Workers Compensation Insurance Definition
Workers compensation insurance is a type of insurance that covers the medical expenses and wage replacement costs for an injured employee. It is compulsory for all Australian employers to take out workers compensation insurance. The actual policies differ based on each individual state and territory.
While the obligations that employers must meet differ based on states and territories, the overall goal is to ensure the employer offers a safe workplace.
The workplace should be set up in a way that minimises the risk of employees suffering injuries while completing their required duties.
Only workers are entitled to compensation in the case of an injury. A worker in Australia is defined as a man or woman who works under some sort of contract or agreement, regardless of whether it is an actual contract or just an implied/verbal contract.
Some examples of workers are included below:
- Volunteers who engage in voluntary firefighting, police work, etc.
- Taxi drivers who are either driving or performing related duties (unloading baggage, cleaning the taxi, etc.)
- Jockeys and apprentice jockeys.
- Salespeople who work on commission.
Workers compensation insurance in Australia does not cover everybody. For instance, it does not cover outworkers. Nor does it cover casually employed people who are engaging in tasks not directly related to their employer’s benefit. Other types of people not included are casual domestic workers, fishing boat crew members and those people participating in work-for-the-dole schemes.
Workers Compensation Insurance Coverage
Workers compensation insurance in Australia covers all injuries or diseases that are directly attributable to the individual’s job functions. There are notable exceptions to keep in mind, however:
- Injuries or conditions suffered while a worker travels between his/her home and workplace are not covered. The only exception is if the employer orders the employee to deviate from his/her normal route.
- Injuries or conditions suffered during a non-authorised absence from work are not covered by workers compensation insurance.
- Those injuries caused by willful on-the-job misconduct and behavior are never covered, unless those injuries lead to permanent incapacity.
Workers Compensation Insurance Employer Requirements
The premium an employer must pay for workers compensation insurance is based on something known as the WorkCover Industry Classification (WIC). This classification itself is based on such factors like the goods and services provided by the employer; the specific activities performed by the business; and more.
The actual dollar value of premiums that must be paid can be very complicated to calculate. The advice of trained professionals might be needed.
If and when a worker wins a compensation claim against an employer, the employer must then begin making payments to the employee. The employer may dispute the claim, but the employer must still make payments until the dispute is settled one way or another.
Note also that the employer must keep the worker’s job position unfilled for a minimum of 12 months. The only exception is if the evidence suggests that the worker will never be able to return to work.
Workers Compensation Insurance Entitlement Period
The period of time an employee may receive payments from the employer is determined by a fact known as whole person impairment (WPI).
- WPI less than 15%: nine years weekly entitlement payments
- WPI between 15% and 20%: twelve years weekly entitlement payments
- WPI between 20% and 30%: twenty years weekly entitlement payments
- WPI greater than 30%: weekly entitlement payments until age 65
Note also that the age restriction of 65 applies to all four cases. For instance, a 58-year-old man with a WPI of 12% would have his weekly entitlement payments cut off at the age of 65, regardless of the nine years specified.
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