Frequently Asked Questions

Disclaimer: None of the information provided here is to be considered legal advice. Users of these FAQs must consult their own legal advisers before acting on any information contained in these answers.

About Self-Insurance

Yes. The legislation specifies that the State public sector is self-insured. The public sector accounts for about half of all self-insured remuneration, or 18% of the State remuneration base.

The primary objective of self insurance for most businesses is to improve the cost-effectiveness of their WHS and workers compensation arrangements. For example:

  • Not being a part of the broader workers compensation insurance pool releases the employer from the cross-subsidies that inevitably occur in insurance pools. If an employer is a superior safety performer, its workers compensation costs will be lower. While self insurers regard best practice WHS to be far more than a simple business proposition, the self insured employer does get the immediate benefit of those lower costs. If it was still in the insurance pool, that superior performance would be offset by the poorer performance of other employers, and there would be little or no change in the levy the employer would have to pay.
  • Being a self insurer allows a business to manage its own claims at the workplace. It is generally accepted that workplace-based return to work management delivers better claim outcomes in terms of the employment relationship and returns to work. This benefits both the injured employee and the employer.

‘Exempt employer’ was the term used in the Workers Rehabilitation & Compensation Act 1986 to describe self insurance until 2008, when that Act was amended to delete all references to 'exempt employer' and adopt ‘self-insured employer’ as the preferred term, as it more accurately describes the concept.

The term 'self-insured' has been continued in the Return to Work Act 2014.

'Exempt’ and ‘self-insured’ have in the past been used interchangeably when discussing self insurance in South Australia, but 'exempt' is no longer the correct statutory term.

About 38% of South Australia’s remuneration is paid by self-insured organisations.

Not as much as is sometimes thought. Self-insurers are subject to scrutiny from a number of sources. The Board of ReturnToWorkSA has control over the granting and renewal of self-insurance, and has an elaborate financial oversight system and audit teams to monitor WHS and return to work performance. Self-insurers are also scrutinised by SafeWork SA in the same way as all other employers. They are also scrutinised by State and Federal regulators under specific industry standards and measures, environmental laws and so on. It is arguable that self-insurers are some of the most scrutinised employers in South Australia.

At a policy level, it is SISA’s understanding that most unions oppose self insurance. However, at the workplace level, self insurers generally report having a sound and constructive relationship with the unions and associations that represent their employees.

The current scaling factor is 200%.

Consult the Code of Conduct for Self Insured Employers on the SISA website or contact SISA on 8232 0100 or sisa@sisa.net.au.

This is difficult to state with precision but data indicates that self-insurers on average: 

  • Have lower numbers of lost time claims
  • Experience lower average lost time claim duration
  • Carry a proportionally lower claims liability
  • Generate better workplace health and safety outcomes

You can:

  • Ask your employer's human resources, workers compensation, safety, finance or insurance manager
  • Call ReturnToWorkSA on 13 18 55

The primary criteria are financial and are measures of:

  • Balance sheet test (total assets/total liabilities)
  • Gearing ratio (loan capital/total capital)
  • Liquidity (current assets/current liabilities)
  • Cash flow margin (operating cash flow/net sales)
  • Profitability ratio (net profit before tax/total equity)

The actual benchmarks for these criteria vary by industry and are tabulated in section 3.5.4 of the Code of Conduct for Self-Insurers.

There are also organisational and prudential requirements (including statutory considerations) that are set out in part 3.5 of the Code of Conduct for Self-Insurers.

Most industries are represented with the exception of building and construction. Among the most numerous are the aged care, health and manufacturing sectors. Bear in mind also that the SA State public sector is self-insured in its entirety.

 

About SISA

This fluctuates as new companies join and change through mergers, de-mergers, acquisitions and so on. At any given time, SISA has 70-75 full members and about 70 associate members.

SISA is wholly funded by member subscriptions and sponsorships. It receives no subsidies from any regulator or Government body, although it does receive event sponsorship from ReturnToWorkSA from time to time.

SISA was formally incorporated on 3rd August 1984 as the Employer Managed Workers Compensation Association, although it eventually adopted the name SISA. On 1st November 2005 the association was officially re-named as SISA.

Full membership is limited to organisations that are self insured. Associate membership is available to other organisations that are applicants or potential applicants for self insurance or providers of services to self insurers. Please refer to the ‘Joining SISA’ pages on this website for more detail.

