In many industries, the workplace can be a dangerous environment. In 2021 alone, there were 169 work-related injury fatalities and 130,195 work-related injuries and diseases in Australia.
To protect workers from potential hazards, the government requires employers to take reasonable precautions to guarantee a safe workplace. However, accidents still happen. When they do, workers’ compensation insurance offers coverage.
This article discusses everything about workers’ compensation insurance, including what it is, how it works, what it covers, and more.
What is Workers’ Compensation Insurance?
Workers’ compensation insurance, also known as workers’ comp, is a government-mandated insurance policy that protects employees who suffer from a serious work-related injury or disease and employers from any related lawsuits.
If you run a business in Australia and employ workers, regardless of the type and size of your business, you’re obligated to provide workers’ compensation insurance to your employees. This not only stands as a moral and legal obligation but also makes financial sense.
When it comes to the amount of workers’ compensation premiums that your business must pay, the state government generally regulates it based on a specific formula used in that particular state.
Typically, it’s based on the number of wages your employees get, as well as the industry your business operates.
Who Manages Workers’ Compensation in Australia?
A national policy body called Safe Work Australia (SWA) is responsible for developing and improving work health and safety (WHS) and workers’ compensation arrangements across Australia.
As a national policy body, its primary roles include:
- Performing research and data collection to develop, evaluate, and improve WHS and workers’ compensation policies and strategies
- Publishing the data collected to inform the development and evaluation of WHS and workers’ compensation policies and strategies
- Developing and implementing national education and communication strategies to improve workers’ compensation arrangements in Australia
READ: How to Apply for the Research and Development (R&D) Grant in Australia
How Does Workers’ Compensation Benefit Employees?
Australian law mandates that employers must have adequate insurance to cover their workers in case they get sick or injured because of work.
Workers’ comp is an excellent protection that offers financial support to enable employees to focus on post-injury recovery without worrying about treatment costs.
Besides, it also offers rehabilitation services to ensure they don’t have to stress about having a safe and timely return to work.
Depending on the kind of injury or illness, workers’ comp may:
- Cover the costs of medical and hospital care, as well as ongoing care, such as medication and physical rehabilitation
- Cover a portion of the employee’s lost wages while they are recovering from a workplace injury or illness
- Pay a lump sum amount if the employee receives a permanent impairment
- Pay death benefits that cover funeral expenses and a lump sum compensation amount to support the worker’s family in an unfortunate incidence of death at work
How Does Workers’ Compensation Work?
Workers’ comp involves the employee and the employer agreeing to specific clauses and conditions in case of a work-related incident.
While the employer must pay for lost wages, medical expenses, and other agreed-upon benefits due to work-related accidents and injuries, the employee must abide by the agreed terms and conditions.
The employer pays the premiums in workers’ compensation insurance, and the schemes cover most workers, including full-time workers, part-time workers, and apprentices.
Since there are several schemes under workers’ compensation insurance, it’s best to check whether you are covered and what to do in case you plan to make a claim.
READ: What is Superannuation in Australia and How it Works
Are Sole Traders Entitled to Workers’ Compensation?
When it comes to sole traders in Australia, they aren’t able to cover themselves as employees with workers’ compensation insurance.
They must consider other options to protect their well-being and cover themselves for accidents, illnesses, or death through a private insurer.
However, in general, workers’ comp covers the following:
- Medical treatment/care
- Survivor benefits
- Any disability
- Physical therapy
- Lost wages
Similar to any other type of business insurance, the overall coverage provided by workers’ comp might vary from business to business.
Further, it depends on the type and severity of the injury or illness that has occurred while the employee is at work.
READ: The Ultimate Guide to Small Business Tax Offset in Australia: What It Is and How It Works
Seek Legal Help with Handling Claims
Regardless of how careful you are, work-related injuries and illnesses are inevitable.
If you have a business in Australia, you not only need to pick the best domain name and web hosting solution but also have both a moral responsibility and a legal obligation to look after your workers.
If you don’t already have a workers’ compensation policy in place, it’s time to get in touch with a professional insurance broker to find the right cover for your business and employees.
