Workplace Injury Insurance
FREQUENTLY ASKED QUESTIONS
On-Hire/Employment Agencies New Classification Arrangements 2005/06
Why do we need this change?
As part of the Fairer, Simple Insurance review, it was identified that anomalies exist within the classification system, especially for labour hire as it does not fit well within the structures based on conventional employment.
Employers and Industry bodies have also campaigned for changes to the labour hire classifications due to inequity within the industry.
When is this change taking effect?
The implementation date of the new labour hire classification system is 1 January 2006.
Do the changes apply to you?
The new rules will apply to your business if you are an employment, recruitment or placement agency or you provide on-hired personnel services.
Your business is considered to be engaged in placement or recruitment services if your services include listing employment vacancies, selecting, referring and placing applicants in employment.
Your business is considered to be engaged in on-hiring when it enters into a contract to temporarily supply its workers to a client (an end-user), which does not become the employer or principal of the workers provided.
What change is being considered?
Under the current classification system on-hire/employment agency workplaces can currently be classified to two different Workplace Industry Classifications (WICs), depending on the type of industry to which they on-hire to, either:
Employment Agency Services to workplaces operating in the “Blue Collar” type industries Employment Agency Services to workplaces operating in the “White Collar” type industries.
The new classification system is based on allocating remuneration paid to your on-hired workers to the respective Workplace Industry Classification (classification) of your client’s workplaces. This is achieved by registering workplaces to your Workcover policy and allocating your client’s workplace industry classification(s). Internal Staff
Your internal staff will be re-classified to a new Employment Services Administration industry classification.
On-hired Workers
You will be required to register workplaces for your on-hired workers. The workplaces for your on-hired workers can be registered in any of the following three ways:
You can register the individual address of the workplace of your clients where you on-hire workers (workplace level); or You can register a new workplace at the address from which your on-hired workers are managed, if they are on-hired to several clients that have the same classification (aggregate level); or A combination of the above.
Implementation of the new on-hire classification system
To implement the new classification system, supply the following details to your VWA agent, as early as possible, for the coming 2005/06 policy period:
1. The legal name and business name of each on-hire client. 2. The address of your clients workplace(s) to which you on-hire. 3. Your internal staff/administration address. 4. Estimated remuneration and number of workers for period 1 January to 30 June 2006 for each client and internal staff workplace.
Example
ABC Personnel P/L anticipates that they will on-hire workers to eight clients during January - June 2006. ABC Personnel P/L needs to supply the following details to their VWA agent:
Your On-hired Clients
On-hire client name On-hire client address Estimate of Estimated number and business name Remuneration $ of employees
Abattoir P/L 1 Henry Street Dandenong $ 350,000 8
Meat Works P/L 55 Mosley Street Laverton $ 500,000 10
XYZ Storage P/L 1 Davis Street Collingwood $ 150,000 3
ADT Storage P/L 35 Duo Street Richmond $ 200,000 4
Melbourne Supermarket 23 Duke Street Melbourne $ 350,000 5 P/L Friendly Supermarket 119 Glover Street Yarraville $ 200,000 6 P/L Footwear Manufacturing 255 Smith Street Frankston $ 400,000 7 P/L Alpha Trading Bank P/L 351 Jones Street $ 700,000 11 Melbourne Your Internal Staff
Internal Staff - Legal Your address Estimate of Estimated number of and business name Remuneration $ employees
Internal Staff - ABC 65 Exhibition Street $ 425,000 5 Personnel P/L Melbourne Internal Staff - ABC 145 Brown Way, Richmond $ 210,000 3 Personnel P/L
Once the process of determining the WIC(s) is complete, the policy details of ABC Personnel P/L will look like this:
ABC Personnel ABC Personnel Level 1 P/L P/L WIC: Employment Employment Employment Services Administration Services Admin Services Admin WIC WIC 90 Collins St Main Office
Level 2 90 Collins St* C2155L G5803W F4881K C2460A I6142T Aggregate Level Abattoir Storage Supermarket Footwear Trading $ 850,000 $350,000 $550,000 Mfg Bank $400,000 $770,000
Abattoir P/L XYZ Storage Melbourne Footwear Mfg Alpha Level 3 1 Henry St P/L Supermarket P/L Trading 1 Davis St Actual Client Dandenong 23 Duke St 255 Smith St Bank 351 $350,000 Collingwood Melbourne Frankston Jones St Workplace Address $150,000 $350,000 $400,000 Melbourne & WIC $770,000 Workplace Level
* for any aggregate level workplace(s), the workplace address utilised will be your own address as this is generally where your on-hired workers are managed from.
What happens when you supply your data/information to your VWA agent?
WHEN THEN
Your agent will allocate the correct Workplace Industry Classification (WIC) for each workplace (as You have supplied your initial above). Your agent will advise you of the WIC’s. data/information to your VWA agent Or you may complete this yourself by using the WIC Search facility. You are required to chose your preferred option of workplace registration; being any of: Your VWA agent has advised you of the workplace level; or appropriate workplace WIC’s aggregate level; or a combination of both
You have chosen your preferred option Advise your agent. of workplace registration
Your VWA agent will register your workplaces and re- classify your internal staff. Your VWA agent has received confirmation of your preferred option You will receive a premium notice confirming your workplace registration(s) and your new 2005/06 premium
How do you obtain the client WIC for your new workplaces?
