WorkCover for dairy farmers: reality vs myth

Dairy farmers get injured. A lot. But how many of us think about workers compensation until there’s a serious incident?

I invited the author of “WorkCover that Works”, Mark Stipic, to bust some of the myths for dairy farmers. I highly recommend the book, which is packed with practical information yet easy to read, even after a long day in the paddock!

Thanks very much, Mark!

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Recently, I had a conversation with Milk Maid Marian thanks to an introduction by our mutual colleague Kevin Jones from SafetyAtWorkBlog.

We discussed WorkCover in the context of the dairy industry. The more we talked, Marian discovered there could be many dairy farmers out there sharing some misconceptions about how WorkCover works.

Dairy farming is what I’d call a pretty high-risk industry. In Victoria the WorkCover Industry Rate for ‘Dairy Cattle Farming’ is 4.546% in 2018/19. This means many dairy farmers are paying more than 4.5% on top of their labour costs in WorkCover insurance alone. The average premium rate across all employers in the state is 1.272% so by comparison, you guys pay quite a lot.

Here are 5 common myths (and 5 harsh realities) about WorkCover in Victoria.

Myth 1: WorkCover is just another type of commercial insurance

The reality: WorkCover is more like taxation than insurance

First let’s compare WorkCover insurance to car insurance. When insuring your motor vehicle, you can browse the market, negotiate rates and compare the benefits of different policies. You can usually change insurers as often as you like. Once you have a reasonable claims history, you can request a lower rate or threaten to switch providers.

However, when it comes to WorkCover, each year the Victorian Government releases industry rates that are used to determine how much you’ll pay. Legislation determines your level of coverage. You cannot negotiate a better deal, not even through an insurance broker. Restrictions are in place that affect how often you can move your policy to another provider.

The WorkCover scheme is heavily regulated and WorkSafe Victoria has the authority to audit your business at any time. They even share information with the Australian Taxation Office and State Revenue Office to target employers who aren’t paying their fair share of WorkCover premiums. That’s all very different to other forms of insurance.

Myth 2: There are 5 WorkCover insurers in Victoria

The reality: There is only one insurer – WorkSafe

WorkSafe Victoria is the trading name of the Victorian WorkCover Authority. This is the state government agency responsible for OHS matters, employers’ WorkCover premiums, and claims for compensation by injured workers.

WorkSafe has appointed five agents to administer premium- and claims-related matters on their behalf. These are Allianz, CGU, Employers Mutual Limited (EML), Gallagher Bassett (GB) and Xchanging. These companies are often referred to as ‘the insurer’. But don’t be mistaken, they are not insurers. They are agents of WorkSafe.

When you pay your annual WorkCover premium, the money goes to the WorkSafe scheme, not to your WorkSafe agent. Even though the notices will display a logo from one of the five companies listed above, the agent is merely the administrator of the premium collection process. So be aware that, for WorkCover purposes, you are not dealing with an insurer per se, but with the third-party administrators of a state government agency.

Myth 3: I don’t need WorkCover insurance because I’m the only person working in my business

The reality: You don’t get to decide whether or not to take out a WorkCover insurance policy – either you’re required to have it, or you’re not eligible for cover

As I stated above, WorkCover is much like taxation. And you don’t get to decide whether or not to pay taxes – if you meet certain criteria, you must pay. Well, the same goes for WorkCover.

With regard WorkCover insurance, if WorkSafe finds out that you were uninsured for a period of time, they may audit you and sting you with back-payments and penalties.

So, if you’re the only person working in your business, how do you work out if you should have a policy or not?

Generally, if you are a sole trader or a partner in the business and have no other employees then you cannot take out a WorkCover insurance policy. This means you don’t have to pay, but it also means you aren’t covered in the event of an injury.

However, if you have a Pty Ltd company, you could be an employee of the company (even if you are the only employee and the business owner). In this case it is likely that your company should have a WorkCover policy. Regular payments made to you would need to be declared to WorkSafe and used in your premium calculation.

