Report: Australian Unions Win Landmark Accident Make-up Pay Case

Abstract

Since the 1970s, the significance of make-up pay has fluctuated depending on the adequacy of weekly payments available under state workers’ compensation legislation. From the 1970s through to the latter part of the 1980s there was an, uneven but, upward trajectory in weekly payments and their duration. Since then the general trend has been in the opposite direction, reflected in the winding back of entitlements and the widespread use of step-downs in weekly payments. In the wake of these setbacks, accident make-up pay remains an issue of significant relevance for the Australian labour movement. The reason is not hard to find. In New South Wales and Victoria, for example, injured workers receive no more than 80 percent of their average pre-injury earnings if unable to return to work within 13 weeks. A stepdown of this magnitude equates to a pay cut of 20 percent - a high price to pay for being injured at work and particularly so for low paid workers. Elsewhere in Australia, step-downs are not always as harsh or, where they are, come into force at a later date. The continuation, however, of accident pay provisions as an enforceable collective bargaining entitlement was brought into question by the award modernisation process which commenced in 2008. The stated aim of the modernisation process was to review and streamline Australia’s national industrial relations system. One of the crucial aspects involved was the extent to which existing entitlements remained relevant and should be incorporated in modern awards. In the case of accident pay provisions, employer groups argued for their exclusion from modern awards whereas unions and the federal Labor government sought to secure their inclusion. When the new system came into place in January 2010 over 1500 pre-existing awards had been reviewed and transformed into 122 modern awards. Accident pay was included, but only as a ‘transitional ’ provision to be reconsidered as part of a four yearly review of modern awards scheduled for 2014. Fair Work Safety Nets and Workers’ Compensation Laws A key aspect of the Fair Work Act (FWA) and the modern awards system involves the requirement to ‘provide a fair and relevant minimum safety net of terms and conditions’. The ACTU argued that inclusion of accident pay provisions into the relevant awards was consistent with, and necessary to achieve, this objective. The emphasis placed on the safety net objective in the FWA was particularly pertinent for low paid, award reliant, workers who are most likely to experience substantial financial disadvantage were this entitlement to be removed. The industrial relations tribunal examined the evidence for and against workers’ compensation step-downs for the first time and ruled to protect entitlements available to injured workers INTERNATIONAL union rights Page 18 Volume 23 Issue 1 2016 KEVIN PURSE is with Central Queensland University’s Appleton Institute in Adelaide, South Australia, and has an extensive background in Work Health and Safety and Workers’ Compensation policy I n August 2015 a Full Bench of the Fair Work Commission, Australia’s national industrial relations tribunal, handed down a decisive judgement upholding the principle that accident make-up pay provisions should continue as an entitlement available to injured workers under 37 modern industrial awards. The unanimous Full Bench decision supported an application by the Australian Council of Trade Unions, the country’s peak union organisation, despite vigorous opposition major employer groups along with the federal Liberal/National coalition government and its New South Wales counterpart. Accident make-up pay provisions have been an important component of many industry awards and enterprise agreements in Australia. They are designed to offset the financial hardship of ‘stepdowns ’ - phased cuts in income replacement payments for injured workers - contained in Australia’s predominantly state based workers’ compensation laws. Accident pay provisions operate on the principle that if a worker suffers a work related injury the employer is obliged to make up the difference between his or her pre-injury wages and income replacement payments paid by the workers’ compensation insurer. Typically, make-up pay provisions apply for periods ranging from 26 to 52 weeks, by which time the vast majority of injured workers have returned to work. Accident Pay and Modern Awards Accident...