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If we close a business what happens to a worker on work

Customer Question
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if we close a business what happens to a worker on work cover
Submitted: 2 years ago.Category: Australia Law
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Answered in 24 minutes by:
8/24/2015
Solicitor: James D. Ford, Solicitor replied 2 years ago
James D. Ford
James D. Ford, Solicitor
Category: Australia Law
Satisfied Customers: 1,601
Experience: Consulting Principal at Nexus Law Group
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Are you self-insured? I assume not.

If not, then what happens to the worker is a matter for Work Cover.

You need to contact WorkCover and tell them and/or your agent that you are closing your business down, and want to cancel you WorkCover policy.

CANCEL A POLICY

Your insurance agent can cancel your policy in the following situations:

Ceased trading

Your policy can be cancelled if the business has ceased trading. You need to provide evidence of having ceased trading to the insurance agent that holds the policy.

Liquidator/trustee in bankruptcy appointed

Your policy can be cancelled if a liquidator/trustee in bankruptcy has been appointed and the business has ceased trading.

Business is sold by employer

Your policy can be cancelled if the business is sold. The new owner must take out a new workers compensation insurance policy covering their employees.

Other situations

In all other situations you should discuss with your insurance agent the reason for wanting the policy cancelled. This may result in the matter being referred to us for a formal decision to cancel and a cancellation date.

FURTHER INFORMATION

Insurance agents cannot cancel a policy if:

  • you take out a new policy at a lower premium
  • you no longer have employees. In this case the policy can be cancelled at expiry of the policy period
  • a liquidator or administrator is appointed and the employer continues trading even if the liquidator or administrator attempts to take out a new policy.
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Customer reply replied 2 years ago
we were not covered at the time and are self insured. This is the reason we are considering closing down as the worker has a pinched nerve in his back and has been on compensation for 15weeks.
Solicitor: James D. Ford, Solicitor replied 2 years ago

Are you sole traders? trading in a pty ltd company structure? or a trading trust?

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Customer reply replied 2 years ago
Family trust trading as a pty ltd company
Solicitor: James D. Ford, Solicitor replied 2 years ago

Did you have a licence to be self-insured?

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Customer reply replied 2 years ago
We paid all creditors and then went in to voluntary liquidation in October last year and re opened with a new trading name very similar to the old one. In the mix up our admin assistant did not renew the policy. When the worker injured himself we were uninsured.
Solicitor: James D. Ford, Solicitor replied 2 years ago

OK, there are heavy penalties for employers who fail to have a current workers compensation insurance policy.

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Solicitor: James D. Ford, Solicitor replied 2 years ago

Please bear with me whilst I investigate the details...

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Customer reply replied 2 years ago
We have one now and have been paying all costs for the employee. It was a genuine error as we have been insured for seven years with the old trading name.
If we close the business will we be responsible for his onging treatment and wage
Customer reply replied 2 years ago
How are you going with the answer?
Customer reply replied 2 years ago
Any news? Has this chat stopped?
Solicitor: James D. Ford, Solicitor replied 2 years ago

WorkCover will take action against uninsured employers to recover any monies paid to injured workers from the scheme.

What is not clear is your responsibilities as individuals... and it may take some time to find a definitive answer.

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Solicitor: James D. Ford, Solicitor replied 2 years ago

Assuming the family trust trading as a pty ltd company cannot pay... Workcover will start looking to you personally to pay... Please leave this with me overnight...

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Solicitor: James D. Ford, Solicitor replied 2 years ago

Here are the NSW Workcover prosecution guidelines:

http://www.workcover.nsw.gov.au/__data/assets/pdf_file/0019/15319/compliance_policy_prosecution_guidelines_2012_4437.pdf

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Customer reply replied 2 years ago
Thanks , I look forwrd to tomorrow. Cath
Solicitor: James D. Ford, Solicitor replied 2 years ago

