“Workers’ compensation is a fundamental workers’ entitlement, and is central to every Australian’s safety net, having operated in some form for over 100 years. While all responsible policy makers, businesses and trade unions are on a unity ticket when it comes to ensuring Australian workplaces are safe, the unfortunate reality is that hundreds of thousands of Australians workers are hurt on the job each year, necessitating workers’ compensation schemes to ensure that those who suffer workplace injuries are not driven towards poverty.” It’s Broken, Workers Compensation in NSW Since 2012 McKell Institute
The Origins Of Workers’ Compensation
The primary premise of workers' compensation when it was initially established was to ensure the retention of some earning capacity for an injured worker following a work based injury or illness.
It is this simple premise that appears to have been lost as we now have a complicated ‘industry’ that seeks to oversee medical approvals for treatment and rehabilitation support for return to work. The GP as gatekeeper to the health system and already under pressure is expected to liaise with insurers who often have a competing goal to return to health for their patient and that is to minimize a claim payout. The system also needs to be sustainable and unfortunately it appears historically this has been almost impossible to achieve.
In addition, with so many players now operating in the Scheme, the injured at a time serious illness and incapacity, and with little or no knowledge of the scheme when they enter becomes a chess piece in a maze that is now modern Workers’ Compensation. All they really want to do is see their GP and get well and back to work.
The first statutory Workers’ Compensation Scheme began in Germany in 1884. It quickly spread in concept and was adapted by other countries around the world. The legislation emphasized the importance of improving workplace safety and rehabilitation facilities. The scheme assumed that if employees could return to work sooner, compensation costs would decrease while simultaneously retaining the status, morale and financial viability of the injured workers.
Credit: Re-published with permission: Image Credit: John McKinnon/Australian Information Service/National Library of Australia, The Conversation, March 29, 2023 author Angela Woollacott from Australian National University
First introduced in Western Australia in 1902
The first workers compensation scheme was established in Australia early in the twentieth century and applied only to personal injuries from defined dangerous occupations such as physical labour jobs. Remember that was the nature of the world of work at that time, farm laboring, mining and so on. It was known as Workman's' Insurance.
Workers’ Compensation was first introduced in Western Australia in 1902, in Western Australia in 1902, in New South Wales in 1910, and in most other Australian States by 1915.
Prior to this time, an injured worker, even if severely disabled, could only receive compensation if self insured, an option not available to most blue collar workers last century (Ferguson, 1986).
One In Twelve Workers
Today, Australia's Workers’ Compensation System is a $60 billion dollar sector employing thousands of individuals across various roles, including claims management, rehabilitation services, and legal advisory. While exact employment numbers for the sector are not readily available, Safe Work Australia provides extensive data on work-related injuries and claims.
Over the past ten years, there have been more than 1,850 traumatic injury fatalities in Australian workplaces, and over 1,140,000 workers have made a serious workers’ compensation claim involving more than one week of working time lost. That’s around one in every twelve workers. Despite this large population of vulnerable Australians there is no Minister for Injured Workers or Commissioner to advocate for their rights.
Demographics: The average median compensation claim paid by sex is $16, 476 for men and $14, 604 for women (2021 – 2022)
According to Safe Work Australia there are also notable differences in the type of Work-related injury and disease suffered by men and women, as indicated by the compensation paid and time lost associated with serious claims for workers of each sex.
Claims for women have a higher median time lost (8.8 weeks) than claims for men (7.6 weeks).
However, claims for men have a higher median compensation paid ($16,476) than claims for women ($14,604).
This is due to the nature of injury and disease experienced, the types of jobs that women and men are more likely to work in, and differences in pay.
We say, this again highlights the gender pay gap.
For further detailed and updated statistics, Safe Work Australia is a primary source for information on workers' compensation and workplace safety in the country.
Resources: https://data.safeworkaustralia.gov.au/insights/key-whs-stats-2023
Workers’ Compensation Nationally
Currently each State and Territory in Australia has its own laws governing compulsory workers’ compensation and motor vehicle third-party insurance. During the 70's the name of Workmans' Insurance was also changed to Workers’ to better reflect the role women also played in the workforce. A national compensation scheme was considered by the Whitlam Government and a bill was before Parliament but the dismissal ended that opportunity.
Resources: The Clauses of the National Compensation Bill 1974
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New South Wales
In New South Wales the 1910 Act was refined in 1926, the purpose of which was to make it a statutory requirement for employers to protect the income of the injured worker or to assist dependent survivors in case of death.