The best thing to do is contact one of the five WorkSafe agents and explain your business structure, including how you pay yourself. They will guide you through the policy registration process if appropriate or confirm you are ineligible for coverage.

Myth 4: WorkCover insurance will protect my business from the costs of an injury claim

The reality: Some employers will experience premium increases that significantly outweigh the actual amounts paid on the claim

If your business pays over $200,000 rateable remuneration (which is basically WorkSafe’s term for ‘labour costs’) then the costs paid on your WorkCover claims will be used in calculating your premium. If you have higher claims costs than the average for your industry, you can expect to payer higher than the average rate applied to your sector.

Having worked with hundreds of employers in many different industries I have observed that the system doesn’t treat every business fairly. Generally, small businesses in low risk industries (eg. A local real estate agency) will be well protected from the costs of a claim. For example, if an injured worker received $10,000 in WorkCover payments, the employer’s premium might go up a total of $1000 over the life of the claim.

But medium-to-large employers, especially those in higher risk industries, often experience premium increases that outweigh the actual costs paid on a claim. $10,000 paid to an injured worker could result in $40,000 additional premium over the life of the claim.

It’s difficult for me to explain the nuances of this risk in this relatively brief blog post. In the dairy industry I’ve found the tipping point is that if you pay more than $400,000 labour costs, you face a risk that a single WorkCover claim could lead to significant additional premiums to be paid. And that can decimate your bottom-line profits. You would be well advised to grab a copy of my book and pay close attention to the section on ‘sizing factor’ where I further unpack this topic.

Myth 5: I don’t need WorkCover for contractors

The reality: Some contractors are considered ‘deemed workers’ by WorkSafe. They attract additional premiums for your business, plus they could be eligible to lodge a claim against you

Generally, payments to employees are used to calculate how much WorkCover premium you’ll pay and payments to contractors don’t need to be declared.

While a person might be a genuine contractor for all intents and purposes regarding taxation and benefits, if they earn 80% or more of their income from a single source, they may be considered by WorkSafe to be a deemed worker. And payments to deemed workers are included in rateable remuneration (meaning they count towards your WorkCover premium).

There are many contractors out there who only provide contracting services to just one business. It is likely that the hiring business would be required to declare payments to this contractor as a deemed worker. If you engage contractors, you should brush up on WorkSafe’s guideline around contractors and workers.

Furthermore, WorkSafe has specific guidance around when a sharefarmer would be considered a worker or contractor. I understand this is a common working relationship in the dairy industry and you can read WorkSafe’s position on the topic here.

My advice to you

The dairy industry is an incredibly important part of the Australian economy and it’s my privilege to have been invited to share some helpful advice. Here are my top tips for dairy farmers:

  1. If you’ve made an error on your WorkCover policy – or perhaps you forgot to set one up when you went into business – sort it out sooner rather than later. The longer you leave it the bigger the problem could become. Plus, WorkSafe is generally more lenient when you self-disclose an error as opposed to when they discover it following an audit.
  2. Get to understand your WorkCover risk now and start taking steps to prevent injuries. Often it is cheaper, less time-consuming and more rewarding to proactively invest in injury-prevention strategies now than to deal with the fallout of a single claim.
  3. Don’t be afraid to seek independent advice. Most employers rely solely on their WorkSafe agent regarding claims strategies. But remember, they are an agent of WorkSafe. They must also provide advice to your injured worker and they may be working towards targets that don’t benefit the goals of your business.

About the author

Mark Stipic is #TheWorkCoverGuy and managing director of Mark Stipic Consulting. He is the author of WorkCover that Works, the only book of its kind written specifically to help employers reduce their injuries, claims and WorkCover premiums.

When you’re ready, here are two ways Mark can help you and your business take control of your WorkCover situation:

  1. Get a copy of his book WorkCover that Works. It will show you how to reduce your injuries, claims and WorkCover premiums.
  2. Request a free, no obligation 30-minute strategy call. Mark will help you address your most pressing challenges and connect you with potential solutions if appropriate.

