Workcover Claims Against Uninsured Employers
What are an Employer’s Responsibilities in Queensland with respect to health and safety?
Generally, in Queensland, employers and business owners have a legal responsibility known as the primary duty of care in the Work Health and Safety Act 2011.
To meet your duty of care, you must:
- provide a safe work environment;
- ensure safe use, handling and storage of machinery, structures and substances;
- make sure your facilities are well-maintained and at an acceptable standard;
- give your workers any information, training, instruction or supervision needed for safety;
- keep an eye on the health of workers and conditions at your place of work;
- keep an injury register;
- have a workers’ compensation policy and a return to work plan.
When are Employers and Businesses required to hold a workers’ compensation (WorkCover) policy?
Generally, if you employ workers in Queensland you must insure them against work-related injury or illness. Unless you’re a self-insurer, you need to take out a policy with WorkCover.
A WorkCover policy covers businesses if one of their workers experiences a work-related injury or illness and needs to claim workers’ compensation. This includes both no-fault statutory claims and damages (at-fault) claims.
A WorkCover policy is required by the Workers’ Compensation and Rehabilitation Act 2003. A business’s insurance policy needs to reflect the type of business they run and the total wages they pay, or estimate they will pay, to their workers.
If your business grows or changes over time, a business must update your policy. There are penalties for not having a policy or the incorrect cover.
What if an Employer fails to Insure their Employees?
If an employer or business does not insure an employee within five (5) business days after the employee starts their employment, that employer or business will be in breach of their obligation to insure their employees.
When this happens, and a worker is injured, WorkCover will still compensate the employee. However, the employer will bear all of the costs, and will be required to pay WorkCover. In addition to this, penalties apply for failing to hold appropriate insurance.
As of 2022, fines of up to $39,531 (275 penalty units as of 1 Jul 2022) apply for failing to hold that insurance. Furthermore, a 50% penalty will be passed onto the employer for any compensation paid to the worker.
For example: if an employer fails to ensure a worker who is injured, and that worker obtains $200,000 in compensation from WorkCover for lost wages and medical expenses, then:
- the employer could be liable to pay up to $339,531 consisting of:
- a. Up to $300,000 in any recovery action by WorkCover, being:
- $200,000, representing the claim amount; and
- $100,000, representing the 50% penalty uplift (50% of the claim amount); and
- b. Up to $39,531 in fines (as of 1 July 2022, this represents a penalty of up to 275 penalty units).
What every Employer should do if WorkCover has approved a Worker’s Compensation Claim
If WorkCover has made a decision that the employer disagrees with, employers can apply for a review of WorkCover’s decision to have the decision overturned.
If you disagree with a decision by WorkCover to accept an employee’s claim, you should:
- Ask for “reasons” for the decision, which can only be done within 20 business days of being advised of the decision; and
- Immediately obtain legal advice from lawyers on whether you have grounds to dispute the decision; and
- If you do have grounds, file a review application with the Office of Industrial Relations (the WorkCover Regulator) within 3 months of receiving the insurer’s written decision (or within 3 months of receiving written reasons for the decision, if issued).
Grounds to Defend Uninsured WorkCover Claims
Whether or not an employer can successfully overturn a personal injury claim or WorkCover claim, is a technical argument for which employers should seek legal advice. Grounds to dispute a WorkCover decision to approve a Worker’s claim, includes, for example:
- The worker not being an employee at common law (for example, if the worker is a contractor); or
- the injury was a pre-existing injury which was not work related.
- the worker was appropriately insured or the employer is self-insured in accordance with the rules under the Workers Compensation legislation.
The grounds set out above are summarised and the exact tests are much more complex. There are also other grounds for which an employer may have grounds to successfully challenge a WorkCover decision.
The Worker was a Contractor, but has made a WorkCover Claim claiming they were an Employee. What should I do?
Employers should immediately obtain legal advice if a contractor has made a WorkCover claim in which they claim they were an employee of the business. In these cases, it will also be alleged that the employer was not appropriately insured, which means the fines and 50% penalty rates may apply.
WorkCover will often approve claims for these Workers with little due diligence, since the Act focuses on ensuring that all workers are compensated for work related injuries, so long as they appear to meet the definition of a “Worker” within the meaning of section 11 of the Act. This means that a claim can be erroneously approved by WorkCover for a person who is not entitled to compensation (for example, a contractor instead of an employee).
In deciding whether or not to overturn these decisions, the WorkCover Regulator (upon receiving an application for review) will provide the parties with an opportunity to make submissions, after which the Regulator will then decide whether the worker meets the definition of a “Worker” under section 11 of the Act.
Whether or not a person is a “Worker” under the Act is a complex and multifaceted assessment. This is because the relevant authorities require the Regulator to consider the totality of the relationship between the parties. In doing so, the regulator must consider the relevant indicia test applicable to determining whether or not a worker is an employee or a contractor.
