COVID-19 Workers Compensation Information for Employers
Financial Capacity of Employers to Insure and Pay Compensation to Workers
The economic impacts associated with government measures to address the spread of COVID-19 will materially affect the financial position of many employers.
The possible impacts on workers’ compensation arrangements may include:
- Insurance premium costs where the size of the employer’s workforce (and aggregate wages) has reduced significantly due to temporary closures from when the insurance policy may have been taken out.
- Employer concerns about financial capacity to pay wages to workers, including those in receipt of weekly compensation payments.
Insurance premium
If your business circumstances have significantly changed (resulting in a significant reduction in overall wages moving forward), you may be able to renegotiate your workers’ compensation payment terms or premium (which is based on declared wages), or discuss options for a mid-term adjustment of the premium payable.
It is strongly recommended employers engage with insurers through their broker if they have one.
All employers are required to maintain a current workers’ compensation policy while they have workers, even though wages may have dropped significantly. You will not be able to cancel your policy while you employ workers.
Payments to workers
It is very important that weekly payments continue to be paid to injured workers.
In circumstances where you (as the employer) are paying weekly payments to injured workers, you can discuss with your insurer how best to ensure those payments continue.
Insurers may be able to make the reimbursement to employers in advance (max of one pay period) so the employer can deduct the necessary taxes and make the net payment to injured workers. It is important that a person with payroll responsibility, or business owner, continue to engage with the insurer.
In exceptional circumstances and where the above solution of advance payments has been exhausted, you (or your broker) may be able to negotiate with your insurer to make the weekly payments directly to injured workers on your behalf.
In the unfortunate circumstance where an employer will be ceasing to carry on its business or is wound up due to the financial impacts of COVID-19 and they do not intend to restart the business at a later date, workers have the same rights and remedies against the insurer, that the employer otherwise would have had under the insurance policy. This means workers in this circumstance can lodge claims directly on the insurer and the insurer is obligated to make payments to the worker in place of the employer.
