Parliament) receives Royal Assent.

326.      Currently, subsection 130(1) of the Fair Work Act provides that an employee is not entitled to take or accrue any leave or absence as provided for by the National Employment Standards while the employee is absent from work for an injury or illness for which the employee is receiving statutory workers’ compensation payments. Subsection 130(2) of the Fair Work Act provides an exception where a workers’ compensation law permits the taking or accrual of leave. The Fair Work Amendment Bill 2014 currently before Parliament will repeal subsection 130(2) of the Fair Work Act, with the effect that a workers’ compensation law will no longer be able to allow for the taking or accrual of leave as provided for by the National Employment Standards while an employee is on compensation leave.

327.      Section 116 of the Act allows, in spite of the provisions of any other Act, for the following leave entitlements during an employee’s absence on compensation leave:

·                 paid maternity leave;

·                 the accrual of long service leave entitlements; and

·                 the accrual of sick leave and recreation leave entitlements.

328.      When enacted, the amendments to section 130 of the Fair Work Act would result in an inconsistency with section 116 of the Act. The amendment to section 116 aligns the Act with the proposed amendment to section 130 of the Fair Work Act.



SCHEDULE 9 - CALCULATION OF COMPENSATION

Overview

329.      Schedule 9 to the Bill amends the Act to:

·                 ensure that the method of calculating an employee’s weekly incapacity payments is fair and reflects the employee’s earnings before their injury by:

o       changing the concept of ‘normal weekly earnings’ in section 8 of the Act to ‘average weekly remuneration’ to better reflect an employee’s income;

o       providing flexibility in determining the ‘relevant period’ to fairly represent an employee’s pre-injury remuneration; and

o       clarifying the operation of the cap on average weekly earnings in subsection 8(10) of the Act (recommendations 7.10 and 7.11 of the Review);

·                 introduce new ‘step down’ provisions to taper the amount of weekly incapacity payments to which an injured employee is entitled (recommendation 7.13 of the Review);

·                 link the payment of incapacity payments to the pension age, rather than cutting off those payments at a set age (recommendation 7.16(a) of the Review); and

·                 remove the 5% deduction on weekly incapacity payments to employees who are accessing superannuation benefits.

Commencement

330.      The amendments in Schedule 9 to the Bill commence on a day to be fixed by Proclamation, but no later than 12 months after Royal Assent. The extended period for Proclamation is necessary to enable Comcare and licensees to establish systems and processes to give effect to the new requirements.

Part 1 - Amendments

Safety, Rehabilitation and Compensation Act 1988

Item 1 - Subsection 4(1)

Item 2 - Subsection 4(1) (definition of employee )

Item 3 - Subsection 4(1)

Item 4 - Subsection 4(1) (definition of normal weekly earnings )

Item 5 - Subsection 4(1) (definition of normal weekly hours )

Item 6 - Subsection 4(1)

331.      These items repeal and insert a number of new defined terms into subsection 4(1) of the Act as a consequence of the amendments made by Schedule 9 to the Bill, in particular:

·                 amendments to section 8 of the Act which replace the concept of ‘normal weekly earnings’ with ‘average weekly remuneration’;

·                 the definition of ‘total remuneration’ in new section 8A; and

·                 amendments to section 23 of the Act which align the age cut-off provisions for the payment of compensation with the qualifying age for the age pension as set out in the Social Security Act 1991 .

Item 7 - Section 8 (heading)

Item 8 - subsections 8(1), (2) and (3)

Item 9 - Subsection 8(4)

Item 10 - Subsection 8(4)

Item 11 - Subsection 8(4)

Item 12 - Subsection 8(4)

Item 13 - Subsection 8(5)

Item 14 - Before subsection 8(6)

Item 15 - Subsections 8(6) and (7)

Item 16 - Paragraph 8(8)(a)

Item 17 - Paragraph 8(8)(b)

Item 18 - subsection 8(8)

Item 19 - subsection 8(8)

Item 20 - Subsections 8(9), (9B) and (9E)

Item 21 - Paragraphs 8(9E)(a) and (b)

Item 22 - Subsection 8(9F)

Item 23 - Subsection 8(9F)

332.      These items amend section 8 of the Act to change the concept of ‘normal weekly earnings’ - which is used to calculate an employee’s weekly incapacity payments - to ‘average weekly remuneration’ to better reflect an employee’s pre-injury income. 

333.      Currently, an injured employee who is incapacitated for work as a result of an injury receives weekly incapacity payments for a specified period based on the employee’s ‘normal weekly earnings’ (section 19 of the Act). ‘Normal weekly earnings’ are calculated using the formulae in subsections 8(1) and (2) of the Act:

·                 subsection 8(1) of the Act provides that an employee’s normal weekly earnings are calculated by multiplying the employee’s average ordinary rate of pay by the average number of hours worked in each week during the ‘relevant period’ (defined in section 9 of the Act to be the last 2 weeks before the injury), plus any allowance paid to the employee in respect of expenses incurred or likely to be incurred by the employee; and

·                 subsection 8(2) of the Act provides for an additional amount where an employee is required to work overtime on a regular basis.

334.      Sections 8 and 9 of the Act currently contain provisions which allow for the relevant period or the normal weekly earnings formula to be disregarded, or recalculated, if their application would result in an unfair calculation:

·                 subsections 8(4) and (5) of the Act allow for an alternate calculation of normal weekly earnings where, because of the shortness of the relevant period, it is impracticable to calculate the normal weekly earnings of an employee before an injury or if using the relevant period defined in section 9 of the Act would not fairly represent the weekly rate at which the employee was being paid;

·                 where there is a variation to the employee’s minimum rates of pay during the relevant period, subsections 9(2) and (3) of the Act allow for the part of the relevant period before the variation to be disregarded or, where that would not produce a fair result, for the deeming of the new rate of pay to have been in effect from the beginning of the relevant period; and

·                 subsection 9(4) of the Act allows for a part of the relevant period to be disregarded if an employee did not receive any earnings, or their earnings were reduced due to absence from employment during the relevant period.

335.      Section 8 of the Act also contains provisions which adjust the way in which ‘normal weekly earnings’ may be calculated (for example, substituting another period for the relevant period) as well as adjusting the final value of the normal weekly earnings so that it is not below or above a particular amount.

336.      When the Act commenced in 1988, the majority of employees covered by the scheme were Commonwealth public servants whose conditions of employment were governed by the then Public Service Act 1922 . Conditions of employment for most employees covered by the Act were therefore markedly similar - that is, they were generally paid a consistent salary or wage on a fortnightly basis - and the formula used for calculating normal weekly earnings was practicable. Since that time, the employment conditions and industrial profile of the employees covered by the Act have changed significantly; however, the provisions for the calculation of weekly incapacity payments remain largely unchanged. Many employees have terms and conditions that do not fall within the prescribed formula, which makes it difficult to calculate normal weekly earnings in a way that fairly represents the employee’s lost earnings.

337.      The current methods of calculating normal weekly earnings result in various inequities, for example:

·                 where an employee’s remuneration is based on productivity, distance driven, a fly-in-fly-out roster, etc.; or

·                 where an employee works irregular patterns, including a 9-day fortnight, or has fluctuating earnings due to commissions or seasonal work.

338.      The amendments to section 8 of the Act adopt a broader view of what can constitute ‘average weekly remuneration’ by averaging, over the relevant period, all income earned plus overtime and specified allowances payable for the first 104 weeks of incapacity. The amendments also adopt a more flexible approach to determining the relevant period so that it fairly reflects an employee’s remuneration.

339.      These amendments give effect to recommendations 7.1 and 7.2 of the Review with some modifications.

340.      New subsection 8(1) provides that the ‘average weekly remuneration’ of an employee before an injury is calculated by dividing the total remuneration (defined in new section 8A - see item 27 below) of the employee for the relevant period (defined in section 9 of the Act as amended - see items 28 to 30 below) by the number of weeks in the relevant period.

341.      New subsection 8(2) enables the total remuneration of an employee to include income from other employment the employee was engaged in throughout the 6-week period before the injury. Previously, only part-time employees could have income from other employment counted towards their ‘normal weekly earnings’. New subsection 8(2) provides that other employment can only be counted towards an employee’s total remuneration if the employee complied with any terms and conditions of their employment with the Commonwealth or licensed corporation in engaging in that other employment, for example, by notifying their employer of their other employment, or seeking permission to engage in the other employment.

342.      Subject to amendments reflecting the use of new terminology, the provisions that allow for an adjustment to average weekly remuneration in subsections 8(6) to (10) remain largely unchanged.

Item 24 - After subsection 8(9G)

343.      This item inserts new subsection 8(9H) which excludes a location allowance from an employee’s average weekly remuneration if the employee no longer resides at the location in respect of which the allowance was payable.

Illustrative example

Ben suffers an injury resulting in incapacity for work. One component of his total remuneration is a location allowance payable while Ben is posted to, and resides in, Hong Kong. After Ben’s injury, he remains in Hong Kong for 2 weeks before returning to Australia. Upon Ben’s return to Australia, because his primary place of residence is no longer Hong Kong, the location allowance will be deducted from the calculation of Ben’s total remuneration.

 

Item 25 - Subsection 8(10)

Item 26 - At the end of section 8

344.      These items repeal and substitute a new subsection 8(10) of the Act and clarify the operation of the cap on average weekly remuneration.

345.      Subsection 8(10) of the Act currently provides that if the amount of an injured employee’s average weekly remuneration calculated under subsection 8(1) of the Act would exceed the amount that would be the employee’s average weekly remuneration before the injury if he or she were not incapacitated for work, the amount will be reduced by the amount of the excess. Subsection 8(10) of the Act currently contains 2 different tests, depending on whether an employee continues to be employed or has ceased to be employed:

·                 where the employee continues to be employed, paragraph 8(10)(a) of the Act provides a broad ‘but for’ test which requires an enquiry as to his or her earnings if he or she had not been incapacitated for work;

·                 where the employee has ceased to be employed, paragraph 8(10)(b) of the Act provides a narrow test based on the actual position of the injured employee at either the date of injury or the date that he or she left employment.

346.      Item 25 substitutes a new subsection 8(10) which provides a single ‘but for’ test that applies to both ongoing and former employees. This amendment addresses the Federal Court decision in Comcare v Simmons [2014] FCAFC 4 where a former employee was able to continue to receive an allowance as part of his ongoing workers’ compensation incapacity payments even though he had previously left the position that attracted the allowance for reasons unrelated to his injury and would not have been entitled to receive that allowance on a continuing basis if he had remained an employee.

347.      Item 26 inserts new subsections 8(11) and (12) which clarify the application of subsection 8(10) of the Act.

348.      New subsection 8(11) provides that a suspended employee is taken to be employed during the suspension for the purposes of subsection 8(10) of the Act. Where an employee is suspended without pay, the cap would not be prevented from operating simply because the employee has failed to earn an amount. This amendment addresses the Federal Court decision in Comcare v Burgess [2007] FCA 1663 which ruled that paragraph 8(10)(a) of the Act - which is expressed to apply to an injured employee who continues to be employed during his or her incapacity - does not contemplate the situation where an employee continues to be employed but is suspended from that employment without pay and therefore does not apply to an employee who is suspended without pay. In other words, an employee who would not have earned anything if free from incapacity (because he or she is suspended without pay) is able to receive an income because of his or her incapacity.

349.      This amendment gives effect to recommendation 7.11 of the Review.



 

Illustrative example

Matt suffers an injury which results in incapacity for work, and remains employed by his employer. His weekly incapacity payments are calculated to be $500 a week. However, Matt is then suspended from work due to misconduct. Subsection 8(10) of the Act operates to reduce Matt’s average weekly remuneration to the amount that he would have received had he not been incapacitated for work. As Matt would not have received any payment had he not been incapacitated for work due to his suspension for misconduct, subsection 8(10) of the Act operates to reduce Matt’s average weekly remuneration to $0. Subsection 8(11) of the Act operates to ensure that subsection 8(10) of the Act operates even where Matt remains employed, but is suspended from work.

350.      New subsection 8(12) provides that subsections 8(6), (7), (9), (9H) and (10) of the Act  operate from time to time for the purposes of working out compensation payable under the Act to an employee for a particular week of incapacity. This means, for example, that subsection 8(10) may operate in respect of a particular week of incapacity so that an employee’s average weekly remuneration is reduced for that week and increased in later weeks.

351.      This amendment gives effect to recommendation 7.10 of the Review.

Illustrative example

Jordan suffers an injury which results in incapacity for work. Her average weekly remuneration is calculated to be $1200, and one component of that amount is an allowance for being on-call during weekends. While Jordan is incapacitated for work, her team is restructured and no longer required to be on-call during weekends, and the allowance is removed from their entitlements. Subsection 8(10) of the Act operates to remove that allowance from the calculation of Jordan’s average weekly remuneration. A month later, Jordan’s team is restructured again, and the requirement for being on-call, and the on-call allowance, is reinstated. New subsection 8(12) operates to ensure that Jordan’s average weekly remuneration is adjusted again to include the on-call allowance.

Item 27 - After section 8

New subsection 8A - Total remuneration

352.      This item inserts new section 8A which specifies the types of payments and benefits that may be included in an employee’s ‘total remuneration’ for the purposes of calculating the employee’s average weekly remuneration.

353.      Reportable employer superannuation contributions are those made by the employer on behalf of an employee, such as salary sacrifice contributions, or extra super contributions. Contributions not regarded as reportable employer superannuation contributions are super guarantee contributions or contributions made by an employer under a collectively negotiated industrial agreement.

354.      Overtime and specified allowances may be included in the calculation of average weekly remuneration for the first 104 weeks (2 years) of incapacity. Overtime may be included if, but for the employee’s injury, it would have been likely that the employee would have worked paid overtime at any time during those 104 weeks of incapacity.

355.      The weeks referred to are weeks during which the employee is incapacitated. That is, any week in which the employee is incapacitated for work is a week for the purposes of counting the 104 weeks.

Illustrative example

Sarah suffers a compensable injury and provides a medical certificate demonstrating incapacity for work resulting from that injury. As Sarah is incapacitated for her pre-injury duties, her employer gives Sarah a new role with suitable duties she can perform, at the same hours as her pre-injury role. Sarah’s pre-injury role included working in dangerous situations, which was reflected in a ‘danger pay’ allowance. Sarah’s new role does not include working in any dangerous situations, or a ‘danger pay’ allowance. The ‘danger pay’ allowance formed part of Sarah’s total remuneration for the relevant period and would therefore be included in the calculation of Sarah’s average weekly remuneration for the first 104 weeks during which Sarah is incapacitated for work. In this example, Sarah is incapacitated for work during a week in respect of which she has a medical certificate demonstrating that she is incapacitated for her pre-injury role.

Item 28 - Subsection 9(1)

Item 29 - Subsection 9(3)

Item 30 - At the end of section 9

356.      These items amend the definition of ‘relevant period’ in section 9 of the Act.

357.      ‘Relevant period’ is defined in section 9 of the Act to mean the latest period of 2 weeks before the date of injury during which the employee was continuously employed by the Commonwealth or a licensed corporation. Section 9 of the Act also contains provisions which would alter the ‘relevant period’ in particular circumstances.

358.      The amendments to section 9 of the Act retain this as the default position, but enable the relevant authority to determine an alternative relevant period (consisting of a single week or 2 or more weeks, whether consecutive or otherwise) provided that the total remuneration attributable to the employee’s employment during that period is a fair representation of the total remuneration that was attributable to the employee’s employment before the date of the injury.

Item 31 - Subsections 19(2) to (3)

359.      This item repeals subsections 19(2), (2A), (2B), (2C), (2D) and (3) of the Act, and substitutes new subsections 19(2), (2A), (2B) and (2C) which introduce structured reductions (commonly referred to as ‘step downs’) in the calculation of weekly incapacity payments based on the period of incapacity.

360.      Step-downs provide an incentive for employees to return to work as quickly as possible. Step-downs also take into account any savings that an injured employee makes by virtue of not attending work, such as not paying for travel costs.

361.      Currently under the Act there is only one step down point at approximately 45 weeks after the injury is suffered. Such a late step-down creates a disincentive for early return to work by injured employees.

362.      Under current subsection 19(2) of the Act an employee’s weekly incapacity payments are worked out by a formula which reduces the employee’s normal weekly earnings (as calculated under current section 8 of the Act) by the employee’s average earnings, defined as greater of either the amount that the employee is actually earning or has been deemed able to earn in suitable employment. This formula is used for the first 45 weeks after the injury. After 45 weeks of incapacity, compensation is paid at an adjusted rate of between 75% and 100% of the injured employee’s normal weekly earnings: current subsection 19(3) of the Act. A week for the purposes of these provisions is a ‘maximum rate compensation week’ as defined in current subsection 19(2A) of the Act, that is, a week in which the employee is receiving compensation rather than a calendar week. An employee who has an intermittent injury may reach 45 ‘maximum compensation weeks’ over a period of time greater than 45 calendar weeks.

363.      The amendments to section 19 of the Act provide for the following step down points:

·                 for the first 13 weeks of incapacity an employee will be entitled to receive weekly incapacity payments worked out by a formula which reduces the employee’s average weekly remuneration (as calculated under section 8 of the Act as amended) by the employee’s ‘applicable earnings’, defined as the greater of the amount that the employee is actually earning in any employment (including self-employment) and the amount the employee has been deemed able to earn in suitable employment;

·                 after 13 weeks of incapacity, compensation will be paid at an adjusted rate of 90% of the employee’s average weekly remuneration less the employee’s applicable earnings;

·                 after 27 weeks of incapacity, compensation will be calculated using the formula of 90% of the employee’s average weekly remuneration less the employee’s applicable earnings and paid at an adjusted rate of no more than 80% of the employee’s average weekly remuneration; and

·                 after 53 weeks of incapacity, compensation will be calculated using the formula of 90% of the employee’s average weekly remuneration less the employee’s applicable earnings and paid at an adjusted rate of no more than 70% of the employee’s average weekly remuneration.

364.      An employee who is receiving weekly incapacity payments will never receive more than 90% of their pre-injury take home pay (comprised of their weekly incapacity payments and applicable earnings) after their first 13 weeks of receiving weekly incapacity payments. The only way an employee would be able to take home more than 90% of their pre-injury pay, after the first 13 weeks, would be to earn that amount from employment undertaken by the employee during that week.

365.      The step down periods will no longer be based on hours worked by reference to the maximum compensation week. Instead of being tied to the number of hours worked, step down points will be determined on weeks during which an employee is incapacitated for work as a result of the injury.

366.      These amendments give effect to recommendation 7.13 of the Review with some modifications.

Illustrative example

Jenny suffers an injury which results in incapacity for work. Her average weekly remuneration is $2000. Jenny is deemed able to earn $250 a week in suitable employment, and actually earns $100 a week in suitable employment, making Jenny’s ‘applicable earnings’ amount equal to $250.

For the first 13 weeks of incapacity for work, Jenny’s weekly incapacity payments are calculated using the formula:

(100% x $2000) - $250 = $1750

The amount of compensation payable to Jenny is $1750 per week.

For weeks 14 to 26 of incapacity for work, Jenny’s weekly incapacity payments are calculated using the formula:

(90% x $2000) - $250 = $1550

The amount of compensation payable to Jenny is $1550 per week.

For weeks 27 to 52 of incapacity for work, Jenny’s weekly in capacity payments are calculated using the formula:

(90% x $2000) - $250 = $1550,

capped at 80% x $2000 = $1600

Since $1550 is less than the cap of $1600, the amount of compensation payable to Jenny continues to be $1550 per week.

