Working together for a shared future
Review of the Queensland Workers
24 March 2010
ABN 59 050 486 952
Level 13 133 Mary St Brisbane Queensland 4000
T 07 3295 9560 F 07 3295 9570 E email@example.com
QRC submission Page 2
The Queensland Resources Council
The Queensland Resources Council (QRC) is the peak representative organisation of the Queensland
minerals and energy sector.
The QRC‟s membership encompasses minerals and energy exploration, production and processing
companies and associated service companies. The QRC works on behalf of members to ensure
Queensland‟s resources are developed profitably and competitively, in a socially and environmentally
QRC Members WorkCover Arrangements
The QRC represents members who are covered by the WorkCover scheme and members who are
self insured. While the driver of this reform process is ensuring the ongoing financial viability of the
WorkCover scheme in Queensland, the impact of changes to the scheme on self insured businesses
needs to be taken into account.
Drivers of the Current Funding Crisis
The approximately $800M lost from investments during the recent economic downturn is a significant
contributing factor to the $1.3B operating deficit under which the WorkCover is currently labouring,
however the resources sector is far more concerned by the $500M underwriting shortfall which
represents an ongoing challenge to the integrity of the system.
Having evaluated the evidence presented by WorkCover, Price Waterhouse Coopers and Deloitte,
QRC does not believe that sufficient work has been done to identify all of the factors contributing to
the WorkCover funding deficit.
QRC accepts that that much of the growth in common law claims is as a result of the decisions in
Bourk v Power Serve P/L and Anor and Parry v Woolworths Ltd . There is little doubt that the burden
of demonstrating the tort of Breach of Statutory Duty under the strict liability provisions of the
Workplace Health and Safety Act 1995 (Qld) is significantly lower than the burden of demonstrating
negligence, particularly given that the applicable standard of proof is the civil standard of on the
balance of probabilities.
There is little doubt that the availability of claims for Breach of Statutory Duty has encouraged the
growth in common law claims over the past two years (since the decision).
We do however believe that there are a number of factors which have a significant influence on
WorkCover‟s bottom line which have not been addressed throughout this process.
 QCA 225
 QCA 26
WorkCover, Discussion Paper Queensland Workers Compensation Scheme: Ensuring Sustainability and
Fairness, Feb 2010 pp 4 – 6.
QRC submission Page 3
Settlement of Claims
Our members advise us that WorkCover has a tendency to settle claims for a higher quantum than
would be settled by a self insured party. A number of QRC members have provided us with
confidential examples of instances where WorkCover has settled for figures as much as three times
higher than what individuals were willing to accept.
QRC also heard evidence of claims being settled regularly despite the fact that WorkCover had not
contacted the employer or properly investigated the matter.
We understand from our discussions with a number of other parties that this is not an issue unique to
resources companies who hold WorkCover policies.
We find it curious that the issue of internal efficiencies, staffing levels and third party claim
management was not addressed in the initial report and only dealt with at a cursory level in
WorkCover effectively operates a state run monopoly for third party insurance provision for workplace
injuries; self insurers cannot fairly be considered competitors because they don‟t compete with
WorkCover. Due to this position of market dominance and the fact that the scheme is not run for profit,
WorkCover should be obliged to look for cost savings before imposing additional costs on either policy
holders or claimants. As a principle, a culture of enhanced efficiency is not at odds with WorkCover‟s
Deloitte Report Conclusions
Based on the fact that the process has been flawed (by omission) from the beginning, QRC can not
state with any confidence that we support the conclusions drawn in the Deloitte report.
QRC Preferred Option
The QRC believes that WorkCover should investigate moving to a model similar to that in Victoria.
Outsourcing of claims management and increased competition will create greater efficiencies within
the system, resulting in significant cost savings and potentially calling into question the need for other
Given that self insurers can successfully manage their underwriting costs,it stands to reason that a
more commercial WorkCover system would be able to do the same.
This greater commerciality would drive better decision making regarding the quantum of settlements
and would encourage a more proactive approach to defending spurious claims.
QRC submission Page 4
Future Economic Loss
One of the primary frustrations for employers is the following all too common scenario:
rehabilitation of a worker following injury;
medical advice confirming that the worker is fit to perform his or her normal duties with little or
return of the worker to their normal position in which they have worked for many years without
any loss of salary; BUT
still the employer subsequently faces a claim for future economic loss on a “global basis” for
“future disadvantage in the workforce”.
