In November’s HR Breakfast Club, Bill Pardy from the Employment Law & Investigations team led an informative session for HR professionals on the employer’s role in managing workers compensation claims.
Bill’s discussion examined the following areas:
Bill explored the structural issues and complexities of the workers compensation (WC) system in the ACT. The discussion highlighted how the ACT compares to other Australian jurisdictions and the challenges ACT businesses face in managing ever-increasing insurance premium costs despite limited avenues to reduce the cost of claims.
Key subjects of the session included:
The ACT Workers Compensation Act (WC Act) is recognised as being more generous to injured workers than other Australian jurisdictions, with key differences in the treatment of claims and entitlements.
A notable issue discussed was the prevalence of disputes over whether a claim should fall under NSW or ACT jurisdiction, creating confusion and inconsistencies in the application of the law.
The WC Act in the ACT, originally established in 1951, is increasingly seen as outdated and no longer ‘fit for purpose’ in today’s context. Necessary reforms were suggested to modernise the legislation to reflect approaches in other jurisdictions, current workforce dynamics and societal expectations.
The seminar discussed the difficulties surrounding psychological injury claims, especially given the broad definition of injury in the WC Act.
It was further noted that ACT insurers often lack the appetite to defend psychological injury claims based on ‘reasonable employer action’.
Workers compensation litigation in the ACT is characterised by slow proceedings and high costs, which stands in contrast to other statutory claims, such as claims under the Motor Accident Injuries Act (MAIA).
Plaintiff lawyers have little downside risk from a costs perspective, making them more likely to proceed with claims, even if they are not particularly strong from an evidentiary perspective.
Conciliation processes in the ACT are managed by relatively inexperienced court officers and there is a lack of contested hearings, meaning few precedents are established to guide future decisions.
The high cost of claims was discussed in depth, particularly how premium costs are impacted by claims. The impact of claims on premiums, while dependent upon the individual insurer’s underwriting approach, can often last up to five years, creating long-term financial pressures for businesses.
The ACT WC insurance market is small, with limited options, resulting in low competition among insurers and driving up premiums.
Common law settlements dominate the settlement landscape, with workers alleging negligence on the part of their employer to try to ensure a successful claim and maximum damages. This often requires employers to contribute time and energy towards collaborating with investigations, advising on defences and responding to subpoenas, leading to significant cost burdens for businesses.
Businesses must meet their obligations to their insurer to retain indemnity under the standard WC insurance policy. This means time and other productivity losses, and there is no mechanism to compensate ACT businesses for those losses.
This session highlighted the need for reform in the ACT’s workers compensation system to bring it in line with modern practices and to address the growing burden on businesses dealing with claims, particularly those involving psychological injury.
The seminar concluded with a call for a more balanced approach that properly addresses the needs of workers while also recognising the significant strain on employers, particularly regarding direct costs, such as higher premiums, and indirect costs, such as lost productivity.
If you are a HR professional in the ACT and would like to attend future HR Breakfast Club forums, visit our monthly forum page and register to attend.
If you have any questions or queries about your rights and responsibilities under the ACT Workers Compensation Act, as either an employer or an employee, please contact the Employment Law & Investigations team on 02 6274 0999.