A review of the Return to Work Scheme01 August 2018
The operation of the Return to Work Act 2014 (SA) (the Act) began on 1 July 2015, replacing the repealed Worker’s Rehabilitation and Compensation Act.
Recently, the first significant review of the Act was conducted.
As an insurer and claims manager, it is important that you are aware of the outcomes and recommendations provided as part of the review process.
The Act aims to deliver a sustainable, practical scheme that:
- provides early intervention and supports injured workers in their recovery and return to independence and/or employment
- providesa high-quality, expeditious decision-making service and access to justice in a cost effective manner, and
- provides a balance between the interests of workers and employers, principally delivering an affordable scheme for all stakeholders, including the State.
The introduction of the Act in 2014 represented the most significant reform to workers compensation legislation in South Australia for the best part of 30 years, including major reforms to key administrative functions and entitlements, including:
- a significant restructure of the function and role of the SA Employment Tribunal (SAET), which replaced the Worker’s Compensation Tribunal, including the incorporation of other jurisdictions under the SAET umbrella
- a streamlined alternative dispute resolution process and judicial process
- a revised test for eligibility of “‘work injuries”
- greater focus on rehabilitation, return to employment and return to independent function in the community post-injury
- a “capped” regime for weekly payments and medical expenses for mainstream workers
- major restructures to the permanent impairment process including a streamlined assessment process and the introduction of additional lump sum entitlements for economic loss
- the introduction of a category for “seriously injured” workers based on a 30% whole person impairment threshold, and
- more significant obligations for employers and greater scope for workers to seek suitable employment duties post-injury.
Provisions for a mandatory, independent review of the Act were included in the legislation at the three-year anniversary of commencement.
In December 2017, the Honourable John Mansfield AM QC, began the review process by inviting submissions (Sparke Helmore Lawyers contributed) and on 26 July 2018, the Independent Review of the Return to Work Act 2014 (the Review) was released publicly.
Outcome of the Review
The Review provides a significant retrospective analysis of the scheme’s operation from an administrative, legal and practical perspective, as well as recommendations for the continued, sustainable operation of the Return to Work Scheme moving forward.
The Review endorses the change to workers’ entitlements and recommends maintaining a scheme for weekly payments capped at two years of entitlements, unless the worker is “seriously injured”.
While it is recognised that the scheme has introduced positive return to work and reskilling initiatives, it is recommended that more resources be diverted into those areas.
The Review provides recommendations for amendments to the legislation in the following areas:
- a more balanced approach to a worker’s ability to request “suitable work duties” for their employer, such as providing a time limit for an application to be filed
- a more streamlined single-step test is endorsed for medical questions concerning future surgery, rather than the current regime (which is convoluted), with particular focus on detailed applications supported by medical evidence, and
- the permanent impairment regime and, in particular, suggested legislative amendments aimed at a more balanced award of long-term compensation for workers with “functional injuries” for the purposes of determining a “seriously injured worker”.
Administration and financial performance
The Review strongly endorses the current financial performance of the scheme, which is providing a more affordable alternative to its predecessor.
The scheme is achieving many of its goals, particularly financially, and is fully funded. The scheme is also more affordable, a significant decrease in premiums rates for registered employers has been noted.
The viability of the scheme may be undermined by the outcome of the decision in Return to Work SA v Mitchell  SAET 81 (Mitchell), which concerns a worker’s ability to combine various secondary injuries (for instance, medication-induced dental and digestive injuries) with a primary work injury, which may affect the initial estimates regarding the number of “seriously injured” workers and as a result, threaten the financial sustainability of the Scheme.
Subject to the outcome, legislative reform is recommended in reply to Mitchell, noting a decision from the Supreme Court is unlikely to be handed down for 12-18 months.
The performance of Self-Insurers was praised. It was acknowledged that they have historically outperformed the registered scheme in terms of financial and return to work related benchmarks. Apart from a few discrete issues, the changes post-1 July 2015 were less pronounced.
Particular praise was directed at Self-Insurers for reduced dispute numbers and a reduction in the reliance of “lump sum” settlements to resolve disputes.
For RWTSA and Self-Insurers, the Review strongly recommends a greater level of transparency regarding the performance of the scheme as a whole, including return to work outcomes and the success of rehabilitation and reskilling initiatives as well as financial key performance indicators.
There was some criticism for the timeliness and quality of decision-making, noting the Review recommends this becomes an area for focus in the future. In our experience, those issues are partly due to uncertainty around the Act and have improved over time.
We expect this trend to continue as further test cases are decided.
Disputes and litigation
The scheme has experienced a decrease in disputes and while the disputes that remain are comparatively more complex, effective incentives and mechanisms also remain for parties in litigation to reach practical outcomes that balance the interests of all stakeholders. It was considered premature to make a definitive finding about whether a long-term reduction in disputation has been achieved or not because of the many transitional claims that remain to be resolved by the SAET.
The available data from the SAET and insurers shows there are fewer disputes being filed and that those disputes are being resolved at an earlier stage.
The Review strongly endorses the SAET’s performance in terms of alternative dispute resolution and litigation. Recognition of the SAET’s specialised nature is encouraging noting that, in our experience, it has provided a platform for more meaningful dispute resolution when compared to its predecessor, the Workers Compensation Tribunal.
The Review does not endorse the transfer of jurisdiction to the South Australian Civil and Administrative Tribunal.
In our view, the Review provides useful and practical suggestions to assist in developing a more mature and sustainable scheme.
Overall, it provides a timely reminder of the goals of the Act and indicates that with continued attention to key issues, such as rehabilitation and return to work services, a commitment to data retention and transparent reporting, and with appropriate legislative intervention, the scheme is well-placed to offer a solution to the State’s long-term need for an accessible and affordable workers compensation scheme.