Aggravation of Employee Pre-Existing Injury? Make Sure Your Employment Documentation is in Order

In Victoria, the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic) (WIRC Act) provides grounds to disentitle an employee to workers compensation if they suffer a recurrence, aggravation, acceleration, exacerbation or deterioration of a pre-existing injury or disease in the course of their employment. However, for an employer to rely on this provision, they must strictly comply with the requirements of the WIRC Act in respect of pre-employment declarations provided to employees regarding pre-existing injuries and diseases.

Such pre-employment declarations can act as a defence to any such claim, meaning that the employee would be disentitled from accessing the workers compensation scheme.

In summary, s41 of the WIRC Act provides that an employer must, in writing, prior to commencement of employment:

• Ask the employee to disclose any pre existing injury/disease; and
• Refer the employee to the WIRC Act which states that a failure by the employee to disclose would disentitle them to compensation

However, for an employer to rely on the availability of s41 in seeking to have an employee’s workers compensation claim rejected, the Courts have found the employer must strictly comply with the s41 requirements.

Key Case

The case of Perfetto v Moorabbin Cabinets Pty Ltd [2020] VMC 32 provides a reminder to employers in Victoria of the importance of strict compliance with the requirements contained in the WIRC Act.

In this case, the Victorian Magistrates’ Court found that the employer, Moorabbin Cabinets Pty Ltd (Moorabbin Cabinets), was unable to rely on s41 of the WIRC Act regarding Mr Perfetto’s workers’ compensation claim, because it did not strictly comply with the requirements under s41 to inform the employee in writing, prior to commencement of their employment that, failures to make the disclosures under s41 would result in a disentitlement to workers compensation.

Mr Perfetto was a cabinet joinery installer for Moorabbin Cabinets. His WorkCover claim in respect of an aggravated back condition while at work was declined by Moorabbin Cabinet’s insurer on the basis that Mr Perfetto had failed to disclose his pre-existing back injury in his pre-employment health declaration, including by responding ‘no’ to a question asking whether he had any existing injury or condition that could be affected by the nature of the proposed employment.

The pre-employment health declaration provided to Mr Perfetto did not precisely state the requirements of s 41 of the WIRC Act, instead stating that a failure to disclose ‘may’ disentitle from compensation.

Mr Perfetto claimed the use of the discretionary wording ‘may’ meant the declaration was not compliant with s41 and could not be relied upon in denying compensation. The Court agreed, finding Moorabbin Cabinets should have used the mandatory wording contained in the WIRC within its Declaration in order for it to comply with the requirements contained in s41. Therefore Mr Perfetto was entitled to workers compensation payments.

The Court found that the wording contained in s41 does not provide for any discretion, whereas the wording used in the Declaration informed the worker that ‘the effect of such a failure to comply was discretionary’.

The Court held that ‘[t]he final and onerous requirements of non-compliance with s.41 should strictly be pointed out’ if an employer is to then rely on it as a defence to a claim for workers compensation.

Take Aways for Employers

In Victoria, employers must strictly comply with the requirements of s41 and use its mandatory wording if seeking to disentitle an employee from workers compensation. This includes ensuring pre-employment fitness declarations or employment contract clauses are strictly in compliance with the required wording of the WIRC Act.

Any ‘Fitness for Work’ employment contract clauses or pre-employment health declarations for Victorian employees must:

• Inform the intended employee of the consequences of their failure;
• Advise that s.41(2) will apply to any failure to disclose; and
• Advise of the consequential effect on any entitlement to compensation (that they will not be entitled).

Similar requirements in other jurisdictions within Australia may also apply. In particular, workers compensation legislation in Queensland and Tasmania contains equivalent provisions.

HR Legal can assist in reviewing or drafting contract clauses or pre-employment documents to ensure they are compliant with the WIRC Act or other state based workers compensation legislation.