Employers have been urged to maintain multiple workers’ compensation policies across states and territories as brokers and insurers grapple with confusion over where claims will be paid out after a series of court decisions and new legislation.
Many companies operate across multiple states, and their workers move interstate, which has created confusion over where “usual work” is and where workers’ compensation payouts are made. The confusion was partially addressed by the Michael Hanns versus Greyhound Pioneer Australia case in 2006.
Hanns, an interstate bus driver injured in NSW, started shifts in the ACT, where Greyhound was based, but spent 80% of his work time in NSW. An ACT Supreme Court judge ruled that when there were two usual workplaces the traditional “quantitative” test, which determined a “usual workplace” based on time spent in a state, did not apply, and the test would revert to where they “habitually” or “customarily” work, which in Hanns’ case was the ACT. Two subsequent decisions in the ACT and Western Australia have handed down similar rulings.
Still a need for multiple policies
Andrew Muller, the Canberra Managing Partner of law firm Moray & Agnew Lawyers, agrees the issue is creating confusion for brokers and employers nationally. “The great difficulty they have is when an employer comes to them for cover and they’re trying to work out what the pattern of the workforce’s engagement over the next 12 months is,” he says.
“People thought, and brokers thought, they were able to have one workers compensation policy when they previously had three. That’s just not the case.
“There’s been a bit of confusion about what ‘usual work’ means,” he adds. “That’s been the biggest challenge. There’s even difference of opinion about how it should be applied across regulatory bodies in different states. There’s a lot of misinformation about there about what it means and how it’s going to be applied."
Muller says much of the confusion was created when harmonisation legislation was introduced. He says that initially it was pitched as removing the need to have a number of workers’ compensation policies. “That was never going to be the case,” he says. “Chances are you’re still going to need more than one policy. There was an expectation in the market place that it was going to do away with that. That was never intended.”
States and territories look to tweak test
Muller also says that working out premiums is challenging. “How do you split wages? Which wages go to the ACT and NSW? Guys in the building industry, particularly, can spend 12 months on the job in the territory and next year is back working on a project in NSW,” he says.
“That whole premium-setting issue is still problematic. Legislation doesn’t really deal with that. It deals with what jurisdiction is going to be attached do.”
Muller says various states and territories are looking to tweak the test to make it easier for brokers and other stakeholders.
Chris McHugh, Executive General Manager Statutory Portfolio at Suncorp Commercial Insurance, says that harmonisation remains a key policy objective for the industry, but despite significant dialogue and consultation momentum for workers’ compensation harmonisation has slowed.
“Harmonisation of OH&S has been put in front of workers’ compensation simply because of the ease of application,” he says. “Everyone involved in that dialogue realises we’re not close to harmonisation on workers’ compensation legislation. There’s still a lot that needs to be done. We’re still years away from achieving that goal.”
Better articulation of harmonisation benefits
McHugh says harmonisation still requires the agreement and alignment of each of the different states.
“The states are going to have to give up components and be a bit more malleable to change,” he says. He added that for harmonisation to be achieved there needs to be a concerted effort and focus on better articulating the benefits of harmonising workers’ compensation legislation.
McHugh says the benefits are significant because it will take costs and complexity out of the system.
“At the end of the day, brokers are looking to create value for their clients. They’re also trying to take costs out of their own system. National harmonisation achieves that for everyone involved.”
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