The complex process of amending legislation and the potential pitfalls of doing so have become apparent from some unintended consequences of the recent changes to Workers’ Compensation in WA.
One of the gaps identified during WorkCover’s 2009 review of the legislation was that some seriously injured workers were not able to access their rightful entitlement to common law. Although measures were in place to protect workers whose employers did not carry compulsory Workers’ Compensation insurance, these measures did not extend to common law provision.
The amendments enacted on 1 October 2011 have introduced measures to correct this anomaly. With the introduction of a common law safety net under amended section 160 of the WA Workers’ Compensation and Injury Management Act, employers are now obliged to obtain insurance against potential common law liability for their workers.
Unfortunately, by using the word ‘worker’ instead of the word ’employee’ there are some unintended consequences. The extended definition of ‘worker’ includes contractors, and therefore, the amendment to the Act stipulates that a Principal’s Common Law policy must respond to a Contractor’s workers.
Apart from the complication of calculating the value of such a policy extension and the cost to employers to purchase it – no such insurance product currently exists!
Technically, every employer that uses contractors is now in breach of the WA Act, and susceptible to a $5,000 penalty.
In practical terms, the situation is academic as workers cannot ‘double-dip’ within the WC system and their own employer’s policy would be the first to respond, with the amendments protecting the injured employee’s right to common law if their employer did not carry compulsory WC insurance.
Insurers are now looking at introducing such a product, in the event that parliament doesn’t see the need to correct this oversight. Aurenda will keep you updated!