Chapter 1: History of workers’ compensation schemes in Australia and New Zealand


This section provides an historical overview of the development of workers’ compensation schemes in Australia at both the national and jurisdictional level, and for New Zealand.

In preparing this section the following publications were used: Kevin Purse, ‘The Evolution of workers’ compensation policy in Australia’, 2005, from the Health Sociology Review; the CCH Workers’ Compensation Guide, Volume 1; and the Productivity Commission’s National Workers’ Compensation and Occupational Health and Safety Frameworks report of 2004.

The national perspective

There are 11 main workers’ compensation systems in Australia. Each of the eight Australian states and territories have developed their own workers’ compensation scheme and there are three Commonwealth schemes: the first is for Australian Government employees and the employees of licensed self-insurers under the Safety, Rehabilitation and Compensation Act 1988 (SRC Act), and Australian Defence Force personnel with service prior to 1 July 2004 under the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (DRCA); the second is for certain seafarers under the Seafarers Rehabilitation and Compensation Act 1992; and the third is for Australian Defence Force personnel for service on or after 1 July 2004 under the Military Rehabilitation and Compensation Act 2004 (MRCA). The Veterans’ Entitlements Act 1986 (VEA) also provides compensation coverage to veterans and other Australian Defence Force personnel with certain periods of service prior to 1 July 2004.

The origin of these Australian workers’ compensation systems lies in 19th century British law. Before the implementation of workers’ compensation arrangements an injured worker’s only means of receiving compensation was to sue their employer for negligence at common law. However, workers rarely succeeded in these actions due to what has been described as the ‘unholy trinity’ of legal defences: common employment, voluntary assumption of risk and contributory negligence. To limit the application of those defences, the Employment Liability Act 1880 was enacted in Britain. This Act was adopted in the Australian colonies between 1882 and 1895. While these Acts were well intentioned, taking them up did not lead to any significant improvement in outcomes for injured workers.

New workers’ compensation laws incorporating a ‘no-fault’ principle came about after Federation in Australia. New laws were prompted by the failure of the Employment Liability Act 1880 to improve conditions for injured workers, increasing industrialisation and the rise of the labour movement and popular support for state intervention on behalf of workers. To be eligible for workers’ compensation under the no-fault principle, workers covered by the legislation merely had to prove that their injuries were work related. It was no longer necessary to prove negligence on the part of an employer. Nonetheless early no-fault coverage for workers’ compensation was limited. Firstly, although laws provided for some benefits, the taking out of insurance by employers was not compulsory. Secondly, to be eligible for workers’ compensation, an injury had to be found to have arisen out of and in the course of employment.

In keeping with contemporary attitudes, the first workers’ compensation laws in Australia were generally known as workmen’s compensation and did not expressly cover female workers until challenged by the women’s movement of the 1970s. Coverage for workers’ compensation gradually expanded to include most workers, and lump sum payments for loss of body parts were introduced. By 1926 New South Wales had introduced compulsory insurance which became the model for most workers’ compensation schemes around Australia.

Between the 1920s and 1970s incremental reforms took place across the jurisdictions. Eligibility continued to widen with the broadening of the definition of injury to ‘arising out of or in the course of employment’. Reforms from the 1970s to the mid-1980s generally improved compensation benefits for workers. However, economic difficulties in the mid 1980s and early 1990s shifted the focus onto reducing the cost of workplace injuries, containing insurance premiums, underwriting arrangements and administrative efficiency.

In the last quarter of the twentieth century there was a shift in emphasis in the schemes to strengthen the role of work health and safety and to highlight the need for rehabilitation of injured workers. This shift was expected to place downward pressure on costs but did not achieve the level of success expected. Further reform attempts focussed on cutting back benefits and making premiums more competitive. By the mid 1990s, workers’ compensation costs had fallen by 20 per cent as a percentage of total labour costs, easing pressure for reform of premiums and costs, although each jurisdiction continues to grapple with these issues.

Since the introduction of the first workers’ compensation laws, each jurisdiction has developed its own arrangements. This has resulted in differences in the operation and application of workers’ compensation laws. Some of the differences include scheme funding, common law access, level of entitlements, return to work and coverage. These differences can be attributed in part to the varying industry profiles and economic environments of each jurisdiction and judicial decisions that have led to legislative amendments. However, as businesses and workers become increasingly mobile, the need to understand the various workers’ compensation systems at the national level is becoming increasingly important.

In the 21st century workers’ compensation systems have continued to adapt to changing societal expectations and increasing knowledge regarding the impact of work on health. This is reflected through reviews into the impact of the gig economy, additional diseases such as silicosis added to deemed disease lists and the introduction of presumptive legislation. In particular, presumptive legislation for firefighters and first responders which acknowledge that these occupations have an increased risk of developing certain forms of cancers and post-traumatic stress disorder (PTSD).

The recent global pandemic can also be reflected in legislative developments for workers’ compensation schemes with the utilisation of presumptive laws in certain jurisdictions for occupations with an increased risk of contracting COVID-19 in the workplace and a number of jurisdictions which have made other adjustments to their benefits and payments.

It is anticipated that workers’ compensation schemes will continue to evolve to meet emerging societal trends in relation to the changing nature of work.