The Australian Tax Office (ATO) has published a table setting out an overview of six factors which, taken together, may determine whether a worker is an employee or contractor, as reproduced below:
|Ability to subcontract/delegate: the worker can’t subcontract/delegate the work – they can’t pay someone else to do the work.
|Ability to subcontract/delegate: the worker can subcontract/delegate the work – they can pay someone else to do the work.
Basis of payment – the worker is paid either:
Basis of payment: the worker is paid for a result achieved based on the quote they provided.
A quote can be calculated using hourly rates or price per item to work out the total cost of the work.
|Commercial risks: the worker takes no commercial risks. Your business is legally responsible for the work done by the worker and liable for the cost of rectifying any defect in the work.
|Commercial risks: the worker takes commercial risks, with the worker being legally responsible for their work and liable for the cost of rectifying any defect in their work.
|Control over the work: your business has the right to direct the way in which the worker does their work.
|Control over the work: the worker has freedom in the way the work is done, subject to the specific terms in any contract or agreement.
|Independence: the worker is not operating independently of your business. They work within and are considered part of your business.
|Independence: the worker is operating their own business independently of your business. The worker performs services as specified in their contract or agreement and is free to accept or refuse additional work.
The factors set out above are in no way exhaustive, and additional considerations may apply as case law continues to develop.
What if I am “out of time” to file for review?
Employers who failed to file for a review of the decision within 3 months from receiving WorkCover’s decision, should immediately obtain advice from a lawyer on whether they can successfully apply “out of time” (or in other words, outside of the 3 month limitation period). With each day that passes, their prospects of succeeding will decrease, and so legal advice should be obtained on an urgent basis.
Section 542(2) of the Act was amended to allow an applicant to seek an extension of time to review the decision despite the three month limitation period lapsing. However, such a request can only be made once, and the Regulator can only approve such an extension of time, only “if it is satisfied that special circumstances exist”.
Relevantly, the Act does not define what a “special circumstance” is. Accordingly, the meaning of special circumstance derives from case law. For example, in the matter of Devi v Workers Compensation Regulator  QSC 311, at paragraph , Justice Boddice acknowledged that the three-month limitation period balances two competing interests:
- First, to permit time for a person to consider the decision, take advice and decide whether they wish to challenge it; and
- Second, to provide finality to the parties affected by that decision.
In the matter of Blackwood v Pearce  ICQ 012, at paragraph , President Martin J stated that it is a question of fact in each case as to what circumstances might be “special” but clarified that the accumulation of new evidence would, ordinarily, not amount to a special circumstance.
At the time of writing this article, one of the leading cases that deals with the meaning of “special circumstances” is Workers’ Compensation Regulator v Pryszlak  2 Qd R 58. In the Court’s decision, McMeeking J ruled as follows at paragraphs  and  respectively:
- “The power to extend time exists to prevent injustice in a particular case that might be caused by the enforcement of a general time limit. It is an instance of the general policy of the law to ensure that mandatory statutory provisions are not applied blindly so as to cause injustice in an individual case.
- “The meaning of “special circumstances” will be informed by its purpose but also by other provisions that depend on it. In the case of s 542 the large factor will always be the explanation for the failure to make the application within time. However, the merits of the claim for compensation are also obviously relevant for if a claim has little merit there can hardly be any likely injustice in refusing an extension of time”.
Additional considerations apply, and the Regulator should consider the circumstances as a whole to ascertain whether a person can apply outside of the limitation period. The best practice is to obtain legal advice early, and before the expiry of these limitation periods, in order to avoid ‘out of time’ applications altogether.
Where possible, reasons for the decision should be requested, since at the time of writing this article, the 3 month limitation period is extended when reasons are provided and begins from the date the reasons are received by the applicant.
Why Potts Lawyers?
Potts Lawyers is experienced in assisting businesses with insurance matters, including defending WorkCover claims where employers are uninsured for the person who initiates the claim. In certain circumstances, where a person does not meet the definition of “worker”, or where the injuries were not sustained in connection with the employment, these claims can be successfully defended.
Failing to defend these matters, means that the Employer will have to bear the entire cost of the claim, plus potentially fines and a 50% penalty. Employers should not underestimate the severity of a claim, even for minor injuries. Potts Lawyers has observed an increase in WorkCover claims where even minor injuries, can easily result in a successful WorkCover claim of $50,000 or more, especially if complications arise and the Worker is unable to return to work for months instead of weeks.
The importance of obtaining advice early cannot be understated, since the statutory limitation periods can only be overcome in special circumstances.
If you are a business owner facing a WorkCover claim, and that person was not insured with a valid WorkCover policy at the time of their injury, contact Potts Lawyers today to assess your eligibility for a free consultation.