 

RTW Act - Redemption

That provision is now section 49(2) of the RTW Act 2014.

Firstly, the receipt of a redemption is of itself unconnected with the employment relationship unless it is accompanied by other actions. The redemption provisions of the RTW Act have no requirement for any action affecting the employment relationship. Some organisations may have policies in place to require resignation or some other thing as part of redemption negotiations, but that is a workplace relations matter unconnected with the provisions of the RTW Act.

Much then depends on whether the worker resigned as part of the redemption agreement and how that resignation was documented. If the worker was dismissed for reasons other than serious and wilful misconduct then the right to apply under s.18(3) will remain open regardless of the receipt of a redemption.

This is at present an untested area of the law. It appears to SISA from the language of s.18(2) that a resignation will void the obligation to provide suitable employment into the future. However, the nature of the resignation and how it is documented gives rise to the possibility that it will be viewed by a court as constructive dismissal.

Until this area is clarified in a court, it is strongly recommended that all redemption negotiations involving termination of employment be conducted under legal advice.

Probably the most important difference is that an economic loss lump sum is an entitlement, whereas redemption is at the discretion of the compensating authority.

The other main difference is that redemption is a negotiated amount, while an economic loss lump sum is calculated in accordance with statutory tables and an assessment of whole person impairment (WPI).

Both, however, recognise in different ways the loss of a worker's ability to sell his or her labour on the open market due to a work-related impairment. So to all practical purposes, the two types of payment compensate for the same thing.

Given that an economic loss lump sum is an entitlement if the worker's WPI is 5% or more, compensating authorities are strongly advised to assess and determine a worker's economic loss lump sum entitlement before considering redemption of weekly benefits. While it is quite legal to do both, the risk of double compensation is there. It may, however, be necessary where a global claim settlement under a deed is being negotiated.

As at January 2016, this is under consideration by the Australian Taxation Office (ATO).

In the past, weekly benefit redemption has been treated by the ATO as capital and therefore not taxable as income. Recipients of redemption payments have obtained private tax rulings to that effect by way of confirmation.

In mid-2015, the ATO published a position paper that essentially reversed this position. The paper stated that:

  • Where weekly benefit redemption is part of an Employment Termination Package (ETP), it would be taxable under the complex ETP formula.
  • Where weekly benefit redemption is not part of an ETP, it would be taxable at the worker's marginal rate.
  • Redemption of medical benefits would remain as capital but not subject to Capital Gains Tax.

This proposal remains under discussion, and the current tax status of unpaid weekly benefit redemption agreements is uncertain. It seems unlikely that any ruling will be retrospective, so completed income redemption agreements will probably be unaffected.

This answer will be updated as more information comes to hand.

SISA is aware of recent cases where legal representatives have charged the maximum fee for legal advice twice, to a total of $1,800, in cases where both medical and income redemption are being negotiated.

The RTW Act and Regulations and the general principles of billing for legal services are unclear as to the legality and ethics of this practice. It will probably take action in the SAET to resolve. In the meantime SISA would observe that:

  • The prescribed rate of $900 per service is a maximum, not a fixed fee
  • From that it can be inferred that the intent of the Parliament was that a solicitor would calculate the fee based on the normal method of increments of time, with the maximum set to ensure that costs are contained to a reasonable level
  • At $1,800, by that method, the provision of advice on the two redemption agreements would take 6 hours at the Supreme Court rate
  • That is, to us, manifestly excessive

SISA members receiving accounts for legal advice on any redemption agreement that is at the maximum rate of $900 are advised to request more detail on how long the advice took to deliver and the hourly rate used to calculate the fee. In the absence of clear evidence that the worker received 3 hours of advice per redemption, members can consider rejection of the cost claim and negotiation of a more reasonable fee.

 

RTW Act - Common Law

No. Part 5 of the Return to Work Act 2014 specifies that in some circumstances, where the worker recovers damages, some benefits cease. SISA interprets that as meaning that the worker has to succeed in a common law claim and be paid damages before the benefits cease.
In any case, for a worker to be entitled to issue common law proceedings, he or she has to be seriously injured (30% or more whole person impaired), in which case medical benefits continue indefinitely regardless of common law.

Section 73(2)(c) of the RTW Act specifies that a seriously injured worker can only recover damages for future economic loss, and can only do so after formally electing to seek damages rather than redemption of weekly benefits.