After 52 weeks of incapacity for work, Jenny’s weekly incapacity payments are calculated using the formula:

(90% x $2000) - $250 = $1550,

capped at 70% x $2000 = $1400

Since $1550 is greater than the cap of $1400, the amount of compensation payable to Jenny is capped at $1400 per week.

Note: sections 8, 9 and 19 of the Act contain provisions which may affect the calculation of an employee’s weekly incapacity payments. This example demonstrates the operation of the step down provisions only.

Item 32 - Before subsection 19(3A)

Item 33 - Subsection 19(3A)

Item 34 - Before subsection 19(4)

Item 35 - Subsection 19(4)

367.      These items make consequential amendments to subsections 19(3A) and (4) of the Act as a result of the new step down provisions.

Item 36 - Subsections 19(5), (6) and (7)

368.      This item substitutes new subsections 19(5), (6) and (7).

369.      New subsection 19(5) provides that the current reduction of compensation where weekly incapacity payments exceed 150% of Average Weekly Ordinary Time Earnings of Full-time Adults applies after 13 weeks. This aligns the reduction with the first step down point.

370.      New subsection 19(6) provides that the final 2 step down provisions do not apply where 90% of the employee’s average weekly remuneration is less than the minimum earnings - as defined in new subsection 19(7).

371.      New subsection 19(7) is a consequential amendment as a result of the new minimum earnings protection provision as set out in new subsection 19(6).

Item 38 - Subsection 20(3) (formula)

Item 39 - Subsection 20(3) (definition of amount of compensation )

Item 40 - Subsection 20(4)

Item 41 - Subsection 21(3) (formula)

Item 42 - Subsection 21(3) (definition of amount of compensation )

Item 43 - Subsection 21(4)

Item 44 - Subsection 21A(3) (formula)

Item 45 - Subsection 21A(3) (definition of amount of compensation )

Item 46 - Subsection 21A(4)

372.      These items amend sections 20, 21 and 21A of the Act to remove the 5% deduction from weekly incapacity payments to retired employees who are receiving superannuation benefits, that is, a pension, a lump sum benefit or both.

373.      These provisions were enacted when it was compulsory for public servants to contribute to their own superannuation accounts. However, this requirement no longer exists in the Australian Public Service superannuation schemes; nor does it exist in the superannuation schemes used by employees of licensed corporations.

Item 47 - Subsection 23(1)

Item 48 - Subsections 23(1A) and (1B)

374.      These items amend subsection 23(1) to provide that weekly incapacity payments cease when an injured employee reaches his or her ‘pension age’. The term ‘pension age’ is defined in subsection 4(1) of the Act by reference to the Social Security Act 1991 .

375.      Currently, subsection 23(1) of the Act provides that weekly incapacity payments are not payable to an employee who has reached 65 - the standard retirement age when the Act commenced in 1988. Current subsections 23(1A) and (1B) allow for employees who suffer an injury when they are 63 or more to receive incapacity payments for a maximum of 104 weeks (that is, 2 years) while they are incapacitated.

376.      The policy behind ceasing weekly incapacity payments, or limiting them to 104 weeks, is that once the employee has reached retirement age they can move off weekly incapacity payments and on to other means of financial support, such as the age pension or superannuation. However, the ‘pension age’ as defined in the Social Security Act 1991 has risen beyond 65 for people born after 1 July 1952. One consequence of this is that an injured employee who is aged 65 will not only be unable to receive weekly incapacity payments under the Act but will also be unable to access the age pension until he or she reaches his or her pension age.

377.      There is no age limit to compensation for medical treatment.

378.      The amendment aligns the age cut-off provisions in section 23 of the Act with the qualifying age for the age pension as set out in the Social Security Act 1991 .

379.       This amendment gives effect to recommendation 7.16(a) of the Review.

Item 49 - Section 23A (heading)

Item 50 - Paragraph 23A(1)(b)

Item 51 - Paragraph 23A(1)(b)

Item 52 - Subsection 23A(2)

Item 53 - Subsection 23A(3) (note)

Item 54 - Paragraph 23A(6)(a)

Item 55 - Subsection 23A(6)

Item 56 - Subsection 23A(9)

Item 59 - Subsection 33(1)

Item 60 - Paragraph 33(2)(e)

Item 62 - Subsection 97F(1)

Item 63 - Subsection 112A(4) (note)

Item 64 - Subsection 112B(4) (note)

380.      These items amend sections 23A, 33, 97F, 112A and 112B to replace the term ‘salary, wages or pay’ with ‘monetary remuneration’, a new term defined in subsection 4(1) of the Act to include a wider range of remuneration.

Item 57 - Subsection 30(3) (paragraph (a) of the definition of number of days )

Item 58 - Subsection 30(3) (paragraph (b) of the definition of number of days )

381.      These items amend the definition of ‘number of days’ in subsection 30(3) of the Act as a consequence of the amendments to section 23 of the Act that align the age cut-off provisions to the qualifying age for the age pension as set out in the Social Security Act 1991 .

Item 61 - Subsection 60(1) (definition of determination )

382.      This item amends the definition of ‘determination’ in subsection 60(1) of the Act to enable determinations of an alternative relevant period under section 9 of the Act to be reviewable under Part VI of the Act. 

Item 65 - Subsection 131(2)

Item 66 - Subsection 131(2)

Item 67 - Subsection 131(2A)

Item 68 - Subsection 131(2A)

Item 69 - Subsection 131(3)

Item 70 - Subsection 131(3A)

Item 71 - Subsection 131(3A)

Item 72 - Subsection 131(4)

Item 73 - Paragraph 131(5)(b)

Item 74 - Subsection 131(6)

Item 75 - Subsection 132(2)

Item 76 - Subsection 132(2)

Item 77 - Subsections 132(3) and (4)

Item 78 - Subsection 132(4)

Item 79 - Subsection 132(5)

Item 80 - Subsection 132(5)

Item 81 - Paragraph 132A(3)(b)

383.      These items make consequential amendments to sections 131, 132 and 132A of the Act as a result of the amendment to section 8 of the Act which replaces ‘normal weekly earnings’ with ‘average weekly remuneration’.

Item 82 - Subsection 137(5) (definition of number of days )

384.      This item amends the definition of ‘number of days’ in subsection 137(5) of the Act as a consequence of the amendments to section 23 of the Act that align the age cut-off provisions to the qualifying age for the age pension as set out in the Social Security Act 1991 .

Part 2 - Application and transitional provisions

Item 83 - Application of amendments

385.       This item provides that the main amendments made in Schedule 9 to the Bill apply in relation to a payment of compensation in respect of a week that began after commencement.

386.      The amendments of section 23A (items 49 to 56), paragraph 33(2)(e) (item 60) and sections 112A (item 63) and 112B (item 64) of the Act apply in relation to a payment made by the Commonwealth after commencement.

387.      The amendment of section 97F of the Act (item 62) applies in relation to an estimate given by the principal officer of a premium payer after commencement.

388.      The amendment of section 137 of the Act (item 82) applies in relation to a determination made after commencement.

Item 84 - Transitional - weekly compensation payments

389.       This item contains transitional provisions in relation to the application of the new step down provisions in section 19 of the Act as amended to employees entitled to, or receiving, incapacity payments at commencement of this item.

390.      Subitem 84(2) applies in relation to an employee who at commencement of item 84 is entitled to, or has received, weekly incapacity payments for 13 weeks or less. In this case the following transitional step down rules apply:

·                 for the first 13 weeks after commencement an employee will be entitled to receive weekly incapacity payments worked out in accordance with new subsection 9(2);

·                 after 13 post-commencement weeks, incapacity payments will be adjusted to 90% of the amount calculated in accordance with the formula in new subsection 9(2);

·                 after 27 post-commencement weeks, incapacity payments will continue to be paid at the adjusted rate of 90% of the amount calculated in accordance with the formula in new subsection 9(2) but capped at 80% of the employee’s average weekly remuneration before the injury;

·                 after 53 weeks, incapacity payments will continue to be paid at the adjusted rate of 90% of the amount calculated in accordance with the formula in new subsection 9(2) but capped at 70% of the employee’s average weekly remuneration before the injury. 

Illustrative example

Stephen suffered an injury before the commencement of Schedule 9 to the Bill, and has been receiving weekly compensation for 12 weeks when the Schedule commences.

As, pre-commencement, his weekly incapacity payments would have been calculated by reference to ‘normal weekly earnings’, his relevant authority will need to calculate Stephen’s ‘average weekly remuneration’ in order to apply the transitional provisions.

Stephen’s average weekly remuneration is worked out to be $2000. Stephen is deemed able to earn $250 a week in suitable employment, and actually earns $100 a week in suitable employment, making Stephen’s ‘applicable earnings’ amount equal to $250.

For the first 13 weeks of incapacity for work from the commencement of Schedule 9 to the Bill, Stephen’s weekly incapacity payments are calculated using the formula:

(100% x $2000) - $250 = $1750

The amount of compensation payable to Stephen is $1750 per week.

For weeks 14 to 26 of incapacity for work from the commencement of Schedule 9 to the Bill, Stephen’s weekly incapacity payments are calculated using the formula:

(90% x $2000) - $250 = $1550

The amount of compensation payable to Stephen is $1550 per week.

For weeks 27 to 52 of incapacity for work from the commencement of Schedule 9 to the Bill, Stephen’s weekly compensation is calculated using the formula:

(90% x $2000) - $250 = $1500,

capped at 80% x $2000 = $1600

Since $1550 is less than the cap of $1600, the amount of compensation payable to Stephen continues to be $1550 per week.

After 52 weeks of incapacity for work from the commencement of Schedule 9 to the Bill, Stephen’s weekly incapacity payments are calculated using the formula:

(90% x $2000) - $250 = $1500,

capped at 70% x $2000 = $1400

Since $1550 is greater than the cap of $1400, the amount of compensation payable to Stephen is capped at $1400 per week.

Note: sections 8, 9 and 19 of the Act contain provisions which may affect the calculation of an employee’s weekly incapacity payments. This example demonstrates the operation of the step down provisions only.

 

391.      Subitem 84(3) applies in relation to an employee who at commencement of item 84 is entitled to, or has received, weekly incapacity payments for at least 13 weeks but less than 27 weeks. In this case the following transitional step down rules apply:

·                 for the first 13 weeks after commencement an employee will be entitled to receive weekly incapacity payments worked out in accordance with new subsection 9(2);

·                 after 13 post-commencement weeks, incapacity payments will be adjusted to 90% of the amount calculated in accordance with the formula in new subsection 9(2) but capped at 80% of the employee’s average weekly remuneration before the injury;

·                 after 27 post-commencement weeks, incapacity payments will continue to be paid at the adjusted rate of 90% of the amount calculated in accordance with the formula in new subsection 9(2) but capped at 70% of the employee’s average weekly remuneration before the injury.

Illustrative example

Abbey suffered an injury before the commencement of Schedule 9 to the Bill, and has been receiving weekly incapacity payments for 26 weeks when the Schedule commences.

As, pre-commencement, her weekly incapacity payments would have been calculated by reference to ‘normal weekly earnings’, her relevant authority will need to calculate Abbey’s ‘average weekly remuneration’ in order to apply the transitional provisions.

Abbey’s average weekly remuneration is worked out to be $2000. Abbey is deemed able to earn $250 a week in suitable employment, and actually earns $100 a week in suitable employment, making Abbey’s ‘applicable earnings’ amount equal to $250.

For the first 13 weeks of incapacity for work from the commencement of Schedule 9 to the Bill, Abbey’s weekly incapacity payments calculated using the formula:

(100% x $2000) - $250 = $1750

The amount of compensation payable to Abbey is $1750 per week.

For weeks 14 to 26 of incapacity for work from the commencement of Schedule 9 to the Bill, Abbey’s weekly incapacity payments are calculated using the formula:

(90% x $2000) - $250 = $1500,

capped at 80% x $2000 = $1600

Since $1550 is less than the cap of $1600, the amount of compensation payable to Abbey continues to be $1550 per week.

After 27 weeks of incapacity for work from the commencement of Schedule 9 to the Bill, Abbey’s weekly incapacity payments are calculated using the formula:

(90% x $2000) - $250 = $1500,

capped at 70% x $2000 =  $1400

Since $1550 is greater than the cap of $1400, the amount of compensation payable to Abbey is capped at $1400 per week.

Note: sections 8, 9 and 19 of the Act contain provisions which may affect the calculation of an employee’s weekly incapacity payments. This example demonstrates the operation of the transitional step down provisions only.

392.      Subitem 84(4) applies in relation to an employee who at commencement of item 84 is entitled to, or has received, weekly incapacity payments for at least 27 weeks but less than 46 weeks. In this case the following transitional step down rules apply:

·                 for the first 13 weeks after the injury (or such lesser period worked out in accordance with subitem 84(4)(a)(i)) an employee will be entitled to receive weekly incapacity payments worked out by a formula which adjusts the employee’s average weekly remuneration (as calculated under amended section 8 of the Act as amended) by the employee’s applicable earnings;

·                 after that period compensation will be reduced to 90% of the amount calculated in accordance with the formula in new subsection 9(2) but capped at 70% of the employee’s average weekly remuneration before the injury.

393.      Under the current section 19, the only step down occurs after 45 weeks of weekly incapacity payments. These transitional step down provisions reflect in part that current step down point, by ensuring that the final step down does not occur until after the employee has received weekly incapacity payments for 45 weeks of incapacity for work.

Illustrative example

Henry suffered an injury before the commencement of Schedule 9 to the Bill, and has been receiving weekly incapacity payments for 42 weeks when the Schedule commences.

As, pre-commencement, his weekly incapacity payments would have been calculated by reference to ‘normal weekly earnings’, his relevant authority will need to calculate Henry’s ‘average weekly remuneration’ in order to apply the transitional provisions.

Henry’s average weekly remuneration is worked out to be $2000. Henry is deemed able to earn $250 a week in suitable employment, and actually earns $100 a week in suitable employment, making Henry’s ‘applicable earnings’ amount equal to $250.

The length of the first stage of Henry’s transitional step down is 2 weeks (2 weeks being the lesser of (45 weeks - 43 weeks) and 13 weeks).

For the first 2 weeks of incapacity for work from the commencement of Schedule 9 to the Bill, Henry’s weekly incapacity payments are calculated using the formula:

(100% x $2000) - $250 = $1750

The amount of compensation payable to Henry is $1750 per week.

After receiving weekly incapacity payments for those 2 weeks after the commencement of Schedule 9 to the Bill, Henry’s weekly incapacity payments are calculated using the formula:

(90% x $2000) - $250 = $1550,

capped at 70% x $2000 = $1400

Since $1550 is greater than the cap of $1400, the amount of weekly incapacity payments payable to Henry is capped at $1400 per week.

Note: sections 8, 9 and 19 of the Act contain provisions which may affect the calculation of an employee’s weekly incapacity payments. This example demonstrates the operation of the transitional step down provisions only.

394.      Subitem 84(5) applies in relation to an employee who at commencement of item 84 is entitled to, or has received, weekly incapacity payments for 46 weeks or more. In this case the employee will be entitled to receive weekly incapacity payments at the rate of 90% of the amount calculated in accordance with the formula in new subsection 19(2) to a maximum of 70% of the employee’s average weekly remuneration.

Illustrative example

Justine suffered an injury before the commencement of Schedule 9 to the Bill, and has been receiving weekly incapacity payments for 100 weeks when the Schedule commences.

As, pre-commencement, her weekly incapacity payments would have been calculated by reference to ‘normal weekly earnings’, her relevant authority will need to calculate Justine’s ‘average weekly remuneration’ in order to apply the transitional provisions.

Justine’s average weekly remuneration is worked out to be $2000. Justine is deemed able to earn $250 a week in suitable employment, and actually earns $100 a week in suitable employment, making Justine’s ‘applicable earnings’ amount equal to $250.

From the commencement of Schedule 9 to the Bill, Justine’s weekly incapacity payments will be calculated using the formula:

(90% x $2000) - $250 = $1550,

capped at 70% x $2000 = $1440

Since $1550 is greater than the cap of $1400, the amount of compensation payable to Justine is capped at $1400 per week.

Note: sections 8, 9 and 19 of the Act contain provisions which may affect the calculation of an employee’s weekly incapacity payments. This example demonstrates the operation of the transitional step down provisions only.

 



 

Item 85 - Transitional - average weekly remuneration

395.       This item provides that an employee’s average weekly remuneration before an injury will be increased on 1 July following 6 months from commencement.

Item 86 - Transitional - indexation

396.       This item provides that the minimum earnings of an employee (including any additional amounts payable in respect of dependents and prescribed children) will be indexed on 1 July following 6 months after commencement.

Item 87 - Transitional - certain former employees

397.       This item provides that the amendments of sections 131, 132 and 132A of the Act (which contain special transitional provisions in relation to former employees under 65) do not apply if it is not practicable to calculate the former employee’s average weekly remuneration.

 



SCHEDULE 10 - REDEMPTION OF COMPENSATION

Overview

398.      Schedule 10 to the Bill amends sections 30 and 137 of the Act to increase the compulsory redemption threshold from $110.65 (as at 1 July 2014) to $208.91 (indexed annually) to align it with the Military Rehabilitation and Compensation Act 2004 .

399.      Redemption of compensation involves the payment of a lump sum amount to an employee in lieu of the employee’s ongoing weekly incapacity payments. Under sections 30 and 137 of the Act Comcare must make a lump sum incapacity payment in lieu of weekly incapacity payments where:

·                 Comcare is liable to make weekly incapacity payments of $50 or less; and

·                 Comcare is satisfied that the degree of the employee’s incapacity is unlikely to change.

400.      The current low maximum weekly rate of incapacity payments that can be redeemed under section 30 of the Act means that there are very few employees who qualify for redemption.

401.      This amendment gives effect to recommendation 7.19 of the Review.

Commencement

402.      The amendments in Schedule 10 to the Bill commence on the day after Royal Assent.

Part 1 - Amendments

Safety, Rehabilitation and Compensation Act 1988

Item 1 - Paragraph 30(1)(b)

Item 2 - Paragraph 137(1)(b)

403.      These items amend paragraphs 30(1)(b) and 137(1)(b) of the Act to increase the compulsory redemption threshold to $208.91 per week. This amount is in line with the redemption threshold in the Military Rehabilitation and Compensation Act 2004 .

Part 2 - Transitional Provisions

Item 3 - Transitional - indexation

404.      This item ensures that the amount specified in paragraphs 30(1)(b) and 137(1)(b) of the Act will be indexed on 1 July following 6 months from commencement.

 



SCHEDULE 11 - LEGAL COSTS

Overview

405.      Schedule 11 to the Bill amends the Act to:

·                 empower Comcare to prescribe, by disallowable legislative instrument, a Schedule of Legal Costs that provides for the maximum amount of costs that may be awarded or reimbursed to a claimant in certain circumstances;

·                 empower relevant authorities to reimburse costs incurred by a claimant in connection with the favourable reconsideration of a determination after commencement, subject to certain conditions; and

·                 require all parties to a proceeding (including employers and third parties) to disclose any evidence that they intend to adduce at least 28 days prior to the first day of hearing (recommendation 9.12 of the Review).

406.      The purpose of these amendments is to:

·                 control, and thereby reduce, the overall amount of costs that may be awarded or reimbursed to a claimant in certain circumstances, as currently provided in other Australian workers’ compensation schemes;

·                 avoid potentially lengthy and expensive merits review proceedings by introducing an incentive and mechanism to resolve claims before proceedings are commenced and, if proceedings are commenced, earlier in the proceedings; and

·                 limit the need for and length of hearings before the AAT, noting that disputes in the Comcare scheme take longer to resolve than disputes in other Australian workers’ compensation schemes (see pages 172-174 of the Review).

