Sparke Compensation Quarterly - Issue 2

Welcome to the second edition of Sparke Compensation Quarterly, aimed at keeping you informed about the latest Commonwealth, state and territory legislations that could impact you as an employer or insurer.

In this edition, at the Commonwealth level we look at the independent review of the Safety, Rehabilitation and Compensation Act 1988 (SRC Act), and a recent ART decision that provides guidance on what costs are payable to an applicant under s 67 of the SRC Act and the Safety, Rehabilitation and Compensation (Defence Related Claims) Act 1988 (DRC Act).

Across the state and territories we cover:

• For New South Wales, we provide an update on proposed amendments to reform workers’ compensation for psychological injury
• For the Dust Diseases jurisdiction, we explore the case of Workers Compensation Nominal Insurer v Sako in which the Court of Appeal concluded that workers with a dust disease cannot claim damages from an uninsured employer under the uninsured liability scheme.
• For Victoria, we look at scheme modernisations introduced in March 2024.
• For South Australia, we look at the Return to Work Scheme Impairment Assessment Guidelines, which will come into place in October 2025.
• For Western Australia, we highlight a case that seeks to determine who was the true employer of an injured worker and the importance of ensuring that the correct legal entity is a party to the proceedings.
• For ACT, we report on the Supreme Court consideration of a reduction in common law damages awarded to an injured worker to account for vicissitudes.
• For Northern Territory, we review several key decisions made by the courts in 2024.
• For Queensland, we report on the Workers’ Compensation and Rehabilitation and Other Legislation Amendment Bill, which passed in August 2024.

Workers’ compensation guides for FY25/26

We are pleased to provide a range of workers' compensation guides for each Australian jurisdiction, and these can be accessed via our website: Workers' compensation guides.

Commonwealth Compensation

Independent review of the SRC Act now due in September

The due date for the independent review of the SRC Act initiated by the Federal Government in June 2024 has been extended to September 2025.  With the aim of modernising the legislation to reflect today’s workplaces and injuries and deliver better outcomes for injured workers, all aspects of the Comcare scheme are being examined, including rehabilitation, compensation, entitlements and governance.

Published responses to the review include recommendations to: quarantine the scheme to Commonwealth and ACT public sector workers with ‘tight tests’ recommended for any private employers seeking to be in the scheme; include provisional liability arrangements as found in other workers’ compensation schemes; and improve access to common law damages and redemptions. 

Public submissions closed on 31 January 2025 and can be read here.   

Payment of applicants’ costs under s 67 of the SRC Act and DRC Act

In a recent decision of Deputy President O'Donovan, Re the Estate of the Late Judith Hartikainen and Military Rehabilitation and Compensation Commission, handed down on 12 June 2025 (the Decision), the Administrative Review Tribunal (the Tribunal) exercised its discretion in relation to costs that were payable to an applicant, providing guidance on matters that should be taken into account when deciding what costs are payable to an applicant under s 67 of the SRC Act and the DRC Act.  

Prior to the Decision, the Tribunal set aside the decision under review in the application and made a decision more favourable to the applicant.  In those circumstances, s 67(8) of the DRC Act, which relevantly is in the same terms as s 67(8) of the SRC Act, provides that the Tribunal may ‘order that the costs of those proceedings incurred by the claimant, or part of those costs, shall be paid by’ the respondent to the proceedings.

In the Decision it was ordered ‘that the respondent must pay 90% of the applicant’s reasonable party/party costs as agreed or taxed, however the applicant is not entitled to recover any costs associated with its application contending that the hearing was conducted contrary to the requirements of procedural fairness’. In the reasons for that decision [6], it was noted that this order recognised two matters:

‘First, the applicant caused the respondent to incur unnecessary costs in dealing with a meritless application to abort the proceedings after the hearing was complete. Second, the applicant failed to comply with the directions of the Tribunal concerning the filing of relevant evidence. This impeded the respondent’s capacity to brief its expert with complete information on which to express his view about the degree of whole person impairment.’ 

