Workers Compensation

All employers in NSW are required to have a current workers compensation policy.  In the event of a workplace injury or disease, the policy may provide the worker with:

• Weekly benefits if unable to perform work duties
• Medical and hospital expenses
• Rehabilitation services
• Certain personal items (e.g. clothing, spectacles if damaged in a work-related accident)
• A lump sum payment for permanent impairment and pain and suffering.

The policy covers all workers for injuries sustained in the course of their employment whether full-time, part-time, casual or supported employees.  Some people are deemed to be workers such as some contractors e.g. if a contractor works for you exclusively for a long period of time and has no employees of his or her own he/she may be a deemed worker and, if injured, could claim compensation.  Policies are available through the seven scheme agents for the NSW WorkCover Scheme.

• QBE
• Allianz
• GIO
• CGU
• Employers Mutual
• Cambridge
• Gallagher Bassett

Or you may be eligible for insurance from a speciality insurer – Catholic Churches Insurance, StateCover.  The scheme agents deliver claims and policy services under commercial contracts.  The scheme agents calculate an employer’s premium, determine the effect, if any, of claims on that premium and issue the workers compensation insurance policy. 

An employer’s premium is calculated twice for each period of insurance.  The initial premium (called the premium estimate) is calculated at the beginning of the policy period.  It is based on an estimate of wages that an employer is likely to pay during the policy period.

The final premium (called the hindsight premium) is calculated at the end of the policy period.  It is calculated using the actual amount of wages paid by the employer during the policy period.  The difference between the two determines if further payments are required or if a credit for overpayment is available.

The Scheme Agent calculates your premium based on:

1. Classifying the business and assigning an industry rate

• Information you supply about your business activities on your wage declaration forms helps the insurer to allocate your business to an industry class in the WorkCover Industry Classification (WIC) system.  WIC rates are based on the costs of all workers compensation claims lodged with employers in the same industry classification and are reviewed annually by the scheme actuaries and gazetted in the Insurance Premium Order.

2.Calculating the basic tariff premium, making adjustments as required and issuing the Premium Demand Notice

• Basic tariff premium = wages x WIC rate
• Where the employer has a multi-tariff policy (employees in different industry classifications), the basic tariff premium formula is repeated for each applicable industry class, and the outcomes added together to produce the total basic tariff premium.  The minimum premium is $175, even if the calculation produces a lower amount.  Multi-tariff policies may only be held where an employer is operating separate and distinct businesses.
• If an employer’s basic tariff premium is more than $10,000 and annual wages are more than $300,000 then an employer will have their premium experience adjusted based on cost of claims incurred.

3.Applying the experience adjustment formula for medium and large employers

• Caps have been applied to provide most medium employers with greater protection from significant experience-based premium increases.  For experience adjusted employers with a basic tariff premium:
  • Greater than $10,000 but less than $50,000, the total premium cannot exceed one and half times the basic tariff premium
  • Equal to or greater than $50,000 and less than $150,000 the total premium cannot exceed two times the basic tariff premium
  • Equal or greater than $150,000 and less than $3000,000 the total premium cannot exceed two and a half times the basic tariff premium.

• For the purposes of calculating a medium or large employer’s experience premium, claims costs include:
  • All payments made by the Scheme Agent in respect of the claims, including weekly benefits, medical expenses and service provider costs
  • The estimated costs of all future payments arising from the claims, calculated in accordance with the WorkCover’s Claims Estimation Manual, as at the expiry or renewal date of the policy.
• The initial experience premium is calculated using the employer’s wages and adjusted claims costs for the two years prior to the commencement of the policy period.
• The hindsight experience premium is calculated using the employer’s wages and adjusted claims costs for the previous two years, together with the wages and adjusted claims costs for the current year of cover.