Commencement

407.      The amendments in Schedule 11 to the Bill commence on a day to be fixed by Proclamation, but no later than 12 months after Royal Assent. The extended period for Proclamation is necessary to enable Comcare to prepare a Schedule of Legal Costs in consultation with the legal profession.

Part 1 - Amendments

Safety, Rehabilitation and Compensation Act 1988

Item 1 - Subsection 4(1)

408.      This item amends subsection 4(1) of the Act by inserting a new definition of ‘Schedule of Legal Costs’ consequential on the enactment of new section 67A (see item 8 below).



 

Item 2 - After section 62

New subsection 62A - Reimbursement of costs incurred by a claimant in connection with reconsideration of a determination

409.      This item inserts new section 62A which will enable a determining authority to reimburse costs reasonably incurred by a claimant in connection with a reconsideration, for example, reasonable legal fees and medical report costs, where:

·                 the determining authority has received a request for reconsideration in respect of a determination under subsection 62(2) of the Act;

·                 the reconsideration has resulted in either a variation of the determination in a way that is more favourable for the claimant, or the revocation of the determination; and

·                 the claimant gives the determining authority a written undertaking not to seek a review of the decision by the AAT.

410.      Where an undertaking is given, and costs are reimbursed, the claimant is not entitled to seek review of the decision by the AAT unless the undertaking is withdrawn, by written notice given to the determining authority, and the reimbursement amount is repaid to the determining authority.

411.      The purpose of this provision is to provide an incentive and mechanism to resolve claims before potentially lengthy and expensive merits review proceedings are commenced.

Item 3 - After subsection 66(1)

412.      This item inserts new subsection 66(1A) which prevents any party (other than the claimant) from presenting any evidence in proceedings before the AAT which has not been disclosed to the AAT at least 28 days before the hearing date, except with the leave of the AAT. A similar restriction currently applies in relation to claimants under section 66 of the Act.

413.      This amendment is consistent with the AAT’s practice, procedural fairness, the obligation to act as a model litigant and the requirement for respondents to use their best endeavours to assist the AAT to make its decision in relation to the proceeding.

Item 4 - Subsection 67(8A)

Item 5 - Subsections 67(8B) and (9)

Item 6 - Subsection 67(10)

414.      These items amend section 67 of the Act to enable the AAT to make partial costs orders - subject to the Schedule of Legal Costs - where it is appropriate to do so in all the circumstances.

Item 7 - After subsection 67(10)

415.      This item inserts new subsections 67(10A) and (10B).

416.      New subsection 67(10A) requires the AAT to comply with the Schedule of Legal Costs prescribed under new section 67A (see item 8 below).

417.      New subsection 67(10B) gives the AAT the discretion to make orders requiring a claimant to pay the costs of another party to the proceedings, but only if:

·                 the claimant instituted the proceedings under Part VI of the Act;

·                 those proceedings were dismissed under section 42B of the Administrative Appeals Tribunal Act 1975 ; and

·                 another party to the proceedings has applied for an order that the costs of the proceedings incurred by that party be paid by the claimant.

Item 8 - At the end of Part VI

New subsection 67A - Schedule of Legal Costs

418.      This item adds new section 67A empowering Comcare to prescribe a Schedule of Legal Costs limiting:

·                 the costs that can be ordered by the AAT under subsections 67(8), (8A), (8B) and (9) of the Act as amended; and

·                 the amount a determining authority can reimburse a claimant under new section 62A.

419.      New subsections 67A(4) and (5) provide that different amounts may be specified in, or ascertained in accordance with, the Schedule of Legal Costs in different circumstances, including where:

·                 an agreement is reached between the parties to a proceeding instituted after commencement as to the terms of a decision of the AAT in the proceeding or in relation to a part of the proceeding or a matter arising out of the proceeding in accordance with section 42C of the Administrative Appeals Tribunal Act 1975 ; and

·                 the agreement was reached as the result of a process set out in the Schedule of Legal Costs (for example, a formal settlement offer process).

420.      Comcare will be required to take all reasonable steps to ensure that a Schedule of Legal Costs is in force at all times after commencement.

421.      The Schedule of Legal Costs will be a legislative instrument for the purposes of the Legislative Instruments Act 2003 .

Part 2 - Application Provisions

Item 9 - Application of amendments

422.      This item provides that:

·                 new section 62A applies in relation to a decision made after commencement of this item; and

·                 the amendments to sections 66 and 67 of the Act, and new section 67A, apply in relation to proceedings instituted after the commencement of this item.



 

 



 

SCHEDULE 12 - PERMANENT IMPAIRMENT

Overview

423.      Compensation for permanent impairment and non-economic loss is paid as a lump sum. The compensation is separate from, and additional to, weekly incapacity payments payable to an injured employee under the Act:

·                 weekly incapacity payments are paid to replace an employee’s regular salary or wages and are referred to as compensation for economic loss; and

·                 lump sum compensation is paid to compensate for permanent impairment resulting from an injury (that is, the loss of the use, or damage or malfunction, of any part of the body or of any bodily system or function or part of such system or function) and for loss or damage of a non-economic kind suffered by the employee (including pain and suffering, a loss of expectation of life or a loss of the amenities or enjoyment of life) resulting from that injury or impairment and of which the employee is aware.

424.      Schedule 12 to the Bill amends the Act to:

·                 combine the compensation payable for permanent impairment under section 24 of the Act and compensation payable for non-economic loss under section 27 of the Act into a single permanent impairment payment under section 24 and increase the maximum benefit payable for permanent impairment to $350,000;

·                 provide a new method for calculating permanent impairment compensation that permits a more equitable distribution of compensation based on the level of permanent impairment (recommendation 8.5 of the Review);

·                 treat associated injuries as a single injury so that the impairment resulting from that deemed single injury can be combined to achieve a whole person impairment value (recommendation 8.2 of the Review);

·                 require relevant authorities to discount the pre-existing degree of permanent impairment (both compensable and non-compensable) when assessing the level of permanent impairment resulting from an injury; and

·                 exclude access to permanent impairment compensation for secondary psychological or psychiatric ailments and injuries.

Commencement

425.      The amendments in Schedule 12 to the Bill commence on a day to be fixed by Proclamation, but no later than 12 months after Royal Assent. The extended period for Proclamation is necessary to enable Comcare and licensees to establish systems and processes to give effect to the new permanent impairment requirements.

Part 1 - Amendments

Safety, Rehabilitation and Compensation Act 1988

Item 1 - Subsection 4(1) (definition of non-economic loss )

Item 2 - Subsection 13(1) (definition of relevant amount )

426.      These items repeal and amend certain definitions as a consequence of the repeal of section 27 of the Act by item 11.

Item 3 - At the end of subsection 24(1)

427.      This item adds a note to the end of subsection 24(1) of the Act to refer to new sections 28A, 28B and 28C which impact on the assessment of the degree of permanent impairment.

Item 4 - Subsection 24(3)

428.      This item makes a consequential amendment to subsection 24(3) of the Act (see item 5 below).

Item 5 - Subsection 24(4)

429.      This item amends section 24 of the Act to substitute a new subsection 24(4) and insert new subsection 24(4A) which introduces an algorithmic formula based on multiplying factors that must be used to determine the amount of compensation payable for permanent impairment assessed at less than 75% of the whole person.

430.      The amount of compensation currently payable for permanent impairment is assessed as a percentage of the maximum amount payable under section 24 of the Act based on the degree of permanent impairment determined by Comcare expressed as a percentage. For example, an employee with a 50% permanent impairment receives 50% of the maximum amount payable.

431.      New subsection 24(4) provides that an employee with a permanent impairment resulting from an injury (or deemed single injury under new section 28B - see item 20 below) of 75% or more will receive the maximum amount payable under section 24 of the Act.

432.      New subsection 24(4A) provides that an employee with an impairment of 74% or less will receive compensation calculated in accordance with an algorithmic formula based on multiplying factors specified in the table in clause 1 of Schedule 1 to the Act (see item 26 below).

433.      These amendments give effect to recommendation 8.5 of the Review and ensure that those employees with the greatest level of impairment receive the greatest compensation.

Illustrative examples

Under the provisions of the current approved Guide and using the statutory maximum rate of $350,000:

1.              A 5% permanent binaural hearing loss resulting from a compensable injury would be assessed at 2.5% whole person impairment—this should be rounded to the nearest whole integer in the multiplying factors table in Schedule 1 to the Act, which in this example is 3.0%:

0.03 x 0.18 x $350,000 = $1890

2.              A complete loss of taste resulting from a compensable injury would be assessed at 10% whole person permanent impairment:

0.10 x 0.25 x $350,000 = $8750

3.              A compensable compression fracture of one vertebral body of more than 50%, with unilateral neurological compromise, would be assessed at 50% whole person impairment:

0.50 x 1.00 x $350,000 = $175,000

4.              A compensable mesothelioma would be assessed at 85% whole person impairment:

= $350,000. 

Item 6 - After subsection 24(8)

434.      This item inserts new subsections 24(8A) and (8B).

435.      New subsection 24(8A) provides that where 2 or more injuries are treated as a single injury under new section 28B, the thresholds in subsections 24(7), (7A) and (8) of the Act do not apply.

436.      New subsection 24(8B) provides that where 2 or more injuries are treated as a single injury under new section 28B and Comcare determines that the degree of permanent impairment resulting from the deemed single injury is less than 10%, an amount of compensation is not payable to the employee under section 24 of the Act.

Item 7 - Subsection 24(9)

437.      This item amends subsection 24(9) of the Act and substitutes the existing maximum amount prescribed for the purposes of section 24 of the Act with the amount of $350,000. This amount is to be indexed annually in accordance with section 13 of the Act.

Item 8 - After subsection 25(3)

438.      This item inserts new subsection 25(3A) and provides that subsection 25(3) of the Act has effect subject to new section 25A (see item 10 below). New section 25A provides for the reduction of compensation payable for permanent impairment where the employee makes a subsequent claim for permanent impairment compensation under Division 4 of Part II of the Act.

439.      Subsection 25(3) of the Act will continue to apply, subject to new section 25A, where Comcare makes a final determination of the degree of permanent impairment of the employee after an amount of compensation has been paid to an employee following the making of an interim determination.

Item 9 - At the end of section 25

440.      This item inserts new subsections 25(6) and (7).

441.      New subsection 25(6) provides that where 2 or more injuries are treated as a single injury under new section 28B, the thresholds in subsections 25(4) and (5) of the Act do not apply.

442.      New subsection 25(7) provides that where 2 or more injuries are treated as a single injury under new section 28B, and Comcare has made a final assessment of the degree of permanent impairment of the employee resulting from the single injury, no further amounts of permanent impairment compensation are payable to the employee in respect of a subsequent increase in the degree of impairment, unless the increase is 10% or more.

Item 10 - After section 25

New section 25A - Reduction of compensation

443.      This item inserts new section 25A which provides for the reduction of compensation payable for permanent impairment where the employee has previously been paid permanent impairment compensation and makes a subsequent claim for compensation under Division 4 of Part II of the Act.

444.      New subsection 25A(1) provides that the amount of permanent impairment compensation payable to the employee on the determination of the subsequent claim is to be reduced (but not below zero) by the total amount of permanent impairment compensation previously paid to the employee in respect of the injury.

445.      New subsection 25A(2) provides that where 2 or more injuries are treated as a single injury under new section 28B, a claim or determination in relation to any of the individual injuries is taken to be, and to have been, a claim or determination in relation to that deemed single injury, and compensation paid in respect of any of the individual injuries is taken to be, and to have been, compensation paid in respect of that deemed single injury.

Illustrative example

Robyn suffers compensable lower back, neck and shoulder injuries and each of those injuries is an associated injury in relation to each other of those injuries. In 2004, the whole person impairment resulting from Robyn’s lower back injury was finally determined by Comcare to be 10% and she received $20,000. In 2012, the whole person impairment resulting from Robyn’s neck injury was finally determined by Comcare to be 10% and she received $23,000.

Robyn subsequently gives an undertaking to Comcare in accordance with the transitional provisions and makes a claim for permanent impairment compensation. The whole person impairment resulting from Robyn’s deemed single injury (that is, the combined impairment from all associated injuries) is determined to be 30%. Using the statutory maximum rate of $350,000, the amount of compensation payable to Robyn is calculated as follows:

0.30 x 0.50 x $350,000 = $52,500

$52,500 - $20,000 - $23,000 = $9500

In the above example, if Robyn had been awarded $25,000 in 2004 and $28,000 in 2012, the calculation would be as follows:

0.30 x 0.50 x $350,000 = $52,500

$25,000 + $28,000 = $53,000

$52,500 < $53,000 = nil compensation.

Item 11 - Section 27

446.      This item repeals section 27 of the Act which deals with compensation for non-economic loss. There will be a single permanent impairment payment under section 24 of the Act. 

Item 12 - At the end of paragraph 28(1)(a)

Item 13 - Paragraph 28(1)(b)

Item 14 - Paragraph 28(1)(c)

447.      These items make amendments to section 28 of the Act as a consequence of the repeal of section 27 of the Act by item 11 above.

Item 15 - After subsection 28(1)

448.      This item amends section 28 of the Act by inserting new subsections 28(1A) to (1E).

449.      New subsection 28(1A) enables Comcare to prepare a ‘Guide to the Assessment of the Degree of Permanent Impairment’ under subsection 28(1) of the Act (the approved Guide) to include methods by which the degree of permanent impairment resulting from an injury (expressed as a percentage) is to be reduced where an employee has a pre-existing impairment that is permanent immediately before the injury. This might include methods that concern the permanent loss, loss of the use, or damage of malfunction, of any part of the body or of any bodily system or function or part of such system or function resulting from any previous injury (regardless of whether the impairment results from a compensable injury), pre-existing condition or abnormality.

450.      New subsection 28(1B) provides that if the pre-existing degree of permanent impairment cannot be determined under the approved Guide, the degree of permanent impairment resulting from the injury is to be reduced by 10%. If, for example, the degree of permanent impairment is assessed as 20% and new subsection 28(1B) operates to require a 10% reduction in that impairment, the degree of permanent impairment is reduced from 20% to 18% (a reduction of 10%). In the case of a deemed single injury under new section 28B, new subsection 28(1B) is to be applied to each individual injury before the impairment ratings are combined.

451.      New subsection 28(1C) provides that the approved Guide may set out criteria and methodology for determining the pre-existing degree of permanent impairment.

452.      New subsection 28(1D) clarifies that that the reduction of permanent impairment compensation on account of a pre-existing permanent impairment may be a reduction to 0%.

453.      New subsection 28(1E) clarifies that it is immaterial whether compensation has been paid, or is payable, in respect of the pre-existing permanent impairment.

454.      These amendments will align the Comcare scheme with provisions in other Australian workers’ compensation schemes, for example, section 323 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW).

Item 16 - Subsection 28(4)

Item 17 - Subsection 28(5)

Item 18 - Subsection 28(6)

Item 19 - Subsection 28(6)

455.      These items amend section 28 of the Act to remove references to non-economic loss as a consequence of the repeal of section 27 by item 11 above.

Item 20 - At the end of Division 4 of Part II

456.      This item adds new sections 28A, 28B and 28C.

New section 28A: Combined values - single injury

457.      New section 28A provides that where a single injury to an employee results in 2 or more permanent impairments, the relevant authority must, first, work out the degree of permanent impairment for each of those permanent impairments and, second, ascertain the degree of the permanent impairment of the employee resulting from that injury (expressed as a percentage) in accordance with the combined values chart set out in the approved Guide.

New section 28B: Combined values - multiple injuries

458.      Most workers’ compensation schemes in Australia are event-based or accident-based and, in the case of multiple injuries, use a combined values chart to determine one overall impairment value so that, regardless of the number of injuries or impairments, the combined value does not exceed 100% of the whole person. This was the original intention of the Act.

459.      However, in Canute v Comcare [2006] HCA 47; (2006) 226 CLR 535 the High Court decided that where an employee sustains 2 injuries (in that case, a physical injury to the back and a secondary psychological injury), the permanent impairment resulting from each injury must be assessed separately, and the permanent impairment from each injury must individually satisfy the relevant statutory threshold. The High Court’s decision has produced anomalous, and in some cases unfair, results in practice. For example:

·                 an injured employee who has suffered multiple injuries resulting in permanent impairments each of which fall below the statutory threshold will receive no permanent impairment compensation even if the combined impairment value would meet the threshold; and

·                 conversely, multiple injuries arising from one incident which reach the applicable threshold will be separately compensable, resulting in the total compensation payable being greater than the compensation that would have been payable had the resulting impairments been combined.

460.      To address that anomaly and inequity, new subsection 28B(1) provides that associated injuries resulting in permanent impairment are to be treated as a single injury and that the deemed single injury is taken to have resulted in each of those permanent impairments. When assessing the degree of permanent impairment resulting from the deemed single injury, the relevant authority must, first, work out the degree of permanent impairment for each of those permanent impairments and, second, ascertain the degree of permanent impairment of the employee resulting from that deemed single injury (expressed as a percentage) in accordance with the combined values chart set out in the approved Guide.

461.      This amendment gives effect to recommendation 8.2 of the Review.

New section 28C: Psychological or psychiatric ailments etc. that are secondary injuries

462.      Under the Act permanent impairment payments for psychological injuries (whether primary or secondary) are currently higher than for any other type of injury. New section 28C will provide that permanent impairment compensation is not payable for psychological or psychiatric ailments or injuries that are secondary injuries. This will closer align the Comcare scheme with provisions in other Australian workers’ compensation schemes, for example, section 65A of the Workers Compensation Act 1987 (NSW).

463.      New section 28C provides that where an employee suffers a primary injury (of any kind) and the primary injury results in a secondary injury to the employee (being a psychological or psychiatric ailment, injury or aggravation), Division 4 of Part II of the Act does not apply to the secondary injury and, consequently, the secondary injury must be disregarded in determining the degree of the permanent impairment of the employee.

464.      The effect of this amendment is that compensation for permanent impairment will continue to be payable for primary psychological or psychiatric injuries, for example, a major depressive disorder that was contributed to, to a significant degree, by a traumatic incident at work. However, no compensation will be payable for permanent impairment where the psychological or psychiatric injury is a secondary injury, for example, a major depressive disorder that was the latent result of a compensable back injury. All other forms of compensation, including incapacity payments, and access to rehabilitation, will continue to be available for secondary psychological or psychiatric injuries.

Item 21 - Paragraph 45(1)(a)

Item 22 - Subsection 45(1)

Item 23 - Paragraph 45(2)(b)

Item 24 - Subsection 55(4)

Item 25 - Subsection 60(1) (definition of determination )

465.      These items make minor technical amendments to a number of provisions as a consequence of the repeal of section 27 of the Act by item 11 above.



 

Item 26 - At the end of the Act

Schedule 1 - Multiplying factors for calculating compensation for injuries resulting in permanent impairment

466.      This item adds new Schedule 1 to the end of the Act which includes a table of multiplying factors for calculating permanent impairment compensation under new subsection 24(4A) (see item 5 above).

Part 2 - Application and transitional Provisions

Item 27 - Application of amendments

467.      This item provides that the amendments made by Schedule 12 to the Bill apply in relation to the determination of a claim for permanent impairment made after commencement of this item.

Item 28 - Transitional - claims

468.      This item contains transitional rules in respect of the treatment of claims for permanent impairment compensation made by an employee who had made a claim prior to commencement of this item - referred to in this item as an ‘old claim’ - in respect of the same injury.

469.      Subitem 28(2) provides that an employee is not entitled to make a claim for permanent impairment - referred to in item 28 as a ‘new claim’ - unless the old claim has been finally determined and the employee gives the relevant authority a written undertaking not to request reconsideration of, or apply to the AAT for review of, or institute legal proceedings (other than in the High Court) in relation to, a determination or decision made in respect of the old claim. 

