Category: workers compensation

Return-To-Work and OHS

Many OHS professionals do not understand the return-to-work (RTW) process.  Many OHS professionals choose to avoid RTW like the swine flu.  In Australia, rehabilitation and compensation come under different legislation to OHS so it is easy to delude one’s self that they are different beasts.

On September 15 2009 at the WorkCover SA Conference, it was possible to argue the same ideological isolation as above but from the RTW stance.  RTW can be as isolationist as OHS.  Admittedly, the conference was about workers’ rehabilitation and injury management but it was surprising how many speakers talked about integrated management without mentioning OHS.

Is this demarcation widening?  Was it formalised by the different Acts of Parliament? By different training backgrounds and criteria?  By the different work-related government departments (they often inhabit the same office, share the same board members, but report to government separately?!)?   Is the demarcation between the human resource specialists and the safety engineers?

In most workplaces such a demarcation would be unmanageable.  Most workplaces, certainly the smaller ones, have the official RTW Coordinator role as part of the duties of an existing staff member, whoever is already juggling the personnel duties and often payroll as well.  It is often a luxury to have a full-time RTW Coordinator.

It is noted that the Australian conferences of the OHS professionals rarely include RTW, and vice versa.  Isn’t is just possible that some bright spark may offer a safety management conference that unites the complementary disciplines, professionals and government departments so that business managers can receive a combination of information that matches the reality?

Kevin Jones

Kevin Jones attended the conference with the support of www.rtwmatters.org an (increasing prominent) online RTW website, and WorkCoverSA.

Injuries cost business 6% of their profit

At The Safety Conference in Sydney in October 2009, Dr Ian Woods, a senior research analyst for AMP Capital Investors, will advise Australian employers that the cost of workplace injuries on their businesses could be around 6% of their profit.

According to a media release in support of the conference

Dr Woods signals three occupational health and safety costs of concern to investors: workers’ compensation premiums, indirect costs, and the costs of alleviating workplace incidents.

“The indirect and unbillable costs associated with workplace injuries are like an iceberg,” he says.  “They represent a huge percentage of the total cost that’s impossible to assess until you run into trouble.”

“The disruption to production caused by workplace injuries cost Australian businesses an estimated $490 million in 2000-01.  The extra administration cost another $360 million.  Incidents can also trigger loss of goodwill, strikes, recruitment issues and dozens of other immeasurable costs.  The United Kingdom’s Health and Safety Executive indicated that the cost of uninsured losses is 10 times the business cost of insurance premiums paid for the same period.

“An injury with $1,000 in direct claims costs will also bring about $5,000 of indirect costs.  Assuming a 5% profit margin, that equates to $100,000 of turnover.  This simple return on investment (ROI) illustrates how valuable preventive measures are to financial bottom lines.

“Still, there is more to investing than just the economic case for improving OH&S performance.  As well as the economic costs, inequality of benefits, costs and suffering are key issues.”

Some of the concepts sound familiar.  Around the turn of the century there was increasing interest in corporate social responsibility and ethical investments and OHS was mentioned regularly as a corporate element that investors would seriously consider.

A good example of the feeling at the time can be seen in a 2002 interview for SafetyAtWork magazine, Paul Gilding of ECOS Corporation* talked about workplace safety.  He was asked about linking workplace safety with sustainable business.

Pages from Safe Companies Ecos Corporation March 2002 coverPG: This is a real fascination for us.  We first came across workplace safety as a major issue for one of our clients, DuPont, where safety culture is so embedded in their business that you can’t walk into their offices without picking it up.  We realised that, as sustainability experts, we had hardly ever come across that issue.  The people who talk about sustainability also talk about corporate social responsibility, human rights in developing countries, climate change, biotechnology, ethics, every issue you could think of but they very rarely, except in a token way, talk about workplace safety.