By the 1980s, the system faced significant challenges as businesses and insurers found it unsustainable due to rising costs and inefficiencies. The cost of workers’ compensation had become a burden to the community. Between 1974 and 1984 wage and salary costs increased 249.6% whilst workers’ compensation costs increased 479.7% (Office of the Commissioner for Employee Compensation, 1986). Moreover in NSW there was no systematic attempt to reduce workplace accidents or the cost of these accident.
1983 Occupational Health and Safety Act – Prevention Focus
In response, the 1983 Occupational Health and Safety Act was introduced to improve workplace safety and reduce the incidence of work-related injuries and illnesses. This act laid the groundwork for a more preventative approach, emphasizing the responsibility of employers to maintain safe working environments.
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Establishment of WorkCover
The ‘modern’ workers compensation scheme was established in the late 1980s. It had a broader goal of promoting productive, healthy and safe workplaces. A single government entity, WorkCover, acted as both insurer and regulator for workers compensation. Its functions included: oversight and regulation; licensing of private insurance companies to manage claims; injury management; and oversight of the workers compensation fund.
Despite these measures, employers continued to face spiraling costs of premiums while insurers were concerned that premiums were not high enough to cover payouts (Meadowbank TAFE, 1988). The factors identified as contributing to this escalation of costs became the subject of many government inquiries which culminated in the change of legislation ( that is the Workers’ Compensation Act 1987) in New South Wales.
Parliament’s Law and Justice Committee
Concerns about financial viability and potential conflicts between WorkCover’s multiple roles emerged from the early 2000s. In response, the Law and Justice Committee of the NSW Parliament undertook an inquiry into WorkCover’s operations in 2014. The review recommended, among other things, a clear separation between WorkCover’s insurance provision and its regulatory functions.
2012
In early 2012, the newly elected O’Farrell Labor Government embarked upon a suite of substantial policy and legislative changes in the NSW workers’ compensation system. Major legislative changes and revisions were undertaken in 2012, followed by a mandatory statutory review of said changes in 2014. The 2012 reforms included substantial legislative amendments which changed the benefit structure for injured workers. See Workers Compensation Amendment since 2012 Page 53.
2015
In 2015 the then Liberal Government NSW Treasurer, Dominic Perrottet, replaced the old WorkCover scheme after it had racked up $4bn in debt. Three new agencies were established to manage the Scheme, iCare as the Nominal Insurer, State Regulatory Authority as the regulator and Safe Work to oversee WHS. Despite the intentions to manage the debt and achieve surplus iCare was found to subsequently be mismanaged and on the verge of collapse. All three agencies have also been embroiled in their own management issues. The result: Injured Workers' have been abused both economically and health wise with no integrated complaints system across the entire scheme to stop the harm and shattering of lives. In short, the injured, many of them women were victim blamed for screaming for help to 'please stop the abuse' all while the system was allowed to continue to malfunction with the injured within in.
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Ongoing Scandals
In 2020 a combined investigation by the Age, the Sydney Morning Herald and ABC TV’s Four Corners into the NSW Scheme found it had underpaid up to 52,000 injured workers by up to $80m in compensation.
What followed was a flurry of further investigations, parliamentary inquiries, resignations and intense pressure.
Tension in Claims Management
Despite the premise that employers and workers should work cooperatively to maintain an injured worker at work, or to achieve an early, safe and appropriate return to work often this does not occur. Stigma for those claiming support through Workers' Compensation remains a significant community problem with many injured ostracized from their workplaces and communities. Further, Injured workers are deemed a risk by the business despite the public rhetoric and the conflict between a case manager representing all parties – employer, injured worker and insurer is simply not working, with the injured often refusing to even talk to their case manager and conducting communication only via email. The trauma caused to injured workers – women and men is deeply embedded in the system and it obstructs the focus, return to health and return to work. It needs to change.
Overall, the present system is creating significant social inequality. It punishes someone for being injured at work. Despite this intense pressure on a system that is failing to keep injured people safe and inquiry after inquiry a Royal Commission has not occurred and thousands of lives are being needlessly destroyed by a system that harms. Women are particularly vulnerable to systemic abuse as we show throughout the documentary, Shattered.
Is a Continuous Cycle of Reform after Reform the Answer?
Overall, the present system is creating significant social inequality. It punishes someone for being injured at work. Hard working businesses are made to pay for the Scheme through statutory premiums but the very system they think is helping their injured takes no risk. In others words billions of dollars is being collected by the NSW government who has no skin in the game. How is this equitable?
Similarly, despite the intense pressure on a system that is failing to keep injured people safe while in the government controlled system and following inquiry after inquiry a Royal Commission has not occurred and thousands of lives are being needlessly destroyed by a system that harms. Women are particularly vulnerable to systemic abuse as we show throughout the documentary, Shattered.
COMING SOON
