Common law damages claim and duty of care of the employer

common-law-claim-negligence

A claim for damages, which is also called a Common Law (Damages) claim, is usually the only way that substantial compensation can be obtained for the full effects of your injury.

In a claim for damages, you are entitled to claim for the pain and suffering you have and will experience in the future. You may also be entitled to claim for the income loss (economic loss) you have and will sustain because of your injury.

Claiming economic loss damages is only permitted in some cases. In order to succeed in this type of claim, you must establish that your employer or some other person was negligent (i.e. breached a duty of care to you), and that as a result you have suffered a serious injury.

Common law damages claim and duty of care of the employer

Damages

There are 2 main categories of damages sought in a common law claim:

1. Pain and suffering, or general damages – this is compensation for the pain and suffering you have endured and will continue to endure, and your loss of enjoyment of life;

2. Past loss of earnings and future loss of earning capacity (aka ecomonic loss) – compensation for wages lost because you have been unable to work, and/or are unable to work into the future.

Even where your injury was caused by your employer or another person’s fault, you do not automatically have the right to sue for damages. You must first establish that you have suffered a serious injury.

Only if serious injury has been established in reference to your pain and suffering, can you can claim damages to compensate you for your pain and suffering and loss of enjoyment of life.

Only if serious injury has been established in reference to your capacity to earn income, can you claim damages to compensate you for your loss of wages or loss of the ability to earn wages into the future.

If you recover damages for your loss of earnings and earning capacity you are required to repay any amount you have received from WorkCover for weekly payment of compensation.
This is something we did not know! See original source here

If you have received benefits from Centrelink following your accident, these must also be repaid. You may also be unable to receive benefits from Centrelink for a period of time following your accident.

No claim can be made for medical expenses incurred by you in the past, or for medical expenses you may incur into the future. As a result you are not required to repay WorkCover for medical and like expenses paid and your right to claim future medical treatment from WorkCover is unaffected.

What is serious injury? (VIC)

You must have a serious injury to be able to bring a common law claim. This means either receiving an impairment assessment of 30% or greater in a lump sum application under your WorkCover claim (this is what we refer to as a Deemed Serious Injury), or qualifying under one of the definitions of serious injury in the Accident Compensation Act. These are:

  • Permanent serious impairment or loss of a body function
  • Permanent serious disfigurement
  • Permanent severe mental or permanent severe behavioural disturbance or disorder
  • Loss of a foetus

Whether you meet any of the above definitions involves an assessment of the injury itself and the consequences of the injury to see if these consequences are ‘more than significant’ when compared with other cases.

The Victorian Workcover Authority (or WorkSafe) through its lawyers, may issue a certificate confirming you have suffered a serious injury. If your application is denied, then a case can be issued in the County Court of Victoria seeking a certificate, where a judge decides whether you meet the serious injury criteria.

Also: Permanent means that the probability is that the impairment or other condition will last and not mend or repair to any significant extent: the injury is likely to last for the foreseeable future.

For an injury to be assessed as serious it must be found, with respect to pain and suffering or loss of earning capacity (and when compared with other impairments of a similar type) to be more than significant or marked and at least as being very considerable.

For an injury to be severe it must fairly be described as being more than serious to the extent of being severe.

If you wish to claim damages for loss of earnings, or loss of earning capacity, an additional test must be met: you must show that you have suffered a 40% loss of your capacity to earn income, comparing the amount that previously represented your earning capacity with the amount you are capable of earning into the future.

The amount you are capable of earning into the future is assessed by examining what you should be capable of earning in suitable employment following rehabilitation and re-training.

If the Court cannot determine what you should be capable of earning then you will fail to satisfy this test!

Read more The 40% loss of earning capacity test – some cases

Does the serious injury certificate entitle me to sue for both types of damages?

No, a certificate can either be granted to allow you to sue for both pain and suffering and loss of earnings, or just pain and suffering. It is very difficult to get the right to sue for loss of earnings. Unless you have a deemed serious injury, you can only claim for lost earnings if you can prove that your present and future earnings have dropped by at least 40%, and that this drop will be permanent. A detailed analysis of your earnings and the medical reports would need to be done to see whether you establish this loss. It is a particularly onerous requirement because the analysis of your future earnings does not look at whether you are actually working or can get a job, but whether your medical condition allows you to work, and if so, how much money you could theoretically earn.

