An employer must revise their estimate of rateable remuneration for a premium period in each of the following cases:

Transcription

1 Premium Guideline Penalties for Underestimation of Rateable Remuneration This Guideline applies from 1 July 2014 Background WorkSafe Victoria (WorkSafe) may send a notice to an employer which requires the employer to provide an estimate of the rateable remuneration they expect to pay for a premium period or a certified statement of rateable remuneration they actually paid for any premium period. This information is used by WorkSafe to calculate the employer s premium in accordance with premium legislation. It is an offence under the Workplace Injury Rehabilitation and Compensation Act 2013 ( the Act ) if an employer does not comply with a notice or provides an incorrect certified statement of rateable remuneration. All employers are required to maintain an accurate estimate of their rateable remuneration for the current premium period and some employers will be required to provide revised estimates of their rateable remuneration during the period. WorkSafe may apply a penalty to an employer under section 444 of the Act if the employer fails to meet this requirement. The purpose of this guideline is to explain when WorkSafe will apply a penalty under section 444 of the Act; it also provides a guide for the full or partial remission of the penalty. When must an employer revise their estimate? An employer must revise their estimate of rateable remuneration for a premium period in each of the following cases: Requirement 1: A Change in Circumstances. If as a result of changed circumstances an employer becomes aware that the rateable remuneration that they have paid or are likely to pay for a premium period is at least 20% higher than the last estimate of rateable remuneration they provided for that period, then the employer must advise WorkSafe of the changed circumstances and submit a revised estimate of rateable remuneration within 28 days of becoming aware of the changed circumstances. Requirement 2: Actual Rateable Remuneration Exceeds the Latest Estimate If at any time before the last 2 months of a policy period the rateable remuneration that an employer has paid or is likely to pay for that period exceeds the last estimate of rateable remuneration provided by the employer for that period, then the employer must advise WorkSafe and submit a revised estimate of rateable remuneration within 28 days of the actual rateable remuneration exceeding the estimate. What if an employer fails to revise their estimate when required to do so? If then

2 an employer does not meet requirement 1 or requirement 2 above; or the employer provides WorkSafe with a statement of the actual rateable remuneration they paid for a policy period and the actual rateable remuneration is more than 20% higher than the last estimate of rateable remuneration provided by the employer for that period, the employer is liable to pay - the difference between the premium that should have been payable by the employer for the premium period and the premium calculated using the employer s latest estimate of rateable remuneration for that period; and a statutory penalty. What is the statutory penalty? The statutory penalty is equal to the difference between the premium that should have been payable by the employer for the premium period and the premium calculated using the employer s latest estimate of rateable remuneration for that period. However, WorkSafe has discretion to reduce the statutory penalty wholly or in part in appropriate circumstances. This guideline provides guidance as to the circumstances that would invoke that discretion and the resultant penalty rates generally applicable in those circumstances. Notwithstanding this guidance each case must be and will be considered on its merits. How will a penalty be calculated for an employer? WorkSafe will calculate an employer s penalty according to the following formula: Penalty = the employer s premium difference X the applicable penalty rate. The employer s premium difference is the difference between the premium that should have been payable by the employer for the premium period and the premium calculated using the employer s incorrect certified statement of rateable remuneration for that period. The applicable penalty rate is determined by WorkSafe having regard to the employer s circumstances. What is the basis for the applicable penalty rate? The policy intent is that the applicable penalties should match the degree of employer culpability and employers should be encouraged to voluntarily declare any premium liabilities or facts relevant to the calculation of premium which may change as soon as they are known. What is the applicable penalty rate? In the first instance, the standard penalty rate for an employer will be one of the following - a) 0% where WorkSafe is satisfied that the employer has taken reasonable care or is satisfied that there are circumstances beyond the control of the employer; or b) 30% where WorkSafe is not satisfied in relation to the matters noted in paragraph a) and is satisfied there was no intentional disregard of premium legislation; or c) 75% where WorkSafe is satisfied that the employer intentionally disregarded premium legislation. Standard Penalty rate decrease voluntary disclosure before a review and additional disclosure during a review WorkSafe may reduce the 30% or 75% standard penalty rates where- Whether ministers of religion can be workers for workers compensation purposes 2

