WorkCover That Works: WorkCover Demystified (scroll down to view video)
Olivia:
Hi.
Mark:
Good morning.
Olivia:
Good morning, hi. I’m Olivia, this is Mark.
Mark:
Good day, thanks for having me.
Olivia:
Pleasure, thanks for coming. So, okay, so for those who are new to the group, SEMBA, which is “South East Melbourne Business Associates” is a business resource and networking group we set up. I’m from Officeway, and because we deal business to business, we were interested in setting up a group that gave businesses a way to get in touch with each other and free business resources, things that would be of interest to business people.
So that’s what the group is about and so we aim to have a livestream every month on something of interest to business people.
Now, we have dealt with Mark ourselves and we have saved ourselves a fair bit of money on our WorkCover premiums. So there is a lot to learn about WorkCover, it’s an important part of every business.
So Mark, welcome.
Mark:
Thanks for having me. Firstly, well done with the Facebook group, by the way.
Olivia:
Thank you.
Mark:
I think it’s a fantastic resource, I think it’s a good way to keep in touch with people. I think there’s a lot of people from the Dandenong Chamber who’re getting on and I think it’s great. I think it’s been helpful for me to keep in touch and sort of see what other business people are promoting and what’s going on for them so I think, well done with the group, I think it’s a great idea and for providing this content to people, too. I think it’s really a good stuff. So thanks for having me.
Olivia:
Okay, pleasure, thanks. So you’re known as the WorkCover guy, I noticed.
Mark:
That’s right.
Olivia:
So how did you manage to end up with that nickname?
Mark:
Yeah, look, it sort of came about naturally. I mean, look, a little bit about my history is that I’ve worked in WorkCover pretty much all of my adult life which is about 20 years now that I’ve been working in WorkCover in one form or another. Over the years I’ve held roles at the WorkSafe agents which some people will call insurance. I’ve worked at a large labour hirer employer, I also worked in Coles who is I think Australia’s largest employer.
Olivia:
What were you doing at Coles?
Mark:
I was doing WorkCover related stuff. So they … in Victoria, I mean, they are huge, they are such a big employer. In Victoria, I think they had about 100 people who just look after WorkCover related stuff. So I was doing injury management related things there and also some of the processing of claims and all sorts of stuff there.
But what’s that’s come about to be over the years is that I’ve had lots of different experience in all different sides of the WorkCover spectrum and that’s allowed me to really understand just what everyone does in the system and how the system works. And it’s positioned me to be able to give advice to people, sort of knowing, sort of really understanding what are all the different ways that this could be looked at and what’s the best advice that I can give you.
And I guess the reason I became known as the WorkCover guy is simply because when I … a lot of people come to me with questions so whenever there’s something thinking, “I’ve got this WorkCover thing, who should I call?”, it’s like, “I better call that WorkCover guy, Mark, Mark, the WorkCover guy.” And similarly, when I call people up, you know, when they say, “Where are you calling from?” I say, “I’m from Mark Stipic Consulting and just tell them I’m the WorkCover guy,” “Ah, yeah, yeah, you’re the WorkCover guy, right.” And that’s how it came about.
And then that’s what I’m known for and so basically just the fact that whenever there’s an issue with WorkCover, no matter what it is, I either know the answer or I can get you the answer, one or the other.
Olivia:
Excellent. Good to know.
All right, so it’s a big question but can you explain what WorkCover is and how it works?
Mark:
Yeah. It’s a very good question, I think it’s a good way to start the conversation and it’s a common question, this one, I’ve answered a lot of time, so I think I’ve managed to compress it down into a relatively … I don’t need to take all day hopefully to answer it.
But let me run through some of the fundamentals of what WorkCover is, what it’s all about. And who some of the stakeholders are in it. So you might have seen WorkSafe Victoria and WorkSafe, they had to have a lot of ads on TV for Health and Safety, you hear about the Health and Safety inspectors who could knock on your door any day. So WorkSafe Victoria, it’s a trading name of the Victorian WorkCover Authority, they are basically a government agency who’s responsible for all of the occupational health and safety, WorkCover claims and WorkCover premiums in the state of Victoria.
