The Guardian July 28, 1999


Fight for workers' compensation

NSW WorkCover is in crisis and the manufacturing, building and 
construction unions have launched a campaign to defend and improve workers' 
compensation benefits in the State. Their first action is a stopwork rally 
at Sydney Town Hall on July 28. Workers' compensation benefits for injured 
workers are in jeopardy. The WorkCover scheme now has a debt of $1.7 
billion, meaning there is not enough money to pay existing and future 
claims, with the situation getting worse daily.

Confronted by this crisis the Carr Government is proposing to reduce 
injured workers' benefits and the payments made to the families of workers 
killed in workplace accidents.

The union movement rejects this "solution", saying the crisis has not been 
created by workers but by government mismanagement and employer non-
compliance.

The problem is employers are ripping off the system through their 
widespread non-compliance, avoiding their legal obligations to pay 
premiums.

In some industries the level of this non-compliance is estimated at more 
than 40 per cent: body hire companies are even worse!

The unions point out that if employers were made to pay their correct 
premiums workers' compensation benefits could not only be maintained, but 
improved. 

Employers cheating

The workers' compensation system in NSW is essentially an honour system, 
with employers taking out a policy and advising the insurance company how 
much they will be paying their workers in wages over a 12-month period.

The employer is then charged a premium based on the type of risk involved 
in the work. For example, because building work is dangerous the premium is 
9.36 per cent of wages, whereas the rate for child care workers is 1.58 per 
cent.

Most employers under-declare the wages they pay and therefore minimise 
premiums.

So, if an excavation company has 50 workers on $50,000 in wages per worker 
per year, it would have to pay 9.36 per cent in premiums on an annual wages 
bill of $2.5 million. This amounts to $234,000.

If the employer lies and tells the insurance company it has only ten 
workers on $35,000 per worker per year, it would have to pay 9.36 per cent 
in premiums on an annual wage bill of $350,000 which amounts to $32,760, a 
saving for the employer of $201,240. A theft of $201,240 from WorkCover and 
injured workers.

If the excavation company tells even more lies it can cheat even more.

For example if it told the insurance company that it was not operating the 
machinery but hiring it, which involves less risk, it would pay only 3.66 
per cent of its already understated wages bill.

Combine these rorts and the employer would pay only $12,810 in premiums 
instead of $234,000.

Make-up Pay

The employer organisation, Australian Industry Group, has withdrawn in NSW 
from a 25-year-old agreement which guaranteed normal rates of pay for 
injured workers on compensation under metal industry awards.

The Make-up Pay agreement meant the employer made up the difference between 
the award rate of pay (which is paid by the insurance company) and the 
actual take-home pay the worker was receiving at the time of the injury.

This action is a serious attack on the living standards of workers and 
their families who through being injured by their employer, find themselves 
on workers' compensation. Injured workers could lose between $100 and $300 
per week.

Another consequence of this position is that injured workers will be forced 
back to work before they are fully fit with the very real risk of further 
injury.

The metal and building unions are campaigning to have the Carr Government 
change the Workers' Compensation Act to ensure the normal rate of pay is 
paid to workers, saying it is clearly not enough to rely on industry 
agreements with employers as they cannot be trusted to honour them.

The unions point out that it is also not good enough to rely on enterprise 
agreements to achieve this on a workplace by workplace basis, because only 
those workers in industrially strong areas will win.

The only way to be sure injured workers are not made to pay for the 
mistakes of their employers is to force the government to legislate.

* * *
Acknowledgements: AMWU, ETU, CEPU, AWU, CFMEU newsletter

Back to index page