Insuring your workers’ safety is perhaps the most important insurance your business requires and with a recent increase in workplace related injuries, especially in the construction industry, compulsory worker’s compensation insurance policy offers businesses protection in the event of a claim.
In the last few months alone, headlines such as ‘Architects out of touch on construction safety’ and ‘Death toll of construction workers ‘unacceptable’’, have jolted the industry.
In the 2011 Safe Work Australia report titled Key Work Health and Safety Statistics, statistics show that 53 out of every 1000 workers experienced an injury in the workplace and that 25 per cent of serious claims required 12 or more weeks off work.
Workers’ Compensation Injury Insurance provides protection for businesses in the unfortunate event that an employee is injured in the workplace. Under state legislation this insurance is compulsory provided that the business meets the required criteria.
As Australia edges towards a landmark harmonisation of workplace legislation, which is due to be rolled out from January 2012, currently each individual state’s legislation maintains that Australian businesses must be covered by a workers’ compensation insurance policy.
Trent Bekis, Honan Insurance Group’s Manager – Risk Services explains the general need and the benefits of a workers’ compensation insurance policy:
What is a workers’ compensation policy?
A workers’ compensation policy is a statutory scheme that provides employers with insurance to cover the expenses that are incurred when a worker is injured or becomes ill as a result of their work.
Why do you need the insurance policy?
According to individual statutory acts, if you engage workers or contractors deemed to be workers and you pay or expect to pay more than $7,500 a year in rateable remuneration, businesses must be covered by a workers’ compensation policy.
Failure to obtain a workers’ compensation insurance policy will leave you exposed in the event of a claim. In this case if one of your workers is injured or falls ill as a result of work the policy may still pay the worker entitlements. However you will be subject to heavy penalties for failing to hold a policy and your workers entitlements may be recovered from you.
Furthermore you may also be penalised if you underestimate your rateable remuneration or fail to notify your agent with the correct figures within 28 days of exceeding your previous estimate.
In the unfortunate event that an employee is injured or suffers an illness due to work, a workers’ compensation policy ensures that the employer is covered for the costs of all benefits that the injured worker receives. For example if a worker is injured on the worksite and requires medical attention, treatment or rehabilitation the employer will be reimbursed the costs involved. In the case of a serious injury lump sum compensation will also be paid to the employer where needed.
Do you need the insurance if you are a sole trader or in a partnership?
Sole traders or members of a partnership are not workers of their own business which means you can’t take out insurance for yourself. However if you employ any workers, apprentices of trainees you may need to take out a policy to cover them.
Do companies require the insurance cover for their workers?
Directors and employees, including apprentices and trainees of proprietary limited companies who are paid salaries or wages are deemed as workers. As a result they must be covered under a Workers’ Compensation policy.
This also includes Trustees which means that if you are a director of your own company and receive any payments as salaries or wages, or if you run a company that employs directors who receive salaries or wages an insurance policy must be taken out if the company’s remuneration exceeds $7,500.