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Declaring wages in the labour hire industry

With accident insurance policies coming up for renewal from 1 July employers will be looking for simple ways to take the guesswork out of declaring their wages. This webinar aims to help employers in the labour hire industry do just that by providing essential information you need to help you accurately declare your wages.

The webinar covers:

  • Are you still a labour hire agency?
  • An update from our Compliance and Education team on recent labour hire audits
  • Predominate business activity vs. position description
  • How do I determine the correct host WIC?
  • Are you correctly classifying your administration staff?
  • What are wages?
  • How do I budget for next year's premium?
  • The importance of record keeping
  • Key premium renewal dates

View the presentation below.

Download a copy of the presentation slides (PDF, 0.66 MB).

Mr Scarrott: Good morning. Apparently had a problem with my mute button, so I'm just going to go back a couple of slides and just start again. So welcome to the day's webinar in Declaring Wages in the Labour Hire Industry in 2017. Obviously you've already seen these slides. So my name is Jason Scarrott. I'm one of the labour hire managers here at WorkCover Queensland. I've just stepped through how you can interact today, and due to the fact that you probably couldn't hear me, you probably read along, so and I was just saying just a minute ago that obviously the presentation, the slide package and any questions and answers will be provided on the website within about a one week period. I do want to reiterate that we have a short survey at the end of the webinar and your feedback will help us improve these and potentially give us future topics.

So, back to where I was a minute ago. Alongside of me today is Adam Walshe, and he is a customer compliance advisor from our Customer Compliance team, and he will be giving us some updates. So, the topics today. So we want to cover off what is a labour hire agency? Adam is going to give us an update on the compliance and education. We're going to talk about predominant business activity versus position description, how do I determine the correct host WIC, are you correctly classifying your administration staff, we'll look at what is wages and “How do I budget for next year's premium?” and Adam will also come back and talk to you about the importance of record keeping and look at the key premium renewal dates. So, I'll hand over to Adam to start with.

Mr Walshe: Apologies, guys, we've just switched over headsets now, but we just want to touch on, first and foremost, what is a labour hire agency. So a labour hire agency is defined as a business responsible for providing temporary staff to employers on a contract or fee basis, and you may have people that specialise in a particular type of industry or various types of industries providing on-hire staff. Instances where you may not be a labour hire agency is that if your workers are performing work as part of contracts that your business is directly responsible for, and what we want you to do is to review your position and if you do have any queries or questions on whether you should be under labour hire or not is to contact WorkCover to have a discussion about that.

So to give a bit of an update of customer compliance and the activities that we've been doing lately, customer compliance is responsible for ensuring that all Queensland employers are meeting their obligation to insure their business and their workers correctly. One of the primary reasons for this presentation is as a result of recent outcomes for wage audits and policy reviews that WorkCover has completed in the labour hire industry, and we just wanted to touch on a few common trends noted where employers have found to have been non-compliant. So a few of those minor areas where we have identified room or gaps in education for employers as in terms of declaring wages incorrectly based on the position description of the people that they're on-hiring, rather than using the correct method, which is looking at the classification of the host business. We've also identified that there are sometimes issues with not all assessable components of WorkCover wages being included, so we're looking at gross wages, superannuation, salary sacrifice and fringe benefits. There's also been a few of the problems appear to stem from employers not having an appropriate reporting method in place enabling them to capture all of the information for the WorkCover declaration. So it's important to keep in place some record-keeping things, and we'll touch on just a simple example later on in the presentation. And another thing that we will define in more detail is looking at the own administration classification, so the contract staff services WorkCover industry classification, and providing a little bit more guidance who you can include as part of that classification. Jason will be up next to provide more detail on the predominant business activity versus the position description.

Mr Scarrott: All right. I do apologise. We've got a technical difficulty here which sees Adam and I sharing a headset and we're having to change in between, so it's not as smooth as we'd like it to be, but bear with us. So we'd like to talk, firstly, about predominant business activity versus position description and both Adam and I, in our involvement with the labour hire industry, has found that this is traditionally an area of misunderstanding. What we see is that many, many employers are applying wages to the position description that they're filling, as opposed to what is the predominant business activity of the actual host employer. And most of the information that we're talking about today falls in the Queensland Government Gazette under section 22.2.

