Employers of seafarers looking for an exemption? We’ll need to sea evidence for that!
By Grace Collis and Stephanie Driscoll
A Ministerial Direction requiring Seacare to consider additional factors when determining whether to grant exemptions from the scheme has taken effect from 1 July 2023. Seacare is expected to incorporate the Ministerial Direction in updated exemption guidelines shortly, with the anticipated result being more onerous requirements on employers and ship operators to substantiate requests for exemption from the scheme.
As employers in this space are likely to be aware, a request can be made to the Seacare Authority (Seacare) for an exemption from the operation of the Seafarers Rehabilitation and Compensation Act 1992 (Cth) (SRC Act). An exemption may be sought to exclude all employees engaged on a particular ship, or a group of ships, at the discretion of Seacare.
Common reasons for seeking exemption include one-off voyages outside of a vessel’s usual trading pattern which would bring that vessel into coverage under the SRC Act, or where a ship will be operating only within a territory. An employer or operator can also apply for an exemption where state or territory based insurance is available at a lower cost, or where employers and operators are unable to place workers’ compensation cover for employees under the Seacare scheme.
It appears that many insurers are reducing their policy offerings in the Seafaring space due to cost considerations. We understand that this has resulted in a larger number of applications for exemptions from coverage being made to Seacare.
State and territory workers’ compensation insurance policies are invariably available at a lower cost as claims made under the SRC Act have no total cap on entitlements, resulting in larger overall claims costs for insurers, particularly for long tail claims. This has resulted in a reduced willingness to offer coverage in the area, and high premiums in an effort to recover those costs.
On 30 June 2023, the Minister for Employment and Workplace Relations issued a Direction to the Seacare Authority (Seacare) requiring it to amend its exemption guidelines to introduce four ‘primary factors’ which must be considered by Seacare when determining whether to grant an exemption under section 20A of the SRC Act. These include that the integrity and ongoing viability of the Seacare scheme is to be a primary factor in determining all applications for exemption (irrespective of the justification provided for seeking the exemption).
A reduction in workers’ compensation entitlements for affected seafarers is directed to be a primary factor in not granting an exemption, where Seacare is satisfied a reduction in entitlements would be a likely outcome. Seacare is also required to ensure that it is ‘reasonably satisfied’ that an applicant has taken all reasonable steps to obtain insurance for liability under the Seafarers Act, and that an applicant has obtained state or territory insurance in all jurisdictions in which it operates.
The Ministerial Direction is consistent with the overall intention of the SRC Act as beneficial legislation intended to compensate and rehabilitate injured workers at sea. It remains to be seen how this Direction will be applied in practice, but Seacare has released a statement advising of its intention to revise exemption guidelines and forms to support the Ministerial Direction.
We anticipate that the Direction will result in more onerous requirements for employers and operators to demonstrate that they cannot place relevant insurance despite making all efforts to do so, and that they have taken steps to ensure seafarers will not be adversely affected by the exemption.
Please contact Grace Collis should you have any queries regarding this article or Seafarers Compensation.
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