We first thought why should this be a sustainability issue and then we thought why wouldn’t it be?  We’re talking about the way corporations behave, the effect they have on society, the effect they have on the community they work in, yet we’re not talking about the fact that they are killing and hurting their own people.  This is a surprising omission when it is so fundamental to sustainability.

This perspective has transformed into the widespread advocacy of “safety culture”.

2i14-3 horstAround 2001 Westpac Banking Corporation was developing an OHS index that measured the share performance of the top 100 companies.  Interest in this has faded over the last ten years to such an extent that it is difficult to locate any reference to it.  However, the Westpac index was discussed at many OHS conferences at that time and gained overseas attention as shown in these comments by the former Director of EU-OSHA, Hans-Horst Konkolewsky to Safety At Work magazine in 2001. [Full interview is available]

Q: One of Australia’s major banks, Westpac, is establishing an OHS index that shows relations between this index, the All Ordinaries share index and a company’s share performance. Have you seen this sort of thing in the European region?

HHK: We haven’t seen it explicitly. This bank has taken the lead. I saw on my way to Australia that there seems to be an F4 investment initiative to assess companies’ performance but more broadly with environmental performance, social performance, child labour issues, but also safety and health.

This is one of the many ways we can improve awareness and create a preventive culture starting through the investment area. In Europe, we have had quite a number of different approaches where companies have issued social statements or accounts where they have informed about their employees’ satisfaction with their work, working conditions, customer satisfaction with servicing, their relationship to the society, activities related to employment problems and so on. There are a number of examples that point in the same direction.

I must say that I believe that this can be a rather strong movement if investors and customers, through their demands and market mechanisms, can improve safety and health.

A capital-idea coverA more detailed report that places OHS strongly within the CSR discipline is a 2002 report, now available through an Australian Government website, called “A capital idea -Realising value from environmental and social performance“.

Dr Wood’s presentation will build on these reports and the work of overseas OHS organisations in trying to provide a cost estimate for workplace injuries.  Let’s hope that there are specifics and that there is enough audience enthusiasm to generate a sustainable interest.

Kevin Jones

* cannot verify that this report is still available online

HR management needs to engage with safety management

Businesses, more often than not, place OHS as a subset of the Human Resources Department.  This gives the HR manager considerable organisational clout but often keeps the importance of OHS constrained.

This structure may be functional but also reinforces that the belief that safety can be addressed in HR terms and that is not necessarily the case.

HR Leader cover 001The limitations can be illustrated through the cover story of the latest edition of Human Resources Leader, a weekly publication from LexisNexis.  “People profit…and how to measure it” * is a very good article for the magazine’s intended readership of HR practitioners and recruiters.  It discusses the need for more research into the links between corporate financial performance and employment engagement, “soft measures” and other “metrics” and several other personnel management concepts.  It even provides a “formula for measuring Employee Lifetime Value (ELTV)”.

One serious safety incident could blow all these metrics out of the water.  The risk of injury or illness doesn’t seem to be calculated anywhere in the article.  The costs associated with not managing safety seem to be well-established and tangible through medical costs + repair costs + rehabilitation costs + business disruption + workers compensation.   Dr Ian Woods of AMP Capital Investors estimates injury costs equal an average 6% of profit.

If safety is an element of human resources management, there should be at least some (passing) mention of it, or its costs, in articles that try to measure people management costs.  Omitting this business cost, or wellbeing threat, or continuity threat, or whatever phrase is fashionable at the time, does both safety management and personnel management a great disservice.

Safety is far more than just “health & wellbeing” – a truism that some in the HR sector, particularly the white-collar professions, tend to forget.

Kevin Jones

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Business drops opposition to Australia’s new OHS laws

A story on the front cover the Australian Financial Review on 8 September 2009 lists the “wins” of the union movement in its negotiations on new national OHS law.  But it is the last couple 0f paragraphs on page 8 that are most surprising.  The article says

“The coalition dropped its previous opposition to the SafeWork Australia bill, allowing it to pass in its original form, limiting the number of unions and employer representatives on the body to two each and giving Ms Gillard [the Workplace Relations Minister] a veto on the appointment of these representatives.”

