THE REAL CONSEQUENCES OF FAILING TO OBTAIN (AND RENEW) WORKERS COMPENSATION INSURANCE
In Western Australia workers compensation insurance is compulsory for all businesses, regardless of size or business structure.
Compliance is crucial to protect your company from hefty fines, potential litigation, and financial strain.
We recently represented a client who was charged with one count of failing to obtain Workers Compensation Insurance for 30 workers. The client historically kept consistent insurance but due to an administrative oversight, the insurance lapsed and due to non-renewal in a timely manner was cancelled.
The statutory penalty for the charge is a fine of $5,000.00 per worker.
However, because the client was a body corporate, Western Australian legislation provides that this penalty was subject to a multiplying factor of 5: therefore, the actual maximum statutory penalty was potentially $750,000.00.
The client entered a plea of Guilty at the earliest opportunity, had no previous criminal history and the effected employees did not suffer any injuries whilst at work.
After detailed sentencing submissions were presented in mitigation, our client was fined $34,000.00.
The Court also ordered the client to pay avoided premiums in the amount of $3,000.00 and costs.
An expensive administrative oversight indeed.
The courts place significant emphasis on general deterrence for failing to obtain or renew Worker’s Compensation Insurance.
This is because a failure to obtain or renew such insurance can not only catastrophically affect an employee who may be injured, but it will affect the business owner and the system as well, which strives to prevent the public from bearing the cost of a preventable financial burden.
Now, more than ever, it is imperative both individuals and corporations pay strict due diligence over their own Workers Compensation Insurance. It is both unacceptable and wholly unwise to assume Worker’s Compensation Insurance (and indeed any type of insurance) should be, or is, the responsibility of another, for example, an accountant.
If you are seeking further legal advice on this issue or require assistance, please call Appius Lawyers and speak to one of our experienced business lawyers in Perth.
