Comparison Of Workers' Compensation Arrangements In Australia And New .

SCHEMES AT A GLANCETable 1.2 (continued) Synopsis of all of the jurisdictions’ workers’ compensation schemes.1.77%- 2006/071.62%- 2006/071.99%- 2006/073.00%- 2006/072.13%- 2006/07 71.20%- 2006/071.95%- 2006/078N/A 2006/073.15%- 2006/070.86%- 2006/071.22%- 2005/061.76%- 2005/062.35%- 2005/063.06%- 2005/061.67%- 2005/0671.36%- 2005/062.32%- 2005/0682.17%- 2005/062.87%- 2005/060.94%- 2005/06Funding Ratio110%(Jun 07)134%(Jun 07)107%(June 07)65%(Jun 07)125%(Jun 06)183.4%(Jun 07)168%(2005/06)100%(Jun 06)Not available186%(Jun 07)Excess/Unfunded9(June 07) 115mexcess 2.556 billionexcess 812mexcess 843munfundedNot available 1.47 billionexcessNot availableNilNot availableNZ 1.09billion excessRedemptions /Settlements etcYes (limited)Yes (limited)YesYesYesYesYesYesYesNoPortion ofclaims %12.5%(2002/03)0.4%(2006/07)AveragePremium Rate2005-06 1, 61 Source: Workplace Relations Ministers’ Council, Comparative Performance Monitoring Report, ninth edition. These figures have inherent inaccuracies due to the comparativelyhigh standard errors in the estimates involved.2 This figure does not include self insurers under the Comcare scheme who are not employed by the Commonwealth, but does include ACT Public Service and Seacare employees3 For New Zealand this figure includes self-insurers and self-employed persons who are covered by the scheme.4 Average compensated deaths per 100 000 employees 2005-06 2.3.5 Includes new claims plus ongoing payments relating to self-employment and employees.6 Includes insured and self insured sectors.7 The WA rate is recommended, insurers are able to discount or load the recommended rate.8 These are actual rates not published rates.9 Assets and liabilities for centrally funded and privately underwritten schemes are calculated differently, see ‘Scheme funding ratio’.Summary of benefitsImportant notes: The level and degree of entitlements in the accompanying tables are maximum or minimum amounts for illustrativepurposes. It is important to note that these amounts will not automatically apply to every injured employee.Similarly, not every injured employee will have his or her entitlement limited to one component. Amounts of compensation, other than for lump-sum payment to dependants in the case of work related deathor permanent impairment, will be based on the degree of financial loss a person has suffered as result of a workrelated injury, and the amount of financial loss, including lost income, is determined differently in each jurisdiction. It must be noted that each component described below represents only one part of an overall entitlement to workers'compensation. The information should not be used to assess the overall level of benefits available to injured employeesin each jurisdiction. There are many exceptions to the benefits quoted below, so these figures should be taken to be applicablein the majority of cases.COMPARISON OF WORKERS’ COMPENSATION ARRANGEMENTS 2007

SCHEMES AT A GLANCEIncapacity benefits and step downsEach scheme provides (within limits) for a period of near-full income replacement of pre-injury earnings for workers who cannotearn. Table 1.3 lists this period for each jurisdiction.Table 1.3 Period of near-full income replacement of pre-injury earnings for workers who cannot NSW26SA52WAQLDTasNTACTNZ1326(at 85%of normalweeklyearnings)132626week 2-5:80% ofshort-termcalculationIncome replacement payments, also known as weekly payments, are ‘stepped down’ by a percentage or to a set amountfor workers who cannot earn an income because of a work related injury. There is a range of entitlements acrossthe jurisdictions, and Table 1.4 shows the final step-down arrangements. In almost all arrangements detailed provisionsare made to further reduce the amounts of income replacement based on an injured person’s capacity to earn. Some of theseprovisions need to be read as either/or provisions, for example in Queensland, the maximum amount of income replacementis set as 209,555, or five years.Table 1.4 Final step-down in incapacity paymentsFinal Step downCTHVicNSWSAWAQldTasNTACTNZAfter week . . .45132652141047826265: 80% oflong-termcalculationMinimum amount75%75% 287.4080%85%65% #80%75%65%NZ 328More fordependants,less capacityto earnLess capacityto earnIncreases fordependentspouse and/or childrenLess capacityor deemedcapacityto earnSubject toaward rates--VariationMore fordependants,less capacityto earnMore fordependants,less capacityto earnLess capacityto earnFinancial Limit150% ofAWOTEFA* 1,190 perweek--- 209,555---NZ 1,535.65Time limit-2.5 years2 years--5 years9 years2 years2 years-65 unlessworker isover 63 yearsat time ofinjury, inwhich casemax 2 years65 unlessworker over62.5 years attime of injury,in which casemax 2.5years afterincapacityRetirementage 12months65 unlessworker is over64.5 at timeof injury,in whichcase max6 months.Paymentscease at 7065 unlessworker is over64 at timeof injury, inwhich casemax 1 year-65 unlessworker is over64 at timeof injury, inwhich casemax 1 year65 unlessworker is over64.5 at timeof injury,in whichcase max6 months.65 unlessworker is over63 years attime of injury,in which casemax 2 years65 unless:Age limit if a workeris between63 and 64years attime of injury,max 2 years if a workeris 64 at timeof injury,max 1 yearAll subject toan election tobe entitled tocompensationrather thansuperannuation#If the work related impairment is over 15%* Average Weekly Ordinary Time Earnings of Full-time AdultsCOMPARISON OF WORKERS’ COMPENSATION ARRANGEMENTS 2007

