Report of the Ministerial Advisory Panel on Work Related Gradual Process Disease or Infection
Section 31 Injury, Prevention, Rehabilitation and Compensation Act 2001
Part 2 - The Woodhouse Vision
14. By the end of the 19 th Century it was widely appreciated common law claims did not provide the most equitable and socially desirable response to industrial injuries. There was by that time a growing belief that industry needed to have regard to the welfare of its workers and that the cost of injury needed to be borne as part of the costs of production. Workmen's Compensation Acts, starting with the English Workmen's Compensation Act 1897, introduced a system of social insurance designed to protect workers and their families from financial ruin caused by work injury.
15. The first legislation in New Zealand to confer upon workers a right to compensation for work injuries was the Workers' Compensation for Accidents Act 1900. As with their counterparts in the United Kingdom, New Zealand claimants had to prove "injury by accident arising out of and in the course of employment" before they were eligible for cover. This required proof of a causal connection between injury and employment. Cover for disease was precluded.
16. In 1908 Parliament enacted the Workers' Compensation Act 1908 which departed from the earlier policy of providing compensation for work related death or injury by making provision for compensation for certain "schedule injuries".
17. From 1940 coverage for industrial disease was gradually introduced. After the passing of the Workers' Compensation Act 1947 compensation became payable in respect of any disease contracted in the course of employment and due to the nature of employment (with the exception of a disease for which a worker was in receipt of a miner's benefit).
18. The Workers' Compensation Act 1956 came into force for all practical purposes on 1 April 1957.
The essential elements in the 1956 regime were summarised in the following way in McDonald's Law Relating to Workers' Compensation in New Zealand (4 th Ed 1968, Butterworth and Co, p.7):
"The 1956 Act provides a system of insurance at the expense of the employer of the workmen against accidents arising out of and in the course of his employment. The payment of premiums is charged to the expense of the business and made a part of the cost of the product - as much so as the cost of labour and materials, and so becomes ultimately a part of the price to the purchaser.
The essential feature, therefore, of a worker's compensation Act is that in the case of injury to a worker due to a risk or hazard of his employment there is indemnity dependent upon the amount of his wages and independent of considerations as to contributory negligence" .
19. The three essential elements for cover under the 1956 Act were:
19.1 That the plaintiff suffered personal injury by accident or contracted a disease due to the nature of the claimant's employment;
19.2 That the accident arose in the course of, or out of, employment;
19.3 That total or partial incapacity resulted from the injury, or, that the injury was one listed in the first schedule to the Act, or was able to be assessed having regard to the percentage of disability described in the first schedule to the Act.
20. The benefits available under the Workers' Compensation Act 1956 were far from satisfactory. The maximum compensation corresponded to approximately 52% of the average weekly earnings[1]. Compensation could only be paid for six years, after which it ceased automatically.
21. Dissatisfaction with the low levels of workers compensation benefits led to the establishment of a Royal Commission of Inquiry chaired by the Honourable Justice Woodhouse. The Commissioners believed workers compensation could not be examined in isolation and had to be reviewed in the context of other systems of compensation for injury[2].
22. The Commissioners recommended replacing the existing fragmented and arbitrary system of compensating persons injured by accident with a comprehensive scheme characterised by five "guiding principles" which the Commissioners noted should be accepted by any modern system of compensation. Those five guiding principles were[3]:
"(1) In the national interest, and as a matter of national obligation, the community must protect all citizens (including the self employed) and the housewives who sustain them from the burden of sudden individual losses when their ability to contribute to the general welfare by their work has been interrupted by physical incapacity.
(2) All injured persons should receive compensation from any community financial scheme on the same uniform method of assessment, regardless of the causes that gave rise to their injuries.
(3) The scheme should be deliberately organised to urge forward their physical and vocational recovery while at the same time providing a real measure of money compensation for their losses.
(4) Real compensation demands that income related benefits should be paid for the whole period of incapacity and recognition of the plain fact that any permanent bodily impairment is a loss in itself regardless of its effect on earning capacity.
