Financial Benefits for Injured Workers

Details of employee entitlements under the Return to Work Act 2014 (SA)

The Return to Work Act 2014 (SA) (RTW Act), which commences on 1 July 2015, makes a significant change to the very premise on which workers compensation is to operate in South Australia.  At the heart of the new scheme is a focus on returning injured workers to work.  The financial benefits operate as a safety net to support that objective.

The RTW Act also introduces the concept of a seriously injured worker in section 21. Establishing whether a worker is seriously injured will be a threshold issue that determines whether only the safety net financial benefits will apply or whether more traditional compensation and indeed additional benefits, will be available.

A seriously injured worker is one who has a permanent impairment assessed at 30% Whole Person Impairment (“WPI”) or greater taking into account:

  1. Any physical injury must be assessed separately from any psychiatric injury.
  2. Consequential mental harm or psychological sequelae is not to be considered.
  3. To qualify the assessment must be 30% WPI for a physical injury or 30% WPI for a psychiatric injury.

For injured workers, there are now four categories of financial benefits available under the RTW Act:

  1. Weekly payments of income support;
  2. Medical expenses;
  3. Economic lump sum payments; and
  4. Non-economic lump sum payments.

Weekly payments of income support

Weekly payments of income support will cease after 104 weeks from the date the worker was incapacitated, unless the worker is seriously injured pursuant to section 21 of the RTW Act.

The first 52 weeks of income support payments will be based on 100% of the worker’s notional weekly earnings (“NWE”). An injured worker is then entitled to a further 52 weeks of income support at the rate of 80% of NWE.

Up to a further 13 weeks of supplementary income support may be approved for incapacity resulting from surgery which takes place after 104 weeks of incapacity has elapsed.

Seriously injured workers are entitled to income support payments until they reach their normal retirement age, or the date at which they are entitled to receive the age pension.

In a practical sense, this means that injured workers who have not fully recovered and are not able to perform their pre-injury normal hours after 104 weeks will no longer be entitled to “top-up” payments of income support.

Medical expenses

An injured worker is entitled to be compensated for medical expenses reasonably incurred in consequence of a work injury.

The entitlement to medical expenses is largely the same as that under the current scheme. However, an injured worker’s entitlement to medical expenses under the RTW Act will now cease 12 months after their entitlement to weekly income support ceases.

The only exceptions are:

  1. Pre-approved surgery which occurs after the entitlement to medical expenses ceases; and
  2. Seriously injured workers who will be entitled to medical expenses for life.

Furthermore, Section 33(17) of the RTW Act allows an injured worker to apply for pre-approval of payment of certain medicines, therapeutic appliances, services or materials rather than having to make payment in advance.

Economic lump sum payments

As an offset for the cessation of income support payments after 104 weeks of incapacity, a new entitlement has been established.

Section 56 of the RTW Act provides an entitlement to a lump sum payment for economic loss for those injured workers who have a permanent impairment of between 5% and 29% WPI due to their work injury.  That is, those who are not seriously injured.

While this entitlement provides compensation for economic loss it is not designed to take into account all of the individual specific features that make up each injured worker’s economic loss.  Rather, it compensates for the fact of the loss and is calculated using a formula.

The amount of the compensation is calculated by the prescribed sum that applies to the injured worker’s degree of WPI, their age and the proportion of full-time work performed at the time of the injury.

Only one claim for a lump sum for economic loss may be made per trauma (or event).

There is no entitlement for psychiatric injury, consequential mental harm and noise induced hearing loss.

Non-economic lump sum payments

What is currently section 43 lump sum compensation will become section 58 lump sum compensation under the RTW Act.

An injured worker will be entitled to compensation calculated as a proportion of the prescribed sum for the degree of WPI caused by their work injury.

However, a very signiificant change is that section 22(10) of the RTW Act allows only one assessment of the degree of permanent impairment caused by the one trauma.

Practically, this means that injured workers will wait to ensure that all of the injuries sustained during a trauma are known to them and stable to maximise their entitlement lump sum compensation for non-economic loss.

Significantly, any injury that subsequently manifests itself or develops after the assessment of impairment is made will not be assessed and will therefore not be compensable.

Again, there is no lump sum entitlement for psychiatric injury or consequential mental harm.  Further, the degree of permanent impairment must be at least 5% WPI before compensation is payable.

Common law claims

Part 5 of the RTW Act provides seriously injured workers only with a limited ability to claim damages at common law against a negligent employer, which includes vicarious liability.   This is the case regardless of whether the injury is physical or psychiatric.

However, as stated above the entitlement to claim damages at common law is limited.

  • The injured worker cannot commence common law proceedings until the degree of WPI has been assessed, and it is clear they are seriously injured.
  • Any claim for damages does not extend to treatment, care or support services. Only economic loss can be claimed.
  • An injured worker cannot claim both a redemption of a liability to make weekly payments and common law damages for future economic loss.
  • An injured worker cannot commence an action for damages or enter into a Redemption Agreement unless or until an election has been made, in accordance with the Regulations.
  • Regulation 39 provides that the election must be in writing and provided to Return to Work SA before common law proceedings are commenced or redemption negotiations are commenced.
  • The injured worker must confirm that he or she has received advice about the consequences of the election and the election must be accompanied by any claim for the cost of obtaining advice.
  • A claim for common law damages cannot proceed to trial without mediation.

Common law claims are therefore likely to form a small subset of claims only.

For more information, please contact:
John Walsh

John Walsh
Director
p.  +61 8 8124 1951
e.  Email me

Jonathan Ikonomopoulos

Jonathan Ikonomopoulos
Associate
p.  +61 8 8124 1824
e.  Email me

This communication provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Should you wish to discuss any matter raised in this report, or what it means for you, your business or your clients' businesses, please feel free to contact us.

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