In his review of the operation of the Return To Work Act, the Hon. John Mansfield AM QC reported in June 2018 that the Return To Work (RTW) Scheme is financially sustainable and that the average 1.7% premium rate set for 2018/19 will be the lowest in the Scheme’s history.
Unlike its predecessor, the RTW Scheme is designed to punish non-seriously injured workers who don’t get back to work within two years. The RTW insurance premium is designed to reward employers whose employees spend limited time in receipt of income support.
South Australia can afford lower RTW premiums because:
RTW premiums are calculated according to a standard formula that multiplies your estimated annual employee remuneration by your nominated industry premium rate. You might assume that all industry premium rates in construction are high and all industry premium rates in professional services are low, but it’s more complicated than that. For example, in 2018/19 rates vary across industries in agriculture from 2.021% to 5.543%. Rates in manufacturing vary from 0.397% to 9.786%. This provides an obvious incentive for employers to invest in WHS to keep industry rates down, but there’s more that employers can do.
Take, as an example, a transport business that has estimated its annual employee remuneration for 2018/19 at $1m. Multiply that by the industry premium rate of 6.127% to get a base premium of $61,270. Varying discounts are applied to the base premium according to the size of the employer. A 15% discount applies for this employer, bringing the premium payable to $52,080 + claim costs + GST + WHS fee.
The claims costs relate to income support only; not medical expenses – and they are capped. The maximum claims costs payable by this employer in 2018/19 are 3x the discount rate x the base premium = $27,572.
So there are potential savings of up to $27,572 in 2018/19 for this employer if its employees did not claim income maintenance in 2017/18 for work-related injuries which occurred within the last three years.
Under the new RTW Scheme, employees who run out of income support after two years will have added incentive to RTW, whether or not they are fit to do so. Employers will need to balance their duty to provide work, with their duty to ensure their employees are safe at work and their interest in minimising premiums.
RTW decisions made about an employer’s duty to provide work, about employer premiums and acceptance of claims generally are reviewable. There is a government subsidy to help with the cost of legal representation and most applications for review must be lodged within a month of the relevant decision, so seek legal assistance early if you have a concern.
Please note that some aspects of the scheme have been simplified for the purpose of this article. For further information or assistance with RTW queries or disputes, please call a member of our employment law team on 8414 3400.
This article was written by Senior Associate Thea Birss