2023/24 WorkSafe Victoria Workers’ Compensation Renewal Guide

WorkSafe has recently released the 2023/24 Victorian Government Gazette for Premiums Order and Gazette rates. The Premiums Order (No. 31) is applicable to WorkCover insurance premiums for the 2023–24 years. It outlines the methods for calculating premiums that employers need to pay for their WorkCover insurance. The Order also includes industry classifications and rules assigned to employer workplaces.

Want to Renew Your Policy and Save Time?

Renewing and managing your policy with myWorkCover can simplify the process of renewing and declaring your wages. When you appoint myWorkCover to handle your policy, we ensure that your business classification is accurate and that you pay the appropriate premium. By renewing your policy with us, you gain various benefits. Firstly, you'll have the opportunity to identify any discounts you're eligible for. Additionally, you can compare your claims performance to the industry average, allowing you to assess how well your business is performing in terms of claims. Moreover, renewing your policy will help you understand the factors that influence the calculation of your premium, such as wages or industry rates.

It's important to note that each legislative state publishes industry rates and claims cost rates annually, which play a significant role in calculating an employer's premium based on their workplace classification. Additionally, the claims you've been involved in can affect your WorkCover insurance premiums. Payments associated with a claim, including estimates of future costs, are known as claim costs.

For more detailed information, you can visit the provided sources.

Statistical Case Estimation (SCE): A Comprehensive Guide to WorkSafe Victoria SCE Model & Premiums

What Effects Do WorkCover Claims & Other Factors Have on Your Premium & Advice?

Victorian Employers with Small Claim Costs Set to Reap Benefits from 2023-24 Industry Rate Surge!

2023/24 New Gazette Rules: 75% Capping and 1.8% Industry Rate - How Will Your Premium Be Affected?

Modernisation of the WorkSafe Victoria Scheme in 2023/24

WorkSafe Victoria has recently implemented significant changes to the management of workers’ compensation premiums and claims. These changes have several implications for employers and workers in Victoria. If you believe this will impact, you and/or your business reach out to?myWorkCover for a free and confidential health check on your policy to see where we can help you be compliant and ways to save your premiums.

"There’s nothing safe about being sick – we’re helping workers return to their jobs and making sure WorkCover can support Victorians for many years to come". Premier Daniel Andrews

"We’re modernising the WorkCover Scheme and establishing Return to Work Victoria, so that no injured worker is left behind". Minister for WorkSafe Danny Pearson

Summary:

1. The minimum premium:?$330 plus charges.
2. Increase in Industry Rates:?WorkSafe Victoria has announced an increase in industry rates, which will impact the WorkCover bill starting in July 2023. Most industries will have a significant increase in their premium up to more than 150%. Labour hire services have increased by 145% while others such as House Construction have increased by 32%.
3. Premium Capping Increase: Premium capping is the maximum limit on the amount an employer needs to pay for workers’ compensation premiums. The search results state that premium capping has increased from 30% to 75%. This means that employers’ premium payments are limited to a maximum of 75% of the potential premium amount.
4. Claim Capping Increase:?Claim capping refers to the maximum limit on the amount of compensation a worker can receive for a claim. According to the search results, the claim capping has increased from $438,300 in 2022/23 to $450,500 in 2023/24. This means that the maximum compensation amount for workers’ claims has been raised.
5. Increase in Premium Percentage:?The search results mention that organisations will experience a 42% increase in premiums paid. The premium percentage paid by employers will rise from 1.272% to an average of 1.8% of the remuneration. This increase in premiums aims to ensure the ongoing financial sustainability of the WorkCover Scheme.
6. Changes to Workers’ Compensation Test:?The test for workers receiving WorkCover weekly payments beyond two-and-a-half years will be changed. To conform with the policies of other states and territories, WorkSafe will modify the assessment for individuals who have been receiving weekly benefits for two and a half years. The new assessment will more objectively evaluate the extent of physical and mental impairment in conjunction with work capacity. Following the implementation of this change, a Whole Person Impairment of over 20% will be necessary, in addition to the capacity test, for a worker to continue receiving weekly benefits after two and a half years. Return to Work Victoria will offer injured workers various options for finding appropriate employment, such as training and incentives for job placement.
7. The sizing factor value for 2023/24:?the sizing value increased from 600,000 to 1,700,000 and is used in the calculation to determine the premium rate for the industry. This value is a key factor in determining the premium rate, and it is used in conjunction with other factors such as the industry classification and the estimated wages of the business. The sizing value is set by the relevant authority and is subject to change over time. The sizing value of 1,700,000 is a crucial component in this calculation, as it helps to standardise premium rates across different industries and ensure that businesses are paying a fair and appropriate amount for their workers’ compensation coverage. The formula: Size adjustment factor = XT ÷ (XT + sizing value), where XT is the sum amounts produced by applying the formula?IR (industry rate) x RCOV (remuneration of coverage)?to each experience period workplace of the employer for each relevant period of coverage.
8. Eligibility for Stress and Burnout Claims:?Harassment, bullying and post-traumatic stress disorder will remain on the scheme. Workers experiencing stress and burnout will no longer be eligible for weekly benefits. Instead, they will receive provisional payments for 13 weeks to cover medical treatment. This change may reflect a shift in the eligibility criteria for mental health-related claims.
9. Splitting of Industry Classifications:?WorkSafe Victoria has further categorised industry classifications between the public and non-public sectors. Public industries are typically associated with higher industry rates compared to private industries. The growing list of industries now includes Primary Education, Secondary Education, Special School Education, Combined Primary and Secondary Education, Ambulance Services, Other Social Assistance Services, Hospitals, Technical and Vocational Education and Training, Rail passengers, Correction/Detention Services, and General Insurance.
10. Indexation to Medical and Like Services: The employer initial liability threshold amount for?medical and like services effective 1 July 2023 will increase from $763 in 2022/23 to $824 for 2023/24.
11. Indexation to maximum entitlements to weekly payments:

