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Workers’ compensation changes to affect contribution claims

Workers’ compensation changes to affect contribution claims

Workers Compensation Qld – Workers Compensation Legislation Qld – Workers Compensation Lawyers Brisbane – Workers Compensation Law – Workers Compensation and Rehabilitation Act – Workers Compensation Insurance – Workers Compensation Scheme – Contractual Obligations – Contractual Indemnities – What is an indemnity clause? – Contractual Interpretation Australia – Contractual Indemnification – Contractual Disputes – Workers Compensation Regulator

On 14 June 2016, the Queensland Parliament introduced the Workers’ Compensation and Rehabilitation (National Injury Insurance Scheme) Amendment Bill 2016 (Qld) (Bill).

On 31 August, the Bill was passed (with amendments) that will constrain contractual indemnity clauses in workers’ compensation claims.

The Bill

The Bill is part of a broader social reform which includes the establishment of the National Injury Insurance Scheme for Queenslanders.

The Bill set out to restore the original policy intent of the Workers’ Compensation and Rehabilitation Act 2003 (Qld) (WCRA) and provide certainty to stakeholders after recent Court decisions interpreted certain provisions of the WCRA in ways that could adversely affect the operation of the scheme.

The Amendment

Clause 31: which will amend Chapter 5 of the WCRA states as follows:

‘236B Liability of contributors

(1) This section applies to an agreement between an employer and another person under which the employer indemnifies the other person for any legal liability of the person to pay damages for injury sustained by a worker.

(2) The agreement does not prevent the insurer from adding the other person as a contributor under section 278A in relation to the employer’s liability or the insurer’s liability for the worker’s injury. 

(3) The agreement is void to the extent it provides for the employer, or has the effect of requiring the employer, to indemnify the other person for any contribution claim made by the insurer against the other person.

(4) In this section-

damages includes damages under a legal liability existing independently of this Act, whether or not within the meaning of section 10.’

The Bill also proposed to amend the definition of damages under section 10 of the WCRA, however, a motion in the parliament to change the definition was defeated.

For Parties 

This amendment will mean that if:

  • a common law claim has been made against an employer; and,
  • the employer agreed to indemnify another party for that party’s legal liability; and,
  • WorkCover Queensland brings a contribution claim against that party,

the party joined to the claim will be unable to enforce their contractual indemnity clause to neutralise the contribution claim.

In many claims, the addition of section 236B(3) will allow contribution claims to be made by WorkCover, with third parties constrained in their ability to enforce indemnities against employers. However, the application of section 236B in a claim will depend upon:

  • who the parties to the relevant agreement are; and
  • the wording of the indemnity.

For instance, in an agreement where:

  • the parent company of an employer grants indemnity to a party; and
  • the agreement was not between the ’employer’ and the other party,

but the employer is referred to as part of a ‘contractor group’ or otherwise in the agreement, then section 236B may not apply to the agreement. In such a case, an entity related to the employer (such as a parent company) may remain liable for the indemnity granted to the other party.

Otherwise, the new Section 236B(3) may not operate to defeat actions in contract against employers by other parties (e.g. for breach of warranty or, for breach of an obligation to insure).

Once enacted, the amendment will apply to existing claims; if a settlement for damages has not been agreed or, a trial has not commenced.

To read the Bill in full, click here. To read the Queensland Parliament’s third reading speech, click here.

BOOK A FREE CONSULTATION for advice and information about your rights and obligations in a workers’ compensation matter, by calling (07) 3067 3025 or contact us online.

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Kate DenningWorkers’ compensation changes to affect contribution claims
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Workers’ compensation changes to affect contractual indemnities

Workers’ compensation changes to affect contractual indemnities

Workers Compensation Qld – Workers Compensation Legislation Qld – Workers Compensation Lawyers Brisbane – Workers Compensation Law – Workers Compensation and Rehabilitation Act – Workers Compensation Insurance – Workers Compensation Scheme – Contractual Obligations – Contractual Indemnities – Contractual Interpretation Australia – Contractual Indemnification – Contractual Disputes – Workers Compensation Regulator

 

On 14 June 2016, the Queensland Parliament introduced the Workers’ Compensation and Rehabilitation (National Injury Insurance Scheme) Amendment Bill 2016 (Qld) (Bill).

