Australia: Bill introduced in Queensland to exclude indemnity claims by employers

The Byrne decision required WorkCover Queensland to indemnify an employer which had assumed liability pursuant to a contract with another party. For example, if a labour hire employer agreed to contractually indemnify a host employer, or an employer agreed to indemnify a principal contractor, and assuming the indemnity was effective to transfer the liability, Byrne provided that liability would be sheeted home to WorkCover Queensland as the relevant insurer. Although, in many respects, the decision in Byrne was quite narrow and only applied in cases where:

• As a matter of construction there was an effective contractual indemnity; and
• The worker otherwise had a right to sue the employer, for example, had not accepted a lump sum compensation and made their positive election.

Byrne did cause significant concern for WorkCover Queensland, in circumstances where WorkCover faced financial exposure to contractual liabilities that were assumed by certain employers for their own commercial imperatives.

This amendment will restore certainty. The proposed amendment extends the definition of damages in section 10 of the Act to exclude an effective indemnity granted by the employer to another person in which the employer assumes that other person's legal liability.

Not only does this amendment restore the pre-Byrne position, it goes further in providing that indemnity provisions are void and not to be applied by the courts. This amendment is proposed to simplify issues of appointment generally in work injury claims. By providing that contractual indemnities are void and are not to be applied or enforced by the courts, this means that issues of apportionment between joint tortfeasors are determined by reference to established principles pursuant to the Law Reform Act 1995. Importantly, an employer is then not faced with a potentially uninsured loss if an employer has assumed liability pursuant to a contract with another party.

The application of the National Injury Insurance Scheme

Although the reversal of the Byrne decision will have significant impact on certain employers, the main purpose of the Bill introduced into Parliament is to ensure that workers who suffer particularly serious personal injuries as a result of work related events in Queensland, receive necessary and reasonable treatment, care and support payments regardless of fault. That is, this Bill provides for injured workers to access the National Injury Insurance Scheme ('NIIS').

In 2011 the Productivity Commission recommended a National Injury Insurance scheme ('NIIS') alongside the National Disability Insurance Scheme ('NDIS')

Where certain seriously injured workers can establish that their employer was at fault, they are able to elect to opt out of treatment and pursue common law rights. Seriously injured workers who cannot establish fault or choose not to opt out of treatment will nonetheless receive treatment care and support through NIIS.

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