What happens when I get the serious injury certificate?

If a certificate is granted, you then have the right to sue for damages. There are steps that must be completed before you can issue your court case, such as a settlement conference and written offers from each party. If your case does not settle during this negotiation stage, a Writ would then be issued in the County Court or the Supreme Court. This is the case where negligence and damage has to be proven and the outcome is usually determined by a judge and jury of six.

What must I prove in a claim for damages?

Claiming damages can be a very complicated process. If you are injured at work, the claim will be made under the WorkCover legislation. If you are injured away from work for example, while you are on a break, the claim may be made under the General Civil liability legislation.

Under WorkCover, there are three (3) elements that you must establish to obtain common law damages. These elements are:

  1. You are suffering from a “serious injury
  2. Some other person was negligent – this can be your employer or a co-worker, and
  3. You have suffered loss and damage as a result

Establishing all three elements is essential to a claim.

These elements are best understood as three hurdles that you must pass through to succeed. It is important to remember that you must pass through all hurdles, not just one or two. This means that even if you have proven negligence and proven suffered loss and damage , if you don’t have “the serious injury hurdle” there is no point – you  as may well give up now.

Many “workers” are injured in negligent circumstances and suffer loss but they can only succeed in claiming damages if they can demonstrate that they have suffered a “serious injury“. In Victoria for example you need to have a whopping 30% total permanent body impairment to qualify for “serious injury” – unless you obtain a serious injury certificate at Court through a complex qualitative test.

How can I prove it was their fault?

Over the years, courts have broken down negligence into various elements. Some of these are:

The Defendant (your employer) must have owed you a duty of care.

  • It is important to note that for work injuries, employers have a duty to provide a safe place of work, and therefore it is almost always the case that a duty of care was owed.

The defendant must have breached their duty of care.

  • In work injury cases this involves looking at whether a reasonable employer in the defendant’s position should have foreseen that their conduct or inaction involved a risk of injury to you or a class of persons including you.

The defendant’s breach must have caused your injury.

  • This relies on medical opinion to confirm that you have suffered an injury and that it is related to the defendant’s negligent conduct.

But what is negligence?

People owe other people a duty of care to take reasonable steps to ensure safety. Employers, in particular, are required to provide a safe system of work and perform risk assessments of the workplace to try and reduce the risk of injury. A risk that must be addressed is one that is not far fetched or fanciful and the steps that must be taken to reduce the risk are those that would be considered reasonable.

You cannot sue just because your employer has been negligent. You must have suffered serious injury and damage as a result of the negligence. A near miss , unless psychiatric injury is then suffered, is not enough.

It is very difficult for workers to determine what the law would consider to be negligent conduct by an employer or other party. We therefore recommend that you seek legal advice to determine if your injury/s have been caused by negligence. Usually this involves an interview with a barrister.

Now, the purpose of this article is to dig into the “negligence” (breach of owned duty of care causing injury) part of a common law damages claim. The following NSW legal cases and arguments were sourced by our co-author Trinny

duty-of-care

Employer’s Duty of Care

Czatyrko v Edith Cowan University [2005] HCA 14.

12. The appellant relied in this Court on these basic general principles.

An employer owes a non-delegable duty of care to its employees to take reasonable care to avoid exposing them to unnecessary risks of injury.

If there is a real risk of an injury to an employee in the performance of a task in a workplace, the employer must take reasonable care to avoid the risk by devising a method of operation for the performance of the task that eliminates the risk, or by the provision of adequate safeguards.

The employer must take into account the possibility of thoughtlessness, or inadvertence, or carelessness, particularly in a case of repetitive work.

13. The appellant’s reliance on these principles is well founded.

Gittani Stone PL v Pavkovic [2007] NSWCA 355.Hodgson, Ipp, McColl JJA separately.

Hodgson JA said [13]: “The primary judge referred to cases concerning the circumstances in which an employer’s duty to an employee may extend to protecting the employee from the criminal conduct of third parties: Modbury Triangle Shopping Centre PL v Anzil [2000] HCA 61, 205 CLR 254; English v Rogers[2005] NSWCA 327; Coca-Cola Amatil (NSW) PL v Pareezer[2006] NSWCA 45; and Macquarie Area Health Service v Egan[2002] NSWCA 26. He also referred to the general statement as to an employer’s duty of care in Czatyrko v Edith Cowan University [2005] HCA 14.”