WorkSafe Vic to get tough on quad bikes

It sounded like a threat from WorkSafe.

“I think you’ll see us getting quite radical in the new year….  So prosecuting farmers has not been an area that we’ve particularly been in but we think we may need to be in that space.”
– Marnie Williams,
Executive Director, Health and Safety at WorkSafe – Victoria

That was the response to questions from Kevin Jones, the author of Australia’s top independent OHS blog, Safety At Work, about how the regulator would attack Victoria’s stubbornly high number of quadbike-related deaths.

Ms Williams also told Safety At Work that WorkSafe plans to send inspectors to 25 per cent more farms next year. One in 10 can now expect a knock at the door.

So, what exactly does WorkSafe have in mind for Victorian dairy farms? Milk Maid Marian invited Marnie Williams to write a guest post and I am very grateful for her explanation. Thank you, Marnie.

Why WorkSafe is getting tougher on quadbike safety – and how you can help

Marnie

Marnie Williams, executive director of Health and Safety at WorkSafe Victoria

Bad news arrives by text message at WorkSafe.

Usually, the fact that the phone of everyone around me beeps simultaneously provides a few seconds of warning, but this never quite prepares me for the details on the screen.

Inevitably the message is a Code Yellow, notification to senior WorkSafe staff that someone has been seriously injured, or worse, killed, at a workplace in Victoria.

As WorkSafe’s inspectors and investigators swing into action, my mind goes to the scene and to the thought of families being given the heartbreaking news that something has happened to someone they love.

Sadly – and all too often – these families are on farms, perhaps just a few hundred metres from where the incident has occurred.

And frustratingly for everyone at WorkSafe, too many Code Yellows contain the words “quad bike”.

Make no mistake, quad bikes are the most dangerous piece of machinery on Australian farms.  SafeWork Australia data shows that 115 people have died as a result of quad bike incidents in Australia since 2011, 24 of these in Victoria alone.  Even more tragically, some were young children.  Not all of these people were using a quad bike for work at the time of their incident, but we know from our own research that many of the circumstances remain stubbornly the same.

Helmets not worn, operator protection devices (OPDs) not installed, quad bikes poorly maintained, being used to perform tasks they weren’t designed for or travelling over ground they were not built for.  Operators not trained to ride them and children, physically incapable of handling such machines safely, allowed to ride them.

Despite the media focus, the academic studies, the recommendations of numerous coronial inquests and the pleas from medical professionals who see the trauma caused by quad bike accidents first-hand, the deaths have kept coming.

The reluctance of quad bike owners to fit OPDs, take up training and wear helmets has been of particular frustration to WorkSafe.  Considering that more than half of the quad bike deaths recorded by Safe Work Australia involved a rollover incident, and that quad bikes often weigh 300-350kg, it confounds us.

That is why, early last year WorkSafe decided that enough was enough.  It decided to put OPDs on the list of risk control measures formally recognised for quad bikes (helmets were already there).  This means that if a quad bike is being used in a workplace – and there is a risk of rollover – the employer must consider fitting the bike with an OPD to eliminate or reduce the risk so far is reasonably practicable.

Since that time we have been working hard to educate the farm community about the safety benefits of an OPD.  Together with the State Government, we have implemented a $6 million rebate scheme – administered by the VFF – to help farmers pay to fit OPDs on existing quad bikes, or to help pay for the purchase of safer side-by-side vehicles.

We have also been driving home the message to Victorian farm owners that enforcement activity will soon begin.

This means that when WorkSafe inspectors see a quad bike that is at risk of rolling over due to the task it is performing or the terrain it is being operated on, they won’t be waiting for an incident to occur. An improvement notice will be issued on the spot, requiring the employer to fit an OPD or remove the bike from the risky environment.

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Ignoring a WorkSafe improvement notice may lead to charges for breaching the Occupational Health and Safety Act. In cases where a quad bike without an OPD has rolled over and caused death or injury, the owner can expect to be prosecuted through the courts.

