Publish date: 02 July 2024

When you get injured at work, it’s natural to be concerned about the impact of making a WorkCover claim, not just on your recovery, but also on your employer. It is not uncommon to worry about how a workers compensation claim will affect the relationship with your employer and the workplace atmosphere.  

Contrary to common belief, the impact of a workers compensation claim on an employer is often minimal, but for the employee, the impact can be much greater, especially from a financial perspective. 

Understanding WorkCover Queensland 

WorkCover Queensland is a statutory body that provides insurance coverage for workers who are injured or become ill due to their work. The primary aim is to ensure that employees, like yourself, receive the necessary medical treatment and financial support during your recovery period. It also aims to facilitate a safe return to work. 

Employers and WorkCover Queensland Insurance 

When a business takes out WorkCover insurance, their premium is calculated by placing the business into one of two categories: – 

  1. Smaller Businesses – those who pay $1.5 million or less in wages 
  1. Larger Businesses – those who pay more than $1.5 million in wages  

Smaller Businesses  

The premium for a smaller business is calculated by reference to a rating scale. For example, policy rating 1 is calculated from 80% of the industry rate. The industry rate is worked out based on the cost of claims for all employees in the same industry. The business’ rating is then worked out from the cost of claims for the previous financial year – the better the rating, the lower the premium.  

For small businesses, a 10% movement limit is applied, which means that their policy rating can only go up or down by one (1) rating each year. This is to ensure that changes are predictable and easier to manage. If a business has no claim costs for the year, their policy rating will automatically improve by 1 rating, meaning that their premium will reduce, unless they are already on rating 1, which will remain the same.  

The additional benefit for a small business is that there is a $500 claim cost protection, which means that the first $500 of claims costs won’t count towards the total claims experience. In short, small or simple claims will not affect their premium. 

Larger Businesses  

For a larger business, the premium is calculated using an experienced-based rating. This means wages, industry rate and business performance are all considered when calculating the applicable premium. With respect to performance, 4 years’ worth of claims costs are considered – this includes the statutory claims costs for the 3 previous years and common law claim costs for the 1-year proceeding.  

The main difference for larger businesses is that the number of years of claims costs and the size of the business is considered when their premium is calculated.  

Similarly to smaller businesses, larger businesses can lower their premiums when they lower the number of claims made by putting safe work practices into place and supporting injured workers in getting back to work. 

Larger businesses also have a 30% limit on annual premium rate increases, which is to help manage the increase in cost if a business experiences a significant performance decline. 

Impact on Employer vs Impact on Injured Worker 

It is not uncommon for employees to be hesitant to lodge a workers compensation claim in fear of the impact it will have on their employer. But more significantly, and in fact critical, is the impact that failing to lodge a claim could have on the injured worker.  

I narrowed it down to what I thought was the most significant impact a workers compensation claim could have on an employer: –  

  1. Financial Impact: Increase in premiums, which is generally minimal in the whole scheme of things.  
  1. Operational Impact: Depending on the severity of the injury, the employer might need to make adjustments to cover absences e.g. hiring new staff, redistributing workloads amongst existing employees and/or modifying the duties of the injured worker to accommodate recovery.  
  1. Reputational Impact: Employers who handle WorkCover claims poorly or who have a significant number of claims, may face reputational damage.  
  1. Legal and Compliance Impact: Employers are legally required to provide a safe working environment and to support employees who are injured at work. Failure to comply with these obligations can result in legal consequences and penalties. 

In contrast, a workers compensation claim might be what prompts an employer to impose change and improve practices and safety measures in the workplace.  

Impact on Injured Worker 

On the other hand, if you are injured in the workplace and decide not to lodge a workers compensation claim, it may have a profound and enduring impact on your life. Although there are many ways deciding to forgo a workers compensation claim can impact and injured worker, I have highlighted the most common ones below. 

  1. Financial Hardship: Without claiming workers’ compensation, you may face significant out-of-pocket expenses for medical treatment and lost wages, potentially leading to financial instability. 
  1. Health Outcomes: Lack of formal medical and rehabilitative support can result in prolonged recovery times or permanent disabilities if injuries are not adequately treated. 
  1. Job Security: The worker might feel pressure to return to work prematurely to secure their job, potentially exacerbating the injury and leading to long-term health issues. 

In addition, by not claiming workers’ compensation, you may forfeit certain legal protections and benefits designed to support injured workers during recovery. In Queensland, you have six (6) months to lodge a claim for compensation with WorkCover and any delay might mean that you are out of time to commence a statutory claim.  

Case study  

A business with about 60 people, with more than $1.5 million in wages per year might attract an annual premium of roughly $15,000 to $20,000. A smaller business, with 4 – 5 staff, might attract a premium of $1,000 to $2,000 per year.  

To put it into practice, in most cases, a person will pay roughly $40.00 out of pocket (after the Medicare rebate) for a GP appointment. If a 27-year-old female were to require monthly GP appointments for management of an injury, for the remainder of her life, she would be looking at a cost of approximately $28,320.00. This is for GP appointments alone, but what about allied health, medications, specialists and loss of wages? 

If this same 27-year-old female was an employee at a large business, who pays up to $20,000 per year in insurance premiums, the most this business would be looking at for in increase in their premium is approximately $6,000.00 – but this is the worst-case scenario. If she were an employee at a small business, the most their premium would increase would be approximately $200.00. 

If we compare the out-of-pocket costs for GP appointments to the increase in premiums for both businesses – who is worse off? $28,320.00 is a far cry from $6,000.  

What should I do? 

The purpose of this article is not to persuade anyone on the fence into lodging a workers compensation claim, my hope is to provide insight as to the minimal impact a claim has on an employer, especially when comparing to the injured employee. Throughout my career as a Nurse, I saw several patients who failed to lodge workers compensation claims in the past, and 5-10 years on, were requiring ongoing (and costly) treatment. They were forced to access their superannuation or obtain substantial loans to fund treatment. In addition, there had often been significant delays in accessing treatment, which had many potential long-term implications on recovery.  

In summary, lodging a workers compensation claim if you are injured at work ensures that you receive and have access to appropriate treatment and rehabilitation and provides financial security and support throughout the process. In addition, your claim could highlight areas where workplace safety can be improved, preventing future injuries for yourself and your colleagues.  

Libby Thomas
Libby Thomas
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