There has been commentary in the media, and an extensive campaign by NSW Paramedics, regarding changes to the Death and Disability benefits scheme.  This comment, dated 22 August 2016, was on Facebook page called “Zero One – Code One” (which appears to be a page operated by the Ambulance Division of the Health Services Union).

Today Mr Baird’s government closed the legal loop on struggling NSW Paramedics. His government created a law that made it illegal for the IRC to rule against his financial interests. He then made an application to the IRC to replace preexisting paramedic death and disability protections with substandard protections. He was successful and his law ensured it.

Given that I thought I’d better look into the relevant law.

The legal issue was the future of the Ambulance Service of NSW Death and Disability (State) Award.   This Award was originally made on 29 February 2008 and had been amended over time.  References to the Award, below, are references to the (Ambulance Service of NSW Death and Disability (State) Award as amended on 30 April 2009 (No. IRC 615 of 2009); the ‘Death and Disability Award‘) unless otherwise indicated.

The award provided for lump sum payments for paramedics who were killed or rendered permanently unfit for work, whether that death or injury was work related or not.  From 11 July 2015, the lump sum for the ‘off duty’ death of a paramedic ranged from $73,572 to $367,869 depending on the age of the paramedic at the time of death (Ambulance Service of NSW Death and Disability (State) Award; Review of Award pursuant to Section 19 of the Industrial Relations Act 1996 (No. IRC 621 of 2015), 15 October 2015).  For on duty death or permanent disability the lump sum was calculated as a percentage of the paramedic’s salary, ranging from 3.71% to 8.5% again depending on the paramedic’s age.  These benefits were over and above whatever entitlements the paramedic may have under Workers Compensation law and from their superannuation scheme (Death and Disability Award[6]).

To obtain the benefits of this award eligible paramedics had to contribute between 0.92% and 1.8% of their salary depending on their age and other whether they had elected for other relevant cover with their superannuation (Death and Disability Award, [5]).   The Service in turn agreed to contribute not more than 3.6% of total salaries.  The contributions were paid to First State Super that in turn maintained a ‘a superannuation scheme to pay the lump sum benefits’ for on duty death and total and permanent disability.  The Ambulance Service would establish ‘a separate scheme to pay the benefits’ for death and death and total and permanent disability that occurred ‘off duty’.

Critically the award provided that ‘The Governments contribution to the costs of the superannuation scheme and the separate scheme … is limited to 3.6% of salaries …’ (Death and Disability Award [10.1]).    The Award provided (at [14.2]) that where:

… the long term cost to the Government is likely to exceed 3.6% of salaries, there will be an immediate review of the benefits and/or the officer contributions of the scheme. Appropriate steps will then be taken by the parties to implement a revised scheme that maintains a maximum cost to Government of 3.6% of salaries.

It was this clause that triggered the latest issue as that threshold had been met.  That is it was likely, and all the parties agreed that it was likely, that the long term cost to Government would exceed 3.6% of salaries so a review was required (NSW Ambulance Death and Income Protection Benefits Interim (State) Award [2016] NSWIRComm 5, [7]).

The IR Commission was required, by the terms of the award and the Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 (NSW) to consider the cost to government in any new scheme and to limit government liability under any scheme to 3.6% of salaries.

The Industrial Relations Commission (comprised of Judge Walton and Commissioners Stanton and Murphy) said (in NSW Ambulance Death and Income Protection Benefits Interim (State) Award [2016] NSWIRComm 5, [6]) that the government proposed a new scheme that provided for:

(1)       Unchanged Lump sum payments in the case of on or off duty death;

(2)       Income protection (rather than lump sum) benefits for on and off duty injuries or illnesses

(3)       Transitional provisions in relation to injuries or illnesses incurred prior to the commencement of the proposed award to provide that benefits under the Death and Disability Award would still be paid;

(4)       A commitment to a Health and Wellness Program for paramedics with 1.9 per cent of the scheme’s funds to be used for health and wellness initiatives;

(5)       The Government’s commitment to contribute a maximum of 3.6 per cent of salaries is continued, as is the review trigger should the long term costs to Government be likely to exceed this amount; and

(6)       No employee contribution towards the revised scheme is required.

I infer that ‘Income protection benefits’ are paid as regular payment, like a salary, rather than as a single lump sum.  (Anyone who’s been involved in compensation knows the problem with ongoing benefits which is that they usually require the claimant to be subject to supervision to ensure that they remain entitled to the benefits).   There would be a 90 day waiting period before income protection was paid and it would ensure that the paramedic received 75% of their pre-injury salary.  It was proposed that income benefits would be paid for a maximum of 2 years ([19]).

Extra benefits of the proposed scheme were that it would extend income protection to officers who were sick and injured but not permanently disabled and it did not require a contribution from paramedics giving, in effect, an up to 1.8% pay increase (see [21]).

The unions proposed alternative schemes. The HSU proposed that the scheme be transferred from an insurance/superannuation scheme to a scheme managed by the Government ([9]).  The APA proposed amending the existing award by removing the limit on the government’s commitment ([10]).

There were further discussions and offers to try to reduce the areas of disagreement but, at the end of the day, agreement could not be reached and the Commission had to determine whether to make the award sought by the government, or one of the alternatives sought by the trade unions.   Here the Commissioners were very critical of the unions.

