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.
Premium calculations:
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:
Rateable remuneration can include both cash and non cash items.
Cash items include:
- Salaries and wages
- Allowances
- Annual leave and LSL payments
- Bonuses
- Director’s fees
- Fees for work performed
- Superannuation
- 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.