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ACC's social contract blown wide open

ACC's social contract blown wide open

The basis of ACC's 'no fault, no liability' compensation for injury has been blown wide open by a Court of Appeal ruling in favour of an injured person's claim for income while off work as a result of an accident.

While ACC covered the person for 80 per cent of his earnings while off work from injury, the Court found he was within his rights under the Sentencing Act 2002 to sue for the other 20 per cent of lost income while off work.

"The case blows apart the 'no fault, no liability' basis of our world leading accident compensation scheme," said Paul Jarvie, Manager of Occupational Health and Safety for the Employers & Manufacturers Association (Northern).

"All employers have every reason to be very concerned.

"The case means if the issue is not resolved quickly employers will have to pay ACC levies as well as to insure themselves against the risk of being sued for the 20 per cent of income not covered by ACC payments.

"But only those injured persons whose cases are prosecuted by the Department of Labour's OSH division or the police can take a case for the extra 20 per cent reimbursement of income.

"So the Court ruling creates two classes of injured party; those whose cases are prosecuted and those that are not. OSH typically prosecutes only 20 per cent of serious harm accidents.

"The change in fact results not from the laws around ACC but from the relatively recently amended Sentencing Act 2002 where the loophole appears to be.

"The questions in law addressed in the case hinged around legal definitions of what constitutes earnings compensation and what is considered reimbursement of lost income within the terms of the Sentencing Act 2002.

"The decision while following due process has created an unwanted and untenable two tier system for accident compensation.

"Businesses where work place accidents have occurred could be liable for substantial costs where an employee is off work for a lengthy time or where a workplace death occurred.

"The same applies for all motor vehicle accidents and private motorists.

"ACC should be protecting its scheme to maintain the social contract New Zealand has benefited from for the past 33 years. In particular it should be maintaining the certainty there will be no litigations over injury accidents. It should take these matters up urgently with Government to plug the loophole in the Sentencing Act.

"We urge the Minister for ACC, Maryan Street, to respond by picking up this challenge."


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