• For claims where payments?commence from 5 April 2010 - $2,660
• For claims received before 5 April 2010 but made after 12 November 1997 - $1,960
• For claims made before 12 November 1997 - $1,550

Workplace Injury Rehabilitation and Compensation Act 2013 WORKCOVER PREMIUMS ORDER (NO. 31). The Authority determines 2023/2024 Specific values and rates itself.

All employers’ Victorian Workcover policy has expired on 30 June 2023 and WorkSafe will automatically renew the 2023/24 policy with a Preliminary Estimate of Rateable Remuneration with a pre-loading of an increase in line with the Consumer Price Index (CPI).

The Premium will be calculated using the Preliminary Estimated Rateable Remuneration.?This estimated amount will be based on the most recent estimated 2022/23 remuneration figure available.

Estimating Your Rateable Remuneration

If your 2022–23 estimated rateable remuneration was $200,000 or less, then your premium for 2023–24 is calculated using your industry rate and your rateable remuneration. If your 2022–23 estimated rateable remuneration was more than $200,000, then your 2023–24 premium will be calculated using your industry rate and any recent claims experience.

If you believe WorkSafe’s estimate of Rateable Remuneration is either too low or too high, you can provide your estimate of Rateable Remuneration.?Thus, the Premium will be calculated using your estimate of Rateable Remuneration.?

Your estimate of Rateable Remuneration must be submitted before the Discount due date to receive the discounted benefit offered by WorkSafe.?

Please allow sufficient time for WorkSafe to issue an Adjusted Premium Tax invoice for payment.

Claims Statement available online – 10 May 2023

For employers who filed claims between 1 January 2020, and 31 December 2022, the WorkCover Insurance Claims Statement can be obtained via Worksafe's Online Employer Services beginning on 10 May 2023. This statement is provided once a year and serves as the basis for determining the premium for the 2023-24 fiscal year.

Dates for Certifying your 2022/23 Remuneration

The due date for certifying remuneration is stated in an employer’s renewal pack.

Importance Note

If you do not certify your Rateable Remuneration for 2022/23 by the due date, WorkSafe will be assessed/deemed the remuneration by assessing a minimum of 20% above the highest previous figures.?Where Rateable Remuneration is not certified or is incorrectly certified, an Underestimation Penalty charge may apply. See Underestimation Penalty

2023/24 Preliminary Premium Tax Invoice

The 2023/24 Premium Tax invoice is scheduled to be issued on 8 July 2023.

What to do when I receive WorkSafe Premium Tax Invoice based on the Preliminary Estimated of Rateable Remuneration.

