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In NSW, workers compensation is governed by the Worker’s Compensation Act 1987. It was introduced to replace the Worker’s Compensation Act 1926. Overseen by WorkCover, the Act outlines the compensation and rehabilitation of workers in respect to work related injuries. The Act is divided into 10 parts (2 of which have been repealed) to cover the issues of compensation liability and benefits, uninsured liabilities, common law remedies, insurance and protection of injured workers from dismissal.

Part 1 - Preliminary

NSW Workers Compensation Act System

The New South Wales workers compensation system consists of four elements such as:

1. NSW Work Cover Scheme (under WorkCover) – which provides workers compensation insurance through contracted Scheme Agents to employers operating in New South Wales.
2. Self-insurance Corporation (SI Corp) - through the Treasury Managed Fund – manages workers compensation, administration and financial liability for most public sector employers except those who are self-insurers.
3. Self-insurers – organisations with enough investment to pay and manage their own claims. There are strict criteria that employers must meet prior to Work Cover granting a self-insurers licence.
4. Specialised insurers – hold restricted licences to support the workers compensation insurance risk for a specific industry or class of business or employer.

Role of WorkCover

WorkCover has dual roles within the workers compensation system.

1. Work Cover acts on behalf of the Nominal Insurer, which is the legal entity responsible for the performance of the Work Cover Scheme.
2. Work Cover also regulates and manages the workers compensation system, including the licensing of self and specialised insurers.

The workers compensation system in work cover operates under The Workers Compensation Act 1987 and The Workplace Injury Management and Workers Compensation Act 1998.

Definition of injury

Injury is when employees get injured while they working or at their work place, which includes when workers get disease due to the cause of employment and the employment became a contributing factor to that disease and if the employment was the contributing factor of any disease which would lead to irritation, acceleration or worsening of that disease. Dust disease is excluded from this Act as it comes under workers compensation Dust Disease Act 1942.

Part 2 - Compensation: liability

Workers injured at the work place or in case of death during their work, his or her dependents are eligible to get workers compensation from the employer according to this Act. Compensation under this Act is only payable in respect of employment that is connected with this state.

Important contributing factors to injury

There are certain factors that need to be considered for the eligibility of receiving the worker’s compensation such as :

1. The time and place of the injury
2. The nature of the work performed and the particular tasks of that work
3. The duration of the employment
4. The possibility that the injury or a similar injury would have happened anyway, at about the same time or at the same stage of the worker’s life, if he or she had not been at work or had not worked in that employment
5. The worker’s state of health before the injury and the existence of any hereditary risks
6. The worker’s lifestyle and his or her activities outside the workplace

Part 3 - Compensation: benefits

Benefits of workers compensation are dependent on the individual claim and the type, nature and severity of the injury.

Death benefits and funeral expenses

If death was the result of an injury at the work place, the compensation payable by the employer under this Act shall be $425,000 (the lump sum death benefit) which is to be allocated to any dependants of the injured worker or (if there are no such dependants) they pay that money to the worker’s legal personal representative. In addition, dependent children of the worker are entitled to extra payments.

The employer must pay additional compensation equal to the reasonable funeral expenses but not exceeding to $9000 or the other amount prescribed by the regulations.

Weekly benefits

If the worker totally or partially incapacity for work which result from an injury at work place while they working they are eligible to get their compensation each week as their normal wages. They get this payment during the incapacity of work or unfit for work.

The maximum weekly payment of compensation to an injured worker in respect of any period of totally or partially incapacity for work shall not in any case exceed $1000 and additional amounts for workers with dependent children.

Medical, hospital and rehabilitation expenses

This act also provide compensation for the cost of medical treatment and rehabilitation required for the workplace related injuries. These include:

1. Any medical or related treatment.
2. Any hospital treatment.
3. Any ambulance service.
4. Any workplace rehabilitation.

The worker’s employer is liable to pay, in addition to any other compensation under this Act, the cost of that treatment or service and the related travel expenses specified.

Permanent imparment benefits

Worker who has a permanent impairments due the work related injury. They are entitled to receive the compensation. Permanent impairment compensation is in addition to any other compensation under this Act.

