Australian Government's proposed changes to the Seacare Scheme

26 April 2017

The Australian Government is seeking to make changes to the Seacare scheme, which provides workers compensation coverage for Australian seafarers serving on ships engaged in inter-state, territory or international trade and commerce.

The Seafarers and Other Legislation Amendment Bill 2016 (the amendment bill) seeks to introduce a new test to clarify the coverage of the Seacare scheme partly in response to the Federal Court’s decision in Samson Maritime Pty Ltd v Aucote [2014] FCAFC 182.

The Aucote decision extended the reach of the Seacare scheme beyond ships engaged in inter-state, territory or international trade, to all persons who met the Seafarers Rehabilitation & Compensation Act 1992 criteria of being an “employee” (i.e. a seafarer) employed by a trading corporation, thereby extending the Seacare scheme to ships undertaking intrastate voyages, which in the Aucote decision was a working barge used in the construction of an iron ore export wharf in Western Australia.

The amendment bill also seeks to align the compensation benefits available under the Seacare scheme with those in the Comcare scheme, implement Maritime Labour Convention changes concerning the insurance obligations of employers and to extend the Commonwealth Work Health and Safety Act to the Seacare scheme through the repeal of the Occupational Health and Safety (Maritime Industry) Act 1983 (OHS (MI)) Act).

The amendment bill also proposes that the Seacare Authority be abolished and that its functions be integrated into Comcare and the Safety Rehabilitation and Compensation Commission (SRCC).

Two separate bills have also been introduced to make new arrangements for the payment of levies and provision of information by employers.

The new proposed coverage test moves away from focusing on the trading pattern of the ship, so that the Seacare scheme will only cover a ‘prescribed vessel’ which is not used on voyages wholly or predominately within the territorial sea of a state or territory and their internal waters.

Generally this will capture all waters within 12 nautical miles from the coast plus internal waters and a voyage between two places in the same state or territory will be treated as ‘wholly’ within that state or territory. The amendment bill also has scheme “opt-in” and exemption arrangements.

The proposed changes:

The proposed changes to the workers compensation benefits under the Seacare scheme include:

  • A change to the level of contribution of employment to an injury that is a disease from a ‘material’┬áto a ‘significant’ degree, requiring the employment to be more than a mere contributing factor so as to ensure that an employer is not liable to pay compensation for ailments which have little, if any, connection with the employment.

A non-exhaustive list is provided as to the matters to be taken into account when determining whether the ailment was significantly contributed to by the employment, including any predisposition to the ailment, the duration of employment and any activities of the employee not related to the employment;

  • A change to the coverage of psychological injuries to exclude injuries suffered as a result of ‘reasonable administrative action taken in a reasonable manner’ in place of the current formulation of ‘as result of reasonable disciplinary action’.

A non-exhaustive list is provided of what may constitute ‘reasonable administrative action’ and includes a reasonable appraisal of performance, reasonable counselling action taken, and anything reasonably done in connection with the employee’s failure to attain a promotion, reclassification, transfer or benefit, or to retain a benefit, in connection with the employment.

  • A reduction in the threshold for compensation for permanent binaural hearing loss from 10% whole person permanent impairment to 5%.
  • Payment of incapacity payments until a seafarer’s ‘pension age’ rather than the current age of 65.
  • The ability for legislative rules to be made to cover additional types of compensable medical treatment.
Next steps

The amendment bill is still before the House of Representatives where it has received its second reading speech. Should the amendment bill be passed by the House, the amendment bill will also require Senate approval before becoming law.

In the meantime, an option available to ship operators who may be inadvertently caught under the Seacare scheme is to seek a section 20A Seafarers Act exemption from the Seacare Authority. Under section 20A the Seacare Authority may exempt the employment of employees on a ship from the Seacare scheme.

The Minister for Transport can also be requested to make a section 3A declaration that the relevant ship is not to be regarded as a prescribed ship for the purposes of the Seacare scheme.

For further information on the amendment bill and the potential impact of its proposed changes on your operations, please contact a member of our team.

This article was written by Anthony Highfield, Partner.

Subscribe to HWL Ebsworth Publications and Events

HWL Ebsworth regularly publishes articles and newsletters to keep our clients up to date on the latest legal developments and what this means for your business.

To receive these updates via email, please complete the subscription form and indicate which areas of law you would like to receive information on.

Contact us