Proposed Section 18 changes and implications - aspects to consider

Background

Since 1986, one of the primary objectives of the workers compensation legislation has been to facilitate a return to work for injured workers in some capacity by imposing an obligation on pre-injury employers to provide suitable duties.

Originally, section 58B of the repealed Workers Rehabilitation and Compensation Act, 1986 made it mandatory for a pre-injury employer to provide suitable duties. The onus was placed on the employer to show cause as to why it was not reasonably practicable to provide those duties. However, the requirement to do so was administrative with Workcover being empowered to impose a monetary penalty on the employer’s premium on those who did not comply or show cause.

The current “duty to provide work” provisions were introduced in 2015 with the new section 18 provisions pursuant to the Act providing for:

• An obligation on a pre-injury employer to provide suitable employment (as opposed to suitable duties),
• A procedural basis for the injured worker to apply to the employer to provide nominated employment that the worker was fit for, and that the worker was ready, willing and able to return to the nominated duties,
• The employer to provide a response to the worker within 30 days as to whether they were able to comply or whether one of the exemptions as set out in section 18(2) applied – the predominant exemption being that it was not reasonably practicable to provide employment, and
• The worker being able to challenge any such decision by the employer by applying to the South Australian Employment Tribunal to determine whether or not it was unreasonable for the employer refusing to provide employment.

Since the introduction of section 18, there have been a number of applications to the Tribunal, but it is fair to say that the respective parties to such disputes approached the matter by way of a financial payment for a resignation under a deed of release in exchange for a release from section 18 of the Act.

Proposed Provisions

The proposed amendments under section 5 of the Return to Work (Employment and Progressive Injuries) Amendment Bill, 2023 are intended to address a number of concerns about the operation of the current provisions. There are two main concerns addressed.

The first is to create some flexibility in the section insofar as it required there to be suitable employment identified that the worker was able to undertake. The proposed provisions under section 18(5a) allow for the Tribunal to decide the nature of the duties to be provided, whether there needs to be some modification or alteration to the duties of the identified employment, the reduction in the hours of employment (temporary or otherwise) for the worker’s level of capacity to be accommodated and any need for a gradual increase in the duties or hours of work.

The Tribunal also has power under the proposed section 18(15a) to consider employment not nominated by the worker and to take into consideration any change to the level of the capacity of the worker after making the application under section 18.

The second relates to the way that the section applies to labour hire companies and host employers. The draft bill seeks to address this concern by imposing a dual obligation on both the labour hire company and the host employer to provide the suitable employment in cases where the worker has expressly requested this to occur in the initial request. It does so by imposing a statutory duty on the host employer to co-operate with the labour hire company to provide suitable duties at the host employer’s workplace consistent with the worker’s capacity. It expressly does not create a contract of employment between the worker and the host employer. However, the Tribunal now has powers to make appropriate orders for the host employer to co-operate with the pre-injury employer and the extent of any obligations that may be imposed on the host employer.

The definition of labour hire worker defers to the definition that is contained in the Labour Hire Licensing Act, 2017. This Act sets out detailed definition of what is and is not a labour hire situation and would need to be considered as a primary reference. To facilitate any potential application, the labour hire company is obliged to provide the host employer with details of the request by the worker under section 18(16b)(a) as soon as practicable and, in any event within 14 days of a receipt of an application under section 18(3) of the Act.

It should be noted that the provisions do not make the host employer a party to proceedings.

There are a number of other amendments that include:

• The introduction of a new exemption under section 18(2) to apply to an injured worker who has been terminated on the grounds of serious and wilful misconduct, but with the onus of proof remaining on the employer to establish that grounds exist to apply such an exemption.
• The introduction of the evidentiary grounds upon which an employer will need to establish that it is not reasonably practicable to provide employment. In essence this provision codifies the case law.
• The reduction of the time period for the employer to respond to a request by the worker for suitable employment from 30 days down to 21 days, and with a corresponding reduction in which a worker can apply to the Tribunal for an application from 30 days to 21 days from the time of the receipt of the response from the employer.
• The introduction of an obligation on an employer to provide a written response to the worker’s request if there is a refusal to provide suitable employment.
• The introduction of a 6 month time period for a worker to lodge the application to the Tribunal in circumstance where the worker’s capacity for work is at least equal in time to their pre-injury capacity but will not apply to a situation where the worker has intermittent or recurring levels of incapacity for work.
• Widening the scope of any employment with the pre-injury employer to include members of a group of companies that comprise the self insurers, related body corporates and, in the case of the Crown, an agency or instrumentality of the Crown.
• Empowering the Tribunal to make orders for the pre-injury employer to pay an amount equal to the wages or salary that a worker would have been entitled to if the employer was obliged to provide suitable duties.
• The expansion of the costs penalty provisions to all parties including the worker and the employer.
• The introduction of rules as to costs and the service of documents.

It is important to note that the Transitional provisions contained in Clause 3 of Schedule 1 provides that the amendments made by section 5 of the amendment Act are to apply on or after the designated day including in respect of any work injury attributable to a trauma that occurred before that date.

Finally, it should be noted that section 19 of the Act has been amended to provide the Tribunal, constituted as the South Australian Employment Court, to hear and determine any monetary claims that may arise.

Overview

The duty of a pre-injury employer to provide suitable employment to an injured worker who has an ongoing incapacity for work due to the injury is not new to the jurisdiction. However, the proposed provisions extend the role of the Tribunal to consider any employment that may be suitable for the worker beyond the employment as nominated by the worker. The role is more related to an investigatory role as opposed to an adversarial role that has been the primary function of the Tribunal to date.

Additionally, the extension of the section 18 employment obligation to host employers now transforms the labour hire market from one that is focused on temporary causal labour in times of need to imposing a continuing statutory duty that adds ongoing commitment for the host employer to provide suitable employment to a worker who is injured in the course of the hire agreement with the host employer.

This raises the question of what is the nature of the relationship, notwithstanding the qualification under the proposed section18(16b)(d) of the Act. Such questions include:

• What becomes of the existing labour hire agreement if its obligations are limited to that of providing a manual labourer but the duties to be provided are now clerical duties? Is the agreement is enforceable? Does there need to be a new agreement?
• What if the hire agreement is between an interstate company and the laws of South Australia do not apply under the agreement?
• What happens if the labour hire company is no longer in business? Does the obligation continue and the payment to the labour hire company revert to the worker thereby recreating a contract of employment?
• How is the Host employer able to plead that it is not reasonably practicable to provide such employment if it is not a party to the proceedings?
• What if the injured worker sustains a new injury in the course of their employment with the host employer? Does this mean that the injury is not to be compensable under the Act given that there is no contract of employment? Does this mean that the worker’s remedy is limited to that at common law?
• Who is responsible for monitoring the level of the worker’s incapacity post the 104 weeks to determine whether there is any continuing obligation under section 18?
• How does the host employer extinguish the obligation to provide suitable employment in the event that the worker returns to their pre-injury level of incapacity.
• What is the situation when the labour hire worker is on a working visa and they are injured? Does the obligation still apply? Can the order of the Tribunal usurp the Immigration Act?

As noted, the provisions do not clarify whether a host employer has any locus standii (legal standing) in any application brought under section 18 and to what extent the Tribunal can exercise its investigatory function under the new provisions. It can hardly be said to be in the interest of justice to impose an order on a party who is not a party to proceedings under section 18. Additionally, there are ramifications for self-insured employers who fall under the umbrella of a Group of Companies which needs to be considered and explored on a case-by-case basis.