QRC is advised by its members that it is not uncommon for awards of future economic loss on this
basis, even where it is improbable that there will ever be any actual loss and the worker continues in a
role that they have historically performed.
Such loose awards of damages for significant sums of money:
dramatically raise the quantum of claims;
often result in unmeritorious claims being brought in the first instance; and
result in the rejection of statutory lump sum compensation in favour of bringing common law
claims, thus increasing claim numbers.
QRC submits that it ought to be an express requirement that Future Economic Loss only be awarded
where a Court is satisfied that there is a likelihood, on the balance of probabilities, that the worker will
actually sustain economic loss in the future.
Civil Liability Act
At present, the Civil Liability Act (CLA) applies to all claims in Queensland for personal injury except
claims against an employer, and claims considered particularly offensive (dust diseases and tobacco).
The CLA was initiated based on recommendations coming out of the Review of the Law of Negligence
in 2002 chaired by Justice David Ipp, on referral from the Commonwealth Government. Similar
legislation has been introduced in all States of Australia. Its purpose is to:
strengthen (or prevent the continued erosion of) the tests for negligence, codifying the
provide rules for, and in some respect restrict, the quantification of damages.
QRC submits that there is little or no sound basis for workplace injury claims to operate on a different
basis to that provided under the CLA for all other types of claims. The principles enunciated in the
legislation, and the reasoning behind them, are of equal application. Any special restrictions or
considerations applicable to one branch of liability but not to another, may be included within the CLA.
QRC submission Page 5
In addition to the matters addressed in this section the QRC supports some recommendations from
other proposals to address matters such as Bourk v Power Serve P/L and Anor, costs, alternative
dispute resolution, etc. These matters are addressed in the sections where we evaluate alternative
policy positions and are contained in the recommendations.
This option does not address the matters relating to claims management and costs addressed in the
Drivers of the Current Funding Crisis section of this submission.
Additionally, QRC does not have a sound basis for offering an opinion on what an appropriate
threshold would be and chooses to limit its comments to the operation of a threshold.
QRC wishes to flag the risk that the introduction of such thresholds would lead to a transformation of
the current system from a short tail system to a long tail system – we would not support such a
QRC opposes any threshold which creates a distortion or artificial transfer between the three branches
of person injury liability in Queensland – workers compensation (Workers Compensation and
Rehabilitation Act), motor vehicle (Motor Accidents Insurance Act) and everything else, which is
commonly known as public liability (Personal Injuries Proceedings Act). Any threshold introduced
ought to be applied across the board. Imposing a threshold in one branch alone, will result in undue
distortion and likely see a shift of the burden to other branches.
This is of particular concern in the resources industry (and equally to the building and construction
industry) where a large number of specialist contractors are engaged to perform specialist tasks.
Contractors are primarily responsible for their employees, including for their training, expertise and
supervision. If an employee of a contractor was injured, and was prevented from seeking damages
from his or her employer (the Contractor) the employee will inevitably look to other potential parties,
the most obvious being the holder/operator of the mine, the principal. As such, while the principal may
(properly) play a very limited role in any such claims at present, should a threshold be applied which
artificially removes the primary party responsible, other less culpable parties may find themselves
bearing the full claims.
Such outcomes are fundamentally unfair and unjust. It is also would result in:
increased legal costs as parties seek to pursue more “legally speculative” claims against third
higher public liability premiums and higher deductibles;
increases in costs to sizeable corporations, who will usually carry a significant deductible or
„self insured retention‟ before any public liability responds; and
an artificial disadvantage to employees of the principal mining company, as compared to
employees of contractors (who would still have open to them a claim against the principal
QRC submission Page 6
Further, a threshold applicable only to workers compensation claims is unjust if it may be relied upon
in conjunction with WorkCover‟s right to recover statutory benefits under s207B of the Workers
Compensation and Rehabilitation Act.
The above comments are best illustrated by this example:
Jones works as a tradesman on a construction site and sustains injury. His injury resolves
over the course of the next 12 months with a small impairment. He has received $80,000
worth of statutory benefits. At common law he may have recovered damages of $100,000, at
say 75% against his employer and 25% against the principal contractor.
