Stakeholder Consultation on the Introduction of
Experience Rating and Retro-Paid Loss
WorkCover SA
Submission of
The Recruitment and Consulting Services Association (RCSA)
March 2011
Recruitment & Consulting Services Association Ltd
RCSA Head Office
PO Box 18028 Collins St. East
Melbourne Victoria 8003
RCSA Submission
WorkCover SA – Experience Rating and Retro-Paid Loss
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The Recruitment and Consulting Services Association
The RCSA is the peak body for the recruitment and on-hire workers services industries
throughout Australia and New Zealand. It is a not-for-profit Association that is managed by a
Board of Directors.
The principal focus of the RCSA is “to represent and serve the interests of Members for the
increased profile and professionalism of the industry”. The RCSA has more than 3200
Members in Australia and New Zealand comprising multi-national companies, single
consultancies, and individual practitioners operating within a recruitment consultancy.
The Association is instrumental in setting the professional standards, educating and
developing Member skills, monitoring industry participant performance and working with
legislators to formulate the future. Members are kept up-to-date on information regarding
best practice techniques, resources and technological innovation, along with legislative
changes impacting on employment.
The RCSA also acts as a lobbying voice, representing its Members on issues that impact upon
the industry. It has a strong relationship with the public and private sector.
Members of the RCSA provide an extensive range of employment services including on-hire
employee services (‘labour hire employees’), contracting services (“including labour hire independent
contractors’), recruitment services (agency/placement only), Job Services Australia services and
consulting services.
Every year the industry places millions of individuals in on hired employment and on-hire
independent contracting in an increasingly broad range of sectors from building,
construction and engineering to secretarial placements, call centres and accounting. The
method of engagement may vary within occupational type and industry, with the majority of
on-hire independent contracting amongst the RCSA Membership occurring within
professional, scientific and technical occupations.
The RCSA is instrumental in setting standards in the on-hire worker services industry. Furthermore,
maintaining and raising standards in work safety, workplace relations and work law are at the top of
the Association’s agenda.
RCSA Code for Professional Practice
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The RCSA has a Code for Professional Practice, authorised by the ACCC, which can be viewed at
http://www.rcsa.com.au/imis15/RCSA/RCSA_Code/Introduction_to_the_Code/RCSA/wcRCSACode/Introduction_to_Code.aspx. In conjunction with the RCSA Constitution and By Laws, the
Code sets the standards for relationships between Members, best practice with clients and
candidates and general good order with respect to business management, including compliance.
Acceptance of, and adherence to, the Code is a pre-requisite of Membership. The Code is supported
by a comprehensive resource and education program and the process is overseen by the Professional
Practice Council, appointed by the RCSA Board. The Ethics Registrar manages the complaint process
and procedures with the support of a volunteer Ethics panel mentored by RCSA's Professional
Practice barrister.
RCSA’s objective is to promote the utilisation of the Code to achieve self-regulation of the on-hire
worker services sector, wherever possible and effective, rather than see the introduction of
additional legislative regulation.
RCSA Member Service Categories and Terminology
RCSA believe that the absence of precise terminology is contributing to the confusion and lack
accountability amongst any non-compliant element of the industry. RCSA has been instrumental in
developing and promoting the following categories of service and terminology, with a view to
identifying the various forms of third party employment and contracting services.
Put simply, the term ‘labour hire’ is now used to describe most a-typical forms of employment and is
no longer descriptive of genuine on-hire employee services, which results in misinformation,
misrepresentation and ultimately harbours both intended and unintended non-compliance.
See attached diagram for RCSA definitions and service categories along with additional information,
which provides some context around on-hire worker services.
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RCSA Submission
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On-Hired Work in Context
The on-hired employment industry is a significant contributor to the Australian economy
Research completed by the Australian Bureau of Statistics in 2002 indicated that the on-hire services
industry contributes $10 billion to the Australian economy, more than that of accounting services
and more than that of legal services. The annual revenue of the industry is $16 billion, according to
both Recruitment Super and RCSA Member Research.
Most on-hired employees employed by RCSA Members are either skilled or professional workers
RMIT University research1 found the 61% of RCSA on-hired employees are skilled or professional
workers with the remaining 39% being semi-skilled or unskilled.
Many on-hired employees are employed on a permanent basis
RMIT University research found that 16% of on-hired employees are now employed on a permanent
basis.
Where on-hired employees are employed on a casual basis they have improved opportunities for
ongoing work as they are supplied to alternative workplaces
RMIT University research found that half of all on-hired casual employees employed by RCSA
Members are immediately placed in another assignment following the completion of their initial
assignment that is, they enjoy ‘back to back’ assignments without having to search for new work like
those engaged in direct hire casual employment.
