Jacquie Seemann and Katie Simon

Restriction against ‘double recovery’ in workers compensation in New South Wales

Jacquie Seemann and Katie Simon

26 September 2016

Employment Disputes

Employees often make more than one claim against their employer – or in racing terms, try for a quinella or trifecta of claims. Whether more than one claim can succeed depends on the nature of the claims; sometimes the law will not allow it.

One circumstance in which two claims can coexist is a situation involving an alleged workplace injury. For example, a workers compensation claim might be brought alongside a discrimination claim or general protections claim. When negotiating to settle these types of double claims, employers often face the hurdle of section 234 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW). This section doesn’t allow parties to ‘contract out’ of the legislation. This means that, even if an employee agrees (for example, in a settlement deed) not to make any further claims against the employer, the employee may still be able to make a workers compensation claim.

However, there is also a basic principle that a person cannot be compensated more than once for the same injury – also known as the principle of ‘double recovery’.  Using this principle a properly constructed settlement deed can assist in preventing further claims by an employee.

This principle is dealt with in section 151A of the Workers Compensation Act 1987 (NSW) (WC Act) which states that ‘if a person recovers damages in respect of an injury from the employer liable to pay compensation under this Act then… the person ceases to be entitled to any further compensation under this Act in respect of the injury concerned…’ 1. This principle was considered in a recent Workers Compensation Commission decision: Super IP Pty Limited v Mijatovic [2016] NSWWCCPD 33.

Ms Mijatovic suffered a psychological injury at work. After the injury, she made both a claim under workers compensation legislation for the psychological injury and a complaint under the Disability Discrimination Act 1992. Ms Mijatovic settled the discrimination complaint in exchange for her employer paying her $8,700. The deed between the parties contained a limited release; that is, Ms Mijatovic released her employer from all claims except claims made under workers compensation legislation.

After that settlement, Ms Mijatovic claimed permanent impairment compensation for the injury claimed in the workers compensation claim. The employer denied this claim because of section 151A of the WC Act – the employer said the payment made under the deed was damages for the same psychological injury.

Initially, the Arbitrator found for the employee – generally because the release in the deed excluded claims under workers compensation legislation. However, on appeal, the Commission found that the payment was indeed damages for the same psychological injury. The Commission took into account the fact that the medical report referred to in the deed was almost identical to the medical report relied on by the employee in her workers compensation claim. This meant that the employee was not entitled to compensation – even though the release in the deed excluded claims under workers compensation legislation.

A similar question was considered in the South Australian Workers Compensation Tribunal in Cheriton v Local Government Association Workers Compensation Scheme [2014] SAWCT 21 (upheld on appeal) – however, with a different outcome. Mr Cheriton’s employer terminated his employment unlawfully – but paid him as if his employment had not been unlawfully terminated. When Mr Cheriton made a workers compensation claim, the employer argued that, in light of the termination payment, weekly workers compensation payments would result in double recovery. However, the Tribunal held that the termination payment was unrelated to the injury; and so the employee was able to claim workers compensation.

What does this mean for employers? It is important to consider the legal boundaries of ‘quinella’ or ‘trifecta’ claims before settling any dispute and entering into a deed – even if the employee has only made one claim at the time of settlement, it may be worthwhile to obtain legal advice about the issues. A properly constructed settlement deed can assist in preventing further claims by an employee either under workers compensation legislation or other laws.

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1 A similar provision exists in each of the other states and territories in Australia (ss 63, 64 and 65 of the Workers Compensation Act 1958 (VIC), s 119 of the Workers’ Compensation and Rehabilitation Act 2003 (QLD), s 75 of the Return to Work Act 2014 (SA), s 92 of the Workers’ Compensation and Injury Management Act 1981 (WA), s 133 of the Workers Rehabilitation and Compensation Act 1988 (TAS), s 54 of the Return to Work Act 2015 (NT), and s 184 of the Workers Compensation Act 1951 (ACT)).