|Description of this FunctionDescription of this Function|
Since proclamation of the Workers' Compensation Act 1914 employers have been obliged to obtain accident insurance policies indemnifying them against their liability in relation to payment of accident compensation to workers or their dependants. The operation and administration of workers' compensation legislation has, over time, been undertaken by a number of public and bodies. The nature of the function has also evolved. Below is a summary of the evolution of the statutory workers' compensation systems.
A worker traditionally had the right to sue his employer at common law for civil damages for loss suffered through the negligence of the employer.
The role of the Government was limited to the Courts which heard such cases.
1914 to 1985
The Workers' Compensation Act 1914 gave certain workers and their dependants the right to claim limited compensation from their employer, without proof of negligence or breach of statutory duty by the employer, in respect of accidental injuries sustained by them arising out of and in the course of their employment. The right to take action at common law was not removed by this Act. The general principle of the legislation was to cover workers who had entered into or who worked under a contract of service or apprenticeship with an employer, whether by way of manual labour, clerical work or otherwise.
The Act remained substantially unchanged, apart from variations in benefits, until 1938 when the Workers Compensation Board was established by the Workers' Compensation Act 1937 (No.4524). The Workers' Compensation Board was vested with power to
receive and accept or refuse to accept compensation claims
hear and determine disputes arising out of compensation claims (see workers compensation arbitration)
identify diseases and corresponding processes or occupations
inquire into schemes of compensation.
Substantial changes to the Act occurred in 1946. The definition of "injury" was widened to include virtually any disabling event occurring at work, however, this change was reversed in 1965. In 1946 the benefits of the Act were also extended to persons travelling between their home and work. In 1953 an important provision was introduced to enable claimants to be paid compensation from the Workers Compensation Board Fund if their employer was uninsured and without assets. The class of persons entitled to benefit, the scope of employment, the types of injuries included, and the extent of the benefits were all changed by amendments to the original Act.
Under the Workers' Compensation Act 1914 the Government established the State Accident Insurance Office to provide accident insurance policies indemnifying employers against their liability under the Act or under common law. The Government commenced the provision of this form of insurance to protect the employers from exploitation by insurance companies. The Government also regulated the insurance companies offering accident insurance.
The role of the Courts also widened in 1914. Apart from hearing civil cases under common law, responsibility for hearing and determining disputes arising out of the statutory workers' compensation system was vested in County Court Judges and Police Magistrates. In 1938 the Workers' Compensation Board assumed responsibility for cases arising out of the statutory compensation system (see workers compensation arbitration).
A Board of Inquiry into Workers Compensation in Victoria was constituted in 1976 and submitted its final report in March 1977.
1985 to 1992
The WorkCare workers' compensation system was established in 1985 following proclamation of the Accident Compensation Act 1985 and the Occupational Health and Safety Act 1985. The objectives of the legislation were to reduce the social cost of workplace accident compensation by reducing the incidence of accidents and diseases in the workplace and to provide for the compensation and rehabilitation of injured workers. WorkCare was introduced therefore as an integrated system with greater focus on prevention of accidents through occupational health and safety and on rehabilitation services.
Under WorkCare the Government assumed an even greater role than previously. The Accident Compensation Commission was established as the primary insurer for workers' compensation. In effect the Commission assumed all insurance business from insurance companies although the companies continued to function as claims administration agents of the Commission. The only exception to insuring with the State was the option of being a licensed self-insurer. This was only possible for the largest corporations. In its role as the prime insurer the Accident Compensation Commission was also vested with responsibility for
determining and collecting the levy payable under the Act (through the Levy Collection Agency of the State Taxation Office, established for this purpose)
receiving, assessing and accepting or disputing claims for compensation;
payment of compensation to entitled persons
administration of the Accident Compensation Fund (undertaken through Fund Management agents)
defending applications for review before the Accident Compensation Tribunal;
promotion and funding of workers' rehabilitation
identifying proclaimable diseases in relation to places, processes or occupation for the purpose of section 87 of the Act and advising the Governor-in-Council, through the responsible Minister, for the proclamation of these in the Government Gazette
research and educational programmes and maintenance of statistical records.
The Levy Collection Agency registered employers and establishments, collected levy, and detected undeclared or underdeclared levy.
The Accident Compensation Tribunal was established to succeed the Workers' Compensation Board as an independent appeals body to determine disputes arising within the WorkCare system.
The Victorian Accident Rehabilitation Council was established to co-ordinate the provision of rehabilitation services to injured workers.
A related agency established as a component of the WorkCare scheme was the Occupational Health and Safety Commission (VA 1647) responsible for developing policies to prevent workplace accidents and setting workplace safety standards. The Commission was supported by the Occupational Health and Safety Division of the Department of Labour (VA 2777) which was responsible for the implementation, inspection, and supervision of the standards established by the Commission (see health and safety (workplace)).
The co-ordination of the WorkCare agencies was undertaken by the WorkCare Unit of the Department of Management and Budget. The Department of Management and Budget also undertook the approval and monitoring of self-insurers.
The Accident Compensation (Amendment) Act 1989 provided for the establishment in March 1990 of the WorkCare Appeals Board and the Medical Panels. The WorkCare Appeals Board provided a non-legalistic mechanism for appeal against decisions of the Accident Compensation Commission or self-insurers in relation to entitlement to compensation or to the amount of compensation or other payments. The Medical Panels provided independent medical advice to the WorkCare Appeals Board, the Accident Compensation Tribunal, and to workers, their advisers and claims agents.
