Can you contract out of your right to common law damages?
The recent Supreme Court decision in the matter of Bakhit v Hartley Healy Pty Ltd [2025] QSC 352 has clarified the longstanding confusion around whether a person can contract out of their right to common law damages under the Workers’ Compensation & Rehabilitation Act 2003 (Qld) (“the WCRA”).
In this matter, the Plaintiff had brought a claim in the Australian Human Rights Commission alleging she was sexually harassed at work. The allegations were denied by the Defendant but the claim was eventually resolved with the parties entering a Deed of Settlement (‘the Deed’).
The Deed released the Defendant from ‘all claims which she may have or may at any time have had or may at any time in the future have’ against the Defendant in relation to the allegations and the discrimination complaint except for ‘any claim for statutory benefits’ under the WCRA or for unpaid superannuation – both of which are statutory entitlements that can’t be contracted out of.
Some years later, the Plaintiff initiated a workers’ compensation claim under the WCRA for the very same harassment that she alleged in her earlier Australian Human Rights Commission complaint.
Her claim for statutory workers’ compensation claim was rightly accepted by WorkCover and a common law damages claim under the WCRA soon followed. WorkCover brought an application in the Supreme Court to determine if the Plaintiff was barred from bringing this common law damages claim.
The decision spends some time discussing the difference WCRA statutory compensation and the benefits this provides as opposed to common law damages which focus on compensating for a tortious act by way of a calculated sum – and the very different mechanics that apply to both in the Workers’ Compensation & Rehabilitation Act 2003 (Qld). This was the key issue because the Plaintiff argued that:
the term ‘statutory benefits’ used in the Deed was not defined in the Deed itself or in the WCRA (which instead refers to ‘statutory compensation’
her claim for common law damages was actually one for ‘statutory benefits’ which were specifically excluded from the operation of the Deed
in any event, section 110 of the Workers’ Compensation & Rehabilitation Act 2003 (Qld) prevents a person from ‘relinquishing an entitlement to compensation’, with any agreement made to relinquish the entitlement being of ‘no force or effect’ anyway.
Ultimately, however, the Honourable Justice Sullivan determined the Plaintiff’s claim was not a claim for ‘statutory benefits’, instead being a common law damages claim which is not intended to be covered by section 110 of the WCRA. The Plaintiff’s cause of action therefore could be (and was) fully released and discharged by the Deed.
His Honour’s decision provides some much-needed clarity by confirming that section 110 is limited to statutory compensation only, meaning parties are free to contract out of and settle common law damages claims under the WCRA in the same way they can with virtually any other claim for damages.
About the author
Belinda Hughes is a Director of Hughes and Lewis Legal