Improving return to work outcomes for workers
Workers’ compensation schemes are available to workers when they suffer a work-related injury or illness. Workers’ compensation schemes have been a staple of workplace legislation for some time, and have always maintained a clear objective of reducing the time workers are away from employment due to their injury or illness.
Research from SafeWork Australia and some state workplace safety regulators suggest that emerging societal developments and workplace trends are challenging the sustainability of existing workers’ compensation schemes and return to work outcomes.
This article explores these developments and trends, how some jurisdictions have addressed them with amendments to their schemes, and other national strategies aimed at improving return to work outcomes.
First, a look at an employer’s workers’ compensation obligations.
Workers’ compensation obligations for an employer
In an ideal world, employers want to have zero worker injuries or illnesses. However, if an injury or illness does occur, workers’ compensation schemes are available to workers providing a financial and rehabilitative safety net.
Under Australian workplace injury laws, all employers must have workers’ compensation insurance for their workers in case they are injured or become sick due to work. However, the specifics of the workers’ compensation scheme and the responsibilities of an employer in relation to compensation coverage, injury management and rehabilitation differ based on the jurisdiction’s Workers’ Compensation laws.
Below are some general obligations consistent across most jurisdictions. Some of these requirements also apply in workplace health and safety legislation.
General workers’ compensation obligations
Area of responsibility | General obligations |
Compensation coverage criteria |
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Injury management |
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Rehabilitation |
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Potential challenges impacting the effectiveness of current workers compensation schemes
Changing societal developments and employment trends have fuelled the many iterations of Workers Compensation laws over the decades. And that is still the case today.
Psychological risks, vulnerable workers and new employment models are persistent and emerging challenges impacting the nation’s workplace health and safety management, and unsurprisingly, also challenging the effectiveness and sustainability of workers’ compensation schemes and return to work outcomes.
Inconsistent schemes across jurisdictions
The arrangements of workers’ compensation schemes such as funding, level of entitlement and coverage, differ between jurisdictions. This makes it difficult for workers who work across multiple jurisdictions to decipher which injury or illness is covered. With an increase in complex and global supply chains being anticipated in Australia’s future, this siloed approach to workers compensation could become even more problematic.
Emerging employment types and models
To be eligible to make a compensation claim, the claimant must be a “worker” or “deemed worker”. The definition of a “worker” varies between jurisdictions, but in general, it is someone who completes work under a contract of service with the employer. Those who are not covered under workers’ compensation schemes are independent contractors (unless referenced in legislation as deemed workers) and sole traders.
New and emerging employment types and models, such as the gig economy or hybrid working arrangements, have the potential to add complexity and uncertainty to current workers’ compensation schemes by challenging the differences between a worker and independent contractor or by challenging the traditional business relationship between worker and employer. This could potentially result in financial burden on workers unaware that they aren’t covered by the workers’ compensation scheme, or administrative pressure on insurers and regulators who may have to spend more time on these complex claims.
The increase and impact of mental illness claims
Possibly one of the most significant challenges affecting the effectiveness and sustainability of workers’ compensation schemes, is the increase and impact of mental illness claims. The number of claims made for mental illness is increasing year-on-year reflecting the increasing prevalence of mental health conditions in Australia. The total number of mental illness claims is still small compared to physical injury or illness claims, but where determining symptoms and treatment for physical injury or illness is generally straightforward with mental illness it is far more complicated.
Mental illness is unique to the individual, there is not a one-size-fits-all approach. The root cause of the mental illness and any contributing factors is not always clear, or it can be the result of several triggers. This can prove problematic to the viability of the workers’ compensation scheme (as seen by Victoria’s recent reforms which are explained later) as claims can take longer to determine.
Secondary psychological injury can also develop with workers who make a physical injury claim also developing a mental illness from aspects relating to the physical injury or claims process. Research presented by Monash University shows the devastating impact secondary psychological injury can have on a worker’s recovery and return to work outcomes if it is not identified and properly treated. Workers can end up in a vicious cycle where their physical pain worsens their mental health and vice versa. With no positive distractions to keep them motivated, their physical and mental state ends up far worse than what would be expected from the primary physical injury itself.
How recent or upcoming legislative amendments have addressed some of these challenges
Victoria’s scheme modernisation
Financial instability was the catalyst for the Victorian Government’s recent amendments to the Workers Injury Rehabilitation and Compensation Act 2013. The main reason for the financial instability was due to the significant increase in mental injuries and workers staying on the workers’ compensation scheme for longer. In its current state, WorkSafe Victoria determined the scheme was no longer fit for purpose and would not adequately meet its claims liabilities and return to work outcomes.
The main changes to the Act were in relation to mental injury eligibility and whole person impairment assessment. Here are the details of those changes as well as some other changes enforced to help improve the sustainability of the scheme:
- The mental injury must cause significant behavioural, cognitive or psychological dysfunction, and has been diagnosed by a medical practitioner in accordance with the Diagnostic Statistical Manual of Mental Disorders.
- Employment must be the strongest or largest contributing cause of the worker’s primary mental injury.
- Stress and burnout will no longer be eligible for a mental injury claim if the result of the stress or burnout was reasonably expected with the worker’s duties.
- An additional whole person impairment assessment must be undertaken at 130 weeks to determine the amount of permanent damage a worker has because of their injury.
- The establishment of a Return to Work Advisory Committee to provide advice on return to work initiatives
- An independent review of the changes to the scheme to be conducted in 2027 to review the effectiveness of the reform.
In addition to these legislative changes, WorkSafe Victoria also launched Return to Work Victoria, providing information and resources to help expedite workers recovery and rehabilitation to work.
