Workcover
Workers' Compensation Insurance
Businesses employing staff must have Workers' Compensation insurance. This insurance covers the cost of work-related injuries sustained by employees.
Purpose of Workers’ Compensation Insurance
Workers' Compensation insurance aims to cover expenses related to work-related injuries or illnesses. This includes:
- Loss of wages
- Medical and other health-related treatments
- Rehabilitation
- Lump sums for permanent disabilities
Premiums are calculated based on several factors, including:
- The employer’s industry
- Working conditions
- Deemed wages paid to workers
- Registration in specific Apprenticeship and Traineeship Government Programs
To ensure accurate premium calculations and coverage, employers must provide information on the following:
Employer's Industry
Businesses must describe their activities to their Work Cover provider. This helps assign the correct Workers Compensation Industry Classification (WIC) for premium calculation.
Workers' RemunerationEmployers must submit an Annual Declaration of the remuneration paid to workers over the year.
Working Conditions
In some Australian states, employers must indicate if workers are exposed to asbestos during their employment.
Premium Calculation
The state Work Cover provider uses the provided Annual Declaration and the business's WIC to calculate the premium for the current year. They will also use declared remuneration or an estimate to calculate the premium for the upcoming year. A Dust Diseases Levy is added for businesses involving asbestos exposure.
Definition of Workers
Under the Worker Compensation Act, a 'worker' is anyone under a contract of service or training with an employer, whether manual labor, clerical work, or otherwise, and whether the contract is explicit, implied, verbal, or written. There are four types of workers:
- Employees: Individuals with regular salary payments.
- Directors: Appointed to manage company activities and finances; paid through payroll, director’s fees, or dividends.
- Apprentices: Employed under an approved training contract by the Department of Industry State Training Services.
- Contractors: Individuals managing their own business with an ABN, hired for specific contracts. Contractors deemed workers by the Act must have their own workers' insurance policy if not otherwise covered.
Wages, as defined by the Workers’ Compensation Act, include payments made to or for the benefit of a worker. This includes:
- Employees’ gross earnings
- Superannuation
- Directors’ fees
- Contractor payments
- Earnings: Premiums are calculated on gross amounts before PAYG taxes.
- Fringe Benefits: Premiums are calculated on the grossed-up amount of the fringe benefit.
- Contractor Payments: Premiums are based on the contractor’s invoice amount, excluding GST. Superannuation paid to contractors must be included in the wage declaration.
This factsheet provides essential information for businesses to comply with Workers' Compensation insurance requirements and accurately calculate premiums.
Book an appointment with Befinancial Accounting.
Contact - 1300 699 161Email - info@befinancial.com.au
32 Main Rd Bakery Hill, VIC 3350