How WorkCover Claims Impacting Your Premium
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An Overview of WorkSafe Victoria Premium
Each legislative state publishes its industry rates and claims cost rates every year. These are used to calculate an employer's premium based on how their workplaces are classified. WorkCover insurance premiums may be affected by any claims you've been engaged in. Payments paid about a claim, including an estimate of future costs, are referred to as claim costs.
This includes the following:
How Workers' Compensation premium is calculated
The workers' compensation insurance?premium, for most businesses, is one of the biggest single costs paid every year.
The Act defines remuneration broadly, including wages, salaries, superannuation, and other benefits payable to workers.
Remuneration Matrix - Full guide can be found here .
The key elements that determine the premium payable are an employer's remuneration and the applicable industry rate. The Authority establishes industry rates, which are based on the claims experience of the employer's industry.
Workers' compensation premiums can be perplexing due to the formula's complexity and numerous variables, but knowing where your premium originates from might help you devise practical measures to lower it. We'll strive to clarify how premiums are calculated and help you understand how claims can affect your premium. We've highlighted the main aspects and variables that go into determining premiums, as well as some tips for keeping premiums low.
WorkSafe Victoria uses a complicated formula to calculate the employer's premium. Simply put, the premium is determined by the amount of remuneration paid by the employer, the industry in which the?business operates (industry rates), and the employer's history of claims (performance rating). The rate you will pay (workplace rate or employer's rate) will be determined by the employer's claim costs. As a result, the higher the claim costs and remuneration, the higher the premium that the employer must pay.
WorkSafe will include weekly payment costs only for claims made in the previous calendar year when calculating each year's premium. All other costs will be excluded; if a claim was made during that period and the worker returned to consistent work within the same time frame, the future cost will be minimised and thus have less of an impact on the employer's premium calculation in future years.
The performance rating compares an individual employer's claims experience to the average claims experience in the relevant industry. Employers whose experience is better than the industry average receive a discount against the industry rate. Those whose experience is worse than the industry average receive a loading on top of the industry rate.
What is rateable remuneration and how does it affect your premium?
Remuneration includes wages, salaries, superannuation and other benefits you pay to your workers before tax and can include both cash and non-cash payments. Remuneration matrix guidelines can be found here . Your remuneration also determines if your own claims experience is used in your premium calculation.
Remuneration for premium periods
During a premium period, the remuneration for a period of coverage at an employer's workplace is the sum of the rateable remuneration paid or payable to the employer's workers in respect of operations performed at that workplace during that period.
Remuneration if worker working at two or more workplaces and division of remuneration not identified
If a worker works for two or more employers and the remuneration paid or payable to the worker for work in each workplace is not identified, the proportion of the remuneration attributable to each workplace bears the same proportion to the total number of hours the worker is or was engaged works in those workplaces.
If an employer has two or more workplaces and the proportion of remuneration attributable to each is not reasonably ascertainable, the Authority may deem the proportion and require the employer to pay a premium based on the deemed proportions, subject to such terms and conditions as it determines.
Use of estimates by WorkSafe
WorkSafe must use the certified remuneration or WorkSafe's estimate of certified remuneration in calculating the premium payable by an employer. However, it is not available at the time of the premium calculation, WorkSafe may use the employer's or WorkSafe's estimate of remuneration.
WorkSafe estimates your rateable remuneration and calculates your WorkCover premium every July. If you don't agree with WorkSafe's estimate you can change it at any time to have your premium recalculated – the premium due dates still apply.
You're required to tell your WorkSafe agent your certified rateable remuneration by:
If you don't provide your certified remuneration by the due date that applies to you, WorkSafe will estimate your remuneration as 20% more than it was the previous year.
If you expect your remuneration to change
The amount you pay your employees is easily variable. You must provide a revised estimate to your WorkSafe agent within 28 days of becoming aware of:
Failure to notify your WorkSafe agent will result in a penalty of up to 100% of the insurance premium difference being applied for the financial year. You should also advise your WorkSafe agent if your actual remuneration will be less than your estimate so your future insurance payments can be adjusted.
