Workers compensation common law matters (NSW)


Workers compensation common law matters (NSW)

On 31 August 2001, the Commission of Inquiry, headed by Justice Sheahan released the Report of Commission of Inquiry into Workers Compensation Common Law Matters.


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On 31 August 2001, the Commission of Inquiry, headed by Justice Sheahan released the Report of Commission of Inquiry into Workers Compensation Common Law Matters. The Commission of Inquiry was set up by the NSW Government in an attempt to amend the workers compensation scheme. The Commission was asked to identify ways to reduce the incentive of pursuing common law claims; to recommend the appropriate threshold for serious and permanent injury to access common law damages; to examine more effective ways of processing common law claims and to identify ways to reduce unnecessary costs and inefficiencies in the processing of common law claims. The Commission noted that the emphasis in workplace injury management in NSW has been moving from 'what the worker can no longer do' to 'what the worker can do' with rehabilitation and assistance.

'Common law' claims, rights and damages 

The Commission identified that the 'common law' allows an injured worker to recover more benefits from the employer, or managed fund, where he or she can establish that the injury, and losses, arose from some 'fault' on the part of the employer. 'Fault' arises where the employer is guilty of the tort of negligence or breach of statutory duty.

The pay out of a lump sum has been popular and support was found for the view that there is a lump sum mentality. The Commission also found that the objective of maximising common law awards conflicted and compromised the statutory objectives of the scheme.

Financial considerations 

The Report detailed available data, which demonstrated that the current escalation of common law claims and their costs threaten the financial viability of the scheme and are not temporary aberrations. The data revealed that the scheme was losing at least $160 million per annum and had an accumulated deficit of $2.18 billion.

Access to common law

The Commission discussed tort law reform and the difficulties of obtaining predictable and affordable insurance against the risk of tort actions. This has given rise to statutory intervention, such as the attempt to introduce the Personal Injuries Damages Bill 1990 and more recently, the passed Health Care Liability Act 2001. The Commission noted that the tort law reform debate was far from over. There exists a difficulty in finding a proper balance between the adequacy of compensation against the capacity of respondents to pay; the treatment of injury and fault on a case-by-case basis against the need for certainty of outcome.

Incentives to pursue claim 

An injured worker who can prove 'fault' and demonstrate that there was no contributory negligence on their part can recover close to fully quantifiable damages. Common law damages include past economic loss net of weekly benefits paid; future economic loss, net of tax, attributable to the injury and its consequences; more general damages for pain, suffering and other non-economic loss; along with benefits for domestic care provided gratuitously.

The Commission recommended that damages provided for gratuitously provided domestic care ought to be abolished from common law claims but that the scope of such damages remain under the statutory scheme to be paid to the care giver where there is a demonstrated cost to them. The Commission recommended that caution be taken so that these damages do not simply become part of the structured settlement.

The Commission noted that there was an increasing gap between damages for pain and suffering under the statutory scheme and the common law. Damages under the common law have been indexed, whilst statutory damages have remained the same since 1992, resulting in a growing incentive for the pursuit of common law claims.

To address these problems the Commission made the following recommendations:

  1. Non-economic loss claims under common law be abolished;
  2. All claims for non-economic loss be dealt with under the statutory scheme; and
  3. As soon as responsibly practicable, the amount for pain and suffering under the statute be significantly increased.

The Commission also recommended that as scheme finances improve the compensation for loss benefits be indexed and that the maximum amount recoverable be indexed and increased to $250,000.


The Commission recommended that the common law injury threshold be 20 per cent whole of person injury as assessed by the Australian Medical Association guide and that consistency of the threshold be monitored.

Process questions 

The process of litigation was examined and the Commission recommended that all tort actions arising from injuries sustained in employment be dealt with by the District Court. The significance of this recommendation is the fact that it would result in the abolition of juries in such cases. The Commission also recommended that a pre-litigation process be introduced and outlined a standard procedure.

Consideration was afforded and a recommendation made as to the possible extension of judicial discretion concerning structured settlements whilst retaining the principle that structured settlements should be voluntary.

Concluding remarks of the commission 

The Commission expressed concern over the recent relaxation of commutation rules and the risk that the costs of getting the injured worker off the books may be at a higher price than continuing them and may not be in the worker's best interests. The Commission noted complaints about the performance of insurers and urged the government to address these process issues urgently.

Finally the Commission recommended that WorkCover record principal parameters of common law claims, including dates of parts of the claim progress, impairment assessments, offers of compromise and settlement amounts.

The Inquiry came to a close with the presentation of the Report to the Governor on 31 August 2001. All further enquires relating to the Inquiry will now be referred to the Information Centre at WorkCover NSW on 13 10 50.

Subscribers requiring further information should contact Helen Wu - tel. (02) 9458 7743; email: 

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