ACC Levy - Layman's Guide for ACC proposals 2005/06

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Your ACC company level is set based on the industry group you represent NOT your employees occupation - there are 17 industry divisions and 129 risk groups for employee level and 41 groups for the pre-1999 risk levy which covers payments for those still being compensated based on accidents etc pre 1999.

Your ACC company level is set based on the industry group you represent NOT your employees occupation - The classification is closely based on the Australia & New Zealand Standard Industrial Classification System (ANZSIC) which is under review for implementation by ACC in 2007/08. If you have taken up either a Partnership Discount Plan or a full Self Cover Plan with ACC and are an accredited employer your levies will be reduced by between 39 and 90% BUT you will be covering a lot of employee injury costs yourself. An amendment to the Partnership programme is proposed.

The ACC funding policy is to gain sufficient funds during a year to pay all expenses and claims with a 15% margin to account for past claims which will be paid over several years. For the 2004/05 FY ACC claims were forecast to be at average of $13,035 each. Between Jun 2001 and Dec. 2003 the number of claims increased from just less than 6000 to over 7000. Currently Workplace Safety Practices schemes - businesses with a plan to reduce risk of and actual harm - provide a discount of 0.03 per $100 payroll. An additional 0.02 per $100 payroll is added to all employers to fund the discounted employers.

In 2003 ACC introduced a Workplace Safety Evaluation programme - to allow for INCREASES to levy when employees are NOT being protected from harm and risk of harm by employers. When bad accidents occur ACC can require a Safety audit and for employers who will nor cooperate ACC may increase your levy by 50%.

Costs to Construction small businesses (SME)

In 2003 small businesses had 101,036 claims or one for every 7.4 workers at an average cost of $620 each claim. For agriculture, forestry CONSTRUCTION, motor trades and road freight industries there was 1 claim for every 4.9 workers in2003 - Construction had the largest number of claims in that sector with 21, 280 claims costing $13.5 million in 2003 alone.

ACC Reserves

ACC has received higher than expected levy income in the 2003/04 year leading it to have higher reserves than needed (no news about this years - 2004-05 - levy income yet!). ACC propose to maintain this year's rate for next year - average of $1.21 per $100 of payroll.

Proposed Small Business Process

ACC has proposed a scheme for small businesses (under 20 employees) and self employed in targeted high risk industry classes (including Construction) to charge a higher levy for those that do not have good safety plans and records and a lesser levy for those that do. The scheme will separate SMEs into two groups - those employers who identify potential and actual hazards in the workplace AND take all practicable steps to control or eliminate them and those who do not.

ACC proposes that employers would complete a one page document "describing the work hazards identified and showing the measures to eliminate or manage the hazards" and apply for the reduction to ACC - they indicated that the expected cost to SME would be $100. Employers would give ACC auditors written approval to access the employee workplaces so that an audit can be conducted. A course in hazard management - SITE SAFE?? - may also comply. The maximum reduction to levy would be 10% of work accident cover levy.

If your small company is classified under 'construction' industry group you could be affected - The submissions on the consultation document closed 16 Sept, ACC Board will consider submissions and report to the Minister in October. Minister reports to cabinet Nov/Dec. Cabinet consider reports from ACC, Minister of ACC, Dept of Labour and Treasury and decides on levy rates effective from 1 April 2005 - Watch this space for decision early January (subject to Cabinet deliberations).

If you want the full ACC proposal - 315 kb size pdf file (67 pages) - contact Gretchen at office@nziqs.co.nz.