SCHEMES AT A GLANCEMedical treatmentMaximum amounts that a person can be compensated for the reasonable costs of medical treatment following a work relatedinjury (as at 30 June 2007) are listed in Table 1.5Table 1.5 Maximum amounts for medical treatment as at 30 June 2007MedicalTreatmentCTHVICNSWSAWAQLDTASNTACTNZ limitNo limitNo limit 50,000No limit 47,727No limitNo limitNo limitNo limitNo limit-Except incertaincircumstances,ceases52 weeksafter weeklyentitlementceases, or after52 weeks ifcompensation ispayable only formedicalAny amountabove 50,000 atWorkCover’sDiscretion-Additional 50,000 wherethe worker’ssocial andfinancialcircumstancesjustify it-Entitlementscease 10years afterthe date theclaim waslodged-Total amountmust not bemore thanthe maximumamount(agreedbetweenemployerand workeror 569.07CPI indexed)for eachtreatment-OtherPermanent impairment entitlementsSome work related injuries result in medical conditions that will never resolve, such as loss of a limb or chronic conditions.Jurisdictions provide lump sum payments for permanent impairment where the degree of impairment is above a thresholdpercentage. There may be additional amounts payable for other loss, such as pain and suffering, or caps on the amountsthat could be obtained through the courts.Table 1.6 Permanent impairment thresholds and entitlements as at 30 June 0% WPI10% exceptfor totallossescompensatedunderdifferenttable.30% forpsychologicalinjuries.1%None excepthearing loss5%1%1%5% WPI5%1%10% 141,351 373,420 231,000 136,000 159,091 209,555 208,370 215,030 170,719.51NZ 110,555.80 53,007 462,720(less anystatutoryimpairmentbenefit paid) 50,000 91,800- 191,345----5% hearing% of impairmentLump SumAdditional 0% fingers,toes, taste,smell 0% fingersand toes10%psychiatricimpairmentCOMPARISON OF WORKERS’ COMPENSATION ARRANGEMENTS 2007

SCHEMES AT A GLANCEDeath benefitsThere are occasions where some work related injuries result in death. Each jurisdiction has a benefit structure in placethat provides for lump sum payments, funeral costs and weekly payments for dependents. Some jurisdictions provideadditional payments for spouses and counselling.Table 1.7 Death benefits as at 30 June 2007DeathbenefitsCthVicNSWSAWAQldTasNTACTNZ 212,027 250,000 325,400 227,800 218,095 392,525 208,370 268,788 170,720Spouse:NZ 5,333.86Each childor otherdependent:NZ 2,666.94s381Lump sum 70.65Weeklypayments /childFuneralOther% of preinjuryearnings fordependentspouse and/orchildren tomax 1,190per week 102.3025% ofdeceased’snotionalweeklyearnings25% ofdeceased’snotionalweeklyearningsif child is“orphan”,or 12.5% if“dependent,nonorphaned”10% of‘ordinary timeearnings’payableweekly to eachdependantfamilymemberuntil 16 ora student(where spouseis totallydependent)A dependentchild isentitled to10% of thebasic salary,commencingon theexpirationof 13 weeksafter the dateof death. 103.38 56.91Spouse: 60% ofthe long-termrate of weeklycompensationthat the earnerwould havereceived.Each childand otherdependent:20% ofthe weeklycompensation. 9,000 9,000 9,000 7,010 7,813ReasonableReasonablecost of burialor cremation 5,375 4,553NZ 4,975.01-Counsellingfor family 1,960Counsellingfor familyWeeklypayments ofup to 50%of notionalweeklyearningsfor a totallydependentspouse ordomesticpartner, lessdependingon degree ofdependency- 10,925Spouse isentitledto weeklypaymentscalculatedat the samerate as thedeceasedwould havereceived if he/she becametotallyincapacitated--Child carepayments:paid to totallydependantspouse reduced by thetotal amountof weeklypayment ofcompensationNZ 113.42 fora single child,NZ 68.05each if thereare more thantwo children,and a totalof NZ 158.79for 3 or morechildren. first 13weeks:100% ofweeklypayments 14-78weeks: 85%of weeklypayments78 weeks-2years: 80%of weeklypaymentsCOMPARISON OF WORKERS’ COMPENSATION ARRANGEMENTS 2007

