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Waiting for compensation clarity

Feature Articles

Cite as: May 2011 85(5) LIJ, p.44

Commonwealth workers' compensation cases and legislative changes have created uncertainties for those most vulnerable in the workforce.

By Damian Clarke

The Safety, Rehabilitation and Compensation Act 1988 (Cth) (SRC Act) (initially known as the Commonwealth Employees’ Rehabilitation and Compensation Act 1988) commenced on 1 December 1988.

It established the workers’ compensation scheme applicable to employees of the federal government and government business enterprises (GBEs).

In 1992, the scheme was expanded to allow privatised GBEs to continue under the commonwealth scheme and also allow entry as licensees (self-insurers) for corporations that were, or had been, in competition with GBEs.1

Between 1992 and 2004, inquiries by the then Industry Commission (now Productivity Commission) as to national workers’ compensation and occupational health and safety (OHS) caused delay in corporations obtaining licences. Optus was granted a licence in November 2004; the subsequent challenge by the Victorian WorkCover Authority to the issuing of this licence was dismissed by the High Court.2

Amendments in 20063 made it more attractive for corporations to seek licences under the federal scheme because it also enabled them to come under the federal OHS regime. This meant that all their employees/licensees would be under a single workers’ compensation and OHS coverage.

In 2007, significant amendments were made to the workers’ compensation scheme,4 including:

  • the abolition of journey coverage to/from work;
  • the abolition of ordinary recess coverage when away from the workplace;
  • an increase in the threshold from “material degree” to “significant degree” in the connection test between disease and employment, with the latter being defined as “a degree that is substantially more than material”;5 and
  • the introduction of a wider exclusionary provision in respect of injury so as to exclude injury suffered as a result of reasonable administrative action (RAA) taken in a reasonable manner.6 An inclusive definition was inserted as to what may amount to RAA but it is not exhaustive.7

While there have been Administrative Appeals Tribunal (AAT) decisions on RAA and “significant degree” under the SRC Act,8 there have been no Federal Court decisions, although there are appeals in progress. Whereas “significant degree” has been used in a number of state/territory workers’ compensation schemes, none of these schemes has defined its meaning as “a degree that is substantially more than material”.

In fulfilling pre-election commitments, the federal Labor government in 2007:

  • placed a moratorium on new applications from private sector corporations wanting to move under the federal system;9 and
  • announced a review of the commonwealth workers’ compensation system (touching also on OHS as a precursor to reaching an agreement to harmonise OHS laws Australia-wide).10

To support the moratorium, the government introduced legislation amending s100 of the SRC Act to provide that the Minister was not required to consider a request for a declaration of eligibility to be granted a licence for self-insurance.11

While the review was completed in January 2009, it was not released until later in the year12 when the government announced that it remained committed to continuing the moratorium until OHS harmonisation was achieved.13 The beginning of 2012 is the timeframe for this to be achieved. Western Australia has not committed. Given the recent election in NSW, indications are that the new government will support harmonisation, something the previous state Labor government was pulling back from.

A significant increase in death benefits for lump sum and weekly payments was made in 2009,14 with retrospective application to benefits payable from 13 May 2008.15 Indexation to the increased benefits continues to apply. Further amendments were introduced into Parliament in 2009,16 but the Bill lapsed on the calling of the federal election in 2010.

This lapsed Bill proposed:

  • extending workers’ compensation coverage to off the worksite where an employee was temporarily absent from their place of work during an ordinary recess (reinstating the coverage that existed pre-2007 amendments);
  • in suspension of a claimant’s entitlements for non-compliance with certain sections of the SRC Act, the suspension was not to cease the medical expense entitlement;
  • the introduction of time limits within which compensation decision making was to occur (something not currently provided for). These were to be set out in regulations.

On 23 March 2011 the government introduced the Safety, Rehabilitation and Compensation and Other Legislation Amendment Bill 2011 to give effect to what had previously been proposed.

As at 28 March 2011 there were 29 licensees, although rumour has it that there are applications pending.