So it says there that the wages for all employers applied to a host are to be declared based on their predominant business activity or classification. So, for example, if the labour hire company is supplying to a host a number of different positions, let's say a labourer, a project manager, a cleaner, an accountant, and they're hired out to perform work for a construction company then the wages for all of those position descriptions or all of those individuals need to be declared under the WorkCover Industry Classification or WIC E30000 or construction. Another example I came across declaring of last financial year was – and a good example to me – was a chef that was being on-hired to a mining company and you want to jump to the conclusion that it's hospitality or food prep services, but because they are going to a mining host or a host company then the wages for that chef needs to be declared under the mining WIC. I'll just pass you back over to Adam. Please bear with me for a second.

Mr Walshe: Okay, the next section that we will touch on is how you determine the correct we call WorkCover Industry Classification based on the host employer. So one of the facilities that we have available on our website – and we will provide links in this slide, and also there is some more information through the labour hire microsite – is the verification of cover, and it's a tool where you will input the ABN details of your host employer and the tool will produce a Verification of Cover Certificate that will correspond with one of our 19 - well, actually, it will provide the WorkCover Industry Classification which will correspond with one of 19 labour hire classifications. There are a few instances where a certificate may not be made available, for instance if the host employer has multiple classifications themselves or if they're a self-insured business, and in those instances the tool will advise you to contact WorkCover to obtain a classification for your host employer. The next slide we will touch on is own administration staff and I'll pass back to Jason for that one.

Mr Scarrott: Thanks, Adam. So own administration staff is another area we commonly see an issue with, the declaration of wages. So once again we're referring back to information that appears in the Government Gazette under that section 22. In this case it's 22.1 of the Gazette that says, “Identifying the proportion of total wages paid by an employer which are paid to workers whose labour is not supplied to a third party.” So what we're looking at here is we're looking at that administration component, the payroll staff, the OH&S team and team members and maybe those internal business managers, and what we find often happens is that a labour hire employer will declare under the more broad clerical WIC, as opposed to the contract staff WIC, which is 721236. Often the rate is actually lower under the contract staff, so it's actually at a loss to the labour hire employer. But what we also need to consider is that in a labour hire industry, we'll often have a role where we have an on-site officer who might be responsible for all of the on-hires within a site, and they basically work on-site coordinating those host employees. In that instance that is not an own administration staff, that particular individual's function would fall under the WIC of the host employing. I'll just pass you back over to Adam.

Mr Walshe: Okay, excellent. We're just getting up the slide now that has what needs to be included and what you can exclude as part of the wage declaration. So what we do need to see as part of the wages, when you're calculating those at the end of financial year, is that you're including for all of your on-hire staff PAYG, gross salary and wage payments, all superannuation payments, including super salary sacrifice components, any fringe benefits or other entitlements that have a monetary value and payments to individual contractors for those that are deemed to be workers. So if there's any concerns with worker definition, we do have information available on the website for how you determine whether an individual contractor needs to be included or not, and then we look at the payments that can be excluded. So if any of these form part of the components that you've included, you may deduct them from your WorkCover return.

So that includes allowances that are reimbursements. So if someone incurs something like a travelling allowance that is paid out of their own pocket, and that allowance is provided as a reimbursement, then that can be deducted from their gross wages. Any payments that are provided as a lump sum fee on termination can also be deducted. We've got excess period payment and compensation payments that are associated with claims, if those have been included as part of the payments in the top amount, you can subsequently deduct those, and payments in respect to directors, trustees and partners are not assessable because those people are not included or covered by the WorkCover policy. So more information is available and will be published as part of the 2017 renewal process, but we've got our wages working sheet and wages definition manual, which are the big ones to look out for. We've got coming up next Jason speaking about the WorkCover Connect simulator tool.

