The national inquiry into workers’ compensation has had to balance some difficult competing interests. At present, the various public and private sectors in the eight states and territories have inconsistent regimes for dealing with people injured in the course of their employment. This week the Heads of Workers’ Compensation Authorities’ interim report made some recommendations to overcome inconsistencies and to increase efficiencies. Efficiency is important to ensure that enterprises are not unduly burdened with unfair costs so that they may employ more people, pay higher wages and be more profitable. However, justice and decency demand that people injured in their employment are covered by a sensible compensation scheme.
The interim report attempts to strike a balance, or tip the pendulum back after a century of reforms giving workers greater benefits. Last century, common-law doctrines were laced with employer bias. In particular, the doctrine of common employment stated that each employee consented to the risk of working with other employees and if they were injured by the negligence of another employee they had to sue that employee, who was usually penniless, while the employer escaped liability. The doctrine of last opportunity exonerated the employer if the worker had the last opportunity to avoid the injury, even if the general work environment was unsafe. The doctrine of contributory negligence exonerated the employer if the employee’s negligence, however slight, contributed to the cause of the injury.
These doctrines have been slowly reversed. Now courts are quick to find employers negligent. Further, the statutory workers’ compensation schemes provide compensation even if injury is caused by a genuine accident with no-one at fault. They provide compensation if the injury is caused while the worker is travelling to or from work. They provide compensation even if the workplace element is only partly to blame. And failing that, workers can get social security for injury or illness unrelated to work. In short, present systems are mainly focused on the injured worker as the basis for compensation; they are less focused on the fault of the employer in causing the injury.
Employers, of course, have to pay premiums for insurance to cover their liability if their negligence causes injuries to workers and for the statutory liability to injuries for accidental injury. Insurance companies charge premiums according to risk. The more claims an employer has, the higher the premiums will be.
Last week’s inquiry argued that it was unfair to impose the cost of extra premiums on employers for things employers have no control over. It particularly cited the journey to and from work and injuries which had more than one cause and were only partly caused by workplace factors. An example of the latter is where young people’s hearing is primarily damaged by loud music and some trivial extra hearing loss is caused by loud machinery at work. The theory is that extra premiums serve as an incentive to improve work systems to reduce injury; but that incentive is not there if the employer can do nothing to reduce the injury because it is not the employers’ fault. This has some superficial appeal. But where would the costs be shifted? To individual workers who would bear the loss or have to insure themselves, or to the general community through the social welfare system. Would employers be willing to give pay rises or pay higher taxes to offset these costs?
Viewed in that light the inquiry’s proposals are an attempt to shift cost burdens from the profit sector to the wages and social security sector. Yet those costs properly lie in the profit sector. They should be part of the cost of running an enterprise in a decent society. The cost of injury to employees in the course of their employment should reside with the enterprise that employs them. This is irrespective of fault or ability to prevent the injury.
If this were not the case, and the logic of the inquiry’s position were taken to its full, one could ask, why should employers be liable for the accidental injury of employees at work, as they are now? Why should employers be liable for injuries caused by the negligence of other employees or people with whom the employer contracts, as they are now? Employers cannot do much about those events, yet they are liable.
Now, it is true that the threat of higher premiums works as an incentive to employers to improve safety, and that is a worthwhile element of the present system. But it is not the be all and end all of it. There is a social element to workers’ compensation. Employers can bear the burden of all injuries associated with work better than employees. They can (indeed, must) insure and they can pass on the cost to consumers and the tax system. Employees, on the other hand, are not in a position to bear the cost, and would probably not insure or neglect to. They would then be cast on to the social security system.
By all means tighten up rorts and ensure that only genuinely injured people with a significant work element get compensation, but let’s not have a de-facto return to the evils of last century’s doctrine of common employment and contributory negligence.