It is unlikely. In most jurisdictions, an overwhelming majority of common law matters are settled before court proceedings begin. Of the remainder, most will settle prior to a judgement being handed down.

The exceptions will be where there are significant sums at stake and liability and/or contributory negligence are vigorously defended.

This will vary with the circumstances of the incident giving rise to the proceedings.

The SA Civil Liability Act 1936 defines contributory negligence as a failure by a person who suffers harm to exercise reasonable care and skill for his or her own protection or for the protection of his or her own interests

With such an imprecise definition, each matter will turn on its own facts. For example, in a motor vehicle accident, a failure to wear a seat belt is clear contributory negligence where the failure caused an escalation of the injuries. Compare that to a worker who is new to a worksite who ignores a sign, lights a welder and suffers burns when a flammable material ignites. Much depends on the sign, what the worker was told about naked flames on site beforehand and the reasons why the environment was so flammable.

 

RTW Act - Financial Benefits

Yes. Section 32 specifies interim benefits "under this Part", meaning Part 4 of the Act, which is the part dealing with financial benefits. Part 4 includes weekly payments, medical and hospital benefits, return to work services, property damage, transportation for initial treatment and so on.

Yes, if the worker's claim is undetermined at 10 business days, the worker must be offered interim benefits. It is optional to offer them before the 10 business day deadline. See section 32 of the Return to Work Act 2014.

In SISA's opinion, yes, you can if you choose to. What the Act says is that these workers are not entitled to economic adjustments to weekly benefits. There is, however, no bar to a compensating authority exceeding the minimum entitlement that the Act establishes.

No. The Act only sets a minimum level of entitlements for workers. A compensating authority could, in its sole discretion, lawfully choose to continue compensation beyond the 2 and 3 year statutory entitlement limits, even if the worker is not determined to be seriously injured. Any compensating authority considering this option would need to do so consistently and seek detailed legal advice beforehand.

Long service leave (LSL) is an entitlement that has a different status to other forms of leave in the context of workers compensation claims. While there has been no judicial clarification of this, SISA offers the following view:

LSL is an entitlement that usually accrues and is retained up to the time that the worker either takes the leave, retires or leaves the employment.

The Long Service Leave Act 1987 allows for LSL to be cashed out by agreement between the worker and the employer once 10 years' service has been completed.

While LSL cannot be taken or cashed out prior to the completion of 10 years' service, the entitlement to pro-rata cash-out on resignation or retirement arises after 7 completed years' service.

However, if a worker opts to continue to work until retirement without taking LSL, then the LSL is payable as a lump sum on retirement. In this way, the worker can obtain both the LSL lump sum and their normal pay, albeit at different times.

The same situation applies where a totally incapacitated worker on weekly benefits opts to take LSL as either paid leave or as a cash-out while still employed. Where it is taken as paid leave, it seems likely that the worker will be entitled to both the LSL and weekly income support payments. Where the LSL is taken as a lump sum, the worker is likely to still be entitled to weekly income support in the same manner as a worker who is not on compensation would be entitled to their normal wage.

While on the face of it this seems to be double-dipping, that is not actually the case. The worker has the entitlement to LSL regardless, and is only bringing that entitlement forward rather than waiting for retirement or resignation to take it. It could be argued that by bringing the LSL entitlement forward, the worker is reducing the cost of the entitlement to the employer by calculating the entitlement on the worker's earnings at the time, rather than on some higher figure in the future.

 

In our view that will depend on the circumstances, (assuming that the worker has not been declared to be seriously injured):

  1. If the notice is provided ahead of the cessation as a courtesy, then no decision has yet been made and there would accordingly be no grounds for a formal dispute.
  2. At the time of the cessation, there will be appeal rights under s.97(g) or (i) if the worker contends that the services fall within the scope of s.33(21)(b) and/or Regulation 23 and should not be ceased.
  3. Where, at the time of the cessation, there are services that had already been approved but not yet used by the worker, a subsequent decision to not fund the previously approved services would probably be open to appeal via s.97(g) or (i).

This is covered by subregulation 5 of the Return to Work (Transitional Arrangements) (General) Regulations 2015 (the RTWTAG Regulations).