One issue that was in dispute was whether income protection should be paid for 2 years, or for 7 years.  The Government brought in financial evidence as to the cost of the proposed programs in order to keep their commitment to 3.6% of salary.  With respect to the union’s claim for a 7 year period of entitlement the Commissioners said ([42]-[43]):

Unlike the Ministry’s proposal, the seven year scheme proposed by the unions was entirely unsupported by any evidence…

The failure of the two unions to advance any evidence in support of the claim for a maximum benefit period of seven years, or to engage in any meaningful way with the evidence relied upon by the Ministry in support of its two year proposal, meant that the Ministry’s position assumed greater weight than would otherwise have been the case.

They later said ([45]-[46]):

In the matter presently before the Commission, the obstinate refusal of the two unions to engage in any meaningful way in the arbitral process has, in effect, greatly assisted the Ministry in achieving the outcome for which it has contended.

As a consequence of the lack of evidentiary support for the claim pressed by the two unions, the prospects of that claim or, indeed, any outcome which improved upon the Ministry’s proposal, being awarded in arbitral proceedings were virtually nil.

Given the lack of evidence in support of alternative claims, ‘the Full Bench was left with no alternative but to announce its decision to make an interim award with a maximum benefit period of two years and other provisions as proposed by the Ministry, but with a duration of twelve months’ ([49]).   Some further negotiation did lead to some changes in waiting periods: “A waiting period of 90 days before any benefit is payable in the case of an Off Duty Injury, or 26 weeks in the case of an On Duty Injury” ([60]).    The new scheme operates from 20 August 2016 for 12 months during which time, no doubt there will be ongoing negotiations.

What of the HSU’s comments?

Today Mr Baird’s government closed the legal loop on struggling NSW Paramedics. His government created a law that made it illegal for the IRC to rule against his financial interests.

That’s “playing the man, not the ball” because of course it’s not “Mr Baird’s … financial interests’ that are at stake but the governments albeit a government which he leads so we can forgive that.

I would infer that this is a reference to the Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 (NSW) which did restrict the Commission’s powers.  This regulation came into force on 24 June 2014, two months after Mr Baird took office as premier (23 April 2014).     It is correct that it was ‘his government’ that passed this law.  That regulation provides that ‘Public sector employees may be awarded increases in remuneration or other conditions of employment, but only if employee-related costs in respect of those employees are not increased by more than 2.5% per annum…’ (cl 6(1)(a)).  The Commission felt that it could not accept the suggestion that the government simply take over the liability for death and disability scheme or that the cap of government contribution at 3.6% of salaries should be removed, as either approach would ‘offend the terms of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2014’ (at [20]).

As for the clause in the award that said that the government would not commit more than 3.6% of salaries, that was a matter of agreement between the government of the day and the relevant unions.  As that agreement was made in 2008 that was certainly before Mr Baird’s time in office.

That ‘He then made an application to the IRC to replace preexisting paramedic death and disability protections’ is correct but hardly suprising.  It was a term of the agreement that should actuarial review suggest costs to government would exceed 3.6% of salaries, the Award had to be reviewed.  Applying for that review, in accordance with the agreed terms, is not bad faith – people should be expected to, and expect others to,  honour their agreements (see also Industrial Relations and asking the CFA to stick to its bargain (January 26, 2015)).  The unions or paramedics could hardly be surprised that the matter ended up back on the negotiating table, and ultimately in the Commission, given that all parties agreed that the trigger for a review had been met.

I make no comment on whether the new, interim award contains ‘substandard protections’.   Whilst it has removed lump sums for permanent incapacity it has extended benefits to those that suffer an incapacity that is not permanent and removes the need for paramedics to make a contribution to the scheme.  The Commission did note (at [5]) that:

In September 2015, the Service conducted a ballot in which affected officers were invited to vote to either replace the existing scheme with a death benefit and income protection scheme or to wind up the existing scheme, cease employee contributions and return 85 per cent of achieved employee related cost savings to employees in the form of a new allowance. The HSU advised its members not to participate in the ballot. Of the 579 employees who chose to vote, 365 (63 per cent) voted for the first option, that is, to replace the existing scheme with a death benefit and income protection scheme.

Accordingly whether the conditions in the new award are ‘substandard’ is for others to judge and no doubt with reference to other government employee schemes by which the ‘standard’ can be determined.

Conclusion

It is certainly true that the Ambulance Service of NSW Death and Disability (State) Award (2008) is no longer available to provide lump sum payments for death or permanent disability for paramedics.  A new interim award is in place that continues to provide lump sum payments in the event of death, but ‘income protection’ in the event of injury.  There are wins and losses – the lump sum may be gone but the class of people who can benefit is increased and individual contributions are gone.

Whether a better deal could have been struck is no doubt debatable.  The IR Commission was of the view that the relevant trade unions did not support their claims with sufficient evidence and that left them with no choice but to accept the government’s proposal, given, as the HSU have noted, they were constrained by the Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 (NSW) and the initial agreement that the government’s contribution was to be limited to 3.6% of salaries.   I have no doubt that many will disagree with that analysis of events, but that is how the Commissioners’ saw it.