470.      Subitem 28(4) provides that where an employee institutes proceedings in the High Court in relation to the determination of an old claim, the relevant authority may defer considering and determining any new claim until those proceedings have been finally determined, and the timeframes in new subsections 61(1A) to (1D) do not apply to the new claim.

471.      Subitem 28(5) imposes a threshold of 10% permanent impairment in relation to all new claims where compensation was previously paid in respect of an old claim.

472.      Subitem 28(6) reduces the amount of permanent impairment compensation in respect of a new claim by the total amount of compensation previously paid to the employee in respect of the injury.

473.      Subitem 28(7) provides that new sections 28A, 28B and 28C are to be applied when determining transitional claims under item 28. Subitem 28(8) provides that, in the case of a deemed single injury under new section 28B, a claim or determination in relation to any of the individual injuries is taken to be, and to have been, a claim or determination in relation to that deemed single injury, and compensation paid in respect of any of the individual injuries is taken to be, and to have been, compensation paid in respect of that deemed single injury. These subitems ensure that item 28 applies to every old claim relating to the deemed single injury, and that compensation will only be payable in respect of a new claim if the amount of compensation exceeds the total amount of compensation paid to the employee in respect of any old claim relating to the deemed single injury.

Item 29 - Transitional - indexation

474.      This item ensures that the maximum benefit payable for permanent impairment specified in subsection 24(9) of the Act will be indexed on 1 July following 6 months from commencement of this item.



SCHEDULE 13 - LICENCES

Overview

475.      Schedule 13 to the Bill amends the Act to clarify that a single employer licence for an eligible corporation or group employer licence must authorise acceptance of liability and management of claims, and that a single employer licence for a Commonwealth authority must authorise acceptance of liability or management of claims, or both.

476.      When enacted, the Safety, Rehabilitation and Compensation Amendment Bill 2014 (which is currently before Parliament) will amend the Act to allow for group employer licences to be issued. Schedule 13 to the Bill makes amendments to clarify the operative effect of those amendments in so far as they relate to authorising the acceptance of liability and management of claims.

Commencement

477.      The amendments in Schedule 13 to the Bill commence on either the day after Royal Assent or the commencement of Schedule 2 to the Safety, Rehabilitation and Compensation Legislation Amendment Act 2015 , whichever is the later.

Safety, Rehabilitation and Compensation Act 1988

Item 1 - Subsection 4(10A)

Item 2 - At the end of subsection 4(10A)

478.      These items make technical amendments to subsection 4(10A) of the Act to provide that, where an employee is employed by a corporation covered by a group employer licence, certain references in the Act to Comcare are to be read as references to a corporation that is designated as a relevant authority for that group employer licence.

Item 3 - After section 104A

479.      This item adds new sections 104B, 104C and 104D.

New section 104B - Single employer licence granted to a corporation must authorise acceptance of liability and management of claims

480.      New section 104B requires a single employer licence granted to a corporation to authorise both acceptance of liability and management of claims. Sections 108 and 108B of the Act (as amended by the Safety, Rehabilitation and Compensation Legislation Amendment Bill 2014) empower the Commission to determine the scope of a licence holder’s liability and claims management responsibilities.

New section 104C - Single employer licence granted to a Commonwealth authority must authorise acceptance of liability or management of claims, or both

481.      New section 104C requires a single employer licence granted to a Commonwealth authority to authorise either acceptance of liability or management of claims, or both. Sections 108 and 108B of the Act (as amended by the Safety, Rehabilitation and Compensation Legislation Amendment Bill 2014) empower the Commission to determine the scope of a licence holder’s liability and claims management responsibilities.

New section 104D - Group employer licence must authorise acceptance of liability and management of claims

482.      New section 104D requires a group employer licence to authorise both acceptance of liability and management of claims by each relevant authority designated for the licence. Sections 108AA and 108CA of the Act (as added by the Safety, Rehabilitation and Compensation Legislation Amendment Bill 2014) empower the Commission to determine the scope of each relevant authority’s liability and claims management responsibilities.

Item 4 - At the end of section 108D

483.      Section 108D of the Act (as amended by the Safety, Rehabilitation and Compensation Legislation Amendment Bill 2014) provides that the Commission may grant a single employer licence on conditions. This item adds new subsection 108D(3) which clarifies that the application of the Act is subject to the conditions of a single employer licence.

Item 5 - At the end of section 108DA

484.      Section 108DA of the Act (as added by the Safety, Rehabilitation and Compensation Legislation Amendment Bill 2014) provides that the Commission may issue a group employer licence on conditions. This item adds new subsection 108DA(6) which clarifies that the application of the Act is subject to the conditions of a group employer licence.

 

 



sCHEDULE 14 - GRADUAL ONSET INJURIES

Overview

485.      Schedule 14 to the Bill provides that compensation responsibilities for gradual onset injuries and associated injuries (including for incapacity, impairment and death resulting from such injuries) will rest with the most recent employer where employment by 2 or more employers covered by the Act have significantly contributed to the gradual onset injury, and provides a mechanism for recovery of compensation payments made in relation to gradual onset injuries and associated injuries.

Commencement

486.      The amendments in Parts 1 and 3 of Schedule 14 to the Bill commence on the day after Royal Assent.

487.      The amendments in Part 2 of Schedule 14 to the Bill commence immediately after the commencement of Part 1 or immediately after the commencement of Schedule 2 to the Safety, Rehabilitation and Compensation Legislation Amendment Act 2015 , whichever is the later.

Part 1 - General Amendments

Safety, Rehabilitation and Compensation Act 1988

Item 1 - Subsection 4(1)

488.      This item inserts a number of new definitions into subsection 4(1) of the Act of terms that are defined in new section 7B (see item 2 below) for the purposes of new Division 5A of Part VIII of the Act (see item 4 below) and related provisions.

Item 2 - Before section 8

489.      This item inserts new section 7B that defines the terms ‘gradual onset injury’, ‘contributory employment’ in relation to a gradual onset injury and ‘financial authority’ in relation to a gradual onset injury.

490.      New subsection 7B(1) defines a ‘gradual onset injury’ generally as a disease of gradual development or the result of a disease of gradual development. However, new paragraph 7B(1)(b) also deems a permanent hearing loss injury caused by a gradual process to be a gradual onset injury for the purposes of the Act.

491.      New subsection 7B(2) defines ‘contributory employment’ in relation to a gradual onset injury as employment by a premium payer (that is, an Entity or Commonwealth authority, other than a licensed authority, as those terms are defined in the Act) or a licensee which has contributed (to a significant degree) to the gradual onset injury. New subsection 7B(2) also identifies the responsible ‘financial authority’ - that is, the employer who is liable to pay compensation in respect of the gradual onset injury - in relation to each type of contributory employment. In particular:

·                 Comcare is liable to pay compensation for a gradual onset injury suffered by an employee if the injury was contributed to, to a significant degree, by the employee’s employment by a premium payer; and

·                 a licensee is liable to pay compensation for a gradual onset injury suffered by an employee if the injury was contributed to, to a significant degree, by the employee’s employment by the licensee.

492.      New subsection 7B(3) provides that new subsection 7B(2) does not apply to the ‘liable employer - basic rule’ in new section 35 (see item 50 in Schedule 2 to the Bill). This ensures the concept of ‘liable employer’ in the substantive provisions relating to rehabilitation responsibilities set out in Schedule 2 to the Bill are kept separate and distinct from the issues going to compensation responsibilities in Schedule 14 to the Bill.

Item 3 - After subsection 97A(1)

493.      This item inserts new subsection 97A(1A) that allows Comcare to have regard to the proportion of the contribution to a gradual onset injury made by 2 or more premium payers who are responsible for the contributory employment when setting premiums under section 97 of the Act.

Item 4 - After Division 5 of Part VIII

494.      This item inserts new Division 5A into Part VIII of the Act that:

·                 allocates primary responsibility for the payment of compensation in relation to a gradual onset injury (or an associated injury) suffered by an employee; and

·                 provides a mechanism for the recovery of compensation payments made in relation to a gradual onset injury (or an associated injury).

New Division 5A - Gradual onset injuries

New section 108DB - Application of this Division

495.      New section 108DB provides that new Division 5A of Part VIII of the Act applies to a gradual onset injury (or an associated injury) if there are 2 or more contributory employments and at least one is employment by a licensed corporation.

496.      New subsection 108DB(2) provides that the ‘most recent contributory employment’ for the purposes of applying the new Division is to be ascertained as at the time when the gradual onset injury was notified under section 53 of the Act.

New section 108DC - Liability of Comcare

New section 108DD - Liability of a licensee

497.      New sections 108DC and 108DD allocate primary responsibility for the payment of compensation under the Act for a gradual onset injury (or an associated injury) to the employer responsible for the most recent contributory employment. In particular:

·                 new section 108DC provides that Comcare has primary responsibility for the payment of compensation where the most recent contributory employment was employment by a premium payer; and

·                 new section 108DD provides that the licensee has primary responsibility for the payment of compensation where the most recent contributory employment was employment by the licensee.

498.      These provisions ensure that employees (or their dependants) have full recourse under the Act against the relevant authority responsible for the last employment that made a significant contribution to the gradual onset injury without the need to claim against all potentially liable relevant authorities.

New section 108DF - Shared liability

499.      New section 108DF contains provisions relating to the recovery of compensation payments made by a financial authority for a gradual onset injury or an associated injury where it has paid compensation under the Act and another financial authority also has a liability under the Act for the injury. It also contains provisions requiring the first financial authority to re-pay an amount to the other financial authority (in proportion to its contribution to the gradual onset injury) if it receives any compensation or damages under the Act.

500.      New subsection 108DF(1) provides that new section 108DF applies where a financial authority has paid compensation or another amount under the Act in respect of a gradual onset injury or an associated injury and another financial authority is responsible for another contributory employment.

501.      New subsection 108DF(2) provides that financial authorities may enter into an agreement regarding the reimbursement of a part of the compensation or other amounts paid under the Act. New subsection 108DF(3) provides that if the financial authorities do not enter into such an agreement, the financial authority that has paid the compensation or other amounts under the Act in respect of a gradual onset injury or an associated injury may recover a proportion of the compensation or other amounts it has paid by action in a court of competent jurisdiction. The amount to which the financial authority is entitled to recover is to be calculated with reference to the proportion of the contribution to the gradual onset injury made by any other contributory employment for which another financial authority is responsible.

502.      New subsections 108DF(4) and (5) provide that where a financial authority has recovered compensation or other amounts paid under the Act from another financial authority, and the first financial authority receives an amount under section 48, 50, 50A, 113, 114, 118 or 119 of the Act in relation to the gradual onset injury or associated injury, the first financial authority must pay to the other financial authority an amount equal to the amount received multiplied by the proportion of the contribution to the gradual onset injury made by the other contributory employment. If the payment is not made by the first financial authority within 30 days after receiving the amount, the payment (plus a penalty amount to be calculated in accordance with the regulations) may be recovered by the other financial authority by action in a court of competent jurisdiction.

503.      New subsection 108DF(6) provides that an amount payable under new subsection 108DF(3) is to be reduced by an amount paid under new subsection 108DF(4).

New section 108DG - Constitutional limits

504.      New section 108DG is a constitutional safety net which provides that new Division 5A of Part VIII of the Act has no effect to the extent (if any) to which it imposes taxation or results in an acquisition of property otherwise than on just terms.

Illustrative example

John worked for a Commonwealth department from 1951 to 1960 and then another Commonwealth department from 1961 to mid-1975. John then worked for an employer that is now a licensed corporation from mid-1975 until his retirement in 1985. During the course of each of those employments, John was exposed to asbestos dust and fibres. In 2013 John was diagnosed with an asbestos-related disease. 

Expert evidence showed that John’s asbestos-related disease was a gradual onset injury that was contributed to, to a significant degree, by his first and third periods of employment, but not by his second period of employment. Consequently, the financial authority responsible for the third period of employment is liable to pay compensation or other amounts under the Act in respect of the asbestos-related disease and any associated injuries.

The financial authorities responsible for the first and third periods of employment subsequently agree that the contribution from the first period was 60% and from the third period was 40%. The financial authority responsible for the first period of employment agrees to reimburse the financial authority responsible for the third period of employment an amount equal to 60% of the compensation and other amounts paid under the Act.

Part 2 - Amendments contingent on the commencement of Schedule 2 to the Safety, Rehabilitation and Compensation Legislation Amendment Act 2015

Safety, Rehabilitation and Compensation Act 1988

Item 5 - Paragraph 7B(2)(c)

Item 6 - After paragraph 7B(2)(c)

Item 7 - Paragraph 7B(2)(f)

Item 8 - At the end of subsection 7B(2)

Item 9 - At the end of section 7B

Item 10 - Paragraph 108DB(1)(d)

Item 11 - Section 108DD (heading)

Item 12 - Subsection 108DD(1)

Item 13 - Subsection 108DD(1)

Item 14 - After section 108DD

Item 15 - At the end of section 108DF

505.      These items make consequential amendments to new section 7B (see item 2 above) - and new Division 5A of Part VIII of the Act (see item 4 above) - contingent on the commencement of Schedule 2 to the Safety, Rehabilitation and Compensation Legislation Amendment Act 2015 .

Part 3 - Application provisions

Item 16 - Application of amendments

506.      This item provides that new Division 5A of Part VIII applies in relation to an injury sustained by an employee after commencement of this item.



SCHEDULE 15 - SANCTIONS

Overview

507.      Schedule 15 to the Bill amends the Act to streamline and enhance the existing regime of sanctions by:

·                 identifying key requirements of the Act that an injured employee must comply with as ‘obligations of mutuality’; and

·                 where obligations of mutuality have been breached, providing for the application of sanctions in stages, culminating in a cancellation of compensation rights. 

Breaches of obligations of mutuality

508.      An employee’s failure to comply with key requirements of the Act is a breach of an ‘obligation of mutuality’. A breach of an obligation of mutuality is defined as an act or omission that is declared by the Act to be a breach of an obligation of mutuality. There are 2 types of breaches:

·                 a breach of the obligations relating to suitable employment in new section 29L (see item 14 below). A breach of this kind cannot be remedied by the employee under the Act as it is contingent, in some cases, on an offer of employment being made by a third party which may lapse or be withdrawn by the potential employer if the offer is refused by the employee; and

·                 a breach relating to any other requirement, which the employee can be directed to remedy. These are a failure, without reasonable excuse, to:

o       undergo a medical examination under section 57 of the Act (new section 29M);

o       produce a medical certificate when absent from work when receiving income replacement payments (new section 29N);

o       follow a reasonable medical treatment advice (new section 29P);

o       undergo an assessment for the need of household or attendant care services (new section 29Q);

o       fulfil responsibilities under a workplace rehabilitation plan (new section 29R);

o       undergo a work readiness assessment (new section 29S);

o       comply with information requests under sections 58 and 120A of the Act (new section 29T);

o       comply with a requirement under section 50 of the Act in relation to the conduct of a common law claim against a third party (new section 29U); and

o       provide a statutory declaration under section 118 of the Act (new section 29V).



 

Sanctions regime

509.      Employees who breach an obligation of mutuality in relation to the same injury or an associated injury (as defined in new section 6B; see Schedule 17 to the Bill) will be subject to a 3-stage sanctions regime:

·                 for the first breach, the relevant authority must determine that the employee is subject to the level 1 sanctions regime. In the case of a breach covered by new section 29L, the employee’s weekly incapacity payments will be reduced by the amount that the employee is able to earn in suitable employment in accordance with subsection 19(4) of the Act. In the case of a breach that the employee has been directed to remedy, the employee’s rights to compensation ( other than compensation for medical treatment) and to institute or continue any proceedings in relation to compensation ( other than proceedings in the AAT in relation to the sanctions regime) are suspended until the breach is remedied;

·                 for a second breach, or a failure to remedy the first breach (other than a breach covered by new section 29L) within the period determined by the relevant authority (being no less than 30 days), the relevant authority must determine that the employee is subject to the level 2 sanctions regime. In the case of a breach covered by new section 29L, the employee’s weekly incapacity payments will be reduced by the amount that the employee is able to earn in suitable employment in accordance with subsection 19(4) of the Act. In the case of a breach that the employee has been directed to remedy, the employee’s rights to compensation ( other than compensation for medical treatment) and to institute or continue any proceedings in relation to compensation ( other than proceedings in the AAT in relation to the sanctions regime) are suspended until the breach is remedied; and

·                 for a third breach, or a failure to remedy the second breach (other than a breach covered by new section 29L) within the period determined by the relevant authority (being no less than 30 days), the relevant authority must determine that the employee is subject to the cancellation regime. Under the cancellation regime the employee’s rights to compensation and to institute or continue any proceedings in relation to compensation ( other than proceedings in the AAT in relation to the sanctions regime) in respect of all current and future associated injuries are permanently cancelled. This will also have the effect of permanently cancelling the employee’s right to rehabilitation. However, the cancellation of an employee’s right to compensation and rehabilitation will not affect the right of the employee’s dependants to claim compensation if the employee subsequently dies as a result of an injury in respect of which compensation has been cancelled.

Commencement

510.      The amendments in Part 1 of Schedule 15 to the Bill commence on the day after Royal Assent.

511.      The amendments in Part 2 of Schedule 15 to the Bill  commence on a day to be fixed by Proclamation, but no later than 12 months after Royal Assent. The extended period for Proclamation is necessary to enable Comcare and licensees to establish systems and processes to give effect to the new sanctions regime.

Part 1 - Amendments commencing on the day after Royal Assent

Division 1 - Amendments

Safety, Rehabilitation and Compensation Act 1988

Item 1 - After Division 5 of Part II

512.      This item inserts a new Division 5A into Part II of the Act - dealing with the suspension of rights to compensation in certain situations.

Division 5A - Suspension of rights to compensation

New section 29G - Requirement for the purposes of a common law claim against a third party

513.      New section 29G suspends an employee’s (or a dependant’s) right to compensation (other than the employee’s right to compensation for the cost of medical treatment) where the employee (or dependant) fails to comply with a requirement made by Comcare under subsection 50(5) of the Act in relation to a common law claim against a third party. This amendment relocates existing provisions in subsections 50(5) and (6) of the Act.

514.      New section 29U (see item 14 below) provides that an employee’s refusal or failure, without reasonable excuse, to comply with a requirement under subsection 50(5) of the Act, is a breach of an obligation of mutuality. Breaches of obligations of mutuality are subject to the sanctions regime in new Subdivision B of Division 5A of Part II of the Act and may result in the cancellation of compensation rights (see item 14 below).

New section 29J - Requirement to give a statutory declaration

515.      New section 29J suspends a claimant’s right to compensation (other than the right to compensation for the cost of medical treatment) where the claimant fails to give a statutory declaration under subsection 118(3) of the Act. This amendment relocates existing provisions in subsections 118(4) and (5) of the Act.

516.      New section 29V (see item 14 below) provides that an employee’s refusal or failure, without reasonable excuse, to comply with a requirement under subsection 118(3) of the Act is a breach of an obligation of mutuality. Breaches of obligations of mutuality are subject to the sanctions regime in new Subdivision B of Division 5A of Part II of the Act and may result in the cancellation of compensation rights (see item 14 below).

517.      Amendments made by Part 2 of Schedule 15 to the Bill add further suspension provisions into new Division 5A of Part II of the Act (see item 11 below).

518.      An employee’s right to weekly incapacity payments will also be suspended if the employee is absent from Australia on non-work related purposes for 6 weeks or more - new section 29K (see item 1 of Schedule 7).

Item 2 - Subsections 50(5), (5A) and (6)

Item 3 - Subsections 118(4) and (5)

519.      These items make a number of minor technical amendments that are consequential upon the amendments made by item 1.

