Workers Compensation Survival Kit – Part 8 (The New Laws)

In Part 8 of the Workers Compensation Survival Kit, Mal Byrne writes about how injured workers will be impacted by the enactment of the Return to Work SA scheme.

In response to the WorkCover Corporation’s significant unfunded liability, the State Government has now enacted the Return to Work Act 2014 (SA) and in doing so has reduced this liability by cutting workers’ entitlements. The Return to Work scheme replaced the outgoing WorkCover system from July 1 2015.

The new Act is a curate’s egg in that some entitlements have been increased but some taken away.  Section 43 entitlements have not changed.  However, the Corporation’s principal liability is income maintenance payments on long term claims.  Like the April 2009 amendments to the Workers Rehabilitation and Compensation Act 1986 (SA), the focus of the Act is to reduce the Corporation’s liability by reducing the number of workers on long term income maintenance payments.  Section 35B of the Act was introduced in April 2009 where workers were cut off income maintenance payments after 130 weeks if they had work capacity.  In the new Act, the only workers who will be allowed to continue on income maintenance payments beyond 1 July 2017 are those with a 30% whole person impairment.

The principal changes to the Act are as follows:-

1. Compensability

Under the current legislation, an injury must arise from employment to be compensable.  That requirement does not change under the new legislation, but the new legislation goes on to prescribe what the phrase “arise from employment” means.  Previously work need only have been a substantial cause of the injury.  Under the new legislation, employment has to be a “significant contributing cause of the injury”.  The situation is even more difficult for psychiatric injury where the cause has to be “the significant contributing cause”.  Previous decisions of the Workers Compensation Tribunal allowed substantial causes to be just one of a number of substantial causes.  The Tribunal did not have to identify or delineate a particular cause as the significant contributing cause.  The change means that the Tribunal will have to identify employment as the predominant cause, in effect, one that outshines all other potential causes.  That will make work related psychiatric injury claims harder to establish.

2. Seriously Injured Workers

The only type of workers who will be better off under the new legislation are seriously injured workers.  A seriously injured worker will be entitled to ongoing weekly payments until age 65 even if they have work capacity (a strange anomaly and hardly an incentive to return to work or continue working, the stated object of the Act).  A seriously injured worker will be someone assessed as having 30% whole person impairment or more pursuant to the AMA Guidelines.  Where a person suffers from a physical and psychiatric injury, the 30% impairment will have to relate to either the physical injury alone or the psychiatric injury alone, not a combination of both.  A worker can apply to be declared a seriously injured worker and the corporation investigates and makes the determination.  A worker can only make one application to be declared as seriously injured worker unless the Tribunal grants the worker permission to make a second application.

The situation on income maintenance payments changes dramatically for long term injured workers currently on those payments.

Only workers declared to be seriously injured workers will be able to receive income maintenance payments beyond 1 July 2017.  Currently, workers who have any work capacity for any form of employment after 130 weeks from the date of injury who were receiving income maintenance at that point in time can have their payments ceased.  Workers with partial incapacity at that point in time can apply for a determination under Section 35C of the current legislation that they are working to their maximum capacity and they should receive “top up” income maintenance payments indefinitely.  Under the new system applying from 1 July 2015, the only workers who will be able to remain on income maintenance payments two years after the date of injury will be those workers who are 30% or more whole person impaired, that is to say, those workers declared to be seriously injured workers.  The issue will not be work capacity.  The issue will be whole person impairment.  Any workers who do not meet that threshold will be cut off their income maintenance payments regardless of their work capacity.

3. Weekly Payment Rates

Workers will be entitled to 100% of their average weekly earnings for the first 12 months from the date of injury whereupon it drops to 80% if the worker is still incapacitated.  Under the current laws, workers receive a 100% of their average weekly earnings for three months, then 90% for the next three months then 80% thereafter.

4. The Return of Common Law Damages

Seriously injured workers are doubly blessed as they and only they will be able to sue their employer for common law damages if they can show that the work injury was caused by the negligence of the employer.

5. Lump Sum Payments for Future Economic Loss

This is a new entitlement available to workers who do not meet the 30% whole person impairment threshold but have greater than 5% whole person impairment.  However, it applies to physical injuries only and also does not apply to noise induced hearing loss.

6. Redemptions

The law on redemptions has not changed, but the availability of redemptions of income maintenance from the WorkCover Corporation itself (not exempt employers) has been a matter of policy for a number of years and that will continue.

7. If I am an injured worker with a current claim, what do I do now?

If you are a current injured worker with a serious injury and you have been on income maintenance payments for some time, it is worthwhile seeking a legal advice about what the next two years hold.  In particular, if you are incapacitated for work and have been for a long time, you need to give consideration to whether you might meet the 30% whole person impairment threshold and if not, what you should be thinking about now, particularly if you work for an exempt employer who has an unfettered discretion to offer you a redemption.  Redeeming your claim now might make more sense economically and probably does make more sense economically if you are unlikely to make that 30% whole person impairment threshold.  If your claim is being managed by Employers Mutual Limited or Gallagher Bassett, a redemption may still be an option now or may become an option between now and 1 July 2017 depending on your circumstances.

When I called this blog the “Workers Compensation Survival Kit”, I was not joking.  Workers on workers compensation survive.  They do not prosper and survival becomes tougher with every legislative amendment.  There will be winners and losers under the new changes.  If it appears that you might be a loser, you should seek legal advice on at least minimising those losses.

For a free initial interview about your workers compensation claim, contact us. TGB assists workers in South Australia, Western Australia and Northern Territory.