For many employers WorkCover declarations can be confusing, especially if you aren’t aware of what is and isn’t defined as wages according to WorkCover Queensland.
This means a lot of people get their WorkCover declarations wrong and this includes directors of companies, who cannot be covered and should make sure that they obtain separate insurance for themselves.
This can be a hard lesson to learn if you, as a director of a company, have ever tried to claim workers compensation insurance and have found out that you weren’t covered.
If you have a business in Queensland and employ workers, it is compulsory to insure them against work-related injuries.
As an employer you have many rights and responsibilities, which relate to your obligation to insure your workers and it is important to be aware of the renewal dates, assessable declarations and premiums in the financial management of your business.
What you need to know about declarations
WorkCover accident insurance policies are due for renewal from 1 July, and it’s important to understand who to cover for workers’ compensation and the wages you need to declare.
You also need to include superannuation payments and fringe benefits and that some contractors you hire may be deemed to be workers.
Your accident insurance policy covers any worker you employ and insures you against the cost of any claims for work-related injuries.
Put simply, a person who works under a ‘contract of service’ is a worker, which means a person who performs the same work in the same way as an employee is likely to be a worker.
Even where a person calls themselves a ‘sub-contractor’, has their own ABN and is responsible for their own tax, if you engage them for work, they may be considered a worker.
A person who satisfies any one of the following criteria will also be considered a worker:
- some sharefarmers
- a sales person paid by commission
- a person engaged by a labour hire agency, group training organisation, or holding company is a worker of that organisation.
What are classified as wages?
Employers are required to provide details of the actual wages paid during the last financial year and the estimated wages you expect to pay in the next financial year, when calculating your premium.
The payments to be declared include the total of all PAYG gross salary and wage payments, superannuation payments including super salary sacrifice, plus any fringe benefits or other entitlements,
Some payments that are not assessable as declarations are any allowances or expenses reimbursed for work related expenses, lump sum termination payments, excess period payments, compensation payments reimbursed by WorkCover and all payments to, or in respect of, Directors, Trustees and Partners.
How your premium is calculated?
WorkCover insurance premiums are paid provisionally at the beginning of a period and are then adjusted at the end.
The method used to calculate your premium varies slightly depending whether the amount of wages you declare are above $1.5 million or less than $1.5 million.
In addition to your wages, your industry rate and previous claims experience are also important factors in your premium calculation.
If you employ a worker who works for you in more than one state or territory, you only need to have workers’ compensation insurance for that worker in the state of connection.
There’s no doubting the importance of staying up-to-date with your WorkCover insurance and MWM Advisory’s highly experienced team of tax professionals is ready to help business owners stay on top of their commitments as employers.
WorkCover Queensland provides some worker determination tests on their website to help you to determine who to cover for workers’ compensation – worksafe.qld.gov.au
For further information, contact an MWM Advisory team member at mwmadvisory.com.au/contact or phone 5596 9070.