There's a lot to think about when starting a business. As well as the financial considerations, you also need to give thought to your legal obligations. This includes creating and maintaining a safe place to work and having the appropriate insurance in place to insure against workplace accidents.
Quite often our clients approach us with questions about their WorkCover obligations. Our blog article here covers the important details of Workcover - without the technical jargon - so you, the business owner, are absolutely clear on how it affects you and your business.
What is WorkCover Insurance?
Workers' compensation is a compulsory statutory form of insurance for all employers in every state and territory in Australia and provides protection to workers if they suffer a work-related injury or disease.
Any business that employs or hires workers on a full-time, part-time or casual basis, under a verbal or written contract of service or apprenticeship, must have workers compensation insurance that covers all workersIf a worker employed by you suffers a workplace injury or disease, the workers compensation scheme may provide the injured worker with weekly benefits, medical and hospital expenses, rehabilitation services, certain personal items and a lump sum payment for permanent impairment on the basis set by the particular scheme.
It's important to note that the coverage provided by WorkCover may vary across states and territories within Australia. Each jurisdiction has its own legislation and regulations governing WorkCover insurance. Therefore, it is advisable to consult the specific WorkCover authority in your state or territory or seek guidance from an insurance professional to understand the precise coverage details applicable to your situation.
The most common question we are asked as small business advisors in Melbourne are:
As a company Director without employees, do I still need to pay WorkCover?
In the state of Victoria, if you receive total salary or wages of at least $7,500 over a 12-month period, then yes, you are required to have WorkCover insurance.
If you are a company director and receive a wage of less that $7,500 from your company or you do not pay yourself a wage at all, you are not required to register for Workcover.
You also don't need to register if you're a company and you do all the contract work for your company's one and only business client.
How does WorkCover apply to Sole Traders, Partnerships and Trust?
If you are a sole trader, a partner in a partnership or an individual trustee of a trust, WorkCover does not consider you to be an employee, and you are therefore not required to pay WorkCover insurance under the scheme.
However, you might want to explore what insurances are available to you in the event of an accident where you are unable to work.
How is my WorkCover insurance premium calculated?
The rate at which workcover insurances premiums are calculated depends on your business’s ‘rateable remuneration’. So what is rateable remuneration?
Rateable remuneration is defined as the combined total salary and wages, superannuation and other benefits paid to employees.
As an employer, the amount of your WorkCover premium will depend on the total remuneration paid to your employees and, in some cases, contractors. Each year, you will required to estimate your annual remuneration and then, at year end, confirm what the actual figures were. This information is reported to WorkCover through a Rateable Remuneration Declaration.
If your annual remuneration is more than your estimate, WorkCover will issue you an invoice to pay the difference.
Conversely, if your annual remuneration is less than your estimate, you will receive a credit on your account or a refund - whichever is most appropriate.
WorkSafe do requoire that you update your remuneration estimate with if you predict that the annual remuneration is likely to increase by 20% or more from your original estimate. Similarly, you can also reduce your remuneration estimate if you know there will be a significant difference for the year from your original estimate.
The industry in which your business operates, and that state or states in which your business is situation will further impact the rate at which your Workcover premium is calculated.
Must all entities have Workcover insurance?
No, not all entities are required to have Workcover. Not-for-profit, public benevolent institutions, religious institutions are exempt from needing a Workcover insurance policy, however it is recommended that you do effect a level of cover.
How do I register for Workcover?
Registering for WorkCover is as simple as completing an online form (paper application forms may still be available). Before completing your application form, you will need to have the following business information handy:
- Number of employees, physical location of work, activities undertaken, materials and equipment used, etc.
- Projected revenue, direct costs and labour expenses.
Given the nature of the information required it is wise to consult with your accountant before completing the form. Platinum Accounting & Taxation can look after your WorkCover requirements as a stand-alone service or as part of our comprehensive business compliance services.
I have multiple businesses - how does this impact my obligations?
For the purposes of Workcover, multiple entities or businesses are grouped where the two businesses are related, a person has controlling interest in two or more businesses or have employees who work between both business.
There may be circumstances where you wish to have a business excluded from a group. WorkCover can provide you with a conclusive determination to this end.
Who is covered by Workcover?
Anyone who receives wages from your business or within your business group is effectively covered by your WorkCover policy. It’s absolutely essential to declare the correct value of wages and number of employees and contractors covered by your WorkCover policy. This will ensure then, in the case of a claim, that the employee or contractor is in fact covered.
- Employees - The primary group covered by WorkCover insurance is employees. This includes full-time, part-time, and casual workers who are employed by a business. WorkCover provides protection for employees who sustain work-related injuries, illnesses, or accidents.
- Contractors and Subcontractors - In many cases, contractors and subcontractors are also covered by WorkCover insurance. However, the coverage may depend on specific factors such as the nature of their work, their relationship with the hiring party, and the applicable laws in each state or territory. It is important to assess the individual circumstances to determine if WorkCover insurance applies to contractors and subcontractors.
- Apprentices and Trainees - Apprentices and trainees are generally covered by WorkCover insurance. This coverage ensures that individuals undergoing vocational training and development are protected in the event of work-related incidents.
- Volunteers - in very specific and limited circumstances
What happens if I don’t have a WorkCover policy?
If you fail to register for WorkCover insurance and one of your workers suffers an injury at work, the WorkSafe may still pay compensation. However, the cost of compensation provided to your worker will be recovered from you and you may also face a significant fine. The penalties are outlined in WorkSafe’s premium rulings on their website.
To continue the conversation about WorkCover, or any other matter, please get in touch with us at Platinum Accounting & Taxation (03) 9746 6479.