Important information about renewing your company’s workers compensation policy this July

Many accident insurance policies are due for renewal from 1st July. In this edition we shed light on the process for correctly declaring wages and the overall renewal process for workers compensation insurance.

An accident insurance policy is compulsory for all Australian businesses who employ workers, so that in the event of a work-related injury, their workers and business are covered. Employers must declare their wages to their insurer annually to ensure they have the right level of cover.

If employers are found to be underinsured or uninsured they are may be subject to significant financial penalties. Further, employers could also be subject to potentially costly claims which could amount to hundreds of thousands of dollars depending on the severity of the injuries sustained by a worker.

This is why ISOsafe have provided three simple steps to help employers accurately declare their wages so they can have peace of mind that their workers and business are covered when they renew their policy from 1 July.

Step 1 - Determine who you need to cover

The Workers' Compensation and Rehabilitation Act 2003 (the Act) defines a worker under section 11 and aligns with the Australian Taxation Office (ATO) definition. Section 11 of the Act also states that only an individual can be a worker. This reduces red tape and makes it easier for employers to correctly identify workers when declaring wages.

In simplified terms, a person who works under a 'contract of service' is a worker. This means a person who performs the same work in the same way as an employee is likely to be a worker. Even where a person calls themselves a 'sub-contractor', has their own ABN and is responsible for their own tax, if you engage them for work, they may be considered a worker under the Act.

Step 2 - Determine what payments need to be included in your wage declaration

When calculating premiums, insurers require details of the actual wages paid during the last financial year and the estimated wages you (the employer) expect to pay in the next financial year.

For workers’ compensation purposes, ‘wages’ means more than just PAYG payments. For example, superannuation payments and fringe benefits need to be included in your wage declaration.

Step 3 - Declare your wages

Before contacting your insurer, you should have your head count and wages figure at hand. We recommend declaring your wages early in July to take full advantage of flexible payment options, which includes discounts and payment plans.

If you have any questions when declaring your wages, please call ISOsafe on 1300 789 132