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Work Injury Compensation (Amendment) Bill 2011 Second Reading Speech by Mr Tan Chuan-Jin, Minister of State For National Development and Manpower, 21 November 2011, 5:00 PM, Parliament

  1. Mr Speaker, Sir, I beg to move, 'That the Bill be now read a second time.'

  2. Sir, the Work Injury Compensation Act or WICA is a piece of social legislation that aims to provide low cost and expeditious resolution of work related injury claims.
  3. MOM currently processes about 12,500 WICA claims each year. Two-thirds of these claims involve minor injuries. In such cases, the employer is liable to pay the injured worker his medical leave wages and medical expenses, upon being notified of the accident. Where the injury is more serious, involving permanent incapacity or death, MOM will ascertain the amount of compensation based on a medical opinion after the injury has stabilised, or upon death. In 2010, a total of $76.5 million in compensation was awarded for permanent incapacity and death. On top of that, an estimated $20 million was paid out by employers and insurers for medical leave wages and medical expenses for both minor and serious injuries1.
  4. Our Ministry last reviewed the then-Workmen’s Compensation Act in 2008. The Act was renamed the WICA, its coverage was extended to all workers, compensation limits were increased and processes were streamlined. The amendments contained in this Bill are more technical and intended to improve the operation of the Act. MOM will also be making some amendments to the WICA subsidiary legislation, as part of an overall package of WICA amendments.
  5. The changes proposed in the Bill are based on two key principles. The first principle is to strike a fair balance between compensation for the injured worker and obligations placed on the employer or insurer. The second principle is to ensure that the WICA framework remains expeditious and workers are able to receive compensation promptly.

    Balance between compensation for employees and obligations on employers.
  6. Balancing the interests of the injured worker and the employer or insurer is critical because WICA is a no-fault regime, similar to other WIC regimes overseas. This means that injured workers will receive compensation as long as the accident occurred out of and in the course of work, regardless of which party was at fault. Therefore, the obligations placed on the employers and insurers in areas such as compensation and liability must necessarily be limited. Injured workers who feel they deserve higher compensation do have the option to file a civil claim, if they can prove negligence of the party they are claiming against. Three of the amendments are based on this principle.

    Updating Compensation Limits
  7. First, MOM will be updating the WICA compensation limits as part of MOM’s regular review of WICA compensation. MOM will increase the compensation limits for death and permanent incapacity by about 21% to account for the rise in nominal median wages since the compensation limits were last revised. The revised compensation limits will apply to all workers covered by the Act.
  8. At present, the minimum limits are $47,000 and $60,000 respectively for death and total permanent incapacity, while the maximum limits are $140,000 and $180,000 respectively. With this change, the minimum compensation for death and total permanent incapacity will be increased to $57,000 and $73,000 respectively. The maximum compensation will also be raised to $170,000 and $218,000 respectively.
  9. To illustrate, with the amendments to compensation norms, the family of a deceased 25-year old worker who earned $1,800 a month could receive $170,000, an increase of $30,000 or 21% more than the family would be eligible to receive currently.
  10. WICA also covers medical expenses for work-related injuries. This coverage is capped at $25,000 per accident or for a period of one year from the accident, whichever is reached first. MOM will be increasing the dollar cap on medical expenses from $25,000 to $30,0002 to address the increase in industrial accident medical bills since the last review in 2008. The updated dollar cap will cover more than 95% of all WICA claims where hospitalisation is required.

    Work-related Fights
  11. Second, Clause 2 of the Bill amends Section 3(5) of the Act to restrict compensation in cases involving work-related fights or attempted assaults. MOM currently receives about 20 claims arising from fights a year, of which three quarters are found to be work-related and hence eligible for compensation. With this amendment, employers will not be liable under WICA to compensate workers who are injured in a fight, or attempted physical assault, except in certain scenarios, which I will elaborate on later.
  12. Whilst the numbers are not large, the rationale for this amendment is that while work-related disputes between co-workers may arise from time to time, they should not resort to fights to resolve them, and employers should not have to bear the cost of injury. Singapore is not unique in doing so; there are overseas jurisdictions which restrict compensation for work-related fights3.
  13. However, MOM also recognizes that workplace fights sometimes occur and there are several scenarios where an employer should remain liable for compensating a worker injured in a work-related fight. For instance, when the injured worker was a victim and did not participate in the fight, or when the worker was injured whilst exercising his right of private-defence, as defined in the Penal Code, or to defend against bodily harm or damage to property. In addition, a security officer who is sanctioned by his employer or principal to break up the fight or prevent the assault will remain eligible for compensation.
  14. The amendment to Section 3(5) specifies that workers involved in work-related fights who are injured in these scenarios will continue to receive compensation, while those who are primarily responsible for the aggression do not.

