Accident Compensation

by The FindLaw Team

The Accident Compensation Act 2001 provides 24-hour, no fault compulsory comprehensive protection for all those covered by the scheme.

The scheme is administered by the Accident Compensation Corporation (ACC) and provides a form of insurance that covers the costs of personal injuries, including those caused by an accident or certain work-related gradual processes (eg occupational diseases).

Paying levies

The accident compensation scheme is funded by levies.

Employers must pay an employers’ levy, also known as WorkPlace Cover, to cover employees who are injured at work. The employers’ levy is payable in advance and is based on the previous year’s payroll. This is recalculated the following year based on the actual payroll. The employer is then sent a levy adjustment.

Employees must pay an earners’ levy, which is deducted from their pay via PAYE and submitted to Inland Revenue. This covers them for non-work-related injuries, such as injuries suffered at home or while playing sport.

The cost of injuries suffered as result of motor vehicle accidents is funded by a levy on fuel (eg petrol) and on vehicle registration.

Levy rates

The amount that an employer must pay for WorkPlace Cover varies depending on:

  • Their payroll;
  • Their industry classification;
  • Their claims history and experience rating; and
  • Whether they are entitled to a discount under the Workplace Safety Management practices programme.

Industry classification

Employers are classified into industry classes, with a particular levy rate determined for each. ACC will decide which industry classification is appropriate for an employer.

There are 536 different industry classifications, ranging from “Accommodation” to “Zoological and botanic gardens operation”. The levy rate for each is based on the level of risk (based on the cost of past claims for the industry), so for example, accounting services have a much lower levy rate than forestry.

Claims history and experience rating

Under the Accident Compensation (Experience Rating) Regulations 2011, employers may have their levy adjusted.

Employers who pay less than $10,000 per year for their work account levy are subject to a “no claims discount” scheme, where their levy may have a discount or loading of 10% based on their claims history (or no adjustment made).

Employers who pay $10,000 or more are subject to a more complex “experience rating programme”, based on individual performance compared to industry peers, and may have a discount or loading of up to 50% (or no adjustment made).

The Workplace Safety Evaluation Programme is targeted at employers whose record of workplace injuries is much higher than the industry average to improve their workplace safety.

Employers selected for the programme are sent a notice and a meeting between ACC and the employer will be arranged. At this point, the employer can provide ACC with information on why the claims information does not accurately reflect the actual situation.

If ACC decide to proceed, the employer is provided with advice on what can be done to improve workplace safety and generally up to six months to take corrective action. A report will be drawn up after the employer has been given a chance to take action, and ACC will decide what to do next based on this report.

If ACC feels that the employer is not making a genuine and concerted effort to improve, an ACC-funded workplace safety audit will be carried out. If the employer fails this audit, their ACC levies will be increased by 50%. Audits will be carried out no more than once a year and the increased levies will continue until the employer passes an audit.

Workplace Safety Management Practices programme

Employers may qualify for levy discounts if they participate in ACC’s Workplace Safety Management Practices programme. The two basic requirements are that employers must demonstrate they have:

  • Established an acceptable benchmark for workplace health and safety; and
  • Health and safety systems in place that strive for continuous improvement.

The first step is for the employer to carry out a self-assessment using ACC’s self-assessment guide. If this assessment indicates that the workplace will pass an independent audit, one will be arranged and the cost met by ACC.

Employers who qualify for the discount will have it backdated to the beginning of the financial year. Levy discounts of 10%, 15%, or 20% are available, depending on the quality of an employer’s workplace health and safety systems. The discount will apply for two levy years, after which the employer must reapply.

Accredited employers

Accredited employers under the Partnership Programme manage their workplace injuries on ACC’s behalf. Accredited employers are eligible for additional discounts and levy components, depending on the pricing option chosen. Employers considering entering into the scheme are advised to thoroughly analyse the cost/benefits associated with the move.

Injured employees

If an employee suffers a personal injury, there are various costs that may be covered by ACC, including the cost of treatment, 80% of earnings lost as a result of the injury, and the cost of rehabilitation.

If an employee suffers a work-related personal injury, the employer must pay for their first week of lost earnings. First week compensation is 80% of the amount of earnings lost, which is calculated to be the amount of the employee’s earnings in the 7 days immediately prior to the incapacity. It is the employer in whose employment the injury was suffered who must pay this first week’s compensation. This will include earnings from other jobs.

Because the employer is required to pay first week compensation in relation to a work-related injury, the employer cannot require the employee to take paid sick leave during that first week.

Rehabilitation

Employers are required under the Act to help rehabilitate injured employees, regardless of whether or not they were injured at work. This duty applies when ACC decides it’s reasonably practicable for an injured person to return to his or her pre-injury employment with the same employer. If this is the case, ACC will notify the employer in writing, and the employer must then take all practicable steps to help the employee to achieve the vocational rehabilitation goals.

An injured person is responsible for his or her own rehabilitation, which means that they must take some initiative and co-operate with ACC and their employer to achieve their rehabilitation goals.

ACC has a legal duty to provide the necessary rehabilitation to a claimant, for example by providing an individual rehabilitation plan, providing assistance (such as home help), and providing training where an employee is unable to return to work in a job which they are able to do without further training.



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