If your remuneration is over $200,000, your premium will be calculated taking into account a weighting, based on your own claims experience. If you think this may affect you, talk to myWorkCover , we are here to help.
If you disagree with the estimated remuneration figure used to calculate your WorkCover insurance premium you can go login into your Online Employer Service insurance account and update your remuneration. You can then recalculate your premium and pay it on the spot. Alternatively, contact myWorkCover for assistance.
WorkCover Industry Classification (WIC): How it affects your premium
Every Victorian business will have a WorkCover Industry Classification assigned by WorkSafe based on the business activity. Heterogeneity businesses that have multiple business activities and workplaces will have several classifications such as a labour-hire business that can have hundreds or more workplaces and activities. Your WIC and rate reflect the claims experience of the industry you operate in. The factors used to classify your WIC and determined?the predominant activity performed by the business that generates its main source of income. The predominant activity at your workplace include:
A workplace with split classification
You can apply to split your classification if your workplace has two or more physically distinct areas of operation and the main activity of each one is different.
You can't split your workplace if your main business activity includes:
Capping Factor: How it affects your premium
The capping factor caps an increase in an employer's premium rate for specific workplaces so that the premium rate for those workplaces does not rise by more than the applicable capping value from year to year. This protects employers from receiving dramatic increases in the amount they must pay from one year to the next as the premium rate rises.
2023/24 policy period, WorkSafe has announced an increase in the capping rule from the previous 30% to 75%.
Increases are limited by a percentage of the premium rate, which is expressed as a number in the capping value. A capping value of 1.75 caps increases by 75%. The capping factor is applied to current risk workplaces and imputed workplaces where the industry classification has not changed since the previous premium period.
Capping occurs when a limit is placed on the size of your premiums. If nothing changes in your business classification, and you're continuing normal operations, your premium rate will not exceed 75%. A limit of 75% is placed on premium rate increases to protect your business from premium rate fluctuations. If you change industries, this limit is not used, and your rate will be uncapped. Importantly, the cap is placed on the premium rate for your industry, not on the amount of premium you pay. Any change to your premium is influenced by changes in your remuneration only.
The capping factor does not apply to workplaces that did not operate during the previous premium period (i.e. new-risk workplaces). The employer's nature determines the applicable capping value. If an employer pays less than its full premium due to the capping factor, the premium rate will gradually increase by a maximum of the applicable capping value per year until the employer pays the full, uncapped premium.
Generally, your premium rate won’t increase by more than 75% if you're continuing normal operations and your classification has not changed or your workplace hasn't been added.
Comparative Rate
The capping factor (see above) is calculated using the comparative rate. The current premium rate is compared to the comparative rate in that calculation to determine whether the increase in the premium rate from the previous year is greater than the applicable capping value; if so, capping may be applied.
The comparative rate for an employer who continues to operate in the same workplaces and industry from one year to the next will be equal to the previous year's "current risk premium rate." If an employer has imputed, predecessor, or related employer workplaces, the premiums for those workplaces are factored into the comparative rate calculation.
Excess buyout for premium payments
Understand the effect of an excess buyout on the cost of your premium.
Excess Buy-out/Buy-out Premium
The Authority’s obligation to indemnify an employer in respect of the employer’s liability to pay compensation and damages by the Act is subject to an excess in respect of each claim. An employer may elect to eliminate the excess payable, in which case an additional amount is added to the employer’s WorkCover premium (referred to as the buy-out premium). That election is generally made on registration. Employers may change their elections from time to time. However, for a chance to have effect in the current premium period an employer must notify the Authority in writing by 1 August each year.
When one of your workers is injured, you are liable to pay an excess. You can avoid the risk of paying the employer excess by selecting the excess buyout option on your WorkCover Insurance premium. This can be a cost-effective option and is paid as an additional 10% on your premium.
The excess buyout option is available to all employers. If you intend to buy out your excess, or you already have the excess buyout option and do not intend to continue with it, you must notify your WorkSafe agent (also known as the "insurer").