The Tribunal further noted [27]:

‘Because proceedings are undertaken in the Tribunal, both parties have a duty to assist the Tribunal to meet its statutory objective. Relevantly, its objective is to provide a mechanism of review that ensures applications are resolved as quickly and with as little formality and expense as a proper consideration of the matter permits. Conduct of proceedings in a manner that is inconsistent with that duty is relevant when considering whether a costs order should be made and what the scope of any costs order should be.’

New South Wales

Update on proposed amendments to reform workers’ compensation for psychological injury

The NSW parliamentary committee held a further hearing on 29 July as part of its ongoing inquiry into the Workers Compensation Legislation Amendment Bill 2025. This hearing featured testimony from legal experts, medical professionals, and advocacy groups, many of whom raised concerns about the proposed changes to psychological injury thresholds and access to compensation.

President of the Law Society of NSW Jennifer Ball recognised that the workers’ compensation system is under pressure and needs reform but said some proposed changes risk stripping the rights of some of the community’s most vulnerable people, while imposing extra costs on business. The proposed increase of the Whole Person Impairment (WPI) threshold from 15% to 31% was seen by critics as conceivably excluding nearly all workers with psychological injury from making a claim.

'To reach 31 percent WPI, a person would need to demonstrate that they are unable to live alone, care for dependents, or to function in society’, Ms Ball said.

The Law Society proposed changing the WPI threshold to 21%, which would ensure that many workers generally recognised by community standards as being severely impacted by mental ill-health would be able to make a claim, while easing upward pressure on workers’ compensation premiums.

The Law Society urged the government to pause the Bill’s progression to allow for broader consultation and evidence-based reform. 

The government however has now released a further bill—the Workers Compensation Legislation Amendment (Reform and Modernisation) Bill 2025 . This bill includes changes to the original bill and confirms the following key changes:

• Changes to lump sum compensation benefits will not be retrospective for claims that are made prior to 1 July 2026.
• The test for medical expenses will change from 'reasonably necessary' to 'reasonable and necessary'.
• A worker will need to prove that psychological injuries have arisen from real defined events in the workplace and a perception of events will no longer suffice. Time frames for determining liability will be strengthened and reasonable management action will be defined more broadly and continue to act as a defence to a psychological claim.
• The Industrial Relations Commission of NSW will have jurisdiction to determine whether such defined events took place prior to a worker being able to proceed to the Personal Injury Commission (PIC).
• There will be further limits to weekly benefits for psychological injury.
• The thresholds for lump sum compensation and WID for psychological injury will increase to 25% WPI and then 31% WPI as from 1 July 2026.
• Parties will be able to negotiate the compromised resolution of death claims in appropriate circumstances.
• The regulations are likely to provide for a greater range of matters that can be resolved by way of commutation, subject to approval by the President of the PIC.

Dust Diseases jurisdiction

Dust diseases claimants excluded from the uninsured liability scheme

In Sako v Workers Compensation Nominal Insurer [2024] NSWDDT 6, the plaintiff, Mr Sako commenced proceedings in the Dust Diseases Tribunal in New South Wales (DDT) claiming damages for the conditions of silicosis, latent tuberculosis, and major depressive disorder. Mr Sako alleged that he had developed these conditions as a result of exposure to silica dust during employment as a stonemason with three employers. One of the three employers was an individual who had not taken out NSW workers’ compensation insurance for Mr Sako.  

Mr Sako argued that he could bring a claim against the NSW workers’ compensation uninsured liability scheme covered by the Workers Compensation Nominal Insurer (WCNI) for the liabilities of his uninsured employer under the Workers Compensation Act 1987 (NSW) and sought leave to amend his Statement of Claim to reflect this position.

WCNI submitted that Mr Sako’s claim (relating to a dust disease) was excluded from the applicable workers’ compensation legislation and therefore a grant of leave to amend the Statement of Claim would be futile. The DDT granted Mr Sako leave to amend his Statement of Claim and continue the proceedings against WCNI under the Civil Liability (Third Party Claims Against Insurers) Act 2017.

WCNI appealed to the Court of Appeal (Workers Compensation Nominal Insurer v Sako [2025] NSWCA 12).

