What is Workcover Insurance?
Workcover Insurance premiums provide insurance cover for the costs of benefits if your workers sustain a work related injury or illness.
Benefits include: weekly payments, medical treatment/rehabilitation costs, legal costs and lump sum payments if there is a serious injury.
Workcover and Companies:
Directors and employees that receive salary and wages are workers and are covered for workcover purposes. You must register for Workcover if your remuneration (salary and wages) is over $7500.
Workcover and Sole trader/Partnerships:
If you are a sole trader or partnership you are not an employee and cannot be covered by Workcover.
Buying out your excess:
If one of your workers is injured at work, generally you are responsible for the first 10 days of weekly benefit payments and the first $667 (2015/16) of reasonable medical expenses.
However, you can remove this amount, known as the employer excess by taking up the buy-out option and paying an additional 10% on your premium.
Small employers – If your rateable remuneration is $200,000 or less your premium is calculated using the industry rate.
Larger employers – if your rateable remuneration is $200,000 or over then the premium is calculated on the rate of your industry, and any recent workers’ compensation claims.
Rateable remuneration can include both cash and non cash items.
Cash items include:
- Salaries and wages
- Annual leave and LSL payments
- Director’s fees
- Fees for work performed
- Payments to deemed Contractors. Normally a three part test will determine if a contractor is deemed to be an employee. They are:
1) The provision of materials or equipment is not the principal object of the arrangement,
2) At least 80% of the work is performed by the same individual, and,
3) At least 80% of the contractors overall services income is earned from the hirer.
Please see vwa.voc.gov.au/contractor for more information.
Items not included in Rateable remuneration:
- Some remuneration paid to apprentices and trainees
- Dividends to shareholders
- Trust distributions
- Partner drawings and
- Termination payments – such as payments in lieu of notice, accrued holiday pay.
There is currently a lot of activity in the Workcover compliance area. If you would like to discuss your Workcover obligations further or need assistance with applying for Workcover please give us a call on (03) 9370 1989.