Selecting the buyout option makes it easier for employers, especially small businesses, by significantly reducing the administrative and financial impact on a business in the early stages of an accepted claim.
Note: Generally, you would take up the buyout option if you know from the history of your Workcover claims per year, if medical and like expenses exceed the employer excess threshold, it is advisable to select this option. However, if you are not anticipated that you would exceed the excess threshold, buyout option is not a viable selection. The employer excess threshold is indexed each year, for 2022/23 the excess is $763.00
Previous claims: How they affect your premium
How previous claims can affect the cost of your premium. Any claims you have been involved with may affect your WorkCover insurance premium. WorkSafe categorises a business from Small, Medium to Large Employers.
Small employers
If your rateable remuneration is less than $200,000, your premium will not be affected by your claims costs as you are classified as a small employer.
Note: If your estimated rateable remuneration at renewal is below $200,000 but when it's time to declare your actual/certified rateable remuneration at the end of the policy period which is after 30 June, and your certified remuneration is above $200,000, your claim costs will be included in the re-calculation of your premium.
Medium to large employers
If your rateable remuneration is over $200,000 your premium will be calculated by taking into account your WorkSafe claims to report period, relative to the claims experience of the rest of the industry. Businesses with a claims history will be given a rating, which also affects your premium if you have wages totalling more than $200,000 per year. Your claims rating can be found in the premium notice that you receive at renewal. If you perform better than your industry average, you will pay less. If you perform worse, you will pay more. See 'Employer's Performance Rating'
Note, if an employer's premium has increased by more than 75% from the previous year due to the impact of claims costs, the premium is capped at 75%. The law says that an employer's premium cannot be above more than 75%.
Cost of claims and recoveries
The total cost of claims relating to an employer's workplace is the total of all individual claims received by WorkSafe during the claims reporting period, claims reporting period means the period commencing on 1 January 2019 and ending on 31 December 2021 for the 2022/23 fiscal year. The remuneration experience period is from 1 July 2018 ending 30 June 2021. The maximum recovery for an individual claim allocated to an employer's performance calculation is $438,300.
Cost of an individual claim
The cost of an individual claim is the lesser of:
Conditions:
As an exception to the above, If WorkSafe receives an individual claim between the claims reporting 1 July 2019 and ending on 31 December 2021 for the 2022/23 fiscal year period. The cost of the claim is the lesser of $438,300 and the sum of the compensation payments, if any, of weekly payments made by WorkSafe in respect of the claim under the Act or the Accident Compensation Act; however, the sum of the compensation payments of weekly payments is subject to the above conditions.
If, about an individual claim, WorkSafe has, during a review of an objection lodged by the employer under the Accident Compensation Act or section 79 of the Act, set aside the decision to accept the claim for compensation against the employer under the section of the Act, or the Supreme Court has, on an appeal by the employer under the Act, determined the alleged worker was not a worker within the meaning of the Accident Compensation Act; or the claimed employer was not the correct employer of the worker at the time of the relevant injury or death, then this rule will apply and the cost of the individual claim is zero.
Note: Cost of an Individual Claim cannot be less than zero If the cost of an individual claim derived through the application?is less than zero, then the cost of that individual claim is taken to be zero.
Estimation of the outstanding liability
The estimations referred to in clause 33 of the Premiums Order;?must be made by the Authority itself and by procedures determined by the Authority itself, and constitute an estimate of the future cost of claims for the definition of estimated future claim cost in section 460 of the Act.
The estimations must include an amount equal to the sum of all amounts paid about the claim or in satisfaction or purported satisfaction of the employer's or WorkSafe's?liability or potential liability in respect of the claim (other than any amount paid in satisfaction of the employer's liability under sections 125(1)(a), 125A(3), or 72(1) of the Act) that have not been reimbursed.
Date of determination of cost of claims
The cost of an individual claim is calculated?at a time designated by the Authority (the relevant time)?and based on information in the Authority's possession at the relevant time unless the rules listed below apply.