Remainder of Gittani Stone summmary >>

Nationwide News PL v Naidu &c [2007] NSWCA 377.

Basten JA:

424 It should be accepted that ISS Security, as employer, had a duty at all times in respect of the safety of its employees, even if it did no more than supply the services of those employees to its principal: see TNT Australia Pty Ltd v Christie [2003] NSWCA 47; (2003) 65 NSWLR 1 at [63]- [65] (Mason P) applying Kondis v State Transport Authority [1984] HCA 61; (1984) 154 CLR 672 at 687-688 (Mason J); Maricic v Dalma Formwork (Australia) Pty Ltd [2006] NSWCA 174 at [57]- [58] and Goldman Sachs JBWere Services (supra).

“However, once it was established on the facts that, through its relevant officer, Mr Blinkworth, ISS Security did not have, nor ought to have had, knowledge of circumstances which would give rise to a reasonably foreseeable risk of cognizable psychiatric harm to the plaintiff, its failure to take steps in relation to his safety did not constitute negligence. There was no notice of contention seeking to support the judgment against ISS Security on any other basis.

“Accordingly, the appeal by ISS Security should be upheld and the judgment against it set aside.”

Kendrick v Bluescope Steel &c [2007] NSWSC 1288. Hoeben J.

115 The obligations of an employer to its employee are well known. The most recent statement of principle by the High Court is in Czatyrko v Edith Cowan University [2005] HCA 14; [2005] 79 ALJR 839 at [12]:

An employer owes a non-delegable duty of care to its employees to take reasonable care to avoid exposing them to unnecessary risks of injury. If there is a real risk of an injury to an employee in the performance of a task in a workplace, the employer must take reasonable care to avoid the risk by devising a method of operation for the performance of the task that eliminates the risk, or by the provision of adequate safeguards. The employer must take into account the possibility of thoughtlessness, or inadvertence, or carelessness, particularly in a case of repetitive work.”

116 In the context of an employer also being the occupier of premises where the injury took place, the Court said:

“[14] Compliance by the respondent, as an employer, with its duty of care to an employee was not to be measured by reference to the reasonableness of imposing on an occupier of land an obligation to warn members of the public about the obvious risks on the land. The case for the appellant was not that he should have been warned by his employer that if he fell off the truck he might suffer injury, or that if he stepped off the back of the truck into space he would fall. It was not a question of warning the appellant of the risk. It was a question of creating a risk by failing to adopt a safe system of work.

[15] There should have been in place a system of work designed to avoid the risk that a person required to step backwards and forwards on and from a moveable platform might do so without first looking behind him. The system of work necessarily had also to take into account that the task was a repetitive one to be performed in a diminishing space. Proper account of these matters was not taken by the respondent. It did no more than require that the appellant and Mr Fendick load the truck. That proper account of these matters was not taken was overlooked or disregarded by the Full Court.”

117 On the facts of this case Bluescope Steel should have had in place a system of work designed to avoid the risk of exposing employees such as the plaintiff to an unnecessary risk of injury. In that regard I would see the system of work encompassing not only duties performed by the plaintiff at No 6 Blast Furnace but also access to and from the blast furnace when using the internal roadways of the steelworks.

122 Having regard to the considerations in Wyong Shire Council v Shirt [1980] HCA 12; (1980) 146 CLR 40 what, if any, should have been the response of Bluescope Steel to this foreseeable risk of injury? What had to be considered was the magnitude of the risk and the degree of probability of its occurrence along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which Bluescope Steel might have had….

127 While the absence of any prior accident involving an oversize dump truck and a domestic vehicle is a factor to be taken into account, it ought not be over emphasised given the particular facts of this case. In Francis v Lewis [2003] NSWCA 152, a case of a fall on stairs, it was said at [57] that the fact that there were no recorded falls did not of itself absolve from finding breach of a duty of care, so long as the circumstances would have alerted a reasonable person to the danger posed by the defect and so long as the court found it unreasonable to have ignored that danger. That statement of principle was endorsed in Fairfield City Council v Petro [2003] NSWCA 150.

142 The test for causation at law is the common sense test set out in March v E & MH Stramare Pty Limited [1991] HCA 12; (1991) 171 CLR 506. It is not necessary that the breach of duty by Bluescope Steel be the sole or principal cause of the accident. It is sufficient if it made a material contribution to its occurrence….

