What are the advantages of the Workers compensation scheme? Most of the benefits to the workers compensation scheme are obvious from the information above. It gives a fair system to ensure that all workers are entitled to compensation from employers, and sets out the amounts that they are entitled to, which ensures that the compensation received is not subjective to the employer. It takes away the onus on the employee to prove the employer as being negligible and ensures that the process is the same for all employees, so there is appropriate guidance available for the employee to ensure that their claim for compensation is as quick and easy as possible, which is especially important during a time when they are probably already undergoing some form of pain and suffering.
Not only is the process quicker, but the fact that the employee no longer has to actively pursue the case through the courts ensures that the litigation costs for both the employee and the employer are reduced. The scheme is also an advantage to the employer5 in that they are aware of the exact costs that they would be liable for if such an accident were to occur, and this enables the employer to take out adequate insurance, based on a risk assessment of the job involved.
In fact, in many states there are large penalties for companies who do not have adequate insurance cover, as it is mandatory by law. 6 Are there any disadvantages to the Workers compensation scheme? The answer to this question, as is usually the case with any form of legislation, is yes, there are disadvantages. The most obvious disadvantage in the system is that the employee is only entitled to around two thirds of their usual income.
This can make a lot of difference, prticularly in houselholds with only one income earner. This is an inevitable outcome to such a bargain having been made with employers when the original schemes were introduced however. If the benefits received by the employee were any more then this would put great financial presure on companies, especially the smaller ones, as if they had people absent from work through sickness and injury they would probably also have to pay another individual to do the employees job until they returned.
It would therefore probably encourage many companies to find other reasons to terminate the employees contract in order to save themselves this expense. One such example of an employer in which this could cause many problems would be in hospitals. Every year there are a large number of healthcare professionals, particularly nurses, who injure their backs at work and have to spend time off from work.
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