Workers’ Compensation Insurance Bulletin 5: Response to COVID-19

declare jobkeeper
TO DECLARE OR NOT TO DECLARE? – THAT IS THE QUESTION…

With apologies for miss-quoting William Shakespeare, there remains confusion and debate regarding whether JobKeeper payments paid to employees during the COVID-19 crisis are considered to be “deemed wages” for the purpose of Workers’ Compensation Wages declarations which will soon be prepared and submitted for 30th June policy renewals.  

In our last bulletin, we mooted the possibility that we may end up with a State by State approach, with each jurisdiction reaching their own position on how wages are to be declared this year, and our concerns have been justified with some Jurisdictions releasing various determinations.  The following matrix provides an overview of the current stance as at 5th May 2020.  Further changes and adjustments are likely to be announced, at which point additional bulletins will be released so please continue to liaise with your Lockton Associate and Broker for the most current situation.

NEW SOUTH WALES

  • JobKeeper payments made to workers who perform no work during the period to which the payment relates will be excluded from the amount of wages used to calculate premiums - businesses who have been forced to close and stand down staff will not be required to include these payments in their wages declarations.
  • JobKeeper payments made to workers who continue to perform work (whether in their usual or a reduced or otherwise augmented capacity) will continue to be included in the amount of wages used to calculate premium - therefore business using the JobKeeper payment to augment reduced salaries to staff working reduced hours will need to include these payments in wages declarations. (SIRA - NSW, 2020)

VICTORIA

  • Businesses participating in the JobKeeper scheme in Victoria will be exempt from payroll tax and the WorkCover premium on payments to their employees if their staff are currently stood down.
  • Payments above a part-time employee’s usual salary, due to JobKeeper being a minimum $1500 fortnightly payment, will also be exempt from payroll tax and the WorkCover.
  • There has been no determination on payments made in lieu of wages as a top-up component of workers’ compensation entitlements if the employee remains at work, so at this stage it is anticipated that these sums will be classified as wages for premium calculation purposes. (Victorian Government May 2020)

QUEENSLAND

  • Exclude JobKeeper payments from wages declarations.
  • Include other payments made as wages for employees who continue to work.
  • If JobKeeper payments are being used to supplement an employee’s wage then the component of the payment not relating to JobKeeper is to be declared e.g. $2,500 paid of which $1,500 is JobKeeper payment and $1,000 salary, then declare $1,000 for that employee.

SOUTH AUSTRALIA

  • Exclude JobKeeper payments from wages declarations regardless of whether an employee is working in any capacity or has been stood down.

WESTERN AUSTRALIA

  • Wages are not required to be declared for workers stood down and not required to work – even if wages are subsidised by JobKeeper payments that the employer receives.
  • Wages must be declared if employers continue to engage workers and pay their wages for work done in exchange for their actual labour or service – even if the wages are subsidised by JobKeeper payments that the employer receives.
  • However, where employers are paying additional amounts to workers because the worker’s wages are otherwise less than the JobKeeper ‘wage condition’ of $1,500 per fortnight, then only the wages for work done must be declared. Any top up amount as part of JobKeeper payments, should not be declared. (Workcover WA, 2020)

AUSTRALIAN CAPITAL TERRITORY

  • Announcement pending post-consultation by the Insurance Council of Australia.  Include JobKeeper payments in your calculations at this time until advised otherwise.

NORTHERN TERRITORY

  • Announcement pending post-consultation by the Insurance Council of Australia.  Include JobKeeper payments in your calculations at this time until advised otherwise.

TASMANIA

  • Announcement pending post-consultation by the Insurance Council of Australia.  Include JobKeeper payments in your calculations at this time until advised otherwise.
  • The Insurance Council of Australia is encouraging all Underwriters in the Risk States (WA, NT, Tas. & ACT) to adopt a consistent approach to the application of wages declarations definitions and further comment is expected shortly.

Implications of COVID and JobKeeper payments on Workers’ Compensation Entitlements
In earlier bulletins, Lockton anticipated that the COVID-19 crisis would have implications on the way in which benefits would be paid.  Individual claims calculations remain on a case by case basis however there have been some announcements which will have a direct impact across your claims portfolio, especially when employees are in receipt of some form of weekly compensation income benefit:

NSW – IMPACT OF THE JOBKEEPER PAYMENT ON THE NSW WORKERS’ COMPENSATION SYSTEM
The Workers’ Compensation Act 1987 defines the calculation of wages entitlements based on the average weekly earnings prior to the date of the injury and the amount the worker is earning while they are recovering from their injury. There are two circumstances where payment of JobKeeper payments will be taken into consideration when calculating an individual’s  workers’ compensation loss of earnings entitlement:

  1. Any JobKeeper payment made to a worker prior to the workers’ injury will be considered earnings for the purposes of determining the worker’s average weekly earnings prior to injury. Therefore if employees remain working and have been receiving JobKeeper payments and lodge a workers’ compensation claim, these payments will be classed as “wages” when calculating the weekly wage loss.
  2. Any JobKeeper payment made to a worker while they are recovering from a work-related injury will be considered earnings for the purposes of determining the weekly payment of compensation to which the worker is entitled.  This calculation will be a bit more complex, taking into consideration any component of JobKeeper paid to a person who is deemed totally unfit for work or at work on partial duties and receiving JobKeeper as part of salary top-up.  It is recommended that you speak with your Lockton Associate to assist in these circumstances.

VICTORIA – VICTORIAN SCHEME RESPONSE TO COVID-19

Advice has been provided as to the ongoing payment of weekly benefits to injured workers, in addition to payment of the JobKeeper subsidy in relation to workers’ compensation entitlements.

  • All workers that continue to have any incapacity from a work-related injury (suitable/alternative duties certificates) have an entitlement under the legislation. 

    As employers were offering suitable employment workers have only had an entitlement to partial or no compensation due to current weekly earnings. If an employer can no longer provide suitable duties (in this instance due to Government enforced shutdown), and the worker no longer has any current weekly earnings, the worker will be entitled to full compensation (this is irrespective of the hours they were working prior to closure).  Whilst this may be different to other workers that may not receive payments due to closure, these workers have entitlements under the legislation.
  • If the worker is unfit for employment, there should be no change to their entitlement weekly compensation should continue in accordance with the act.
  • If an eligible employee is still working for an eligible employer (reduced hours/full hours, modified/alternative duties) then they may be eligible to receive the JobKeeper payment.  If a worker is totally incapacitated for work and in receipt of workers’ compensation payments, they will not be eligible for the JobKeeper payment.
  • JobKeeper payments made to injured workers are considered to be current weekly earnings (CWE) within the meaning of section 152 of the WIRC Act for the purposes of calculating a worker’s top-up workers’ compensation payments. 
    (CGU - Victoria 2020)

It is expected that the remaining Regulators will make their position clear as the impact of COVID-19 on workers’ compensation claims continues to be felt and a consistent application can be developed.

The State Regulators continue to encourage early reporting of wage changes to obtain early premium relief as a consequence of the pandemic.  Lockton is able to support you in taking this step.

If your business is suffering severe financial hardship as a consequence of COVID-19 and is having difficulty paying workers’ compensation instalments, contact your Lockton Associate or Broker. Lockton will work with you to advocate support from the relevant State Regulator to assist you through this difficult time.

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