Scenario 1: Jones brings a claim for damages. Given his small impairment he is prevented
from bringing a claim against his employer, and as such brings a claim for damages against
the principal contractor. The principal contractor cannot seek contribution in tort from the
employer, whose acts or omissions were the primary cause of the incident, because it cannot
rely on the workers claim against his employer for breach of duty because of the threshold. As
such, the principal contractor bears $100,000 – 4 times more than what ought to be the case
under equitable principles.
Scenario 2: Jones does not bring a common law claim. WorkCover instead seeks recovery
from the principal contractor of the statutory benefits under s207B. No rights of contribution or
apportionment exists, and in any event the worker is under the threshold so no cause of action
for damages based on breach of the employer’s duty to the worker is available. As such, the
principal contractor becomes liable for $80,000, more than 3 times what ought to be the case
under equitable principles. Public liability coverage for any such a claim is questionable, as it
is not a claim for damages.
Scenario 3: As per scenario 1 but in this instance there is a standard clause in the
construction contract requiring the contractor to indemnify the principal for injuries up to the
extent of the contractor’s negligence (effectively reflecting the common law). The principal
seeks recovery of 75%, being the appropriate equitable contribution, based on the contractual
indemnity. Coverage for such claim is potentially refused by WorkCover because it is a claim
in contract and there is no liability to the worker because of the threshold. The contractor is left
uninsured and exposed, for what ought to be a simple workers compensation claim.
QRC submits that the implementation of any threshold ought to only be considered on one of three
(a) Any threshold ought to be applied across all branches of liability.
(b) Alternatively, the threshold ought to apply uniformly in relation to any claims against any party
in connection with an “injury” as defined by the Workers Compensation and Rehabilitation Act.
As such, once the initial gateway to the workers compensation scheme is established (entitling
the worker to statutory benefits), the threshold applies across the board to any claim.
(c) Alternatively, the threshold only exist for the worker‟s claim against the employer, but be
expressly removed should the worker bring action against a third party who in turn ought to be
QRC submission Page 7
entitled to seek contribution from the employer based on the employer‟s breach of duty to the
We understand the preferred option outlined in the Deloitte report attempted to address the liability of
principal contractors however it does not sufficiently address this concern as outlined in the following
In this structure:
Operator of Mine (WorkCover Policy)
Principal Contractor (WorkCover Policy)
Sub-Contractor (WorkCover Policy)
Labour Hire Company (WorkCover Policy)
Labour hire worker (Jones)
It would not be unusual that the operator in this scenario has nothing to do with the running of the
mine and contracts that operation out to a contractor who meets the definition of principal contractor.
The principal contractor then contracts part of the operation out to a sub contractor who finds it needs
an extra person and therefore engages a labour hire firm to provide them a worker. Under this
If there is a 10% of impairment common law claim threshold in place and the labour hire
worker is injured with an 8% permanent impairment his statutory claim is not affected; but if he
decides to make a common law claim he will be barred from making it against the labour hire
company, the sub-contractor and the principal contractor. He will however be able to launch
proceedings against the operator (because operators don’t meet the definition of principal
contractor under the proposal). As a result of this, rather than being liable for a minimal
percentage of the claim amount (depending on culpability) as they would under the current
system, the claim against the operator will be for 100% of liability, and WorkCover additionally
claiming, against the operator, the costs they incur as part of any statutory claim .
Any self insured parties in the example above would be in the same situation as the operator. In cases
where there are self insured parties with workers operating alongside contractors we could again see
s 207B Workers Compensation and Rehabilitation Act
QRC submission Page 8
the perverse result where an employee injured in the same incident as a contractor would not be able
to make a common law claim while the contractor would.
If a decision is made to introduce a common law threshold the protection must be extended to cover
self insured parties and WorkCover policy holders such as the operator in this scenario.
If these steps are not taken, WorkCover will be exacerbating the problem - it would just be
externalising its costs, while unfairly and unjustifiably placing a significant burden on Queensland
Increase Premium Option
There has been some suggestion that the solution to the funding shortfall is to maintain the status quo
and merely increase premiums to cover the shortfall. Given the Queensland Government‟s
commitment to create 100,000 new jobs in this term, simply adding further to employers‟ costs of
employing people would send perverse signals to employers.
