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 Unfair compo scheme isn't working

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Number of posts : 10
Registration date : 2007-06-04

PostSubject: Unfair compo scheme isn't working   Mon Jun 04, 2007 1:38 pm

Michael Duffy

September 23, 2006

IN THE workers' compensation scheme for NSW, the rule of law is not
operating properly. There is not adequate predictability, consistency
or protection from the decisions of government.

Several hundred of the biggest employers are outside the scheme
because they insure themselves. Those companies left are being preyed
upon by WorkCover, the State Government agency responsible for the
scheme. Small businesses have no realistic avenue of appeal against the
decisions of WorkCover and the insurance companies, which to many of
those affected appear arbitrary.

The biggest issue is how a business decides whether a
self-employed worker is an employee or a contractor. This matters
because if a worker is defined as an employee, the employer has to pay
workers' compensation premiums for them, which can be considerable: for
example, in the case of bricklayers it adds 12.5 per cent to the wages

In 2003 the Government changed the definition on which this
distinction is based. There was a big increase in the number of audits
to check that employers were defining enough workers as employees (and
therefore paying insurance premiums for them). Audit numbers rose from
2300 in 2001-02 to 20,000 in 2005-06.

Audits are arranged by the insurance companies that operate the
scheme according to policy determined by WorkCover, which says that in
2005-06 audits identified $51 million in underpaid premiums.

They also identified $18 million in overpaid premiums, which was
refunded to employers. This is nice, but it's further evidence of the
genuine confusion that surrounds the question of definition.

David and June Gibson ran a bricklaying business in Narara on the
Central Coast. Before the change they'd had several audits, which had
found they were doing the right thing. In 2004 they had an audit which
looked at the seven years to 2003 and decided they'd been incorrectly
defining some workers as independent contractors rather than employees.
All of a sudden, they were up for back payment of extra premiums plus a
hefty late payment fee. The bill was $52,000 and they were given 28
days to pay.

The Gibsons appealed to WorkCover. Because they refused to pay the
money while the appeal was going on, they were denied a "certificate of
currency" from their insurer, which they needed to get work. They have
had to close their company.

Distinctions made between employees and contractors can be
inconsistent. The Gibsons are aware of cases where the same
self-employed men have been defined as employees in the audit of one
employer and independent contractors in an audit of another.

WorkCover appears to have too much discretion. The Gibsons say
that as their protests mounted, in conversations with WorkCover
officials they were offered reduced bills of $20,000 and then $10,000,
which they refused to accept. They were given no explanation of why the
amount had come down.

WorkCover declined to comment on the case because it is unresolved.

Bob Lalor also lives on the Central Coast, where he runs a road
transport business. After being audited, he was hit with a bill for
$38,000. He paid $7500 in legal fees to protest to the insurer, and the
bill was withdrawn. He says he wasn't told why the decision was
reversed, or whether he should now change his payment procedures.

In late 2004 June Gibson printed some flyers advertising an
anti-WorkCover protest meeting and handed them out at local pubs where
subcontractors socialise. She hired a room for 40 people at Gosford
RSL. On the night, lots of people poured in. "I thought they were there
for the chook raffle," she says. In the end they had more than 100
people, and went on to form the Small Business Reform Group
( It has 300 members, and June says she gets calls from
other people seeking advice every day.

Warwick Ryan, a partner at Central Coast Business Lawyers, thinks
definitional uncertainty suits WorkCover, as small businesses lack the
resources or knowledge to challenge findings. The appeal process is
woeful. The first appeal has to be to WorkCover itself. This involves a
conflict of interest, because the agency is responsible for the
financial health of the state's bloated workers' compensation system.
(As an indicator, Ryan points out that workers' compensation premiums
in construction are only half as much in Queensland as in NSW.) The
next level of appeal is not the relatively cheap Administrative
Decisions Tribunal (used, for instance, in appeals involving payroll
tax) but the Supreme Court. The outcome is uncertain, and a losing
appeal costs more than $100,000.

Gary Brack, the head of the industry association Employers First,
says employers are being "denied natural justice due to the high level
of unpredictability and uncertainty".

The politics of this are tough. The Government wants to encourage
small business, which likes independent contractors, but the unions are
keen to define as many workers as possible as employees and therefore
potential union members. The Commerce Minister, John Della Bosca,
established a panel to come up with a better way of telling the
difference between the two types of worker. The panel had
representatives from employers and unions, and was unable to agree.

WorkCover is introducing a number of changes that could help the
thousands of employers caught in this quagmire, such as an online
questionnaire that will provide non-binding advice on how to define
individual workers. But for many small businesses in recent years, the
system has been a deeply unfair disaster.

Posted by Michale Duffy at 11:40 PM, 2/6/2007
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Number of posts : 8
Registration date : 2007-06-04

PostSubject: Conflict of interest is obvious.   Mon Jun 04, 2007 5:28 pm

I note above and quote
"The first appeal has to be to WorkCover itself. This involves a
conflict of interest, because the agency is responsible for the
financial health of the state's bloated workers' compensation system."
this is obviously the case everywhere. In south australia the government does little to reform workcover. I am sur ethey look at the NSW scheme and think everything in SA is just sweet. After all we only have a billion dollar liability not a 3 billion dollar one. Problem is there are a lot more people live in NSW than south australia. More than 3 times as many.
Our workcover system is much too proud to admit it has problem. As everyone knows when the injured workers speak out they are targeted and vicitimised.
The deceit and trickery that follows in the ensuing trials is often something that the public unfortunately rarely ever hear about. It is well known, there is much case law on the internet nowadays that is starting to expose Workcover.
They may try and keep face with the media spin but its sites like this that are slowly bringing it all out into the open.
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Unfair compo scheme isn't working
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