Australian-style no-fault scheme rejected in Iron Trades study

Iron Trades estimates that implementing an Australian-style workers' compensation scheme to deal with employers' liability (EL) cover would more than double the cost of EL premiums for UK employers.

Iron Trades claims technical manager Mike Noonan went to Australia earlier this year to consider the viability of adopting such a scheme in the UK, as part of Iron Trades' submission to the Department for Work and Pensions (DWP) EL review.

He concluded that the system was too expensive and Iron Trades would not support such a system in the UK.

He found, as Australia had ten different workers' compensation systems, the benefits on offer varied significantly.

But all the schemes operated on a no-fault basis, so employees were entitled to compensation providing they could prove work factors caused, or were a significant contributor, to the injury.

Noonan said that, as a result of not having to prove liability, there were more claims, so the cost to Australian employers was higher.

According to Iron Trades' research, the average premium rate paid by Australian employers was 3% of payroll, although this varied greatly depending on the industry and which of the ten workers' compensation systems they fell within.

Noonan said that by comparison, EL premiums currently only cost UK employers 1% of payroll on average.

In its submission to the DWP, Iron Trades concluded that it did not support a no-fault workers' compensation scheme. "A solution that is even more expensive doesn't seem that sensible," Noonan said.