ACC Changes Proposed

ACC are proposing a raft of changes that will impact employers. Below are some of the key changes with our position on each one. We will be submitting our views formally alongside another 20 recommendations we would like ACC to reflect on.

We welcome your thoughts on this and please respond directly to martin@managecompany.co.nz

Levy Costs

ACC Position: there is a myriad of changes presented in this space.  In summary:

• Work Levy: average 6% decrease in 2022 / 23, then increasing over the 23 / 24 and 24 / 25 years to match what we are paying now.  Please note this is an average decrease.  Several of the 539 levy codes will actually increase - in fact 243 levy codes or 45% will increase.

• Earners Levy: what workers’ pay via their payroll tax.  This is increasing in three increments over the three years – 5.0%, 9.9%, and 14.9%.

• Motor Vehicle Levy: paid via registrations and will increase in three increments over the three years – 5.5%, 13.0%, and 21.2%.

Manage Group Position: We understand that claims costs go up and support the need for an increase in levies.  Our concern, however, is that the proposed increases impact the employer more so than any other party.  The work levy reduction in the first year will not offset the overall rise experienced through the changes in the other two accounts.  ACC has argued that the earners account is actually funded by the worker not the employer.  Although that is true, it is naïve to think that this will not impact the wages payable to workers.

Experience Rating Increase

ACC Position: ACC has recommended that the penalties increase from a maximum of 75% to 100%.  The rationale given for this is not to cover an increase in costs – that would contradict the decrease proposed for the Work Account.  Rather, ACC holds the position that it should drive change in employer attitude to minimise serious harm and fatalities (see below re the Fatality Modifier).  ACC’s position is that increasing the overall penalties will force employers to take more ownership.

Manage Group Position: ACC is moving too far into the WorksafeNZ space by taking a regulatory role in driving compliance.  This is not ACC’s mandate irrespective of whether penalising employers is an effective way to drive change. 

That said, we do not believe it is an effective way to drive change based on several factors.

• Employers do not understand the nuances of Experience Rating well enough in order for change to occur

• ACC is poor at supporting employers with acute and timely claim management

• ACC does not place the employer in a position of strength when it comes to challenging claims that are challengeable under the legislation (repetitive strain, pre-existing, re-aggravation, motor vehicle related, fictitious claims, ACC not following due process).

• ACC’s auto acceptance of claims and onus of proof places employers on the back foot with disputes and challenges

Please note, we do believe and support that employers should be taking ownership over their claims and better still, injury prevention space.  We believe ACC may be better placed educating employers first with the aim to reducing workplace injuries, not penalising employers who have good practices in place, but are penalised through the employees own poor behaviour.  In addition, why would ACC not increase the discounts available to good performing employers which are currently capped at 50%?

Fatality Modifier

ACC Position: The Fatality Modifier, or death penalty will be applied when there is a workplace death as a result from accident.  The penalty will be an additional 20% on the levy payable for the first year and an additional 10% for the second year.  ACC’s argument is the same as the increase in Experience Rating as discussed above.

Manage Group Position: we do not believe this is ACC’s role to play.  ACC is not a regulatory body like Worksafe NZ.  ACC is a Crown Agency that does and should not have this power. 

ACC has been clear in its rationale which does not include covering an increase in costs in one of the 5 levy accounts.  This is a direct penalty placed on those employers who have a fatality, regardless of any action taken by WorkSafe or other authorities.

Prime Contractors

ACC Position: Realign employers so that they are treated consistently across all trades sectors.  This will mean a decrease in levies for a large number.  Prime contractors typically do project management of jobs rather than being on the tools.  They typically subcontract their work out to ‘subbies’.   Historically, employers either sit under a levy code that covers property development or they sit directly under the levy code of that profession i.e. brick laying.

Manage Group Position: we strongly agree with this and is something we have submitted on in previous years.  Employers who use subcontractors for the physical aspect of their work have a substantially different risk profile that should be akin to the contraction project management related levy code.  ACC’s proposed change does not go quite that far, however, the reduction is material for most employers. We support this recommendation.

Credit Interest (Use Of Money Interest)

ACC Position: The current rate is set at 6% and ACC wishes to change this to align to the Three-Year Government Bond rate.  This is currently set at 0.925%.

Manage Group Position: Use Of Money Interest is an area we have challenged ACC on, on numerous occasions.  The reality is, ACC rarely is in a position to have to pay this is interest on the basis of how it interprets the legislation.  Realistically, we should be able to take the position that if ACC has the use of an employer’s money for an extended period of time, that it pays for this privilege.  Yet, it does not.  ACC interprets the criteria in a very tight way and based on our understanding of the legislation, would result in ACC not having to pay interest in most cases if not all.  This is compared to three years ago when ACC had a more liberal view of the interpretation. 

Our recommendation is that ACC reverts back to the interpretation it held pre 2020 and recognises that when it has the use of employers’ money, it pays for this use.

Martin Wouters

martin@managecompany.co.nz

0800 RISK NZ (0800 747 569)