    Compensation for Diseases
  15. Third, Clause 3 of the Bill amends Section 4 of the Act to expand the scope of compensable diseases. Currently, diseases are compensable only when they are listed in the Second Schedule, for example noise-induced deafness, or as a result of a specific accident at work, for example a nurse getting infected after a needle prick injury. A new deadly flu strain would not be compensable until it is included in the Schedule.
  16. With the amendment, diseases contracted as a result of work-related exposure to chemical or biological agents will automatically be compensable, including new diseases. To make a WICA claim, the worker must still prove that he was more likely than not exposed at work, and not as a result of community spread. The majority of workers would not be able to claim compensation for communicable diseases like the common flu or chicken pox. However, certain categories of workers, such as healthcare workers, will generally be able to prove that they were exposed because of work, and receive compensation for diseases they contract.
  17. MOM will also be refining the Second Schedule of compensable occupational diseases. The amendments are technical in nature, mainly to update the list of occupational diseases and associated occupations. Examples include replacing the term industrial dermatitis with occupational skin diseases, which has a broader scope, and the inclusion of "diseases caused by excessive heat" as a new occupational diseases4.

    Ensuring the WICA framework remains expeditious
  18. Sir, the second principle is to ensure that the WICA framework remains expeditious. This will enable the injured workers to receive their compensation as promptly as possible after the accident. Dragging out the resolution of claims also causes uncertainty for employers and insurers. Another three amendments are based on this principle.

    Disallowing work-related exclusion clauses
  19. First, MOM will prohibit work-related exclusion clauses in insurance policies via Clauses 5 and 10 of the Bill which amend Sections 23 and 45 of the Act, and upcoming amendments to the WIC Insurance Regulations.
  20. While Section 23 currently requires employers to have insurance against all liabilities they may have under the Act, MOM has encountered cases where the WIC insurance policy does not cover critical aspects of the scope of work carried out by the insured company. For example, an insurance policy for a spray-painting company excluding coverage for flammable substances, or an insurance policy for a construction firm excluding coverage for works exceeding one storey in height. This could be due to several reasons: insurers may not have had the opportunity to explain the exclusion clauses fully or employers may have conveniently relied on their agents to secure the lowest quote without fully understanding the coverage.
  21. When a worker gets injured, the insurer will disclaim liability and the employer will have to compensate the injured worker from his own pocket. If employers lack the financial ability to pay compensation, their injured workers may not receive compensation for their injuries. MOM sees about 200 cases a year where insurers dispute liability on the grounds that the work activity that caused the injury was excluded from the insurance policy.
  22. With the amendments to Section 23 and the WIC Insurance Regulations, insurers will be liable to compensate injured workers even if such exclusion clauses exist in the policy. Nonetheless, insurers will continue to have the flexibility to recover from the employer any such compensation paid out, if such recovery is allowed for in the insurance policy.

    Clarifying the liability of employer's insurers
  23. Second, MOM will insert a new Section 25E via Clause 6 of the Bill, clarifying liability allocation where there is more than one insurance policy in force for the same accident.
  24. Sir, at present, certain industries have the practice of having multiple parties provide insurance coverage for workers. For instance, in construction, the main contractor may purchase a project policy covering all work relating to the project. At the same time, individual sub-contractors may purchase annual policies covering their workers. When there is an accident, the various insurers may dispute liability and claim that the other insurer should cover the accident. MOM sees about 400 such disputes annually. Compensation to these 400 workers is delayed unnecessarily while MOM sorts out which insurer is liable.
  25. The new section 25E will resolve this issue by stating that when there are multiple insurance policies covering an accident, the employer’s insurer may not object on the grounds that another policy covers the accident. Barring any other objections, this insurer will be made liable to pay compensation. This is consistent with the WICA principle that we hold the employer primarily responsible for work injury compensation.
  26. However, in view of prevailing industry practice in sectors where the main contractor’s insurer compensates the injured worker, MOM will allow third parties to pay compensation as long as they convey in writing to MOM the intent to pay compensation on behalf of the employer's insurer, before the notice of assessment is issued.

