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This guide provides a comprehensive overview of workers' compensation, focusing on who is covered under different business structures such as sole traders, partnerships, and companies. It outlines when a policy is required, the responsibilities of employers, and details on premium calculations based on total wages and associated benefits. We also explore the differences between employees and contractors and how claims affect premiums. This resource is essential for employers aiming to ensure compliance while managing their workers' compensation policies effectively.
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Who is Covered • Sole Trader – Only Employees – not policy holder • Partnership – Only Employees – not policy holder • Company – All employees including directors
When is a Policy Required • When you employ someone (excluding subcontractor) • Where wages are greater than $7500 p.a.
Insurers • Must be registered by Workcover • No difference in premiums • Ancillary benefits may vary • Courses • CPD Points
Premium Based on Total Wages • salary / wages • overtime, shift and other allowances • over-award payments • bonuses, commissions • payments to working directors (including directors’ fees) • payments to pieceworkers (who are not sub-contractors) • payments for sick leave, public holidays and the associated leave loadings • value of any substitutes for cash • employer superannuation contributions (including the superannuation guarantee levy) • grossed-up value of fringe benefits
How is Premium Calculated • The industry in which the employer operates • The amount of wages the employer pays to its workers • The costs of any claims made by their workers (for employers with a basic tariff premium greater than $30,000) • The dust diseases levy • Wages paid to apprentices.
Premium Calculation • Where there are multiple descriptions the highest rate will apply to the premium
Employee or Contractor An employee is more likely to: • be subject to direction from the employer as to the work to be performed and the time and manner in which it is performed; • be required to actually carry out the work; • be paid on a time basis; • have tools and materials supplied by the employer; • work exclusively for a single employer
Employee or Contractor A contractor is more likely to: • be engaged to carry out a particular task using his or her own skill and judgement; • employ others, delegate or sub-let work to another; • be paid on the basis of a quotation for the job; • supply his or her own tools and materials; • carry on an independent business in his or her own name or under a business or firm name; • be affected by PAYG tax arrangements.
Increase in Premiums • Medium & Large Organisations premiums will increase where claims are made. • This applies to organisations where the policy is > $30 000
Calculation of Premium • On application you will estimate the wages • Policy premium will be based on this • Reviewed and adjustments are made at policy renewal time
Certificate of Currency • Proof that you hold a current policy • You should request a copy from subcontractors
Excecise • Calculate Basic Tariff for a Residential Building Company • Admin Staff $35 000 • Supervisor $80 000 • Carpenter $65 000 • Labourer $45 000
Exercise • Calculate Basic Tariff for a Residential Building Company - • Admin Staff $35 000 • Supervisor $80 000 • Carpenter $65 000 • Labourer $45 000 • Total $225 000 x 5.040% = $11 340
