WorkSafe is cracking down on employee remuneration – make sure you provide accurate details to avoid hefty penalties!
At the start of each financial year, WorkSafe requires all employers to notify them of their estimated rateable remuneration – this is the total amount they expect to pay for the upcoming financial year for their employees.
Our Associate Partner, Matt Lazzaro, comments on WorkSafe’s crackdown…
“We have noticed that WorkSafe are now actually charging penalties more often than we have ever seen in the past. They are less lenient on employers who delay with their updates and they are not taking their audits lightly. With more sophisticated systems and data matching programs available to them, red flags stand out quickly and they are acting accordingly. We’re seeing a large number of penalties being charged like never before. So, we are ensuring our clients are informed and confident about their estimates, as well as ensure they are proactive with communicating updates with WorkSafe.”
What is remuneration?
Remuneration includes wages, salaries, superannuation, and other benefits such as cash and non-cash payments which employers pay their employees before tax. Certain types of remuneration are included in the calculation of insurance premiums. This is known as your rateable remuneration.
WorkSafe base the annual insurance premium calculation (the amount a business will need to pay to WorkSafe) off this estimate provided. Once the financial year is over, employers then confirm the actual remuneration paid with WorkSafe by the due date on your notice. This is known as declaring or certifying your remuneration with WorkSafe.
If the actual remuneration is higher than the estimated remuneration provided, then WorkSafe can charge a penalty. As an example, if the actual remuneration is 20% higher than the estimated remuneration, WorkSafe can charge a penalty up to 100% of the difference in the insurance premium – do the math, this could be substantial!
How remuneration affects your premium
If your annual rateable remuneration is $200,000 or less, WorkSafe calculate your premium using remuneration and the standard rate for your industry. If your annual rateable remuneration is over $200,000, they calculate your premium by taking into account how many WorkCover claims have been lodged against your business. If you perform better than your industry’s average, your premium will be lower. If you perform worse, it’ll be higher.
Managing and updating your rateable remuneration is of utmost importance!
If the estimate you provided at the start of the financial year is likely to be more than your expected rateable remuneration due to unexpected employee changes, you can update it at any time by logging in to your Online Employer Services account. The importance of acting on this promptly cannot be stressed enough.
If this estimate is less than your expected rateable remuneration by 20% or more, you must update it as soon as possible. The employer must advise WorkSafe within 28 days to avoid penalty. WorkSafe will recalculate your premium and you can pay it on the spot.
You can declare your rateable remuneration by logging in to your Online Employer Services account and completing the ‘Declaration of rateable remuneration’ form.
We’re here to help!
Make sure you speak with your Highview Accountant about any significant employee changes within your business – as Matt mentioned at the beginning of this article, the key to avoiding any penalties is proactive communication with WorkSafe.
For further details on how remuneration works, head to: https://www.worksafe.vic.gov.au/how-remuneration-works OR reach out to the experts at Highview here.