These are not measures WorkSafe takes lightly, but the number of quad bike deaths and serious injuries demands action.

However, WorkSafe’s new approach on OPDs doesn’t mean that other quad bike safety measures can be ignored.

Employers need to make sure that anyone operating a quad bike wears a helmet and is properly trained to ride.

The bike needs to be maintained according to the manufacturer’s instructions and only used for the purpose for which it was designed.

Passengers are a no go – this can upset the balance of the bike – and children under the age of 16 should never operate an adult-size quad bike.

So if you see your neighbour riding across a steep hill on a quad bike that has no OPD, or riding down to get the cows in thongs, a tank top and no helmet, or letting their 10-year-old who can barely reach the brakes ride the bike down the paddock, call it out.

Ask them why they haven’t taken up the rebate for OPDs, or whether they have heard the stories about kids who have been crushed under a quad bike, or suffered a serious injury after it has rolled.

That one moment of awkward conversation for you may mean one less heartbreak for someone you know, and one less Code Yellow for us to dread.

# Marnie Williams is the executive director of Health Safety at WorkSafe Victoria
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NOTE: This post was edited on October 26 at the request of WorkSafe Victoria. A paragraph which initially read: “This means that if a quad bike is being used in a workplace – and there is a risk of rollover – the employer must fit the bike with an OPD” has been updated with: “This means that if a quad bike is being used in a workplace – and there is a risk of rollover – the employer must consider fitting the bike with an OPD to eliminate or reduce the risk so far is reasonably practicable.”

Charged by a cow

It all happened in slow motion. I was walking across the paddock to offer our vet, Sarah, a light steel pigtail post for protection when the cow we were so desperately trying to save squared up to me, lowered her head and charged.

I managed to strafe her face once with the spring steel rod but it did nothing to deter her.  Collecting me under the chin with her neck, she effortlessly threw her pathetic matador into the air. Luckily, I was not trampled; as my head hit the ground I saw her white belly soar through the sky as she cantered off towards the distant corner of the paddock.

I stood up, sobbing, laughing and shaking. My jaw sat unnervingly askew and my head was already sore but I was still alive and walking.

After three x-rays and a CAT scan, I’m home again, neck in a brace and feeling chastened for the anxiety I caused my ashen-faced children, who witnessed the whole thing. So, what went wrong?

The cow was a terrified first-time calver (“heifer”) in big trouble. She’d been down for a couple of hours with a rotten calf inside and sprang up miraculously the moment Sarah arrived.

1. My instincts were right that she was cranky but I didn’t know her and should have been triply careful.

2. I got off the Bobcat and walked to the vet. Why oh why didn’t I drive to the vet?

3. The vet was on the ground instead of in the Bobcat. I’d already called for extra help on wheels and if we’d waited another five minutes, this would never have happened. A vet’s time is valuable but not more valuable than life itself.

In other words, I was in a rush and took unnecessary risks in the name of getting the job done even though I pride myself on being very safety-conscious. The latest WorkSafe statistics prove dairy farming is agriculture’s most dangerous job: please learn from my mistakes and take care out there.

 

 

Big girl’s toy (my Big Rig)

UTV towing tandem trailer

Well, it’s not just a toy

This is a seriously fun way to get the farm work done. And, now, in relative comfort thanks to the posh roof and screen that came with my new beast on Friday.

WorkSafe and a consortium of others have been running a big campaign to move farmers from quads to UTVs like our Bobcat and, yes, they’re great. You can get the family (parent, two kids and dogs, at least) around the farm safely with a whopping toolbox and all the bits and pieces you need to tackle maintenance chores or major emergencies. It also has the grunt to carry about half a tonne in the box and tow another half tonne behind.

But there are limitations and we won’t be selling our two quads any time soon. Although difficult to bog, these machines do not float on excessively soft pastures, nor do they have the tight cornering needed to thread a wily heifer through a gate.

A UTV like this is a fantastic piece of farm transport that sits somewhere between a quad, a tractor and a ute. Just try taking mine away from me!