You don’t need to obtain the WIC as your agent will be determining your client WIC’s for you. The WIC’s will be confirmed when you receive confirmation from your VWA agent.
If you do wish to obtain your clients WIC’s, a WIC search facility will be accessible via our website in June 2005. Further instructions regarding this facility will be provided to labour hire employers, when the WIC search facility becomes available.
What you do if you acquire any new business after the initial data/information is given to your VWA agent?
In the future, if you acquire any new business and you are required to register a new workplace, you will need to advise your VWA agent of the following:
client legal and business name the address of the workplace(s) to which you on-hire your workers estimate of remuneration number of employees at the workplace your preferred option for workplace registration i.e. aggregate level, workplace level or a combination of both.
If in doubt about what information you need to supply, please contact your VWA agent. Upon receipt of your data/information, your agent will confirm the details with you.
What address will be recorded for your on-hire workplace(s)?
You can register the individual address of the workplace of your clients where you on-hire workers (workplace level).
You can register a new workplace at the address from which your on-hired workers are managed, if they are on-hired to several clients that have the same classification (aggregate level); or
You can register your workplaces using a combination of the above.
What if you on-hire to Commonwealth Government Departments or other entities such as self insured employers, that do not have a Victorian WIC code?
Your VWA agent will allocate the WIC and will advise you or alternatively you can use the WIC search facility. What happens if the WIC of your client is incorrect?
If the WIC reported by the on-hire/employment agency does not match that held in the VWA database, agencies will not be penalised if they have accepted the information from their client.
It would be prudent, where possible, for on-hire/employment agencies to notify their clients of the classification to which a particular on-hiring has been categorised. Where a clearly and patently obvious (on common sense grounds) misclassification occurs further action may be warranted.
Where a classification changes throughout the policy period as a result of an audit or in the ordinary course of business, the VWA does not expect the on-hire/employment agency to be aware of the change and make alterations to its data. However, an agency will be required to update the classification if requested by a client
The VWA will not specifically follow up on any changes in classification within a policy year but, it is expected that at policy renewal, on-hire/employment agencies will annually review the accuracy of their clients’ classifications.
On what basis will your premium be calculated?
The employer’s performance rating (EPR), based on the previous 3 years’ experience, will be used in the calculation of a labour hire agency’s premium rate.
An indicative premium rate, applicable to a transaction with a client where agency premium is uncapped is as follows:
Premium Rate = (EPR x Client’s IR) EPR = Employer Performance Rating of Agency IR = Industry rate relevant to client workplace
Where a on-hire agency’s premium is capped, the formula (EPR x Client IR) cannot be used as it will overstate the premium.
A premium calculation simulator will be available which can be used to determine the premium cost of any particular contract/quote.
Can we assist you in forecasting your 2005/06 premium?
Yes. The VWA acknowledges that the calculation of premium is important in the pricing of rates for labour hire firms.
For the purposes of implementing the new classification on-hire classification system, the VWA proposes to release progressively updated versions of a 2005/06 premium simulator.
The successive versions will increasingly be more accurate as the data underpinning the components of the calculator becomes more complete towards the end of the policy year.
Proposed Release timetable
1. May 05 – Early indicative industry rates or better & 31 Dec 04 EPR* 2. June 05 – Revised industry rates & 31 March 05 EPR* 3. August 05 – Final industry rates & 31 March 05 EPR*
(* EPR = Employer Performance Rating)
The premium simulator will be available for on-hire/employment agencies online at the VWA website www.workcover.vic.gov.au from the end of May 2005. Will capping apply to your premium as a on-hire agent?
Yes. Capping provisions generally apply to employers who face large increases in their premium. The percentage will be in line with that which currently applies i.e. 30%.
Do the current remuneration under-estimation penalties apply to the new classification system?
If, at any time, you become aware that:
what you expect to pay in remuneration is 20 per cent above your current estimate or what you have actually paid in remuneration (prior to 30 April 2005) is greater than your current estimate you must provide you VWA agent with a revised estimate within 28 days.
All current penalties remain for non-compliance.
We suggest you review your workplace registrations, including remuneration estimates, every quarter. If these need updating, please submit the required information to your agent or contact your agent directly.
Will you be penalised if you do not provide the required information under the new on-hire classification system?
If you do not provide the required information under the new on-hire/employment agency classification system your workplaces will be assessed at the highest rated industry classification, applied 1 January 2006. You will then be liable for the premium payable based on the highest industry rate until the relevant details are provided to your VWA agent.
Given that you are supplying your client information, how will your privacy be protected?
Any information supplied is protected by secrecy provisions in the legislation and is information of a type regularly collected by the VWA. Your privacy will be protected.