Western Australia’s complete legislative rewrite
Western Australia’s Workers Compensation and Injury Management Act 2023 is a complete rewrite of the current workers compensation legislation that has been deemed archaic, complex and confusing. The new legislation modernises workers’ compensation laws making them better equipped to respond to the changing nature of employment.
Based on research from an extensive review and consultation process, 171 recommendations from WorkCover WA and some 2021 election promises, the Act has kept the fundamental aspects of the current scheme, and amended existing provisions and added new ones.
Here are some of the changes:
- Clarifying the definition of “worker” to include contractors (unless the contractor is running their own business)
- Adding the flexibility to amend regulations to include gig workers or other non-conventional employment types or models if warranted in the future.
- Requiring workers to attend return to work case conferences if arranged by the employer, insurer, workplace rehabilitation provider or treating medical practitioner.
- Extending the period when a worker’s pre-injury weekly rate of income decreases from 13 to 26 weeks.
- Increasing the medical and health expenses general limit amount to 60% of the general maximum amount.
- Allowing catastrophically injured workers who have a compensable workers compensation claim to also access lifetime care and support services under the Catastrophic Injuries Support Scheme (CISS).
Other ongoing initiatives to improve workers compensation schemes and return to work outcomes
- The Queensland Government’s recently complated a statutory review of their workers’ compensation scheme. Some of the recommendations that were accepted, or accepted in-principle, were:
- Providing adequate information on the definition of “reasonable management action” in relation to mental injuries during the claims process.
- Implementing early intervention services to minimise the risk of secondary psychological injury.
- Adding a requirement that a Return to Work plan for an injured worker is to be developed within 10 days of a compensation claim being accepted.
- SafeWork Australia’s National Return to Work Strategy 2020-2030 was established to achieve national collaboration on positive return to work outcomes.
- Monash University’s COMPARE project is using research to improve return to work outcomes across the country.
How you can stay on top of it all with SafetyLaw
Workers’ compensation goes hand-in-hand with workplace health and safety because they both centre around the protection of workers’ physical and mental wellbeing. So, it makes sense for employers to understand their safety requirements in relation to those who work in the workplace and those recovering away from work.
SafetyLaw Victoria, New South Wales, and soon to come, Western Australia provide summaries of workers’ compensation requirements, including the general obligations mentioned earlier in the article and the recent amendments to Victoria and Western Australia. These summaries, which include links to source legislation and additional helpful publications, provide an avenue to familiarise yourself with amended legislation or to demonstrate a holistic approach to safety compliance. An example of SafetyLaw’s Victorian workers’ compensation page is shown below.
These summaries (and our HSE Bulletin) also provide a way to stay informed of any other potential changes to workers’ compensation laws in the future.
If you have an Environment Essentials subscription and would like more information on these summaries, contact your Account Manager or call (03) 9095 6533. If you are new to Environment Essentials and would like to know more, sign up for a free trial or get in contact.
References
- Environment Essentials HSE Article: Australia’s work health and safety priorities for the next 10 years
- Monash University Website: The Compare Project
- Monash University COMPARE Project Webinar: What do we know about secondary psychological conditions in workers’ compensation?
- NSW Government Legislation: Workers Compensation Act 1987
- NSW Government, State Insurance Regulatory Authority Webpage: If you’re an employer
- Queensland Government Legislation: Workers’ Compensation and Rehabilitation Act
- Queensland Government Publication: 2023 Review of the operation of the Queensland workers’ compensation scheme
- Queensland Government Publication: Recommendations of the 2023 Review of the operation of the Queensland workers’ compensation scheme – Queensland Government response
- Return to Work SA Webpage: Employer and worker obligations
- Return to Work SA Webpage: Who is a worker?
- SafeWork Australia Publication: Comparing Workers’ Compensation in Australia
- SafeWork Australia Publication: Workers’ Compensation Coverage Paper
- SafeWork Australia and SuperFriend Publication: Taking Action: A best practice framework for the management of psychological claims in the Australian workers’ compensation sector
- SafeWork Australia webpage: National Return to Work Strategy 2020-2030
- SafeWork Australia Webpage: Workers’ compensation for psychological injuries
- Victorian Government Legislation: Workplace Injury Rehabilitation and Compensation Act 2013
- Western Australian Government Legislation: Workers Compensation and Injury Management Act 1981
- Western Australia Government Legislation: Workers Compensation and Injury Management Act 2023
- WorkCover WA Publication: Review of the Workers’ Compensation and Injury Management Act 1981 Final Report
- WorkCover WA Publication: Workers Compensation and Injury Management Act 2023, Information Sheet 1
- WorkCover WA Publication: Workers Compensation and Injury Management Act 2023, Information Sheet 13
- WorkCover WA Publication: Workers Compensation and Injury Management Act 2023, Information Sheet 15
- WorkCover WA Publication: Workers Compensation and Injury Management Bill 2023, Explanatory Memorandum
- WorkSafe ACT Webpage: Who is an employer, and the employer’s obligations
- WorkSafe Queensland Webpage: Statutory reviews of Queensland’s workers’ compensation scheme
- WorkSafe Queensland Webpage: Workers’ compensation and return to work
- WorkSafe Victoria Publication: A guide for employers: What to do if your worker is injured
- WorkSafe Victoria Publication: Employer’s legal obligation during return to work
- WorkSafe Victoria Webpage: Practice directive – Mental injury eligibility
- WorkSafe Victoria Webpage: Scheme modernisation
- WorkSafe Victoria Website: Return to work