In NSW Workers Compensation is now managed through a new regulatory body known as Icare or Insurance and Care. This body is responsible for workers compensation but also motor accidents. home building and self-insurance. The regulation of the system comes under a different body known as the State Insurance Regulatory Authority(SIRA). SIRA has recently released the Workers Compensation Regulation 2016 replacing the 2010 Regulation. Only minimal changes were made mainly to bring terminology up to date and in line with the 2012 reforms. The ability to share RTW programs (as opposed to RTW Coordinators) has been removed.
NDS has developed a booklet detailing 'Recommendations for Reducing Workers Compensation Premiums in the Disability Sector in NSW' which is based on feedback from members and knowledge of the legislation to give the disability sector the best practice advice on how to minimise your workers compensation costs. This guidance material should be read in line with the information below.
All employers managing Pty Ltd businesses are required to hold a workers compensation policy in NSW unless they pay salaries of less than $7500 annually and do not employ apprentices or trainees. In the event of a workplace injury or disease, the policy will provide the worker with weekly benefits and cover medical, hospital & rehabilitation expenses. The policy covers all workers whether full-time, part-time or casual and in some cases contractors. Remember there are penalties for no insurance or under insurance.
Take care if you employ contractors that they are not deemed workers for workers compensation purposes. The status of a person for tax purposes bears no direct relationship to their status for workers compensation purposes. Consider if your contractor is:
- subject to direction from the employer as to the work to be performed and the time and manner in which is it performed
- required to actually carry out the work
- paid on a consistent hourly basis
- supplied with tools and materials by the employer
- working exclusively for a single employer
- entitled to superannuation and leave entitlements.
If yes to the above they are likely to be a deemed worker and need to be included in your workers compensation policy.
Workers Compensation PoliciesAll employers in NSW are required to have a current workers compensation policy. In the event of a workplace injury or disease, the policy may provide the worker with:
- Weekly benefits if unable to perform work duties
- Medical and hospital expenses
- Rehabilitation services
- Replace certain personal items (e.g. clothing, spectacles) if damaged in a work-related accident
- A lump sum payment for permanent impairment
The policy covers all workers for injuries sustained in the course of their employment whether full-time, part-time, casual or supported employees. Some people are deemed to be workers even though they are not directly employed i.e. if a contractor works for you exclusively for a long period of time and has no employees of their own he/she may be a deemed worker and, if injured, could claim compensation. Please refer to product disclosure statement available from your insurer.
From August 2016 policies are available directly from Icare through their website or through a Service NSW outlet.
Policies are currently administered in NSW through the five scheme agents for ICare:
- CGU - NDS preferred insurer for the disability sector
- Employers Mutual
The scheme agents deliver claims services under commercial contracts.
An employer’s premium is calculated twice for each period of insurance. The initial premium (called the premium estimate) is calculated at the beginning of the policy period. It is based on an estimate of wages that an employer is likely to pay during the policy period.
The final premium (called the hindsight premium) is calculated at the end of the policy period. It is calculated using the actual amount of wages paid by the employer during the policy period. The difference between the two determines if further payments are required or if a credit for overpayment is available.
Icare calculates your premium based on:
- Classifying the business and assigning an industry rate
- Information you supply about your business activities on your wage declaration forms helps the insurer to allocate your business to an industry class in the WorkCover Industry Classification (WIC) system.
Calculating the basic tariff premium, making adjustments as required and issuing the Premium Demand Notice
- Basic tariff premium = wages x WIC rate
- Where the employer has a multi-tariff policy (employees in different industry classifications), the basic tariff premium formula is repeated for each applicable industry class, and the outcomes added together to produce the total basic tariff premium. The minimum premium is $175, even if the calculation produces a lower amount. Multi-tariff policies may only be held where an employer is operating separate and distinct businesses
- If an employer’s basic tariff premium is more than $10,000 and annual wages are more than $300,000 then an employer will have their premium experience adjusted based on cost of claims incurred
- A maximum claim cost cap of $150,000 per individual claim will be utilised when calculating the premium
Applying the experience adjustment formula for medium and large employers
Caps have been applied to provide most medium employers with greater protection from significant experience-based premium increases. For experience adjusted employers with a basic tariff premium:
- $50,000 or less, the total premium cannot exceed 1.75 x APP
- Greater than $50,000to $100,000 the total premium cannot exceed 1.85 x APP
- Greater than $100,000 to $200,000 the total premium cannot exceed two times APP
- Greater than $200,000 to $300,000 the total premium cannot exceed 2.25 x APP
- Greater than $200,000 to $500,000 the total premium cannot exceed 2.5 x APP
- Greater than $500,000 to $1,000,000 the total premium cannot exceed 2.75 x APP
- Greater than $1,000,000 to $2,000,000 the total premium cannot exceed 3 x APP
- Greater than $2,000,000 the total premium cannot exceed 3.5 x APP
For the purposes of calculating a medium or large employer’s experience premium, from 30 June 2015 claims costs include:
- All payments made by the Scheme Agent in respect of the claims, including weekly benefits and other payments such as death benefits, commutation payments etc.