Your scheme agent should employ a variety of staff, including:

• Account/business managers (also called underwriting staff), who answer queries about premium calculation, underwriting and general performance of your account, they do not usually deal with individual claims,
• Claims officers, who manage claims, process payments and determine liability, and
• Injury management advisers, and/or case managers, who develop injury management plans for injured workers, and help employers and workers coordinate treatment, rehabilitation and return-to-work matters.

Other services you would expect to receive from your scheme agent include:

• Regular claims review meetings – this allows you to update the insurer on progress of injured workers in resuming pre-injury duties and plan any activities required to progress the claim.  You should also check on barriers which exist to a resumption of full duties such as looming disciplinary action etc.  This can have an effect on the estimate placed on the claim which will influence the experience calculation.  You should therefore prepare for such meetings and take the time to ensure that the claims officer has all relevant information and has taken all required actions such as medical reviews, investigations etc.  Ask the question “How can we further reduce the cost of this claim?”
• Regular printouts outlining claim status – this allows you to monitor payments made etc
• Single point of contact for all your claims – this ensures that the claims officer has a thorough understanding of the nature of your business, its inherent risks and any special requirements such as communication issues with your supported workers and supervisors etc.
• Clear and concise information – your scheme agent should be able to respond to any queries you might have regarding your policy or claims estimates,
• Speedy response to enquiries – your claims officer should provide a quick response to any claims enquiries so that early decisions are made regarding medical treatments, denial of liability etc.
• Speedy action on claims including approving investigations and making payments so that treatment can be commenced and a return to work can be progressed quickly.

 The claims process:

• The worker must give notice of injury as soon as possible after the injury preferably in writing but it can be verbal.
• The worker should consult a medical practitioner and obtain a WorkCover medical certificate and if a significant injury, nominate a medical practitioner to undertake the role of nominated treating doctor.
• You must notify your insurer within 48 hours of first becoming aware of an injury.  The initial notification can be done by the injured worker or their representative or by the employer or their representative.  Notification can be done electronically, in writing or verbally (including over the phone).
• The insurer(scheme agent) must authorise provisional payments unless there is a ‘reasonable excuse’ within 7 days of receiving the initial notification.  This is without admitting liability and enables immediate payment of lost wages and medical expenses.  Provisional liability exists for a maximum of 12 weeks and maximum of $7500 for medical expenses.  Reasonable excuses for not commencing provisional payments include:
  • Insufficient medical information
  • Injured person is unlikely to be a ‘worker’
  • Insurer is unable to contact the worker
  • The worker refuses access to information
  • Firm evidence that the injury is not work related
  • Injury is not significant (insurer may extend time to assess entitlements to 21 days)
  • Notice of injury is not given to the employer within two months after the date of injury (insurer may ignore this excuse if a liability is likely to exist).
• The insurer may request a claim form if the worker requires benefits that exceed that available under provisional liability.  The completed claim form may be given to the employer or the insurer.  The employer must forward the claim form and any other documents to the insurer within seven days of receiving them.  Additional documents include WorkCover medical certificates and receipts for services.
• The insurer must generally determine if they are to accept liability for the claim within 21 days of the claim being made except where making provisional payments or if the claim is for lump sum permanent impairment.

It is important to note that a claim for compensation benefits must be made within six months of when the injury occurred, or within six months of when the worker first became aware of their injury and no compensation benefits are payable if a claim is not made within three years of the injury or when the worker first became aware of their injury, unless the injury results in death or serious and permanent disablement.  However, if the injury is recorded in a register of injuries within six months of the injury the time limit provisions do not apply.

The insurer is required to prepare an injury management plan in consultation with the doctor, employer and worker for significant injuries (more than 7 days absence from pre-injury duties) and to monitor and review that plan.

References:

WorkCover NSW Workers Compensation and Injury Management Fact Sheet 1,2 and 6

WorkCover NSW Introduction to Return to Work Coordination Workbook for participants and trainers

WorkCover NSW Workers Compensation (weblink) http://www.workcover.nsw.gov.au/aboutus/workerscompensation