Mr Scarrott: Thanks, Adam. So one of our topics here is how do I budget for next year's premium? So whether it's for budgeting for the company's general well-being or looking at your contract tendering or contract renewal, we utilise or have for your use a Premium Simulator tool and it's a great resource. It will allow a company to input the actuals and provisionals – well, it will default based on what your provisionals were for the last financial year, but you can then adjust those which will allow you to then look at a possible prediction of what your premium will be for the 2017/18 period. At this time, the simulator is currently using the 2016/17 rates as the Queensland state government has not released the rates for 2017/18. Once those rates are released we will be able to update the simulator tool to give you a more accurate representation. So the Premium Simulator tool is found within our WorkCover Connect, and for the right - sorry, let me start again - depending on your access to WorkCover Connect will deem whether or not you have access to the Premium Simulator.

So some of you might be listening today and this particular area might be of interest to you, but you might not currently have access to it, someone else in your organisation might be responsible for your premium declaration. So in WorkCover Connect under 'Insurance', our top tab there if you have access, you will see the Premium Simulator. It will bring you through to a page like this, which is quite complex for labour hire because it does contain all of the 19 WICs, and what it does is it allows for a calculation based on the current industry rate, the company's rate that's applied based on their claims experience and wage component, and it will allow for that calculation of a predicted premium. You can just do a prediction based purely off using the provisionals as actuals and then projecting new provisionals as the - sorry, the new provisions as the provisionals provided from the previous year, but there is a field. So if we look at the bottom of the screen you'll that there's the individual WICs, and if we look across to the right-hand side you'll see 'Edit Details'.

This will allow you to come into a screen that is just for the particular industry that you're looking at and, as we can see at the top, it allows you to look at what the simulation is for the 2017/18 period on the top right-hand side. One of the dropdowns will allow you to look at wage changes and if so you have a better idea of what your actuals were for the 2016/17 period this could be entered into there, and if you can get an estimation of what you believe that your contracts are worth for this particular WIC in the 2017/18 period, that can be entered as well. This will then allow you to recalculate and will then give you, hopefully, a more accurate representation of what your premium will be for that period. As I said, the rates won't be adjusted until the Government Gazette is released, and the expectation is that that will be around maybe mid-June. After that time you'll be able to get the latest rates. You will obviously then have a very accurate idea of what your actuals were for the period and you might have a better idea of what your contracts are going forward for the new year. I'm just going to pass you back over to Adam to talk about record-keeping.

Mr Walshe: Thank you, Jason. As discussed earlier, one of the issues that customer compliance has identified through reviewing labour hire employers and their policy has been the level of reporting. In order to make your job easier it's important to capture a few key details which are specific requirements for your WorkCover wages reporting. Those details include the name of the host employer, the ABN of the host business, the WorkCover Industry Classification and the associated labour hire classification, the total assessable wages paid under each of the host business. By capturing this information throughout the year it should make the process of declaring the wages simpler and more accurate. It will also ease any strain in the event that your policy is reviewed by WorkCover as we would be able to clearly see how you have determined your assessable wages. So the next slide we're going onto provides just a very basic summary of what could be seen as a good way of record-keeping.

Everyone's got differences in their business process and the systems that they use, but we've got up in the top table it's just a very basic payroll summary example with just wages and superannuation, and then reconciling to the wages and superannuation is the supplementary host listing, which lists each of the host business that you may on-hire your workers to. So we've got the own administration classification coming through first and then we've got an example of three on-hire businesses; a mining host, an insurance host and a retail business host. For those you're listing the ABNs associated with that host business, the WorkCover Industry Classification associated, which can be identified through the verification of cover, the labour hire class which we will provide a link through. It's a basic look-up table where you would just look up the host employer WorkCover Industry Classification and it will list what the associated labour hire class is, and then you would report the total wages, superannuation and any other assessable component as part of that table. So, as I said, it's a very basic example, but if there are any concerns it might give you an idea of what you can do to capture information to make your declarations easier come assessment season. So I will pass back to Jason. We're getting towards the end, but we're going to run through some important dates and some of that information with where to find some additional details for you.