Compensation for pain and suffering

A worker who is entitled to receive the compensation depending on the degree of their injury or perment impairment, If the injury was 10% or more. But the amount not exceeding $50,000. Pain and suffering compensation is in addition to any other compensation under this Act.

Compensation for property damage

Under the Act, a worker who has met with an accident during their employment may be entitled to compensation from their employer to cover damage to clothing, spectacles, artificial body parts such as teeth and limbs, and other items. This compensation would cover the cost of consultations or examinations and either repairing or replacing the items.

Commutation of compensation

A commutation is an agreement between the injured worker, employer and Scheme Agent or insurer to pay all of the injured worker’s entitlements to weekly benefits, medical, hospital and rehabilitation expenses as a lump sum. By agreeing to a commutation the injured worker's entitlements to weekly payments and all other expenses will no longer be paid and the Scheme Agent or insurer will not be liable for further claims with regards to the injury.

Part 4 - Uninsured liabilities

Uninsured liability provides workers with benefits under the Act when they have suffered a compensable injury and their employer is uninsured.

Persons eligible to make claims

If the employer is uninsured or the person claiming the compensation has been unable to identify the relevant employer than a claim may be made against the Nominal Insurer by any person who considers they have a claim against an employer for compensation under this Act or work injury damages in respect of an injury to a worker.

If a payment is made by the Nominal Insurer and the employer is subsequently identified, the Nominal Insurer may recover the amount paid.

Publication of claims

A notice of the claim may be published and any person who fails to notify the Nominal Insurer or who fails to supply any information is liable to reimburse such amount as the Nominal Insurer has paid or is guilty of an offence and liable to a penalty.

If the employer is found to have a licensed insurer with a relevant policy at the relevant time, the Nominal Insurer will supply the insurer with all relevant details. The insurer will then have 14 days to either accept or deny liability to compensate the employer.

Proceedings before Commission on claim for compensation

On an application to the Commission, the applicant must name the alleged employer and the Nominal Insurer as respondents to the proceedings. The Nominal Insurer can notify any person who may be liable to pay compensation (or may have insured that liability) to join the applicant as a party to the proceedings.

Recovery from corporations liable to reimburse Insurance Fund

If a corporation is liable for a payment amount and it is not recoverable, the Nominal Insurer is entitled to recover the amount from a person who was a liable director of the corporation at the relevant time.

Miscellaneous provisions

If an award of compensation is made that is the subject of a claim, the Nominal Insurer may cause an inquiry to be made to determine the genuineness of the grounds on which the award was based if the employer did not defend the proceedings or the award was made before the claim.

Part 5 - Common law remedies

Choice of law

Substantive law governs whether or not a claim can be made for damages in respect of an injury (or death). This applies only to a claim for damages against the employer if the injury was caused by the negligence of the employer, or a breach of contract by the employer.

If the injury was caused under circumstances for which a person other than the employer is liable, the worker is entitled to take proceedings against that person and any person liable to pay compensation.

Common law and other remedies

If a person recovers damages then they are no longer entitled to any further compensation and the amount of any weekly payments already paid is to be deducted from the damages and reimbursed to the person who paid the compensation.

There is a 6-month delay before a person to whom compensation is payable can commence with court proceedings for damages against the employer, unless the employer fully denies liability or admits partial liability but the person is dissatisfied with the extent to which they admit.

A person entitled to compensation cannot commence court proceedings for damages against the employer liable to pay that compensation more than 3 years after the date which the injury occurred.

Modified common law damages

No damages may be awarded unless the injury results in death or permanent impairment of at least 15%. The only damages that may be awarded are those for past and future loss of earnings. In rewarding damages for future loss, the court is to disregard any earning capacity of the injured worker after pension age.

Damages for psychological or psychiatric injury can be given to the injured worker or a person (i.e. parent, spouse, child, etc) who as a consequence has suffered more than normal emotional or cultural grief.

Part 7 - Insurance

Policies

Under the Act all employers in New South Wales, whether they are businesses or individuals, must obtain and maintain a workers compensation insurance policy that covers every one of their workers all of the time. Failure to do this may result in penalties for the employer. The reason an insurance policy is required is so that if a worker suffers an injury or disease related to their job they are able to get the support they need. This support may come in the form of weekly benefits, money to cover medical treatments, rehabilitation, or a lump sum payment.

