More costs on the cards for SMEs as COVID-related workers’ comp claims spike

An uptick in workers’ compensation claims related to COVID-19 could lead to a spike in WorkCover premiums, at a time when businesses can seldom afford additional costs.

And one small business accountant is concerned about what those additional pressures will mean for small businesses, and the employees that work for them.

As of September 3, 2021, there have been a cumulative 955 workers’ compensation claims filed related to COVID-19, according to data from the State Insurance Regulatory Authority (SIRA).

That’s up from a total of 350 claims filed by the end of August 2020. Some 416 of the total were filed between June 1 and September 3 this year.

The majority of claims (367) were from workers who had contracted COVID-19, but 254 were from those who had been exposed to the virus.

There were also 146 claims related to psychological issues.

The remaining 188 fell under ‘other’ claims, including those relating to reactions to the COVID-19 vaccination.

It is currently not clear how many of the total claims related to small or medium businesses, as SIRA does not collect this information, a spokesperson told SmartCompany.

The stats could be a cause for concerns when it comes to WorkCover premiums in the future.

Already, SmartCompany has heard from Victorian small business owners who say the current state support payments have not been enough to cover their WorkCover bills, let alone their other outgoings.

Speaking to SmartCompany, Stacey Price, small business accountant and founder of Healthy Business Finance, notes that any time a particular industry sees an uptick in WorkCover claims, premiums tend to increase across the board.

This only exacerbates an existing problem, she adds. She has found many businesses don’t actually have adequate WorkCover — some don’t have any at all.

However, most grant programs require a copy of employers’ WorkCover certificates, she explains.

“We have noticed a jump in premium holders, as well as a jump in premium values as business owners were not reporting correct wage information,” she says.

Of course, any increasing overheads only places more stress on businesses that are already facing plenty of stress as it is. That’s particularly true when it’s cost pressure completely out of the business owners’ control.

Covering those overheads could affect wages, Price notes.

“[We] know this is not always easy to implement as you don’t want to price yourself out of jobs, especially in tricky economic times.”

Equally, Price warns that the number of claims for psychological and mental health concerns may well be on the up.

Extra pressure on employees could also lead to increased claims, Price adds. Many workers are under immense pressure to finish their job on time and under budget, in order to get paid for their work, she explains.

They’re facing mental health challenges that simply didn’t exist before.

“Employees are under immense pressure to stay employed and get paid their full wage so they can provide for themselves and their families, and we are seeing many employees take serious steps to avoid these pressures when it all just gets too much,” she says.

“This is heartbreaking, but it is the reality right now.”