3 the employer makes a voluntary disclosure before WorkSafe commences a review of the employer s premium; or the employer provides an additional disclosure during a review of the employer s premium by WorkSafe. Standard Penalty rate increase Employer conceals or hinders a review Commencement and completion of a review of premium A review of premium commences when WorkSafe has provided an employer, or a person acting on behalf of the employer, with formal acknowledgement that a review of premium or an audit relating to the employer is to be conducted, or on the first use by WorkSafe of its coercive powers available under section 552, section 553, section 558, and section 586 of the Act. A member of a group will be deemed to have been informed of a review of premium if any member of that group has been duly informed. A review of premium is completed when WorkSafe has provided an employer with formal acknowledgement that it has completed the review of premium. Concealment or Hindrance of a review of premium Concealment or hindrance of a review of premium means circumstances where an employer, having been informed by WorkSafe that a review is to be carried out and before the investigation is completed, took steps to prevent or hinder WorkSafe from becoming aware of the premium default. Group or a Member of a Group This refers to and means a group within the meaning of section 431 of the Act. Intentional disregard of Premium Legislation Intentional disregard of premium legislation means circumstances where the premium default is caused by a deliberate act or omission by the employer or the person acting on behalf of the employer. This is determined on the basis of direct evidence of an employer s intention or can be inferred from the surrounding circumstances and conduct of the employer. Examples of conduct, which may demonstrate intentional disregard of premium legislation, include: use of contrived or artificial avoidance schemes; premium evasion or fraud; knowingly making false or misleading records or statements; knowingly concealing relevant facts on a premium liability; ignoring a private or public ruling of which the employer is aware, particularly on a matter where the law is clearly established. Premium Period This means the period of 12 months or such lesser period as may be fixed by WorkSafe ending on 30 June in any year. Premium default A premium default occurs when an employer s premium has not been calculated in accordance with premium legislation. Premium Legislation Premium Legislation, for the purposes of this ruling, refers to: The Workplace Injury Rehabilitation and Compensation Act 2013 Premiums Orders made pursuant to the Act Whether ministers of religion can be workers for workers compensation purposes 3

4 The standard 30% and 75% rates will be increased if the employer hinders or conceals information during a review of the employer s premium by WorkSafe. The rates of penalty that will apply to an employer s premium difference are summarised in the table below: Penalty Category Reasonable care or circumstances beyond the control of the employer. The above penalty category does not apply and there is no intentional disregard of premium Standard Penalty Rate Voluntary Disclosure Before Review Additional Disclosure During Review Concealment or Hindrance during review 0% 0% 0% 0% 30% 15% 25% 50% legislation. Intentional disregard of premium legislation. 75% 35% 60% 100% Is there a minimum amount of penalty applied? WorkSafe will not apply a penalty to an employer if the penalty amounts to less than $100. EXPLANATION OF CERTAIN KEY TERMS Additional disclosure during a review of premium The reduction in penalty for an additional disclosure during a review provides an incentive for employers. This reduces the time and work required by WorkSafe to complete a review once it has commenced. An additional disclosure during a review of premium is one which is made after that review commences and before that review is completed; provides information in a timely manner to enable WorkSafe to complete the review; actively assists the review because the employer obtains, compiles and provides information that is in addition to the information requested by WorkSafe; and enables WorkSafe to determine the nature and extent of a premium default. An employer s response to the commencement of a review will not be considered to be an additional disclosure during a review if the employer does no more than respond to requests for information and allow officers of WorkSafe access to books and records. Circumstances beyond the Employer s control Circumstances beyond the control of the employer or the person acting on behalf of the employer, who has made every reasonable effort to mitigate the effect of these circumstances include the following: postal or delivery delays but not where the employer could arrange for an alternative means of delivery because the employer is aware of the likelihood of a delay; fires, flood or other natural disasters; key personnel not available due to sudden resignation, illness or death; Whether ministers of religion can be workers for workers compensation purposes 4