173 In Vairy v Wyong Shire Council [2005] HCA 62; (2005) 223 CLR 422 at [61] and [126] Gummow J and Hayne J forcefully pointed out the dangers associated with hindsight reasoning:

“[61] In his reasons in this appeal, Hayne J explains why an examination of the causes of an accident that has occurred does not assist, and may confuse, in the assessment of what the reasonable person ought to have done to discharge the anterior duty of care. Moreover, an assessment of what ought to have been done, but was not done, critical to the breach issue, too easily is transmuted into an answer to the question of what if anything had to be done, a duty of care issue.” (Gummow J)

“[126] When a plaintiff sues for damages alleging personal injury has been caused by the defendant’s negligence, the inquiry about breach of duty must attempt to identify the reasonable person’s response to foresight of the risk of occurrence of the injury which the plaintiff suffered. That inquiry must attempt, after the event, to judge what the reasonable person would have done to avoid what is now known to have occurred. Although that judgment must be made after the event it must seek to identify what the response would have been by a person looking forward at the prospect of the risk of injury.” (Hayne J)

Irwin v Salvation Army (NSW) Property Trust & Anor [2007] NSWDC 266 Hungerford ADCJ:

86 Second defendant: An admission was made by the second defendant that it employed the plaintiff and so had a non-delegable duty of care to her. An employer has an undoubted non-delegable duty to take care for the safety of an employee, being a duty of an independent obligation of a comprehensive kind to ensure that reasonable care is being taken: see Nicol v Allyacht Spars Pty Ltd (1987) 163 CLR 611 and TNT Australia Pty Ltd v Christie (2003) 65 NSWLR 1.

“The duty is that of a reasonably prudent employer to take reasonable care to avoid exposing the employee to unnecessary risk of injury: Bankstown Foundry Pty Ltd v Braistina (1986) 160 CLR 301 at 307-308. As Hayne J remarked in Crimmins v Stevedoring Industry Finance Committee (1999) 2000 CLR 1 at 98:

The duty is, of course, not absolute; it is the duty of a reasonably prudent employer and it is a duty to take reasonable care to avoid exposing the employee to unnecessary risks of injury.

87 It is to be noted, by reference to O’Connor v Commissioner for Government Transport (1959) 100 CLR 225 at 230, that the standard of care for an employee’s safety is not of a low order. It should be added also that as the High Court (Gleeson CJ, McHugh, Hayne, Callinan and Heydon JJ) commented in Czatyrko v Edith Cowan University [2005] HCA 14 at para [14]:

Compliance by the respondent, as an employer, with its duty of care to an employee was not to be measured by reference to the reasonableness of imposing on an occupier of land an obligation to warn members of the public about the obvious risks on the land…It was not a question of warning the appellant of a risk. It was a question of creating a risk by failing to adopt a safe system of work.

88 One may, I think, read into this that the common law duty cast on an employer is to be proactive rather than merely reactive in subjective employees to a particular system and place of work as it is in that way the concept of the “reasonably prudent employer” finds effect. Of course, and as Windeyer J observed in Sungravure Pty Ltd v Meani (1964) 110 CLR 24 at 36:

A safe system of work is one that is safe for an average workman taking reasonable care for his own safety.

Parsons v J.J. Richards & Sons PL [2008] NSWCA 331. Gyles AJA, Hislop J agreeing; Beazley JA disagreeing.

The appellant drove a domestic garbage bin removal vehicle for the respondent who was contracted to Baulkham Hills Shire.

In July 2003, a bin fell from the vehicle hoist. The worker attempted to drag the bin, and injured his back.

The plaintiff had urged the employer duty was to have issued a blanket ban on attempting to lift bins in the peculiar circumstances. Balla DCJ found no employer breach.

Her Honour had said: “It was not suggested that all bins should be left where they fall, but that a bin which appears heavy should not be moved. This means that at some stage a worker has to make an assessment of the weight of a bin. Accordingly a person on the position of the plaintiff will always have to make a decision.

“The issue from this point is whether the procedures put in place, which the plaintiff did not follow, were reasonable taking into account the high duty of care placed on employers. I am satisfied that they were.”

By majority, the appellate justices agreed. Gyles AJA delivered reasons with which Hislop J simply agreed. His Honour traversed trial transcripts and appeal grounds.

