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Insights

Background

The workers compensation system is funded by premiums charged to employers and provides a range of benefits for workers who have been injured at work.  In June 2012 the government announced sweeping cuts to the benefits payable to injured workers.  These included restrictions on the length of time that people could recover weekly compensation and medical expenses and the abolition of lump sum compensation for many injured workers.  At that time, the estimated deficit of the scheme was over $4 billion.  The scheme is now estimated to be in surplus.

The changes

There are three principal types of changes introduced by the Bill.  They are:

  1. An increase of benefits for some injured workers

    One of the more controversial changes in June 2012 was to place a limit on the length of time that injured workers could recover medical expenses.  Many injured workers could only recover medical expenses for up to 12 months.  In June 2015 changes increased this to a minimum of two years.  Some workers will be entitled to recover medical expenses of up to five years and the severely injured workers will be able to recover medical expenses for life.Those who require hearing aids or artificial limbs are generally able to recover those for life. There has been substantial increase in the amount of lump sum compensation payable and the death benefit. The return to work programs have also been assisted under the Act.

  2. A reduction on premiums paid by employers

    As part of the emphasis on returning injured workers to work, the NSW Government has announced that there will be a premium discount for employers who achieve or exceed particular performance parameters. It is estimated that the premium reduction for employers will be substantial.

  3. Regulation structure

    WorkCover has regulated the system for many years.  The changes envisage a number of new organisations.  They are:

  • Safe Work NSW which regulates the work, health & safety obligations;
  • Insurance Care NSW (iCare) which regulates insurance; and
  • State Insurance Regulation Authority which regulates the legal framework and obligations of insurers, employers and injured workers.

The details of all of the changes are not yet clear.  One of the changes seems to envisage the abolition of the Dust Diseases Board.  The Dust Diseases Board is a specialist board who administer entitlements to workers compensation for those unfortunate injured workers (or their survivors) who have been exposed to asbestos.  This board has a particular degree of expertise and detailed industry knowledge.  It will be a shame if this knowledge was lost to the community.

Comment

The 2015 changes have been welcomed by most commentators.  It is pleasing to see a restoration of some benefits to injured workers.  Employee organisations are critical of the changes in that they do not go far enough.  Obviously this is a balance which the government makes its own determination on.

Our view is that there is likely to be at least one more liberalisation of the benefits paid to injured workers in the next 12 – 24 months.