Key Points:
South Australia is significantly altering its return to work laws, while Western Australia opts for modernisation, not harmonisation, of its WH&S laws.
The new Return to Work Bill 2014 was introduced into the South Australian Parliament on 6 August, commencing what will be the most significant reform to the State's workers' compensation system in over 25 years.
The need for reform to the return to work laws in South Australia
The Return to Work Bill proposes to introduce a new return to work scheme, and will replace the Workers Rehabilitation and Compensation Act 1986.
In the second reading speech, Minister for Industrial Relations John Rau said that "the current Workers Rehabilitation and Compensation scheme does not best serve workers, employers or the state".
Similarly, South Australian Premier Jay Weatherill has said that the existing scheme is "failing at the most basic level" and that this was "hurting workers by denying them the opportunity to return to the job they left, and was hurting business through expensive premiums the longer workers were not at work".
The current workers rehabilitation and compensation scheme currently has some of the worst return to work rates in Australia, with 11% of Work Cover claims extending past six months but accounting for 92% of the scheme's costs. This has resulted in South Australian employers paying the highest average premium rate in Australia of about 2.75% of payroll.
Furthermore, 25% of workers who are injured at work and stay off work for more than two weeks, remain off work for two years or more.
The 2012-13 National Return to Work Survey has confirmed that although South Australia's return to work rate has been improving, it has consistently been below the national average for many years.
This has prompted the reform to reduce costs, eliminate workers' dependency on the scheme and increase focus on returning to work.
From one size fits all to a more nuanced approach
The current system treats injuries with a "one size fits all" approach. Although the number of seriously injured workers is small, those workers require extra support, case management and care. The Return to Work Bill aims to recognise the difference between serious and more minor injuries, and treat each appropriately.
The legal framework will change
Currently there is no access to the common law in the South Australian system. This will be reintroduced, subject to thresholds and restrictions.
The South Australian Employment Tribunal Bill was also introduced into Parliament on 6 August 2014. It proposes to establish the South Australian Employment Tribunal, which will have jurisdiction to review certain decisions arising under the Scheme.
Higher threshold for injuries to be compensable
Under the existing framework, an injury or disease must "arise from employment" to be compensable. This is less stringent than the test applied in other states, and can disadvantage employers if an injury is predominantly caused by non-work factors. The reform will set new thresholds for determining injuries or diseases. For example, the test for psychiatric injury will be strengthened so that employment needs to be the significant contributing cause of the injury.
Benefits for employers
The Scheme's stated intention is for South Australia to have a workers' compensation system that has comparable costs to other jurisdictions.
Minister Rau predicts that small businesses with around 10 employees paying $12,500 annually on WorkCover premiums could save approximately $5,000 under the Scheme, and that larger businesses with around 200 employees, presently paying around $300,000 per year, could save more than $120,000 per year.
Overall, Premier Weatherill predicts that this reform will lead to savings of around $180 million per year for South Australian businesses, and that the changes will be "vital for South Australian businesses, big and small, to remain competitive."
It is intended that the Scheme will be up and running by mid-2015.
The Return to Work Bill is at the second reading stage and will be further debated when South Australian Parliament resumes in September 2014.
WH&S harmonisation progress in WA
The WA State Government has elected to "modernise" its WH&S laws rather than "harmonise" them in line with the national reform, particularly in relation to regulation of the resources sector.
We expect model WH&S laws to be tabled in West Australian Parliament soon, before being released for a public consultation period of three months.
West Australia and Victoria are the only states not to have yet enacted the model WH&S laws.
State Attorney-General and Commerce Minister Michael Mischin has noted the State Government's support for WH&S consistency across jurisdictions, "in principle" but has stated that it does not support "entering into uniform schemes for their own sake or consider that harmonisation is a desirable end in itself".
The Minister noted that to date, none of the harmonised jurisdictions had "enacted laws that reflect, in every respect, the model laws".
The Department of Mines and Petroleum's ministerial advisory panel has stated that the Bills will be approximately 95 percent compliant with the model legislation developed by Safe Work Australia.
The State Government has indicated that the results of the Council of Australian Government's investigation into the improvement of the WH&S laws in respect of reducing red tape, comments from the public, and the West Australian regulatory impact statement conducted by Marsden Jacob Associates "will provide a foundation upon which the government can consider the best WH&S regime for Western Australia".
It is likely that the State Government will introduce two mirror WH&S Bills – one for occupational health and safety in general industry and one specifically for the resources sector. The resources Bill will incorporate relevant elements of model WH&S laws as well as the National Mine Safety Framework.
West Australia's Mining Industry Advisory Committee Chair Simon Ridge has informed the committee that the new laws are unlikely to reach implementation stage for another 18 months.
At this stage, employers should consider the impact that harmonisation or modernisation may have on their operations, and prepare to make submissions. Please contact us if you would like assistance in preparing submissions.
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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.
