Return to Work SA (WorkCover) Reform
Return to Work SA (RTWSA) have recently announced changes to the end of year process that are due to come into effect for the 2019-20 financial year. The three key changes are as follows:
- More time to lodge your year-end remuneration figures
Employers will now be given up to 10 weeks (previously four weeks) to lodge their year-end RTWSA return. This will allow businesses more time to arrange end of financial year matters and allow for a more accurate estimate to be provided to RTWSA for the following financial year.
For employers that still wish to lodge in July then this option remains available to you. The reconciliation or “adjustment” invoice generated with the year-end refund/payable amount will be provided as soon as the return is lodged; this option may be beneficial for employers that are in a refund position.
- Choose to pay your RTWSA premiums either in nine monthly instalments or one annual payment
Previously only employers who met a certain premium threshold could pay their annual premiums over nine equal monthly instalments (rather than a lump sum). This payment option will now be available to all employers regardless of premiums paid.
Employers now have the ability to choose the payment timeline that suits their business. If choosing to pay the annual premium via instalments, direct debit arrangements are available with RTWSA.
- Eliminating numeration estimates
Each year as part of lodging the year-end RTWSA return, employers were required to provide an estimate of wages for the new financial year; the premium payable was then calculated from this estimate. The original proposal from RTWSA was for remuneration estimates to be scrapped in full, however, for employers with substantial fluctuations from year to year due to seasonal work, businesses winding down etc. this was deemed to be unfair. Accordingly, this option (the current system) will remain available to any employer who wishes to use it over the new system.
Under the new premium calculation system, premiums will be based on the actual remuneration paid in the previous year (provided as part of the year-end return). Under this new method, compliance would be reduced for the employer as you will only be required to lodge final remuneration figures at the end of each year and not worry about providing estimates and processing the payable/refund due on lodgement of the year-end reconciliation. As the premium is always calculated on actual remuneration, fluctuations in total wages will be reflected in your premium over time, however with a delay of one year.
Other key information:
- If an employer elects to use the new system and experiences unexpected changes that cause financial hardship you will be able to apply for a premium adjustment if they cannot wait for this change to be reflected in their premium the following year.
- You will be able to choose between the two different methods each year so if you elect to use one method but then decide you would prefer the other at a later date you will be able to change accordingly.
RTWSA have summarised the two methods of calculating premiums in the below diagram:
In conclusion, the proposed changes appear to provide greater flexibility and options for employers to meet their Return to Work obligations - extensions on lodgement deadlines and more payment options can only be beneficial.
With regards to the new premium calculation system, this is completely at the discretion of the employer. For businesses whose total remuneration does vary significantly from year to year, it may be prudent to continue lodging remuneration estimates (continue using the existing system) to ensure you don’t over/underpay in a given period as there is a delay in this being reflected in actual premiums paid.
If you wish to discuss the new Return to Work SA changes in further detail, please don’t hesitate to contact our office.