The Court of Appeal considered whether the uninsured liability scheme extends to common law damages sought by workers suffering from a dust disease when their employer is uninsured. Ultimately, the Court of Appeal accepted WCNI’s argument and concluded that workers with a dust disease (as defined under the Workers Compensation (Dust Diseases) Act 1942) cannot claim damages from an uninsured employer under the uninsured liability scheme.

The Court of Appeal decision has the effect that a claimant cannot pursue damages for dust diseases under the uninsured liabilities scheme. Whilst uninsured entities can be pursued in their own capacity, this litigation is rarely viable because there are insufficient assets to meet such a claim. The Court of Appeal decision will also limit recovery opportunities for insurers and self- insurers in NSW seeking contribution to their liability for dust diseases claimants where other employers are not insured.

Claimant lawyers in NSW are currently lobbying for a change of the current legislation to allow access to the uninsured liability scheme for dust diseases claimants.

Victoria

Increase in psychological injury disputes: no decrease in premiums

Changes introduced in March 2024 to limit eligibility for psychological injuries and to limit access to weekly compensation after 130 weeks has not seen any decrease in premiums or reduction in contributions required of self-insurers in Victoria, although according to the Workplace Injury Commission disputes in these areas have increased.

Scheme modernisations for injuries on and after 31 March 2024 limit eligibility requirements for psychological injuries including a Diagnostic and Statistical Manual of Mental Disorders (DSM) diagnosis and the predominant cause being work-related. Injuries predominantly caused by stress or burnout arising out of events that are usual or typical and reasonably expected to occur in the worker’s employment have been excluded.

However traumatic events that may be considered usual or typical and reasonably expected to occur in the course of the worker’s duties remain compensable. Anecdotally, this has seen the virtual disappearance of claims for burnout and a pivot to claims that characterise perceived unfair allocation of duties as bullying and harassment.

The modernisations also mandate a more than 20% WPI and total incapacity for eligibility to weekly payments after 130 weeks. It remains unclear as to whether this has led to an increase in damages claims where the entitlement to economic loss damages is not restricted by those mandates.

South Australia

Return to Work Scheme bracing for revised impairment assessment guidelines

Whilst over the last 12 months the scheme has been more stable in terms of claim and dispute numbers based on our feedback from various insurers, we anticipate that the coming year will provide a higher level of uncertainty for all scheme participants, mainly in relation to the permanent impairment regime and ongoing challenges in terms of high volumes of psychiatric and noise induced hearing loss injuries being the subject of claims.

The scheme is bracing for the introduction of the revised Return to Work Scheme Impairment Assessment Guidelines, Third Edition, which will provide significant changes to the permanent impairment assessment regime for all injuries assessed on or after 1 October 2025. The Third Edition of the Guidelines will affect both lump sum compensation entitlements and workers qualifying for seriously injured status. Third Edition of the Impairment Assessment Guideline.

Insurers are yet to see the full effect of the Scheme Sustainability amendments, particularly in relation to revisions to section 18 of the Return to Work Act 2014 in respect of the involvement of grouped and host employers.

For more on these changes, see our overview: Preparing for change - Update on amendments to the Return to Work Act Scheme.

Western Australia

Who was the true employer of an injured worker?

Moon Recruitment Pty Ltd v Execom Software Pty Ltd [2025] WADC 18

Two related appeals from a decision of an arbitrator ordering Moon Recruitment to reimburse workers’ compensation payments which had been made by Execom Software Pty Ltd (Execom) were heard in the District Court in April 2025. Those payments had been made after Mr Horne was injured at his first day at work at Echo Marine.

Mr Horne had responded to a ‘SEEK’ ad for a fabricator and was approved/selected by Moon Recruitment to work on a three-month position at Echo Marine. Moon Recruitment had an agreement with Echo Marine to supply workers on a labour hire basis. Moon Recruitment and Execom had a separate agreement whereby Execom would pay Mr Horne’s wages and also pay the workers’ compensation premium associated with those wages. Ultimately, Mr Horne signed an agreement with Execom but that was three weeks or so after he was injured.