SCHEMES AT A GLANCEAdditional rightsSome jurisdictions provide for a right to sue at common law, although these are usually limited to certain cases,such as permanent impairment.Table 1.8 Common Law entitlementsCommon lawCthVicNSWSAWAQldTasNTACTNZYes for3rd oLimitedagainstemployer/otheremployeeAccessDispute resolutionReview and appeal rights for a person who is claiming compensation and disagrees with a decision about their entitlementsare listed in Table 1.9.Table 1.9 Dispute resolutionAppealRightsCthVicNSWSAReconsideration ConciliationArbitratorof WorkersCompensationCommissionAAT, thenFederalCourt thenHigh courtPresidentialmemberof dTasNTACTNZReconsideration ConciliationInternal nal- ConciliationMediationConciliationReview andmediation,conducted byan independentreviewer ormediatorConciliation,arbitration,judicial review,Appeal toFull Benchof eal toSupreme CourtWork HealthCourtArbitrationA reviewdecision can beappealed to theDistrict strict CourtAppeals onquestions of lawcan be taken tothe High Courtand the Courtof Appeal.COMPARISON OF WORKERS’ COMPENSATION ARRANGEMENTS 2007

SCHEMES AT A GLANCEDefinition: injuryThe definition of what constitutes an injury and what contribution the employment must have to it differs between the jurisdictions.Table 1.10 Definition of injury and contribution of employmentDefinition of‘injury’ forpurposes sNTACTNZ‘ a physicalor mentalinjury arisingout of, or inthe course of,the employee’semployment ’‘ an injuryarising outof, or in thecourse of anyemployment ’‘ personalinjury arisingout of, or inthe course ofemployment ’‘ disabilityarises out of,or in the courseof, employment ’‘ a personalinjury byaccidentarising outof or in thecourse of theemployment ’‘ a personalinjury arisingout of, or inthe course of,employment ’‘An injury, ora disease,arising outof, and inthe course ofemployment’‘ a physicalor mentalinjury out of or inthe course ofemployment ’.‘a physicalor mentalinjury includesaggravation,acceleration orrecurrence ofa pre-existinginjury arising outof, or in thecourse of,the worker’semployment’‘A workrelatedpersonal injuryis a personalinjury that aperson suffers—A substantialcontributingfactorNo requirement(except forwork-relatedgradualprocess,disease, orinfectionsuffered bythe person)To a significant A significantdegree (forcontributingdiseases only) factor forheart attackor stroke,disease, r deteriorationof any preexisting injuryor disease.Nocompensationis payableunder thisAct in respectof an injuryunless theemploymentconcerned wasa substantialcontributingfactor tothe injurySubstantialcause (forpsychiatricdisabilitiesonly)To asignificantdegree (fordiseases only)SignificantcontributingfactorEmploymentis the ‘majoror mostsignificantfactor’ (fordiseases only)To a materialdegree (fordiseasesand gradualprocess)(a) while heor she is atany place forthe purposesof his or heremployment’COMPARISON OF WORKERS’ COMPENSATION ARRANGEMENTS 2007

SCHEMES AT A GLANCECoverage for independent contractors and labour hire workersThe definitions of whether independent contractors and labour hire workers are covered for workers’ compensationare listed in Table 1.11.Table 1.11 Workers’ compensation coverage for independent contractors and labour-hire tion?CTHVICNSWSAWAQLDTASNTACTNZComcare:No, ifemployedundercontractfor serviceNo, ifemployedundercontract forservice; theyare coveredif enter intoany form ofcontract ofservicesNo, ifemployedundercontractfor service.No, ifemployedundercontractfor serviceNo, ifemployedundercontract forserviceNo, ifemployedundercontractfor serviceNo, ifemployedundercontractfor serviceNo, if ABNsupplied,otherwise yesYesThe legislationalso doesnot cover acontractorwho enteredinto acontractof servicewhere theemploymentis for lessthan 5 daysYes, ifundertakeprescribedwork orwork of aprescribedclassNo, ifemployedundercontractfor service.However,there areprovisions forthe coverageof regularcontractorsYes, labourhire firmheld to beemployerYes, labourhire firmheld to beemployerYes, generallyliability restswith labourhire firmYes, labourhire firmheld to beemployerYes, labourhire firmheld to beemployerYes, labourhire firmheld to beemployerFrom 1 August2007, alllabour-hirefirms willhave topurchaseworkers’compensationinsurance fortheir workers,includingthose leton hire.Yes, wherethe individualis not anexecutiveofficer of thecorporationand:Yes, labourhire firmheld to beemployerSeacare: No,compensationonly throughemploymentof employeesComcare:Yes, althoughdefinitionof employermay varySeacare: NoAre labourhire workerscoveredunderlegislation? theindividualhas beenengaged bythe labourhirer undera contractfor servicesto work forsomeoneother thanthe labourhirer there isno contractto performworkbetweentheindividualand personfor whoworkis to beperformed theindividualdoes allor part ofthe workCOMPARISON OF WORKERS’ COMPENSATION ARRANGEMENTS 200710

