Any organisations that pay people to perform work for them – whether this involves administration staff, ministers, cleaners, drivers, or other types of workers – need to be aware that they may be legally obligated to have workers’ compensation insurance in place, to provide cover in case of work-related accidents or injuries. Without the protection of this insurance, employers could find themselves in serious financial difficulty if one of their employees suffers harm or injury at the workplace. It’s also important to be aware that non-profit organisations, charitable institutions, churches other such bodies are not exempt from this obligation.
Good risk management is essential
Of course to avoid accidents and injuries happening in the first place it’s vital to have sound health & safety practices in the workplace at all times. However even with top-notch risk management in place, the risk of injury is never totally eliminated. This means employers should create protections to ensure they are able to manage financially if an accident does occur.
Why workers’ compensation insurance?
Under Australian law employers are expected to bear the financial costs associated with work-related injuries, ailments, illnesses, or aggravation of pre-existing injuries. The expenses involved may include ongoing wages, medical costs, rehabilitation, return-to-work plans, and lump sum payouts. While these expenses may be initially covered by the State workers’ compensation authority, an employer without insurance may be required to directly repay these costs, along with hefty penalties for not fulfilling their obligations. This can amount to a serious sum of money which could cripple an organisation financially.
Apart from providing financial protection in cases of workplace accidents and injuries, workers’ compensation laws mean that injured workers do not need to resort to suing their employers for negligence in order to receive compensation. Workers’ compensation claims are ‘no fault’. This means that injured workers do not need to prove negligence on the part of their employers. While employees may still be able to sue in some instances, workers’ compensation laws greatly reduce the likelihood of this occurring. In many cases they also limit or restrict the right to sue for damages.
What does it all cost?
In Victoria the cost of the insurance premium is determined by the organisation’s industry code and the annual cost of its taxable wages.
The amount of premium payable is calculated as a percentage of the total annual taxable wages cost (tax-exempt benefits do not need to be included in the calculation). The percentage rate used is determined by the industry type and risk level. Employers need to declare their current and anticipated wages cost each year by completing and lodging a ‘Declaration of Rateable Remuneration’ statement. After this they will receive their premium invoice. More information about what is included in ‘Rateable Remuneration’ can be found here.
(Please note that the rules regarding workers’ compensation are not uniform nation-wide. Churches in other States will need to contact their State authority for more information (see below)).
Some employers may choose to self-insure instead. However to do this they need to be able to prove that they can manage it both financially and administratively.
Costs covered by workers’ compensation
These may include:
- Income replacement while the worker is recovering.
- Costs of medical treatments and rehabilitation.
- Return-to-work plans.
- Death benefits and funeral costs if the worker dies.
- Lump sum payments – for example, for permanent incapacity.
- The cost of modifying the workplace if required.
To find out more about your workers’ compensation obligations, contact the authority in your State from the list below:
Victoria – WorkSafe Victoria
Tasmania – WorkCover Tasmania
Queensland – WorkCover Qld
WA – WorkCover WA
NSW – WorkCover NSW
SA – SafeWork SA
To assist you in documenting workplace incidents, an Incident Report Form and Incident Register form are available for download from our website Forms section.
Don’t ignore your obligation!
Workers’ compensation insurance is designed to financially protect both employer and employee, and penalties may be charged for non-compliance. Make sure to get yours up-to-date as soon as possible if you have not done so already.
Written by Tess Oliver
Tags: health & safety, insurance, legal