Australia: Significant Changes To QLD Workers’ Compensation Scheme

On 17 October 2013, the Queensland Parliament passed amending legislation making significant changes to the Workers' Compensation and Rehabilitation Act 2003 (WCRA).  Of particular significance, the amendments introduce, for the first time in Queensland, an injury threshold for workers to be able to pursue common law (negligence) claims against their employer.

Introduction of 5% threshold

A worker under the WCRA must now receive a "degree of permanent impairment" (DPI) – formerly known as "work related impairment" or "WRI" – of more than 5% for an injury in order to pursue common law damages against their employer.  The worker's DPI for the injury is assessed by a doctor appointed by the  workers' compensation insurer WorkCover Queensland or, if the employer is self-insured, by the employer.

The threshold applies to all injuries occurring on or after 15 October 2013.

An injured worker will still be able to make a statutory (no fault) claim under the WCRA irrespective of the threshold and be covered for wage benefits and medical costs and also be entitled to specified lump sum compensation for their injury.

Impact on non-employers and their insurers

The introduction of the 5% threshold is likely to substantially reduce the current number of claims for damages brought by injured workers against their employers, particularly where only minor injuries are involved. This reduction in claims should in turn result in fewer claims for contribution being made by employers against non-employer defendants.

However, we anticipate the change is likely to increase the number, and value, of direct claims being made by injured workers against non-employer defendants – such as host employers, occupiers, contractors and manufacturers (and public and product liability insurers) – under the Personal Injuries Proceedings Act (PIPA) because such claims are not subject to any injury threshold. Injured workers who do not meet the impairment threshold are therefore likely to increase their focus on non-employer respondents to obtain damages.  Further, the non-employer respondent will not be able to obtain contribution from the employer as a joint tortfeasor where the injury threshold has not been met.  Consequently the non-employer will, if found liable, be responsible for the full amount of the claim regardless of any negligence on behalf of the employer (absent any contractual indemnity provided by the employer).

Who is a "worker" under the WCRA

The latest amendments to the workers' compensation scheme come on the back of changes made to the definition of "worker" in the WCRA from 1 July 2013. The change essentially aligns the definition of "worker" under the WCRA with that used by the Australian Taxation Office (ATO), that is, the worker works under a contract and, in relation to the work, is an employee for the purpose of assessment for PAYG withholding under the Taxation Administration Act 1953 (Cth). However, Schedule 2 of the WCRA also specifically includes or excludes certain persons as workers under the WCRA irrespective of whether they satisfy the worker test.

Whether or not a person is called an employee or contractor is not determinative of whether they would be a "worker" under the WCRA. The ATO website contains useful guidelines and an employee/contractor decision tool which can be used to consider whether a person is an employee (and therefore a worker) or a contractor. WorkCover Qld has stated that it will use the ATO guidelines and decision tool to determine who should be covered for workers' compensation and claims purposes, provided the person is not specifically included or excluded as a worker under Schedule Two of the WCRA. Therefore, employers should use the ATO decision tool if they are unsure whether a person is a "worker" for the purposes of the WCRA and a copy of the determination should be kept as a record.

An example of a specific exclusion under Schedule 2 of the WCRA relates to certain crew (including skippers) of fishing vessels. The Schedule provides a member of the crew of a fishing vessel is not a worker for the purposes of the WCRA if (a) the person's entitlement to remuneration is contingent upon the working of the ship producing gross earnings or profits and (b) the remuneration is wholly or mainly a share of the gross earnings or profits. Such crew members are commonly referred to as "share fisherman" but it is important the specific requirements of the exclusion are satisfied otherwise the crew member might be considered to be a worker under the WCRA.

Claims for damages by injured workers who fall outside the operation of the WCRA will not be subject to the injury threshold, and such claims will continue to be governed by the PIPA and be determined in accordance with the provisions of the Civil Liability Act.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.