Danielle Stone - HR Professional
Australian law dictates that businesses are required to register and pay for workers compensation insurance. This provision ensures that your employees will be financially protected if they are injured at work and can also fund beneficial programs such as return to work so that you get your good people back on deck. But like anything that is meant to serve the greater good, there are those that choose to attempt to misuse this insurance. Let’s take a look at a real-life example one of our clients endured recently…
Our client’s business was growing, so much so that they decided to open an Interstate Branch. They went through a lengthy recruitment process and after advertising for a State Manager to run the division, our client received a call from an ex-employee with whom he had worked at another business. Our client recalled their shared work experience and believed he was a good operator and seemed like a decent person.
A challenge was set for him by the owner to develop a comprehensive business plan which was to include the projected sales figures he would be responsible for achieving in the initial 12 months along with costings to set up the new facility.
The business plan was impressive. It was detailed and well thought out. The sales figures, although conservative, looked to be enough to run a sustainable and profitable division. Our client decided to move forward with the appointment: a generous salary package was offered, and the deal was done.
For the first few months, the new employee focused on setting up the facility and offices, hiring staff and purchasing stock. The relationship between the employer and employee was a positive one and there were high hopes for some great sales.
CRACKS STARTED TO SHOW
Quarter two and then three came and went with minimal sales, no real pipeline was established and significant losses were evident. On top of this, a red flag moment occurred when our client discovered that one of the two staff employed in the department happened to be the new Sales Managers wife, which was not disclosed at the time of the engagement.
The business owner had a number of discussions with the Sales Manager addressing the lack of sales and significant losses so as to better understand where the problems lay. Unfortunately, as can often occur in cases such as this, a multitude of excuses were provided that weren’t acceptable or legitimate and blame was directed at everyone else with no acceptance of responsibility.
To counter the problem, our client established weekly meetings with this employee and spent considerable time providing assistance and guidance which included helping him formulate plans on how to achieve the plans that had been set and at the minimum, achieve a break-even financial result.
Quarter four came and COVID19 arrived on our shores. The already significant losses occurring in the new division quickly became untenable. A business decision was made to close the interstate office and all positions would unfortunately need to be made redundant.
A redundancy process following due process was conducted with the three employees and they were advised that they had 48 hours to provide any feedback or ideas for the business to consider prior to the final decision being made. While it was a difficult message to receive, the Sales Manager seemed to understand and said he would respond with some feedback.
That very evening, our client received an email from the Sales Manager however it did not contain feedback relating to the redundancy consultation. Instead, it was a Workers Compensation Claim Form! The claim was for a stress related injury and came with an incident report attached (completed by the employee) dated some months prior which outlined alleged bullying and harassment towards him by the owner. The claim also had a medical certificate (dated that day) stating the employee was now unfit to work for the next 4 weeks!
This was not the feedback the business owner was expecting. Given he had spent months trying to provide the Sales Manager with support, ideas and time to improve and that the redundancy decision was handled appropriately and for sound business reasons, the response from the employee was a shock.
There were two clear matters to address. The fact that the interstate office was not financially sustainable and that no matter what occurred, the Work Cover claim needed to be addressed. As a priority, the business simply could not afford to keep the division open and so had no option other than to proceed with the redundancies.
We assisted our client in lodging their Workcover response, vehemently denying the allegations of bullying and harassment. We clearly outlined the reasonable management actions the owner had taken in providing the support and tools the sales manager required to make improvements and we were able to show the consistent under performance demonstrated by the employee. Stress claims can be notoriously challenging to fight but the owner had managed the situation in a fair and reasonable manner and strongly believed that the claim was lodged purely out of retribution as well as to ensure an ongoing income stream.
As expected, an extensive claim assessment process followed. The Workcover insurer ordered independent investigations, interviewed both parties as well as alleged witnesses, sent the employee for independent medical examinations and requested internal documentation and emails.
It is not often that a Workcover claim is rejected. The insurance scheme is a no blame system, so it is incumbent upon the employer to prove that any injury sustained, or further exacerbated by an employee, did not occur as a result of their employment. Further, the majority of Work Cover insurers tend to take the road to claim acceptance as the priority, as this positively impacts their income stream by premiums being increased.
So, what happened? The claim was rejected! Although the employee was clinically diagnosed with anxiety and depression, the insurer found that these conditions were not sustained at work as a result of bullying and harassment as claimed. Instead, his condition was deemed a result of the employees’ inability to perform to the required standard and his inability to be able to cope with an employer taking reasonable management actions. We were really happy with the outcome for our client, as were they. It took a lot of effort and time to vigorously defend the claim. But this effort paid off. What assured the success of this defence was the fact that our client had kept detailed notes of conversations and sales performance discussions. We always recommend documenting everything because, it’s all good, until it’s not!
Workers Compensation is a real cost to your business and it is there to support and protect your employees but you do have the right to reject a claim that you believe is not legitimate. You will be required to present evidence to support your position and it can be a difficult process but if you believe that an inappropriate or vexatious claim has been submitted, we can support you through the process. Just give us a call for a confidential discussion.
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