News Article

latest news in employment law

ACC rules due to change

Published 01 Nov 2009

The battle for fair and reasonable compensation and employer's costs of ACC levies are taking a significant step up. A word to the wise is simply: 'avoid accidents and injuries over the next few years' - or pay a scary price. A mature employee who enjoys a good income but suffers a long term injury is more than likely to experience considerable difficulty obtaining appropriate & complete medical treatment and adequate wages compensation from the ACC.

The announcement of a $4.8 billion loss for the year drew a statement from ACC Minister Nick Smith the 'Scheme is unsustainable'. He was referring to the $2.4 billion loss the year before and now the $4.8 billion loss this year. (Our calculator suggests that's a total of $7.2 billion over two years.)

Earlier in October ACC Chairman John Judge stated the 'continued existence of the scheme is under threat'. This will seriously undermine any hope or confidence business people had in the scheme and we need to brace ourselves for the levy tsunami that will inevitably result. The numbers indicate that claims liabilities have increased from $9.4 billion to $23.8 in just 4 years.

There's a bill before Parliament and the following will be of interest to business owners and managers:
  • The plan is to force those who receive compensation for more than 12 months back to work if they are assessed as being able to work for 30 hours a week. (The current level is 35 hours). Employers of injured employees in Forestry, Construction, Dairying and others where 'safety sensitive' tasks have to be performed will need to implement systems and procedures to ensure they do not exacerbate existing conditions. This, or face the possibility of an allegation of failing to take 'every reasonably practicable step' to ensure employees are safe.
  • Job Assessors will not be required to take into account previous earnings when alternative work is offered. The effect will be that highly paid professionals will be required as a night time security patrol or other menial tasks.
  • Compensation calculated weekly will change to the average of the previous 12 months rather than what the employee was earning at the time of the injury. This is a 100% turnaround to that introduced under the Helengrad regime.
  • People suffering incapacity will have a longer wait – from 3 weeks currently to 6 weeks if they are below the minimum wage. Then they will be able to have it raised to the minimum wage.
  • It is planned to introduce a 6% threshold for those with a hearing loss injury.
ACC estimates the increase in long term liabilities has increased from $18 billion to $23.8 billion over the last year. While ACC doesn't have to meet all these costs in any one year EAL would point out the levies income received last year by ACC were more than $1 billion more than it had to pay and it's unreasonable to suggest they need more than they owe. The point is there's no need for massive increases in employer levies such as we all experienced last year and for them to now insist on further massive hikes is unfair in the extreme. Employers are mostly aware of increased costs in treatment, ageing workforce, less employees etc., but if we were able to get rid of the political whims the economic woes would lessen considerably.

Another word to the wise is to ensure you minimize your risk of accidents and avoid resultant injuries – we refer to professional OSH policies and procedures. If employers aren't motivated by saving their employees from the pain and suffering of the accident they had better look carefully again anyway because we are heading towards an insurance policy that excludes claims. The ACC policy will only attract premiums.