Division 2 - Application and transitional provisions

Item 4 - Application of amendments

Item 5 - Transitional provisions

520.      These items provide that:

·                 the suspension provisions contained in new sections 29G and 29J  apply in relation to requirements made after commencement; and

·                 the previous suspension provisions in repealed sections 50 and 118 of the Act continue to apply in relation to requirements made by Comcare or a relevant authority, as the case may be, before commencement.

Part 2 - Amendments commencing on Proclamation

Division 1 - Amendments

Safety, Rehabilitation and Compensation Act 1988

Item 6 - Subsection 4(1)

521.      This item inserts a number of new definitions into subsection 4(1) of the Act.

Item 7 - Subsection 4(10) and (10A)

522.      This item makes technical amendments to subsections 4(10) and (10A) of the Act as a consequence of new section 29H (see item 11 below). The amendments ensure that only Comcare can approve specified mental health training for the purposes of new paragraph 29H(6)(c).

Item 8 - Paragraph 29G(1)(b)

Item 9 - Subsection 29G(1)

Item 10 - Subsection 29G(2)

523.      These items make consequential amendments to new section 29G (see item 1 above) as a result of amendments made by Part 2 of Schedule 15 to the Bill.

Item 11 - After section 29G

524.      This item inserts a new section 29H into new Division 5A of Part II of the Act.

New section 29H - Confirmation diagnosis not obtained for a psychological or psychiatric ailment or injury

525.      New section 29H provides that weekly incapacity payments for a psychological or psychiatric ailment or injury (or aggravation of a psychiatric ailment or injury) are not payable beyond an initial 12 week period unless the diagnosis is confirmed by a ‘mental health practitioner’ - defined in new subsection 29H(6) as a psychiatrist, clinical psychologist or a general practitioner who has completed mental health training, being training that is approved by Comcare. The confirmation diagnosis must be certified by the mental health practitioner in a form approved by Comcare - new section 29H(9).

526.      Paragraph 29H(1)(c) makes it clear that this requirement for a confirmation diagnosis does not apply where the initial medical examination was conducted and certified by a mental health practitioner.

527.      At present, compensation for psychological injuries can be paid on the basis of a general practitioner’s report and can be paid for significant periods of time without any confirmation of that diagnosis by a specialised practitioner. This amendment recognises that the diagnosis of psychological injuries calls for relevant expertise. The purpose of requiring the confirmation diagnosis is to ensure that the employee has been examined by a fully qualified mental health practitioner, so as to encourage the employee to seek effective treatment. By allowing weekly incapacity payments to be made for psychological injuries for an initial period of 12 weeks without confirmation of diagnosis by a mental health practitioner, the provision strikes an appropriate balance between ensuring appropriate diagnosis on the one hand and issues of access and equity, particularly for employees in rural and regional areas, on the other. 

528.      This amendment gives effect to recommendation 9.4 of the Review.

529.      New subsections 29H(2) and (3) suspend an employee’s right to weekly incapacity payments (including the right to institute or continue proceedings in relation to weekly incapacity payments) where the employee refuses or fails, without reasonable excuse, to undergo an examination by a mental health practitioner.

530.      New subsections 29H(4) and (5) require the relevant authority to pay costs associated with an examination, including reasonable travel costs.

531.      New subsection 29H(7) enables Comcare to approve specified mental health training. For the avoidance of doubt, new subsection 29H(8) clarifies that an approval under new subsection 29H(7) is not a legislative instrument within the meaning of section 5 of the Legislative Instruments Act 2003 . This provision is declaratory of the law and does not amount to an exemption from the Legislative Instruments Act 2003 .

Item 12 - Subsection 29J(1)

Item 13 - Subsection 29J(2)

532.      These items make consequential amendments to new section 29J (see item 1 above) to disapply the section to employees. Instead, upon commencement of Part 2 of Schedule 15 to the Bill, new section 29V (see item 14 below) provides that an employee’s refusal or failure, without reasonable excuse, to comply with a requirement under subsection 118(3) of the Act is a breach of an obligation of mutuality.

Item 14 - Before Division 6 of Part II

533.      This item inserts a new Division 5B into Part II of the Act dealing with obligations of mutuality and sanctions in respect of breaches of obligations of mutuality.

New Division 5B - Obligations of mutuality

New Subdivision A - Breach of obligation of mutuality

New section 29L - Suitable employment

534.      New section 29L establishes an obligation of mutuality in relation to:

·                 a failure, without reasonable excuse, to accept an offer of suitable employment;

·                 a failure, without reasonable excuse, to engage, or to continue to engage, in suitable employment; and

·                 a failure, without reasonable excuse, to seek suitable employment.

535.      The regulations can provide for exceptions to the breach of obligation of mutuality provisions.

New section 29M - Medical examination

536.      New section 29M provides that a refusal or failure, without reasonable excuse, to undergo a medical examination under subsection 57(1) of the Act, or obstruction of a medical examination, is a breach of an obligation of mutuality.

New section 29N - Employee absent from work without a medical certificate, etc

537.      New section 29N applies to an injured employee who is in suitable employment and, under the terms and conditions of the suitable employment, is required to produce a medical certificate that covers an absence from work. New subsection 29N(2) provides that a refusal or failure, without reasonable excuse, to produce a medical certificate is a breach of an obligation of mutuality.

New section 29P - Employee does not follow medical treatment advice

538.      New section 29P applies to an injured employee who has received reasonable medical treatment advice from a legally qualified medical practitioner or dentist and refuses or fails, without reasonable excuse, to follow that advice.

539.      New subsection 29P(2) provides that a refusal or failure, without reasonable excuse, to follow that medical treatment advice is a breach of an obligation of mutuality.

540.      New subsections 29P(3)-(5) set out the circumstances that constitute a reasonable excuse for the purposes of subsection 29P(1).

New section 29Q - Assessment of need for household services and attendant care services

541.      New section 29Q provides that an injured employee’s refusal or failure, without reasonable excuse, to undergo an assessment under new subsection 29B(1), or an obstruction of such an assessment, is a breach of an obligation of mutuality.

New section 29R - Workplace rehabilitation plan

542.      New section 29R provides that an injured employee’s refusal or failure, without reasonable excuse, to fulfil his or her responsibilities under a workplace rehabilitation plan is a breach of an obligation of mutuality.

New section 29S - Work readiness assessment

543.      New section 29S provides that an injured employee’s refusal or failure, without reasonable excuse, to undergo a work readiness assessment, or an obstruction of such an assessment, is a breach of an obligation of mutuality.

New section 29T - Information notices

544.      New section 29T provides that an injured employee’s refusal or failure, without reasonable excuse, to comply with the requirements to provide information or a document under new subsections 58(1) and 120A(1) (see items 6 and 26 of Schedule 3 to the Bill) is a breach of an obligation of mutuality.

New section 29U - Requirement for the purposes of a common law claim against a third party

545.      New section 29U provides that an injured employee’s refusal or failure, without reasonable excuse, to comply with a requirement made by Comcare under subsection 50(5) of the Act in relation to a common law claim against a third party is a breach of an obligation of mutuality.

New section 29V - Requirement to give a statutory declaration

546.      New section 29V provides that an injured employee’s refusal or failure, without reasonable excuse, to provide a statutory declaration when required to do so under subsection 118(3) of the Act is a breach of an obligation of mutuality.

New Subdivision B - Sanctions

547.      Breaches of obligations of mutuality are subject to the sanctions regime in new Subdivision B of Division 5B of Part II of the Act and may result in the cancellation of rights under the Act.

New section 29W - Level 1 sanctions regime

548.      New section 29W establishes the level 1 sanctions regime which applies to the first breach of an obligation of mutuality. If the relevant authority is satisfied that an obligation of mutuality has been breached at any time in the past 12 months, the relevant authority must determine that the employee is subject to the level 1 sanctions regime in relation to the injury (and each associated injury). This determination must be made even if the breach has been rectified.

549.      A determination comes into force at a time specified in the determination which must not be earlier than the date of the breach and must not be later than the day on which the determination is given to the employee.

550.      A determination remains in force indefinitely unless the employee becomes subject to the level 2 sanctions regime.

551.      In the case of a breach of an obligation of mutuality (other than a breach covered by new section 29L relating to suitable employment) that has not been rectified, the relevant authority must also determine that, if the breach continues for longer than the amount of time specified in the notice (being 30 or more days), the continuing breach will be treated as another breach. This will enable the relevant authority to determine that the employee is subject to the level 2 sanctions regime in relation to the injury (and each associated injury).

552.      The consequence of a level 1 sanctions determination while the employee is in breach of an obligation of mutuality (other than a breach covered by section new 29L relating to suitable employment) is the suspension under new section 29Y of the employee’s rights:

·                 to compensation ( other than compensation for medical treatment); and

·                 to institute or continue any proceedings in relation to compensation ( other than proceedings in the AAT in relation to the sanctions regime)

          in so far as those rights relate to that injury (and each associated injury).

New section 29X - Level 2 sanctions regime

553.      New section 29X establishes the level 2 sanctions regime which applies to an employee who is subject to the level 1 sanctions regime. If the relevant authority is satisfied that an obligation of mutuality in relation to an injury or an associated injury has been breached at any time in the past 12 months, the relevant authority must determine that the employee is subject to the level 2 sanctions regime in relation to the injury (and each associated injury).

554.      This determination must be made even if the breach has been rectified.

555.      A determination comes into force at a time specified in the determination which must not be earlier than the date of the breach and must not be later than the day on which the determination is given to the employee.

556.      A determination remains in force indefinitely unless the employee becomes subject to the cancellation regime.

557.      In the case of a breach of an obligation of mutuality (other than a breach covered by new section 29L relating to suitable employment) that has not been rectified, the relevant authority must also determine that, if the breach continues for longer than the amount of time specified in the notice (being 30 or more days), the continuing breach will be treated as another breach. This will enable the relevant authority to determine that the employee is subject to the cancellation regime in relation to the injury (and each associated injury).

558.      The consequence of a level 2 sanctions determination while the employee is in breach of an obligation of mutuality (other than a breach covered by new section 29L relating to suitable employment) is the suspension under new section 29Y of the employee’s rights:

·                 to compensation ( other than compensation for medical treatment); and

·                 to institute or continue any proceedings in relation to compensation ( other than proceedings in the AAT in relation to the sanctions regime)

          in so far as those rights relate to that injury (and each associated injury).

New section 29Y - Suspension of compensation - employee subject to the level 1 sanctions regime or the level 2 sanctions regime

559.      Where an employee is subject to either the level 1 sanctions regime or the level 2 sanctions regime in relation to an injury, and the employee is in breach of an obligation of mutuality in relation to the injury or an associated injury (other than a breach covered by new section 29L relating to suitable employment), new section 29Y provides for the suspension of the employee’s rights:

·                 to compensation ( other than compensation for medical treatment); and

·                 to institute or continue any proceedings in relation to compensation ( other than proceedings in the AAT in relation to the sanctions regime)

          in so far as those rights relate to that injury (and each associated injury).

560.      These rights will be suspended until the breach has been repaired.

561.      A breach an obligation of mutuality covered by new section 29L relating to suitable employment is unable to be repaired by the employee as it is contingent on an offer of employment being made by a third party that may be withdrawn by the employer if the offer is refused by the employee. In this case, an employee’s weekly incapacity payments will be reduced under the provisions of subsections 19(2), (2A), (2B) and (4) of the Act rather than suspended.

New section 29Z - Cancellation regime

562.      New section 29Z establishes the cancellation regime which applies to an employee who is subject to the level 2 sanctions regime. If the relevant authority is satisfied that an obligation of mutuality in relation to an injury or an associated injury has been breached at any time in the past 12 months, the relevant authority must determine that the employee is subject to the cancellation regime in relation to the injury (and each associated injury).

563.      This determination must be made even if the breach giving rise to the level 2 sanction determination has been rectified.

564.      A determination comes into force at a time specified in the determination which must not be earlier than the date of the breach and must not be later than the day on which the determination is given to the employee.

565.      A determination that an employee is subject to the cancellation regime is irrevocable.

New section 29ZA - Cancellation of compensation - employee subject to cancellation regime

566.      Where an employee is subject to the cancellation regime in relation to an injury, new section 29ZA provides for the cancellation of the employee’s rights to compensation under the Act and to institute or continue any proceedings in relation to compensation ( other than proceedings in the AAT in relation to the sanctions regime) in so far as those rights relate to that injury (and each associated injury).

567.      New section 29ZA also has the effect of cancelling the employee’s right to rehabilitation under the Act. That is because subsection 4(8) of the Act provides that a reference to an ‘injury’ is a reference to an injury in respect of which compensation is payable. Compensation is not payable under the Act unless the employee dies as a result of a cancelled injury and until a claim for compensation under sections 17 or 18 of the Act has been accepted by the relevant authority.

568.      The cancellation of compensation does not affect:

·                 compensation for injuries resulting in death (section 17 of the Act);

·                 compensation in respect of funeral expenses (section 18 of the Act); or

·                 the operation of section 44 of the Act.

569.      Section 44 of the Act does not prevent a dependant from bringing an action for damages against the employer in respect of the death of the employee.

New section 29ZB - Liable employer to inform relevant authority of breach of obligation of mutuality

570.      New section 29ZB requires a liable employer to inform a relevant authority of any breach by the employee of an obligation of mutuality of which the liable employer becomes aware.

New section 29ZC - Recovery of overpayments

571.      New section 29ZC enables a relevant authority to recover an overpayment where a determination under new subsection 29W(1), 29X(1) or 29Z(1) came into force before it was made. For example, if a relevant authority becomes aware of a breach of an obligation of mutuality one month after the breach occurred and subsequently issues a determination, the determination is taken to have been made at the time of the breach and any compensation paid to the employee from the date of the breach is recoverable by the relevant authority under section 114 of the Act.

New section 29ZD - Qualifying occasion on which employee breaches an obligation of mutuality

572.      New section 29ZD defines ‘qualifying occasion’ depending upon the nature of the breach:

·                 if the breach is a breach of the obligation of mutuality in relation to suitable employment as set out in new section 29L, the ‘qualifying occasion’ is the occasion when the breach occurred;

·                 for other breaches, the ‘qualifying occasion’ is the occasion when the breach first occurred; and

·                 if the breach continues for the amount of time (not being less than 30 days) specified in the determination made under new section 29W or 29X, the ‘qualifying occasion’ is the time immediately after the end of that period.

Illustrative example

Jeremy is receiving compensation under the Act for a back injury. Jeremy is incapacitated for performing his usual duties, but he receives an offer of suitable employment which he refuses without reasonable excuse. At this point:

·                 Jeremy has breached an obligation of mutuality under new section 29L (the first qualifying occasion);

·                 Jeremy will be given a notice under new section 29W by his relevant authority, which will determine that he is subject to the level 1 sanctions regime; and

·                 because Jeremy committed a breach under new section 29L, his weekly incapacity payments  will be reduced by the amount that he would have been able to earn had he engaged in that suitable employment, under subsection 19(4) of the Act.

Some time later, Jeremy’s relevant authority requires him to undergo a medical examination under subsection 57(1) of the Act. Jeremy refuses to undergo the medical examination without a reasonable excuse. At this point:

·                 Jeremy has breached an obligation of mutuality under new section 29M (the second qualifying occasion);

·                 Jeremy will be given a notice under new section 29W by his relevant authority; and

·                 Jeremy’s compensation rights (except for medical treatment) are suspended under new section 29G.

The suspension is determined to take effect immediately. It affects Jeremy’s compensation rights under the Act (other than medical treatment) and his rights to initiate or continue proceedings under the Act in relation to compensation. This applies in relation to his back injury and any associated injuries.

The notice under new section 29W issued by his relevant authority advised Jeremy that, in order to stop the breach, he must undergo the medical examination within 30 days.

Jeremy continues to refuse to undergo the medical examination for 30 days (the third qualifying occasion). At this point:

·                 Jeremy has breached an obligation of mutuality under new section 29M (the third qualifying occasion); and

·                 Jeremy will receive a notice under new section 29Z from his relevant authority that his compensation rights are cancelled.

The cancellation is determined to take effect immediately. It affects Jeremy’s compensation and rehabilitation rights under the Act and his rights to initiate or continue proceedings under the Act in relation to compensation for the back injury and any associated injuries.

Two years after Jeremy’s compensation rights are cancelled, he develops a secondary injury as a result of the back injury. This is an associated injury in relation to the back injury. The cancellation of Jeremy’s rights to compensation under new section 29Z will apply in relation to the secondary injury as well.

Five years later, Jeremy suffers a new injury in an accident at work. Because this injury arises from a separate incident, Jeremy’s rights to compensation and rehabilitation for this injury are unaffected by the earlier cancellation determination.

Item 15 - Subsections 57(2) and (5)

573.      This item makes consequential amendments to section 57 of the Act as a result of amendments made by Schedule 15 to the Bill.

Item 16 - Subsection 60(1) (definition of determination )

574.      This item amends the definition of ‘determination’ in subsection 60(1) of the Act to enable  decisions made by a relevant authority under new sections 29W, 29X and 29Z to be reviewable under Part VI of the Act. 

Division 2 - Application provisions

Item 17 - Application of amendments

575.      This item provides that new sections 29G, 29H, 29J, 29M, 29N, 29P, 29Q, 29R, 29S, 29U and 29V, subsections 29L(1), (3) and (5), and subsections 29T(1) and (2), apply to matters occurring after commencement of this item.

Item 18 - Transitional - subsections 57(2) and (5) of the Safety, Rehabilitation and Compensation Act 1988

576.      This item provides that subsections 57(2) and (5) of the Act (being the suspension of an employee’s compensation where employee has refused to undertake a medical examination as directed) of the Act continue to apply to requirements made by a relevant authority under subsection 57(1) of the Act before commencement of this item. This ensures the validity of suspensions made prior to the commencement of Part 2 of Schedule 15 to the Bill.



SCHEDULE 16 - DEFENCE-RELATED CLAIMS

Overview

577.      Schedule 16 to the Bill amends the Act to ensure that the amendments made by Schedules 1 to 15 and 17 to the Bill, with minor exceptions, do not apply to defence-related claims. This is because under Part XI of the Act, defence-related claims are administered by the Military Rehabilitation and Compensation Commission and the Department of Veterans’ Affairs, rather than Comcare. Part XI also provides that the Commonwealth, not Comcare, is liable for all claims relating to Australian Defence Force service rendered prior to 1 July 2004.

578.      This exemption of defence-related claims from the vast majority of the amendments in the Bill recognises the unique nature of military service and, in the main, retains the existing entitlements for Australian Defence Force members and former members.

Commencement

579.      The amendments in Schedule 16 to the Bill commence on the day after Royal Assent.

Safety, Rehabilitation and Compensation Act 1988

Item 1 - At the end of section 147

580.      This item inserts new subsections 147(3) to 147(7) after subsection 147(2) in Part XI of the Act. Part XI of the Act confers responsibility for defence-related claims on the Military Rehabilitation and Compensation Commission. 

581.      New paragraph 147(3)(a) provides that, for the purposes of defence-related claims, the Act applies as if the amendments made by Schedules 1 to 15 and 17 to the Bill had not been enacted. This means that, with the exception of the changes specified in new subsections 147(4) to (7), the Act applies to defence-related claims as it existed prior to the enactment of the Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Act 2015 .

582.      New paragraph 147(3)(b) provides that, following the commencement of Part 1 of Schedule 2 to the Bill, any reference in the Act to an ‘approved program provider’ is, for the purposes of defence-related claims, to be a read as a reference to an ‘approved workplace rehabilitation provider’. This reflects the change in terminology made by Schedule 2 to the Bill and will enable Australian Defence Force members and former members to be provided with rehabilitation by Comcare approved workplace rehabilitation providers.