Mr Horne submitted a workers’ compensation claim to Execom and weekly payments were paid. Execom subsequently took the view that it was not Mr Horne’s employer and sought recovery of the payments pursuant to s 71 of the old Workers’ Compensation and Injury Management Act 1981 and an order that Moon Recruitment reimburse the payments. That application was successful. Moon Recruitment appealed on the basis that the arbitrator had erred in law in not applying the test in CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 and in taking into account irrelevant matters. The appeal was unsuccessful.

There was a second appeal because the original order was made against Moon Recruitment but during the course of the proceedings nobody had actually clarified who that was (i.e. what the legal entity was). There was evidence that Kerrie Moon had t/as Moon Recruitment and she was the person against whom the reimbursement order was made. On appeal, that order was changed to Moon Recruitment Pty Ltd t/as Moon Recruitment.

This highlights the importance of making sure the correct legal entity is a party to the proceedings. Sweeney DCJ observed that the arbitrator could have corrected the name of the respondent under s 188(5) and 216 of the old Act. While the appeal in relation to the current name of the party liable to pay compensation did not succeed (because the point was not argued before the arbitrator), her Honour ultimately made the order correcting the name pursuant to s 250 of the old Act and on proof that the Pty Ltd entity was incorporated at the relevant time and with no other party objecting to the substitution.

The full decision can be read here.

ACT

Consideration of deduction for vicissitudes

The ACT Supreme Court has recently considered a reduction in common law damages awarded to an injured worker to account for vicissitudes. The Full Court of the Supreme Court in Alananzeh v Zgool Form Pty Ltd considered a decision by a primary judge to reduce the whole of an award of damages by 25% rather than only reducing the component of damages relating to future economic loss.

It was found that it was not possible to reduce vicissitudes for past loss, which would have already manifested itself by the time of the award. In contrast, it is conventional to make a discount for vicissitudes for future losses. While the conventional reduction of 15% is adopted in the ACT, in this case, the primary judge considered a 25% reduction was warranted because the appellant had an underlying degenerative condition. The 25% reduction was maintained by the Full Court but only in relation to the component of damages for future economic loss.

Northern Territory

The NT Return to Work Regulations were amended in June 2024 to include correctional officers in the definition of ’first responder’ (along with paramedics, police officers and firefighters). As first responders, correctional officers, too, can now claim compensation on a “deemed” basis (liability assumed, save for proof to the contrary) for PTSD arising out of attending emergency situations.

The regulations also expanded the types of cancers deemed work related (unless the contrary is proved). There are now 23 types of presumptive disease of cancers with various qualifying periods relating to firefighters.

During the year the Northern Territory courts delivered several key decisions.

Maria Rust v Northern Territory of Australia [2024] NTWHC 2

The Court found the claimant sustained mental injury (major depressive disorder with anxiety) caused by the CEO’s conduct during a meeting where the judge found the CEO behaved ’in an aggressive, threatening, dismissive, insensitive and inappropriate manner”’

The judge determined certain action of the CEO surround his interaction with the claimant was ’management action’. However, the judge considered ’none of the management actions … was taken in a reasonable manner’. The full decision can be read here.

In a second ruling in the same matter relating to legal costs, the Court determined while communications in the course of mediation under the Return to Work Act are generally inadmissible, the parties conduct in mediation may be considered when deciding final costs orders.

Northern Territory of Australia v Yao [2024] NTSCFC 1

Mr Yao claimed he experienced mental injury arising from what he perceived as unfair and unreasonable management action and ’micromanagement’. The Court decided in Mr Yao’s favour. The employer appealed to the Supreme Court. The Court allowed Mr Yao’s appeal.

The Court emphasised looking at the overall course of conduct—one misstep by management does not automatically negate the reasonableness of the entire process. The Court found the trial judge erred in some aspects of the reasonableness test (such as implying the worker had to be formally warned before a performance improvement plan (PIP) and clarified that a worker’s subjective perception of being bullied, while relevant, does not determine reasonableness—the test remains an objective one. The matter was remitted to the WHC for further consideration.

The Supreme Court decision is here.

