In WA, a working director cannot make a claim for workers’ compensation if the working director’s company has not requested that its workers’ compensation insurance policy cover the working director.

A working director under the Act is a person –

  • who executes work for or on behalf of a proprietary limited (Pty Ltd) company
  • whose earnings, as a director of the company by whatever means, are in substance for their personal manual labour or services.

Who is not a working director?

The following individuals are not working directors under the Act –

  • Workers who are not registered with ASIC as a director of the company applying for cover
  • Directors of a public company (Ltd or Limited)
  • Entities registered as individual/sole traders
  • Partners in a partnership entity or other unincorporated entity
  • Directors of an entity incorporated under legislation other than the Corporations Act 2001
    • For example, directors of an association incorporated under the Associations Incorporations Act.
Only ‘proprietary limited’ companies can apply to take cover over their working directors.

To obtain and keep current a policy covering its working directors, a company must make a statement to an approved insurer –

  • naming each director on the policy
  • declaring that the directors execute work for or on behalf of the company
  • declaring an estimate of remuneration to be paid to each director during the policy period
  • declaring that the directors earnings are being paid in substance for the director’s personal manual labour or services.

On expiry of the policy period, the company must make a statement declaring the actual remuneration paid to each working director during the policy period.

X Do not include remuneration paid to working directors in the aggregate estimate of remuneration paid to all your other workers.
X Do not combine the earnings of two or more directors. Each director must be named individually on the policy, with their earnings (estimate and actual) reported against their name.
Working directors named on a company’s workers’ compensation policy can make a claim and receive compensation for weekly payments, medical treatment and related services like any other worker.

For more information please visit www.workcover.wa.gov.au/employers

Weekly payments: first 13 weeks

The method for calculating weekly compensation payments varies depending upon whether a statement of the working director’s actual earnings was provided to the insurer for the previous insurance policy period.

The statement of actual earnings of the working director provided to the insurer at the end of a policy period (when an insurance policy is renewed) is the default mechanism for calculating the base rate of weekly compensation for working directors for the first 13 weeks of incapacity.

Where a statement of actual earnings is provided the amount declared in the statement applies regardless of the earnings received by the director immediately prior to any injury.

Where a statement of actual earnings for working directors is not provided to the insurer the weekly compensation rate of working directors is determined in the following way:

  1. If the person was a working director for less than one year, by averaging the earnings paid to the director for the relevant period ending on the day before the injury occurred.
  2. If the person has not been paid any earnings before the injury occurs, the average of the estimate of the director’s earnings provided by the company to the insurer.
  3. Otherwise, by averaging the earnings paid to the director by the company over a one-year period ending the day before the injury occurred.

The amount that is produced by applying the relevant method above to the circumstances of the individual working director will determine the amount of weekly compensation payable for the first 13 weeks of incapacity.

There is a cap on weekly compensation payments which applies to all workers, including working directors. The cap is indexed annually – see the Prescribed amount.

Weekly payments: from week 14

From week 14 the amount of weekly compensation will step down to 85% of the base rate calculated for the first 13 weeks of incapacity.

There is a cap on weekly compensation payments which applies to all workers, including working directors. The cap is indexed annually – see the Prescribed amount.

The following examples illustrate how weekly compensation is calculated for working directors in different circumstances.

Scenario 1 – Company statement of estimated earnings of working director is $80,000. At the end of the policy period the company declares the amount of the working director’s earnings is $100,000. Three months after the last statement of actual earnings the working director is incapacitated for work.

Weekly compensation is based on the annual amount of $100,000 last declared as the actual earnings of the working director.

Scenario 2 – Company provides statement of estimated or actual earnings to insurer with nil remuneration declared for working director. No weekly compensation is payable as the company has declared the working director receives no earnings.

Scenario 3 – Working director working for company less than one year. Statement of working director’s estimated earnings of $80,000 provided to insurer but no statement of actual earnings. At time of injury no remuneration received.

Weekly compensation based on the estimated earnings of $80,000 p/a declared by the company to the insurer at beginning of policy period.

Scenario 4 – Working director working for company less than one year. Statement of working director’s estimated earnings of $80,000 provided to insurer but no statement of actual earnings. At time of injury working director’s weekly earnings averaged $1,000 p/w over 3 month period.

Weekly compensation based on average earnings of $1,000 pw.

Definitions and deeming provision: section 10A

Insurance and remuneration declaration requirements: sections 160(2a) &(2b) and 160A

Calculation of weekly payments: schedule 1 Clause 11 ‘Amount B’ paragraph (a) & subclauses 11(2a), (2c), (3) and (4)