4.18 The factors a WorkCover inspector considers when determining whether to issue a penalty notice
include:
 whether the breach is a minor one;
 in the case of a failure to insure, the number of employees and the length of time the
employer was uninsured;
 whether the breach can be remedied quickly;
 whether the issuing of a penalty notice is likely to have the desired deterrent effect; and
 if the breach is a one-off situation or part of an ongoing pattern of noncompliance.
Debt recovery and reimbursement
4.19 Where there has been a failure to insure under the workers compensation legislation, WorkCover
may take action to recover as a debt up to double the amount of the avoided premium.
WorkCover may also seek reimbursement of any compensation paid to a worker under the
Uninsured Liability and Indemnity Scheme. These actions are in addition to the issue of a penalty
notice or taking action to prosecute an offence.
13
Prosecution
4.20 The fact that a penalty notice can be issued for an offence does not mean that only this action can
be taken. WorkCover has discretion to undertake a prosecution for an offence and it has
discretion to waive prosecution in circumstances where the offender pays a sum equal to double
the amount of avoided premium. Where a penalty notice is considered under the circumstances to
be inappropriate, prosecution action may be initiated.
4.21 Specific offences for which WorkCover may prosecute include non-insurance, under-insurance
and fraud.
Non-insurance
4.22 Section 155 of the Workers Compensation Act 1987 requires all NSW employers to obtain and
maintain workers compensation insurance. Employers who fail to obtain a workers compensation
policy place an unfair burden on those employers who do comply, as this increases their
premiums and places them at a competitive disadvantage.

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Solicitor: James D. Ford, Solicitor replied 2 years ago

Here is the section your trading trust has breached...

WORKERS COMPENSATION ACT 1987 - SECT 155

Compulsory insurance for employers

155 Compulsory insurance for employers

(cf former s 18 (1), (5), (6))

(1) An employer (other than a self-insurer) shall obtain from a licensed insurer, and maintain in force, a policy of insurance that complies with this Division for the full amount of the employer’s liability under this Act in respect of all workers employed by the employer and for an unlimited amount in respect of the employer’s liability independently of this Act (but not including a liability for compensation in the nature of workers compensation arising under any Act or other law of another State, a Territory or the Commonwealth or a liability arising under the law of another country) for any injury to any such worker.

Maximum penalty: 500 penalty units or imprisonment for 6 months, or both.

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Solicitor: James D. Ford, Solicitor replied 2 years ago

WORKERS COMPENSATION ACT 1987 - SECT 138

Definitions

138 Definitions

(cf former s 18C (35))
In this Division:

"employer" , in relation to a worker, includes a principal within the meaning of section 20 who is liable to pay compensation to the worker.

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Solicitor: James D. Ford, Solicitor replied 2 years ago

WORKERS COMPENSATION ACT 1987 - SECT 156B

Recovery from directors of corporation-insurance requirements

156B Recovery from directors of corporation-insurance requirements

(1) If the Authority is entitled to recover an amount from a corporation under section 156 (even if the corporation has ceased to exist) and the amount is not recoverable from the corporation, the Authority is entitled to recover the amount from a person who was a culpable director of the corporation at the relevant time.

(2) An amount is considered to be not recoverable from a corporation if the Authority certifies that it will be unable or unlikely to recover the amount from the corporation by reasonable efforts at recovery, whether because the corporation is being wound up and is unable to pay its debts, or otherwise.

(3) A person is a culpable director of a corporation at the relevant time if the person was a director of the corporation at any time during the contravention to which the entitlement of the Authority relates (whether or not the corporation has been proceeded against or convicted of an offence in respect of that contravention).

(4) A person is not a culpable director of a corporation if the person establishes that:

(a) the contravention by the corporation occurred without the person’s knowledge, or

(b) the person was not in a position to influence the conduct of the corporation in relation to the contravention, or

(c) the person, being in such a position, used all due diligence to prevent the contravention by the corporation.

(5) If there is a right of recovery against more than one director of a corporation in respect of the same amount, the right is a right against all those directors jointly and severally.

(6) A director from whom an amount is recovered under this section is entitled to recover the amount from the corporation.

(7) This section does not apply to an entitlement of the Authority under section 156 that arises from the failure by a corporation to obtain or maintain insurance in respect of any period before the commencement of this section.

