3.6 The rehabilitation and compensation system
Section 3.6 briefly outlines New Zealand’s rehabilitation and compensation system. It includes an overview of the parameters of the compensation system, how the system operates, and the roles and responsibilities of ACC as the lead agency for work-related rehabilitation and compensation in New Zealand. Stakeholder comments on the operation of the ACC scheme are also included. Specific components of ACC’s Safer Workplaces workstream are discussed in section 5.1.
3.6.1 Parameters of the rehabilitation and compensation scheme
ACC is a Crown entity established under the IPRC Act. It is the lead agency for delivering work-related rehabilitation and compensation in New Zealand. The lead policy agency for the rehabilitation and compensation scheme is the Department of Labour. The Minister for ACC provides political leadership.
The parameters of the ACC rehabilitation and compensation scheme are set out in the IPRC Act (as discussed in section 3.3.3).
3.6.2 Coverage provided by the ACC scheme
The IPRC Act provides for 24-hour, no-fault, comprehensive personal injury cover. It determines what personal injury can be covered under the ACC scheme. Cover is provided for personal injury caused by:
- an accident
- a work-related gradual process, disease or infection
- medical misadventure
- mental illness caused by certain criminal acts
- some other related matters.
Cover does not include many conditions that occur gradually; episodes that are wholly internal (eg, heart attacks and strokes); ordinary dental wear-and-tear; diseases or illnesses caused by viruses, bacteria, or fungi; or emotional effects of injuries. All people in New Zealand at the time of injury and some non-resident New Zealanders are covered by the ACC scheme.
3.6.3 Operation of the rehabilitation and compensation system
ACC has a range of statutory functions in regard to the operation of the rehabilitation and compensation system for workplace injuries and disease. It is required to:
- reduce the incidence and severity of accidents
- facilitate the care, treatment and rehabilitation of injured people, including the provision of case management to restore injured persons to health
- determine cover for personal injuries and administer and pay entitlements for rehabilitation and compensation
- collect levies
- advise the government on rehabilitation and compensation services.
3.6.3.1 Injury prevention activities
ACC runs a number of incentive-based programmes in which employers take steps to improve workplace health and safety practices and reduce injuries across individual workplaces in return for discounts on ACC levies. These programmes are discussed in section 5.1. Alternatively, a programme is available to the employers with the worst health and safety records in an industry in which support is provided to improve practices.
A small number of ACC programmes focus on working with employers to support employees who return to work after injury or illness (eg, the Return to Work Project and the Spinal Injury Vocational Rehabilitation project). These projects include people who have been injured both in the workplace and in other settings.
ACC also undertakes a range of public awareness campaigns to promote injury prevention activities in both the community and the workplace (eg, television and radio advertisements, website information, and a range of booklets, brochures and pamphlets for a range of stakeholders).
Resourcing the injury prevention activities undertaken as part of the compensation system is discussed in section 3.3 and section 5.1 of this report.
3.6.3.2 The claims system
Operationally, the ACC rehabilitation and compensation system relies on injured or ill individuals visiting a health professional to seek diagnosis and treatment. A claim to the ACC scheme is made by the health professional if s/he considers that the injury or illness meets the coverage definition. ACC receives, processes and pays out claims made to it. If a claim is not submitted, entitlements and support are not provided. One of the key elements of the ACC scheme is that it does not allow people to sue others for personal injury.
The ACC claims scheme is funded through levies paid by employers and the self-employed. These funds are managed through accounts as set out under the IPRC Act. (See Table 7 in section 3.4.2 for the estimation of income and expenditure within these accounts.)
3.6.4 Stakeholder comments on the rehabilitation and compensation system
Stakeholders made relatively few comments about the operation of the ACC rehabilitation and compensation scheme, or about the coverage provided for work-related injury and disease. Those comments that were made included that:
- the current system does not provide full cover for all work-related injuries and diseases although this is required by ILO Convention 138 (eg, infectious illnesses are not covered)xlvii
- the no-fault focus provided by the ACC system could contribute to lax attitudes towards occupational health and safety because the government meets the cost of addressing personal injuryxlviii
- the removal of the experience rating means that employers implementing good health and safety practices pay the same rates as employers who may not implement such practices.xlix
3.6.5 Comments and conclusions
New Zealand’s rehabilitation and compensation system appears to be a good model for addressing work-related injury and disease: the no-fault comprehensive coverage provided is a fair mechanism to ensure that all workers benefit from assessment, treatment, rehabilitation and compensation if they experience work-related harm that is covered by the ACC scheme. A recent evaluation found that the ACC scheme compared favourably to workplace rehabilitation and compensation schemes offered in other nations.21
No-fault cover is provided as part of the ACC scheme. Research indicates that employees bear about 47 percent of the costs of workplace injury and disease, with the government bearing a similar proportion.6 The government’s contribution is provided by levies paid by employers and the self-employed. While employers may not pay directly for the costs of work-related injury and disease, they contribute significantly to rehabilitation and compensation costs.
As with any scheme, there is potential for improvement: widening coverage for work-related injuries and diseases; improving the visibility of occupational health within the ACC scheme; and smoothing the interface between the rehabilitation and compensation scheme and the compliance and enforcement system.
3.6.5.1 Coverage
While coverage under the ACC scheme is broad, there are a number of instances when a work-related disease may not be covered. For example, cover does not extend to viruses, bacteria or fungi. It is possible that a person could be infected with tuberculosis in a workplace setting but not be covered by the ACC scheme, even though exposure occurred in the workplace. The Ministerial Advisory Panel on Gradual Process, Disease or Infection is currently undertaking work to review the ACC scheme’s boundaries regarding workplace exposure.
3.6.5.2 Visibility of occupational health
Claims data is one of the key tools that ACC uses to operationalise programmes to prevent injury and illness and to identify those workplaces and industries in need of assistance to improve practices. Claims data also guides the amount of levies paid into the system each year and feeds into activity prioritisation through the ACC Safer Industries programmes and national priorities such as those identified in the New Zealand Injury Prevention Strategy.
Overall, claims are more commonly made for work-related injuries (most probably due to the higher incidence of injuries when compared to occupational diseases.) (See discussion in section 2.2 of this report.) Occupational health is, therefore, likely to receive less focus because it has a smaller overall impact on the injury liabilities carried by ACC. This may be a systemic factor that contributes to decreased visibility of occupational disease.
3.6.5.3 The interface between the rehabilitation and compensation scheme and the compliance and enforcement system
Liaison and collaboration between the enforcement and compliance system and the compensation and rehabilitation system is required to ensure that the overall health and safety system operates effectively. For example, it is important that the Department of Labour know about incidents of serious harm occurring in businesses that are part of an ACC incentive programme so that it can ensure that the workplace is safe. Conversely, ACC needs to know if the Department is investigating a workplace or organisation that is a member of one of its incentives programmes. One stakeholder commented that there is a tension between the Department of Labour’s enforcement focus and ACC’s education focus, which can lead to difficulties in sharing information for the betterment of health and safety. A discussion of the prosecution rates for organisations involved in an ACC incentive programme is included in section 5.1.
Other mechanisms for leadership and collaboration between ACC and the Department of Labour are discussed in section 3.9 of this report.