At [36]: “The appellant was aware of the safety issues involved in attempting to move a heavy bin and was aware of all the other alternative courses of action open to him. In my opinion the trial judge was entitled to take the view that it was unrealistic and unreasonable to make a blanket ruling regardless of the circumstances so as to remove all elements of what the plaintiff called his discretion in carrying out his duties.”

Gyles AJA said [38]: “Counsel for the appellant relied upon the decision in Herning v GWS Machinery Pty Ltd [2005] NSWCA 263. Apart from the fact that the case involved moving a heavy piece of machinery the facts there are quite different from the present facts. The Court did not purport to lay down any general principle which would be applicable in the present circumstances.

“The same might also be said of the decision in Harrison v Lau Nay Nominees Pty Ltd t/as Abs Transport [2004] NSWCA 18, referred to by counsel for the respondent. Counsel for the appellant also referred to the decision of the High Court in Turner v The State of South Australia (1982) 42 ALR 669; 56 ALJR 839. The case is not reported in the Commonwealth Law Reports, a good indication that it does not lay down any principle. Again it involved heavy lifting. The warning case had failed in the Full Court of South Australia. The High Court’s decision was based upon other failures in the system together with vicarious liability for the negligent acts of another employee involved in the system.”

His Honour distinguished McLean v Tedman (1984) 155 CLR 306.

Beazley JA cited Czatyrko v Edith Cowan University [2005] HCA 14; (2005) 214 ALR 349 [12]; Bankstown Foundry Pty Ltd v Braistina [1986] HCA 20; (1986) 160 CLR 301; O’Connor v Comm’ for Government Transport [1954] HCA 11; (1954) 100 CLR 225, at p 230.

Her Honour said: “Although the appellant’s actions involved a serious misjudgement, it was a misjudgement that was inherent in the system of work that the respondent had provided. The respondent was under an obligation in those circumstances to take reasonable care to implement a system of work that avoided exposing the appellant to this unnecessary risk. The test at all times is one of reasonableness.”

Appeal dismissed with costs.

A: Mr L T Grey, inst Slater & Gordon. R: Mr PJ O’Connor, Ellison Tillyard Callanan.

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5 Responses to “Common law damages claim and duty of care of the employer”

  1. I am totally shocked to discover that we have to REPAY workcover any moneys we may have received if we are successful at common law – I mean if we are successful at common law it means we are very seriously injured and, for most of us, it also means we have been on workcover handouts for years. It takes forever to get through a common law case… I am dumbstruck! Did any of you know this?

    According to the website Advicelineinjurylawyers:

    If you are granted a serious injury certificate, you can bring a claim for pain and suffering damages. The amount of pain and suffering damages you can claim depends on your circumstances and the impact of your injury. If the matter goes to court, it would likely ultimately be determined by a jury. As a guide, the maximum amount of pain and suffering damages allowed by law is approximately $500,000. However, this is only for the very worst of injuries and most injured workers receive far less than this. The current Victorian average is approximately $80,000. The amount varies according to the severity of the injury and the effect that it has had on your life.

    If you have already received a lump sum payment, this is deducted from any pain and suffering damages that you receive.

    If you are able to bring a claim for loss of earnings, you can claim for your past and future economic loss. The amount of damages that this includes depends entirely on the amount you can prove that you were earning prior to your injury and your earning capacity into the future. It can therefore only be determined on a case-by-case basis.

    If you receive damages for economic loss, you are required to pay back any weekly payments of compensation that you have already received under WorkCover in relation to the claimed injury. You would also not be allowed to receive any further WorkCover weekly payments in relation to the claimed injury into the future. Your medical and like expenses would continue to be paid regardless.

    There is another comprehensive write up here – http://www.tved.net.au/index.cfm?SimpleDisplay=PaperDisplay.cfm&PaperDisplay=http://www.tved.net.au/PublicPapers/June_2009,_Sound_Education_in_Law,_Section_138_Recoveries_Under_Workcover.html

     

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  2. No, not until the article was sourced. However it appears similar as in MVA’s (motor vehicle accidents) where if the injured person claims a benefit from the government whilst waiting for a settlement.Then a percent of that benefit is claimed back through the settlement. Unlike workcover, I don’t believe it is the full amount. So much is not told to injured workers.