Exceptions to the general rule
The cost of an individual claim is generally calculated at the time specified by WorkSafe (the relevant time) using the information in WorkSafe's possession at the time. Unless WorkSafe is satisfied that the worker to whom the payments, costs, and expenses relate has been found guilty of an offence under sections 81, 82, 83, or 83A of the Crimes Act 1958, or sections 248, 248A(2), or 249 of the Accident Compensation Act, or sections 581, 582, 583, 584, or 585 of the Act, the cost of an individual claim must be calculated based on the information about payments, costs, and expenses that WorkSafe has come into the possession of the Authority after the relevant time.
Recoveries
Definition of Recovery: A recovery is money received by or on behalf of WorkSafe?in relation to a claim from someone other than the employer or any related employer.
The definition excludes any monies received by or on behalf of Worksafe from the TAC in the case of a TAC claim (other than a negligent third party TAC claim); any amount repaid as an overpayment unless the overpayment relates to a claim received during the claims reporting period; and any amount recovered by WorkSafe from a third party under section 138(6) or section 369(7) of the Accident Compensation Act that represents the employer's liability to pay compensation under section 125(1)(a) or 125A(3) of the Accident Compensation Act or section 72(1) of the Act and any amount of money received by or on behalf of the WorkSafe about a claim.
Old claim recoveries for calculation
Old claim recoveries about an employer are the sum of any allowable recoveries about old claims against the employer; and any related employer (other than claims made about an unrelated predecessor workplace and excluded claims), where allowable recoveries about a claim are any recoveries received between 1 April 2018 and 31 March 2021 less the reduction amount, but if the allowable recoveries are less than zero, then the allowable recoveries are taken to be zero.
Old claim means a claim received by the Authority or an authorised agent between 1 July
1993 and 31 December 2017
Reduction amount means the sum of all recoveries in relation to an old claim less
$438,300 (2022/2023), but if the reduction amount is less than zero then the reduction amount
is taken to be zero.
"Premiums Order no. 30"
Weighted Industry Rate
The Premiums Order determines a single premium rate for an employer's workplaces where the industry classification has not changed since the last premium period (i.e. current risk workplaces). However, some employers have current high-risk workplaces in various industries. The weighted industry rate is calculated to ensure that the employer's single premium rate accounts for the various industries in which it operates.
The weighted industry rate is computed using the industry rate and remuneration for each current risk workplace. If, on the other hand, the same industry classification applies to all of the employer's current risk workplaces, the weighted industry rate equals the applicable industry rate.
If the remuneration is below $200,000, that is for small employers, an employer’s weighted industry rate is the employer’s comparative rate (industry rate).
What is the Employer's Performance Rating (EPR)?
The employer performance rating is a measurement of the employer's performance in occupational health and safety based on claims made against the employer. The calculation considers the employer's claims history relative to its industry (referred to as the performance index) as well as its size (referred to as the size adjustment factor). The performance index compares a given employer's actual performance (known as the employer's claims cost rate) to the average performance of the industries in which that employer has been operating during the relevant period (known as the employer's industry average claims cost rate).
The size adjustment factor regulates the impact of an employer's performance on its premium so that a larger employer's claims history (good or bad) has a greater impact on its premium than a smaller employer's claims history (good or bad). A one-star employer performance rating is considered average. Anything greater than one represents below-average performance, while anything less than one represents above-average performance.
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Certain employers have an EPR rating of 1
This applies, and the employer performance rating for an employer is 1 if:
If you have had WorkCover insurance claims in the period between 1 July 2018 to 30 June 2021 (2022/23), WorkSafe will give you a performance rating. This rating will be displayed on your July premium notice. This rating is an indication of your performance relative to other employers operating within the same industry and is used to re-calculate your premium rate. The larger your rateable remuneration, the greater the weight that is given to your experience.
Setting EPR
WorkSafe uses all the above factors and variables in setting the rating which is then factored into your premium amount, so if you have a good rating (or low claims) your premium will be reduced. If your rating is below 1, then you are doing better than the industry, if your rating is above 1 then you are doing worst than your peers. Therefore, it is important to take proactive steps to reduce injuries through early intervention and effective injury management when incidents occur.