• Pay your premium as indicated on the invoice if you agree with WorkSafe's estimated remuneration and no other factors need to be changed. Throughout the year, you can make any necessary changes. This is a good practice to avoid the underestimation penalty.
• If you disagree with the estimated remuneration figure used in your 2023/24 premium calculation, you must provide your estimate based on your rateable remuneration for the financial year 2023/24. This estimate will be used to calculate your initial 2023/24 premium. Premiums must still be paid by the dates specified in the Renewal Notice.
• Buying out your excess - the first 10 days of weekly benefit payments and the first $763 (for 2022/23 and indexed annually) of reasonable medical and like expenses. The employer's medical excess does not apply to claims where the worker is entitled to Provisional Payments for a claimed mental injury.

Payment Option & Discount Notice

Employers cannot receive two discounts for the same policy period. Employers can only claim one of the two discounts: 3% or 5%. If you choose the 5% discount and then make another change that increases the Premium difference, you will be unable to claim the 3% discount. Additional discounts are only available if the revised adjustment is made before the 5% discount due date.

Payment Options:

1. Annual Payment - Premium under $1,000
2. Monthly Payment - Premium above $50,000
3. Quarterly Payment - Premium less than $50,000

Penalties:

Late Payment Penalty Rate:

• Annual Rate: 8.6429%.
• Monthly Rate: 0.721%

Uninsured Penalty:

• Standard 15% of the total premium but can be up to 100% of the premium

Note: WorkSafe will charge a Late Payment Penalty if payment is paid after the due date and is compounded monthly until the arrears are fully paid. See Penalties .

When to revise your estimated rateable remuneration – to avoid Underestimation Penalty

When to revise your estimate of rateable remuneration You are required to revise your estimate of rateable remuneration if:

• it exceeds or is likely to exceed the WorkSafe estimate, or your previous estimate, by more than 20%, or
• at any time (before 30 April 2024) the rateable remuneration you have paid, or you are liable to pay, is greater than the last estimate you provided.

Important Note:

Within 28 days of becoming aware of the changed circumstances, you must provide a revised estimate to your agent/insurer. If you fail to notify your Agent/insurer of changes to your estimated rateable remuneration, you may be fined up to 100% of the premium difference for the financial year.

2023/24 Premium – key facts

For subclause 29(6) of the Premiums Order, the default industry rate is 18.00 % and the default industry claims cost rate is 0.177%

2023–24 Premium - due dates

Definition of Rateable Remuneration

The Rateable Remuneration is made up of:

• Gross Salaries/wages
• Superannuation
• Salary sacrifice (employee self-contribution)
• Contractors
• Fringe Benefits Tax (FBT)
• Director fee paid to a working director
• Other Benefits and Allowances which form part of a worker’s remuneration

For the full list see the remuneration matrix

Apprentices:

An Accredited apprentice’s remuneration is not Rateable Remuneration and is Exempt from the premium calculation.?However, you will still be required to disclose the amount of remuneration paid to the apprentice.

The apprentice has no remuneration threshold.

Trainees:

An Accredited Trainee’s remuneration is also exempt from the premium calculation and is still required to disclose to WorkSafe.

A trainee has a remuneration threshold of:

• $47,610 or less in 2019/20
• $49,120 or less in 2020/21
• $51,320 or less in 2021/22
• $51,770 or less in 2022/23
• $53,210 or less in 2023/24

If your trainee's annualised remuneration is paid above this threshold, then the trainee’s remuneration will be considered Rateable Remuneration for WorkSafe Premium calculation and must be certified as deemed workers under the Gross Salary/Wages section.

Fringe Benefits Tax (FBT)

If you are a charitable organisation and your FBT is exempt from ATO, then your FBT will also be exempt from WorkSafe Premium Calculation.

Trust Distribution & Dividends

All listed individual trustees who receive trust distribution are exempt from WorkSafe Premium Calculation.

Dividends paid as profit to directors are also exempt from WorkSafe Premium Calculation.

Employee or Contractor?

It is important to know the differences between an employee and a contractor (also called an independent contractor or sub-contractor) as this will affect your responsibilities, such as paying superannuation contributions.

For full details on ‘contractor provision’ click here .