In March 1990 responsibility for all areas of WorkCare (including the Accident Compensation Commission, the Accident Rehabilitation Council, the WorkCare Appeals Board, the Medical Panels and the Accident Compensation Tribunal) was transferred from the Treasurer (VRG 23) to the Minister for Labour (VRG 86), who had previously had responsibility for occupational health and safety only. A WorkCare Co-ordination Unit was established in the Department of Labour assuming responsibility for the co-ordination of the WorkCare agencies and for the approval and monitoring of self-insurers previously undertaken by the Department of Management and Budget.
On 18 March 1991 responsibility for the Accident Compensation Tribunal was transferred to the Attorney-General (VRG 19).
In March 1992 the Minister for Finance, as Minister assisting the Minister for Labour, was given concurrent but primary responsibility for WorkCare matters.
1992 to ct
A new system of workers' compensation was introduced 1 December 1992 under the Accident Compensation (WorkCover) Act 1992. The Act established WorkCover to replace the WorkCare system. The second stage of legislative reform was introduced by the Accident Compensation (WorkCover Insurance) Act 1993. The WorkCover system has comprised the following reforms:
limiting eligibility for benefits
refocussing the benefit structure on the basis of incapacity
introduction of a work-based occupational rehabilitation program
increased focus on dispute resolution through conciliation rather than legal arbitration
restriction of common law damages to serious injury
restoring employer liability for workers' compensation costs
requiring employers to insure against their liability with licensed insurance companies in a competitive market
replacement of the levy system with an experience-rated premium system, where an employers premium is directly calculated on the basis of workplace claims performance
The WorkCover Scheme moved even further away from the object of compensation alone. Eligibility criteria for compensation have become tightened and disputed claims have became more difficult to appeal compared with the previous scheme. The new scheme also has a less "social" objective, in that it aims to "minimise the burden on Victorian businesses ... to reduce the cost to the Victorian community of accident compensation".
In effect the Government's role moved away from the direct provision of services to the regulation of the providers of workers' compensation services. The Victorian WorkCover Authority (VA 3081) began operations on 1 December 1992 as the regulatory body responsible for the management of the new scheme. The Authority is the successor to the Accident Compensation Commission, the WorkCare Appeals Board and the Victorian Accident Rehabilitation Council. The Authority also assumed those responsibilities of the former Occupational Health and Safety Authority that related to workplace risk management.
The objectives of the Authority are to:
manage the accident compensation scheme as effectively and efficiently and economically as is possible;
administer the Accident Compensation Act, the Workers Compensation Act 1958 and any other relevant Act;
assist employers and workers in achieving healthy and safe working environments;
promote the effective rehabilitation of injured workers and their early return to work;
encourage the provision of suitable employment opportunities to workers who have been injured;
ensure that appropriate compensation is paid to injured workers in the most socially and economically appropriate manner and as expeditiously as possible.
The Accident Compensation Tribunal was abolished and responsibility for legal arbitration was transferred to one of three agencies - the County Court, Magistrates Court, or Administrative Appeals Tribunal - depending on the nature of the dispute. The WorkCare Appeals Board was abolished and the role of dispute resolution has been given to the WorkCover Conciliation Service.
The WorkCover and Executive Support Unit of the Department of Business and Employment (VA 3096) assumed responsibility for advising the Minister Responsible for WorkCover on WorkCover policy and performance.
The transition toward privatisation occurred between December 1992 and July 1993. The Levy Collection Agency of the State Revenue Office closed in March 1993 and responsibility passed to the Victorian WorkCover Authority. The staff of the Levy Collection Agency were subsequently deployed with authorised insurers in anticipation of the new premium system. Also in March 1993 the management of self-insurers transferred from the WorkCover Co-ordination Unit of the Department of Business and Employment to the WorkCover Authority. Self-insurers are companies which do not pay premiums to the WorkCover Fund but which are required to administer compensation claims and pay all compensation and costs associated with such claims.
In April 1993 WorkCare Compensation Services which had been the Accident Compensation Commission's claims administration agent was sold to two insurers. From 1 July 1993 the new premium system was introduced and insurance companies were no longer approved as authorised agents but instead became licensed as WorkCover insurers providing a "one-stop-shop" for employers, claims management, premium collection and provision of rehabilitation and risk management advice.
Under Administrative Arrangements Order (No.147) 1995 the Minister for Finance assumed responsibility for workers compensation from the Minister for Regional Development, effective 13 June 1995. From 1 July 1995 the Victorian WorkCover Authority and the WorkCover Support Unit of the Department of Business and Employment became part of the Department of Treasury and Finance.
Accident Compensation Commission Annual Report 1991/92
Victorian Government Directory 1993
Victorian Year Book 1937-38; 1979 pp.228-31, 691-93.
Department of Labour Annual Report 1990/91.
Department of Business and Employment Annual Report 1992-93.
Public Service Lists 1938, 1977, 1978.
Accident Compensation (Amendment) Act 1986 (48/1986)
Accident Compensation (Amendment) Act 1987 (83/1987)
Accident Compensation (Further Amendment) Act 1988 (13/1988)
Accident Compensation (General Amendment) Act 1989 (64/1989)
Accident Compensation (Amendment) Act 1991 (18/1991)
Accident Compensation (Further Amendment) Act 1992 (37/1992)
Accident Compensation (WorkCover) Act 1992 (67/1992)