Where:

  • A worker had an accepted claim for injury to more than 1 body part under the repealed Act; and
  • There had been a determination of entitlement to non-economic loss under the repealed Act that did not cover all of those injuries (for example, where one or more of the injuries had not reached maximum medical improvement prior to 1/7/15); and
  • The remaining injury/ies reach maximum medical improvement after 1/7/15; and
  • The worker applies to the self-insurer under subregulation 5 of the RTWTAG Regulations for the balance of the lump sum compensation prior to 1/7/16; then

the worker is entitled to a further WPI assessment under the RTW Act and payment of the balance of the lump sum compensation as calculated under Schedule 4 of the repealed 2010 Regulations.

This subregulation will expire on 1/7/16, after which there will be no further right to apply for additional lump sums under this subregulation.

This subregulation excludes any sequelae, aggravation, acceleration, exacerbation, deterioration or recurrence of an existing injury - these should be treated as new claims under the RTW Act.

 

RTW Act - RTW & Suitable Employment

No. SISA recommends that new or other employment options be considered as soon as it becomes clear that a worker will never resume all or a large proportion of his or her pre-injury work.

S.18(3) is the worker's right to apply to the pre-injury employer for suitable employment. The wording of section 18 in its entirety does not give a clear answer to this question. To date, there has been no case law on the question for definitive guidance. SISA prefers the view that s.18(3) is not available to a worker in this situation, but this is in no way legal advice. Where a case of this sort arises, the employer should immediately seek experienced legal advice.

This is untested law but our early view is that it does not. Redemption impacts future weekly compensation entitlements, but it is likely that it will not affect ordinary wages.

 

Evaluation & Compliance

Technically it is not. It is, however, illegal for the provider of a service to charge a worker, compensating authority or employer for a medical or other service at a rate higher than that fixed by the schedules. This rule does not apply where there is no scheduled rate for the service.

Not that we are aware of. It is generally accepted that in order to afford procedural fairness, a determination letter should contain:

  • A plain-English description of the determination and its consequences
  • The sections of the Act or regulation on which the determination is based
  • A list of the evidence on which the determination is based (eg medical reports)
  • The name and title of the delegated person making the determination
  • The recipient's appeal rights (where appropriate), including time limits and the appropriate venue for the appeal

However, the content of notices is not itself a legislative compliance matter. Even where the manner and form of the notice is designated or prescribed, section 25 of the SA Acts Interpretation Act 1915 will allow for  variations provided there is no intent to mislead.

In any case where a self-insurer's notices are questioned by RTWSA staff, they should be informed of the above. Notice content is not a valid matter for comment under the Performance Standards for Self-Insurers.

Technially no - section 25 of the SA Acts Interpretation Act 1915 says:

Whenever forms are prescribed or approved under any Act, forms to the same effect are sufficient provided that deviations from the prescribed or approved forms are not calculated to mislead.

There is case law from the repealed Act that makes it clear that other forms of documentation, such as a letter from a legal representative or advocate or a medical report accompanied by a stated intention to make a claim, can be sufficient to initiate the claims process, notwithstanding the requirements of sections 30 and 31 of the RTW Act.

Similarly, a self-insurer would be permitted to have its own claim form with its own badging provided it falls within the ambit set by s.25 of the SA Acts Interpretation Act 1915.

Prudence and simplicity may, however, direct self-insurers to the use of the designated form.

No - section 191 of the RTW Act prohibits contracting out. Any contract that purports to do so is void to that extent.

The exception to this can be found in section 191(2)(a) - where the Corporation consents to the worker and employer entering into the contract. (Note that there are, as at January 2016, no circumstances prescribed under section 191(2)(b)). While section 191(2)(a) is as yet untested by self-insurers as far as we are aware, presumably such approval can be sought from the Corporation prior to a contract or deed being entered into.

Deeds of release normally function as a discharge of liabilities. Wording must be carefully set out by legal advisers in order to avoid breaches of s.191.

Not within the RTW Act itself. However, a recent case that was referred to the State Ombudsman for an informal opinion suggests that where an application has been received within a short period (say 6 to 9 months) after a copy has been provided under a previous application and little or nothing has changed on the file, it is appropriate to simply provide copies of anything new that had not been provided under the previous application.

This is, however, formally untested as far as we know.

 

RTW Act - General

Part 2 Division 2 of the Return to Work Act 2014 sets out the law for connection with the State. ReturnToWorkSA publishes the Insurance cover for ‘cross border’ workers booklet that describes in more detail how to apply the tests.

