Thanks to our star contributor (and soon to be Author), @trinny61, we were alerted to this interesting HR article. It states that if an employee who is receiving compensation for an injury is terminated and ceases to work, the employer’s premiums could “go through the roof”. The risk is most significant in NSW, Victoria and South Australia, because of the way WorkCover factors the cost of injured employees “sitting off work” into its premiums. Organisations should think twice before dismissing employees who are receiving workers’ compensation – no matter how poor their performance…
Terminating an injured worker can cost a medium employer K70-300 in increased premiums
Organisations should think twice before dismissing employees who are receiving workers’ compensation – no matter how poor their performance, says Warwick Ryan, an employment partner at Swaab Attorneys.
If an employee who is receiving compensation for an injury or illness is terminated and ceases to work, the employer’s premiums could “go through the roof”, he says.
If a dismissal will result in a premium increase, the risk of legal action could be negligible, Ryan says.
Controversially, he says, “Quite frankly, when terminating injured workers, the Fair Work Act is almost irrelevant. I actually don’t care. I don’t even care if they bring a discrimination claim. [WTF]
“There’s no award under a discrimination claim that has come anywhere near to that additional cost.”
In NSW, for example, [popup url=’http://www.workcover.nsw.gov.au/formspublications/publications/Documents/m4_claims_estimation_manual_july_%202010_update_2838.pdf ‘]WorkCover’s Claims Estimation Manual [/popup]says that if a worker’s employment is terminated up to 26 weeks after the date of their injury, the total estimate is increased to 104 weeks of weekly compensation benefits. And if dismissal occurs more than 52 weeks from the date of the injury, the total estimate can increase to eight years of weekly payments.
Further, while the cost of legal remedies is often picked up by a directors and officers policy, the cost of workers’ compensation premiums is inescapable.
Even if a worker has a compensation claim that has not been settled, an insurer will still factor it into its premiums, he adds, recalling a client whose premium for a single year rose by $120,000 because a worker he had dismissed lodged a compensation claim.
Another client retained all its injured workers for the “premium-affecting period” (three years) regardless of their performance, he says.
Even if workers are healthy when they commence performance management, the process often leads to psychological-injury claims, which could thwart plans for their dismissal.
And because “people who are non-performers are often opportunistic about making workers’ compensation claims” [WTF], the dilemma is “common”.
However, he admits that retaining a poor-performer for financial reasons can be “a real problem”.
Hicksons Lawyers partner Stewart Cameron recommends giving careful consideration to all of the issues involved in dismissing a worker on the basis of performance.
“It’s a great challenge, but I think the employer does have to manage the two issues, and manage them separately,” Cameron says.
The performance issue will involve costs associated with productivity and morale. Although harder to quantify than the straight workers’ compensation costs, these are “very real costs”.
There is also the risk that other employees will see an opportunity to take advantage of the system and follow suit, he adds.
Cameron’s advice is to mitigate the risk of un-meritorious compensation claims by ensuring policies and practices are carefully developed, consistently implemented and thoroughly documented.We can’t help but wonder whether the sacking (or not) of injured workers are purely [dodgy and calculated] “business transactions”?!
Perhaps this is the very reason why one of us, a very seriously injured worker, was sneakily reinstated (on paper) after having been (unlawfully) sacked? The injured worker still has her black on white, signed, termination letter, and subsequently those of her workcover agent, and even her “rehab service provider”, clearly stating that she has been referred to “NES = New Employment Services”…. Was the “business decision” of sacking this unfortunate injured worker an expensive mistake that needed rectifying (on the quiet)? Surely appears it was!
[Sourced by @trinny61with a thanks – original source: http://www.hrdaily.com.au/nl06_news_selected.php?selkey=1635]