Group Income Protection

Group Income Protection Insurance, also known as Group Salary Continuance Insurance, is an essential risk mitigation strategy for employers in today’s complex legal environment.

If an employee is absent from work for an extended period of time due to injury or illness, including mental health issues, there is a complex legal framework that governs the obligations you must meet as an employer before you consider termination. These obligations are mandated under employment law, anti-discrimination law, Occupational Health and Safety (OH&S), privacy laws, and WorkCover (if applicable).

The process itself is complex and fraught with risks if not properly conducted. It can also be costly. Failing to comply with these obligations can result in significant penalties and damaging actions.

Employment Law: Why can’t I just terminate?

Complex employment laws exist to prevent discrimination and unfair dismissal. Before terminating due to injury or illness, it must have been properly established that the employee is unable to perform the inherent duties of their own occupation.

It must also be shown to be an unreasonable burden for the employer to bring them back to work with temporarily modified duties or a modified working environment.

General damages awards in discrimination claims are usually a minimum of $10,000 and can be more than $100,000. This does not take into account actual economic loss for the employee that may be awarded.

Anti-Discrimination Law: what is a ‘disability’?

The Disability Discrimination Act (DDA) 1992 makes it unlawful to discriminate against a person living with disability. The DDA covers people who have temporary and permanent disabilities; physical, intellectual, sensory, neurological, learning and psychosocial disabilities, diseases or illnesses, physical disfigurement, medical conditions and work-related injuries.

Anti-discrimination law is balanced by considerations of unjustifiable hardship to the employer and is assessed against the pre-injury role requirements rather than a modified or alternate role.

Occupational Health and Safety (OH&S) obligations: Where do an employer’s obligations start and stop?

Employers have an overarching duty to ensure the health and safety of employees to the extent that it is reasonably practical to do so, including their psychological health. This includes assessing if an employee is at risk if they return to work.

Workers Compensation: What if an injury has been accepted by WorkCover?

If an injury has been accepted by WorkCover, an employer cannot dismiss an employee solely or mainly because they are not fit for their role because of the injury (specific provisions can vary by State). WorkCover obtained medical reports also cannot be used for a non-WorkCover purpose, such as justifying a termination.

Privacy law and discretion obligations: What if an employee refuses to comply?

Employers must obtain a written release from their employees to collect medical information. If the process is part of an income protection claim the employee has a financial incentive to comply with requests for information and return to work capability assessments.

Getting expert advice to ensure your legal compliance

It is advisable for employers to seek professional advice as to the format and content of medical reports obtained to ensure they comply with legal obligations. Reports and professional support from employment law advisors can be costly – at least $1,500 in professional fees and many cases are closer to $5,000 or more.

If the employer holds a Group Income Protection Insurance plan, they are the policy owner and, as such, have the right to access the medical reports and the professional advice of the insurer free of charge.

Working with an insurer also gives employers access to disability managers with extensive experience and skills in return to work programs, including capability assessments and access to medical specialists free of charge.

Do I need Group Income Protection Insurance?

Each year, 2 out of every 110 working age Australians are hospitalised due to injury* and 45% of Australians experience mental health issues during their lifetime**.

The biggest causes for claims are falls (41%) and transport crashes (12%).

The cost of an effective Group Income Protection policy is often less than half of one percent of a payroll – making it an incredibly effective risk management tool for an employer.

In summary, Group Income Protection Insurance ensures that you can meet your legal obligations as an employer and get ill or injured staff back to work faster and safely. It is an effective risk mitigation strategy against costly penalties and damaging actions from employees that carry legal and reputational risk. Early intervention and proper processes are also proven to return employees to work sooner and more effectively.

*SOURCE: Australian Institute of Health and Welfare. Trends in Hospitalised Injury Australia 2016-2017 (17 October 2019).
**SOURCE: Australian Bureau of Statistics (2009). National Survey of Mental Health and Wellbeing: Summary of Results, 4326.0 and referenced by the Black Dog Institute.