There are cases where an injured worker can sue a third party for damages outside the workers compensation system as well as making a claim under the RTW Act. These are usually cases where:

  • An entitlement to make a claim under the compulsory third party (CTP) motor vehicles scheme arises from an accident involving a negligent driver causing injury to a worker in circumstances covered by the RTW Act;
  • A labour hire worker or employee of a contractor is injured through the alleged negligence of a host employer or prime contractor.

In such cases, a compensating authority can, by the provision of an appropriate notice within the statutory period (3 years as specified by s.66(7)(g)(ii) of the RTW Act), recover past and future costs (also called 'paid and payable' costs) incurred under the RTW Act from any damages payable to the worker. This will require an accurate and formal estimate of the ultimate or final cost of the claim, as previous case law suggests that where the estimate has fallen short, the compensating authority cannot make a further recovery - see Pasminco Port Pirie Smelter Pty Ltd v Wastell [2006] SAWCT 51 (30 June 2006).

Section 66 of the RTW Act sets this out in more detail.

Section 188 of the RTW Act sets this out. In simple terms, where a worker is found to have a hearing loss upon being employed by a self-insurer and then suffers a further loss such that the self-insurer is required to pay compensation for the entirety of the loss, the self-insurer can recover a contribution from either RTWSA (where the previous employer was a premium-payer) or the previous self-insured employer.

RTW Regulation 67 sets the audiometric procedure by which the initial loss must be established in order to exercise this right.

The reverse is also the case - RTWSA can make a similar recovery from a self-insured employer.

Such recovery action is undertaken in the SA Industrial Relations Commission.

Note that as at November 2015, such recovery actions are likely to be transferred to the SA Employment Tribunal some time in 2016.

As far as SISA is aware, such recovery actions are rare.

Yes.

In the case of casual workers where weekly earnings have to be averaged for the calculation of LSL entitlements, the Long Service Leave (Calculation of Average Weekly Earnings) Amendment Bill 2015 defines compensated lost time as service for LSL calculation purposes.

 

RTW Act - Whole Person Impairment

You should refer the assessment for a quality assurance review. This can be done by either referral to RTWSA or an independent WPI assessment organisation.

Where it is found that the assessment is technically faulty, it should be referred back to the assessor for rectification.

The name of the assessor and the assessment, along with supporting documentation, should be provided to RTWSA, which is responsible for the accreditation of WPI assessors.

In the meantime, there is no obligation to use or pay for an assessment that does not comply with the Impairment Assessment Guidelines. You may opt to have another assessment done by a different assessor agreed with the worker.

This is a difficult question to answer. This situation may arise where the assessment methodology for a particular body system contains discretions for the assessor that can deliver widely disparate results between assessors. These can arise from judgments about activities of daily living, or simply which diagnostic category a particular injury falls into.

Section 22(10) of the RTW Act precludes the obtaining of another assessment where the existing one is technically compliant. There is, however, no bar on having the existing assessment reviewed by another assessor for an opinion as to whether the first assessor has appropriately exercised the diagnostic and other discretions.

Where an assessment's final result seems out of step with the revier's opinion and/or your understanding of the worker and the injury, legal advice is recommended.

Yes. Appendix 1 of the Impairment Assessment Guidelines at page 119 specifies that an assessment request must be provided to the worker and at least 10 days allowed for the worker to consider the request and raise any issues before the request is sent to the assessor.

This is covered by subregulation 4 of the Return to Work (Transitional Arrangements) (General) Regulations 2015 (the RTWTAG Regulations)

In cases where workers:

  • Had an assessment for a permanent impairment lump sum under the repealed Act as it stood before 1 April 2009 (in other words, under the repealed Schedule 3 to that Act); and
  • Did not at any time have an assessment of whole person impairment under the repealed Act as it stood between 1 April 2009 and 30 June 2015; then

the worker has the right to request a whole person impairment assessment under this regulation.

Such an assessment is solely for the purpose of ascertaining whether the worker is seriously injured (30%+ WPI) and would not give rise to any further claim for a lump sum unless the worker's situation is captured by subregulation 5 the RTWTAG Regulations (meaning that a portion of the worker's lump sum entitlement under the repealed Act remained undischarged on 1/7/15 - see separate FAQ).

It should be noted that:

  • The worker's right to request such an assessment is not time-limited - subregulation 4 of the RTWTAG Regulations has no expiry date.
  • A self-insurer is not required to spontaneously offer assessments to such workers where the workers do not request one under this regulation.
  • However, on request by the worker, the self-insurer must arrange the assessment as required by the Impairment Assessment Guidelines.