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  3. It does not matter whether it is Workcover common law damages claim, or two individuals or two corporations suing each other, the past economic loss amount is ALWAYS reduced for amounts already received to date by the plaintiff. The same rules apply in all litigation. You cannot receive MORE than you would have received had the event, that bought raise to the damages claim, had not occurred. This means you cannot receive more for past economic loss than had your injury not occurred and you had just worked as normal throughout this time.

    Calculating your past economic loss and coming up with an approximation what you will actually receive at settlement of your common law damages claim for the past economic loss component is relatively simple. Putting aside CPI and other factors etc that are taken into account to calculate past economic loss as it just complicates the example.

    Say for example, if your wages are $1,000 per week and you are injured and you cease working. And the judgement date in your common law damages claim is 10 years to the day that you ceased working, your total past economic loss is:

    10 years x 52 weeks =  520 week

    520 weeks x $1,000 pw = $520,000

    This is the amount ($520,000) that will in most cases, appear in your statement of claim under the heads of damages for Past Economic Loss.

    However, this is your “notional” past economic loss. What you actually will receive at settlement will be your “real” past economic loss, which is not the amount that appears on the statement of claim, as any amounts already paid to you over this 10 year period have to be deducted/paid back to others.

    Only amounts paid to you in wages for any actual time worked over this 10 year period will reduce the “notional” past economic loss figure that appears in your statement of claim under the heads of damages for past economic loss. So in the above example, if you returned to work (a failed return to work) for say 5 weeks at some stage during the 10 year period, you would have earned $5,000 in wages. Thus your “notional” economic loss won’t be $520,000 but rather $515,000.

    ($520,000 maximum you could have earned over 10 years less actual wages paid for time worked of $5,000 = $515,000).

    The upshot is, for past economic loss, in the above example the maximum all up that you can receive from actual settlement payment of the past economic loss component your common law damages claim plus any payments you have already received to date, whether they are Workcover weekly payments, Centrelink benefits or things such as salary continuance insurance weekly payments cannot exceed $520,000 in total.

    $520,000 is what you would have been paid over the 10 year period had the accident/injury not occurred and you just worked as normal throughout this 10 year period.

    Workcover weekly payments, Centrelink benefits, and things such as salary continuance insurance or even accident make-up pay if you are entitled to such by an award – you have to look at all these as effectively an “advance” payment on your past economic loss settlement monies.

    Whilst you are required to “pay back” such monies, however in reality, these amounts are just added on and then deducted from settlement/judgement calculations and paid to the relevant party on your behalf by Workcover or by your solicitor. And in the case of weekly Workcover payments, Workcover is just effectively paying itself back as they are the ones paying the total of the judgement in a common law damages claim anyway. You will receive in settlement monies just the nett amount. At the end of the day it is all just financial juggery.

     

    FOR EXAMPLE

    WorkcoverVictim earns $1,000 per week pre-injury.

    She sustains and injury at work and ceases working on that day.

    Assuming it takes many years for her common law claim to get to trial.

    She wins her case and the employer is found to be negligent.

    The judgement is handed down 10 years to the day from the date of her injury.

    For sake of simplicity, assume Workcover weekly payment are paid at 85% of pre-injury wages from date of injury and she continued to receive Workcover weekly payments at that rate up to the day of judgement.

     

    Scenario 1

    WorkcoverVictim receives no other payments during the 10 years period other than her Workcover weekly benefit. She is has no capacity for work throughout that time.

    52 weeks x 10 years = 520 weeks              from date of injury to date of judgement

    Salary $1,000 pw x 520 weeks = $520,000   this is her notional past economic loss and is the maximum amount WorkcoverVictim would have earned over the 10 year period had she not been injured and just worked as normal

    Paid Workcover weekly benefits @ 85% = $850 pw x 520 weeks = $442,000

    ~
    Heads of damages

    Notional Past Economic Loss       $520,000

    Less Workcover payments           $442,000     repaid to Workcover

    Real Past Economic Loss            $78,000        balance payable to worker

    So over the 520 weeks WorkcoverVictim will receive $442,000 + $78,000 = $520,000

    So in effect her “notional” past economic loss is $1000 pw (or $520,000 over the 10 years) but her “real” past economic loss is in reality is only the 15% shortfall in her weekly wages due to her Workcover weekly benefit only being paid at the rate of 85% of her wages.

    This is the scenario that will apply to the vast majority of workers who are successful in their common law damages claim i.e. their past economic loss settlement amount they will actually receive will only be the minor shortfall amount due to Workcover weekly payments not being paid at the rate of 100% of wage.

