The effects of the new Workers Compensation legislation*

Legal Directions

In mid-2012, the NSW Government introduced sweeping reforms to the workers compensation scheme, legislating the Workers Compensation Legislation Amendment Act 2012 (the 2012 Amending Act), following heated debate in both houses.

The reforms were ostensibly introduced to rein in a scheme which the government described as ‘not financially sustainable’ and as an alternative to increases in workers compensation premiums paid by employers in the state[1].

One way the reforms sought to achieve this was by restricting access to lump sum benefits to those workers who established an 11% whole person impairment (WPI) or greater, by restricting workers to a single claim for lump sum compensation in respect of permanent impairment under s66 of the 1987 Act and by removing altogether the entitlement to compensation for pain and suffering under s67.

The relevant savings and transitional provision introduced by the 2012 Amending Act (which became cl.15 of Part 19H to Schedule 6 of the 1987 Act) provided that the amendments to s66 and s67 apply to ‘a claim for compensation made on or after 19 June 2012 but not to such a claim made before that date.’

The decisions of both the WCC and the Court of Appeal turned upon the interpretation of cl15. The Court of Appeal also considered the effect of the Workers Compensation Amendment (Transitional) Regulation 2012 (the Transitional Regulation) which was enacted shortly after the 2012 Amending Act.

*Goudappel v ADCO Constructions Pty Ltd

This decision, which is a boon for some workers, preserves existing rights to lump sum compensation provided a claim for any kind of compensation was made in respect of the injury prior to 19 June 2012. It overturned the decision of the President of the Workers Compensation Commission and has opened a window for some claimants to pursue claims for lump sum compensation in respect of permanent impairment thought to have been closed by the legislative amendments. 

It is not yet known whether the decision will be challenged in the High Court.

In the meantime, the practical effect of the decision is that the amendments to s66 and s67 of the 1987 Act do not apply if a claim for compensation of any kind was made prior to 19 June 2012.

Workers with pre-19 June 2012 claims will be entitled to bring claims for impairment under s66 of less than 11% WPI, claims for deterioration (i.e. further loss claims), and claims for pain and suffering under s67 if the applicable threshold (10% WPI) is satisfied.

Experience suggests that a large number of such claims (previously thought to be excluded) are expected to be brought in the Commission. To the extent that claims had already been dealt with in accordance with the President’s determination, the Commission has indicated[1] that such matters may be dealt with by way of a request for reconsideration of the decision (under s350(3) of the 1998 Act).

A claim for reconsideration of proceedings pending in the Commission prior to 1 March 2013 would circumvent the requirement (which applies to proceedings lodged from that date) that a worker bear his or her own costs of the proceedings.

The Presidential decision

Ronald Goudappel, the applicant worker in the WCC proceedings, sustained an injury on 17 April 2010, which he asserted resulted in a 6% whole person impairment. His lawyers brought a claim for lump sum compensation pursuant to s66 of the 1987 Act on 20 June 2012.

The respondent employer denied liability for the claim asserting that Mr Goudappel was caught by the amendments to s66 made by the 2012 Amending Act, which, it was argued, applied in respect of all claims for lump sum compensation made on or after 19 June 2012 and which had removed any entitlement to a claim for permanent impairment for less than an 11% WPI.

The interpretation of cl.15 was referred as a question of law to the President of the WCC, Keating J. WorkCover intervened in those proceedings and so became a party to the matter.

The question to the President was framed in the following terms:

‘Do the amendments to Division 4 of Part 3 of the Workers Compensation Act 1987 introduced by Schedule 2 of the Workers Compensation Legislation Amendment Act 2012 apply to claims for compensation pursuant to s66 made on or after 19 June 2012 where a worker has made a claim for compensation of any type in respect of the same injury before 19 June 2012.’

The President found that cl.15 should be interpreted such that the amendments to s66 and s67 of the 1987 Act operate in respect of any claim for lump sum compensation made on or after 19 June 2012, irrespective of whether or not a claim for compensation of any kind was made in respect of the injury prior to that date.

The President’s decision turned upon the application of principles of statutory construction which he concluded led to a finding that the phrase ‘a claim for compensation’ within cl.15 should be interpreted as a reference to a specific claim for lump sum compensation for permanent impairment.

It was relevant that a claim for permanent impairment compensation could only be made once the worker had complied with the specific requirements in s282 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act), which provides for supply by the worker of relevant particulars of the claim for lump sum compensation.

The President was ultimately persuaded that the intent of the 2012 Amending Act was to restrict the availability of lump sum claims, and so should be interpreted accordingly. The President addressed the comments made by the Treasurer, the Hon M Baird MP, when the legislation was first introduced to Parliament, as generally supporting the notion that the amendments should be read as having a restrictive operation on the availability of lump sum benefits under the 1987 Act.

