New WA workers compensation laws may impact fishing crew payment arrangements
The WA Government has amended the Western Australian workers compensation laws effective 1 July 2024.
The rationale was to modernise the laws to provide clarity and certainty for everyone within the workers compensation system – employers, workers and insurers.
Background
Section 17 of the previous Act (Workers’ Compensation and Injury Management Act 1981) exempted crew members working aboard fishing vessels under sharefishing agreements (SFAs) from the operation of the Act, where crew contributed to the cost of working the vessel AND were remunerated by a share in the profits, or gross earnings of the working of the vessel. In this situation, employers were not required to arrange workers compensation insurance.
The sharefishing system for remunerating crew working aboard fishing vessels has been used by many in the fishing industry since 1981.
The exemption according to section 17 of the previous Act had two parts to its operation and you had to have both parts of the equation in place to ‘trigger’ the exemption – (1) contribution to the vessel’s working costs + (2) paid by shares in the profits or gross earnings of the working of the vessel. Not one or the other, but both parts had to be satisfied for the exemption to operate.
Court decisions as to the operation of section 17 of the previous Act also determined that for crew to be found to have contributed to the cost of working the vessel, the crew had to have a liability to pay costs, and not just pay costs because of calculations in working out the share of profits or gross earnings amount.
However, despite the exemption option, many WA vessel owners/employers took the view that they would still prefer the comfort that their crew members had access to the workers compensation system. Thus, they simply amended their SFAs so that the crew would not be required to contribute to the costs of working the vessel, and the exemption according to section 17 of the previous Act was not triggered and/or relied upon.
What has changed?
Under section 13(3) of the new Act (Workers Compensation and Injury Management Act 2023) and regulation 17(2) of the new Regulations (Workers Compensation and Injury Management Regulations 2023), the trigger for the exemption has only one part and crew members working aboard fishing vessels under SFAs are exempted from the operation of the Act simply if remunerated wholly or mainly by way of a share of profits or gross earnings of the working of the vessel.
There is now only one part of the requirements under the previous Act required to trigger the exemption.
The requirement for the crew member to contribute to the costs of working the vessel is no longer required.
Despite the changes, it is still the case that owners/operators of fishing vessels must be careful to ensure that the terms and definitions of SFAs are clear as to remuneration being by a share of profits, or gross earnings of the working of the vessel, and that this is supported by the vessel records.
What does this mean?
This means that, for those vessels where SFAs are used, any workers compensation policy that owners/employers have taken out in good faith to benefit their crew may not be a required or effective insurance policy to cover an injured crew member with workers compensation benefits or, for hospital or medical expenses, because the exemption is now triggered or satisfied according to the new Act and new Regulations. This applies to policies taken out since 1 July 2024.
For those fishing operations whose crew are engaged under Limited Partnership/Joint Venture Agreements rather than SFAs, there should be no impact.
Similarly, any vessel owner/employer who engage their crew under wages (PAYG) should not be impacted.
Given the potential gravity of this change, WAFIC recommends that anyone engaging crew under SFAs and holding a workers compensation insurance policy effective from 1 July 2024 should contact their insurers, accountants or legal advisors to determine the way moving forward.
WA workers compensation legislation (2023):
WALW – Workers Compensation and Injury Management Act 2023 – Home Page (legislation.wa.gov.au)
Disclaimer: WAFIC assumes no responsibility or liability for any errors or omissions in the content of this information. The information is not and is not intended to be legal or other professional advice and cannot be relied upon as such. The information is provided on an “as is” and “as available” basis with no guarantee of completeness or accuracy.