Statistics compiled over the past 10 years reveal that 1,140,000 workers made workers’ compensation claims involving more than a week of work time lost.
That’s a sizeable number any way you look at it. The largest proportion of workers’ compensation claims (as well as costs of total claims) were made by small business onwers. This is hardly surprising, considering that there are over two million small businesses operating in Australia that collectively generate over eight million jobs.
Running a small business can be tough, with limited resources that can be allocated to competing needs and obligations. Also, while every worker has a right to a safe workplace, injuries and illnesses can happen in any line of work and occupation.
Injuries and accidents can have a serious impact on y workplace. Foremost of all is the effect on the wellbeing of the workforce. Second is the time and productivity lost when the injured worker takes time off for rehabilitation and recovery.
Third is the cost implications when companies must pay higher insurance premiums when more injuries and accidents occur, and when workers make a compensation claim.
So, lets outline some key strategies to help provide small business owners with the ability to minimise payments for workers’ compensation claims while successfully running your business.
What is workers compensation?
Workers’ compensation is a type of insurance payment made to employees who are injured or become sick at work. It also covers the worker’s wages they recover from injury or sickness, and medical expenses and rehabilitation.
For the employer, workers’ compensation costs generally fall under two areas: direct and indirect. Insurance premiums fall under the direct costs. Your insurance premium is calculated based on the remuneration paid to the injured employee, the industry premium rate, plus income support costs paid to your worker with time lost claims in the previous year. The costs for legal services and medical expenses also fall under direct costs.
Indirect costs include repairs to damaged equipment, the expense of putting corrective measures in place, conducting investigations into accidents, and the like. If the injured worker is unable to return to the same job, you may even have to pay for the training of new hires to replace the injured worker.
Prevention as a cost-effective strategy
Perhaps, the most cost-effective way you can minimise costs for your workers’ compensation claims is by implementing a culture of safety and observing safety measures in your workplace.
A culture of safety can go a long way toward reducing the incidence of accidents in your company. It can also boost employee morale as it demonstrates that you’re giving high priority to their wellbeing. Putting safety first can also influence your employees’ attitude with regard to treating safety as a vital part of doing business. Here are some healthy strategies that can help you achieve this.
Educating and training your employees about the importance of safety in the workplace and involving each one in implementing and following safety measures can have a significant effect. It means that your employees may be less likely to take unnecessary risks.
All of your employees can benefit from undergoing regular safety training that covers a range of issues, from first aid to the safe use of equipment.
Employee wellness programs
Creating wellness programs can also contribute to workplace safety by promoting your employees’ health and wellbeing. Remember, a healthy workforce is a productive workforce.
For small business owners that may not have the manpower or resources to run such an employee assistance program by themselves, consider engaging a health professional, such as an exercise physiologist. Such health professionals are in the best position to assess the health status of your employees and design effective programs that can help employers achieve the desired results.
Identifying and evaluating the hazards in your workplace can effectively reduce accidents. Business owners can then develop plans for eliminating these hazards altogether to prevent accidents or illnesses from occurring.
Putting a return-to-work program in place
Implementing a return-to-work program can help encourage injured employees to get back to work while undergoing rehabilitation or after their treatment has finished. Such a program can help you avoid the more costly process of having to hire new staff and spend more on training your new hires – not to mention the loss of productivity spent on acquainting your new employees with their tasks.
Choosing the right insurance policy for your business as a cost-saving strategy
One way to minimise your workers’ compensation insurance premium payments for workers’ compensation claims is by ensuring that your business is placed in the correct category. This is because insurance companies rate companies according to the kind of work they do and the risks attached to the work they do.
One other factor that determines how much your premiums cost is the number of employees you have. Should you downsize your workforce, it is imperative that you inform your insurer so your premiums can be adjusted accordingly.
Reducing the cost of workers’ compensation claims is possible
Clearly, there are cost-effective ways of reducing your insurance premiums for workers’ compensation without sacrificing comprehensive employee coverage and workplace safety. This is important for the bottom line of any business, and even more so for small business owners.
The old adage that an ounce of prevention is better than a pound of cure may sound cliché, but it’s true and relevant to this day. Promoting a culture of safety can indeed be your best strategy to minimise workplace accidents and illnesses. And at the same time it can help reduce the costs of your insurance premiums.
Author’s Disclaimer: The information provided in this article is for general informational purposes and does not constitute professional advice on workers’ compensation. For specific guidance on workers’ compensation matters, consult with a qualified professional.
“The opinions expressed by BizWitty Contributors are their own, not those of BizCover and should not be relied upon in place of appropriate professional advice. Please read our full disclaimer."