SCHEMES AT A GLANCEJourney claimsAll jurisdictions provide workers’ compensation coverage for journeys undertaken for work purposes, with only some jurisdictionsproviding coverage for journeys to and from the workplace.Table 1.12 Coverage of journey claimsJourney to andfrom workCTHVICNSWSAComcare: NoNoYes(prior to 13April 2007journeyclaims: Yes)(journies arecovered eme)(somerestrictions)Comcare: YesYesYesSeacare: Yes(somerestrictions)Seacare: YesJourneyundertakenfor workpurposesWAQLDTASNTACTNZGenerallyNono. Only invery limitedcircumstancesmay be covered– most journeyaccidentswould notbe ns)YesNoCOMPARISON OF WORKERS’ COMPENSATION ARRANGEMENTS 200711

The evolution of workers’ compensation schemesThe evolutionof workers’compensationschemes inAustralia andNew ZealandThis section provides an historical overview of the development of workers’ compensation schemes in Australiaat both the national and jurisdictional level, as well as New Zealand, and it serves to explain why Australiais faced with the workers’ compensation arrangements that it has today.In preparing this section, the following publications were used extensively: Kevin Purse The Evolution of workers’ compensationpolicy in Australia, 2005, from the Health Sociology Review; the CCH Workers’ Compensation Guide, Volume 1; and the ProductivityCommission’s National Workers’ Compensation and Occupational Health and Safety Frameworks report of 2004.COMPARISON OF WORKERS’ COMPENSATION ARRANGEMENTS 200712

The evolution of workers’ compensation schemesThe national perspectiveIn Australia, there are ten workers’ compensation systems. Over time, each of the eight Australian States and Territorieshas developed their own workers’ compensation laws. There are also two Commonwealth schemes: the first is for AustralianGovernment employees and the employees of licensed authorities under the Safety, Rehabilitation and Compensation Act1988, and the second is for certain seafarers.The origin of these Australian workers’ compensation systems lies in nineteenth century British law. Before the implementationof workers’ compensation arrangements, an injured worker’s only means of receiving compensation was to sue their employerfor negligence at common law.However, workers rarely succeeded in these actions due to what has been described as the ‘unholy trinity’ of legal defences:common employment, voluntary assumption of risk, and contributory negligence.To limit the application of those defences, the Employment Liability Act 1880 was enacted in Britain. This Act was adopted in theAustralian colonies between 1882 and 1895.While these Acts were well intentioned, taking them up did not lead to any significant improvement in outcomes for injured workers.New workers’ compensation laws incorporating a ‘no fault’ principle came about after Federation in Australia. New laws wereprompted by the failure of the Employment Liability Act 1880 to improve conditions for injured workers, increasing industrialisation,the rise of the labour movement and popular support for state intervention on behalf of workers.To be eligible for workers’ compensation under the no-fault principle, workers covered by the legislation merely had to provethat their injuries were work related. It was no longer necessary to prove negligence on the part of an employer.Nonetheless early no-fault coverage for workers’ compensation was limited. Firstly, although laws provided for some benefits,the taking out of insurance by employers was not compulsory. Secondly, to be eligible for workers’ compensation, an injury hadto be found to have arisen out of and in the course of employment.In keeping with contemporary attitudes, the first workers’ compensation laws in Australia were generally known as workmen’scompensation and did not expressly cover female workers until challenged by the women’s movement of the 1970s.Post-Federation growth in trade unionism and the rise of Labor governments led to a process of reforming those early workers’compensation arrangements, a process which, for a variety of reasons, was to continue in all jurisdictions throughout thetwentieth century.Coverage for workers’ compensation gradually extended to include most workers, and lump sum payments for loss of bodyparts were introduced. By 1926, New South Wales had introduced compulsory insurance, which became the model for mostworkers’ compensation schemes around Australia.Between the 1920s and 1970s, incremental reforms took place across the jurisdictions. Eligibility continued to widen, withthe broadening of the definition of injury to arising out of or in the course of employment. Reform

This edition of the Comparison of Workers' Compensation Arrangements provides both a summary and detailed information on the operation of workers' compensation schemes in each of the jurisdictions in Australia and New Zealand. This is the second year that the Australian Safety and Compensation Council has produced the Comparison, with