Changes to the WorkCover Scheme

Changes for injured workers

• Average weekly earnings
• Weekly payments
• Work capacity reviews
• Payment for permanent serious injury
• Payments in the event of death
• Counselling services
• Payments during disputes about ceasing weekly payments
• Notice periods
• Restricting redemptions
• Code of workers' rights

Average weekly earnings

Average weekly earnings (AWE) are now defined as the worker’s pre-injury average weekly earnings during the 12 months preceding the injury. This means that whatever an injured worker earned per week in the 12 months prior to their injury will be averaged over the year. This average weekly sum is the amount paid under the WorkCover Scheme for the first 13 weeks, reducing thereafter in line with reductions in weekly payments, see below.

If an injured worker was not employed by the same employer for the previous 12 months, the pre-injury AWE is now calculated as the average of the period the worker was in that employment. However, if this period of time is not suitable eg, if the worker had just commenced employment, then their AWE will be worked out on the basis of what the worker could reasonably have expected to earn in that employment, with reference, for example, to a comparable employee over an appropriate period of time.

In working out the worker’s pre-injury AWE, the worker’s ordinary time rate of pay for the worker’s normal number of hours per week will be calculated. Regular shift penalties, overtime allowances and prescribed non-cash benefits (such as a motor vehicle), based on the preceding 12 months, are also included if overtime was likely to have been ongoing.

In addition, under the new legislation, an annual adjustment can be made to a worker’s weekly payments as and when adjustments fall due under an award or enterprise agreement with the annual adjustment of benefits applying in other cases.

Changes to the definition of average weekly earnings became effective from 1 July 2008 applying to new claims received on or after 1 July 2008.

Weekly payments

Weekly payments are the compensation payments made to injured workers while they are unable to return to work. For seriously injured workers, weekly payments can be paid until retirement age. The amount of weekly payments paid to injured workers must be fair to cover lost wages, but should not have the effect of discouraging return to work.

The new legislation sets weekly payments at a rate equal to the worker’s average weekly earnings for 13 weeks (ie, 100%). Given that a majority of injuries for which workers compensation is claimed heal within 12 weeks, this ensures that there is full or near-to-full coverage for the majority of worker’s wages over the entire period of their claim. At 13 weeks there is a reduction in payments to 90%, followed by a further reduction to 80% at 26 weeks. The 80% reduction is in line with the reduction that already occurs in South Australia for longer-term claims (ie, claims of 52 weeks or more).

The maximum weekly amount payable to injured workers remains at the current level of twice the State average weekly earnings (of $2,159.20 indexed), higher than other comparable schemes (see Table below).

Note: for existing claims (pre-1 July 2008) the current reduction in weekly payments will continue to apply ie, a reduction to 80% at 52 weeks.

Changes to weekly payments became effective from 1 July 2008 applying to new claims received on or after 1 July 2008.

Comparison of timing and level of reductions

The South Australian Scheme’s weekly payments are the most generous of comparable schemes, particularly the maximum weekly amount payable.

Download 'Weekly Payments' fact sheet.
 

Work capacity reviews

A work capacity review assesses whether an injured worker is well enough to return to work or increase their earnings, either on a full-time, part-time or casual basis in suitable employment. It reviews an injured worker’s skills and capabilities to determine what suitable employment can be undertaken.

The review determines whether an injured worker is entitled to weekly payments beyond 130 weeks. It does not necessarily mean that an injured worker’s weekly payments will stop.

Under the new legislation, workers who are able to return to suitable work but who have failed to do so will no longer receive weekly payments. Injured workers who cannot work because they are not well enough, and this is likely to continue indefinitely, will continue to be supported by the Scheme. Workers who have returned to work to the full extent they are able to may also continue to receive 'top-up' payments.

This change comes into effect for all workers from 1 April 2009.

Download 'Work Capacity Reviews' information booklet (on screen)

Download 'Work Capacity Reviews' information booklet (print version)

Payment for permanent serious injury

All workers compensation schemes provide for one-off ‘lump sum’ payments to injured workers who have suffered permanent injury or illness, called non-economic loss. The lump sum payment is made to the injured worker, in addition to the weekly payments made to the worker.

The new legislation adopts the Victorian model for non-economic loss payments but with a significant increase in the maximum amount payable to workers who suffer a permanent, serious injury or illness – from $230,982 (currently) to $400,000.

The introduction of a threshold, that is, the level at which an injured worker can receive a non-economic loss payment, has been set at 5% for physical injury. If a worker has less than 5% impairment, they are not entitled to payments for non-economic loss. This means the system is weighted so that more compensation is paid to those with moderate to serious permanent injuries, rather than those with minor permanent injuries.

Summary of payments for permanent injury or illness

WorkCover will consult with stakeholders on the new guides which will be used by doctors to assess the degree of permanent impairment before it becomes effective from 1 April 2009.