WorkSafe premium calculation
An employer's remuneration and the applicable industry rate are the primary factors that determine the premium payable. The Act defines remuneration broadly, including wages, salaries, superannuation, and other benefits payable to workers. The Authority sets industry rates, which reflect the claims experience of the industries in which the employer operates.
If an employer is small or new, its premium is calculated based on its remuneration and the applicable industry rate. All other employers' premiums are calculated using their remuneration and an experience-rated premium rate. If an employer operates in more than one industry, a weighted industry rate will be assigned to it.
Performance rating is a method of adjusting premium rates to account for an employer's actual claims experience. The performance rating compares an individual employer's claims experience to the average claims experience in the relevant industry. Employers with more experience than the industry average receive a discount off the industry rate. Those with less than average experience receive a loading on top of the industry rate. The larger an employer, the greater the impact of its own experience on its premium rate.
Employer premium rate increases are generally limited from year to year. Capping generally applies to workplaces that remain in the same industry classification from year to year. Capping also applies to labour-hire employers' alleged workplaces. Other factors that influence an employer's premium payment include the deductible benefit, the minimum premium, and any buy-out premium. The premium is subject to GST, which is calculated after the premium is calculated.
WorkSafe Victoria considers the below factors when calculating your premium:
Premium Payable
The premium payable by an employer is the sum of the WorkCover premium and the buy-out premium, together with the GST payable by A New Tax System (Goods and Services Tax) Act 1999 of the Commonwealth. The minimum premium for 2022/2023 is $227 ($249.70 including GST)
What is the employer excess?
The excess year for the employer is calculated from the date of the worker's injury. When a worker who has a work-related injury or illness has a claim accepted by WorkSafe the employer can be responsible for weekly payments (10 working days) to the worker and initial medical expenses (known as employer excess).
Employer liability indexation
Every year on 1st July, the amount of the initial medical and similar expenses representing the employer's liability is indexed. If the employer has not paid the liability in full by the end of the fiscal year, the liability is increased to a new level.
If one of your workers is injured at work and your WorkSafe agent accepts the claim (for accepted claims with a physical injury only). The employer is also required to pay the first $744 (2021/22?financial year amount, indexed annually) of medical and like expenses relating to the injured worker's treatment - this is your employer excess. After the medical excess is reached your WorkSafe agent will then manage all future medical and like costs according to WorkSafe’s policies and fee schedule. You will not need to pay this if you have selected the excess buyout option for your WorkCover insurance.
For provisional payments on a claim including a mental injury
Where a worker is entitled to provisional payments on a claim that includes a mental injury, no medical excess is payable by the employer for the life of the claim. However, employers need to pay the first 10 working days of weekly payments to their worker who has an accepted work-related injury or illness.
After you have paid the excess for the first 10 days of weekly payments to the worker who has a work-related injury or illness, your WorkSafe agent will take over the claim, including payments to your injured worker.
If your worker is entitled to provisional payments on a claim that includes a mental injury and they send you invoices for reasonable medical treatment, advise the worker that these need to be provided to your WorkSafe agent/insurer. Your agent will then manage all medical and like payments on your behalf.
If your worker is entitled to provisional payments and you have already made the payment on behalf of your worker for their treatment costs, you can ask your agent for reimbursement.
What if I don’t pay the medical excess?
You are obligated to pay the medical excess on physical injury only claims by law. The amount of the employer excess is indexed on 1 July each year. If you have not paid the medical excess by the end of the financial year, the amount of the liability will increase to the next year’s amount. Payment of the medical excess will allow your WorkSafe agent to take over the management of the claim.
Who pays if you remove the employer excess?
Your claims are managed and paid for by your agent from day one, so you have no financial burden for your WorkCover claim.
You can remove both the requirements to pay the medical excess and the first 10 days of weekly payments on any claim by choosing the excess buyout option offered as part of your WorkCover insurance. You can do this by contacting your WorkSafe agent.
How do I opt to remove my employer's excess?
You can do this by logging into the Online Employer Services (OES) insurance portal, then updating your remuneration and selecting the excess buyout option.
