The ACT Government plans to overhaul workers’ compensation in the private sector. It says that it will cut costs by between 10 and 17 per cent, which would be passed on in the form of lower premiums to employers.
The Minsiter for Urban Services, Brendan Smyth, has issued a discussion paper on his plans. Some of the proposals have great merit. Others are merely cost-shifting. Others take away existing rights without much justification. Overall, the proposals are driven more by saving costs in the short-term than anything else.
At present, compensation claims against employers take two forms. The first are common-law claims. These require proof of negligence on the part of the employer. Upon that proof, the worker gets full damages for loss earnings, loss of earning capacity, loss of the amenities of life and pain and suffering. Employers are also generally liable for the negligence of other employees.
The second sort of claim is the statutory claim for injury in the course of employment. No fault is required. But damages are quantified into set lump sums for set permanent losses (limb movements etc) and set periodic payments, usually base pay for 26 weeks followed by $266 a week. The course-of-employment claims include the trip to and from work.
Under the first form, lump-sum damages can be high. Under second form, periodic payments can be quite low. The Government proposes to switch the balance, though it also proposes to cut the work journey out of the second form of claim.
As a general principle, it is a good idea to concentrate of weekly repayments, rather than lump sums. Moreover, the discussion paper proposes to increase the weekly payments. Without reasonably supportive weekly payments, injured workers will just fall back on the social welfare system.
However, limiting the common-law rights of employees to sue for negligence are unfair unless they are accompanied by similar changes across the board to limit damages in tort cases. Why should employees have lesser rights than people injured in car accidents, or people suing for negligent financial or professional advice or people suing for defamation?
Maybe the level of damages awarded by courts in tort actions has got too high. If so, it is not restricted to cases in the workplace.
If anything, there are better reasons for retaining full common-law damages for workplace negligence than retaining them in other fields. They act as an incentive to create safer workplaces. There are too many deaths and injuries in the workplace as it is. Changing the damages regime will ultimately pass the burden to the social-welfare system. Employers might get lower premiums, but that will just capitalise profits and socialise losses.
They may be good reasons for excluding the work journey from the workers’ compensation regime. Car insurance is the proper structure to deal with that. Moreover, employers have no control over the work journey. They cannot make it safer. If the employee is injured through someone else’s fault, the employee can sue that person and their insurer. If it is the employee’s fault, the employee is no worse off than any other journey. Employer liability should start and finish at the workplace.
One idea put in the discussion group was to make rehabilitation programs compulsory. There is merit in following this through, combined with appropriate education programs.
The discussion should be broadened also to deal with safety in workplaces. Safety has to be part of the culture and not undermined by peer pressure. Victoria is thinking of going so far as to fine workers who do not use safety equipment.
The ACT paper showed the ACT has a very high workers’ compensation cost given its lack of heavy industry. It perhaps indicates some poor management practices with respect to stress and office ergonomics which require attention.