Mr Scarrott: Yes, thanks, Adam. Thank you for showing us what we need to do as far as record-keeping is concerned. Everything we've presented today so far are common themes that we've seen being raised as possible misunderstandings or lack of accuracy in record management. Adam's been involved in a number of audits throughout the year of labour hire companies and he's seen a lot of these sorts of things arising. So I'd just like to cover off some important policy renewal dates. So from 1 July obviously employers can go online and declare their wages. They can ring those through to us as well, but online is definitely the best way to do it. It can be done 24/7 whenever you have the information. Those wage declarations need to be in by 31 August, otherwise we'll run out of time for how long it takes to do this process. Just a reminder to everybody that 16 September is the cut-off to receive a 3% discount on your premium if it's paid in full by that date. Just a reminder that 16 September this year actually falls on a weekend, so the Friday before we would need to see that payment received by WorkCover. The 30 September premium is due in full, or you can elect for a payment arrangement if you don't decide to take the 3% discount on paying in full, and this is the last day to request this.

Once again, I'd like to remind everybody that this year 30 September happens to fall on a weekend as well, so the Friday prior to that is the best option. We've got more information for you on our website in relation to premium, and we've also got some information specific to the labour hire industry under what Adam called our labour hire microsite, and there we have a document that you can use to determine the host WIC and which labour hire classification that would fall under. That's been refreshed and put up in the last week or so. So it's a handy tool to help you to be able to determine the correct WICs to declare your wages under. That's it for our presentation today. I've got a couple of questions that have come through. I'm going to hand you over to Adam and I'll let him address the first couple and then I'll come back and answer any others that have popped up.

Mr Walshe: Okay, thank you, Jason. And thank you those that have put these next two questions through for me. So, the first one coming through is asking about the importance of reporting a host employer in the event of a claim. So from our perspective there it's very important. It's one of the queries that we will ask as part of the claims determination process. It is important for us so that we can determine whether the claim has been correctly allocated on your policy, and that leads into the way in which the premium is calculated. So we don't want a claim to be attached unnecessarily to an incorrect classification because it affects how your experience base rating system or how your premium rating system works there. So it is important that we're making sure that claims are being correctly allocated and there may be times throughout the year where WorkCover customer advisors or relationship managers will make contact with you to request for information to confirm that we've correctly categorised or classified those claims on your policy.

The second one I've got a question on there is a question saying, “My business provides nursing staff on a labour hire basis. We normally provide to hospitals and aged care facilities, but sometimes we've provided a nurse to a mining site. Should the nurse's wages be declared under mining?” So in that scenario it's likely that the nurse's payments for the time that they've worked for the mining company would be declarable under the mining labour hire WIC. Please confirm that the classification is correct for that host by performing a verification of cover check on our website. And I think we've got some more ones that have fed through. I'll pass you back to Jason there to have a chat about.

>>Mr Scarrott: Okay, thank you, Adam. Another couple of questions that have come through. Yes. The question is, "Will we get a copy of the slides from today?" Both the presentation, a copy of this recording and an answer to all of the questions that we take down today, all the questions and the answers that we take down today, will be available on the website in about a week's time. I've also got a question here. It says, “When we need to ring WorkCover when the WIC certificate is not available for a particular client, is there a phone number specifically for labour hire? In the past we have rung the main number and the person answering the phone hasn't understood about the labour hire WIC.” So we've spent quite a bit of time with our customer support area, those that answer the main phone lines, and spent time with them educating them on this requirement to assist labour hire employers in identifying the correct WIC for the host employers.

They are now able to answer a fairly broad question in relation to that if they're given the details, but we've also got an escalation process that now sees subject matter experts filtering through that system to questions that can't be answered on a broad or general basis. So the answer, I suppose, to that question is we don't have a dedicated number, but what we do have is a process or system behind your queries or concerns. Sorry, I'm just looking at the next question. “When can I request a Certificate of Currency?” Okay. So a Certificate of Currency can actually be requested at any time using our online services and your current certificate, your Certificate of Currency, is valid until 30 September 2017. And a certificate for the next financial year can be obtained online from 1 July. All right. Adam's actually got a question. Hold on I'm going to pass you over to him.