So just to be clear, the WorkSafe is a government agency, they are … I compare them similarly to the ATO or the State Revenue office, they are a government agency who, when they compile their annual report each year, they send it through to Robin Scott, the Minister for Finance. So WorkSafe is the government regulator.
Now they outsource all of the premiums and claims related activities, they outsource to five companies who are called Agents of WorkSafe. Now these are the companies that are sometimes mistakenly referred to as your insurer. They’re not strictly an insurer but there are five of them in Victoria. So pretty much anyone who’s watching this who’s got a WorkCover policy would have it with one of these five companies. They are Gallagher Bassett, Xchanging, CGU, Allianz and a relatively new one, Employers Mutual, also called EML.
So anyone who’s got a WorkCover policy would be with one of those five companies. But I just want to make the distinction that they’re not strictly an insurer. In fact, three of those companies I mentioned don’t really even provide insurance products. They are actually agents of WorkSafe. So WorkSafe hires them to do the work for them. WorkSafe hires them to manage premiums and claims on their behalf.
So in Victoria, there is actually only one insurer and that is WorkSafe. Each year when the business pays your annual WorkCover premium, you pay that to WorkSafe, so you don’t actually pay … you know, if you pay $100,000 a year, your agent / insurer, doesn’t get $100,000, that money goes to WorkSafe and then WorkSafe decides how to pay those agents.
So they’ve got contract with those agents on how they get paid, they don’t release the contracts to the public, so it’s a little bit mysterious. Having worked in there, I know some of the details of how these things work. But it’s just an important distinction to make when you’re managing your WorkCover to just be aware that you are in a relationship when you have a WorkCover policy, you are in a relationship with a government agency, WorkSafe, and when you’re dealing with your WorkSafe agent, you’ve just got to be aware that you’re dealing with a representative of this government agency. They’re not strictly your insurer, it’s just an important distinction to make.
But WorkCover … it’s a compulsory form of insurance and employers, if you meet certain criteria which is pretty much just that if you are employing people and paying more than about $7,500 wages which just any business who employs anyone probably would, or if you have trainees or apprentices, you must have WorkCover insurance. You can get in trouble if you don’t, much the same as you get in trouble if you don’t pay your tax.
So most businesses are required to have insurance and that’s … does that make sense to you? Does that-
Olivia:
So…
Mark:
Anything you want to clarify there? yeah?
Olivia:
So you have WorkCover. You’re paying to WorkSafe, you do have insurance.
Mark:
Correct.
Olivia:
From them (WorkSafe) directly, it’s not from any of those others
Mark:
That’s right.
Olivia:
Not Allianz or all those people. Those names that we (normally) associate with insurance.
Mark:
That’s correct. So they are called third party administrators of WorkSafe. So WorkSafe is the scheme.
Olivia:
They’re just outsource administrators.
Mark:
Correct. That’s right, yeah. And so you pay your insurance premium into the scheme, the Victorian government gets it all and your … all employers’ premiums are used to fund the cost of all the injuries in the state of Victoria as well as all of WorkSafe’s operating expenses. So all of those five agents that I mentioned, WorkSafe and however many hundreds, maybe thousands of employees that are at WorkSafe, all of that is funded by employers’ premiums.
So personally, I liken WorkSafe insurance more to taxation than I do to genuine insurance because it’s compulsory, you can’t negotiate the terms, you can’t negotiate the rates, you can change from one agent or insurer to another but you don’t get a better rate, you’re just changing the person who’s on the other end of the phone.
Olivia:
Okay.
Mark:
And that’s, in a nutshell, that’s what WorkSafe’s all about and it’s just important … it is similar to insurance just in the sense that yes, you pay your annual premium and if someone does get insured, look, the costs of that will be covered by the WorkCover claim. WorkCover will cover the costs, what comes up with that claim.