     

    Scenario 2

    WorkcoverVictim is employed in the public sector and under her industrial award she has accident make-up pay provisions in which the employer tops-up her pay to 100% of her pre-injury wages (i.e. the employer will pay the 15% shortfall from the Workcover weekly benefit only paid at 85%). The award states that this entitlement is only for the first 52 weeks.

    Note that Accident make-up pay provisions have the effect of making your past economic loss $0 for the period of the entitlement.

    52 weeks x 10 years = 520 weeks              from date of injury to date of judgement

    Salary $1,000 pw x 520 weeks = $520,000   this is her notional past economic loss

    Paid Workcover weekly benefits @ 85% = $850 pw x 520 weeks = $442,000

    Under her award she receives 52 weeks accident make-up pay from her employer:

    Salary $1,000 pw less $850 pw Workcover payment  = $150 pw accident make-up pay

    Make-up Pay $150 pw x 52 weeks = $7,800 paid by her employer

    ~
    Heads of damages

    Notional Past Economic Loss       $520,000

    Less Workcover payments           $442,000     repaid to Workcover

    Less Make-up Pay                       $7,800          repaid to employer

    Real Past Economic Loss            $70,200        balance payable to worker

    So over the 520 weeks WorkcoverVictim will receive $442,000 + $7,800 + $70,200 = $520,000

     

    Scenario 3

    WorkcoverVictim’s claim is initially rejected and takes 12 months to fight through the courts to be accepted and weekly payments, for some reason, are only paid from then (i.e. not backdated 52 weeks).

    Whilst waiting for her claim to be decided by the court, in the meantime WorkcoverVictim applies for Centrelink benefits of $300 pw and receives for the first 52 weeks until her Workcover claim is accepted.

    52 weeks x 10 years = 520 weeks              from date of injury to date of judgement

    Salary $1,000 pw x 520 weeks = $520,000   this is her notional past economic loss

    Centrelink benefit  52 weeks @ $300 pw  = $15,600

    Workcover Weekly benefits for period 9 years x 52 weeks = 468 weeks

    Paid Workcover weekly benefits @ 85% = $850 pw x 468 weeks = $397,800

    ~
    Heads of damages

    Notional Past Economic Loss       $520,000

    Less Centrelink payments            $15,600       repaid to Centrelink

    Less Workcover payments           $397,800     repaid to Workcover

    Real Past Economic Loss            $106,600      balance payable to worker

    So over the 520 weeks WorkcoverVictim will receive $397,800 + $15,600 + $106,6000 = $520,000

     

    Scenario 4

    WorkcoverVictim attempts to return to work after 12 months. She works 5 days pw for 5 weeks. She is paid by her employer as normal i.e. $1,000pw x 5 weeks = $5,000. Her Workcover payments stop during this time. However after working 5 weeks is becomes clear that it’s a failed return to work and she ceases work permanently and returns to receiving Workcover benefits.

    52 weeks x 10 years = 520 weeks              from date of injury to date of judgement

    Salary $1,000 pw x 520 weeks = $520,000   this is her notional past economic loss

    Workcover  benefits for period 10 years x 52 weeks less 5 weeks returned to work = 515 weeks

    Paid Workcover weekly benefits @ 85% = $850 pw x 515 weeks = $437,750

    Wages for time worked $1,000 pw x 5 weeks = $5,000 paid by her employer

    Under this scenario the actual heads of damages for Past Economic Loss will not be $520,000 but rather $515,000. The reason being is that she has earned actual wages for time worked throughout the period and thus her past economic loss caused as a result of the injury is reduced by any wages actually earned during the period.

    ~
    Heads of damages

    Notional Past Economic Loss       $515,000

    Less Workcover payments           $437,750     repaid to Workcover

    Real Past Economic Loss             $77,250       balance payable to worker

    So over the 520 weeks WorkcoverVictim will receive $437,750 + $77,250 = $515,000

    In addition she has also earned wages of $5,000 = $520,000 total

     

     

    If you are pursuing a common law damages claim, it is very important to carefully check over the past economic loss calculations done by your lawyers – Lawyers are not numbers people and often cannot add up to save themselves. Likewise, your lawyer may not be aware of payments you have received from sources such salary continuance insurance policies etc. If these are not allowed for, it can result in you getting a nasty shock down the track when an insurer comes knocking on your door for repayment of these monies and you have already spent the settlement money.