    Clarifying obligations under the WICA and common law
  27. Finally, Clause 4 of the Bill amends Section 11 to state that workers who file a common law suit may not subsequently file a WICA claim for that accident more than one year from the accident.
  28. Currently, workers have to file their WICA claims within one year of the accident, unless there are extenuating circumstances. Having a time limit for filing a work injury claim is practiced in other jurisdictions such as Queensland Australia where claimants have six months to file a claim and a number of US states (e.g. Florida, California, Hawaii) where claimants have one year to file their claim. However, claimants who file their initial claim within one year of the accident and subsequently withdraw it, may re-file their claims with MOM at any time after the accident. MOM has processed claims which are re-filed some six years after the accident. This results in uncertainty for employers and insurers, and drags out the resolution of the claim. Claimants may also be tempted to forum shop in an attempt to get the maximum compensation for their injuries.
  29. This amendment then provides a fixed timeframe of one year from the accident for claimants to decide if they wish to file either a common law or WICA claim for their injuries. Claimants may switch between common law and WICA within the one year timeframe, but may not file a WICA claim after that one year if a common law claim was filed. One year should be sufficient time for the injured worker to make an informed decision about their compensation options.
  30. There are some potential claimants who had previously filed a WICA claim for their injuries within one year of the accident, withdrawn that claim for common law, and still have not received compensation for their injuries. To ensure that such workers are not caught out by this amendment, MOM will provide a one year grace period from the commencement date of this Amendment Bill, for such potential claimants to re-file their WICA claims. After this grace period, these potential claimants may no longer revert to WICA.

    Technical Amendments
  31. Sir, we will also be making some technical amendments to the Act. The first is that Clauses 7 and 8 of the Bill amend Sections 28 and 29 of the Act, to make clear that enforcement of orders and appeal against orders also apply to orders made by the Commissioner under Section 25A. The second is that Clause 9 of the Bill amends Section 32 of the Act, to clarify that the enforcement of orders against an insurer includes orders made under Section 28 of the Act.

  32. Sir, in conclusion, MOM has tried to ensure that this package of WICA amendments is a fair package to all stakeholders involved in the WICA framework. MOM has consulted extensively with various stakeholder groups such as NTUC, SNEF, General Insurance Association of Singapore, Singapore Contractors Association Limited, Specialist Trade Alliance of Singapore and Association of Singapore Marine Industries since December last year. As far as possible, we have taken onboard the feedback as we refined and finalised the proposed amendments. We would like to thank all respondents who contributed to the process.
  33. The amendments will be effected on 1 June 2012, to give industry sufficient lead time to adjust to the changes. MOM will continue to educate employees on their rights under the Act, as well as organising briefing sessions to the various stakeholders to help them comply with the revised legislative requirements.
  34. Sir, I beg to move

1 The figures for temporary incapacity and medical expenses are estimates based on declarations by the employer on the duration of MCs and monthly salary of the injured worker and MOH data on industrial accident cases.

2 Separately, employers of FWs are liable for the medical expenses of their foreign workers, and they are required to purchase medical insurance (MI) with a minimum coverage of $15,000. Employers may choose to use the FW MI, their WIC insurance (where applicable) or pay out of their own pockets, when their FWs are injured in a work-related accident.

3 Different countries restrict compensation for work-related fights in different ways; California disallows the aggressor in a fight from receiving compensation. New South Wales, Tasmania and South Australia have a broad clause that injuries attributable to serious and willful misconduct are not compensable, unless the injury results in death or serious and permanent disablement.

4 Diseases caused by excessive heat is already compensable as an injury, but it will be included in the Second Schedule as an occupational disease for additional clarity.