5 computer breakdowns including third party systems such as Electronic Funds Transfer systems. Circumstances beyond the employer s control shall not be taken to include the employer s financial incapacity. Commencement and completion of a review of premium A review of premium commences when WorkSafe has provided an employer, or a person acting on behalf of the employer, with formal acknowledgement that a review of premium or an audit relating to the employer is to be conducted, or on the first use by WorkSafe of its coercive powers available under section 552, section 553, section 558, and section 586 of the Act. A member of a group will be deemed to have been informed of a review of premium if any member of that group has been duly informed. A review of premium is completed when WorkSafe has provided an employer with formal acknowledgement that it has completed the review of premium. Concealment or Hindrance of a review of premium Concealment or hindrance of a review of premium means circumstances where an employer, having been informed by WorkSafe that a review is to be carried out and before the investigation is completed, took steps to prevent or hinder WorkSafe from becoming aware of the premium default. Group or a Member of a Group This refers to and means a group within the meaning of section 431 of the Act. Intentional disregard of Premium Legislation Intentional disregard of premium legislation means circumstances where the premium default is caused by a deliberate act or omission by the employer or the person acting on behalf of the employer. This is determined on the basis of direct evidence of an employer s intention or can be inferred from the surrounding circumstances and conduct of the employer. Examples of conduct, which may demonstrate intentional disregard of premium legislation, include: use of contrived or artificial avoidance schemes; premium evasion or fraud; knowingly making false or misleading records or statements; knowingly concealing relevant facts on a premium liability; ignoring a private or public ruling of which the employer is aware, particularly on a matter where the law is clearly established. Premium Period This means the period of 12 months or such lesser period as may be fixed by WorkSafe ending on 30 June in any year. Premium default A premium default occurs when an employer s premium has not been calculated in accordance with premium legislation. Premium Legislation Premium Legislation, for the purposes of this ruling, refers to: The Workplace Injury Rehabilitation and Compensation Act 2013 Premiums Orders made pursuant to the Act Whether ministers of religion can be workers for workers compensation purposes 5

6 Rateable Remuneration This means remuneration that is subject to a premium within the meaning of clause 24 of Schedule 1 of the Act. Reasonable Care Penalties will not be imposed where employers can show that they have taken reasonable care in the conduct of their premium affairs. The reasonable care standard requires employers to keep complete and accurate records, make diligent efforts to understand and comply with the law, seek expert advice on uncertain or complex matters and be honest in their dealings with WorkSafe. In determining whether or not an employer has taken reasonable care, WorkSafe will consider a range of factors including the employer s knowledge of premium legislation, commercial experience, access to expert advice and familiarity with the English language. The following situations, whilst not exhaustive, may indicate that an employer or a representative of an employer has taken reasonable care: the employer has maintained appropriate and proper recording systems; the employer has taken reasonable steps to be aware of his or her premium obligations and has become familiar with the relevant legislation so as not to overlook the legislative requirements; the employer has applied any relevant public rulings or guidelines in good faith; the employer has sought professional advice or private rulings for uncertain or complex matters where no public ruling applied or his circumstances differed from those described in a public ruling or guideline; the employer has acted in good faith in applying any independent premium advice received; the employer has observed any private ruling received and has notified WorkSafe if there have been any changes in the information on which the ruling was formed; the employer has acted promptly to seek advice or provide information once made aware, from any source, that he or she might have a premium liability; the employer has sought a formal decision from WorkSafe before relying on any legislative exemption or concession which requires WorkSafe to exercise its discretion or grant approval Voluntary disclosure before a review of premium A voluntary disclosure before a review of premium is one which is made before the commencement of a review. A voluntary disclosure must be in writing and provide sufficient information to enable WorkSafe to determine the nature and extent of the premium default and determine the correct premium payable. The reduction in penalty for a voluntary disclosure before review is a concession for employers who cooperate fully in providing WorkSafe with information and thereby avoid the need for a formal review. WorkSafe This means either WorkSafe Victoria or its authorised agent. Disclaimer Unless otherwise specified within this guideline, this guideline is WorkSafe s interpretation of the Law as it has operated to date and continues to operate. Guidelines do not have the force of law. Each decision is made on the merits of each individual case having regard to any relevant guideline. It is an employer s responsibility to ensure that they are using the current version of a guideline. Whether ministers of religion can be workers for workers compensation purposes 6