Employers able to ditch WorkCover

Kenneth NguyenMarch 22, 2007

DOZENS of companies will be able to ditch Victoria's WorkCover scheme in favour of the Federal Government's more employer-friendly Comcare workers' compensation scheme following a High Court decision yesterday.
The precedent will hurt many employees. While the Victorian scheme caps pay-outs from employers to injured employees at $440,000 for non-economic loss, the corresponding cap under the Federal Government's scheme is $110,000. The federal scheme also imposes more onerous conditions on employees trying to sue for common law damages.
The State Government last year started a challenge against the Federal Government after Optus, which has about 20,000 workers in Victoria, sought to opt out of the state insurance scheme and insure workers through the federal scheme. Lawyers for Victorian Attorney-General Rob Hulls argued that the Commonwealth scheme was unconstitutional, citing section 51(14) of the constitution, which allows the Federal Parliament to make laws on "insurance, other than state insurance". NSW, South Australia and Western Australia supported Victoria's argument.
A 5-2 majority of the High Court rejected Mr Hulls' argument, declaring that the federal law was valid because of the corporations power provided to the Commonwealth. Moreover, the majority said, any corporation covered by the federal act "has no obligations of compulsory WorkCover insurance".
The court was split along the same lines as in last year's WorkChoices decision, which held the Howard Government's industrial relations changes to be constitutional under the corporations power.
Chief Justice Murray Gleeson and Justices William Gummow, Ken Hayne, Dyson Heydon and Susan Crennan found in favour of the Federal Government, while Justices Michael Kirby and Ian Callinan dissented, reinforcing their reputations as the High Court's last believers in federalism, or states' rights.
Justice Kirby described the federal act as an "intrusion" that threatened the viability of the Victorian WorkCover Authority.
"It sets a precedent for other similar moves of private employers to the federal regime, which contains caps and other provisions less beneficial to employees than the state regime provides," Justice Kirby said.
While many employees will now receive lower payouts than they might otherwise have received, employers and their shareholders have been put in a happier position. Optus estimates it will save $2.2 million a year by opting out of the Victorian scheme.
Transport company Linfox and construction group John Holland have also joined Comcare.
Federal employment minister Joe Hockey welcomed the decision and said "employees will receive consistent, generous benefits under the Comcare scheme".
Companies that compete with existing or former government authorities can take advantage of the High Court decision.
Victorian WorkCover Minister Tim Holding said the Comcare scheme "undermines the states' capacity to provide safe workplaces for their workers".