An overwhelming majority of people choose to work as an on-hired employee and the reasons for
this choice are not what you may expect
RMIT University research found that 67% of on-hired employees chose to work as an on-hired
employee and 34% prefer this form of work over permanent employment.
The most important reasons for choosing on-hired employment are diversity of work, to screen
potential employers, recognition of contribution and the payment of overtime worked.
1
Brennan, L. Valos, M. and Hindle, K. (2003) On-hired Workers in Australia: Motivations and
Outcomes RMIT Occasional Research Report. School of Applied Communication, RMIT University,
Design and Social Context Portfolio Melbourne Australia
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Business uses on-hired employees to help with recruitment and urgent labour requirements, not
to reduce cost or pay.
RMIT University research found that the main reason that organisations use on-hired employee
services is to resource extra staff (30%), cover in-house employee absences (17%), reduce the
administrative burden of employment (17%) and overcome skills shortage issues (9%). Only 2% of
organisations surveyed indicated that the primary reason for using on-hired employees was related
to pay.
Business is more productive and competitive because of the use of on-hired workers
RMIT University research found that 76% of organisations using on-hired workers were more
productive and competitive as a result.
On-hired employment creates jobs and doesn’t necessarily replace direct hire employment
opportunities
RMIT University research found that 51% of organisations using on-hired employees would not
necessarily employ an equivalent number of employees directly if they were unable to use on-hired
employees. In fact 19% of organisations said they would rarely do so.
Furthermore, 19% of RCSA Member on-hired employees eventually become permanent employees
of the host organisation they are assigned to work for, according to RMIT University research.
Submission
General Submission
As the peak industry body for the on-hire worker services and recruitment industries within South
Australia, the RCSA wishes to record its interest in being kept abreast of developments in relation to
this review.
Ongoing contact should be made with RCSA Policy Manager, Charles Cameron
Email ccameron@stratecom.com.au or call 0414 734 329
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Specific Submissions
ABOUT YOU
Contact details:
Name: Charles Cameron
Position title: Policy Manager
Organisation: Recruitment and Consulting Services Association
Ltd
Email: bsc@rcsa.com.au or ccameron@stratecom.com.au
Please check the box that best describes the views you
represent:
Employer association
RCSA
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GUIDING PRINCIPLES OF AN EXPERIENCE RATING SYSTEM
Do you support the guiding principles?
Refer to page 8 (of the discussion paper)
X
Yes
No
Prefer not to respond
If you would like to make a comment about the principles, please do
so below.
Experience rating has provided the incentive for employers to
prevent injuries as well as manage claims to reduce claims costs.
Furthermore Experience Rating means that premiums reflect the
employer’s performance rather than the industry generally.
Multi SAWIC employers need to have the claims costs for each SAWIC
partitioned so that each risk profile in their business is
measured accurately.
QUESTION 1
Should a combination of remuneration and premium be used to
determine the threshold for entry into the Experience Rating System?
Refer to page 12
x
Yes, a combination of remuneration and premium should be used
No, only the amount of remuneration should be used
No, only the base premium amount should be used
I do not think there should be an entry threshold
Prefer not to respond
Do you have any other comments?
QUESTION 2
Modelling of these options would need to be provided to allow an
informed debate on the respective thresholds.
Would you support a move from ‘levy’ to ‘premium’? Refer to page 14
x Yes
No
Prefer not to
respond
Should we issue employers with insurance-based documentation? Refer
to page 14
x
Yes
No
Prefer not to
respond
Do you have any comments to add or would you like to explain your
answer?
Worker’s Compensation is an employer insurance against the cost of
workplace injury. The lack of acceptance of this in South
Australia is fundamental to the failure of the system. The
employer is the premium payer who funds the scheme. Levies are
taxes.
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QUESTION 3
Do you support a location-based or employer-based approach to the
calculation of premiums? Refer to page 16
X
Location-based
Employer-based
Prefer not to respond
Do you have any comments about these approaches?
Location based premium calculations allows employers to more
accurately capture costs of worker’s compensation for each
discrete area across their business. Employers can still
apportion costs across their business if they so desire.
QUESTION 4
Should we use manual claims estimates in the experience rating
premium calculation? Refer to page 17
X
Yes, I support the use of manual claims estimates
No, I do not support the use of manual claims estimates
Prefer not to respond
Do you have any comments about claims estimates?
Manual claims estimates are preferred over Statistical Claim
Estimates (SCE’s). Experience in Victoria has shown that SCE’s
are not transparent, bear no resemblance to reality (low cost
claims with high SCE’s) and employers are unable to influence the
SCE regardless of claims management efforts. Typically agents are
unable to interpret SCE movements either.
Manual claims estimates must have robust guidelines and a dispute
mechanism for employers to be able to request a review of the
estimate.
The ability to keep claim costs down is largely in the hands of
the claims manager not the employer, so the concern of this
happening at the expense of the injured worker is not valid.