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Solicitor: James D. Ford, Solicitor replied 2 years ago

WORKERS COMPENSATION ACT 1987 - SECT 156

Recovery of double premiums for contravention of insurance requirements

156 Recovery of double premiums for contravention of insurance requirements

(1) If an employer fails to obtain or maintain in force a policy of insurance as required by section 155 (1) in respect of any period, the Authority may recover from the employer in a court of competent jurisdiction as a debt due to the Authority a sum equal to twice the amount of the premium that would have been payable for the issue of a policy of insurance to the employer in respect of that period or such lesser amount as the Authority may agree to accept in any particular case.

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Solicitor: James D. Ford, Solicitor replied 2 years ago

So at a minimum, you can personally be responsible for twice the insurance premium that should have been paid, if your trading trust does not or is unable to pay.

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Solicitor: James D. Ford, Solicitor replied 2 years ago

Whether you will be chased personally for the payments being made to the injured worker.. I cannot yet determine with any level of confidence... the prosecution policy certainly states that they will chase you for the money if they can.

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Solicitor: James D. Ford, Solicitor replied 2 years ago

It certainly appears as if they have the ability to persue you personally, whether they do or not will be governed by their prosecution policy.. I provided the link above.

Selecting defendants

General principles

5.19 Employers, including corporations and the managers and directors of corporations and other entities, persons conducting a business or undertaking (PCBUs), PCBUs involving management or control of workplaces, manufacturers, suppliers and designers of plant/substances and workers can be defendants. This may mean that a number of people commit an offence arising out of the same incident.

5.20 In addition to the factors set out at 5.13 above, further general considerations that may be taken into account in choosing the appropriate defendant in a particular case are:

20 a) who is primarily responsible for the alleged offence, that is, who was primarily responsible for the acts or omissions giving rise to the alleged offence or the material circumstances leading to the alleged offence or who formed any relevant intention;

b) in relation to (a) above, what was the culpability of the proposed defendant; c) the effectiveness of any Court order that might be made against the proposed defendant. Corporate and director/manager liability

5.21 WorkCover‘s policy is to prosecute duty holders, including corporations and their officers, for breaches of the WHS, workers compensation and other legislation it administers where it is in the public interest to do so. In considering whether such prosecutions are in the public interest, regard will be had to the factors set out in paragraphs 5.6 and 5.22.

5.22 In relation to decisions concerning prosecutions of officers of corporations under the WHS legislation, particular regard will be paid to the steps taken by such persons to ensure compliance by the corporation with the WHS Act. Officers of a person conducting a business or undertaking must exercise due diligence to ensure that the person conducting a business or undertaking complies with its WHS duties and obligations. To meet this obligation, officers are required to take reasonable steps to meet a number of requirements as set out in section 27(5) of the WHS Act including, for example, keeping up to date with WHS matters, understanding the operations of the business or undertaking and the hazards and risks associated with the business or undertaking and having appropriate processes and systems in place.

Please accept and rate my response, cheers, James

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Solicitor: James D. Ford, Solicitor replied 2 years ago

Public interest

5.10 In considering the public interest, the main criteria for consideration will be similar to that adopted by the ODPP Guidelines and will include:

a) the seriousness or triviality of the offence and/or whether the breach is of a technical nature only; WorkCover tends to prosecute when a death has occurred, when there has been a serious injury or illness, or when there has been a risk of fatal or serious injury or illness;

b) any mitigating or aggravating circumstances;

c) the length of time since the alleged offence;

d) the degree of culpability of the alleged offender in relation to the offence;

e) whether the prosecution would be perceived as counterproductive, for example, by bringing the law into disrepute;

f) the prevalence of the alleged offence and the need for deterrence both specific and general;

g) any prior breaches of or convictions under the WHS or workers compensation insurance laws;

h) whether the alleged offence is of considerable public concern;

i) any precedent which may be set by not instituting proceedings;

j) the age, physical or mental health or special infirmity of the alleged offenders or witnesses;

k) the length and expense of a Court hearing;

l) whether proceedings are to be instituted against others arising out of the same incident; m) community expectations that proceedings will be instituted;

n) the availability and efficacy of any alternatives to prosecution. 17

5.11 The applicability of and weight to be given to these and other factors will vary and depend on the particular circumstances of each case.

5.12 The resources available to WorkCover to conduct prosecutions are finite. They will therefore not be expended in pursuing inappropriate cases.

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