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Important changes to Workers Compensation for businesses involved with coal mines

Important changes to Workers Compensation for businesses involved with coal mines

16 Jul 2018

Important changes to Workers Compensation for businesses involved with coal mines
WRITTEN BY
Kyle Scott
Kyle Scott
Associate Director

Important changes to Workers Compensation for businesses involved with coal mines

16 Jul 2018

News alert written by Kyle Scott

Do you have employees entering mine sites in NSW? New laws came into effect on 1 July 2018 which will impact your business, regardless of whether or not you are involved in the extraction, processing or maintenance of coal.

The change at a glance
From 1 July 2018, businesses which have employees who work in or about a coal mine are required to have a workers compensation insurance policy with Coal Mines Insurance (CMI) for those workers.

This means that a broader range of businesses will now be caught by the coal industry workers compensation scheme, and this will likely to have significant legal, practical, and commercial implications for those affected businesses.

Background
The NSW coal industry has had a specialist workers compensation insurance scheme since 1922.  From 2002, this scheme has been managed by Coal Services and its subsidiary companies, CMI and Mines Rescue. 

Prior to the recent amendments, only “employers in the coal industry” were required to take out workers compensation insurance with CMI for their workers in the coal industry.  The test for whether or not a business or its employees were caught by the scheme depended on the character of the employer, and this legal test had led to an unusual situation where certain employees working in the mining industry were not actually caught by the scheme.

Recent changes to the law
The Coal Industry Amendment Act 2018 is designed to extend the application of the specialist workers compensation scheme to all workers employed “in or about a coal mine”.  The legislation was passed by the NSW Parliament on 16 May 2018 without much controversy.

The effect of the legislation is that, from 1 October 2018, businesses which employ workers who are employed “in or about a coal mine” are required to have a policy of insurance with CMI to cover those workers. 

Businesses affected 
The change will have implications for businesses which, although not operating directly in the coal industry, provide services to businesses in the coal industry (i.e. mining companies) and have employees who perform work “in or about” a coal mine.

Although CMI has stated that the change was “intended to restore the original intention of the Act to ensure that all “coal industry workers” are required to be insured under the CMI Scheme”, the reforms appear to go well beyond who most people would consider “coal industry workers” and effectively capture any employee who steps foot onto a mine site, regardless of what work they are performing.

Up until last week, CMI’s guidance material indicated that the new laws would capture:
·    engineering/technical workers (providing non-mining related support on mine sites)
·    civil construction workers undertaking civil construction projects on mine sites
·    admin / consulting personnel working on mine sites
·    general delivery drivers who enter mine sites
·    catering staff 
·    cleaners & waste management personnel, and
·    health practitioners (occupational physicians, drug & alcohol testers).

However, on 12 July CMI revised its guidance material to state that the new laws will only capture workers “who engage in mining activities” in the coal industry. The example provided by CMI is workers who “provide services ancillary to coal mining, for example, mining equipment maintenance and repairs, and construction”.

So while CMI appears to have altered its view on the categories of workers caught, ultimately the guidance material is not determinative, and so employers should carefully consider which of its workers might require coverage under the CMI scheme.

Implications for these businesses 
For those businesses affected, the implications are significant and include:
·    significantly increased costs (given that policies under the CMI scheme are generally more expensive)
·    the need to have two different policies for the one worker in certain circumstances
·    a requirement that employees undergo a pre-placement medical assessment
·    additional record keeping and reporting obligations
·    difficulties with selecting the correct CMI ‘risk category’ for workers, and
·    uncertainty around which workers require a CMI policy and which ones don’t.

The ‘multiple policy’ issue is likely to create all sorts of difficulties for businesses.  Where employees spend some of their time working in or about a mine and the remainder of their time working elsewhere, employers must have two policies for that worker, and must estimate the percentage of the employee’s total work activity in or about a mine, and then split and declare wages between the two policies.  

Update: Kyle Scott speaks to Radio 2NURFM to discuss the recent changes to the coal industry workers' compensation and what steps businesses must take.



If this news alert raises any concerns for your business, get in contact with Kyle Scott on 1300 565 846.

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