Alternatively, you can contact your WorkSafe agent and advise them directly. Any change to your excess buyout must be made before 1 August each year for it to apply to your WorkCover Insurance Premium.
If you are having issues with the above, please contact myWorkcover for assistance. We are here to assist.
What types of treatment and services cannot be paid as part of medical excess?
Non-approved services that cannot be paid or reimbursed as part of a WorkCover claim include:
Bowen therapy, pilates, reiki therapy, Chinese and herbal medicines, Chinese medicine practitioners, hypnotists, natural medicine products, costs associated with obtaining medical reports and services provided by providers who aren’t and cannot be registered with WorkSafe.
What happens if my premium Increases?
Employer premium-rate increases from year to year are generally capped at 30 per cent. Capping generally applies to workplaces that continue from one year to the next and that retain the same industry classification. Capping also applies to the imputed workplaces of labour-hire employers.
Other factors that affect the premium payable by an employer are the deductible benefit, the minimum premium and any buy-out premium. However, the deductible benefit has little impact. Every employer in Victoria regardless of the size of your organisation and remuneration, each employer will receive a $15,500 remuneration deduction, in terms of premium, this depends on your industry rate. The premium payable is subject to GST, which is applied after the premium is calculated.
What are claims costs?
These are payments made about a claim, including an estimate of future costs. This includes:
All employers have their claim costs measured in the same way – measuring your performance compared to your industry. Please note that provisional payments will not impact your 2022-23 premium.
Your premium rate for 2022-23 is expected to be calculated based on the standard factors including your remuneration, industry classification, previous claims and other aspects that may affect it (such as provisional payments).
How to lower your claim costs?
To lower claim costs is by helping your injured workers return to work early. The?return to work ?rate is very important when estimating your claim. If a worker returns to the workplace, compensation will end, so the estimation of future costs will be reduced and thus so will your premiums. The longer they stay at work, the more that estimate continues to reduce. The most effective way to get employees back to work is with a return to work plan, which outlines activities, remedial exercises and a pathway to being a productive member of the workforce. Your claims generally impact your premium for 3 years.
Keeping up to date with medical and financial documentation means WorkSafe can amend your premiums accordingly. It’s not enough that your employee has returned to work, WorkSafe has to know about it! Because of its effect on employer's premiums. Understanding how your premium is estimated can be tricky, what's important is to understand that your claims history and return to work rate can have a significant impact on your business. Make sure you speak to us for a review, so we can assist you to understand why your premium is what it is, and some steps you can take to reduce it. myWorkCover works closely with our clients to implement sustainable?and effective return to work plans.
How do future claim costs (also known as Statistical Case Estimates - SCE) work?
WorkSafe uses a model to estimate the lifetime cost of WorkSafe claims. The model uses WorkSafe's experience over 25 years to estimate the average cost of a similar claim.
The main factor impacting an estimate is your return to work rate. If a worker returns to work and compensation ends, the estimation of future costs is reduced. The longer a worker remains back at work, the more the estimate will fall, reflecting the reduced likelihood of the worker requiring further time off work to recover.
Each estimate is made after a three-month delay, to allow all invoices and reimbursements for a claim to be received. This allows a more accurate cost calculation of the claim.
You can influence the estimated future claim costs by ensuring your WorkSafe agent (also known as the "Insurer") has up-to-date claim information including:
Note: The estimation of future costs also called Statistical Case Estimates (SCE) will never reduce to zero. The SCE fluates all the time, it can go up or down over time depending on what is happening on the claim. When claims are managed efficiently and effectively will reduce the SCE over time. A reduce SCE will reduce your premium.
What happens with rejected or closed claims?
Rejected or closed claims may still have a cost estimate allocated to them. This is because claims can reopen, and workers may have the ability to appeal the rejection of their claim. A claim estimate will only be included in your premium calculation if compensation has been paid.
Grouping employers: How it affects your premium
WorkSafe can treat two or more employers as a single employer for premium calculation, workplace industry classification, and debt collection purposes by grouping them. The Workplace Injury Rehabilitation and Compensation Act of 2013 contain provisions for grouping.
