In brief - Decision in Sara v G & S Sara highlights significant cost to employers of work-related COVID-19 transmission 

On 10 August 2021, the New South Wales Personal Injury Commission found in Sara v G & S Sara Pty Ltd [2021] NSWPIC 286 that the estate of a deceased employee director who contracted COVID-19 during a work-related trip to the USA and died, was entitled to compensation for his death as he contracted COVID-19 in the course of his employment. 

The Commission found that the applicant was entitled to the death benefit of $834,200, weekly payments for the period of time that he was ill and unable to work and medical expenses valued at some $11 million pursuant to the provisions of the Workers Compensation Act 1987 (the Act).  

Sara v G & S Sara Pty Ltd is the first known COVID-19 case to be determined by a tribunal or court in Australia. A key issue in the case was proving that the virus was an injury which arose out of or in the course of employment. 

There are various presumptions found in section 19B of the Act designed to assist workers in prescribed employment establish entitlement under the Act without the evidentiary burden of establishing causation. However, the workers' compensation insurer, iCare, argued in this case that the deceased was not in the course of his employment for the Australian company that employed him when he contracted the virus and that he could have contracted the virus during social interactions. 

Workers' compensation insurer argues that deceased caught COVID while performing work for the US-based company, not Australian company it insured

The deceased was a dental entrepreneur. He had set up a group of companies which included G & S Sara Pty Ltd, an Australian-based company of which he and his wife were the sole directors, and which also paid him a wage. Another company in the group was a United States-based company of which the deceased was the Managing Director and President. 

iCare argued that at the relevant time the deceased was not employed by the Australian company that it insured, G & S Sara Pty Ltd, and that he travelled to the United States to perform work associated with the United States-based company and business in the group.

In order to establish an entitlement, the applicant needed to prove on the balance of probabilities that the virus was an injury as defined in section 4 of the Act, which states:

‘injury’:

(a) means personal injury arising out of or in the course of employment,

(b) includes a "disease injury", which means:

(i) a disease that is contracted by a worker in the course of employment but only if the employment was the main contributing factor to contracting the disease, and

(ii) the aggravation, acceleration, exacerbation or deterioration in the course of employment of any disease, but only if the employment was the main contributing factor to the aggravation, acceleration, exacerbation or deterioration of the disease.

Personal Injury Commission's findings

The Commission was strongly influenced by the fact that G & S Sara Pty Ltd paid the deceased a wage. In contrast, the US company did not employ anyone. The Commission concluded that there was a clear intention by G & S Sara Pty Ltd that there be continuous employment on the part of the deceased and that there was no evidence of a change in those arrangements when the deceased travelled to the United States.

After a review of when the deceased's symptoms first occurred, who he had contact with and whether they had tested positive, and after hearing evidence that the deceased disliked wearing masks and did not always wear them, the Commission found that he contracted COVID-19 between boarding his flight in Sydney and arriving at his hotel in New York, which was work-related travel and thus in the course of his employment. 

The Commission also accepted that the virus caused respiratory failure and that this amounted to an identifiable pathological change which constituted a “personal injury” within the meaning of section 4(a) of the Act. Other medical evidence established further pathological changes were caused by the virus, including strokes and heart attacks.

What does the decision in Sara v G & S Sara Pty Ltd mean for employers?

In a climate where employers are grappling with the legalities of mandating vaccines in fear of encroaching on human rights or workplace discrimination laws, this decision serves as a reminder of the potential financial cost of transmission of the virus to an employee while the employee is at work or otherwise in the course of employment.  

According to Safe Work Australia, as at 13 May 2021, there had been a total of 1,222 COVID-19 related workers' compensation claims lodged across Australia, with 974 of these accepted. At present, the Federal Government has only mandated vaccinations for employees in the aged care sector, with state and territory governments responsible for enforcement. In addition, certain states have introduced limited mandates for the vaccination of groups of employees, for example in construction, child care, disability services and for health workers. 

However, for the overwhelming majority of businesses, the question of mandating workforce vaccinations is at the discretion of the employer, leaving businesses at risk of court action for breaching discrimination and/or human rights laws (amongst others) where vaccination is not considered an inherent requirement or the direction to vaccinate is not considered reasonable and lawful.

It is currently a minefield trying to reach the right balance between competing interests in the debate on mandating vaccines in the workplace. In arriving at a workplace policy on the issue, an employer must currently ensure that it does not discriminate against employees who cannot be vaccinated due to a disability or other attribute that is protected under anti-discrimination, human rights and equal opportunity legislation (such as religion). 

Employers must also satisfy their consultation obligations under occupational health and safety legislation and any applicable industrial instruments. Despite the potential cost to business in the event of transmission of the virus to an employee who is in the course of employment, vaccine policies of employers should not mandate the vaccine for all employees without exception.

This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2021.

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