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QUESTION 5
Should we extend the claims excess waiver notification period from
two business days to five calendar days? Refer to page 19
Prefer not to respond
Do you have any comments about the notification period?
QUESTION 6
Should we move to contributory negligence for third parties, or keep
the current arrangements? Refer to page 20
Keep the current arrangements, where a third party wrongdoer is
liable for 100% of the damages
X
Change to contributory negligence, where the amount of
compensation recovered from a third party is proportionate to
their degree of fault
Prefer not to respond
Do you have any other comments to add about contributory negligence?
Contributory negligence is consistent with case law in all other
jurisdictions. Third parties should not be required to pay for
the negligence of another party (employer). Workers’ rights are
limited if their employer is wholly negligent, so why should this
change (and they receive full common law benefits) if their
employer is partly negligent and a third party is partly
negligent. The scheme underwrites employer negligence so it
should do so in all cases. The S54 provisions are stifling
business opportunities in South Australia.
QUESTION 7
This is broken into three questions, so please respond in the boxes
provided below
Should the definition of injury in the Act be changed to ‘injury’
from ‘disability’?
Refer to page 22
X
Yes, change all references to ‘injury’ from ‘disability’
No, don’t change
Prefer not to respond
Please add any comments below
This is consistent with harmonisation of workers’ compensation
across Australia.
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Would you support a change to the definition connecting secondary
injuries to employment? Refer to page 22
X
Yes, change the definition to ‘significant contributing factor’
(or similar definition)
No, do not change the definition
Prefer not to respond
Please explain your answer or add your comments below
Consistent with other jurisdictions
Should secondary and unrepresentative injuries be included in the
premium calculation for an experience rated employer? Refer to page
22
X
Yes, if the definition connecting secondary injuries to
employment changes
Yes, even if we maintain the current definition
No
Prefer not to respond
Please explain your answer or add your comments below
The major factor determining employers’ view of each category of
claim is the impact on their premium, and this is driven by claims
agent effectiveness in managing claims. If claims that were
previously non premium related were to be included, then more
pressure will be applied to claims agent efficiency and
effectiveness.
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QUESTION 8
This is broken into two questions, so please respond in the boxes
provided below
Would you like more payment options? Refer to page 25
X
Yes, I support more payment options
I support some of the options (please explain below)
No, I do not support more payment options
Prefer not to respond
Please explain your answer or add your comments below
Funding difficulties for business in recent years makes this
highly desirable. Many insurance companies provide these options.
What do you think about a discount for employers who pay their full
premium upfront? Refer to page 25
X
Yes, I support a discount being offered
No, I do not support a discount being offered
Prefer not to respond
Please explain your answer or add your comments below
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QUESTION 9
Which approach would you support for new employers entering the
Experience Rating System?
Refer to page 26
I support Option 1 (Experience Rating System applied after two
years of registration with the Scheme)
x
I support Option 2 (a phased approach to introducing the
Experience Rating System)
I do not support either option (please explain below)
Prefer not to respond
Please explain your answer or add your comments below
QUESTION 10
Should ‘related’ employers be grouped together? Refer to page 28
X
Yes
No
Prefer not to respond
Do you have any other comments?
This is supported in principle, however there should be scope for
flexibility if management control of entities in the same group of
companies is not common in Australia. If two entities share the
same management structure at a global level but nowhere else in
the world, then they can hardly be regarded as part of the same
group for OHS and W/C purposes.
QUESTION 11
Should claims experience be transferred with a business? Refer to
page 30
X
Yes
No
Prefer not to
respond
Please add your comments below
QUESTION 12
Should costs associated with fraudulent claims be taken out of an
employer’s claims experience? Refer to page 31
X
Yes
No
Prefer not to
respond
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Please add your comments below
Fraudulent claims are not something the employer has any control
over, so these costs should be shared across the scheme.
QUESTION 13
What do you think of these options to change the industry rate cap?
Refer to page 32
Keep at 7.5%
X
Increase the cap
X
Remove cap altogether
Prefer not to respond
Please add your comments or suggestions below
Support removal of the cap, or at least increasing it. For those
employers who suffer significant impacts, the changes can be
phased in over 3 years.
This will reduce the cross subsidisation by the rest of the scheme
and make high risk industries accountable.
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QUESTION 14
Should there be a cap on the costs of a single claim when
calculating an employer’s premium? Refer to page 33
X
Yes
No
Prefer not to
respond
Please indicate the cap amount you support and/or add your comments
below
Range of $175,000 to $200,000
QUESTION 15
Do you support a cap on premium movement? Refer to page 34
X
Yes
No
Prefer not to
respond
Please add your comments below
Sometimes premium movement may not occur because of the employer’s
claims experience, so there should be a cap.
