Minimising employers’ liability for prior employment injuries

by 03 Apr 2007

Reducing workers compensation costs is a challenge for many companies and their HR departments. WorkplaceOHS Publishers looks at some strategies to reduce such costs and examines how companies can nip OHS issues in the bud

An important issue for employers in controlling workers’ compensation liability is to have proper systems in place that confine their liability to injuries and illnesses actually arising from work done for their business. This means that employers should not carry liability and responsibility for pre-existing injuries and illnesses carried by new employees.

Failure to address this issue can result in the employer being held liable for workers’ compensation payments that strictly relate to injuries and illnesses that have nothing to do with that business.

Three critical steps:

How can employers effectively minimise their liability for pre-existing injuries and illnesses carried by employees? Three critical steps to take include:

• ‘Base-line’ the relevant health of new employees – there should be systems in place that accurately assess the health of a new employee in terms of the likely risks that the new work will present to the employee;

• Have appropriate documentation completed by new employees that inquires into the health of the employee to the extent that is reasonable in the light of the work to be undertaken; and

• Make reasonable inquiries of previous employers and insurers as to the health and claims history of the employee.

Base-lining health

This is to produce an accurate picture of the health of each new employee. The picture should be of such a nature that pre-existing injuries, illnesses and conditions are understood sufficiently to enable the proper assessment of the latest accident in the light of the true health and condition of the employee.

To properly assess an employee or potential employee would clearly require a medical assessment and possibly more than one assessment. Medical professionals should be briefed to understand the employer’s business sufficiently so that they can assess the likely impact of the work on any injury or condition that they may find.

A sound policy on gathering and use of medical information should be in place. When an employee has a pre-existing injury or condition that requires specialist assessment then this should be sought –particularly if the condition is one that is especially susceptible to exacerbation, such as bad back or loss of hearing.

Careful records should be compiled and kept by employers. These records can be made available to the employer’s insurer as circumstances deem necessary.

Appropriate documentation

Employers need to assess what are the main risks the business generates in terms of OHS. A suitable questionnaire can then be devised that will allow an employer to assess the likely consequences of employing people with certain medical conditions.

For example, if there is unavoidable physical exertion, such as in the construction industry or mining industry, a potential employee with a damaged back may be an unreasonable risk to the employee and the business.

Employers are entitled to ask questions like: Considering the nature of the work as described to you, do you suffer from any medical condition or injury that could be exacerbated by this work?

Note that some awards and agreements acknowledge that pre-employment medical examinations are reasonable.

There are exemptions from privacy law for employee records, but note the qualifications. The federal Privacy Act does not apply to information held by an employer about its current and former employees where that information is held in employee records and its use or disclosure relates to the employment relationship.

However, the Privacy Commissioner has indicated that if an individual goes to a health service provider in a personal capacity (and that provider is also their employer), the information collected would not form part of their employee record and it would be covered by the Privacy Act.

Information that an organisation collects about a job applicant’s health prior to that job applicant being made an offer of employment will also be covered by the Act – that is, privacy law applies. The Act will also cover health records of employees from other organisations where health service providers are handling such records. An example of this would be when workers’ compensation claims are handled by health service providers, not the employer itself.

Reasonable inquiries of previous employers and insurers:

Employers are obliged to take all reasonable steps to protect the health and safety of their employees. This obligation extends to not placing new employees in positions that will threaten their health. If an employee is susceptible in a certain respect then it is incumbent on the employer to eliminate that risk. In that respect employers are entitled to make reasonable inquiries of previous employers about the health and workers’ compensation history of prospective employees.

Discrimination issues

It is extremely important that policies and procedures in relation to pre-employment medical testing are applied in a systematic and non-discriminatory fashion.

Regular review: For pre-employment medical testing it is important that any policy be reviewed regularly.

Is the policy reasonable? It is necessary to ask if the policy and its application are reasonable to avoid complaints of discrimination. It is a dangerous path to routinely screen job applicants for medical conditions if there is no reasonable expectation that such a condition could prevent the person from fulfilling the inherent requirements of the position.

Devising appropriate standards. In relation to medical conditions and/or disabilities, it is important to address the following issues in order to avoid discrimination: any medical standard for new employees must not be higher than for existing employees; any standard relating to medical fitness must be based on performance, not impairment. In other words, whether the person can perform the job, not whether they have a particular disability; and standards must be job-specific rather than organisation-specific.

Once you have a profile

A good picture of the medical history of each new employee allows an employer to more effectively manage any injury or illness that may be suffered by an employee and an accurate assessment of liability in a workers’ compensation sense. Evidence for an insurer in relation to medical history is often difficult to gather unless it is compiled in a systematic manner.