Workers compensation is a form of insurance payment to employees if they are injured at work or become sick due to their work. It includes payments to employees to cover their wages while they’re not fit for work, as well as medical expenses and rehabilitation. Employers in each state or territory must take out workers compensation insurance to cover their employees.

Workers compensation is governed by individual states and territories. Each state and territory has its own regulator that administers and provides advice on workers compensation. For businesses in Queensland, the relevant authority is WorkCover Queensland.

Steps to Follow When an Employee is Injured in the Workplace

Step 1: Immediate Response to Injury

When an employee suffers an injury at work, the priority is to ensure their safety and health.

Step 2: Reporting the Injury

Injured employee must report the incident to their supervisor as soon as possible. Ideally, the employee should complete an incident report document detailing the injury. In cases where immediate medical attention is required, this documentation can be done later.

Step 3: Assessing the Claim

Determine if the injury qualifies for a WorkCover claim. The employee should obtain a WorkCover claim form and a work capacity certificate from their GP or hospital.

Step 4: Payroll Obligations

The payroll officer needs to ensure the injured employee is paid for their entire scheduled shift or day when the injury occurred.

Step 5: WorkCover Interaction

WorkCover will contact the employer regarding the claim and request payroll records for the injured employee.

Step 6: Payment Decision

Employers can choose to have WorkCover pay the weekly benefit directly to the employee or receive reimbursement from WorkCover and continue to pay the wages. Employers must continue to pay superannuation on WorkCover payments and accrue leave for full-time and part-time employees.

Step 7: WorkCover Notification

Employers will receive a letter from WorkCover detailing the claim and amounts owed to the employee.

Setting Up Payroll in Xero for WorkCover Claims

For employers using Xero, follow the below steps to process WorkCover payments. We will be using the example letter from Workcover above to explore a couple of different scenarios.

Creating General Ledger Accounts

1. Create an expense account (e.g., 477w – Wages and Salaries – WorkCover Payments, BAS Excluded).

2. Create an income account (e.g., 240 – WorkCover Reimbursements Income, BAS Excluded) for WorkCover reimbursement payments.

Configuring Payroll Settings

3. Navigate to Payroll, then Payroll Settings, and Pay Items.

4. Create a new pay item under Worker’s Compensation. Name it “WorkCover Excess”.

Ensure Compliance: For QLD employees, configure the pay item to include superannuation contributions and accrue leave entitlements.

 

Processing Pay Runs and Reimbursements Examples

Excess Pay Run Example

For example, if the excess pay run is valued at $1760.70, follow the steps to ensure it is correctly recorded and processed.

Weekly Reimbursement Payments

For weekly reimbursement payments, such as $2314.32, set up the payroll to reflect these amounts accurately.

 

Bank Feed Reconciliation

When WorkCover reimburses the company, match these payments in the bank feed to the previously set up WorkCover Reimbursements Income account.

By following these steps, QLD businesses can ensure they manage WorkCover claims efficiently, providing the necessary support to their employees while maintaining compliance.

Managing WorkCover claims can be complex, but with the right tools and expertise, you can ensure compliance and support for your employees. At Gecko Cloud Solutions, we specialise in bookkeeping, payroll, and integration services to help your business run smoothly. Contact us today to learn how we can assist you with your WorkCover processes and other financial needs.

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