Discrimination settlement extinguishes workers compensation rights

Key Points
  • A payment pursuant to a Deed of Release in discrimination or Fair Work proceedings may extinguish workers compensation rights if the payment is in respect of the same injury for which workers’ compensation is claimed.
  • We recommend employers and insurers review any unresolved workers compensation claims to see if any prior Deed of Release may be able to be relied upon to exclude further payments.


President Keating of the Workers Compensation Commission expressed it to be an unfortunate result when he entered an award for the respondent finding that a workers settlement of a discrimination claim extinguished her further rights to workers compensation.

The worker suffered a psychological injury allegedly due to bullying and harassment in the course of her employment. A complaint was lodged with the Australian Human Rights Commission. This claim was resolved by the payment of monies pursuant to a Deed of Release. The Deed purported to exempt workers compensation benefits from the releases it secured.

The worker subsequently claimed workers compensation.

The central issue on appeal was whether the settlement monies paid pursuant to the Deed constituted damages in respect of the same injury the subject of her workers compensation claim, such that the worker was precluded from any further entitlement to compensation.

Presidential decision: Super IP Pty Limited v Mijatovic [2016] NSWWCCPD 33

In 2012, the worker suffered a psychological injury allegedly due to bullying and harassment in the course of her employment. She notified her employer’s insurer of her injury, which was declined by way of section 74 notice. She also made a complaint to the Australian Human Rights Commission alleging discrimination on a number of grounds.

The proceedings in the Australian Human Rights Commission resolved by way of the payment of monetary compensation and the parties entered into a Deed of Release (“the Deed”).

The worker consequently commenced proceedings in the Workers Compensation Commission (WCC) seeking payment of weekly benefits and medical expenses for her psychological injury.

The insurer maintained its earlier dispute by way of issuing a further section 74 notice. The insurer also asserted that the worker had extinguished her rights to compensation because, pursuant to the Deed, she had received “damages” within the meaning of section 149, and section 151A(1) of the Workers Compensation Act 1987 (“WCA”).

The matter was heard before Arbitrator Harris. He did not accept that the payment made pursuant to the Deed constituted the payment of damages in respect of an injury. He stated (at T43.30):

“My view of the deed, which I accept is somewhat obscure and ambiguous, is that the worker was giving up all rights save as to any rights under the applicable workers compensation legislation. Accordingly, the deed on its face does not relate to damages ‘in respect of an injury’”.

Essentially, Arbitrator Harris found in favour of the worker. An appeal was on its way.

The appeal was heard before His Honour Judge Keating SC. His Honour stated that the above passage illustrated the Arbitrator’s error in his approach in determining the s 151A issue. Section 151A provides that if a worker has already been paid damages for the same injury, the worker essentially extinguishes their rights to claim further compensation in respect of that injury.

His Honour found that the Arbitrator focussed on the construction of the Deed rather than applying the statutory language of s151A to determine whether the amount paid to the worker pursuant to the Deed was “damages in respect of an injury".

The worker submitted that the payment made pursuant to the Deed was not in respect of the same injury, the subject of her workers compensation claim. His Honour disagreed and applied the reasoning in the decision of Adams to find that while the Deed did not refer in terms to “damages” the payment accepted by the worker came within the extended meaning of “damages” as defined in section 149 of the WCA and related to the same psychological injury as she relied upon in her workers’ compensation claim.

This cross over between insurance in the workplace and employment law is at first blush a fairly novel and exciting situation perhaps giving employers hope that they may be able to resolve discrimination claims or Fair Work proceedings, and extinguish a worker’s rights to workers compensation at the same time.

A word of caution though before we get too excited. This matter was decided on its unique facts and, in our view, the decision came about due to the wording of the deed in respect of the Australian Human Rights Commission complaint. We expect that worker’s solicitors will, as a result of this decision, be extra diligent in the drafting of deeds in respect of settlement of discrimination or Fair Work complaints to preserve their client’s workers compensation rights if an injury is alleged to have been suffered.

Having said this now would be a good time to review any unresolved workers compensation claims to see whether there has been an earlier resolution of a discrimination or Fair Work claim in which a similar argument may be able to be raised.

It needs to be remembered that in a lot of discrimination and Fair Work proceedings injury is not alleged so this scenario would not arise and even if injury is alleged it will often be alleged to have arisen from different conduct than may be relied upon in a workers compensation claim. This would make the facts distinguishable from the matter of Mijatovic.

If you have any matters which you think the reasoning in this case may apply to we would be happy to review them for you to see whether a viable s 151A defence may arise.

Post by Jannet Nguyen and Sarah Jones 

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