The Workers Compensation and Injury Management Act 2023 (WA) (‘the new Act’) comes into operation on 1 July 2024. Some key changes involve how a worker is defined, how compensation is calculated and abolition of the s 92(f) settlement agreement process.
Pursuant to section 12 of the new Act, any person working under a contract of service or apprenticeship with an employer will continue to be defined as a “worker” and entitled to compensation.
The biggest change is that whereas in the former scheme, individuals who were engaged under a contract for service and who were remunerated in substance for their personal manual labour or services fell within the definition of “worker”, those contractors are unlikely to be covered under the new Act.
In the new Act, an individual who has contracted with another person for the performance of work will only be considered a “worker” if:
Under the new Act, only contractors who do work that is not in the course of or incidental to a trade or business regularly carried out by that contractor will be considered a “worker” entitled to compensation. The new definition therefore does not provide compensation for people who are “working on an ABN” and contracting out their services to various different entities.
Under the new Act, a worker’s weekly rate of income compensation will be calculated based on the worker’s average earnings over the 12-month period prior to the injury date.
The focus is on the role the worker was doing at the time of the injury. If the worker was employed in that role for less than a year, then you only need to look at the worker’s earnings for the period of time they worked in that role.
If a worker has taken leave without pay prior to the injury, that period is excluded from the calculation of the worker’s average earnings.
There is still a step down to 85% of the initial rate, but it now applies after 26 weeks, instead of the 13 weeks allowed under the former scheme.
Sound simple enough? Just wait, there’s more.
To ensure that workers are not dipping below the minimum wage or minimum award rates, you need to test the rate of income compensation against a “minimum weekly rate”, which looks very similar to the old “award worker” calculation. This minimum is calculated based on the worker’s entitlement to a base award rate under provisions of an industrial instrument or the minimum amount entitled under the Minimum Conditions of Employment Act 1993 (WA) (for non-award workers).
Under the new Act, registration of a settlement agreement in the approved statutory form is the only means to settle a workers’ compensation claim and discharge an employer’s statutory liability for the injury.
The Director will continue to register and scrutinise settlements, and every settlement will require a statement by the worker in the approved form acknowledging that the worker is aware of the consequence of registering the settlement agreement.
Beware! There is a stipulated timeframe for payments (14 days from registration or 7 days from receipt of a Centrelink release notice) with an associated penalty provision if you breach that timeframe for payment.
But what if liability has not been admitted? That’s okay, you can still use the statutory process and statutory form. It can be used for accepted and disputed claims.
But what about settling common law damages claims? These settlements are only effective if there was an election before the action for damages was commenced. Settlements of common law claims also still need to be notified to Workcover, but the Director will no longer be “not disapproving” of those agreements. The usual trigger for payment (i.e. payment “upon non-disapproval”) is removed from the process, so you will need to think about what your new terms might look like.
And what about procuring releases for principals? Unless there is a genuine common law claim against the employer, this is not as straightforward as it used to be, but not impossible. Different principals and insurers are likely to take different approaches depending on their appetite for risk, so watch this space!
The upcoming changes necessitate a proactive approach to ensure compliance and adapt to the new requirements. It is imperative for all parties to review their current practices, seek professional advice, and prepare for the transition to the new Act.
For a detailed understanding of how these changes may affect you or your business, reach out to our dedicated workers compensation team.
This article was written by Xavier Soon, Solicitor Insurance & Risk.