Workers' compensation

Contributed by RobertGuthrie and current to 27 July 2018

Employer's obligations

Workers’ Compensation insurance is compulsory for employers. This means that in Western Australia (as in all other States) employers must obtain coverage on all workers employed by them. The premium paid will depend upon the number of workers, the nature of the industry and the wages paid to the workers.

In the event of injury or work-related diseases, most employees in Western Australia are eligible for compensation under the Workers’ Compensation and Injury Management Act 1981 (WA). This Act makes an employer liable to pay compensation to a worker who has sustained an injury as defined in the Act by section 4. The workers’ compensation system is a no fault system which does not require the worker to show any negligence on the part of the employer or co-workers.

In addition, the Safety and Rehabilitation Act 1988 (Cth) creates rights for various employees of the Commonwealth Government who may work in Western Australia (see below under ‘COMCARE’). There is also a Seafarers’ Rehabilitation and Compensation Act 1992 (Cth) which operates in relation to certain classes of seamen. The following discussion relates to the Workers’ Compensation and Injury Management Act 1981 (WA) unless otherwise stated. Although there are some similarities in the various forms of legislation it is important to seek advice and refer to the specific provisions of the relevant Act to make a proper claim.

A worker who is either totally or partially incapacitated for work as a result of injury may be entitled to weekly payments of compensation. Incapacity means an inability to perform work. Total incapacity means that the worker is unfit for all work. Partial incapacity means that the worker cannot do his or her pre-injury work but could perform some other work. Workers’ compensation is paid for incapacity rather than inability to obtain a job.

A worker who has not been incapacitated for work may still be entitled to compensation if he or she has a permanent impairment as a result of that injury within the limits set out in the Second Schedule to the Act. Schedule 2 sets out a schedule of body parts and faculties/sense which attract an entitlement to a lump sum payment of compensation if it can be established that the worker has a permanent impairment. Medical expenses and the cost of getting to and from medical treatment are covered, whether or not the worker is disabled from working (Clauses 17, 18, 19 First Schedule). The details of current payments can be obtained from the WorkCover website at https://www.workcover.wa.gov.au/workers/understanding-your-rights-obligations-entitlements/receiving-compensation/ . Before an employer is liable to pay compensation, it is necessary that certain conditions are satisfied: These are discussed below.

Who is a worker?

The first element of any workers’ compensation claim is to establish that the claimant is a worker within the meaning of the Act, that is, to establish the existence of an employer/worker relationship.

A clear example of a worker is someone who ‘works for’ someone else in return for wages. He or she is under orders and directions as to how, when and what work is to be performed. The employer exercises a large measure of ‘control’ over the employee. This is one way the courts have used to determine if there is an employer/worker relationship.

Where there is a significant level of control the courts consider that there is a contract of service. Where the court is not satisfied that there is a significant level of control (after considering a range of factors such as the hours of work, who supplies the tools and materials, the taxation arrangements, the level of skill of the worker and the level of instruction) the court may decide that the person claiming should be regarded as an independent contractor and therefore under a contract for services.

Employee versus independent contractor

The case of Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 181 ALR 263 concerned a bicycle courier business called “Crisis Couriers”. Mr Hollis, the plaintiff, was injured when he was struck by a cyclist and knocked to the ground. The cyclist left the scene and was never identified. However, he was wearing a green jacket, on the front and back of which, in gold lettering, appeared the words “Crisis Couriers”. Vabu’s whole business consisted of the delivery of documents and parcels by means of couriers. Vabu retained control of the allocation and direction of the various deliveries. The couriers had little latitude. Their work was allocated by Vabu’s fleet controller. They were to deliver goods in the manner in which Vabu directed. In this way, the couriers effectively performed all of Vabu’s operations in the outside world.

Vabu’s liability in the case depended on whether the courier who struck Hollis was an employee or an independent contractor. In deciding this issue, the High Court considered those factors outlined above and held that it would be unrealistic to describe the couriers other than as employees. Therefore Mr Hollis was able to recover damages from Vabu on the basis that the courier was an employee of Vabu and Vabu was vicariously liable for his negligence.

Although most independent contractors are not covered under the Act, there is a special provision in the Act which provides coverage for those contractors who are paid for what is in substance their labour and skills (see s.5 under the definition of worker). Legal advice should be obtained as to whether a subcontractor is covered. (see for example Marshall v Whittaker's Building Supply Co [1963] HCA 26; (1963) 109 CLR 210 , Summit Homes v Lucev (1996) 16 WAR 566, Australian Institute of Management v Rossi [2004] WASCA 302).