Work cover claims

The price of safety goes up for employers! 

11 December 2019

Australian manufacturers know that safety must be part of the business culture. Manufacturing has always carried a high risk of physical injury.

Investing in robust safety processes always has a cost, whether training staff, spending money on safer, better quality plant or engaging specialist advice.

Two recent developments will make the price of safety increase further, more so for employers who are not proactive.

New Industrial Manslaughter Laws

Victoria has enacted workplace manslaughter laws to commence on 1 July 2020. From July next year, the Courts can impose a fine of up to $16.5 million, and for an individual up to 20 years in prison. Volunteers and employees cannot be charged with industrial manslaughter. Directors, however, are personally at risk. WorkSafe has an extra $10 million in its budget to prosecute, and there is no limitation period on when it can start a prosecution.

Workplace manslaughter offences apply to both physical and mental health risks. An employer could be prosecuted for an employee’s suicide if it is proven that the death arises from the employer’s unlawful conduct.

Ombudsman report on workers compensation claims

Another less publicised development is the Victoria Ombudsman report released on 3 December 2019 of its ‘Follow-up investigation into the management of complex workers compensation claims‘.

The Ombudsman examined the conduct of the five companies (Allianz, CGU, EML, Gallagher Bassett and Xchanging) that act as an agent for WorkSafe Victoria in the management of worker’s compensation claims.

The Ombudsman found that the agents selectively used evidence and medical reports, improperly used surveillance and had wrongly rejected mental injury claims arising from ‘reasonable management action‘ (eg where an employee claims to have suffered a mental injury because an employer has acted improperly or unfairly in its investigation process into poor performance or misconduct). This type of claim has increased significantly in recent years.

Why your business is affected?

The tragedy of losing a loved family member and a valued work colleague is far-reaching and long-lasting.

Safety legislation already provides for large fines and a prison sentence of up to five years but WorkSafe has rarely relied on this existing provision. However, in January 2019, a 72-year-old director was sentenced to 12 months in prison and a $10,000 fine following the death of her worker.

Whether WorkSafe has an appetite to prosecute employers and directors under the new industrial manslaughter laws remains to be seen.

However, an employer and its directors will be far more defensive about its role, naturally fearing the new risk of a manslaughter prosecution. It is difficult to see how a more draconian offence will assist in detecting the underlying causes of safety breaches openly and constructively. Learning about the causes might be stifled by fear of prosecution. Good policy requires an emphasis on prevention rather than punishment.

In respect of workers compensation claims, each WorkCover agent will be more cautious than ever before it rejects any workers’ compensation claim, however dubious a claim may appear.

Consequently, an employer must be proactive in managing its workers’ compensation claims. If a claim is legitimate, as the vast majority are, then making sure the worker returns to work as soon as possible is good for both the worker and the business. Importantly, an early return to work may reduce the annual premium.

If an employer has doubts about the legitimacy of a claim, they must act quickly within the 28 day period after a claims agent receives a claim. An agent has the discretion to reject a claim within this narrow timeframe, but from now on will need persuasive reasons with supporting written evidence to justify any rejection of a claim.

Both developments mean that all employers must adopt the highest standards of safety within their business. Importantly, an employer must document each step to have tangible proof, whether defending a prosecution under safety legislation or in seeking to persuade an agent to reject a worker’s compensation claim.

Safety culture must start from the top in any business.

Make a new year’s resolution for 2020 to put safety as your number one business priority.  Otherwise, your business might not be able to afford the price. And for any director ignoring safety, jail time is priceless.

If you have any questions or would like advice, please contact us.

Disclaimer: This publication contains comments of a general nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional advice. No responsibility can be accepted by Rigby Cooke Lawyers or the authors for loss occasioned to any person doing anything as a result of any material in this publication.

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