A worker isn’t automatically a contractor just because they have specialist skills, or you only need them during a busy time. You need to consider the whole working arrangement. The easiest way to determine someone’s status is to use the Australian Tax Office’s (ATO)

https://www.ato.gov.au/Calculators-and-tools/Employee-or-contractor/

You can also look at?Mistakes to avoid ?relating to employees versus contractors on the ATO website.

In simple terms, employees work in your business and are part of your business, while contractors run their own businesses and provide services to your business.

Other differences are outlined below:

?TIP: A worker with an ABN is not automatically a contractor.

IMPORTANT NOTES:

Volunteers are not regarded as workers. Employers of volunteers are not required to take out workers’ compensation insurance for their volunteers but still have a duty to provide a safe working environment for them.

Employers that operate as sole traders or partnerships are not covered under the WorkCover Scheme in any state or Territories in Australia. These types of policies will only cover their workers and contractors who are deemed workers under the “Contract Provision”. It is compulsory to take out a Workers' Compensation policy for employers who pay or expect to pay wages exceeding the minimum threshold in a policy period, or who hire apprentices or trainees to register for WorkCover Insurance. The threshold could vary from State to State, but generally, it is $7,500.

In South Australia, it is $14,920 for the 2023/24 financial year and it is indexed each year. If one of your workers is injured at work, you must contact RTWSA or your Authorised Representative to report the injury and at this time you will need to register and pay our minimum premium.

See 2023/24 ReturnToWorkSA (RTWSA) - Workers' Compensation Renewal & Premium Rates - My WorkCover Solutions Pty Ltd

Note: in the Territory of ACT, NT, TAS, and WA there is no minimum wage threshold.

• Working directors & Contractors are not covered in the state of Queensland.
• Working directors who are operating as an incorporated entity will get cover in the States/Territories of Western Australia, Tasmania, Australian Capital Territory, Northern Territory, Victoria, New South Wales, and South Australia
• In Western Australia, Australian Capital Territory, Tasmania & Northern Territory, for a working company director, working directors’ names & wages must be stated and specify their names on the registration or the renewal wage declaration form.

Note: In Western Australia – The working director can opt-in or opt-out of coverage only at the start of renewing the policy. Working director for a public company is excluded.

• A business that operates through a Trust and the Trustee is an individual or partnership is not covered in any States/Territories of Australia. This type of policy only covers its’ workers and contractors who are deemed workers under the “Contract Provision”. If you are unsure, please use the following link from the Australian Taxation Office (ATO) - A Guide to determine if your contractor is deemed a worker.

https://www.ato.gov.au/Calculators-and-tools/Employee-or-contractor/

• Trust Distribution – To trustees, directors and beneficiaries are not deemed as wages in any States or Territories. But if trust distribution to a working director is in lieu of wages then it is considered wages and is rateable for WorkCover Premium purposes.
• An Incorporated Entity- Director Fee paid to a Working Director is deemed as wages and must be declared along with their wages to the WorkCover Authority for Premium purposes.
• An Incorporated Entity – Director’s fees that are distributed to a Non-Working Director are not deemed as wages under the WorkCover Scheme and therefore are not rateable for WorkCover Premium purposes.
• Dividend Paid to Working Director – Profit that distributes as a dividend at the end of the policy year is not considered wages. But if the dividend is distributed in lieu of wages, then it is deemed rateable for WorkCover Premium purposes

Author: Yon Ta, updated 13 June 2023

Disclaimer:

The information presented in this post, article or book is intended solely for informational and educational purposes and should not be considered legal advice. It does not express specific opinions on individual cases. Before taking any action based on the information provided, it is strongly advised to seek additional professional advice. This information should only be used to gain a better understanding of how Workers’ Compensation insurance functions and is purely illustrative. My WorkCover Solutions Pty Ltd disclaims any liability for any losses or damage resulting from the use of or reliance upon the information provided. The information in this article is believed to be accurate as of its publication date. However, please note that changes in applicable laws may affect its accuracy. This article provides general information and does not take into account any specific person’s circumstances. It may contain information about Workers’ Compensation insurance regulations in your State or Territory. To ensure compliance with legal obligations, it is recommended to refer to the current legislation in force in the State or Territory where your business operates. Up-to-date legislation can be found on the respective WorkCover Authority websites for each state or by contacting myWorkCover for updated information.