Appointment of an administrator
An administrator is appointed if a company is insolvent or is likely to become insolvent at some future time. Once an administrator is appointed, the company comes under administration.
The administration ends when either:
- a deed of company arrangement is executed
- the company’s creditors resolve that the administration should end
- the company’s creditors resolve that the company be wound up.
Liabilities of an administrator under the legislation
An administrator is not liable for the company’s debts before the administrator's appointment. An administrator is not liable for:
- claims lodged prior to being appointed as the administrator
- claims for injuries that occurred before the date of appointment of the administrator but lodged after the appointment.
An administrator is only liable for a claim if the injury occurs after the appointment of the administrator.
Appointment of a receiver
A receiver is appointed to manage specific property of the company. When a company is under receivership, the company’s normal management is supplanted in the control of some or all of the company’s assets by the appointment of a receiver.
Liabilities of a receiver under the legislation
A receiver is not personally liable for contracts made by the company before the date of appointment unless the receiver has accepted personal responsibility for them. Therefore, unless the receiver has personally accepted responsibility on behalf of the employer for the following types of claims the receiver is not liable for:
- claims lodged prior to being appointed as the receiver
- claims relating to injuries that occurred before the date of appointment of the receiver but lodged after the appointment.
A receiver is only liable for WorkCover claims relating to injuries occurring after the appointment of the receiver.
An administrator and a receiver can be one entity or two separate entities.
No liability for medical excess where worker entitled to provisional payments
Where a worker is entitled to provisional payments for a mental injury, no medical excess is payable by the employer for the life of the claim even if the mental injury component of the claim subsequently resolves. This includes where there is a concurrent physical and mental injury. However this does not include where a secondary mental injury develops after the claim has been determined – for those scenarios refer to WorkSafe’s secondary mental injury policy.
Liability exemption for injuries on/after 4pm on 30 June 1993
The employer has no liability for the employer excess for work-related An injury/disease is work related if it arose out of or in the course of employment and the scope of employment. injuries that occur on or after 4pm on 30 June 1993 if they meet any of the following conditions:
- the claim is for a recurrence of a pre-existing injury or disease in respect of which the worker is entitled to compensation under the legislation where the worker’s employment was a significant contributing factor to the recurrence
- the employer elected to pay an additional 10% of their premium and take the buy-out option on their WorkCover insurance
- the worker is receiving remuneration as a student at a school in a work experience arrangement or a student of a TAFE provider employed under a practical placement agreement
- the work-related injury resulted from a transport accident Transport accident means a transport accident within the meaning of section 3(1) of the Transport Accident Act 1986 within the meaning of the Transport Accident Act 1986 and is deemed to have arisen out of or in the course of employment due to either an authorised recess or attendance at any school for training as part of their terms of employment
Note: If an employer's remuneration is below $7500 per year they are not required to obtain WorkCover insurance. If a claim is made against them they must register with WorkSafe and the employer will be liable for the employer excess.
Exceptions for injuries before 30 June 1993
For exceptions to employer's liability for compensation for injuries before 4pm 30 June 1993 see: Exceptions for injuries before 4pm 30/6/1993.
Agent takes over liability after 21 days
The Agent must assume the employer’s liability if the employer does not pay the excess within 21 days of receipt of the claim for compensation.
Agent action when employer does not pay within 21 days
If the Agent finds out that the employer has not made a payment within 21 days, they must establish whether the employer has:
- received the claim more than 21 days prior
- neglected, refused or is unable to make payment and advise them of their obligation to do so under the legislation where the worker has an entitlement to compensation.
If the employer has still not made the payment for which they are liable, the Agent:
- must take over the employer's liability
- requests the claim form, medical certificate The first medical certificate is for a maximum of 14 days and can only be issued by a registered medical practitioner. and any other documents from the employer
- demands the employer reimburse the Agent for the excess amount paid and costs incurred as a result of the employer failing to pay compensation as required by the legislation.
Examples of when the employer might fail to pay within 21 days
An employer might fail to pay compensation within 21 days if the:
- claim was initially rejected but the employer is subsequently directed by the Agent to meet the liability after:
- the Agent later accepts liability, for example, by a subsequent decision or by accepting a recommendation of a Conciliation Officer
- a direction of a Conciliation Officer or determination of a court
- employer did not receive the particular account or medical certificate, in which case either can be provided to the employer with a request that payment be made.
Company under administration or receivership situation
The Agent must assume the employer’s liability for claims where the injury occurred prior to the appointment of an administrator or receiver.
Employer exiting the Victorian scheme
The Agent assumes the exiting employer’s liability for ongoing claims, new claims and reactivated claims after the exit date where the injury occurred prior to the employer exiting the Victorian scheme.
There are five instances where the employer has no liability for injuries before 4pm on 30 June 1993:
- if the employer’s leviable remuneration is less than twice the exemption limit
- if the worker has been receiving weekly payments and is injured within 12 months of returning to work
- if the claim was a recurrence of a pre-existing injury in respect of which the worker was entitled to compensation
- if the employer elected to pay more levy and take out the buy-out option
- if the worker was receiving remuneration as a sporting contestant.
Total wages less than 2 x $exemption
If the employer’s total wages are less than twice the exemption limit, the employer has no liability.
The exemption limit is the amount of the total wages bill at which level the employer must register.
The exemption limit is $7500. Employers with a total wages bill of $15000 ($7500 x 2) are not required to pay the first 10 days and the initial medical expenses.
Worker on compensation returns to work & is injured
If the worker has been receiving weekly payment and is injured within 12 months of returning to work, the employer has no liability.
This only applies if:
- weekly payments were made to the worker in respect of the prior claim
- the further injury:
- was not a recurrence of a prior injury for which the worker can be compensated
- could have occurred with the same employer or a new employer
- the prior claim was a minor or a standard claim
- the return to work could have been either to normal/alternative duties/hours or on a graduated duties/hours basis.
This section applied to any injury after 5 March 1990 where the injury was within 12 months of return to work
For injuries before 5 March 1990, if the injury was within six months of the return to work employers could apply for s125(1AA) under the Accident Compensation Act 1985.
Pre-existing, compensable injury recurs
If the injury was a recurrence of a pre-existing injury in respect of which the worker was entitled to compensation, where the employment was a contributing factor to that recurrence, the employer has no liability.
- the prior claim could have been:
- a minor or a standard claim
- entitlement to compensation for medical expenses only
- there was no time limit on when the recurrence could occur
- the injury recurred with a different employer
- an injury which was a recurrence could not also be an injury under s125(1AA) and was included in the employer previous Bonus Fund calculations.
Employer pays a higher premium for buy-out option
If the employer elected to pay an additional 10% premium and take out a buy-out option, the employer has no liability for the medical excess.
The employer has no liability if the worker was receiving remuneration as a sporting contestant.