ReturntoWork ruling could cost employers more than $100 million

ReturntoWork ruling could cost employers more than $100 million

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ReturntoWork ruling could cost employers more than $100 million

Tens of thousands of South Australian businesses face significantly higher worker’s compensation premiums next financial year, as a result of a pending court decision that could cost employers more than $100 million in additional annual premiums and the SA economy 20,000 jobs over the next 5 years.

In a major potential hit to employers, legal uncertainty arising from the Supreme Court’s decision in the matter of Summerfield could see average premiums rise from their existing low 1.70 per cent to 2 per cent, or higher, in 2022-23 – potentially adding thousands of dollars onto a businesses’ annual running costs.

ReturnToWorkSA modelling shows that if premiums rise to 2 per cent:

  • A large road freight company (payroll of $20.5m) would face a $239,000 annual hit
  • A medium-sized home builder (payroll of $15.5m) – extra $58,000
  • A mid-sized supermarket (payroll of $5.5m) – extra $15,200
  • A hotel chain (payroll of between $10.5m and $20.5m) – between $35,400 and $69,100
  • A café (payroll of $500,000) – extra $1430

“This is a significant potential blow to tens of thousands of South Australian businesses who have fought so hard over more than a year and a half to trade through the challenges of the global pandemic,” said Treasurer Lucas.

“It comes at a time when the Marshall Government is doing everything in its power to support local jobs and businesses as we chart our strong path out of COVID, with almost $100 million in cash grants paid in the past 3 months alone.”

Treasurer Lucas said ReturnToWorkSA had had applied for permission to appeal the Summerfield decision, which concerns compensation for multiple injuries which may arise from the same cause.

“All told, should ReturnToWorkSA be unsuccessful in their appeal, the scheme will need to carry almost $1.1 billion in additional liabilities and its ongoing costs will be significantly increased,” Mr Lucas said.

“If not corrected, the Scheme will need to collect more than $100 million in additional premiums annually ongoing. These additional costs to employers, not taxpayers, would likely cost the South Australian economy 20,000 jobs over the next five years.”

South Australia’s Return to Work scheme protects approximately 550,000 workers and 54,000 employers from the costs of work injury.

The High Court of Australia will hear ReturnToWork’s application for permission to appeal the Summerfield decision on 5 November 2021 to decide whether the matter should proceed to a full hearing.

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