NSW workers' compensation scheme reforms increase workers' benefits and reward employers11 December 2015
Further changes to the New South Wales workers' compensation scheme are under way following the NSW Government's $1 billion reform package announcement in August 2015. Some of the amendments made by the Workers Compensation Amendment Act 2015 began at the end of October 2015, while the balance should be in effect by mid-2016.
The reform package has three elements:
- premium reductions for employers with good safety and return to work records
- the division of WorkCover NSW's functions between Insurance and Care NSW (icare) for insurance, the State Insurance Regulatory Authority (SIRA) for regulation and SafeWork NSW for work health and safety regulation, and
- enhanced benefits for workers.
It's important for insurers to note the incentives available to eligible employers, to understand the allocation of WorkCover NSW's functions across the newly introduced bodies and to be aware of the scheme's key changes for workers.
Benefits for employers
Under the reforms, a performance discount of 5% to 20% off premiums will apply to high performing employers. The reform package defines high performing employers as those who have low workers' compensation claim costs as a result of their good safety systems and who actively support injured workers to safely return to suitable duties.
The reforms have also introduced the Employer Safety Incentive, which is a 10% discount for medium to large employers to encourage them to invest in safety and support systems. These employers will also receive discounts for remaining claim free for four years and for successfully returning injured workers to work.
New insurance and regulatory arrangements
icare, SIRA and SafeWork NSW started operating on 1 September 2015. The separation of functions under these different regulatory bodies is a response to concerns about the inherent conflict of WorkCover NSW acting as both the Regulator and the Nominal Insurer.
icare has assumed the responsibilities of the Nominal Insurer, as well as those of the Lifetime Care and Support Authority, Dust Diseases Authority, SICorp and Sporting Injuries Compensation Authority.
SIRA now regulates workers' compensation insurance, CTP insurance and home building compensation, while SafeWork NSW is the Health and Safety Regulator.
Benefits for workers
Workers with high needs and highest needs
Workers were previously defined as "seriously injured workers" for the purposes of compensation if they were assessed as having whole person impairment (WPI) of more than 30%.
Under changes to the scheme, injured workers may now be defined as those with high needs and those with highest needs. Where they fall on the scale of WPI will determine their category and the limit on payment of their medical expenses. The new definitions are:
- High needs – greater than 20% WPI.
- Highest needs – greater than 30% WPI.
Medical expenses will be paid to workers with 10% or less WPI for two years after the date of claim or from the date when their weekly benefits stop. Workers with 11%-20% WPI will have their medical expenses paid for five years after the date of claim or from the date when their weekly benefits stop. For workers with high or highest needs there are no time limits on payment.
Changes to s 59A of the Workers Compensation Act 1987 (NSW) do not affect the provision of crutches, artificial members, eyes or teeth; other artificial aids or spectacles (including hearing aids and batteries); modification of homes or vehicles; or secondary surgery. This means that workers will be able to claim for those items, regardless of whether they are workers with high needs or highest needs.
Weekly benefits are now payable for one year after a worker reaches retirement age.
Workers with high needs are no longer required to work for at least 15 hours per week to be entitled to weekly benefits after the first 130 weeks. They will also be entitled to up to $8,000 for the cost of education or re-training after more than 78 weeks of weekly benefits.
Lawyers will be able to charge for legal advice on certain reviews of work capacity decisions and the Government will provide for this by regulation.
The Government has called for submissions on the proposed regulation and it expects that the new regulation will be finalised and implemented no later than June 2016.
Lump sum compensation
The lump sum payable on a worker's death has been increased from $528,400 to $750,000. Funeral expenses have increased from $9,000 to $15,000. The new amounts apply when the death occurs on or after 5 August 2015.
Increased benefits are to be paid for workers with WPI and the benefits are to be indexed. The increased benefits apply to injuries that occur on or after 5 August 2015.
The increase is greatest at the higher end of the scale. For example, for a worker with 55% WPI the compensation received increases from $143,000 to $242,010. A difference of only 1% WPI can make a considerable difference to the compensation payable. For instance, a worker with 56% WPI is entitled to $309,020, which is $67,010 more than a worker with 55% WPI receives.
The 2015 amendments apply to injuries received and claims made before the amendments, with some exceptions:
- they don't apply to compensation paid or payable before the amendments
- the lump sum amendments don't apply to injuries received before the amendments commenced
- the amendments relating to medical expenses don't apply to weekly benefits claims made before 1 October 2012, unless the worker was an existing recipient of compensation at that date, and
- the amendments to payments after retirement age don't apply to a claim made before 1 October 2012.
Effect of the amendments
There is likely to be an increase in disputes about WPI. For example, the difference between 20% and 21% WPI affects whether medical expenses are paid for five years only or have no time limit. An assessment of 21% WPI also affects the payment of weekly benefits after 130 weeks. The difference of 1% may mean an extra $60,000 or more in lump sum benefits.
Cram Fluid Power Pty Ltd v Green  NSWCA 250
In the wake of the NSW Court of Appeal decision in Cram Fluid Power Pty Ltd v Green, the Government has made a new regulation to enable workers who have made a claim for WPI before 19 June 2012 to make one further claim if their condition deteriorates. The Workers Compensation Amendment (Lump Sum Compensation Claims) Regulation 2015 commenced on 13 November 2015.
Workers who aren't affected
Apart from the increased death benefits, the amendments don't apply to police officers, paramedics and fire-fighters. None of the amendments, including the increased death benefits, apply to coal miners.