(5) The achievement of the system must not be eroded by delays in compensation, inconsistencies in assessments, or waste in administration ."
23. The Commissioners recorded that any logical analysis would recognise victims of sickness and disease should be covered in the same way as victims of accidents. They noted:
"It may be asked how incapacity arising from sickness and disease can be left aside. In logic there is no answer. A man overcome by ill health is no more able to work and no less afflicted than his neighbour hit by a car. In the industrial field certain diseases are included already. But logic on this occasion must give way to other considerations. First, it might be thought unwise to attempt one massive leap when two considered steps can be taken. Second, the urgent need is to co-ordinate the unrelated systems at present working in the injury field. Third, there is a virtual absence of the statistical signposting which alone can demonstrate the feasibility of the further move. And finally, the proposals now put forward for injury leave the way entirely open for sickness to follow whenever the relevant decision is taken."[4]
24. Sir Owen Woodhouse and his fellow Commissioners referred to the fact that certain industrial diseases were included within the scope of the Workers' Compensation Act 1956. They recommended, that for reasons of pragmatism, industrial diseases covered under the Workers' Compensation Act 1956 should be the subject of cover under the new regime.[5] The Commissioners made a special case for those who suffered damage to their hearing as a result of repetitious noise. They recommended that those who suffered hearing impairment should have the advantage of a rebuttable presumption that their hearing damage was caused by repetitious noise and that in the absence of evidence to the contrary their injury should be regarded as an injury arising from accident.[6]
25. A key recommendation made by the Commissioners was the abolition of common law claims for compensatory damages for those who had cover under the proposed scheme. It was recommended New Zealand should replace the common law "lottery" with a comprehensive, meaningful, no fault compensation scheme in exchange for which those who had cover would surrender their right to sue.
26. The advisory panel believes the time has now come to ensure that the treatment and rehabilitation benefits provided to those who have cover under our accident compensation regime are provided to all who are disabled or sick in addition to those who are injured by accident. The reasons for such a significant extension of the benefits of cover will be explained in detail in this report . Suffice to say at this juncture:
26.1 New Zealand now has had the experience of 30 years of providing cover for those disabled by accident, and work related gradual process and disease cover. Providing the same level of services to all who are disabled or sick is no longer a "massive leap" but rather a logical step which can be taken against the background of 30 years experience of our accident compensation regime.
26.2 The concerns expressed by Sir Owen Woodhouse and his fellow Commissioners about the need to co-ordinate the unrelated systems working in the field of assisting those who were injured have now been substantially addressed. In particular New Zealand's accident compensation regime now provides cost effective treatment and rehabilitation as well as meaningful compensation entitlements to those who have the misfortune to suffer injury by accident and work related sickness and disease. The emphasis in the IPRC Act upon injury prevention is a long overdue and laudable development. It is logical to extend the benefit of treatment and rehabilitation to all who suffer disability and sickness regardless of their cause.
26.3 There are now resources within the wider realms of government to evaluate the impact of extending the scope of cover recommended by the advisory panel.
26.4 Too many inconsistencies and anomalies exist under the present system of providing cover to some who suffer work related gradual process, disease, or infection but deny others who are equally disabled the benefits of cover under the accident compensation scheme.
Footnotes
[1] The Law of Torts in New Zealand (3 rd Ed) Brookers 2001, paragraph 1.6.2
[2] Other sources of compensation available to those injured in New Zealand prior to 1 April 1974 were:
- Common Law actions;
- Owners of motor vehicles had to be insured against the possibility of common law liability;
- Criminal injuries compensation;
- Social Security benefits.
[3] "Royal Commission of Inquiry - Compensation for Personal Injury in New Zealand - Government Printer, 1967 ("The Woodhouse Report") paragraph 484:
[4] Woodhouse Report paragraph 17
[5] Woodhouse Report paragraph 290(c)
[6] Woodhouse Report paragraph 290(d)