The Case for a National Workers’ Compensation Scheme

The Case for a National Workers’ Compensation Scheme
Aon Insights Series Pacific

03 of 03

This insight is part 03 of 03 in this Collection.

November 8, 2023 3 mins

The Case for a National Workers’ Compensation Scheme

The Case for a National Workers’ Compensation Scheme

With the rising cost of workers’ compensation premiums reaching unprecedented levels and state schemes underperforming, the debate around introducing a national workers’ compensation scheme has resurfaced as a priority for the Federal Government.1

The foundation of Australia’s workers’ compensation systems can be traced back to 19th-century British legislation. Following Australia’s Federation, new workers' compensation laws were introduced, incorporating a 'no-fault' principle.2 However, the economic challenges of the mid-1980s and early 1990s shifted the focus toward reducing costs associated with workplace injuries, managing insurance premiums, and improving administrative efficiency. Since the inception of these initial workers' compensation laws, each jurisdiction has customised its own systems, resulting in a range of inconsistencies in how workers’ compensation laws are implemented and applied. These inconsistencies have today created a deeply unequal, flawed system, leaving employees and employers alike at a significant disadvantage.3

Currently, there are up to 11 different workers’ compensation schemes operating across Australia, each marked by inequality and unfairness. Workers’ compensation coverage varies between each jurisdiction, with constitutional responsibility primarily resting with State and Territory Governments. This has led to a proliferation of inter-jurisdictional inconsistencies relating to:

  • Eligibility for workers’ compensation
  • The range and level of payments
  • Access to common law damages
  • Premium setting principles
  • Injury management arrangements
  • Dispute resolution mechanisms1
The Case for a National Workers Compensation Scheme image 1

Each scheme is regulated by a separate government body, and employers are required to maintain a policy in each jurisdiction where they employ workers. This includes overseas workers who are seconded to Australia on a long-term basis. The benefits payable to injured workers differ for each scheme, creating a complex and fragmented system.3

The Productivity Commission review found that the cost for multi-state employers meeting the requirements of various jurisdictions, rather than those of a single national scheme, can be in the order of millions of dollars a year. Injured employees of multi-state employers would no longer receive different benefits for the same type of injury depending on where they reside. A national scheme would allow eligible corporations to eliminate the inequity of benefits for their workforce.3

/Images/Aon/insights/articles/2024/The Case for a National Workers Compensation Scheme image 2

The introduction of a national workers’ compensation scheme could streamline administrative processes, reduce costs for employers, and ensure equitable treatment for all employees, regardless of their location. That, along with self-insurance schemes, represents a significant step towards modernising and unifying Australia's approach to workers’ compensation.3

Authors
  • Gary McMullen
    Workplace Risk Director, Aon

1 Is Now the Time to Introduce a National Workers' Compensation Scheme?
2 Comparison of Workers’ Compensation Arrangements in Australia and New Zealand 2023 | Safe Work Australia
3 National-Federal-Workers-Compensation-Paper.pdf

© 2024 Aon Risk Services Australia Limited ABN 17 000 434 720 | AFSL 241141 (Aon).

The information provided in this article is current as at the date of publication and subject to any qualifications expressed. Whilst Aon has taken care in the production of the article on this website and the information contained in this, has been obtained from sources that Aon believes to be reliable, Aon does not make any representation as to the accuracy of information received from third parties and is unable to accept liability for any loss incurred by anyone who relies on it. The information contained herein is intended to provide general insurance related information only. It is not intended to be comprehensive, nor should it under any circumstances, be construed as constituting legal or professional advice. You should seek independent legal or other professional advice before acting or relying on the content of this information. Aon will not be responsible for any loss, damage, cost or expense you or anyone else incurs in reliance on or use of any information in this article.

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