But that’s about where it ends. And there is plenty of employers that I meet, particularly in high risk industries, who might have a claim that costs $10,000 but then they find their premiums have gone up by $30,000 and they’re sort of thinking, “What sort of insurance is that?”
And it’s likely. Look, employers tend to … across the whole scheme, employers tend to pay more in insurance than the cost of claims because there is all these other activities, all that occupational health and safety stuff, all of those ads you see on TV for WorkSafe, they’re being paid by employers’ premiums. So yeah, there’s a lot that goes into it.
Olivia:
So, I don’t know that many people would realize, I mean seeing we met you, we met you through the Dandenong Chamber and then we also got chatting on the SEMBA page and I don’t think we would have realized how significant this question is until we got you to have a look at our premiums and save some money. How are the WorkCover premiums calculated?
Mark:
Right. Look, there’s a lot that goes into it, there’s a whole stack of ingredients that get thrown into the cauldron and eventually it spits out your premium at the end of the day. But there’s three main things that employers need to know that are the three … really, the three key things you should be aware of how with how premiums get calculated..
The first is that you need to declare your rateable remuneration which is just a fancy word for money that you pay to employees. Your rateable remuneration, it’s an indicator of how labour intensive your business is. So if you’re a business that has maybe between 10 and 20 employees, over the course of the year, you would maybe pay roughly $1 million in labour costs to those employees. So that’s used … let’s say you pay $1 million in what’s called rateable remuneration, that’s used as a baseline figure to determine who big your company is.
And look, it’s very similar again to taxation where the more labour costs you have, the more you’re paying payroll tax. Exactly the same with WorkCover. So if from one year to the next you went from one million in labour costs up to two million dollars in labour costs, your insurance premium would roughly double. And the reason that’s used as a … the reason I think that’s used as part of the equation is simply that if you have labour costs it means that you … one of two things, you either employ lots of people and that means there is a higher probability that one of those people could have an injury or you might actually employ fewer people but you pay them higher wages and then also what that means is if they have a WorkCover claim, they’ll get compensated at a higher rate. So it makes sense again that you should probably pay a higher premium.
So that’s why they go off rateable remuneration, not off things like headcount. It goes by what you pay to employees. So that’s the first step. And the second part of the equation is your industry classifications, it’s called a WIC, the Workplace Industry Classification. And that determines how risky the work is. So every business or every work place will have its own classification. There are some low risk industries, such as financial advisors, real estate agents, most office type work is relatively low risk.
But then higher risk industries include abattoirs, the trades, any sort of trade, plastering, concreting, painting, they all have high rates. Lots of manufacturing classifications, transport, aged care, disability services. So particularly anything blue collar or health and social support, all of that aged care, health care stuff tends to have a high rate.
In Victoria, the average rate across all business is about 1.2%. There is stacks of business, like I imagine your real estate agents are on about 0.5%, so they’re pretty cruisy, they’re pretty happy. But then you know, some of those higher risk industries, like I said your meat processing, your trades, they can be up on four, five, seven, eight percent. So when you think about, if you’re paying $1 million in wages, you could be paying $80,000, you know, if you’re on an 8% rate, you could be paying $80,000 in WorkCover pay, it’s a significant cost.
So that’s your industry classification. So that determines how risky the work is, it basically means if you’re in a high risk industry, you’re more likely to have claims so you can pay a higher premium.
Olivia:
And that’s what related to us, wasn’t it? With our business.
Mark:
Well, correct yeah. And that’s one of the things that I looked at is … one of the things that I do at Mark Stipic Consulting is I audit these things. So one of the things that we look at is what are you declaring as rateable remuneration? So we find that a lot of employers are quite often declaring the same thing for payroll tax that they do for rateable remuneration. And there’s different rules between payroll tax and WorkCover for what you must declare.