The appeal

The lead judgment of the Court of Appeal was delivered by Basten JA, with whom Bathurst CJ and Beazley P agreed.

Basten JA acknowledged that the question referred to the President of the WCC contained an assumption contrary to the appellant’s submissions and answered the question (and in doing so allowed the appeal and set aside the President’s answer) as follows:

‘The amendments to Division 4 of Part 3 of the Workers Compensation Act 1987 introduced by Schedule 2 of the Workers Compensation Legislation Amendment Act 2012 do not apply to claims for compensation pursuant to s66 which are made before 19 June 2012 in respect of an injury that results in permanent impairment, whether or not the claim specifically sought compensation under s66 or s67 of the 1987 Act[2].’

The terms of His Honour’s answer contain an ambiguity but the clear ratio of the decision is that a worker bringing a claim for lump sums compensation on or after 19 June 2012 is not caught by the amendments to the 1987 Act if a claim for compensation of any type had been made prior to 19 June 2012.

The determination of the issue on appeal turned in part upon the meaning given to the phrase ‘a claim for compensation’ within cl.15 of the savings and transitional provisions.

His Honour was clearly persuaded by the absence from cl.15 of a specific reference to a claim for lump sum compensation: ‘Had it been intended to require an extant claim for lump sum compensation as at the specified date, cl.15 could have so stated, but it did not[3].’

The fact that cl.15 operated only with respect to lump sum compensation should not in His Honour’s opinion, and contrary to submission by the respondent employer and WorkCover, influence the interpretation of the provision.

His Honour made reference to specific provisions within the 1998 Act (namely, s260, s261 and s263) which do not distinguish, in terms of how and when a claim is to be made, between claims for lump sum compensation and any other form of compensation under the 1987 Act.

Interestingly, and in the context of that issue, His Honour did not address the President’s discussion in relation to the requirement, in s282 of the 1998 Act, that particulars of a claim for lump sum compensation be required before an employer must determine that claim (this provision distinguishes a lump sum claim from other claims under the 1987 Act).

One suspects that His Honour was mindful of the separate treatment of ‘making a claim’ within Part 2 of Chapter 7 of the 1998 Act (within which s260, s261 and s263 are situated) and ‘dealing with claims’ contained in Part 3 (which of course contains s282).

In relation to the Part 2 provisions, His Honour concluded that none of those ‘suggest that the Acts required, in June 2012, that an injured worker must make a separate claim for lump sum compensation: rather they are consistent with the contrary conclusion[4].’

From that conclusion it followed that the amendments to s66 did not apply ‘where the worker was able to rely upon a claim made prior to 19 June 2012 to establish an entitlement to permanent impairment compensation[5].’

The rationale of His Honour’s reasoning is demonstrated by the common practice in the jurisdiction of an injured worker receiving a lump sum payment without providing specific notice of a lump sum claim (this can come about when an insurer makes what is known as a ‘pro-active offer’).

Savings and transitional regulations

An issue that was not considered by the WCC (because of the President’s conclusions as regards cl.15) related to the effect of the Workers Compensation Amendment (Transitional) Regulation 2012 (the Transitional Regulation).

The Transitional Regulation came into operation on 1 October 2012. The provision relevant to this discussion is now cl.11 of Schedule 8 to the Workers Compensation Regulation 2010 (the Regulation).

Clause 11 purports to clarify the operation of cl.15 of the saving and transitional provisions in Part 19H of the 1987 Act, by providing that the 2012 Amending Act extends to ‘a claim for compensation made before 19 June 2012, but not to a claim that specifically sought compensation under s66 or s67 of the 1987 Act’.

Having reviewed the sources of the regulation making power in s280 and Schedule 6 (at Part 20 and cl.5 of Part 19H) of the 1987 Act, His Honour concluded that the Transitional Regulation sought to prejudicially affect a right to compensation under s66 which had accrued to the worker prior to the amendment of s66 and was therefore invalid.In addressing the operation of, in particular, cl.5(4) of Part 19H, His Honour thought its scope ‘obscure’ as it was ‘not obvious that this power would permit a regulation to do more than vary the savings and transitional provisions in Schedule 6[6].

While it could be argued that this is precisely what cl.11 of the Transitional Regulation sought to do, the issue was not further addressed in His Honour’s reasons.

Authored by Bradley Stringer, Partner, Sydney.



[1] Ibid at [26]

[2] Ibid at [11]

[3] Ibid at [16]

[4] Ibid

[5] Goudappel v ADCO Constructions Pty Ltd [2013] NSWCA 94 at [36]

[6] The Hon Greg Pearce, ministerial media release, WorkCover Improvements Begin, 23 April 2012


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