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Workers Compensation Premiums
> Requirements
> Industry classification
> WorkCover employer categories
> Wages declaration
> Disagreements about your premium
> Who is a worker?
> Templates & References
Requirements
Australian law requires all employers to have a workers compensation policy to cover workers injured at work. Purchase a workers’ compensation policy from a WorkCover NSW licensed insurer.
Industry classification
Premiums are calculated based on your industry classification, estimated wages and claims experience if applicable.
The Workers Compensation Insurance Premiums Order is issued through the NSW Government Gazette in June of each year. It details the formulae which licensed insurers must apply during the following financial year to calculate an employer's premium. The Outline of the NSW Workers Compensation Premium Scheme 2003/2004 provides information about how workers compensation premiums are calculated in NSW.
Here are the categories that apply to the aged and community care industries in
2004 - 2005.
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Classification No: |
Type of service |
Percentage of wages paid as base premium |
Description of services |
|
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861300 |
Nursing homes |
7.03% |
Employers engaged in providing nursing or convalescent home facilities (including the provision of nursing or medical care as a basic part of the service). |
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|
872100 |
Accommodation for the Aged |
5.81% |
Employers engaged in providing care, accommodation or homes for senior citizens where nursing or medical care is not provided. |
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|
872200 |
Residential Care Services nec |
4.25% |
Employers engaged in residential care not elsewhere classified. Includes providing care, accommodation or homes for disadvantaged persons where nursing or medical care is not provided as a major service. |
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|
872910 |
Home Care Services |
5.29% |
Employers engaged in providing paramedical, nursing or personal hygiene services to clients in their homes. |
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872920 |
Non-Residential Care Services nec |
3.68% |
Employers engaged in providing welfare services not elsewhere classified. This class also includes community transport services provided to aged or disabled clients on account of government agencies or not-for-profit organisations. |
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Describe your service in detail to ensure your insurer places you in the correct industry classification. |
Community organisations must specify if staff are engaged in overnight or residential services. |
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WorkCover employer categories
> Category A employers
> Category B employers
WorkCover categorises employers according to the amount of workers compensation they pay each year. There are two categories:
Category A employers are those whose basic yearly workers compensation premium is greater than $3,000. If you are one of these employers, you:
- must repay your insurer up to $500 of weekly benefits on each claim paid
- have yearly premiums that are affected by the cost of the workers compensation claims that you have during the year. Your premium is worked out using a formula, taking into account wages and the cost of the claims. If you have nil claims you will receive a reduction of premium while employers who have high claims costs pay more. This is to encourage you to have a safe workplace so that injuries at work are reduced.
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Consider the Premium Discount Scheme to improve your safety and injury management systems. |
Review claims estimates on your premium prior to the end of your premium year. Ensure claims are closed when the worker is back on normal duties. |
Check for potential recoveries from third parties eg Compulsory Third Party and Public Liability. |
Category B employers are those whose basic yearly workers compensation premium is $3,000 or less. If you are one of these employers, you:
- have the option to pay an extra 3% on your premium instead of paying the first $500 of weekly compensation for each claim.
- claims costs are not taken into account when calculating the yearly premium.
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Wages declaration
You must complete a wages declaration form so that the insurance company can calculate the workers compensation premium correctly. When you complete the form you will include "Wages" such as salary, overtime, shift allowances, over-award payment, bonuses, commission, payments to working directors, payments for public and annual holidays (including loadings), and payments for sick leave.
WorkCover has published the Wages Definition Manual: October 2003, a guideline to assist employers and their accountants in deciding what wages to include on the wages declaration forms.
If contractors are deemed workers they will need to be included on your workers compensation premium.
Disagreements about your premium
If you disagree with your insurance company's premium calculation, application may be made to WorkCover to have the amount reviewed. This application must usually be lodged within one month of the premium being demanded. Grounds for an appeal against a premium rate are:
- the industry classification;
- the estimate of wages used by the insurance company; or
- the cost of claims assessed by the insurance company.
Contact WorkCover on 13 10 50.
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Who is a worker?
> Sole traders v Pty Ltd companies
> Relationship with the aged care organisation
> Documentation
Aged care organisations have a range of people providing services. How do you tell which of these should be included in your workers compensation policy?
Sole traders v Pty Ltd companies
For the purposes of workers compensation, it is important to determine if your provider is a sole trader or a Proprietary Limited (Pty Ltd) company.
If the provider is a Pty Ltd company, they are an employee of their company and they must have workers compensation insurance for themselves and any other employees. Employees of a Pty Ltd company providing a contracted service to your organisation would not need to be included in your policy.
Sole traders can not cover themselves for workers compensation, although they must hold a policy for any employees of their business. They may need to be included on your policy if they are a contractor to you.
Relationship with your organisation
Once you have determined who are sole traders, you should then look at the service they are providing. Do they have a relationship with the organisation? Do they only provide services to residents? Are they visitor or volunteer? Let’s look at some examples.
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Example 1 – Hairdresser Mavis comes to your facility 1 day a week. You give her a space to provide hairdressing services but do not charge her for that space. Mavis charges the residents for the service she provides. Mavis is a sole trader. But her relationship is only with the residents. You would not need to include her on your workers compensation policy. |
Example 2 – Entertainer Every second Friday night, Bill comes in to host a sing-a-long around the piano. You pay him $100 per hour. Bill is a sole trader. His relationship is with the organisation. You should include him on your workers compensation policy. |
Example 3 – Chaplains Father Cliff is the Minister at the local church. He pops in to visit the residents when he can and runs a service on site once a month. Father Cliff is a visitor at your facility. He is employed by the church and covered by their workers compensation policy. He should not be included on yours. |
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Example 4 – Therapists Sue is a physiotherapist who works at your facility one day per week and works in her own practice 4 days per week. She sees all new residents and occasionally provides back assessments for new staff. Sue is a sole trader who employs a receptionist at her practice. She has personal sickness and accident insurance arranged through her professional association and has a workers compensation policy for her receptionist. Sue should be included on your workers compensation policy for the days she works at your facility. |
Example 5 – Trades persons Bob runs “Water Works Pty Ltd”. He visits your facility on an “as required” basis. He has an apprentice who works with him and occasionally works on simple jobs independently. Bob requires his own workers compensation policy to cover himself and his apprentice. Check that he has a certificate of currency. |
Example 6 – Cleaner Jane runs “Forensic Cleaners”. She works for your community organisation on a job by job basis cleaning. Jane is a sole trader. She employs a team of casual cleaners to help on big jobs. You need to check that Jane has workers compensation insurance for her casual staff. |
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Documentation
Principal contractors should check that their subcontractors:
- are classified in the correct industry;
- have declared an appropriate amount of wages for their insurance cover;
- have signed a statement that all workers compensation premiums applicable for that work have been paid.
All contractors should complete a Subcontractor Statement noting both their workers compensation and public liability status. Declare appropriate sole traders on your workers compensation policy renewal documentation.
Request a certificate of currency from all Pty Ltd contractors. A Certificate of Currency only lasts for 4 months, as employers who pay more than $3,000 per annum are able to pay in 3 instalments.
Ideally, the contractor should provide a new certificate of currency after each instalment. Alternatively, you may note in your contractor agreement that you can request a certificate of currency at any time.
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Templates & References
Outline of the NSW Workers Compensation Premium Scheme 2003/2004
WorkCover NSW Subcontractor Statement
Workers compensation and injury management fact sheets: Information for Principal Contractors: Subcontractor Premiums