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The new Labor Government has moved to update return to work legislation with the introduction of the Return to Work (Permanent Impairment Assessment) Amendment Bill 2022 (Bill) which it wants passed by 7 July 2022.

The proposed changes come in light of the Supreme Court decision in Return to Work Corporation of South Australia v Summerfield [2021] SASCFC 17 (Summerfield). In this case the Supreme Court held that workers could combine their injuries when calculating their impairment rating for compensation claims.

Under the current legislation there are two thresholds which determine the amount of compensation an injured worker is eligible receive. An impairment rating of 5 per cent is needed for an injured worker to receive a lump sum for non-economic loss, while an impairment rating of 30 per cent is the threshold needed for a worker to be considered seriously injured. If the 30 per cent threshold is met, the injured worker will be entitled to ongoing medical support and weekly income maintenance payments until retirement age.

The decision in Summerfield has enabled many more injured workers to meet the impairment thresholds by combining injuries. An example of this is a worker who has been assessed to have an impairment rating of 4 per cent of the wrist for a minor injury, and an impairment rating of 26 percent for a lumbar spine injury can combine the two injuries to meet the 30 per cent threshold. In this scenario the injured worker would be entitled to ongoing medical support and weekly income maintenance payments rather than a lump sum for the lumbar spine injury only.

The Supreme Court decision has resulted in a doubling of Return to Work SA’s (RTWSA) liability deficit which is estimated to now be $1.1bn. To tackle the increasing deficit, RTWSA has proposed to increase the payroll levy on employers from 1.7 per cent to 2.2 per cent unless there are changes to the law.

The new Premier Peter Malinauskas was clear on his stance not to add pressure on small businesses or risk job and wage growth by imposing any more unreasonable costs on businesses. The Premier noted “My message to unions is clear. I have no desire to put an unfair or unreasonable impost on injured workers. But I believe it is equally important that we don’t impose an impost of increasing the cost of employing people that will ultimately be at the expense of either jobs or wages.

The original version of the Bill sought to prohibit workers joining injuries during an impairment assessment, which would have resulted in major ramifications for severely injured South Australian workers. The Premier has however spent the long weekend negotiating with unions and business groups in order to come to a compromise which is beneficial for all parties.

The proposed legislation would ensure that the payroll levy on employers is kept below 2 per cent, with premiums expecting to increase to 1.9 per cent. Further, rather than prohibiting the joining of injuries all together, the threshold to be considered seriously injured would increase to 35 per cent safeguarding the viability of the scheme. Injured workers would also be able to choose to receive a lump sum payment rather than weekly income maintenance payments under the new proposals.

The Premier has stated that “this is a sensible compromise, which ensures injured workers will get the protection they need, while also ensuring businesses are not hit with significant increases in their Return to Work premiums.”

If you would like more information on how the proposed amendments may affect your business please contact our experienced Employment and Workplace Relations team for assistance.

This article was contributed to by Law Clerk, Maida Mujkic.