583.      New subsection 147(4) lists a number of technical exceptions to the exemption in paragraph 147(3)(a) that apply after the commencement of Part 1 of Schedule 2 to the Bill. New paragraphs 147(4)(a), (b), (c) and (d) provide certainty and remove any doubt that an ‘approved program provider’ is, for the purposes of defence-related claims, to be a read as a reference to an ‘approved workplace rehabilitation provider’. New paragraphs 147(4)(a) and (b) repeal the definition of ‘approved program provider’ and insert the definition of ‘approved workplace rehabilitation provider’ in subsection 4(1) of the Act.  New paragraphs 147(4)(c) and (d) amend Part III of the Act in relation to defence-related claims to substitute references to ‘rehabilitation program provider’ with references to ‘workplace rehabilitation provider’. This enables Australian Defence Force members and former members to be provided with rehabilitation by Comcare approved workplace rehabilitation providers. 

584.      New subsection 147(5) provides that, after the commencement of Part 1 of Schedule 12 to the Bill, certain specified amendments in the Bill apply to defence-related claims for compensation for permanent impairment. 

585.      New paragraph 147(5)(a) provides that, after the commencement of Part 1 of Schedule 12 to the Bill, new sections 28A and 28B in Division 4 of Part II of the Act (inserted by item 20 of Schedule 12 to the Bill) apply to defence-related claims for compensation for permanent impairment. New paragraphs 147(5)(b) and (c) provide that the concept of ‘associated injury’ (defined by items 1 and 2 of Schedule 17 to the Bill) applies in relation to defence-related claims for permanent impairment. In combination, new sections 28A and 28B and the definition of ‘associated injury’ provide for the combining of degrees of permanent impairment resulting from associated injuries. The degree of permanent impairment in these situations is to be ascertained in accordance with the combined values chart set out in the approved Guide. These amendments give effect to recommendation 8.2 of the Review and restore the original intention of the Act to assess impairment on a whole of person basis where multiple injuries are attributable (in light of the definition of ‘associated injury’) to the same incident or state of affairs. 

586.      New subsection 147(6) clarifies that new sections 28A and 28B in Division 4 of Part II of the Act only apply to an injury sustained by member or former member of the Australian Defence Force after the commencement of Part 1 of Schedule 12 to the Bill, unless the injury is the result of an injury sustained before that commencement (a ‘secondary injury’). 

587.      New subsection 147(7) sets out the new arrangements for calculating compensation for permanent impairment for a defence-related injury sustained after the commencement of Part 1 of Schedule 12 to the Bill.

588.      The first step is to work out, under new paragraph 147(7)(a), the amount of compensation that would be payable under Division 4 of Part II of the Act as if subsection 147(7) had not be enacted. This means that the amount of compensation is calculated in accordance with the provisions of the Act as it existed prior to the enactment of the Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Act 2015 but with the inclusion of new sections 28A and 28B and the concept of ‘associated injury’. The application of these provisions is authorised by new subsection 147(5).

589.      The second step is to work out, under new paragraph 147(7)(b), the amount of compensation that would be payable under Division 4 of Part II of the Act on the basis that the amendments made by Schedule 12 to the Bill apply with the exception of item 15 of Schedule 12 to the Bill which amends section 28 of the Act to account for pre-existing degrees of impairment and new subsection 28C, which prevents permanent impairment payments for secondary psychological or psychiatric ailments. Furthermore, Schedule 12 to the Bill is to be applied as if:

·                 Part 2 of Schedule 12 to the Bill had not been enacted;

·                 the relevant provisions of Schedule 12 to the Bill apply in relation to an injury sustained by a member or former member of the Australian Defence Force after the commencement of Part 1 of Schedule 12 to the Bill, unless the injury is the result of an injury sustained before that commencement (a ‘secondary injury’); and

·                 paragraph 147(3)(a) of does not apply.

590.      In accordance with new paragraph 147(7)(c), if the amount of compensation worked out in accordance with paragraph 147(7)(b) exceeds the amount worked out in accordance with paragraph 147(7)(a), the amount of permanent impairment compensation payable is the higher amount worked out under paragraph 147(7)(b).

591.      In accordance with new paragraph 147(7)(d), if the amount of compensation worked out in accordance with paragraph 147(7)(b) does not exceed the amount worked out in accordance with paragraph 147(7)(a), the amount of permanent impairment compensation payable is the amount worked out under paragraph 147(7)(a).

592.      These modifications will ensure that a member or former member of the Australian Defence Force will not receive less compensation than an employee covered by the Comcare scheme with the same level of impairment. 

593.      The assessment of permanent impairment compensation for existing injuries will continue to be assessed by applying the Act as it existed prior to the enactment of the Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Act 2015



SCHEDULE 17 - INTERPRETATION

Overview

594.      Schedule 17 to the Bill amends the Act to define a number of terms that are used in the amendments contained in the various schedules to the Bill.

Commencement

595.      The amendments in Part 1 of Schedule 17 to the Bill commence on the day after Royal Assent.

596.      The amendments in Part 2 of Schedule 17 to the Bill commence immediately after the commencement of Part 1 or immediately after the commencement of Schedule 2 to the Safety, Rehabilitation and Compensation Legislation Amendment Act 2015 , whichever is the later.

Part 1 - Amendments commencing on the day after Royal Assent

Safety, Rehabilitation and Compensation Act 1988

Item 1 - Subsection 4(1)

597.      This item inserts new definitions into subsection 4(1) of the Act.

Item 2 - After section 6A

598.      This item inserts a new definition of ‘associated injury’. The concept of associated injury is relevant to new section 28B (combined values—multiple injuries), new Division 5B of Part II (obligations of mutuality), new section 52D in new Part IVA (provisional medical expense payments) and new Division 5A of Part VIII (gradual onset injuries).

599.      New subsection 6B(1) provides that, for the purposes of the Act, where 2 or more injuries (other than diseases) arise out of, or in the course of, the same incident or the same state of affairs, each of those injuries is an associated injury in relation to each other of those injuries.

600.      New subsection 6B(2) provides that, the purposes of subsection 6B(1), if one or more primary injuries arise out of, or in the course of, a particular incident or state of affairs, and any of the primary injuries results in one or more secondary injuries, each of the secondary injuries is taken to have arisen out of, or in the course of, that incident, or that state of affairs, as the case may be.

601.      New subsection 6B(3) provides that, for the purposes of the Act, where 2 or more injuries (being diseases) were contributed to, to a significant degree, by the same incident or the same state of affairs, each of those injuries is an associated injury in relation to each other of those injuries.

602.      New subsection 6B(4) provides that, for the purposes of subsection 6B(3), if one or more primary injuries (being diseases) were contributed to, to a significant degree, by a particular incident or state of affairs, and any of the primary injuries results in one or more secondary injuries, each of the secondaryinjuries is taken to have been contributed to, to a significant degree, by that incident, or that state of affairs, as the case may be.

603.      Subject to new subsection 6B(5), the effect of subsections 6B(1), (2), (3) and (4) is that all primary and secondary ‘injuries’ (as defined in section 5A of the Act) that are causally related, in a direct and substantial way, to the same incident or the same state of affairs are to be treated as associated injuries for the purposes of the Act.

604.      New subsection 6B(5) provides that new section 6B does not apply to an injury covered by subsection 4(3) of the Act. Consequently, where an employee suffers a later physical or mental injury or ailment as a result of medical treatment of an earlier compensable injury, the later and earlier injuries are not taken to be associated injuries for the purposes of the Act.

Illustrative example 1

Jillian suffers a compensable permanent knee injury which makes it difficult for her to walk without a limp. Over time, Jillian’s abnormal gait results in a hip injury. The hip injury would be an associated injury in relation to the knee injury.

Illustrative example 2

Shane suffers a compensable shoulder injury with chronic pain. The chronic pain, along with being unable to maintain his previously active lifestyle, results in Shane developing clinical depression. The depression, being a secondary injury, would be an associated injury in relation to the shoulder injury.

Illustrative example 3

Denise develops kidney disease as a result of reasonable medical treatment (medication) for a compensable back injury. The kidney disease would be compensable due to the operation of subsection 4(3) of the Act. However, the kidney disease in not an associated injury in relation to the back injury because injuries covered by subsection 4(3) of the Act are excluded from the definition of associated injury.

Part 2 - Amendments contingent on the commencement of Schedule 2 to the Safety, Rehabilitation and Compensation Legislation Amendment Act 2015

Safety, Rehabilitation and Compensation Act 1988

Item 3 - Subsection 4(1) (definition of working day ) (the definition that was inserted by item 20 of Schedule 2 to the Safety, Rehabilitation and Compensation Legislation Amendment Act 2015 )

605.      This item repeals the definition of ‘working day’ that is included in the Safety, Rehabilitation and Compensation Legislation Amendment Bill 2014 currently before the Parliament.



Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Safety, Rehabilitation and Compensation Amendment

(Improving the Comcare Scheme) Bill 2015

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

OVERVIEW OF THE BILL

The Safety, Rehabilitation and Compensation Act 1988 (the Act) establishes a scheme (the Comcare scheme) to provide compensation and rehabilitation support to injured Australian Government and Australian Capital Territory Government employees. The Act also applies to deemed employees and certain members of the Australian Defence Force in relation to defence service rendered prior to 1 July 2004, as well as employees of private corporations who hold a licence under the Act (licensees).

The Safety, Rehabilitation and Compensation Amendment (Improving the Comcare Scheme) Bill 2015 (the Bill) comprises the first major review of the Comcare scheme since its establishment in 1988. The Bill:

·                 implements, in part, recommendations of the Safety, Rehabilitation and Compensation Act Review (the Review) by Mr Peter Hanks QC and Dr Allan Hawke AC commissioned by the former Government in 2012; and

·                 makes other changes to the Act which will improve the efficiency, cost effectiveness and viability of the Comcare scheme, and align parts of the scheme with State schemes.

The Bill aims to make the Comcare scheme sustainable over time. Broadly, the Bill:

·                 emphasises the vocational (rather than medical) nature of rehabilitation services and contains measures designed to improve return to work outcomes under the scheme;

·                 promotes fairness and equity in outcomes of injured employees by targeting support for those who need it most; and

·                 strengthens the integrity and viability of the scheme by clearly distinguishing between work and non-work related injuries, improving the quality of compensable medical treatment and support services, and limiting legal and medical costs under the scheme.

The amendments contained in the Bill are organised into 17 Schedules:

·                 Schedule 1 amends the Act to alter eligibility requirements for compensation.

·                 Schedule 2 amends the rehabilitation and return to work requirements in the Act to emphasise the vocational (rather than medical) nature of rehabilitation services and improve return to work outcomes under the scheme.

·                 Schedule 3 makes a number of amendments to the Act to improve the integrity and financial viability of the Comcare scheme.

·                 Schedule 4 amends the Act to enable a relevant authority to make provisional medical expense payments (capped at $5000) in respect of an alleged injury before a claim is determined.

·                 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.

·                 Schedule 6 amends Division 5 of Part II of the Act (and related provisions) which deal with the payment of compensation for household services and attendant care services to give effect to recommendations in the Review.

·                 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 and enhance the notification requirements for recipients of compensation proposing to leave Australia.

·                 Schedule 8 amends section 116 of the Act to provide that an employee is not entitled to take or accrue any leave or absence provided by the National Employment Standards while on compensation leave consistent with proposed amendments to section 130 of the Fair Work Act 2009 .

·                 Schedule 9 amends the Act to amend provisions that determine compensation.

·                 Schedule 10 amends the Act to increase the compulsory redemption threshold to align it with the Military Rehabilitation and Compensation Act 2004 .

·                 Schedule 11 contains a range of amendments designed to control, and thereby reduce, costs under the Comcare scheme associated with proceedings brought before the Administrative Appeals Tribunal (AAT), noting that Comcare scheme disputes take longer to resolve than disputes in other Australian workers’ compensation schemes.

·                 Schedule 12 contains a number of amendments related to compensation for permanent impairment under the Act.

·                 Schedule 13 amends the Act (as it will be amended by the Safety, Rehabilitation and Compensation Legislation Amendment Bill 2014) to clarify that a single employer licence for an eligible corporation or group employer licence must authorise acceptance of liability and management of claims, and that a single employer licence for a Commonwealth authority must authorise acceptance of liability or management of claims, or both.

·                 Schedule 14 amends the Act to clarify compensation responsibilities for gradual onset injuries (including for incapacity, impairment or death resulting from gradual onset injuries) where employment by two or more employers covered by the Act has contributed, to a significant degree, to the injury, and provide for apportionment of liability between employers covered by the Act.

·                 Schedule 15 amends the Act to streamline and enhance the existing regime of sanctions.

·                 Schedule 16 amends the Act to ensure that the amendments made by Schedules 1-15 to the Bill, with minor exceptions, do not apply to defence-related claims.

·                 Schedule 17 amends the Act to define a number of terms that are used in the amendments contained in the various schedules to the Bill.

OVERVIEW OF CONTEXT—SOCIAL SECURITY AND WORKERS’ COMPENSATION IN AUSTRALIA

A number of measures in the Bill engage the right to social security. In Australia, the right to social security is primarily supported by the Social Security Act 1991 , public health care schemes such as Medicare, funding of community services, and more recently the development of a National Disability Insurance Scheme. These schemes establish a safety net that ensures that all Australians are afforded an adequate standard of living, and have access to health care and support when they face disability, injury and illness. Workers’ compensation schemes established by state, territory and federal governments, including the Comcare scheme, also support the right to social security by providing for a scheme of workplace insurance and rehabilitation support when a person is injured at work.

The Act establishes the Comcare scheme which applies to injured Australian Government and Australian Capital Territory public sector employees, as well as employees of licenced corporations and certain members of the Australian Defence Force in respect of service rendered prior to 1 July 2004. The scheme ensures that where employees are injured at work, an appropriate degree of income replacement is available, medical costs are met, and the person is entitled to rehabilitation and support to facilitate their return to work. If, for whatever reason, workers’ compensation is not available for an injured employee the strong safety net described above is available.

A growing body of evidence shows that work is good for health and wellbeing and the Comcare scheme is necessarily focussed on workplace rehabilitation and the ultimate goal of returning employees to health and suitable work as quickly as possible. For example, a 2002 actuarial study found that if an injured employee is off work for 20 days, their chance of ever getting back to work is 70 per cent; however, after 45 days this falls to 50 per cent and after 70 days the chance of ever returning to work is only 35 per cent. [43]

Workers’ compensation legislation must support these aims and measures provided for in the Act should be targeted towards achieving early rehabilitation and sustainable return to work outcomes. The Comcare scheme needs reform so that barriers to recovery at work are removed and employees receive the highest standard of health care and early intervention and rehabilitation support from their employers.

It is important to understand this context when considering the Bill’s interaction with the right to social security and other human rights such as the right to health. These rights are broad and they encompass all of the measures that governments pursue to support citizens who experience disability or suffer injury or illness in life. The measures in the Bill will affect injured employees in different ways depending on their personal circumstances and the nature of their injury or illness. The Comcare scheme is designed to balance supports available with appropriate incentives to achieve safe and sustainable return to work outcomes.

The Comcare scheme is one of the few remaining long tail workers’ compensation schemes that provides lifelong support to employees who are severely injured. As a scheme that is fully funded by employers, only one of which is the Commonwealth Government, the Comcare scheme must be sustainable into the future. Where expenditure in certain areas does not result in improved rehabilitation and return to work outcomes the Government believes that difficult decisions must be made.

The Comcare scheme is coming under significant pressure. Return to work rates have fallen from a high of 89 per cent in 2008-09 to around 80 per cent in recent years. This is despite the emergence of a growing body of evidence that work is good for health and well-being. The Scheme creates barriers and disincentives for injured employees to recover at work, for example by emphasising the medical rather than vocational nature of rehabilitation services. This is out of step with prevailing community expectations that those who can work (even if part-time) should do so to their capacity.

The Comcare scheme’s ratio of assets to liabilities has fallen below 70 per cent and the incidence of costly psychological claims has been growing. Originally designed as a public sector workers’ compensation scheme, the Comcare scheme is no longer limited to the Australian Public Service. Employees covered by the scheme have a broader and more diverse range of pay and work benefits that make it increasingly difficult to calculate the correct amount of compensation to be paid. The distinction between work and non-work related conditions has been blurred and unreasonable constraints have been placed on how employers manage the workplace, resulting in increased premiums and pressures on scheme sustainability.

The Bill is an important step towards modernising a scheme that has not been comprehensively reformed since it was established in 1988. It will ensure early and effective treatment and rehabilitation support is available, enhance the targeting of support to injured employees and put the scheme on a more secure financial footing for the future.

HUMAN RIGHTS IMPLICATIONS

The Bill engages a number of rights which are identified and explained below to avoid repetition in the statement. A detailed consideration of each relevant measure introduced by the Bill and the engagement of rights is set out further below in the detailed consideration of measures.

A number of amendments in the Bill limit the right to social security because existing entitlements may be reduced or no longer available. These amendments may also be viewed as retrogressive measures and accordingly care has been taken to explain the legitimate objective of the amendments, relevant safeguards and the reasons why the measures are considered proportionate and reasonable.

International Obligations

The Bill engages the following rights under International Law:

·                 the right to equality and non-discrimination;

·                 the rights of persons with disabilities;

·                 the right to social security;

·                 the right to work and rights at work;

·                 the right to health;

·                 the right to privacy; and

·                 the right to a fair hearing.

The Right to Equality and Non-Discrimination

Article 2(1) of the International Covenant on Civil and Political Rights (ICCPR) provides:

Each State Party to the present Covenant undertakes to respect and to ensure to all individuals within its territory and subject to its jurisdiction the rights recognized in the present Covenant, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status.

Article 26 of the ICCPR provides:

All persons are equal before the law and are entitled without any discrimination to the equal protection of the law. In this respect, the law shall prohibit any discrimination and guarantee to all persons equal and effective protection against discrimination on any ground such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status.

The rights to equality and non-discrimination in Articles 2 and 26 ensure that no one is denied their rights because of a prohibited ground (for example race, colour or sex). The Committee on Economic, Social and Cultural Rights (‘the Committee’) states that while ‘the Covenant does not explicitly refer to persons with disabilities … the Universal Declaration of Human Rights recognizes that all human beings are born free and equal in dignity and rights and, since the Covenant’s provisions apply fully to all members of society, persons with disabilities are clearly entitled to the full range of rights recognized in the Covenant.’

These rights of equality and non-discrimination are reiterated in Article 5 of the Convention on the Rights of Persons with Disabilities (CRPD).

A number of measures in the Bill may impact disproportionally on persons with particular disabilities, illnesses or injures. For example a number of measures in Schedule 1 to the Bill will affect employees suffering from mental illnesses. Each particular measure that engages the right is discussed in the detailed consideration below.

The right to equality and non-discrimination is engaged by:

·                 Schedule 1

o       Items 8 and 9 (conditions arising out of reasonable administrative action)

o       Items 9 to 16 (significant degree test and perception)

·                 Schedule 7

o       Item 1 (new section 29K concerns extended absences from Australia)



 

·                 Schedule 12

o       Item 20 (new section 28C provides that compensation not payable for psychological or psychiatric secondary injuries)

·                 Schedule 15

o       Item 11 (new section 29H concerns psychological and psychiatric injury and ailment, and requires confirmation of diagnosis at 12 weeks)          

o       Item 14 (new section 29L concerns the obligation of an employee to find or participate in suitable employment, even if not employment they would have chosen)

The Rights of Persons with Disabilities

The rights of persons with disabilities are set out in the CPRD. Article 4(3) of the CRPD states that ‘in the development and implementation of legislation and policies to implement the present Convention, and in other decision-making processes concerning issues relating to persons with disabilities, States Parties shall closely consult with and actively involve persons with disabilities, including children with disabilities, through their representative organizations’. Article 26(1) of the CRPD requires States Parties to ‘take effective and appropriate measures, including through peer support, to enable persons with disabilities to attain and maintain maximum independence, full physical, mental, social and vocational ability, and full inclusion and participation in all aspects of life’. Article 12(3) of the CPRD provides that appropriate measures should be taken ‘to provide access by persons with disabilities to the support they may require in exercising their legal capacity’. Article 12 accords a person the right to be independent and to make decisions on their own behalf.

