Under the Accident Compensation Act 2001, the ACC Board has now made recommendations to the Minister for ACC on the introduction of experience rating into the ACC Work Account. In making these recommendations, the Board has considered submissions received as part of the public consultation process, which took place between
1 October and 29 October 2010.
WHAT IS EXPERIENCE RATING?
ACC levies are the main way in which the Government provides a financial incentive to businesses to improve their workplace safety. However, the current system of setting levies recognises and rewards, or penalises, safety records at an industry level. This means that businesses with good workplace safety records are carrying the cost of businesses that are less safe, and detracts from the incentives for improving safety.
Experience rating will modify the levies paid by individual employers and self-employed people. ACC has recommended that experience rating will begin from 1 April 2011.
SUMMARY OF THE ACC BOARD’S RECOMMENDATIONS FOR THE EXPERIENCE RATING FRAMEWORK
Application Threshold Recommended level
Programme participation level Level of annual work levy (current portion) used to determine the programme a business group will participate in $10,000
Experience period The period used to determine which claims will be included in the experience rating framework 3 years
No-Claims Discount Programme (small employers) Maximum discount/loading applied to the current portion of the Work Account levy +/- 10%
- Number of weekly compensation claims and duration The number and duration of claims used to determine the level of loading or discount for small employers no claims = 10% discount
1-70 days paid = no change
more than 70 days paid = 10% loading
Experience Rating Programme (large employers) Maximum discount/loading applied to the current portion of the Work Account levy +/- 50%
- Industry size modification Maximum proportion of discount/loading applied to experience rating programme modification +/- 15%
- Experience rating modification Maximum proportion of discount/loading applied to experience rating programme modification +/- 35%
- Rehabilitation component Proportion of discount/loading applied to the experience rating modification 75%
- Risk management component Proportion of discount/loading applied to the experience rating modification 25%
BUSINESS GROUPING RULES
ACC has recommended introducing business grouping rules for the purposes of experience rating. The main objective is to group commonly owned or controlled businesses so that:
- experience rating is, as far as possible, based on common control of the workplace
- the claims histories of all entities that are under common control are taken into account when calculating a levy modification
ACC is recommending that the business grouping rules, and rules about business transfers, will be largely based on those that are applied in the Income Tax Act 2007, including the disclosure of certain information by employers.
NEED MORE INFORMATION?
For information that accompanied the recommendations made to the Minister, you can:
- email: ERConsultation@acc.co.nz
- write to Experience Rating Consultation, ACC, PO Box 242, Wellington for a printed document
- visit us on our website: http://www.acc.co.nz/about-acc/consultation-have-your-say
For information of the Government’s decisions on the introduction of experience rating in the Work Account you can visit www.beehive.govt.nz