Premiums

As with workers compensation policies, all employers in New South Wales must pay workers compensation premiums. This funds the NSW Workers Compensation Scheme so it is able to provide support to injured employees. The amounts employers must pay for these insurance premiums are calculated on a number of factors, including the type of industry in which they are involved, the wages they pay and the cost of any claims made by their workers. There are many obligations employers are required to fulfil in relation to their policies and premiums under the Act, and failure to do so may result in financial penalties for the employer.

Scheme agents

In order to obtain the relevant workers compensation insurance policy, an employer without a current one must contact a scheme agent, who can immediately establish a policy. The length of a workers compensation insurance policy is usually one year. In New South Wales, WorkCover chooses the scheme agents to do a number of tasks. These include issuing workers compensation insurance policies, determining and collecting insurance premiums, managing claims, providing support including rehabilitation for workers injured while at work, paying benefits to injured workers, and overseeing services such as medical treatments provided by third parties. In NSW there are seven scheme agents:

• Allianz Australia Workers’ Compensation (NSW) Limited
• Cambridge Integrated Services Australia Pty Ltd trading as Xchanging
• CGU Workers Compensation (NSW) Limited
• Employers Mutual NSW Limited
• Gallagher Basset Services Pty Ltd
• GIO General Limited
• QBE Workers Compensation (NSW) Limited

Part 8 - Protection of injured workers from dismissal

The Act offers protection to workers who have been injured in the workplace by giving them cover for reinstatement, rehabilitation, and financial and medical support. It also allows for penalties to be given to employers who do not follow the provisions outlined in the Act.

Application to employer for reinstatement of dismissed injured workers

The Act offers protection to workers who have been injured in the workplace by giving them cover for reinstatement, rehabilitation, and financial and medical support. It also allows for penalties to be given to employers who do not follow the provisions outlined in the Act.

Application to Industrial Relations Commission for reinstatement order if employer does not reinstate

If the employer does not immediately reinstate the injured worker to the position they are applying for (or a similar position), the worker may apply for a reinstatement order from the Industrial Relations Commission, however a time limit for this application of two years from the date of dismissal may apply.

Order by Industrial Relations Commission for reinstatement

It is possible for the Industrial Relations Commission to order an employer to reinstate the injured worker in a position they have applied for as long as they are satisfied the worker is fit for the job. If the employer does not have such a position available the Industrial Relations Commission may order the employer to reinstate the worker in another kind of employment that might be less advantageous, or possibly a part-time position or one which allows for the injured workers rehabilitation. If an order for reinstatement is given by the Industrial Relations Commission, it may entitle the worker to be paid a specified amount by the employer for the time between the application for reinstatement and the order for such from the Industrial Relations Commission.

Presumption for dismissal

It is presumed that if applying for a reinstatement order, the main reason for the workers dismissal was that they were unfit for employment due to the injury they received. However, if an employer can prove to the Industrial Relations Commission that the workers dismissal was due to other factors, not the injury alone, this presumption is rebutted and a reinstatement order may not be issued.

Disputes as to fitness

If there is a dispute over the fitness of a worker for employment, the Industrial Relations Commission may refer them to an approved medical specialist for assessment.

Duty to inform replacement worker

An employer who replaces an injured worker within two years of dismissing them must inform the new employee that the dismissed worker may be entitles to return to the position, otherwise the employer is guilty of an offence and can be issued a penalty of up to 50 penalty units.

Dismissal within six months of injury an offence

An employer may be found guilty of an offence if an injured worker is dismissed as a result of being unfit due to their injury within the relevant period after the injury occurred, often six months or the period during which they are entitled to accident pay. The maximum penalty for an employer who does this is 100 penalty units. However, this may be avoided if the injured employee refused a medical examination for an assessment of fitness at the time of dismissal.

Part 10 - Miscellaneous

This section of the Act contains extra information relevant to different Parts previously mentioned in the Act, such as repeals of Acts (and Amendments to Acts); tracing of both direct and indirect interests of an entity (be it a single person or a group of people) in corporations; and how changes can be made to the Act and relevant regulations, and how these changes can be carried out.