Succession Provision Review

How Succession Provision Affects Your WorkCover Premium

What is Succession?

When an employer “inherits” the claims experience of another employer, this is known as succession. Inheritance of claims history usually occurs when the preceding workplace’s primary activity is being carried out at the new workplace, and there is a control relationship between the two employers. WorkCover may apply succession when a new employer acquires all or part of an existing business and the new employer has previously been associated with that business or there is a familial relationship between them.

Regardless of whether you are a small or large employer, succession can have an influence on your premium in a variety of ways, particularly with the transferred WIC. If an employer pays the legal state minimum premium, however, the succession will have very little or no effect.

Every legislative state has a similar approach to succession, with the Authority scrutinising the controlling interest and the relationship between the new and previous employers. To discuss the succession clause, we shall refer to the WorkSafe Victoria Premiums Order.

Succession is required even if:

• The successor employer is different from the predecessor employer.
• The workplace locations are different.
• The predecessor workplace continues to operate.
• The predominant activity is still being carried on in the predecessor workplace.
• The predominant activity in the predecessor workplace is not the predominant activity in the successor workplace

When deciding if there is an existing relationship of control, the Authority analyses all relevant information, including information from the predecessor employer, successor employer, or any member of a group. There is a control relationship between the preceding and successor employers if:

• Each employer is a public authority (i.e. a body, whether incorporated or unincorporated, that is established by or under an Act for a public purpose).

• At any time in the relevant test period

• the predecessor employer has or had a “controlling interest” in the successor employer or vice-versa.

WorkSafe Victoria also considers the relationship between the new and previous employers. If the new employer and preceding employer have any of the following relationships, succession will apply.

• the spouse, domestic partner, parent, grandparent, brother, sister, uncle,
• aunt, nephew, niece, lineal descendant or adopted child of the relevant person or of his or her spouse or domestic partner;
• the stepfather, stepmother, stepson, stepdaughter, half-brother, or half-sister of the relevant person and any person who stands in the place of a parent in relation to the relevant person; and
• the spouse or domestic partner of any person referred to in paragraph (a) or (b)(other than the relevant person).

In Summary

When creating a new policy or adding a newly acquired business as a new worksite to an existing policy. The Authority will examine the succession of an acquired business to see if there is any transfer of all or a majority of the predecessor’s workforce – the employer has employed workers who at any time constituted all or a majority of the workers employed during any policy period, and those workers have carried out or performed services for the employer that were the same or similar to the activities or services carried out or services performed by the predecessor.

The key factors under the Succession Provision are:

• controlling interest test between the predecessor employer and new employer
• the transfer of the workforce from the predecessor employer to a new employer
• purchased of the assets
• the nature and degree of the relevant entity’s independence, if any, from the employer new employer or the predecessor employer
• the nature and degree of the relevant entity’s ownership interest (whether directly or indirectly)
• any financial interest that the relevant entity has or had (whether directly or indirectly)
• any other entity has or had a controlling interest in the new employer or predecessor employer
• relationship connection between the two employers (whether of a business, family, or other nature)
• any other matters that the Authority considers relevant.

Ref: WorkCover Qld | WorkSafe Vic |RTWSA | icare Workers Insurance

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Disclaimer:

The information in this post is strictly for informational and educational purposes only and should not be construed as legal advice. It is not intended to express specific opinions about specific cases. Before acting on any of the issues discussed in this post, seek additional advice. The information provided should not be relied on for any purpose other than to assist you in understanding how Workers’ Compensation insurance works. It is for illustrative purposes only and My WorkCover Solutions Pty Ltd does not accept liability for any loss or damage suffered by any person resulting in any way from the use of or reliance on, the information provided. The information in this article is believed to be correct as of the date of publication. However, changes in the applicable laws may have an impact on the accuracy of the material. This article contains general information that is not tailored to any specific person’s situation. This publication may contain information that relates to the regulation of Workers’ Compensation insurance in your State or Territory. To ensure you comply with your legal obligations, we would recommend you refer to the appropriate legislation as currently in force in the State or Territory you conduct your business. You can find up-to-date legislation by visiting each state’s WorkCover Authority website, alternatively contact myWorkCover for updated information.