The Comcare scheme applies to workers who have suffered an injury at work, and some of these workers may be considered to have a disability for the purposes of international law. While the scheme is better characterised as a scheme that provides income support for injury or illness the rights of persons with disabilities are discussed where a person with a disability would be particularly affected by a particular measure. Throughout the detailed consideration this right is often discussed with the right to non-discrimination. Each particular measure that engages the right is discussed in the detailed consideration below.

The rights of persons with disabilities are engaged by: 

·                 Schedule 1

o       Items 5 to 8 and 15 (work-related injuries)

o       Items 8 and 9 (conditions arising out of reasonable administrative action)

·                 Schedule 2

o       Item 9, 64 and 52 (suitable employment, work readiness assessments and employee and employer obligations)

o       Items 50 and 52 (‘liable employer’, employer and employee obligations, new workplace rehabilitation plans)



 

·                 Schedule 4

o       Item 4 (new subsection 52C(1) provides that a request for payment is able to be made by another person on behalf of an employee who is physically or mentally incapable of giving the request himself or herself).

·                 Schedule 12

o       Item 20 (new section 28C provides that compensation is not payable for psychological or psychiatric secondary injuries)

·                 Schedule 15

o       Item 14 (new section 29L concerns the obligation of an employee to find or participate in suitable employment)

o       Item 11 (new section 29H concerns psychological and psychiatric injury and ailment, and requires confirmation of diagnosis at 12 weeks)

The Right to Social Security

Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) provides for the right to social security including social insurance. The Committee provides that the right to social security ‘includes the right not to be subject to arbitrary and unreasonable restrictions of existing social security coverage, whether obtained publicly or privately, as well as the right to equal enjoyment of adequate protection from social risks and contingencies.’ [44] Where an employee is injured in the course of their employment, ‘the social security system should cover the costs and loss of earnings from the injury or morbid condition and the loss of support for spouses or dependent suffered as a result of the death of a breadwinner.’ [45]  

The Committee note that ‘adequate benefits should be provided in the form of access to health care and cash benefits to ensure income security’. [46] These benefits, ‘whether in cash or in kind, must be adequate in amount and duration in order that everyone may realise his or her rights to family protection and assistance, an adequate standard of living and adequate access to health care.’ [47] The Committee further states that ‘[q]ualifying conditions for benefits must be reasonable, proportionate and transparent. The withdrawal, reduction or suspension of benefits should be circumscribed, based on grounds that are reasonable, subject to due process, and provided for in national law.’ [48]

The Committee states that ‘[t]here is a strong presumption that retrogressive measures taken in relation to the right to social security are prohibited under the Covenant. If any deliberately retrogressive measures are taken, the State party has the burden of proving that they have been introduced after the most careful consideration of all alternatives and that they are duly justified by reference to the totality of the rights provided for in the Covenant, in the context of the full use of the maximum available resources of the State party.’

 

The right to social security is engaged by many of the measures in the Bill. For example the Bill makes changes to eligibility that will result in some injuries no longer being compensable under the Act, increases the amount of compensation available for some employees, and provides for a sanctions regime that may result in the suspension or cancellation of compensation. Each particular measure that engages the right is discussed in the detailed consideration below.

This right to social security is engaged by the following Items to the Bill:

·                 Schedule 1

o       Items 5 to 7 (requirement that injury or aggravation be contributed to, to a ‘significant degree’ by employment)

o       Items 8 to 9 (expanding the scope of ‘reasonable administrative action’ to operational actions and anticipation of such actions)

o       Items 9 to 15 (factors to be considered under ‘significant degree’ test and perception)

o       Item 16 (new section 7A which empowers Comcare to determine a Compensation Standard)

·                 Schedule 3

o       Item 6 (new section 58 provides that the relevant authority can request a claimant to provide information or documents within a specified period not less than 14 days; new section 58A provides that the relevant authority can request information or documents from a third party)

o       Items 5, 8 and 10 (time limits in relation to the determination of compensation claims)

·                 Schedule 5

o       Items 2 and 3 (requirement for ‘therapeutic treatment’ to be provided by a ‘registered health practitioner’)

o       Items 4 and 5 (expanded requirements for ‘medical treatment’)

o       Items 7, 8, 10 and 11 (cost of medical treatment)

·                 Schedule 6        

o       Items 1, 2 and 3 (allow the making of regulations about the accreditation, registration and approval of persons as attendant care providers)

o       Item 5 (introduces definition of the term ‘catastrophic injury’ which will govern the amount and duration of compensation payable for household services and attendant care services)

o       Items 6 to 14 (payment of compensation for household services and attendant care services for non-catastrophic injuries)

o       Item 16 (payment of compensation for household service and attendant care services for catastrophic injuries)

·                 Schedule 7

o       Item 1 (suspension of compensation, absence from Australia for non-work related purposes for more than 6 weeks)

·                 Schedule 9

o       Item 26 (amendments to section 8 provide a broader view of what can constitute normal weekly earnings by averaging, over the relevant period, all income earned plus overtime and specified allowances payable)

o       Item 26 (deals with the application of paragraph 8(10) of the Act to an employee who is suspended without pay; and clarifies the ambulatory application of subsections 8(6), (7), (9), (9H) and (10) of the Act)

o       Item 27 (overtime and specified allowances may be included in calculation of average remuneration for the first 104 weeks of incapacity)

o       Item 31 (change in the step-down provisions)

o       Items 47 and 48 (compensation payments cease when an injured employee reaches his or her ‘pension age’)

·                 Schedule 12

o       Item 5 (formula to determine the amount of compensation payable for permanent impairment assessed at less than 75% of the whole person)

o       Item 6 (increase in the maximum benefit payable for permanent impairment)

o       Item 20 (combined impairment value; new section 28C - compensation not payable for psychological or psychiatric secondary injuries)

·                 Schedule 15

o       Item 11(section 29H concerns psychological and psychiatric injury and ailment and requires confirmation of diagnosis at 12 weeks)

o       Item 14 (obligations of mutuality and sanction provisions)

§     Section 29Y (suspension of compensation and right to institute or continue proceedings, etc.)

Section 29Z (cancellation of compensation and right to institute or continue proceedings, etc.) Suspension of compensation/sanctions/breach of obligation of mutuality

·                 Schedule 15

 

The Right to Work and Rights at Work

Article 6 of the ICESCR provides for the right to work, which ‘includes the right of everyone to the opportunity to gain his living by work which he freely chooses or accepts’. Article 7 provides ‘the right of everyone to the enjoyment of just and favourable conditions of work’. The Committee highlights the importance of work for personal development as well as for social and economic inclusion. [49] The Committee emphasises the ‘freedom of the individual regarding the choice of work’, and states that the right ‘includes the right of every human being to decide freely to accept or choose work. This implies not being forced in any way whatsoever to exercise or engage in employment and the right of access to a system of protection guaranteeing each worker access to employment. It also implies the right not to be unfairly deprived of employment’. [50] The Committee further note that the right to work is to be exercised without discrimination of any kind. [51] Work as specified in Article 6 of the Covenant must be decent work. [52]  

The Committee provides that ‘States parties must take measures enabling persons with disabilities to secure and retain appropriate employment and to progress in their occupational field, thus facilitating their integration or reintegration into society’. [53] Article 27 of the CRPD reiterates the right of persons with disabilities the opportunity to gain a living by work freely chosen or accepted in a labour market and work environment that is open inclusive and accessible. States parties have responsibilities to, among other things, provide assistance in returning to employment and promoting vocational and professional rehabilitation, job retention and return-to-work programs for persons with disabilities. [54]

The right to work is engaged most significantly by Schedule 2 to the Bill which improves the arrangements in place for rehabilitation of employees and will make it easier for injured employees to remain in or return to employment. Each particular measure that engages the right is discussed in the detailed consideration below.

The right to work is engaged by:

·                 Schedule 2

o       Item 9 (expanded definition of ‘suitable employment’)

o       Item 50 (new section 34K concerns the duty of the employer to provide ‘suitable employment’)

o       Item 64 (Division 4 provides for work capacity assessments and promotes the monitoring of an employee’s capacity for work)

·                 Schedule 15

o       Item 14 (new section 29L concerns the obligation of mutuality in relation to ‘suitable employment’)

The Right to Health

The right to health is contained in Article 12(1) of the ICESCR and is ‘the right of everyone to the enjoyment of the highest attainable standard of physical and mental health’. The Covenant in Articles 12(2)(b) and (c) specifically provides that this includes taking steps ‘necessary for the improvement of all aspects of environmental and industrial hygiene’ and those necessary for the prevention, treatment and control of occupational diseases. 

In addition, Article 25 of the CRPD provides for the right of persons with disabilities to the enjoyment of the highest attainable standard of health without discrimination on the basis of disability. Article 26 of CRPD provides that States Parties shall take effective and appropriate measures to habilitate and rehabilitate persons with disabilities to enable them to attain and maintain maximum independence, full physical, mental, social and vocational ability, and full inclusion and participation in all aspects of life.

Persons with disabilities should be provided with medical and social services aimed at helping them ‘to become independent, prevent further disabilities and support their social integration’. Similarly, such persons should be provided with rehabilitation services that would enable them ‘to reach and sustain their optimum level of independence and functioning’. All such services should be provided in such a way that the persons concerned are able to maintain full respect for their rights and dignity. [55]

The right to health is engaged in a number of different ways by the Bill. For example, the right to health is engaged by amendments that change eligibility criteria for certain injuries because compensation for medical costs is only payable where a person suffers a compensable injury. The right is also directly engaged by changes that would cap the amount of compensation payable for certain medical treatments. Each particular measure that engages the right is discussed in the detailed consideration below.

The right to health may be engaged by the following Items:

·                 Schedule 1

o       Items 5 to 7 (requirement that injury or aggravation be contributed to, to a ‘significant degree’ by employment)

o       Items 8 and 9 (expanding the scope of ‘reasonable administrative action’ to operational actions and anticipation of such actions)

o       Items 9 to 13 (factors to be considered under ‘significant degree’ test)

§     Item 12 (where an injury is attributable to a belief about or interpretation of an incident or state of affairs, the employee must have a reasonable grounds for the belief or interpretation)

o       Items 14 and 15 (Comcare to determine a Compensation Standard in relation to a specified ailment to be taken into account in determining liability for the ailment)

o       Item 16 (new section 7A which empowers Comcare to determine a Compensation Standard)

·                 Schedule 2

o       Item 52 (new provisions relating to workplace rehabilitation plans)

·                 Schedule 5

o       Items 2 and 3 (definition of medical treatment)

o       Items 7 and 8 (reasonable medical treatment and clinical framework principles)

o       Items 10 and 11 (medical examination rates determination)

·                 Schedule 6

o       Items 1 to 3 (allow the making of legislative rules about the accreditation, registration and approval of persons as attendant care providers)

o       Item 5 (introduces a definition of the term ‘catastrophic injury’ which will govern the amount and duration of compensation payable for household services and attendant care)

o       Items 6 to 14 (payment of compensation for household and attendant care services for non-catastrophic injuries)

o       Item 16 (payment of compensation for household and attendant care services for catastrophic injuries)

·                 Schedule 12

o       Item 20 (new section 28C provides that compensation not payable for psychological or psychiatric secondary injuries)

·                 Schedule 15

o       Item 11 (new section 29FA concerns psychological and psychiatric injury and ailment and requires confirmation of diagnosis at 12 weeks)

The Right to Privacy

The right to privacy in Article 17 of the ICCPR prohibits unlawful or arbitrary interferences with a person's privacy, family, home and correspondence. It also prohibits unlawful attacks on a person's reputation. Article 17 provides for an implied permissible limitation on the right to privacy to the extent that the limitations are not arbitrary or unlawful. In order for an interference with the right to privacy not to be ‘arbitrary’, the interference must be for a reason consistent with the ICCPR and reasonable in the particular circumstances. Reasonableness, in this context, involves notions of proportionality, appropriateness and necessity. [56]

The Bill engages the right to privacy where information gathering powers are expanded or additional permissions to disclose information are inserted. Each particular measure that engages the right is discussed in the detailed consideration below.

The right to privacy may be engaged by:

·                 Schedule 2

o       Item 50 (new sections 34H and 34K provides that a medical practitioner may ‘give the liable employer information about the employee that is relevant to the consultation’)

o       Item 52 (new section 36H provides for consultation with the employee’s medical practitioner)

o       Sharing of personal information, potentially including medical records, about an employee between the liable employer and the relevant authority where these are not the same entity:

§     Item 64 (new section 38C)

§     Item 71 (additions to section 53)

§     Item 74 (addition following section 54(4))

§     Item 77 (new section 57A (report of medical examination etc))

·                 Schedule 3

o       Item 6 (new sections 58, 58A provide that employees are to comply with request for information or breach obligation of mutuality (new section 58); relevant authorities may obtain information or documents regarding an employee’s claim or an employee’s compensation from third parties (new section 58A))

o       Items 32 to 29 (new subsection 108C(11) empowers Comcare to request documents relevant to any proceedings brought against, or instituted by, a licensee - legal professional privilege is not affected)

o       Item 26 (new sections 120A and 120B enhance a relevant authority’s information gathering powers by enabling a relevant authority to obtain information or documents from an employee or a third party in relation to the ongoing management of a claim for compensation)

·                 Schedule 4

o       Item 4 (provisional medical expense payments)

·                 Schedule 5

o       Item 13 (new sections 71A provide for the disclosure of information by Comcare to disciplinary bodies)

·                 Schedule 15

o       Item 14 (new section 29T concern the breach of obligation of mutuality for failing to provide information or documents)

The Right to a Fair Hearing

Article 14(1) of the ICCPR states that ‘[i]n the determination of … rights and obligations in a suit at law, everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law’.

General Comment No. 32 notes that the right to a fair hearing includes the right of access to the courts in cases of determination of rights and obligations in a suit at law. The Comment further states that ‘[a]ccess to administration of justice must effectively be guaranteed in all such cases to ensure that no individual is deprived of his/her right to claim justice’.

The Act provides review mechanisms for most determinations relating to employees’ rights under the Comcare scheme. Amendments to the Act engage Article 14(1) where they affect the ability of employees to seek review of determinations about their rights. Each particular measure that engages the right is discussed in detail below.

Items which may engage the right to a fair hearing:

·                 Schedule 2

o       Item 81 (amends section 60 of the Act to provide that the employee’s responsibilities and obligations of a liable employer under a workplace rehabilitation plan are not reviewable under the Act)

·                 Schedule 3

o       Items 1 and 12 (new section 70C provides for compensation for detriment caused by defective administration is to be added to the classes of decisions which are not decisions to which the Administrative Decisions (Judicial Review) Act 1977 applies)

·                 Schedule 11

o       Item 2 (new section 62A provides for reimbursement of a claimant’s legal costs in connection with reconsideration of a determination only where the claimant undertakes to not apply to the Administrative Appeals Tribunal for review of the decision)

·                 Schedule 15

o       Item 14 (suspension and cancellation of the employee’s right to institute or continue any proceedings under Act in relation to compensation relating to any current or future associated injury)



RIGHTS ENGAGED BY THE BILL—CONSIDERATION IN DETAIL

Schedule 1—Eligibility for compensation and rehabilitation

The tightened eligibility criteria introduced through Schedule 1 to the Bill will reduce the number of injuries and diseases (including psychological diseases) that will be compensable under the Act and, as a result, engages the right to social security and the right to health. Some amendments also may be considered to engage the right of non-discrimination because they will affect persons with particular disabilities.

Items 5 to 8, Item 15 - Work related injuries

Currently, the fact that the culmination of a condition, such as heart attack or stroke, occurs at the workplace is sufficient for a workers’ compensation liability to exist. Items 5 to 8 will amend the definition of injury in subsection 5A(1) of the Act to ensure that workers’ compensation is only available where either an underlying condition or the culmination of that condition is contributed to, to a significant degree, by the employee’s employment. This amendment will impact on incidents that are a manifestation of an underlying disease, such as heart attacks, strokes and spinal disc ruptures caused by degenerative diseases and similar phenomena. Because the effect of the amendments is that some injuries will no longer be compensable under the Act, the amendments limit the right to social security and the right to health.

The underlying purpose of workers’ compensation schemes is to establish a scheme of compensation and rehabilitation for injuries and diseases that are related to a person’s work. The legitimate objective of the amendments is to realign the Act with this purpose and to ensure that the scheme remains focussed on workplace injuries and diseases.

The amendments are a reasonable, necessary and proportionate approach to achieving this objective. The amendments will ensure that eligibility criteria reflect and align with the true purpose of workers’ compensation schemes; support for workers who suffer from occupational injury and disease. Where an employee suffers from a work-related injury or disease, they will continue to have access to medical treatment costs, compensation, and rehabilitation. However, an employer’s liability will not extend to diseases or injuries that are manifestations of underlying genetic or lifestyle factors which occur in the workplace but have no significant basis in employment.

Items 8 to 9 - Conditions arising from reasonable administrative action

The Act currently aims to prevent compensation claims from being used to obstruct legitimate and reasonable management action by excluding from the definition of ‘injury’ any condition (usually a psychological condition) that has arisen as a result of such action. To this end, subsection 5A(1) currently provides that the definition of ‘injury’ does not include a disease, injury or aggravation suffered as a result of reasonable administrative action taken in a reasonable manner in respect of the employee’s employment. Subsection 5A(2) provides a non-exhaustive list of matters that are ‘administrative action’.

This exclusion has been the subject of a considerable amount of litigation, for the most part in the AAT but also in the Federal Court. In Commonwealth Bank of Australia v Reeve [2012] FCAFC 21; (2012) 199 FCR 463 the Full Federal Court drew a distinction between ‘administrative’ and ‘operational’ actions of an employer. The effect of this decision is that operational decisions of employers, such as corporate restructures or instructions to employees to perform work at a particular location, or to perform particular duties, are not administrative action and do not trigger the exclusionary provision, so that any injury to an employee resulting from such actions is compensable.

Items 8 to 9 will remove the distinction between administrative and operational actions of an employer, further specifying that administrative action includes reasonable management actions such as corporate or organisational restructures, or reasonable directions about the performance of duties. In addition, item 7 will ensure that an injury arising from an employee’s belief that they may be subject to reasonable management action will not be compensable. The right to social security and the right to health are limited because it is foreseeable that a small number of injuries that may currently be compensable under the Act will no longer be compensable. The right to non-discrimination is also engaged because these amendments will mostly affect persons with a particular kind of disability - mental illness.

The legitimate objective of the amendments is to ensure the Act applies as intended, and to ensure that employers can take reasonable action in managing their workplaces.

The amendments are reasonable, necessary and proportionate for a number of reasons.

First, the amendments are necessary to ensure that there is clarity around the scope of the exclusion following decisions such as Commonwealth Bank of Australia v Reeve [2012] FCAFC 21; (2012) 199 FCR 463.

Second, the amendments are reasonable and proportionate because employees will remain eligible to be compensated for their condition if it arose because of an unreasonable operational action, or the expectation of unreasonable management action. The amendment will allow employers to engage in the reasonable management of their business, including takeovers, restructures and other operational matters, without concern that these actions may consequently form the basis of workers’ compensation claims.

