Workers Compensation Issues Impacting the Thoroughbred Racing Industry
Please find below information on the Workers Compensation Act
Racing NSW is the Workers Compensation insurer for the NSW Racing industry, and under NSW state law, licensed trainers are required to insure their workers with Racing NSW. In order to operate its Workers Compensation fund, Racing NSW charges trainers and clubs premiums to cover the cost of claims made.
Historically, trainers have been charged approximately one-third of the premium costs, reflecting one third of total claims being against trainers policies.
How are the total premiums calculated?
There are a number of ways that Racing NSW charges the total premiums that trainers across NSW contribute to the Racing NSW Workers Compensation fund. These are:
- Activity Fees for Barrier Triallers and Race Starters: 70%
- Fees charged on renewal of licence: 6%
- Claims Experience Premiums: 15%
- Exposure Fees (Per Horse Stabled): 9%
- Total: 100%
Each of these is described in further detail below:
Activity Fees 2013/14
The bulk of the workers compensation premiums charged to trainers are charged in the form of fees levied on race starters and barrier triallers. The fees are levied as follows:
- Metropolitan $49.46
- Provincial $36.26
- Country $18.80
- Metropolitan $92.28
- Provincial $65.94
- Country $33.05
Claims Experience Premiums
Claims experience premiums are charged by Racing NSW based on the number and cost of claims that a trainer had on their Workers Compensation policy relative to the size of the trainer’s training establishment, both in terms of horses and staff.
Claims experience premiums have been charged by Racing NSW previously. However, the methodology used by Racing NSW to calculate the Claims Experience Premiums has changed from that adopted in previous years.
There are a number of other issues associated with the administration of the Racing NSW Workers Compensation scheme that are relevant to trainers. These are summarised below:
Exempt Employee changes
Trainers that train through a corporate entity (e.g. a Pty Ltd company) will have noticed an additional charge where the trainer is considered to be a working director (i.e. employee) of that company. This additional charge is to acknowledge that it is the company, rather than the trainer himself/herself, that is the employer of the staff. In this instance, the trainer is covered under the company workers compensation policy, which is different to a sole trader where the trainer is the employer and therefore does not have workers compensation coverage.
It would therefore seem that trainers that are significantly hands-on and may be exposed to a higher risk of injury should consider structuring their training operations through a company (and making themselves a working director) so that they may be covered by the Racing NSW Workers Compensation policy.
The NSWTA has been advised that trainers that operate through a corporate structure but are not themselves considered to be working directors should not have been charged the fee ($500 -2011) as they will not have the additional workers compensation coverage. Please let us know of any instance where the fee has been charged.
Dust Diseases Levy
Trainers would have noticed that they may have contributed to the Dust Diseases levy through the payment of $0.95 per horse stabled. Under the relevant NSW law, each Workers Compensation insurer, including Racing NSW, is required to pay a certain amount to pay for Dust Diseases compensation, and Racing NSW has been advised by the NSW Government that it is required to pay $15,000 per year. The $0.95 per horse stabled contributes approximately $7,000 towards this requirement, with the remainder coming from NSW race-clubs.
What you need to do
The information provided by Racing NSW is quite complex; however, there are a couple of things that trainers should check to ensure that the methodology that Racing NSW has adopted is being applied correctly. These are:
- Review your charges based on the information above, have a look at the information that Racing NSW has sent out and advise the NSWTA of anything that you either don’t understand or that appears incorrect.
- Fix up your stable returns to the extent that Racing NSW continues to use stable return information to calculate Workers Compensation premiums, it is crucial that trainers review what is currently on their list and remove any horses that have left their stable on a permanent basis.
- Consider your structure if you are an active and hands-on trainer, it may be worthwhile considering operating through a corporate structure to the extent that doing so will allow you (as the trainer) to be covered under Workers Compensation.