Who needs a workers’ compensation policy?
Workers’ compensation is compulsory for most businesses in Australia. If you employ someone to work for you, whether it be full-time, part-time, as a contractor, an apprentice or a trainee, you’ll need to take out a workers’ compensation policy.
Employers with annual wages of no more than $7,500 do not need to have a workers' compensation policy in Victoria. This exemption does not apply to employers who engage an apprentice/trainee.
You will need to take out a policy if you hire:
- contractors
- apprentices or trainees
- a director working for an employer
- a beneficiary employed by a trust
- household domestic staff
Who is covered by a policy?
All employees are covered by a workers' compensation policy and are entitled to compensation for any injury that occurs in the course of their employment (where their employment is deemed to be a significant contributing factor).
If you are a sole proprietor or a member of a partnership, you are not a worker of your own business and therefore you cannot take out a workers' compensation policy.
Managing your policy effectively
As a business operating across multiple states, your company structure may mean that you have complex needs when it comes to managing your workers' compensation policy.
CGU will work with you to understand your business structure and strategy and help make the management of your portfolio of policies as effective and efficient as possible.
Your claims performance can potentially have a significant impact on your premium.
CGU will work with you to focus on specific areas or claims that are negatively impacting your premiums, in order to reduce the cost of workers' compensation. We’ll keep you regularly updated on how your portfolio is tracking and the impact any claims are having on your premiums. We can also provide you with benchmarking information to let you compare your workers' compensation performance with your peers’.
We provide training to employers wanting to know more about how their premium is calculated and how to accurately forecast for the future.
Premium calculation
Premiums are calculated differently within each state or territory scheme. Generally, there are two distinct divisions:
Fee-based states – NSW, VIC, QLD, SA
In these states, premiums are set by a government authority, with claims and premium management administered by agents (except in Queensland which is state-managed).
Please note, CGU Workers Compensation does not operate in South Australia due to a monopoly.
Although premium is set by the government authority, CGU can still work in partnership with employers to reduce their premium through education sessions, scenario builders and set strategies to reduce claims costs which directly impact premium cost.
Risk-based states – WA, TAS, ACT, NT
In these schemes, the local WorkCover Authority maintains responsibility for the scheme and provides 'recommended premium rates'. Within this, CGU is able to offer:
- Conventional rates - premium is calculated based on wages and the relevant industry code.
- Experience rates - based on a conventional rate but a risk factor is included based on the employer's past claims history and risk profile. Employers need to exhibit a comprehensive risk management system in order to potentially benefit from this premium.
- Burners - suitable for large employers (premiums >$500,000 pa), premium is based on claims history. Whilst employers can benefit through this premium, they can also be impacted due to high unforeseen claims costs. You should ask your adviser before engaging in this type of policy.
With premium primarily based on claims costs, CGU has a number of specific strategies to help you reduce these costs.
CGU will help ensure you are paying the correct premium and help you understand how it is charged, how it is tracking, and where it is heading. This is done via:
- regular detailed premium projection reports
- scheduled training sessions covering the premium calculations
- projections as to the likely impact of claims on premium during claims reviews and when estimates are calculated
- payment arrangements to help cash flow variations.
CGU will also assist you in understanding your obligations in respect of:
- contractors
- policy registration and ongoing maintenance
- reviewing industry classifications in line with changes to business activity
- remuneration reviews and declaration
- cross-border employees
- timely payments of premiums
- grouping and succession
- apprentices and trainees.
Information when you want it
Our performance reporting tool, Workers Compensation Online, can help keep you keep track of your claims experience.