What Is Workers Compensation Insurance?

Every workplace is supposed to be safe for both employers, employees and visitors. No matter how much you risk-proof your workplace and conduct WH&S inductions, there is bound to be incidents here and there. Sometimes those incidents can be a bit more serious and will lead to time off work and medical costs – workers compensation insurance will help you dealing with those incidents as they come.

Who needs it?

Almost all employers who pay more than $7500 in wages per year will need to have some level of workers compensation policy in place: for full-time, part-time, casual employees, whether under an oral or written contract.

How do I get it?

You can apply for insurance through any of the insurance agencies, found at the WorkCover website. Premiums and the level of cover are set by the government public financial enterprise iCare, whilst the insurance companies act only as agents for iCare.

For medium to large businesses, you will need to provide evidence and an estimate of wages payable at the beginning of the policy period and then keep records to provide evidence of actual wages at the end of the period.

What does it cover?

Whenever you are injured, there are a seemingly endless stream of bills that somehow arise – workers compensation will cover a wide range of these costs (and are generally capped for most claims), and include:

  • Permanent injury
  • Death
  • Short- to medium-term injuries
  • Property damage
  • Legal costs (for claim disputes)

What is the regulatory scheme?

The NSW workers compensation system is provided and regulated through three agencies: iCare, the State Insurance Regulatory Authority (which monitors claims and payouts) and SafeWork NSW (which regulates WH&S in workplaces). Most of the time you will only deal with WorkCover (when you report incidents and injuries) and your insurance agent – any disputes about claims and payments is made between the employee and the insurer.

Ways to reduce your premium

The NSW Government in 2015 introduced reforms to change the way premiums are calculated and regulated. In addition to the new regulatory bodies, there are now ways for businesses to reduce their premiums: a performance discount will apply where business can prove a track record of an effective injury prevention system, support provided for workers returning to work and how quickly they return to work.

It is important then you have a clear policy on workplace safety, maintain a return to work program that outlines your commitments to helping employees return after an injury – it could save your company a lot over the long run. For more on injury management at the workplace, see our blog post.

Where to from here

If you are required to obtain workers compensation insurance, contact one of the insurance agents to discuss an appropriate policy for your workplace and negotiate premiums. It’s one of those “I hope never to use it but glad I have it when things go wrong” things in life, and even if not required at law workers compensation insurance is just good practice for any prudent and responsible company. It may also be a good time to review the contracts with your employees – have a look at our legal document tool for quickly making employee agreements.

Unsure where to start? Contact a LawPath consultant on 1800LAWPATH to learn more about customising legal documents, obtaining a fixed-fee quote from our network of 600+ expert lawyers or any other legal needs.

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