Key cases

The High Court in Canute v Comcare17 held that each separate injury must be considered for the purposes of compensation. This is most significant when looking at permanent impairment and when considering 45 week step down of incapacity payments. For example, an employee suffering a back injury who subsequently suffers a secondary depressive condition in response to that injury has two distinct injuries: the back injury and the secondary condition.18

In Comcare v Burgess,19 the Federal Court considered s8(10)(a) of the SRC Act. This sub-section allows a reduction of normal weekly earnings (NWE) in circumstances where, but for the injury, the employee would be earning less if they were not incapacitated for work. The employee received weekly compensation payments when suspended without pay on a code of conduct matter. The argument advanced was that, because the employee had been suspended from employment without pay, there were no weekly earnings lost by reason of incapacity. The Court held that there could be no reduction of the NWE and payments should continue, and that the sub-section did not cover a circumstance where an employee was suspended from the employment without pay.20

The Full Federal Court in John Holland Group Pty Ltd v Robertson21 considered s8(10) in circumstances where the employee’s employment would have ceased during the period of incapacity due to the finalisation of a construction job six months post injury, but nonetheless while the employee was still incapacitated. The Court was of the view that s8(10)(b) did apply and remitted the matter back to the AAT for determination.

McGuinness v Comcare,22 a decision in the Federal Magistrates Court, looked at factors that must be considered in determining whether there is a valid rehabilitation program pursuant to s37 of the SRC Act. The issue was whether an employee had a reasonable excuse for refusing or failing to undertake a rehabilitation program. The rehabilitation program was found to be invalid because the rehabilitation authority had not demonstrated that it had considered all the factors set out in s37(3), including the attitude of the employee towards the program.

Fellowes v MRCC23 followed Canute. It reinforces the need to identify each injury for which compensation is payable under the SRC Act, the impairments that flow from each injury, and the assessment of those impairments under the relevant Comcare Guide as applicable to each injury. Comcare has taken the view that a claim for permanent impairment under ss24 or 25 of the SRC Act can only be determined where there has been a preliminary acceptance of liability under s14 of the SRC Act.24

Secretary, Department of Employment and Workplace Relations v Comcare,25 a decision in the Federal Court, is significant for two reasons, namely:

  • it held that some aspect of employment must make an actual contribution to the ailment in question and that a mere imagined contribution will not suffice. The decision supports the earlier decision in Wiegand v Comcare;26 and
  • it considered the exclusionary operation of s7(7) of the SRC Act.27

In Wiegand v Comcare (No 2),28 the Federal Court held that in looking at the exclusionary provisions of the SRC Act, the exclusionary factor has to operate at the same contribution level as that applicable for the injury in the first place. In other words, if there was an exclusionary factor such as, for example, RAA, then unless that factor contributed to a material degree (pre-2007 amendment) or significant degree (post-amendment), then the factor would not count in excluding the claim.29 Regard must be had to the decision in Hart v Comcare30 where it has been held that even if there are multiple work-related contributing factors, if only one of those factors comes within the exclusionary factors, then that will be enough to disqualify the employee from entitlement to compensation.

The Full Court of the Federal Court recently handed the important decision in Comcare v Broadhurst,31 a case dealing with the applicability of the Comcare Guide used to assess the degree of permanent impairment for the purposes of ss24 and 25 of the SRC Act.

Save for hearing loss, loss of taste or smell, and the loss or loss of use of a finger or a toe,32 there is a threshold requirement of 10 per cent permanent impairment before permanent impairment compensation is payable.33

The current Comcare Guide in a number of tables does not provide for a 10 per cent impairment percentage but, rather, allows for percentages above and below. By way of illustration, Table 9.17 has grades of 0 per cent, 8 per cent and 13 per cent and does not have a 10 per cent rating.

The Court considered that Table 9.17 was inappropriate as it did not provide a 10 per cent rating. This arguably follows through to other tables in the Comcare Guide where a 10 per cent level is not provided. The Court is of the view that in circumstances where the Comcare Guide cannot be used, then the AMA Guides to the Evaluation of Permanent Impairment (5th edn) (AMA5) are to be used.

In response to this decision, Comcare has issued Interim Policy Guidance No. 2011/01, setting out by reference to tables in the Comcare Guide when AMA5 is to be used in lieu of those tables.

The decision in Broadhurst will no doubt impact on the overall review of the Comcare Guide which was undertaken by Comcare in 2009. The results of this review are yet to be seen.34

However, in the Interim Policy Guidance just issued, Comcare states that this interim policy is to apply “pending publication of Edition 2.1 of [the Comcare Guide] planned for July 2011. Edition 2.1 is being prepared as a response to defects in the Guide identified in a number of Court decisions”.

What are we waiting for?