     

     

     

     

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    • @Carol M – thank you so so much for this invaluable information! You are an absolute God-sent! I’d been searching all over the net in a desperate effort to find additional information to make more sense of the way they calculate past economic loss to no avail and was about to ask our lawyers for some clarification. Your explanation makes a lot more sense, and in a way is somewhat “fair” when broken down this way. Thank you so so much!

      PS I do know of lawyers who advise NOT to file for the economic loss part (only pain and suffering) and to stay on weekly payments indefinitely – perhaps this is one of the reasons….

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      workcovervictim May 20, 2013 at 8:18 am
  4. Yes @ WCV you are correct. From my understanding I think it is now actually a lot of people that do not pursue the economic loss component of common law damages; just pain and suffering component.

    This is especially the case where Workcover has not automatically granted them the serious injury certificate. The criteria to “qualify” for the serious injury certificate for economic loss, whilst on the surface does not look particularly difficult, is in actual fact quite onerous. Unless you were made quadriplegic and clearly were never going to work again till age 65 or were on a very high income, to prove 40% loss of earning capacity effectively for a significant period of time in the future is actually very difficult.

    And I think this was compounded by, wasn’t there some changes recently regarding awarding of costs in serious injury certificate applications?? Apparently in the past most people would make applications for both pain and suffering and economic loss – if you have to go to court to get the serious injury certificate you may as well try to get a certificate for both. However, the Victorian government changed the rules something along the lines of if you fail in one part of your application for the serious injury certificate (i.e. you succeed in being granted the certificate for P&S but not for EL) you get hit with large costs (of which you actually have to pay). From my understanding, the court was concerned too many people were pursuing certificates for economic loss that they had absolutely no prospect of succeeding in that part of their application and thus no hope in being granted a certificate for economic loss and as a result were taking up the a lot of the courts time, rather than their lawyers being realistic and only pursuing the certificate for pain and suffering only which their client actually had a reasonable prospect of succeeding in. This now makes it financially risky to pursue making an application for a serious injury certificate for economic loss unless you are fairly confident of meeting the criteria and thus your application succeeding in court.

    And Yes you are also correct that often it can be more financially practical for some workers to  remain on weekly payments rather than pursuing an economic loss component settlement for their common law damages claim. The reason being is because of the statutory cap on the maximum amount that can be awarded in total for economic loss in Victoria for workers compensation (isn’t about $1mill at present?).

    You can see in the example I did above, this worker at $1,000 pw (which is hardly a high income) after 10 years has already chewed through 50% of the maximum they can be awarded for economic loss in total. So by the time you allow for future economic loss (which is always a significantly higher component than past economic loss) it does take much to hit the statutory cap of approx $1m. If the above worker was 25yrs when injured, after 10 years at 35yrs their past economic loss is already $520,000+. That leaves less than an another $500,000 that can be awarded for future economic loss which may well have to provide for them for another 30 years to age 65 if there was no prospect of them ever working again. They would be better off just staying on their weekly benefit of $850pw (indexed) until aged 65.

    And it’s not just young workers that are better off staying on weekly payments. Workers on higher incomes can often chew up the entire $1m statutory cap just with their past economic losses, which in effect means they get will nothing or very little for future economic loss – the very income that is supposed to provide for them in the future due to their incapacity to work for the foreseeable future. And by high income I don’t mean mega rich incomes – someone earning even $90k or $100k will lose roughly $1mill earning capacity over 10 years.

    Also Centrelink apply an exclusion period for any damages settlements/judgements you receive. So if a worker goes the common law route and were successful they will be locked out of access to Centrelink benefits for a significant period of time (probably 15 to 20+ years) if awarded at the upper limits of the statutory cap for economic loss. And in many cases the worker may in fact, because of the statutory cap, received very little for future economic loss (the very dollars they are supposed to live off in the future) yet they are locked out receiving say the disability pension for 15 years!

    Also remember the Centrelink exclusion periods apply to any settlement/judgement amount that you receive from Workcover; it does not just apply to settlements for economic loss. Particularly for older workers getting close to retirement age this means that if they had a settlement for pain and suffering only and remained on weekly benefits to age 65, the exclusion period may lock them out of receiving the aged pension for a period of time when they are kicked off Workcover weekly payments at age 65.

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