Common law damages
Common law damages is a payment made after a common law claim.
It's paid if:
- an employer is found to have breached their duty of care to a worker, and
- a worker has experienced an injury that's caused them loss as a result of that breach.
The payment of common law damages is made once a settlement is reached. This can happen through negotiation or by going to court.
What makes up common law damages?
The amount of damages given for pain and suffering is formally defined in the legislation depending on the type and severity of the injury.
A worker may be paid this type of damages if they’ve lost income because of their injury, or if this might happen in the future.
Payment may also consider employer funded superannuation contributions.
Calculations can be based on lost wages up to retirement age.
This type of loss can include:
- not being able to work
- having to work in a role with a lower salary
- not being able to do full hours
- not being able to do overtime.
Even if a worker is able to go back to work in their pre-injury role without loss of income, they may still be entitled to a ‘global amount’ for any problems they might have in getting another job in the future.
Sometimes, workers might be able to go back to work in their pre-injury role, but not permanently. If a doctor has indicated this is the case, common law damages could include an amount for loss of income for some years up to retirement.
If a worker is assessed as requiring ongoing medical treatment, their past and future medical costs will be included in their damages claim.
This may include:
- future surgery
- medically recommended therapies
- pharmaceutical items (such as pain medication)
- travelling expenses
- in some cases only: past or future paid care.
How common law damages are calculated
The damages amount will consider:
- a worker’s likely remaining working years; based on their age and the retirement age
- the availability of employment; based on their current employment situation and the availability of similar work in their area
- the degree of impairment; based on independent medical examinations and reports
- a worker’s income; based on:
- past and current work history
- tax and financial documents including copies of PAYG Summaries, previous tax returns and Australian Tax Office Notice of Assessments
- Centrelink records
- employer records
- expense costs; based on:
- medical records
- independent medical examinations and reports
- Medicare and Pharmaceutical Benefits Scheme (PBS) records
- tax invoices and receipts for expenses
- a worker may also receive legal costs. This will be based on legislation and will depend on the degree of their permanent impairment.
How are common law damages paid?
After the amount of common law damages is determined, an insurer will need to see if a worker owes money to other organisations, or if some money already paid to a worker by their insurer needs to be refunded. To do this, an insurer is legally required to obtain notices from Services Australia which include the following organisations:
- Medicare
- Centrelink
- Child Support Agency (CSA)
- if it applies, an insurer may also obtain a charge from the National Disability Insurance Agency.
After a worker’s claim has settled and any of this money has been deducted, legal fees will be taken out of the damages paid to a worker, to pay their solicitor.
To release a payment, an insurer needs a signed form from a worker. By signing the form, a worker acknowledges they won’t be able to seek more money from their insurer or employer for their work-related injury, and that they’ll keep the settlement details confidential. A worker’s solicitor will explain the details of the form to them before they sign it.
An insurer can then pay the settlement to a worker’s solicitor’s trust account (held on a worker’s behalf).