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Workers Compensation Overview

worker

What is workers compensation?

Workers compensation (or WorkCover) is covered by State and Territory legislation. The provisions can differ between States and Territories, so reference must be made to the appropriate legislation.

Workers compensation is a statutory, no-fault system of compensation for work-related injuries.

Being a ‘no fault’ system means that an employee may be entitled to compensation regardless of whether the employer’s conduct was negligent or careless, and in most cases whether or not the employee’s conduct contributed to the injury or illness.

For the purposes of workers compensation, 'injury' means any physical or mental injury and includes any disease contracted in the course of employment. It also includes the recurrence or aggravation of any existing injury or disease and, in some jurisdictions, includes injuries while travelling to and from work. The definition of injury usually includes ‘psychological injury’, such as work-related stress.

The definition of a 'worker' is very broad, and covers full-time, part-time, casual or seasonal workers. In some instances, contractors and sub-contractors also may be defined as 'workers', depending on the circumstances of their working arrangement.

Arising ‘in the course of employment’ can include circumstances where an employee is travelling to or from work, working at locations away from the employer’s premises (including working at home) and may include events that are incidental to employment, such as during lunch breaks or social functions.

It is compulsory for an employer to take out workers' compensation insurance to cover all employees.
Employees who suffer an illness or injury in the course of their employment may receive the following benefits under workers compensation insurance:

  • Payment for lost wages while they are unable to work.

  • Payment of medical and related expenses relevant to the illness or injury.

Workers compensation payments are not wages. The payments can be paid to an employee in one of three ways:

  • Directly from the insurance company.

  • From the insurance company via the employer.

  • By the workers compensation regulator.

The applicable workers compensation laws will determine who makes the payments in each particular case.

The employers Workcover Insurance Premiums will be set by the insurer and is based on a percentage of the employer’s payroll cost. Employers who have frequent and/or costly claims or who operate in industries that are determined to be less safe will usually be required to pay a higher premium.

Employer's Workers Compensation Obligations

Please note: An employer’s obligations may differ from state to state. However, as an overview, the following types of obligations will apply:

  • To maintain a record at the workplace of details of accidents and injuries to employees;

  • To process all claims made by employees — as an employer, you cannot refuse to allow an employee to make a claim;

  • To notify your insurer within the required timeframes of an injury to an employee and submit a claim form if the employee makes a claim.

  • To submit the required documents with the claim form, such as medical certificates, hospital/medical accounts and evidence of expenses already paid by the employee;

  • To provide compensation payments directly to the injured employee for the initial period of absence from work (typically the first 10 days) — these payments are equivalent to the employer’s insurance policy ‘excess’. Note that you must still notify the insurer of a claim even if in practice the employer is meeting the full cost of it;

  • To arrange rehabilitation programs for injured/ill employees to assist them to return to their usual work as soon as possible. This requirement involves preparing an injury management plan for the employee and nominating a rehabilitation provider to coordinate the program. This would be done in consultation with the insurer;

  • To keep the insurer informed of all relevant details.

The legislation sets out various maximum amounts and time limits for payment of benefits, for example according to the type of injury or illness.

As the above list is an indicative guide only, employers should seek specific advice about their particular circumstances and obligations from their insurer.

Information in HR Advice Online guides and blog posts is meant purely for educational discussion of human resources issues. It contains only general information about human resources matters and due to factors such as government legislation changes, may not be up-to-date at the time of reading. It is not legal advice and should not be treated as such.

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