Several reforms to the NSW WorkCover scheme, designed to reduce the administrative burden on the state’s small business owners, will come into effect on 30 June this year.
The changes are intended to simplify the workers compensation process and create more certainty around premium rates. Importantly, these reforms include incentives for small employers to support injured workers to get back to sustainable employment as quickly as possible. They will affect nearly every small business in NSW.
Expansion of small employer category
One of the key changes to the scheme is a redefinition of what constitutes a ‘small employer’. Previously, small employers were those that paid $10,000 or less in workers compensation premiums. These businesses’ claims experience did not impact their premium rate.
Under the reforms, the threshold for small employer has now been increased to $30,000, meaning 95 percent of NSW employers will no longer have to be concerned about the impact of previous claims costs.
If this change is applicable to your business, it will provide you with greater certainty for when it comes time to pay for your workers compensation insurance. You will no longer face a situation where your high claims costs result in significant increases to your premium.
The renewals process
The renewals process has also undergone changes as part of the reforms. If your business is categorised as a small employer, you are no longer required to complete an estimated wages declaration in order to have your premium calculated.
The new process is as follows:
- Four-to-six weeks prior to the expiry of your policy, you will be sent an offer from your current Agent to renew your workers compensation. The premium calculation will be based on your previous actual wages, plus a factor that is yet to be determined (such as a CPI increase). If you have not provided your previous actual wages, a 30 percent loading will apply.
- In the four-to-six week period before the current policy expiry date, you are able to contact your Agent and adjust your wages level if you believe the figure used to calculate the premium for your renewal is inaccurate. It is very important that your wage information is correct. During this period, you are also able to cancel your policy or make other changes, such as adjusting the expiry date of your new policy.
- When the current policy expires and the renewal term begins, you will be sent a tax invoice for the renewed policy. You will have one month from the renewal date to pay for the policy, either in full or in instalments.
- Four months after the renewal date, you are required to submit your actual wages for the previous period. Previously, actual wages were required two months after the renewal date. An adjustment to your premium for the previous period will be made if the actual wages are different from the estimated wages figure used to originally calculate the premium. This retrospective premium adjustment process is relatively unchanged from the previous process.
It’s important to also note that there is a transitionary measure in place for when you renew your policy for the first time since these reforms took effect. Your Agent will calculate the renewal premium for your 2013/14 financial year policy based on the estimated wages that were used to calculate the premium for the previous period (2012/13 financial year). No loading will be applied to this initial renewal premium only.
Return to work incentives
The changes also introduced incentives to encourage small employers to ensure injured workers are returned to work as quickly as possible. A rapid return to work is the best outcome for everyone involved.
Upon renewal, you will be given a 10 percent discount on the basic tariff premium of your renewed policy. If all injured workers return to their pre-injury duties within 13 weeks from the date of injury, you will retain this discount.
If any injured workers do not return to their pre-injury duties within 13 weeks, your Agent will recover this discount. This will typically occur when other adjustments are made to the premium for the previous policy period (ie, when adjustments are made with actual wages information – see Step 4 above).
Policy expiry date rationalisation
The expiry dates for all policies have moved to the end of the month. Renewed policies will automatically change to expire at the end of the previous month (i.e. the new policy duration will be 11 months and a number of days). The renewed policy period cannot be longer than 12 months.
In addition, you have the option of moving your expiry date to your preferred month (e.g. 30 June). You are able to do this in the four-to-six week period between receiving your offer to renew and the actual renewal date.
Increased discount for payment in full
If you pay your premium in full by the due date (one month after your date of renewal), you will receive a five percent discount. This is an increase from the three percent discount that currently exists.
You have the option of paying your workers compensation premium in instalments, but this will not attract the five percent discount.