We await :

  • the review of the Comcare Guide and in particular the addressing issues arising from the Broadhurst decision;
  • the passage through Parliament of the proposed amendments to the SRC Act;
  • the lifting of the moratorium on new licensees and ascertaining the government’s attitude to new entrants;
  • the proposed OHS harmonisation, whether the 1 January 2012 implementation date will be met and whether current licensees under the SRC Act will be pushed back into state and territory OHS regimes. If the latter does occur, it may well raise questions as to whether a licensee from a business perspective would wish to continue under the SRC Act;
  • Federal Court decision-making to give guidance about the application of “reasonable administrative action” and the “significant degree” test.

In the meantime, we remain with a regime where there are no timeframes in which compensation decision-making is to occur, a Comcare Guide that is inadequate and maybe confusing to some, and implications that flow from the decision in Canute that has created benefits for some injured employees but denied benefits to others in the area of permanent impairment entitlement.

For information on the commonwealth compensation scheme, see the Comcare website www.comcare.gov.au.

For more about the AAT process and dispute resolution, see www.aat.gov.au, in particular the practice directions and guides. Readers are also referred to the relevant chapter in the Lawyers Practice Manual Victoria.

Focus in this article has been on the SRC Act, but other compensation schemes applicable to the Commonwealth, such as the scheme for seafarers35 and military compensation, including that for veterans,36 are also relevant.



DAMIAN CLARKE is sole director of Clarke Legal Pty Ltd. An accredited personal injury specialist with over 26 years experience, he has an extensive practice acting for licensees in the commonwealth workers’ compensation jurisdiction, including litigation, advice, training, policy development and OHS.

1. Commonwealth Employees’ Rehabilitation and Compensation Act 1992.

2. Attorney-General (Vic) v Andrews [2007] HCA 9.

3. OHS and SRC Legislation Amendment Act 2006.

4. Safety, Rehabilitation and Compensation and Other Legislation Amendment Act 2007.

5. Section 5B(3) SRC Act.

6. Section 5A(1)(c) SRC Act.

7. Section 5A(2) SRC Act.

8. For example, Reeve v Commonwealth Bank of Australia [2010] AATA 893, Kara v Comcare [2010] AATA 1031, Storey v Comcare [2010] AATA 973, Griffiths v Telstra Corporation Ltd [2010] AATA 952.

9. Media release, 11 December 2007, Julia Gillard MP.

10. Media release, 23 January 2008, Julia Gillard MP.

11. Safety, Rehabilitation and Compensation Amendment Act 2010.

12. Report of the Review of Self-Insurance Arrangements under the Comcare Scheme prepared by the Department of Education, Employment and Workplace Relations, January 2009.

13. Media release, 25 September 2009, J Gillard MP (Minister for Education, Minister for Employment and Workplace Relations), “Improvements to the Comcare scheme announced”.

14. Employment and Workplace Relations Amendment Act 2009.

15. JPA No 2009/7 was issued by Comcare in relation to the increased benefits.

16. Health & Safety and Other Legislation Amendment Bill 2009.

17. [2006] HCA 47.

18. See also Jurisdictional Policy Advice (JPA) No. 2007/05 issued by Comcare in relation to the Canute decision.

19. [2007] FCA 1663.

20. In response to the Burgess decision, Comcare issued JPA No. 2009/13 regarding considerations required before reducing NWE under s8(10).

21. [2010] FCAFC 88.

22. [2007] FMCA 1486.

23. [2009] HCA 38.

24. Comcare issued JPA No. 2010/02 in response to the decision. For a discussion on whether a tribunal could deal with a permanent impairment decision in the absence of a s14 acceptance of liability, see Bryant v MRCC [2008] FCA 1424, Telstra Corporation Ltd v Hannaford (2006) 151 FCR 253 and Lees v Comcare (1999) 56 ALD 84.

25. [2008] FCA 52.

26. [2002] FCA 1464.

27. Section 7(7) of the SRC Act effectively excludes entitlement to compensation for a disease where an employee has at any time for the purposes connected with employment, or proposed employment, made a wilful and false representation that the disease had not been previously suffered or was not currently suffered.

28. [2007] FCA 237.

29. Comcare issued JPA No. 2009/12 in relation to the contribution test and exclusionary factors.

30. [2005] FCR 29.

31. [2011] FCAFC 39.

32. Section 24(7A)-(8).

33. Section 24(7).

34. Review commenced 1 April 2009, closing on 31 August 2009.

35. Seafarers Rehabilitation and Compensation Act 1992.

36. Military Rehabilitation and Compensation Act 2004 and Veterans’ Entitlements Act 1986.

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