Workers’ compensation not keeping up with labour market changes

The following article is a news item provided for the benefit of the Workplace Health and Safety profession. Its content does not necessarily reflect the views of the Australian Institute of Health & Safety.
Thursday, 21 November, 2019 - 11:15
Industry news
National News

Workers who are employed outside traditional employment arrangements, such as independent contractors and gig workers, risk losing access to workers compensation schemes – which are in need of an overhaul in order to keep up with the changing nature of employment, according to a recent paper.

The workers’ compensation system in Australia today emerged before the forces of the fourth industrial revolution were conceived (let alone realised) and the system was built and structured to cater for a traditional workforce of full time and permanent employees.

There are 11 individual workers’ compensation systems in operation in Australia: one in each state and territory, with the Federal Government maintaining three workers compensation systems – one for Commonwealth workers, one for seafarers, and one for veterans.

Most Australian workers are covered by these schemes, but an increasing number of contract workers – particularly those in the gig economy – are at risk of falling through the cracks and being left unprotected, according to a McKell Institute report, Opportunities in Change: Responding to the Future of Work.

“While the nature of work and employment relations are rapidly evolving, Australia’s workers' compensation system has been slow to evolve in such a way that workers on short-term, independent contracts, or those in the gig-economy, are often not covered by workers compensation.”
Legally, labour-hire workers are the employees of, and have workers’ compensation insurance provided for them by, the labour-hire company that supplies them.

The reported noted that there are instances of labour-hire companies relying on the insurance provided by the host employer to provide cover for any injuries sustained, however, the host employer workers’ compensation does not extend to labour-hire and therefore the cost gets pushed to other insurance products, like liability.

“These products are not designed to cover a person in the same way that workers’ compensation is,” said the report, which noted that this problem is compounded by liability products which are assessed under common-law – and therefore the injured person is not protected in the same way and does not benefit from the statutory injuring management guidelines.

The inability for existing schemes to cover much of the short-term, independent contractor workforce has real-world consequences.

In a tragic incident in Sydney in 2017, for example, a food-delivery rider deemed an ‘independent contractor’ was killed while performing his service, however, the entity through which he had received the ‘gig’ was ultimately not deemed liable for the fatality.

Had the worker been covered in the same fashion as a permanent employee for the company through which his gig was awarded, a workers’ compensation payment would likely have been delivered.

The report recommended that the Federal Government explores ways (through the Council of Australian Governments (COAG) process) to extend workers compensation to the growing pool of non-permanent workers in the gig-economy and other industries with a high ratio of contractual, short-term employer-employee relationships.

“A nationally consistent approach to workers’ compensation is needed,” said the report, which noted that there have long been calls for a nationally consistent approach to workers compensation.

In 2004, the Productivity Commission published its recommendations for a national approach, and identified four different proposals that had the potential to further harmonise the existing workers’ compensation landscape in Australia:

1: Expand access to Comcare Allow more Australian workers to access the Federal Government workers’ compensation scheme, Comcare.

2: New Commonwealth Government parallel scheme: Create a new scheme which runs in parallel with existing state schemes but is open to non-Commonwealth workers.

3: New Commonwealth run ‘premium paying’ scheme, privately operated. Work with the private sector to create a similar scheme to that presented in Option 2.

4: Create a joint Commonwealth-States body to harmonise existing schemes Instead of creating Australia’s 12th workers’ compensation scheme, create a Commonwealth Body with a mandate to work with each existing scheme to harmonise their elements. Contemporarily, such a process could be coordinated through the Council of Australian Governments (COAG), a forum in which the heads of Government across each jurisdiction in Australia, as well as the head of the Local Government Association, meet each quarter.


“Workers compensation is designed to insure the Australian workforce (and businesses) against potentially life-altering events, like injury or illness,” said the report.

“Traumatic events that undermine an individual’s capacity to engage productively in the workforce can happen to any Australian in any industry.”

Data from the 2016-17 financial year calculates that 106,260 ‘serious claims’ for workers compensation were made, 90 per cent of which were the consequence of injury and musculoskeletal disorders, with the remainder the result of disease.

These incidents occurred across all industries and age groups, and for these workers and the businesses that employed them, the fact that they received adequate workers’ compensation offers at least a semblance of comfort in the wake of often traumatic events.

“Unfortunately, not every worker in Australia is covered by workers’ compensation,” said the report.