Mr Walshe: So the question that we've been asked is “We provide workers interstate, as well as Queensland, so we only declare the Queensland wages to WorkCover and deal with the other relevant insurers interstate?” So with that this is a little bit more complex than saying that a worker is Queensland or New South Wales because there's some information that we have in terms of connection with the state, so we need to have a look at - it's a three step process to determine a worker's connection or association with each state. So there is information available up on the website and we can provide greater detail on those three steps to determine which state a worker needs to be included under, but WorkCover is only interested in those workers that are deemed to be Queensland jurisdictional workers. Those that are interstate would be required to be declared with the other jurisdictions.

Mr Scarrott: Okay, thank you, Adam. I've got another question come through. “We have employees we pay through their own ABN and do not pay workers' compensation for them. Should we be declaring their wages?” Look, that's a great question. It's quite an in-depth question because it's not a simple case of if somebody has an ABN they're not classed as a worker. In fact, they could actually be classed as a worker based on a certain series of criteria and I don't have - I would need to know a little bit more information or I'd have to ask a series of questions to be able to really get a direct response for that. So what I'd like to do is we'll probably provide a fairly broad response to that in our notes next week. So I'm also happy to take any calls in relation to that and have a discussion over the phone. Just got another couple coming through. Hold on. Okay, so I've got a question here. “I'm trying to find the list of labour hire WICs on the WorkCover labour hire microsite, but can't find it. Can you please advise where?” Unfortunately, I don't have it in front of me right now and I can't quickly access it, but there's a 'Resources' tab off to the side, I think it is, and it's under the 'Resources' tab itself. So I'm just going to get confirmation on exactly where. All right. While I'm looking for that one, I'm just going to pass you over to Adam and he's got another question.

Mr Walshe: Okay. Thank you for the question that we've received here asking from a two day a week bookkeeper on contract to the company. So this is in line with what Jason was saying before is that anyone that's paid as an individual person on ABN can be deemed as a worker, depending on the way in which they're performing work for the business. So what we would direct you to is we do have information on the website called 'Who Should I Cover?' So if you type in 'Who Should I Cover' on the website, it will direct you to the questions that we ask when we're doing a worker determination. So that would only apply to someone who is an individual contractor. So anyone who is a company trust or partnership cannot be deemed as a worker because they're not an individual, but if you're operating under your own ABN, which is for an individual sole trader or if you're being paid on any sort of rate basis – hour rate, day rate, piece rate – then there may be circumstances when you can be deemed as a worker for the purposes of workers' compensation insurance. I think we might have a couple more questions coming through so while we have a quick read of those I will just pause it for a sec.

Mr Scarrott: All right, Adam. Thank you very much for that answer. That answer actually links into that previous question about employees that we pay through their own ABN. We'll have more information about that in our Q&As. As for where to find the labour hire WICs, it is under the 'Resources' tab or dropdown. We're going to actually provide a link with the presentation today. It's actually called 'Labour Hire Codes' as a heading topic, and it's about three-quarters of the way down the page. Look, I'd like to thank everybody – the questions seem to be petering out. If anymore questions pop up in the next couple of minutes we will add them to the questions presented with the rest of the documentation. And what we'll do is we'll email you all when we've added this recording to the website, and we'll have more information on the interstate workers, who is a worker, and they'll be added to the Q&A in a week and also, as I said, a link to those codes. So thank you very much for your time today. Thank you very much for your questions. Please remember to fill out the surveys to help us look at topics that you're interested in, and have a great day. Thank you.

Related resources

Questions and answers

Answers to the questions we didn't have time to answer during the webinar are listed below. See the end of the video for Q&A's answered during the webinar.

If there is a variance from week to week of hours and days then the roster should be left blank and the individual circumstances discussed with a WorkCover representative when contacted to discuss the claim.