And the rules, it’s impossible for any average person in business to know what all the rules are. On their website WorkSafe does list about a dozen dot points about what you should and shouldn’t include. But then there’s always other precedents and all this fine print that you know, only people like myself and the people that I work with who have had experience doing literally tens of thousands of these audits, you just wouldn’t know all of the fine print.
And we go through, we make sure that you’re only declaring what you are required to declare. And usually, it’s not uncommon that we can identify that an employer has over declared their rateable remuneration by 5%. And that might be that they paid five … if you’ve over declared, it means that you paid 5% more than you needed to in your premium.
And what we do is we can actually go back and we can audit the last four years and get refunds on that. So the rateable remuneration, yes, that’s one thing that we audit and we can find ways of reducing it. The classification is another thing and that’s … a lot of employers set up their policy, could be 10 years ago, 20 years ago. They go into business for a particular type of work, they set up their WorkCover policy and then they just go about their business for years and years on end.
But they never revisit, well, what are the activities that we’re doing in the business now compared to when we started 10 years ago? And quite often, things change and that’s one of the things that we found with you guys, if you’re happy to mention it, we identified that there was a case to justify that there was a different classification that was more appropriate for you guys.. so we were able to build a case to justify that you were classified one way but we looked through certain aspects of the way your business is set up, a few things internally, and we built a case to justify that this is a more appropriate classification for the business. And that resulted in, yeah, for you guys, a significant saving in your annual premium.
And we were able to go back to the WorkSafe agent and request refunds on the past four years. So yeah, a really great outcome that we got with you guys. Looking at those two things, the rateable remuneration and the classification.
And just while we’re talking about premium calculation, they are the two out of three. The third thing is your claims history. Employers who have WorkCover claims may pay higher than the average rate for their industry. So like I said, if your industry rate is 2% and if you’ve had a bunch of claims, your rate could go up to 2.5, 3% you could go up if you have claims.
I mentioned the employer before who … you know, kt happens all the time when I hear of employers who have got $10,000 of claims costs that have been paid and then their premium goes up by 30 grand. And that happens, so yeah, so they are the three things, your rateable remuneration, your classification and your claims costs.
Ideally, if you don’t have claims costs, you don’t have to worry too much, hopefully.
Olivia:
So what do people normally come to you for, what’s the biggest-
Mark:
Yeah you know what, regrettably, people usually come to me because they got a big problem right now. There’s people i met at the chamber like you guys who didn’t have a big problem but you thought, “You know what, I’d be happy to have a look at that and see if he can save us some money,” which we did. So that’s very common when I meet people and they become aware of who I am and what I do. But they’ll say, “Cool, let’s have a look and see if we can save some money.”
On the other side, though, when people are seeking me out, when they jump onto Google and try and find me, it’s usually because they’ve got a big problem with something to do with WorkCover. And the unfortunate thing there is that they haven’t gotten on the front foot end, it’s usually because they’re reacting to a problem. And probably that they haven’t done enough in the lead up to that problem coming about to prevent the problem from [crosstalk 00:17:20]
Olivia:
So they’ve got a claim?
Mark:
A claim basically. Sometimes another issue, sometimes they are employers who have been audited by WorkSafe and WorkSafe has said … like how I did the audit for you guys, WorkSafe has come in and done an audit which has gone the opposite direction. You know, I’ve had employers come to me, saying, “We’ve just been audited by WorkSafe and they’re telling us we gotta pay $200,000 and we got 60 days to pay that.”
Because we can go back four years and get you a refund but also WorkSafe can potentially go back four years and make you back pay and hit you with penalties for underpaying and all sorts of stuff.
Olivia:
Ouch.
Mark:
Yeah, it’s not dumb, it’s not too pleasant. So sometimes I get called in to do a counter audit and in the example that I gave with the employer who got stung with that $200,000 back pay, we didn’t get all of that back, we actually reduced that down to about $120,000. So they were stoked, you know, we effectively saved them $80,000.