The Bill

The Bill is part of a broader social reform which includes the establishment of the National Injury Insurance Scheme for Queenslanders, to commence from 1 July 2016.

The Bill proposes to restore the original policy intent of the Workers’ Compensation and Rehabilitation Act 2003 (Qld) (WCRA) and provide certainty to stakeholders after recent Court decisions have interpreted certain provisions of the WCRA in ways that could adversely affect the operation of the scheme.

If passed, the legislation will prevent employers from securing cover under their workers’ compensation insurance policies for contractual indemnities they have given to third parties for damages payable to workers. In the first reading speech for the Bill, the Minister for Employment and Industrial Relations said:

‘The Bill prevents the contractual transfer of liability for injury costs from principal contractors or host employers to employers with a workers’ compensation insurance policy such as subcontractors or labour hire employers and clarifies that an insurer will not be liable to indemnify an employer for a liability to pay damages incurred by a third party contractor under a contractual arrangement.’

The Amendments

The relevant sections of the Bill that will impact contractual liabilities are:

  • Clause 5: which proposes to amend the ‘Meaning of Damages’ in Section 10 of the WCRA to say:

‘(4) Further, a reference in subsection (1) to the liability of an employer does not include a liability to pay damages, for injury sustained by a worker, arising from an indemnity granted by the employer to another person for the other person’s legal liability to pay damages to the worker for the injury.’

  • And Clause 31: which will amend Chapter 5 of the WCRA as follows:

‘236B Liability of contributors

(1) This section applies to an agreement between an employer and another person under which the employer indemnifies the other person for any legal liability of the person to pay damages for injury sustained by a worker.

(2) The agreement does not prevent the insurer from adding the other person as a contributor under section 278A in relation to the employer’s liability or the insurer’s liability for the worker’s injury. 

(3) The agreement is void to the extent it provides for the employer, or has the effect of requiring the employer, to indemnify the other person for any contribution claim made by the insurer against the other person.

(4) In this section-

damages includes damages under a legal liability existing independently of this Act, whether or not within the meaning of section 10.’

For Employers

These amendments will mean that WorkCover Queensland will only be liable to indemnify an employer to the extent of the employer’s legal liability to the worker for damages under the WCRA. So, if an employer agrees to indemnify another party for damages beyond its legal liability under the WCRA, the workers’ compensation policy will not extend to cover those damages.

The changes may result in some employers exposed to liabilities for which they hold no insurance. However, in many claims, the addition of Section 236B(3) will allow contribution claims to be made by WorkCover, with third parties constrained in their ability to enforce indemnities against employers. What is unclear from the Bill and the WCRA, is whether an employer could secure cover for their liability to indemnify another party for ‘compensation’ under the WCRA (as opposed to ‘damages’). Also, the new Section 236B(3) may not operate to defeat actions in contract against employers by third parties (e.g. for breach of warranty or, for breach of an obligation to insure).

The industries that are most likely to be affected by the changes include: construction; mining; resources; and, transport. With these amendments, and the extension of the unfair contract terms regime to small businesses later this year, employers may wish to consider updating their service agreements to limit the risks to their business and follow current developments in the law.

The changes may see a rise in the number of employers requiring independent legal representation in common law claims. An employer who has agreed to indemnify another party may require independent legal advice about their contractual obligations, rights under the WCRA, the worker’s entitlements to damages under multiple regimes, apportionment and costs.

The Parliament has nominated the Finance and Administration Committee to consider the Bill.  To read the Bill in full, click here.  To read the Queensland Parliament’s first reading speech, click here.

BOOK A FREE CONSULTATION for advice and information about a workers’ compensation or contractual indemnity dispute, by calling (07) 3067 3025 or contact us online.

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Kate DenningWorkers’ compensation changes to affect contractual indemnities
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Parties review claims as Qld changes workers’ compensation laws

Parties review claims as Qld changes workers’ compensation laws

by Kate Denning Google+

New Qld WorkCover Laws – Changes to Workers Compensation Qld – Workers Compensation Lawyers Qld – Workers Compensation Lawyers for Employers

On 24 September 2015, the Workers’ Compensation and Other Legislation Amendment Bill 2015 (Qld) (Bill) received assent.