This seems to be a considerable backtrack on the strong opposition and media statements coming from employer groups over the last 12 months.  One wonders what trade-off the industry associations have managed to obtain.

The changes reported are not very radical for those familiar with the Victorian OHS laws – leave for OHS training and greater protections for union members.  But the union movement has (yet) to get a reverse onus of proof or rights to prosecute.

The media release from the IR Minister crows about the Conservatives’ backdown and says little else other than marking the passing of the legislation.  Ultimately the biggest benefit of this legislation is clarifying the status of Safe Work Australia.

UPDATE: ACCI media statement

The Australian Chamber of Commerce & Industry has released a conciliatory media statement making no reference to its previously strident opposition.  The only semi-interesting content (other than the fact of the statement itself) is its reiteration of OHS being a shared responsibility and the need for Safe Work Australia to ensure its independence.

“The message that working safely requires everyone to take their responsibilities seriously now has a better chance of becoming a co-ordinated national message, with parallels to the mutual responsibility message that features in road safety awareness and safe driving campaigns.”

Kevin Jones

Australian Statistics – Part 3 – Injury data comparison

Safe Work Australia was released four statistical reports into worker health in Australia. These are important and useful reports that will assist many companies and safety professionals to better address workplace hazards.

Pages from ComparisonwithNDSThis report is a comparison of two data sets in the hope that the report provides a more accurate picture of workplace injury rates than just that based on workers’ compensation claims.

NDS =National Data Set for Compensation based Statistics

WRIS = Australian Bureau of Statistics’ Work-Related Injuries

A detailed explanation of the sources and purposes of these data sets is in the full report.

Comparison of compensation data with all incurred work-related injuries

Comparison of the WRIS with published data on serious claims from the NDS indicates that the NDS represents only one in five work-related injuries occurring each year. In addition, this analysis has shown that the NDS collected information on only 63% of the injuries that involved a week or more off work in 2005–06. The analysis in this report, however, shows that the NDS still provides useful information on the characteristics of work-related injuries

To enable a more robust comparison, the two datasets were scoped to only include injuries with similar periods of time lost (one working week for the NDS and five or more days for the WRIS). The following points were observed

  • The NDS incidence rate for male employees was 80% of the WRIS rate but for female employees the NDS incidence rate was only 60% of the WRIS rate. This indicates that in 2005–06 female workers were less likely to claim workers’ compensation than male workers
  • While the two datasets produced similar incidence rates for age groups involving workers over 25 years of age, the NDS recorded only half the incidence rate of the WRIS for workers aged less than 25 years. This indicates that in 2005–06 young people were less likely to claim workers’ compensation than older workers
  • Both datasets indicated that the highest incidence rates in 2005–06 were recorded by the Agriculture, forestry and fishing, Manufacturing, Construction, Transport and storage and Mining industries. However, comparison of the two datasets indicates that the NDS underestimated incidence rates in the Retail trade, Health and community services, Education and Government administration and defence industries

These industries had high proportions of employees who were eligible for workers’ compensation and hence the data indicates that employees in these industries were less likely to claim workers’ compensation than those in other industries

  • Both datasets indicated the highest incidence rates by occupation groups were recorded by Labourers and related workers, Intermediate production and transport workers and Tradespersons and related workers. However, the data show that the NDS underestimates incidence rates for Managers and administrators
  • The way in which injuries occurred was similar between the two datasets, with 42% of injuries due to lifting, pushing and pulling objects
  • The two datasets agreed that the main type of injury was Sprains and strains. However, the analysis showed that the NDS only captured one in three injuries involving Stress or other mental condition and one in two injuries involving Fractures, Cut/open wound or Chronic joint or muscle condition

Australian Statistics – Part 2 – Workers’ Compensation

Safe Work Australia was released four statistical reports into worker health in Australia. These are important and useful reports that will assist many companies and safety professionals to better address workplace hazards.

