Small business: Anthony O’Brien
Workers' compensation insurance provides protection in case of injury or illness
As you’ll discover when starting a small business and employing staff, it’s critical you arrange business cover such as workers’ compensation insurance. This is purchased by business owners to protect themselves and their workers, and it pays benefits in the event of a workplace or work-related accident, injury or illness, according to Fred Schebesta, co-founder of Finder.com.au. Workers’ compensation schemes are managed at a state level, and the cost of the policies and their benefits will vary by location.
Unlike other types of insurance, workers’ compensation insurance is compulsory if you employ staff and the premiums will also differ depending on the size of the business, the number of employees and your industry. The latest statistics from Safe Work Australia show that in 2014-15 there were more than 107,000 serious workers’ compensation claims. Labourers had the highest rate of claims – almost three times higher than the national rate. The healthcare and social assistance industry had the highest number of claims (16%) and agriculture, forestry and fishing had the highest rate of claims (13.7%).
A hard lesson learned
Fortunately, as a writer, a nasty paper cut is probably the most dangerous workplace hazard I face. That said, my business, Corpwrite, employs some staff and therefore we must cough up for workers’ compensation. I also discovered to my horror just how seriously insurers enforce the compulsory aspect of workers’ compensation. A year or so ago I lost my business partner, Chris Walker, a long-time Money writer, after a protracted illness. From the time of Chris’s diagnosis in March 2014, it was a two-year challenge for the business and there were some slippages. Early on we’d decided to shift to a geographically more convenient commercial location. As part of the hurried move, we overlooked changing our account details with our workers’ compensation insurer. Even with our latest contact details prominently displayed on our website, the policy paperwork failed to find us. We only recognised the error of our ways when a legal representative acting on behalf of the insurer contacted us. Around $1000 later, which included the removal of a credit black mark against our company, along with some frustrating phone calls and emails, we’re thankfully on track with our workers’ compensation.
What you would pay
As mentioned earlier, the premiums for workers’ compensation policies are largely determined by your industry classification and your employee remuneration. Also the varying workers’ compensation legislation in each state could mean that the owner of a bricklaying firm in Western Australia might be up for a different premium to a similar business in Tasmania. “That said, workers operating across state and territory borders should be covered by a policy from the state or territory in which they usually and regularly work or operate from,” says Schebesta. Adding to the cross-border complexities is the fact that with workers’ compensation, in the ACT, Northern Territory, Tasmania and Western Australia premiums can vary from insurer to insurer, according to Finder. However, in NSW, Queensland, Victoria and South Australia there are fixed premiums from all insurers. This means that shopping around for a better premium is pointless even if you’re unhappy with your insurer. To give you an indication of the premiums, let’s assume you’re operating in the NSW building industry. According to broker NWC Insurance, a small construction firm with three employees and turning over $2 million a year can expect to pay an annual premium of $14,847. We’ve assumed that all employees are earning $150,000 a year and the firm isn’t employing apprentices, who won’t have the same level of experience as fully trained tradespeople.
Anthony O’Brien is a small business and personal finance writer with 20-plus years’ experience in the communication industry.