Payments in the event of death

The Victorian scheme’s provisions for payments in the event of death – considered by Alan Clayton to be the “most comprehensive of any Australian jurisdiction” – have been adopted with a maximum entitlement of $400,000, in addition to ongoing weekly payments. This extends to ensuring that family members of deceased workers are provided with counselling to assist with grief and psychological pain (see ‘counselling services’, below).

These changes became effective from 1 July 2008 applying to claims received on or after 1 July 2008.

Counselling services

In addition to increased payments in the event of death and ongoing weekly payments (see ‘payments in the event of death’, above), the new legislation also allows for the provision
of counselling services to family members of a deceased worker.

According to the review, it was often the case that, where there had been a workplace fatality, particularly a traumatic fatality, workmates of a deceased worker would receive some form of counselling, but that often counselling was not extended to family members of the deceased worker. The new legislation now provides for counselling services for family members in the event of a compensable death.

This change became effective from 1 July 2008 applying to new claims from 1 July 2008.

Payments during disputes about ceasing weekly payments

Section 36 of the legislation is about the discontinuing of weekly payments. This section of the Act outlines the only reasons why weekly payments can be stopped and includes a worker’s refusal to participate in rehabilitation activities or to attend medical examinations (called ‘mutual obligation’).

There are a variety of other clauses that give rise to weekly payments being ceased outside of mutual obligation (refer to section 36 of the Workers Rehabilitation and Compensation Act 1986 for further details).
Under the former legislation, workers who disputed a decision to stop or reduce their weekly payments under section 36 continued to be paid their full weekly payments while the dispute was in progress.

The approach of all other States is to stop payments during a dispute of this type to ensure the focus returns to recovery and rehabilitation activities. Where weekly payments are stopped under the new section 36, weekly payments will not be reinstated for the duration of the dispute. If the dispute is found in the worker’s favour, the unpaid weekly payments will be repaid to the worker, with interest.

This amendment includes a safety net for workers, which enables workers to apply for a review of the decision to stop payments on the basis of ‘unreasonable’ decision-making. The WorkCover Ombudsman can check that the decision has a proper or valid basis and is thus 'reasonably open'. If the decision is unreasonable, payments will be reinstated while the dispute continues. If the decision is reasonable, payments will not be reinstated while the dispute is being resolved by the Tribunal.

Note 1: Under the new legislation, the stopping and re-starting of weekly payments can occur only for disputes under section 36, not disputes that otherwise pertain to the Act.

Note 2: This change is accompanied by stronger accountabilities for those empowered to make decisions. These accountabilities include the Code of workers’ rights and the WorkCover Ombudsman.

This change became effective from 1 July 2008 applying to new disputes made on or after 1 July 2008. Claims that are currently the subject of dispute resolution and have had payments reinstated will continue to receive those payments.

Notice periods

A notice period is the amount of time that must be given to an injured worker before weekly payments can be reduced or stopped. The new legislation changes the notice periods required to be given to the worker in this situation. The new notice periods are outlined below.

Notice Periods

This change became effective from 1 July 2008 and applies to all claims.

Restricting redemptions

The use of redemptions (that is, a one-off payment from WorkCover) to finalise claims from the Scheme where there has not been a return to work will be restricted to certain circumstances.

A redemption is a lump-sum payment to effectively ‘settle’ and cease an injured worker’s entitlement to ongoing compensation or rehabilitation support. Previously, redemptions have been used to finalise compensation claims only after all return to work options have been exhausted.

The Clayton-Walsh review recommended redemptions only be used in limited circumstances, rather than complete elimination (see below), consistent with the NSW and Victorian schemes. The new legislation allows the use of redemptions only where it will not undermine the Scheme’s primary focus on return to work.

Use of redemptions will only be allowed in circumstances where:

• the worker has returned to work but has an ongoing entitlement to a small top-up of $30 per week or less and the redemption will remove the administrative cost of the claim remaining open for WorkCover and the worker
• the worker is 55 years of age or older and has no current work capacity
• exceptional circumstances apply where there is an overwhelming social interest in finalising the matter (as determined by the Workers Compensation Tribunal).

The legislative provisions became effective on 1 July 2009. From this date, the new redemptions restrictions apply to all claims with an injury date on or after 1 July 2006.
From 1 July 2010, the new restrictions on redemptions apply to all claims.
In anticipation of these changes, from 1 July 2008 the WorkCover redemption policy was revised so that all claims with injury dates on or after 1 July 2006 will be subject to the new redemption restrictions (unless negotiations have already commenced).

Download "Restricting redemptions" fact sheet
 

Code of workers' rights

The Code of workers' rights will set out the rights of injured workers and the level of service they should expect from WorkCover and its claims agent, and self-insurers, as well as a process for dealing with breaches of the code. It will be developed in consultation with stakeholders and will help protect workers against poor decision making by WorkCover, its agent or self-insurers. A similar code exists in New Zealand.

The provisions allowing for the Code of workers’ rights to be regulated commenced on 1 July 2008. Prior to regulating the Code, the Government will consult with stakeholders. This is ongoing.