Factors affecting applications for workers’ compensation

Pages from WCapplicationsThis report has identified several factors that affected the likelihood of employees making workers’ compensation claims and the reasons for not applying for workers’ compensation following a work-related injury. These include:

Sex

Female employees were less likely to apply for workers’ compensation for their work-related injury than male employees.

Of injuries that involved some time lost from work, 52% of female employees did not apply for compensation compared to 46% of male employees.

Reasons for not applying

Male and female employees did not apply for compensation for nearly four tenths of their injuries that involved some time lost from work because they considered the injury too minor to claim. For a further one-tenth of these injuries, male and female employees felt it was inconvenient or too much effort to apply.

Male employees did not apply for compensation for over two in ten injuries because they did not know they were eligible for compensation.

For female employees, nearly two in ten did not apply due to concerns about their current or future employment.

Age

Young female employees were least likely to claim workers’ compensation while males aged 45–54 years were most likely to claim compensation for injuries that involved some time lost from work.

Type of injury

The type of injury had little impact on whether an injured employee applied for workers’ compensation except in cases that involved stress or other mental conditions. While around half of all injuries that involved some time lost from work were claimed, injuries that involved stress were only claimed in 36% of cases.

Duration of employment

There was little difference in the percentage of employees who claimed workers’ compensation based on employment duration: employees with less than one year of employment claimed workers’ compensation for 52% of their time lost injuries compared to 47% of time lost injuries for those with more than one year of employment.

Alternative sources of financial assistance

Regular sick leave was used by nearly two in ten injured employees who did not apply for workers’ compensation

One in ten accessed government payments such as Medicare and Centrelink payments.

Full-time / part-time employment

Of the injuries incurred by full-time employees that involved some time lost from work, 47% applied for workers’ compensation compared to 53% of part time employees.

Unlike full-time employees, one of the main reasons why part-time employees did not apply for compensation was due to concern about current or future employment.

Leave entitlements

Of the injuries to employees with paid leave entitlements that involved some time lost from work, 56% applied for workers’ compensation compared to just 43% of employees without paid leave entitlements.

Injured employees without paid leave entitlements were three times as likely to think they were not eligible for workers’ compensation as employees with paid leave entitlements.

James Hardie directors face the consequences of their poor decisions

SafetyAtWorkBlog has kept a watchful eye on the long saga involving the directors of James Hardie Industries and their mishandling of a compensation fund specifically established for victims of the company’s asbestos products.  The compensation fund story has been handled well by Gideon Haigh in his book on the company.

The saga has since evolved into one of the duties and actions of the board of directors, moreso than one of compensation.  Today, 20 August 2009, the previous directors will be told of the financial and professional penalties determined by the New South Wales Supreme Court.

The ABC News online has an article about the impending court decision but more relevantly to the OHS and compensation issues is the fact that the existing compensation fund runs out in 2011 and the company says that the current economic climate does not allow for any more funds.  For a company that has earned good profits from asbestos over many decades, two years of poor corporate performance does not seem to balance the scales.

Too many corporations are using the global financial crisis to mask their own management failings.  The United States and England have seen this more than most countries.

The ABC was able to interview the current CEO of James Hardie Industries, Louis Gries, who is not as damning of the past directors’ decisions as some might expect, and the reporter, Sue Lannin, asks many direct questions about the company’s responsibilities to victims of its products.  This interview deserves careful listening.

Company directors around Australia are watching how the court case ends and the size of penalties they may face if they make similar decisions.  The OHS element is oblique to the issue of directors’ responsibilities but it is the hot topic in Australia at the moment and many OHS professionals talk with these same directors.  It may be necessary to adjust one’s language or message when talking safety with them from tomorrow on.

Kevin Jones

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