Premiums

New Grouping Provisions

In May 2006, NSW Minister for Commerce, John Della Bosca, announced new grouping provisions for workers compensation premium calculation purposes. The Workers Compensation Legislation Amendment Act 2006 gives effect to the new arrangements.

In 2002 the NSW Government appointed special advisers to make recommendations on measures to substantially improve employer compliance with workers compensation and pay-roll tax provisions.

The advisers’ final report Review of Employer Compliance with Workers Compensation Premiums and Pay-roll Tax in NSW included recommendations to group related entities for workers compensation purposes with the aim of improving the level of employer compliance and giving businesses the opportunity to compete equally.

This recommendation was followed by over 18 months’ consultation with industry around the methods of implementation for grouping, included as part of the broader Premium Review. As a result, the Minister for Commerce announced the current grouping provisions in June 2005.

Under these arrangements, which apply to policies commencing on or after 30 June 2006, employers that are related entities with combined wages of more than $600,000 will be grouped for workers compensation purposes.

All members of a group may continue to have separate policies but are required to be insured with the same Scheme Agent and have a common renewal date for all policies. The experience adjustment factor (S factor) of the premiums of grouped employers is calculated using the combined basic tariff premium of the group.

Some charities and other not-for-profit organisations will be able to apply to WorkCover for exclusion from grouping status if those group members are not in direct competition with for-profit businesses.

Grouping of employers for workers compensation purposes does not affect employers who are specialised insurers or self-insured.

Grouping of related entities for workers compensation purposes is required under P art 7 Divison 2A of the Workers Compensation Act 1987 and is similar to the grouping requirements for pay-roll tax purposes.