New South Wales Premium Changes to Benefit Employers
WorkCover New South Wales (WorkCover NSW) has announced the most significant workers compensation premium changes for medium and large employers in New South Wales since the commencement of the current workers compensation legislation. The changes will commence on 30 June 2015.

For safe employers, the changes mean reduced workers compensation premiums through lower claims costs and premium discounts. While the premium formula has not been publically released, it is expected that unsafe employers will bear significant costs for their poor safety performance.

The key premium changes are:

1. Claims Costs – claim costs estimates will no longer impact upon premium calculation. Premiums will be calculated primarily on the amount of weekly compensation an employer has paid, rather than the estimated future medical, wages and other costs associated with a claim. Death benefits, as well as lump sum and pain and suffering payments, will also form part of the premium calculation process. However, the exclusion of estimated claims costs may have a significant deflationary effect on affected employers' premiums.
2. Average Perfomance Premium (APP) – the basic tariff premium will now be known as the APP. The APP is the amount of wages an employer pays multiplied by their WorkCover Industry Classification (WIC) rate. At this stage, there is no information on whether WorkCover NSW will review the WIC rates.
3. Employer Safety Incentive (ESI) – the ESI is a new discount on an employer's APP. It is an incentive designed to be reinvested into businesses to improve safety and support for workers. However, at this stage there is no mandatory requirement to do so.
4. Employer Safety Reward (ESR) – the ESR is an additional discount on the APP which will be available to employers who maintain a safe workplace and have not incurred any premium impacting claims for 4 consecutive years.
5. Claims Performance Rate (CPR) – the CPR will take the form of a discount or a loading that is attached to an employer's premium when its policy is renewed. The amount of the discount or loading will reflect how well the employer's APP and claims costs for the preceding three years compared against scheme performance overall. At this stage it is not known what those scaling factors will be or the quantum of loading which will be placed on poor performing employers.
6. Return to Work Incentive (RTWI) – this is a further premium discount for employers who proactively return workers to suitable and safe work. It applies in respect of claims made after 30 June 2015 and provides employers with injured workers that have returned to work:

(a) up to 13 weeks after their injury with a 15% premium discount
(b) between 13 and 25 weeks after the injury with a 10% discount
(c) between 26 to 51 weeks after the injury with a 5% premium discount.

What Should Employers do to Benefit From the Scheme Changes?
Employers should take advice about how they can maximise the new discounts that could apply to their upcoming workers compensation premiums and proactively manage weekly payments claim costs.

A key way of doing so is to focus on the speedy return of injured workers to safe work. Employers should also adapt their processes and procedures to ensure that they are not subject to any scaling or loading factors that could be applied to the APP resulting in an adverse CPR calculation.

Employers should also be ready and willing to engage competent rehabilitation providers at an early stage to get workers back to work as soon as possible.

K&L Gates will update employers on any further changes and impacts on premiums once the premium formula is released.