QUESTION 16
Do you support a cap on the amount premiums can increase as part of
moving to an Experience Rating System? Refer to page 35
X
Yes
No
Prefer not to
respond
Please add your comments below
This prevents undue volatility caused by the move.
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QUESTION 17
This is broken into three questions, so please respond in the boxes
provided below
What are your thoughts on harsher fines and/or penalties for
employers who fail to register, or who provide a false statement to
the principal contractor? Refer to page 36
Fines should be appropriate to the benefit the employer expected
to gain by failing to register. The fines should be in keeping
with other jurisdictions.
What are your thoughts on principal contractors holding
responsibility to ensure sub-contractors are registered? Refer to
page 36
Principal contractors often use sub-contractors to reduce their
own risks, so the onus should be on them to establish the subcontractor is registered.
What are your thoughts on issuing a certificate of currency to
registered employers to help principal employers in confirming a
sub-contractor’s registration?
Refer to page 36
This works well in other States, and will further reinforce the
concept of insurance.
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If you have any further comments on the consultation paper or any
suggestions, please complete the box below
Thank you for your feedback.
Please note: If you would like more room for your comments please attach another
sheet,
or provide a separate submission outlining your feedback.
End of feedback form
RCSA Submission
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GUIDING PRINCIPLES OF A RETRO-PAID LOSS SYSTEM
Do you support the guiding principles?
Refer to page 7 (of the discussion paper)
X
Yes
No
Prefer not to
respond
If you would like to make a comment about the principles, please do
so below.
QUESTION 1
An entry threshold will be set for the Retro-Paid Loss System. What
are your views?
Refer to page 11
Please provide your answer below
QUESTION 2
Agree with an entry threshold. This will limit access to the
scheme to those employers with the resources to manage the risk of
the scheme.
This question has two parts
We will ask for a written commitment from an employer’s CEO or Board
to participate in the Retro-Paid Loss System. What are your views?
Refer to page 12
X
I agree with all of the ways that commitment will be required
I agree with some of the ways that commitment will be required
(please explain)
I do not agree with these measures
Prefer not to respond
Please explain your answer
Should employers in the Retro-Paid Loss System be required to
participate in quarterly networking sessions facilitated by
WorkCover? Refer to page 12
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X
Yes
No
Prefer not to respond
If you would like to make a comment, please do so below
QUESTION 3
This will facilitate sharing of experience between participants
and also provide a forum for discussion between WorkCover and
employers.
Employers will be required to provide a financial guarantee to
participate in the Retro-Paid Loss System. What are your views?
Refer to page 14
Please provide your answer below
QUESTION 4
Agreement in principle with a financial guarantee. However it is
the level of the guarantee that is more relevant. Rolling
guarantees that in total exceed the exposure to the scheme are
inappropriate.
This question has two parts
Should employers be able to choose between two different large
claims cap amounts? Refer to page 15
X
Yes
No
Prefer not to respond
Should there be a cap for a single event with multiple claims? Refer
to page 15
X
Yes
No
Prefer not to respond
Please use the space below if you would like to explain your answers
QUESTION 5
The cap on single events operates on the same principle as the cap
on EBR schemes. The amount may be higher but needs to be
reasonable.
A Retro-Paid Loss System requires a minimum, deposit and maximum
premium to be set. What are your views? Refer to page 16
Please provide your answer below
Support the concept of minimum, deposit and maximum premiums.
However modelling needs to be presented to establish what each
premium should be. The maximum premium in NSW is generally
considered high relative to the tariff premium. It would be very
unlikely that a participant in the scheme would have claims costs
of 2.5 times tariff premium.
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QUESTION 6
In the Retro-Paid Loss System adjustment factors will apply to an
employer’s claims costs. What are your views? Refer to page 18
Please provide your answer below
Agree that adjustment factors should exist. Comparison with
similar schemes operating in the private sector should be
conducted to evaluate what the factors should be. A premium of
$1.67 per $1 of claims cost is not a very strong incentive to
entice an employer away from self-insurance.
QUESTION 7
A run-off period and periodic premium adjustments would be part of a
Retro-Paid Loss System. What are your views? Refer to page 20
X
I support all elements of the policy run-off system outlined
I support some but not all elements of the policy run-off
system (please explain)
I do not agree with this system (please explain)
Prefer not to respond
Please use the space below to explain your answer
QUESTION 8
What are your views on the two conditions for employers leaving the
Retro-Paid Loss System? Refer to page 22
X
I agree with both conditions
I agree with only one of the conditions (please explain)
I do not agree with the conditions (please explain)
Prefer not to respond
Please use the space below to explain your answer
If you have any further comments on the consultation paper or any
suggestions, please complete the box below
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Thank you for your feedback.
Please note: If you would like more room for your comments please attach another
sheet,
or provide a separate submission outlining your feedback.
RCSA Submission
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