WorkCover insurance is statutory insurance. An employer must have a WorkCover insurance policy if they:

–  employ an apprentice, or

– their annual remuneration (i.e. wage bill) exceeds $7500.

When taking out a WorkCover insurance policy, employers also need to include in their annual remuneration figure any payments for labour that are made to “deemed” subcontractors. This is an issue the Master Builders OHS Unit discusses regularly with small-business builders and subcontractors, particularly those operating in the housing sector. Master Builders is concerned that there is a significant number of small-businesses owners in construction who do not have WorkCover insurance policies.

When asked if they have any employees, many employers reply by saying they use only subcontractors. Often, these employers use a small number of “subbies” who, in effect, work for their business all year round, and the employer doesn’t realise they have a legal obligation to cover these subcontractors under their WorkCover insurance policy. Housing builders, for example, often employ a small number of carpenters who work with them consistently all year. Whether these subcontractors have their own ABNs and submit invoices for their work is totally irrelevant; the builder still needs to include them under their WorkCover insurance.

The WorkCover premium rates vary among trades in the construction industry. For example, concrete companies and bricklayers pay premiums of about 4.5%. These premiums are reflective of the level of risk associated with the activity, and are varied yearly based on the rate of injury (i.e. claims experience) in each industry sector.

Many employers have no idea just how much their WorkCover insurance covers them. Employers are liable for the first ten days off work and the first $660 (indexed annually) of medical expenses on a worker’s claim for compensation. Employers have the option of buying out this excess. Once the excess payments have been made, the WorkCover scheme covers ongoing workers’ compensation payments, all reasonable medical and like expenses, legal costs, lump-sum compensation payments and common law payments for negligence.

Each year, a number of common law cases appear in the news headlines highlighting workers having been awarded hundreds of thousands of dollars in damages resulting from workplace injuries. These payments, and the costs associated with the attached legal proceedings, are covered through the WorkCover scheme. When you consider that a WorkCover insurance policy can potentially cover an employer for liability in the millions of dollars, the 2.5 per cent average premium offers sizeable value. It’s an important investment in protecting your business and ensuring adequate protection for workers.

If a worker has a work-related injury or illness and the employer has not registered for WorkCover insurance, the benefits payable to the injured worker are guaranteed by WorkSafe. However, WorkSafe may apply a penalty to the employer under the Workplace Injury Rehabilitation and Compensation Act 2013 for failing to register, and the employer may be liable for the full cost of the claim.

Master Builders urges its members to make certain they have adequate WorkCover insurance that covers deemed subcontractors. The VWA offers guidance for determining a subcontractor’s worker status on their website. The Master Builders OHS Unit can also provide members with advice on obligations to hold a policy, and assist members with advice if a worker is injured and needs to make a claim for compensation.

For further information contact the Master Builders OHS Unit on (03) 9411 4569.