Seeking to address a funding shortfall via premium increases amounts to little more than placing a
“finger in the dyke” because it does not address the root causes; it is therefore a poor policy solution.
Employment a Major Contributing Factor – The QRC agrees that employment must be considered a
major contributing factor to the injury for a claim to be made. Policy holders pay their premiums to
protect themselves from liability arising from incidents at or caused by the workplace. Any system
whereby employers are effectively paying for insurance to protect individuals from actions taken
outside the workplace is a cost on the system which is unnecessary, unfair and which the system is
not designed to bear .
Bourk v Power Serve P/L and Anor - There is little doubt that the decision in Bourk has helped drive
the increase in common law claims lodged between 2008 and the present. Indeed the standard is
such that almost no defence is possible:
The obligations imposed by the Act verge on absolute. Observance of the statutory obligations
may require the doing of more than is reasonable and the expenditure of more than is
In reality the imposition of civil liability based on near absolute statutory duties is manifestly
inappropriate. There is no gap or lack of protection for employees in the common law requiring
s 5(1)(a) Workers Compensation and Rehabilitation Act 2009 (Qld)
 QCA 225
President Hall - Twigg v Hughes and Hessey Pty Ltd  QIC 65 (17 November 2005)
QRC submission Page 9
This standard gives lawyers the confidence to advise claimants to issue proceedings where in the past
litigation on the same facts would have been considered fraught at best.
Alternative Dispute Resolution – QRC supports calls for greater use of Alternative Dispute Resolution
(ADR) processes and encourages costs penalties be levied upon those who proceed to litigation and
are awarded significantly less by way of compensation than they were offered in mediation.
Costs – The QRC believes it is appropriate to award costs against plaintiffs whose claims are
dismissed; this approach is in line with accepted legal practice and makes litigants evaluate the
reasonableness of their case more closely before proceeding.
Increase in Excess – For any increase in employer excess to be appropriate, WorkCover must more
closely involve employers in the decision making process and ensure that it rigorously defends claims
Greater Increase in Premiums – The QRC agrees that this option would require a greater increase in
premiums than that provided for under the Deloitte proposal.
Conclusion – While there are some good suggestions, Option A falls short of providing a valid, costed
Excluding Workers with 0% impairment – The QRC agrees with the concept of excluding workers with
0% impairment from claiming but believes this threshold is too low for the reasons outlined above.
Aligning the Workers Compensation Scheme with the Civil Liability Damages Regime – While there is
merit in this suggestion, it is not costed and thus cannot be considered to provide a solution.
Any legislative change in the area of workers‟ compensation should not be taken lightly and can have
substantial flow on effects (both intended and unintended) to business and workers.
However, there is a clear case for some legislative reform. Certain aspects of common law claims,
both from a liability and quantum perspective, have moved beyond what any reasonably minded
person in the community would consider appropriate. Recent trends are clearly unsustainable.
Incentives to avoid returning to work, malinger, or become a “repeat claimant” are highly undesirable
and have a broader social impact particularly as the labour market tightens. Further, they detract from
(and insult) genuine claimants doing their best to overcome the effects of significant injuries and move
forward with their lives.
No one begrudges a claim by a worker who was genuinely injured as a result of a fault of his or her
employer and has a material injury and detriment. Regrettably, they are often swamped by the volume
of more opportunistic claims. It is with this in mind that QRC makes its recommendations.
QRC submission Page 10
1. That WorkCover investigate the option of moving to a system of external claim management
to increase efficiencies, reduce claim costs and provide better value for policyholders‟ money.
2. That WorkCover launch a major review of its internal structures and costs and that any
proposed premium increases be accompanied by an independent third party review into
WorkCover‟s costs and structure.
3. Awards for future economic loss be limited to circumstances where the Court is satisfied that
there is a likelihood, on the balance of probabilities, that the worker will actually sustain
economic loss in the future.
4. That the Civil Liability Act apply to common law claims arising from workplace injuries.
5. That any common law threshold protecting employers from common law claims be extended
to protect all parties involved in the employment relationship.
6. That common law actions for Breach of Statutory Duty be barred under the scheme.
7. That alternative dispute resolution be introduced and cost penalties applied where awards
vary significantly from offers.
8. That costs be awarded against plaintiffs who fail in their claims.