What is Workers Compensation Insurance?
Workers Compensation Insurance provides financial protection for employees who suffer injuries at work or illnesses because of their work. Managed under state and territory legislation, it offers support such as medical expenses and wage replacement to workers who are injured on the job. Although the specific regulations and schemes vary across states and territories, a ‘worker’ generally includes anyone who receives a wage or commission from your business, encompassing full-time, part-time, casual, and temporary employees, as well as contractors.
What Does Workers Compensation Insurance Cover?
Workers Compensation typically includes:
- A portion of the injured worker’s wages for the time they are unable to work
- Compensation for lost earnings if the worker must reduce their work hours due to an injury
- Coverage for medical, hospital, pharmacy, and other treatment expenses related to a work injury
- Costs for rehabilitating the worker to facilitate their return to work
- Lump sum payments for permanent impairment, as defined by the specific scheme
Who needs workers compensation Insurance?
Under Australian law, employers MUST have insurance to cover their workers in case they get sick or injured because of work. There can be serious consequences for Employers who don’t hold a Workers Compensation policy. These include:
- Legal penalties and substantial fines
- Financial liability – employers without Workers Compensation are personally liable for all costs associated with employee injuries
- Civil lawsuits filed by injured workers
- Reputational damage
- Regulatory action
Workers’ compensation may not be required for sole traders without employees or self-employed individuals who do not employ others. However, they may still choose to obtain personal accident or injury insurance to protect themselves in the event of a workplace injury or illness.
Client Example
An employee at a construction company, injures their knee while climbing a ladder. The injury is promptly reported to the site manager and the employee seeks medical attention.
The claims process was as follows:
- The worker reports the injury to his supervisor and fills out an incident report.
- The worker visits a GP, who diagnoses a knee injury and provides a medical certificate recommending time off work and further treatment.
- The Employer files a Workers Compensation claim with their insurance provider, providing the medical certificate and incident report as supporting documentation.
- The Insurer reviews the claim, including medical reports and injury details, and determines the employee’s eligibility for benefits.
- The insurer starts paying the medical expenses and provides wage compensation for his time off work.
- The insurer arranges for any necessary rehabilitation and conducts regular follow-ups to monitor the recovery.
- Final Review: At the end of the claim period, the insurer reviews all payments and costs, making any necessary adjustments.
In summary, the Workers Compensation claim involves reporting the injury, obtaining medical treatment, filing the claim, receiving compensation, and undergoing rehabilitation. This process ensured that the injured worker got the support they needed while recovering from the injury.