But regrettably, they should have looked at things sooner to check, they should have had someone independent specialist come in to check whether they were doing things right.
And look similarly, when it comes to WorkCover claims. It’s pretty regular that I would get a phone call from someone and it’s because they got this complex claim, they got a person who’s off work, refusing to talk to anyone, they don’t know what’s going on, they’ve got issues with lawyers and you know, it’s a really complex situation. So they call on me, a specialist, to come and try and help them navigate the situation. And I will do everything I can to help them navigate towards the best possible outcome.
The only unfortunate thing there is, we’re in damage control basically at that point. So there is certainly things you can do but you’re never going to get the best possible outcome because it’s already happened, the horse is already bolted a little bit. When you get to that point where there’s an injury, there’s a claim and you know, it’s feeling complex, it’s feeling like the relationship is breaking down with their budding heads, you got a lot of ground to make up and ideally, if I could somehow travel back in time and grab that employer a year beforehand, I would try and teach them to identify some of the warning signs that you are either at risk that someone’s going to have an injury or there is other things going on in this work place that says to me that if someone gets injured, you’re going to have a hard time getting him back to work.
You know, when you got poor employee engagement and you got a terrible work environment then people don’t want to come back to work. So you need to address those issues well before the injury ever happens. All of the things that happen in the one year, two years, five years before the injury are all highly relevant to what happens after the injury.
So there’s plenty of stuff that you can do, there’s plenty of stuff that I will do for people in that situation but there’s … you can’t perform miracles, you know? So you are in damage control. But yeah, they are the reasons people track me down.
Olivia:
Okay. So ideally, they would … one of the common mistakes employers make, what would you or rather, if you could get in there early or give them advice, how would they avoid getting to that point?
Mark:
Sure, and I sort of touched on some of the mistakes. I mean, I did mention in the premium side of things, if you’ve never looked at your premium, if you never even sort of considered are we doing things right or not, then that’s probably a mistake, you should probably get someone independent to come and check your situation.
Olivia:
So how often should someone do that then?
Mark:
Once every three years pretty much. I mean, when I talk about my services, I mean if you’ve been in business for a number of years, generally, we’ll do our WorkCover refund audit on a no win no fee basis, that’s what we did with you guys where we’ll come in and do the audit and we don’t get paid for that work unless you guys get a refund basically.
So I think it’s a no brainer, I think anyone should give that serious thought. But I think anyone who is just sort of going through the motions once a year without thinking is this actually right? Do we know for certain that we’re doing things right? I’d say that’s a mistake.
But tying back to that other area we were talking about how you prevent these injuries ’cause I actually believe any injury is preventable. There’s very few businesses who have a 100% success rate in preventing every single injury but I think every single time I’ve looked at any injury that’s come up, we can find a way that it could have been prevented.
And one of the mistakes that employers make, I think, is just not realizing or not doing enough of the sort of things that can prevent injuries. So an area that I’m constantly learning more and more about is … it’s called leading indicators in occupational health and safety and there’s probably people who will see this who understand what leading indicators are, like maybe from other senses of business, when it comes to economics or sales and things.
But a leading indicator … well, there’s leading indicators and lagging indicators, right? Lagging indicators just measure things that have happened recently whereas leading indicators are a measure of something that predicts the future, okay?
So in WorkCover, a lagging indicator is measuring how many injuries did we have last month? We had three injuries last month. So that’s a lagging indicator, it’s measuring what happened last month. But there are leading indicators. Knowing how many injuries you had last month won’t help you prevent any injuries next month.
But if you’re measuring your leading indicators, that’s a measure of things that are going on in the business now that can predict if or how many injuries you’ll have in the future. And in a nutshell, a couple of the easiest ones to explain here, the easiest one is employee engagement basically.
