South Australian WorkCover Reform
Update 5 – 26th June 2008

As you would be aware, the legislative amendments to the Workers Rehabilitation & Compensation Act 1986 and the Scheme for workers compensation in South Australia passed through Parliament on the 17th June 2008 and are now due to be implemented and applied at various times over the next two years. The first changes are due to be implemented on 1st July 2008.

We are grateful to SISA (Self Insurers of South Australia) for their regular updates and comprehensive analysis of the amendments at all stages of the passage of the Amendment Bill through Parliament, and in particular for their excellent overview of how and when each amendment will come into force now that the Bill has been passed.

Below is an overview of the significant amendments which will be effective from Tuesday 1st July 2008. We will communicate further with you in relation to further amendments which we expect will be implemented in January 2009 and April 2009.

The amending Act incorporates a number of new definitions of terms used throughout the Act, the most important of which are “suitable employment”, “total incapacity”, “partial incapacity” and “current work capacity”:-
Suitable employment means employment in work for which the worker is currently suited, whether or not the work is available (having regard to a number of factors).

Total incapacity for work is the incapacity for work that is represented by a worker having no current work capacity.

No current work capacity means a present inability (arising from a compensable disability) such that a worker is not able to return to work, either in his/her pre-injury employment or in suitable employment.

Partial incapacity for work is the incapacity for work that is represented by a worker having a current work capacity.

Current work capacity means a present inability (arising from a compensable disability) such that the worker is not able to return to his/her pre-injury employment, but is able to return to work in suitable employment.

The amending Act contains a simplified provision for the calculation of average weekly earnings involving:-

1. The average weekly amount that the worker earned during the period of 12 months preceding the date of disability.


2. Earnings from all employment continue to be taken into account.


3. For the purposes of calculation, any amount paid to a worker whilst on annual, sick or other leave will be taken to be earnings.


4. If during the period of 12 months a worker was employed only casually or seasonally and then changed to permanent employment (either full time or part time), then earnings may be determined by reference to the average amount earned during the period of permanent employment, rather than the casual/seasonal employment during the 12 month period.


5. Conversely, if a worker voluntarily reduces the normal hours usually worked or alters the nature of work, then any period before the reduction would be disregarded unless it is on account of the worker’s incapacity from a compensable disability.


6. If it is not possible to arrive at a “fair average” by reason of:-


• 6.1 Shortness of time;


• 6.2 The terms of the worker’s employment;


• 6.3 Any other reason;

then regard can be had to a comparator.

7. If a worker is a contractor, then average weekly earnings will be determined by reference to the rate of pay that the worker would have received if employed pursuant to an award or industrial agreement as an employee.


8. A working director’s earnings will also be determined by reference to the remuneration declared to the Corporation.


9. If the earnings of a disabled worker prior to a disability were affected by the disability (for example, in the case of a disability of gradual onset) then average weekly earnings should be set so that an amount fairly representing the worker’s usual earnings would be fixed, as if the level of earnings had not been so affected by a disability.


10. A period of 18 months can be taken into account in determining average weekly earnings for a worker who was not a full time worker immediately before a disability, but had been seeking full time employment and had been predominantly engaged full time in the preceding 18 month period.


11. A worker who suffers a permanent incapacity under the age of 21 years will be entitled to average weekly earnings based on 21 years of age or the applicable rate on completion of an apprenticeship/traineeship.


12. The overtime provisions have been significantly simplified so that overtime will be taken into account unless the worker at the time of the disability had no reasonable expectation to work overtime within the foreseeable future.  This means that we no longer have to consider whether there has been a “pattern” of overtime or whether hours are substantially uniform.


13. Amounts paid by voluntary salary sacrifice to superannuation will also be taken into account.


14. Any non-cash benefit will be taken into account if the worker does not retain the benefit of the non-cash benefit, or alternatively will not be entitled to a component for the non-cash benefit in average weekly earnings if he or she retains the benefit of the non-cash benefit (such as a vehicle).


15. Amounts paid by an employer to a superannuation scheme for the benefit of the worker, and any prescribed allowances, are to be disregarded.


16. A worker’s remuneration if covered by an award or industrial agreement shall be not less than the weekly wage to which the worker would then be entitled under such an Award or industrial agreement.


17. If the average weekly earnings are less than the prescribed amount, then average weekly earnings will be fixed at the prescribed amount.


18. Average weekly earnings will in no case be fixed at more than twice the State average weekly earnings.

This new method of calculating average weekly earnings applies to claims lodged on and from the 1st July 2008.

The amendments now involve a step-down process whereby:-

• If the worker has no current work capacity, s/he will receive 100% of average weekly earnings for 13 weeks, then 90% of average weekly earnings for the following 13 weeks, with a reduction to 80% of average weekly earnings at 26 weeks, through to 130 weeks.

• If the worker has a current work capacity, the worker will receive 100%, 90% or 80% (respectively) of the difference between his/her notional weekly earnings and designated weekly earnings.

Designated weekly earnings (DWE) are:

1. The current weekly earnings of the worker in employment/self-employment; or
2. The weekly earnings that the Corporation determines that the worker could earn from time to time in employment (whether in pre-injury or suitable employment) that the Corporation determines the worker is capable of performing despite their disability;

whichever is the greater, but not to include a prescribed benefit.

After 130 weeks, a worker’s entitlement to weekly payments ceases unless the worker is assessed as having no current work capacity and likely to continue indefinitely to have no current work capacity. The onus of proof is on the worker. If the compensating authority is satisfied as to the ongoing incapacity of the worker, income maintenance continues at the 80% rate.

Where the worker has a current work capacity after 130 weeks but the compensating authority is satisfied that the worker is working to their maximum capacity, then the worker will continue to be entitled to payments of 80% of the difference between their notional and designated weekly earnings.

Any discontinuance of income maintenance pursuant to Section 35 of the Act requires a notice period of 13 weeks. Sections 35B and 35C of the Act set out the procedures to apply for a determination that weekly payments should not cease at 130 weeks.

Discontinuance of weekly payments pursuant to Section 36 of the Act has been modified and incorporates a new Section 36(2)(d) dealing with reduction in payments due to the passage of time.

Section 36(3)(b) provides that 14 days notice is required if weekly payments are to be discontinued where payments have been received for less than one year, and 28 days notice is required in any other case. The amendments provide that there is no suspension of the decision to discontinue or reduce payments upon lodgement of a Notice of Dispute, although the WorkCover Ombudsman can be asked to review the decision and can reinstate the payments until the dispute is resolved.

Economic adjustments to weekly payments
Section 39 has been amended requiring notice be given to a worker prior to the review and invitation for submissions.

Section 44 and Section 45 of the Act have been amended to include greater clarity in determining dependency entitlements and provision of counselling services.

The amendments provide for the establishment of the Office of the WorkCover Ombudsman. The Ombudsman can receive and investigate complaints and resolve them, and can also suspend the operation of a decision to discontinue weekly payments pursuant to Section 36. Mr Wayne Lines has been appointed as the Acting WorkCover Ombudsman for the next 12 months.