- The initial experience premium is calculated using the employer’s wages and adjusted claims costs for the three years prior to the commencement of the policy period
- The hindsight experience premium is calculated using changes to the employer’s wages only
Your scheme agent employ a variety of staff, including:
- Account/business managers (also called underwriting staff), who answer queries about premium calculation, underwriting and general performance of your account, they do not deal with individual claims
- Claims officers, who manage claims, process payments and determine liability, and
- Injury management advisers, and/or case managers, who develop injury management plans (IMPs) and help employers and injured workers coordinate treatment, rehabilitation and liase on return-to-work matters
- Regular claims review meetings – this allows you to update the insurer on progress of injured workers in resuming pre-injury duties and plan any activities required to progress the claim. You should also check on barriers which exist to a resumption of full duties such as looming disciplinary action etc. It is beneficial to prepare for such meetings and take the time to ensure that the claims officer has all relevant information and has taken all required actions such as medical reviews, investigations, etc. Ask the question “How can we further reduce the cost of this claim?”
- Regular printouts outlining current claim status – this allows you to monitor any increases in paymentsthat maybe irregular and need to be followed up with the insurer, it is recommended that you request a monthly cost of claims report
- Single point of contact for all your claims – this ensures that the claims officer has a thorough understanding of the nature of your business, its inherent risks and any special requirements such as communication issues with your supported workers and supervisors etc.
- Clear and concise information – your scheme agent should be able to respond to any queries you might have regarding your policy or claims
- Speedy response to enquiries – your claims officer should provide a quick response to any claims enquiries so that early decisions are made regarding medical treatments, denial of liability etc.
- Timely action on claims including approving investigations and making payments so that treatment can be commenced and a return to work can be progressed quickly
The insurer is required to prepare an Injury Management Plan (IMP) in consultation with the doctor, employer and worker for significant injuries (more than 7 days absence from pre-injury duties) and to monitor and review that plan.
Employer responsibilitiesUnder the workers compensation system in NSW the employer has the following key responsibilities:
- To hold a suitable workers compensation premium calculated according to the number of employees, industry type etc., which covers all workers.
- To display, at a minimum, a summary in the workplace of the Workers Compensation legislation about giving notice of an injury and the making of a claim.
- To maintain a register of injuries in which workers record details of work-related injuries.
- To provide the injured worker with first aid and/or transport to medical treatment.
- To provide details of the insurer, company name and employer contact details, a claim form, if requested by the worker and any assistance to help the worker to recover and return-to-work quickly
- To notify WorkCover immediately of any serious injury or illness by ringing 13 10 50 immediately and follow-up with written advice if requested. See guidelines for notification.
- To advise the insurer within 48 hours of any injury to a worker which may result in a workers compensation claim.
- If the injury is not notified within five days of the employer becoming aware of the injury an excess payment of the equivalent of one week of the injured worker's weekly compensation is to be repayed to the insurer.
- Keep a record of wages paid for at least the previous five years (failure to comply may result in a fine of $500 or prosecution with a penalty of up to $55,000 - current at time of publishing)
- Provide wage information to the insurer within 7 days of request from insurer or receipt of information through completinof the PIAWE form.
- To advise the injured worker of their rights and responsibilities under the workers compensation system.
- To forward all paperwork related to the injury to the insurer as soon as it is received e.g.Certificate of Capacity, receipts, accounts, etc. within 7 days of receipt.
- To initiate injury management procedures as soon as possible after being advised of an injury and an inability to undertake full normal duties including provision of suitable duties.
Employee responsibilitiesUnder the workers compensation system in NSW employees have some key responsibilities:
- Seek medical attention if required.
- To advise the employer within 24 hours of any work-related incident/injury and complete all details in incident notification log/form.
- To submit a signed certificate of capacity immediately, if medical attention has been sought.
- To co-operate with the employer and insurer in relation to any injury management actions implemented.
- To return to work on suitable duties once cleared by the treating doctor.
- To comply with all requirements in the agreed RTW plan.
- To attend all medical or treatment appointments as organised by treating health professionals or the insurer, if required.
- To arrange appointments outside of work hours whenever possible.