The changes

The Bill amended the Workers’ Compensation and Rehabilitation Act 2003 (Qld) (Act).  The Act (as amended) provides that:

  1. Workers injured during the period 15 October 2013 to 30 January 2015 and assessed with a Degree of Permanent Impairment (DPI) of 5% (threshold) or less, will be paid ‘additional lump sum compensation’ to compensate them for the fact that they cannot claim common law damages against their employer.
  2. From 31 January 2015 onwards, workers with an accepted claim for compensation under the Act will be able to seek common law damages against their employer, without the need to exceed the threshold.

For respondents

The amendments will be welcomed by respondents to some claims regulated by the Personal Injuries Proceedings Act 2002 (Qld) (PIPA) and the Motor Accident Insurance Act 1994 (Qld) (MAIA). It was a consequence of changes to workers’ compensation laws passed in 2013, that respondents to claims could not seek contribution from employers on a joint tortfeasor basis where workers suffered an injury with a DPI of 5% or less: Bonser v Melcanais [2000] QCA 13.

This resulted in general insurers, respondents to PIPA claims and compulsory third party insurers, having to pay 100% of the damages payable to workers in what were otherwise, master/servant claims. This anomaly caused particular problems for organisations with complex company structures. For claims arising out of incidents on or after 31 January 2015, these respondents will now be able to join an employer as a party to a claim in accordance with the Law Reform Act 1995 (Qld) and the regulating legislation.

Contractual indemnities

The changes do not address the Supreme Court decision of Byrne v People Resourcing (Qld) Pty Ltd & Ors [2014] QSC 269. A respondent with a contractual indemnity in its favour (from an employer) can seek to enforce that indemnity against an employer, WorkCover or a self-insurer.

How to respond

We recommend that insurers and PIPA respondents conduct a review of their current Queensland claims to consider potential claims for contribution or indemnity in contract or tort.

BOOK A FREE CONSULTATION for advice and information about a workers’ compensation matter, by calling (07) 3067 3025 or contact us online.

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Kate DenningParties review claims as Qld changes workers’ compensation laws
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Bill to remove threshold to access damages in workers’ compensation claims

Bill to remove threshold to access damages in workers’ compensation claims

On 15 July 2015, the Queensland parliament introduced the Workers’ Compensation and Other Legislation Amendment Bill 2015 (Qld) (Bill).

If passed, workers who suffered an injury from 31 January 2015 onwards that have an accepted claim for compensation under the Workers’ Compensation and Rehabilitation Act 2003 (Qld), will be entitled to seek common law damages against their employer, regardless of how minor the injury may be.

For workers with injuries during the period 15 October 2013 to 30 January 2015 resulting in a Degree of Permanent Impairment (DPI) of 5% or less, the Bill provides for ‘additional lump sum compensation’ to be paid.

This legislation is likely to see a significant rise in the number of common law claims made against employers.

However, these changes will be welcomed by parties to claims regulated by the Personal Injuries Proceedings Act 2002 (Qld), who otherwise would have had no contribution from WorkCover (or self-insurers) in claims caught by the threshold.

The Bill also proposes to remove the ability of prospective employers to request the workers’ compensation claims history of job applicants.

The Bill does not address the Supreme Court decision of Byrne v People Resourcing (Qld) Pty Ltd & Ors

BOOK A FREE CONSULTATION for advice and information about a workers’ compensation matter by calling (07) 3067 3025 or contact us online.

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Kate DenningBill to remove threshold to access damages in workers’ compensation claims
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InDefence covers legal and technical issues in a general way. Changes in circumstances or the law may affect the completeness or accuracy of the information published. InDefence is not designed to express opinions on specific cases, to provide legal advice or to establish a relationship of client and lawyer between Denning Insurance Law and the reader, or any third party. No person should act or refrain from acting solely on the basis of this publication. You should seek legal advice particular to your circumstances before taking action on any issue dealt with in this blog.