Employers need to be able to give fair and constructive feedback on an employee’s performance, make necessary decisions to respond to poor performance or changing operational requirements and, if necessary take disciplinary action and be able to effectively direct and control the way work is carried out.

To the extent that the amendments will disproportionately affect employees suffering from psychological injuries, the right to non-discrimination is indirectly engaged. However, the indirect differential treatment of employees with psychological injuries is permissible as the amendments are justified by a legitimate aim and are an appropriate, objective and necessary approach to achieving that aim. [57] First, the amendments respond to a real need. As explained above, the Act must be amended to ensure that it applies as intended and to provide clarity around the scope of the exclusion. Secondly, the amendments are necessary to achieve the legitimate objective. The underlying purpose of workers’ compensation schemes is to establish a scheme of compensation and rehabilitation for injuries and diseases that relate to a person’s work. The amendments are necessary to realign the Act with this purpose. Thirdly, the amendments are proportionate as there is no other means of achieving the objective that impose less interference with the right to non-discrimination. Finally, the amendments are objective as they apply equally to all employees and all types of injuries suffered as a result of reasonable administrative action.

Items 9 to 16 - Significant degree test and perception

Items 9-14 amend subsection 5B(2) to enable additional matters be taken into account in determining whether an ailment or an aggravation of an ailment was contributed to, to a significant degree, by an employee’s employment:

·                 Item 16 inserts a new section 7A which empowers Comcare to determine a Compensation Standard that relates to a specified ailment and sets out the factors that should, as a minimum, exist before it can be said that an employee is suffering from the ailment.

·                 Item 12 will insert a new paragraph 5B(2)(d) to ensure that an employee’s perception of a state of affairs will only provide a connection with employment where that perception has a reasonable factual basis. Currently, an employee’s perception of a work-related event is a sufficient basis to connect a mental stress claim to employment, regardless of whether the perception was reasonable or reflected the reality of a situation.

The right to social security and the right to health are limited because it is foreseeable that a small number of injuries that may currently be compensable under the Act will no longer be compensable.

The legitimate objective of the amendments is to ensure that an employer’s liability will not extend to diseases or injuries that are manifestations of underlying mental health conditions which manifest in the workplace but have no significant basis in employment. 

The amendments are reasonable, necessary and proportionate for two reasons.

First, the amendments will ensure that eligibility criteria better align with the purpose of workers’ compensation schemes; compensation for workers who suffer from occupational injury and disease. There are examples in the AAT of cases involving the acceptance of claims arising from a perception of an event or state of affairs that have a very limited connection to an employee’s work or employment.

Second, an employee’s perception of a state of affairs will only be compensable where that perception has a reasonable basis in fact. In cases where there is a clear connection with an event or state of affairs at work, compensation will be payable.

To the extent that the amendments will affect employees suffering psychological injuries more than those suffering physical injuries, the right to non-discrimination will be indirectly engaged. The amendments are permissible as they respond to the need to realign the Act with its purpose: to provide compensation for employees who suffer from an occupational injury. As discussed above, the amendments are a reasonable, necessary, and proportionate response to achieving this objective. In particular, the amendments are proportionate as there is no other mechanism that will lessen the effect on the right to non-discrimination while also achieving the legitimate objective.



 

Schedule 2 - Rehabilitation

Schedule 2 to the Bill amends the rehabilitation framework under the Act to emphasise the vocational nature of rehabilitation services and strengthen the rehabilitation obligations of employers and employees to improve return to health and work outcomes under the workers’ compensation scheme. The amendments:

·                 combine the current two-step process for the development of rehabilitation programs into a single process to ensure that workplace rehabilitation is delivered on a service continuum of assessment of need, planning, active implementation, review and evaluation (recommendation 6.13 of the Review)

·                 clarify rehabilitation responsibilities by combining the roles of ‘rehabilitation authority’ and ‘employer’ into one concept, the ‘liable employer’. A liable employer will have a duty to ensure the rehabilitation of an injured employee and to provide the employee (or assist the employee to find) suitable employment and to maintain the employee in suitable employment

·                 expand the existing definition of ‘suitable employment’ to include any employment with any employer, including self-employment (recommendation 6.16 of the Review)

·                 provide relevant authorities (Comcare or self-insured licensees) with the discretion to perform work readiness assessments.

Schedule 2 to the Bill generally engages and promotes the right to work and the right to habitation and rehabilitation by providing for early access to rehabilitation and clarifying the duties and responsibilities of employers and employees. Amendments in Schedule 2 to the Bill also engage the rights of persons with disability, the right to a fair hearing and the right to privacy, which are discussed below.

Items 50 and 52 -Rehabilitation - ‘liable employer’ employer obligations, responsibilities of employees, new workplace rehabilitation plans

Liable employer

New Division 2A introduces the concept of a ‘liable employer’ to replace the concept of ‘rehabilitation authority’ and Division 2B sets out the duties of liable employers. 

The concept of a liable employer is introduced to clarify who is the employer responsible for rehabilitation and return to work responsibilities. The amendments address uncertainty, confusion and duplication of responsibilities under the current scheme, in particular for Commonwealth employees. The identity of the rehabilitation authority can be difficult to establish for employees who have changed employers, been affected by machinery of government changes or where the ‘liable employer’ no longer exists. This can result in difficulty for employees in accessing rehabilitation benefits or workplace programs. The amendments clarify that the ‘liable employer’ will always be responsible for providing suitable employment and vocational rehabilitation to injured employees.

Employer’s duty to ensure the rehabilitation of an employee

New section 35J will require a liable employer to take all reasonably practicable steps to ensure the rehabilitation of an employee who suffers an injury. Currently, there is a lack of clarity about when the rehabilitation obligations of an employer commence and in practice there can be delays in commencing rehabilitation activities until a claim for workers’ compensation is accepted. The amendments provide for rehabilitation to commence following notification of an injury. Notification of an injury will include the making of a provisional medical expense payment request under the amendments made by Schedule 4 to the Bill.

Workplace rehabilitation plans

Item 52 repeals sections 35, 36 and 37 of the Act and substitutes new provisions relating to workplace rehabilitation plans. These amendments will ensure that workplace rehabilitation is delivered on a service continuum of assessment of need, planning, active implementation, review and evaluation that is responsive to changes in an employee’s injury and any resulting incapacity.

New section 36 defines a workplace rehabilitation plan. For an employee who has the potential to engage in suitable employment, the plan is directed towards returning the employee to suitable employment as soon as practicable. If an employee is in suitable employment, the plan is directed towards maintaining the employee in suitable employment. If an employee does not have the potential to be in suitable employment, the plan is directed towards maximising the employee’s independent functioning. 

In order to assist a liable employer to make a decision about the formulation, variation or revocation of a workplace rehabilitation plan, item 76 amends section 57 to empower the relevant authority (such as Comcare) to require an employee to undergo a medical examination by a nominated medical practitioner, a suitably qualified person (such as an occupational therapist or a physiotherapist approved by Comcare to be a rehabilitation provider under Division 2, Part III of the Act), or a nominated panel. The ability to require this type of medical examination is currently a power of the rehabilitation authority; the relevant authority can currently also only require a medical examination by a nominated medical practitioner. The amendment will mean that there will be only one type of medical examination and only one body that can require them. This amendment is intended to reduce the fragmentation of medical information received by the liable employer and the relevant authority.  It will also assist in streamlining the rehabilitation process to facilitate the timely rehabilitation of injured employees.

Employee responsibilities under a workplace rehabilitation plan

New section 36A provides for responsibilities imposed on an employee by a workplace rehabilitation plan to be known as employee responsibilities. Item 81 amends section 60 to provide that an employee’s responsibilities and obligations of a liable employer under a workplace rehabilitation plan are not reviewable under the Act. The formulation (and any variation of) a workplace rehabilitation plan will be reviewable. 

New section 29R in Schedule 15 to the Bill provides for an employee’s responsibilities under a workplace rehabilitation plan to be an obligation of mutuality to which sanctions may apply. This builds on existing sanctions available under the Act (for example, under sections 37 or 57, if an employee refuses or fails, without reasonable excuse, to undertake a rehabilitation program or undergo a medical examination). The operation of the sanctions framework, in respect of an employee’s responsibilities under a workplace rehabilitation plan, or in respect of an employee’s requirement to undergo a medical examination, is discussed in this statement in relation to Schedule 15 to the Bill. 



 

Rights engaged

The amendments generally promote the right to habilitation and rehabilitation in article 26 of the CRPD. Article 26 of the CRPD provides, inter alia, that States ‘shall organize, strengthen and extend comprehensive habilitation and rehabilitation services and programs, particularly in the areas of health, employment, education and social services’ for people with disabilities. States parties are required to ensure that habilitation and rehabilitation services are available at the earliest possible time and are locally based, including in rural areas. The article stresses the multidimensional nature of habilitation and rehabilitation by requiring that service delivery is based on the multidisciplinary assessment of the person’s needs and strengths. The article makes it clear that habilitation and rehabilitation cannot be imposed coercively by insisting that participation must be voluntary.

To the extent that the amendments could be viewed as narrowing the scope of medical rehabilitation, that is, rehabilitation for the purpose of increasing independent functioning, the amendments may limit the right to rehabilitation. Article 26 provides that States parties shall organise, strengthen and extend rehabilitation services to ensure that ‘[p]ersons with disabilities … attain and maintain maximum independence, full physical, mental, social and vocational ability, and full inclusion and participation in all aspects of life.’ Consequently the amendments may also indirectly limit the right to health contained in Article 12 of the ICESCR and Article 25 of the CRPD.

The legitimate objective of these amendments is to enable the Comcare scheme to more effectively pursue one of its core purposes: to, as far as possible, provide for early intervention and rehabilitation support for injured employees to stay in or return to suitable employment. This objective is important for three main reasons. The first is that for most people, work is good for their health and wellbeing. This is supported by the fact that Comcare is a signatory to the Australian Consensus Statement on the Health Benefits of Work which emphasises the benefits of work for health and wellbeing. The second reason is that the Consensus Statement confirms that long-term absence from work has a negative impact on health and wellbeing. Thirdly, improved return to health and work outcomes will ensure the long term sustainability of a scheme that supports injured employees for life. 

The amendments are a reasonable, necessary and proportionate approach to achieving the objective of returning employees to work for a number of reasons.

First, the amendments are reasonable and necessary as they clarify and strengthen existing rehabilitation obligations and responsibilities of employers and employees and provide for early access to rehabilitation support which underpins an effective workers’ compensation system. It is reasonable to require employees to fulfil their responsibilities under a workplace rehabilitation plan because active participation in rehabilitation is essential for an employee’s recovery.

Second, by emphasising the vocational nature of rehabilitation and returning and maintaining employees in work, the amendments positively engage the right to work under both the ICESCR and the CRPD. Article 27 of the CRPD emphasises that States parties must safeguard and promote the realisation of the right to work by taking appropriate steps to promote employment opportunities and enable persons with disabilities to have access to technical and vocational guidance programs, placement services and vocational and continuing training. Article 6 of the ICESCR also promotes the right to work stating that it ‘[i]ncludes the right of everyone to the opportunity to gain his living by work…’

Third, the amendments are reasonable and proportionate because, while these plans have an increased focus on returning and maintaining an employee in suitable employment, rehabilitation remains directed towards maximising the employee’s independent functioning if the employee does not have the potential to be in suitable employment (new subsection 36(1)(d)).

The extent to which the new workplace rehabilitation plans are more vocationally directed must be viewed in the context of other measures designed to enable early access to medical treatment costs through provisional medical expense payments provided in Schedule 4 to the Bill and amendments in Schedule 5 to the Bill that strengthen the framework for medical support and the quality of medical treatment  to achieve better health outcomes.

Finally, the amendments are reasonable and proportionate as they only emphasise vocational rehabilitation for those who are able to work in some capacity. The new duty on liable employers to take all reasonably practicable steps to ensure the rehabilitation of an employee (new section 35J) makes it clear that for employees who do not have the potential to be in suitable employment, the rehabilitation for that employee must be directed towards maximising the employee’s independent functioning. This new section promotes the right to rehabilitation and indirectly, the right to health, contained in the CRPD and ICESR. 

Item 81 limits the right to a fair hearing. The legitimate objective of the amendment is to avoid frustration of the purpose of these provisions which is to promote compliance with rehabilitation plans rather than arguments regarding particular employee responsibilities and obligations of the liable employer. The amendment is a reasonable, necessary and proportionate approach to achieving this objective for a number of reasons.

Firstly, there are substantial safeguards in place to ensure that employee responsibilities are tailored and appropriate to the individual circumstances of an employee. The plans are developed in consultation with the employee and his or her medical practitioner which will ensure that the workplace rehabilitation plan reflects the capacity and abilities of an individual employee. 

Secondly, the formulation (and any variation of) a workplace rehabilitation plan will be reviewable by Comcare and the AAT. In practice this means that the development of the plan or the objectives and main components of a workplace rehabilitation plan will be reviewable.

Items 9, 50 and 64 - Broadened definition of ‘suitable employment’, work readiness assessments and employer and employee obligations

Under section 40 of the Act, employers currently have a duty to provide suitable employment to employees who have undertaken or are undertaking a rehabilitation program. Item 12 will broaden the definition of ‘suitable employment’ in subsection 4(1) so that employment with any employer who is not the Commonwealth or a licensee (including self-employment) can be considered ‘suitable’. This gives effect to recommendation 6.16 of the Review. Suitable employment will be defined to include employment to which the particular employee is suited having regard to a number of factors, including the personal circumstances of the employee and the employee’s suitability for rehabilitation or vocational retraining as well as the availability of suitable employment.

Employer’s duty to provide suitable employment

New section 34K requires a liable employer to take all reasonably practicable steps to provide an injured employee with suitable employment or assist the employee to find such employment. An employer’s duty in relation to suitable employment only applies if an employee has the potential to be in suitable employment. 

In circumstances where an employee is injured and the employee is in suitable employment, the section will also impose a duty on the liable employer to take all reasonably practicable steps to maintain the employee in suitable employment. 

The obligation to provide suitable employment will apply when the employer is formally notified of the injury rather than when an employee is undertaking, or has completed, a rehabilitation program as is currently the case. 

A failure of a liable employer to fulfil these obligations may result in a deemed delegation of liable employer functions and powers to Comcare under new section 35F.

Work readiness assessments

In order to determine an employee’s capacity to work in suitable employment, item 64 inserts a new Division 4 which empowers the relevant authority (for example, Comcare) to require an injured employee to undergo a work readiness assessment or examination by a nominated medical practitioner, a suitably qualified person nominated by the relevant authority or a panel of medical practitioners and suitably qualified persons nominated by the relevant authority. New section 38C provides that a copy of the report of the assessment must be given to a liable employer. 

Amendments made in Schedule 15 to the Bill introduce an obligation of mutuality in relation to a work readiness assessment. Breaches of obligations of mutuality may be subject to the sanctions framework and are discussed in this Statement in relation to Schedule 15 to the Bill.

Employee obligations in respect of suitable employment

New section 29L in Schedule 15 to the Bill establishes an obligation of mutuality in relation to:

·                 a failure to accept an offer of suitable employment

·                 a failure to engage, or to continue to engage, in suitable employment

·                 a failure to seek suitable employment.

Regulations can provide for exceptions to the breach of obligation of mutuality provisions. An employee’s obligations of mutuality and the operation of the sanctions framework with respect to suitable employments are discussed in this Statement in relation to Schedule 15 to the Bill.

Rights engaged

The amendments positively engage the right to work by imposing stronger obligations on employers with respect to facilitating suitable employment and providing greater opportunities for injured employees to participate in employment outside of employment by a liable employer.

By positively engaging the right to work, the amendments also indirectly positively engage the right of persons with disabilities to earn an adequate standard of living and to live independently, which are rights protected in Articles 28 and 29 of the CRPD respectively. The Committee has commented that that ‘States Parties must take measures enabling persons with disabilities to secure and retain appropriate employment and to progress in their occupational field, thus facilitating their integration or reintegration into society.’ [58] As employment is considered to be good for a person’s health and wellbeing, the amendments also indirectly promote the right to health contained in Article 12(1) of the ICESCR and Article 25 of the CRPD.

However, it could also be argued that the amendment may indirectly limit the right to freely choose one’s work which is a key aspect of the right to work. Article 27 of the CRPD reiterates the right of persons with disabilities to have the opportunity to gain a living by work freely chosen or accepted in a labour market and work environment that is open, inclusive and accessible. States parties have responsibilities to, among other things, provide assistance in returning to employment and promoting vocational and professional rehabilitation, job retention and return-to-work programs for persons with disabilities. [59]

Where ‘suitable work’ is available employees have an obligation to engage in that work and sanctions may apply where they do not do so including the reduction of compensation (excluding medical expenses) and escalating to the cancellation of compensation. The sanctions regime for failing to engage in suitable employment is discussed in this Statement in relation to Schedule 15 to the Bill . In some cases the amendment may result in employees being induced to undertake employment in circumstances where they are not otherwise willing to perform the new role.

The legitimate objective of these amendments is to strengthen the obligations of employers to provide greater opportunities for injured employees to engage in suitable employment and thereby improve health and return to work outcomes for injured employees. Under the current Act, an employee may have some capacity to work but be prevented from doing so due to a lack of suitable employment with their pre-injury employer. The amendments could therefore provide more employment options for some injured employees.

The amendments are a reasonable, necessary and proportionate approach to achieving this objective for a number of reasons.

First, the amendments are necessary for supporting injured employees to stay in, or return to, suitable employment. The amendments clarify and strengthen the obligations of employers and employees to support employees to remain in or engage in suitable employment if they have the potential to be in suitable employment. The amendments will be supported by the ability of Comcare to implement an incentive scheme for employers under new section 70D as inserted by Item 84 to provide for employment opportunities outside of the employment which gave rise to their injury. 

Second, the amendments are reasonable and proportionate in that there are substantial safeguards in place to ensure that suitable employment is appropriate to the individual circumstances of an employee. Relevant considerations include the capacity of an employee to remain or engage in suitable employment which must be assessed in consultation with the employee and their medical practitioner to ensure that employment reflects the capacity and abilities of an individual employee. If necessary, a relevant authority is empowered to arrange a work readiness assessment to determine an employee’s capacity to return to work and the medical and rehabilitation support needed to help achieve a safe and sustainable return to work.

Third, in assessing the potential to engage in suitable employment (including self- employment), it is necessary to have regard to the employee’s age, experience, training, language and other skills, and the employee’s suitability for rehabilitation or vocational retraining. If employment is available at a place that would require the employee to change his or her place of residence - regard must be had as to whether it is reasonable to expect the employee to change his or her place of residence. Also, any other relevant matter may be taken into account.

The amendments will provide safeguards and additional support for employees who suffer from injuries resulting in ongoing disability by expanding the definition of suitable employment and providing additional incentives to employers. The incentives are provided for employers through strengthened obligations on employers that are more capable of regulation by Comcare.

Financial incentives are provided through premiums that are tailored to the incidence of injury, and through rehabilitation frameworks which promote return to health and work outcomes. In addition, the National Disability Insurance Scheme now provides access to support for employees who have suffered injuries resulting in permanent impairment and this further promotes opportunities for social inclusion. 

Finally, in complying with its rehabilitation obligations and duty to provide suitable employment, it is important to note that an employer is bound to comply with its obligations under the Work Health and Safety Act 2011 to ensure, as far as reasonably practicable, the health and safety of an employee. Appropriate work health and safety obligations will also be imposed on employers who provide suitable employment under applicable Commonwealt