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Workers’ compensation insurance protects employers from financial costs when a worker sustains a work-related injury or disease. It also protects injured workers by providing weekly payments to cover loss of earning capacity, payment of reasonable medical and rehabilitation expenses, and other entitlements.
Take out insurance
You can obtain insurance cover from any of the insurers approved by the Minister to underwrite workers' compensation insurance. It is important to shop around to get the best policy for your business.
Standard workers' compensation policy
All insurers are required to issue workers' compensation policies in an approved form. WorkCover WA has issued a Standard Employer Indemnity Policy (PDF - 70kb) which is the basis of all workers' compensation policies.
How your insurance premium is calculated
WorkCover WA determines and applies recommended premium rates to each industry classification, and updates the rates annually. However, insurers can discount these rates or load (increase) them by up to 75%.
In determining the premium rate for your business, your insurer will:
- request a wages declaration as the recommended premium rate applies to the aggregate amount of wages, salaries or other remuneration paid to an employer's workers
- assign an industry classification to your business - all premiums for a particular industry are calculated on the same rate
- examine the risk factors (claims history, safety and injury management policies etc) associated with your business
- discount the recommended industry rate by any amount, or surcharge it by up to 75%, depending upon an employer's individual risk factor
- insurers may surcharge more than 75% with approval from WorkCover WA, dependent upon the claims experience and risk associated with the operation of an employer’s business
- apply your premium rate. Only one rate applies for each ‘establishment’ - defined as a unit covering all the operations of a company conducted at or from a single location. If an employer conducts more than one industry at the same single location, the classification of the employer's predominant industry (based on gross remuneration) applies.
- adjust your premium following the submission of your actual gross wages, depending on whether the actual wages were more or less than the estimate you first provided. If you wish to renew your policy with the same insurer, you need to submit (on the same declaration) an estimate of gross wages to be paid the following year.
Appeals against your premium rate
Appeals against your premium rate can be made in accordance with section 154(1) of the Workers' Compensation and Injury Management Act 1981 (the Act). An employer may appeal if, at the time of issue or renewal of the policy, they are dissatisfied with:
a) the industry classification; or
b) insurance premium issued by the insurer.
Appeals must be lodged with WorkCover WA under the provisions of section 154 of the Act within one month from the date of being informed of the classification or premium payable.
Under section 154(3) of the Act, notwithstanding the notice of appeal, the employer is to pay the premium as assessed by the insurer and the insurer is to issue or renew the policy. If the effect of a decision on the appeal is that a lesser sum is payable by way of premium than that already paid to the insurer, the insurer shall forthwith repay to the employer the amount of the overpayment and if he does not do so the employer may sue and recover the amount from the insurer.
WorkCover WA aims to ensure that the appeal process is as transparent and fair as possible. See the Process used by WorkCover WA when considering an Appeal (PDF - 90kb).
Wages declaration
It is important that you calculate your wages costs accurately, as the declaration will affect the premium applied to your workers’ compensation insurance policy. When the policy expires, you must submit a declaration stating the actual gross wages paid in the past period, and an estimate of wages for the next period. If you do not provide a statement, or if your statement of actual wages is false, you may leave yourself liable for prosecution.
What is included in ‘wages’?
The term ‘wages’ means all:
- wages
- salaries
- remuneration
- commissions
- bonuses
- overtime
- allowances and the like
- directors’ fees
- superannuation contributions (except those made by force of law)
- Superannuation contributions made as part of the Superannuation Guarantee (currently 9% of earnings) are not to be included in the calculation of ‘wages’. However, any other superannuation contribution made on behalf of the employee is classed as ‘wages’.
- fringe benefits
- all other benefits paid (whether paid in cash or non-cash benefits such as vehicles, equipment, mortgage payments, travel, school fees etc.) to or in relation to a worker (including working directors declared as such to WorkCover WA) or to contractors, before deduction of income tax.
What is not included?
‘Wages’ does not include:
- termination payments
- retirement pay
- retrenchment pay in lieu of notice
- pensions
- ‘golden handshakes’
- weekly payments of workers’ compensation of existing claims.
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