Employees who are engaged with the company, meaning that there is a strong bond between the business and employees, people who like their job, who respect their team leader, they’re much less likely to get injured than employees who are disengaged. So that’s one thing that employers, leaders in business can be working on to make sure that we are leading well, that we are demonstrating to our employees that we care about safety, that we’re willing to invest and do stuff and just taking whatever steps need to be taken to engage the employees. That will correlate to fewer injuries or if people do get injured, they’ll come back to work quicker.
Olivia:
What would that be? Is that because there’s greater communication and things get put into place if there’s … they’re engaged but that equals less injuries, that’s because steps are proactively being taken that-
Mark:
Yeah, correct. When employees are engaged, when they … and there’s a bunch of other layers to it. when I’m coaching a person in business through it, I’m teaching them that you need to invest a bit in safety, doesn’t have to be a lot of money but your time and your effort needs to be invested in safety and you need to communicate what you’re doing back to your staff so that people who work for you can report that, “Oh, yeah, look, the CEO, he takes safety seriously, once a week, she comes through and she checks and if anyone’s not doing the right thing, they get pulled up and the team leader gets in trouble as well.” So the company takes safety seriously.
Olivia:
Part of the culture.
Mark:
It is, that’s called safety culture. And when there is higher engagement, when people band together and prevent injuries, when people reprimand one another if they don’t wear their personal protective equipment and when they all band together to help get people back to work, that just creates that environment. And I could speculate all day long about why these things correlate to lower injury rate but the reality is, there’s stacks of research and I’ve got plenty of anecdotal proof that when you get that stuff right, you have less injuries and people come back to work.
So I’m not too concerned about the why it works, more just the fact that when you do-
Olivia:
But it does.
Mark:
The following activities, you’ll have fewer injuries and people will come back to work.
Olivia:
Okay, gosh, there’s so much we could cover but I think we’ve already-
Mark:
Yeah, look, I mean we’ve … we may as well sort of … what have we got?
Olivia:
I think we could do a whole other session, a whole other one on returning to work quicker or something like that.
Is there anything you’d like to say in closing. We could definitely have you back and just focus on one subject.
Mark:
Certainly, there’s a bunch of areas we could get into there.
Mark:
No, look, I just want to say thanks for having me here. I know it’s a complex area and it’s … I’m grateful for the opportunity to get in front of the SEMBA group because what I think what I do in WorkCover is such a niche area, it’s a small part of every business but it can be a significant cost. And so not everyone’s fully aware of the risks. So I’m grateful for the opportunity to raise a bit of awareness about WorkCover, also want to let everyone know that I am in the final stages of publishing my book, still have two or three months before it will actually exist in material form. But it’s … I’ve finished the writing process, I’m going through the editing and the production process now and that’s going to be great.
And what we’ve covered here in about 20 minutes, there’ll be a book for anyone who has sort of had a little bit of interest today, that will take you right through everything you need to know about how the system works and how you can handle it. So I’m really looking forward to getting that out, I’ll see if I can whip up some special offer for the SEMBA group maybe when the day comes.
Olivia:
Sounds good.
Mark:
Yeah but in wrapping up, look head to markstipic.com.au if you want to find out more about who I am and what I do and I’d love to connect with anyone on Linkedin, primarily, so just look me up on Linkedin, it’s Mark Stipic.
Olivia:
I didn’t see any questions pop up but often I find since that they were ones after, so I don’t know. But if people have any questions, can they just pop comments in?
Mark:
Sure thing, I’ll respond in the Facebook comments for sure.
Olivia:
Thank you very much.
Mark:
It’s been my pleasure, thanks for having me.
Olivia:
Pleasure. Thank you, bye everyone.
Mark:
See you guys.
Interview conducted by Olivia de Sousa-Ferres
You can contact Mark Stipic via his webpage www.markstipic.com.au or vis LinkedIn here
You can find the SEMBA South East Melbourne Business Associates Facebook page here.
SEMBA is sponsored by Officeway, a business to business supplier of office furniture. www.officeway.com.au