When the Authority may treat Group workplaces as a single workplace
If two or more people (the relevant people) are members of a group; and?carrying out their respective operations at two or more group workplaces (the constituent workplaces) that are contiguous with each other or occupy (in whole or in part) the same area of land, and the Authority is satisfied with one or more of the matters set out in below clause, the Authority may decide that some or all of the constituent workplaces are to be treated as one.
Definition: group workplace means any place of business (whether or not a workplace of an employer) at which any of the relevant persons (whether or not an employer) carries out its operations, and such place shall be treated as a workplace of that person.
Premiums Order No. 30
Grouping in Victoria can have a tremendous effect on your WorkCover premium. The Authority may decide only if it is satisfied that the operations at the constituent workplaces are:
The impact of treating Group workplaces as one workplace
If the Authority decides, this Order will take effect as if the predominant activity and applicable industry rate for each constituent workplace were the same as for the grouped workplace. If workers employed by a group member work at the workplace (or place of business) of another group member, this subclause Item 2(5) of the Premiums Order applies, and the second-mentioned workplace (or place of business, as the case may be) is deemed to be the employer's workplace for this Order. This means that if the second workplace has a different and lower premium rate, it will be treated the same as the first. The second workplace will be classified in the same industry as the first.
More grouping information in Victoria and other states can be found here.
Who forms part of a group?
Grouping is when two or more related employers are treated collectively for Workers' Compensation premium calculation and debt collection purposes. A typical group structure is a parent company with one or more subsidiary companies.
For example:
Belinda Boyd Pty Ltd, Bellinda Boyd Car Dealership Pty Ltd and Bellinda Boyd Car Repairs Pty Ltd
In this example, Bellinda Boyd Pty Ltd, Bellinda Boyd Car Dealership Pty Ltd and Bellinda Boyd Car Repairs Pty Ltd are related and grouped.
Employers are grouped for Workers Compensation premium calculation purposes when two or more employers each hold a Workers Compensation policy and are related for grouping under the Workers Compensation Act in each state and territory.
Total wages paid for the group must also exceed the prescribed threshold. For Pay Roll Tax reporting to the States Revenue Office, the threshold is $750,000 and is indexed annually.
Circumstances for grouping
Grouping provisions can be found in the Workplace Injury Rehabilitation and Compensation Act 2013. Workplace Injury Rehabilitation and Compensation Act 2013 Statutory rule in force
Related corporations
Two corporations will be grouped when one is related to the other under section 50 of the?Corporations Act 2001.
Inter-use of workers
Businesses will be grouped with other businesses where:
Commonly controlled businesses
There will be a group if a person has a "controlling interest" in two or more businesses.?The definition of a "controlling interest" varies depending on the type of entity that runs the business.
Grouping for industry classification
For Premium calculation purposes, members of a group who share a workplace or have contiguous workplaces may be classified as one workplace. Contact myWorkCover for more information on when this may apply.
Exclusion from grouping
In certain circumstances, WorkSafe may exclude a company from a group. WorkSafe will consider the following factors when deciding whether or not to exclude a business from a group:
Joint ventures
In the case of joint ventures, a group will almost certainly exist between the joint venture entity and the joint venturers, based on either the 'inter-use of workers' grouping or the 'common controlling business' grouping. WorkSafe has ruled that joint venturers will not be grouped if they are not related under any of the grouping circumstances, except when they come together as joint venturers.
Professional practice
WorkSafe will generally exercise its discretion not to group when several professionals practise (for example, doctors and accountants) share the services of a common administrative services group.
Author: Yon Ta, updated 23 May 2023
Disclaimer:
This document is not?intended?to be taken as advice regarding any individual situation?and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy.??My WorkCover Solutions Pty Ltd shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication, or any matter contained herein. Any statements concerning legal matters are based solely on our experience as Workers’?Compensation insurance consultants and are not to be relied upon as legal advice, for which you should consult your professional advisors. My WorkCover Solutions Pty Ltd?does not accept liability for any loss or damage arising from reliance on the content of this blog, or links on this website to any external website. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.