Woods v Northern Territory of Australia [2024] NT

The claimant, a teacher, sustained two work‑related psychological injuries on different dates and at different schools. The claimant was assessed for permanent impairment compensation for each injury. She argued the two assessments should be combined.

The Work Health Court ruled against the claimant, determining the first injury, albeit compensable, was a ‘pre-existing’ injury to the second injury and the impairment assessments are not combined. The Supreme Court dismissed an appeal, finding no error.

The Court of Appeal affirmed this construction of the legislation and dismissed the appeal.  The full decision can be read here.

Cigobia v Greyhound Australia Pty Ltd & Anor [2024] NTSC 70

The Supreme Court dealt with the method of the compilation of the report of a panel of medical practitioners re-assessing an evaluation of permanent impairment. The Court noted ’all members of the panel must participate in the reassessment bringing to the exercise the benefit of their particular specialist knowledge and expertise.’ This was not the case in Cigobia, as the report was the work of one of the three doctors only. The Court found this was a key omission or error and declared the purported panel report invalid.

The full decision can be read here.

There were some other cases of interest during the year which were determined on their facts and or the exercise of judicial discretion: Sandeep Kumar v Jassal Enterprises (determining wages whether the claimant was working two jobs); Mark Raymond Casey v Northern Territory Police (Courts discretion in managing an application to amend a statement of claim); Lincoln Wilson v Northern Territory of Australia (claim for compensation for modifications to a home); and Sayed Khail v RTA Gove Limited (working capacity, availability of employment).

Queensland

Workers’ Compensation and Rehabilitation and Other Legislation Amendment Bill 2024

The Workers’ Compensation and Rehabilitation and Other Legislation Amendment Bill 2024 was passed on 22 August 2024, making changes to the Workers’ Compensation and Rehabilitation Act 2003 (WCRA). The objective of the proposed amendments to the WCRA is to implement the legislative recommendations of the 2023 Review of the Operation of the Queensland Workers’ Compensation Scheme (2023 Review).

The 2023 Review identified emerging trends which may impact the scheme’s performance and viability. These trends included:

• a rise in psychiatric and psychological injury claims, including secondary psychiatric and psychological injury claims
• lower rehabilitation and return to work (RRTW) performance compared to other Australian workers’ compensation jurisdictions, and
• delays in administrative decision-making by workers’ compensation insurers and the Workers’ Compensation Regulator.

The 2023 Review made 54 recommendations which were said to, as well as other things, be designed to:

• increase early intervention to pre-empt the deterioration of physical injuries into secondary psychiatric or psychological injuries
• address workplace issues that may be causing or worsening psychiatric or psychological injuries
• make it easier for injured workers to find gainful employment with their own or another employer, and
• promote reductions in delays in the time taken to provide information and make decisions in the scheme.

The Bill is said to achieve the objective of implementing recommendations of the 2023 Review by amending the WCRA as follows:

• A new provision that requires an insurer to take all reasonable steps to minimise the risk of a worker sustaining a psychiatric or psychological injury arising from a physical injury following acceptance of a claim until the worker’s entitlement to compensation ends. It is also proposed to develop a code of practice to further support insurers in this area.
• Amendments to promote increased scrutiny of the availability of suitable duties by requiring insurers to form their own opinion about whether it is practicable for an employer to provide suitable duties and take certain steps if it is not satisfied by the employer’s evidence about this.
• Inserting a head of power to set service delivery, competency and professional standards for workplace rehabilitation providers.
• Enhancing workers’ direct participation in decisions about their rehabilitation by enabling workers to request a different workplace rehabilitation provider where they are dissatisfied with the initial provider selected by the insurer.
• Requiring an insurer to ensure a RRTW plan is in place within 10 business days after the workers’ application for compensation is accepted and provides for that plan to be kept under review and modified as further information becomes available and developments arise.
• Inserting a new provision which requires host employers to cooperate with the labour hire provider by taking all reasonable steps to support them to meet their RRTW obligations, including by extending the provision of suitable duties. Importantly the provision does not make the host employer the employer of a labour hire worker (which remains the labour hire provider) as there is no contract of employment with the labour hire worker. This aligns with approaches in the Victorian and Western Australian schemes.