Purchasing an existing business

Succession applies where the acquiring employer is associated with the former employer. As a result of this association, the former employer's premium rate and industry rate is applied to the acquiring employer's new policy.

Example: Joe and Sam have a legal partnership, which owns a fishing business. Joe acquires the fishing business as a sole trader, because Sam no longer is interested in the business. This means Joe and Sam are no longer in partnership. Because Joe has purchased the business, the entity that owns the business has changed from a partnership to a sole trader. Joe, as the sole trader, was associated with the former employer (he was one of the partners), so succession would apply.

When an employer acquires an existing business and has not previously been associated with that business, the employer does not acquire the former employer's premium rate and the industry rate. Instead, the industry rate for WorkCover Industry Classification (WIC) for that business will be applied. The premium rate is fixed for an 18 month period at the industry rate for the employer's business activity, which allows the business to develop their own claims experience. After this period of time, the premium rate would be calculated by using the Experience Based Rating (EBR) system.

To determine if an employer has previously been associated with the business they have acquired, we may consider any relevant circumstance including whether:

• the new employer or any partners, officers or shareholders of the new employer were or are owners, partners, officers or shareholders of the previous employer or its related body corporate
• the new employer is or was a related body corporate of the previous employer.

What if I have a current policy?

If you have current policy and acquire another existing business with the same WorkCover Industry Classification (WIC), succession will apply. Therfore, the acquiring employer’s premium rate is influenced by the premium rate on the previous employer’s policy and the relative size of the previous and current policies.

If you acquire another existing business with a different WIC, where you have previously been associated with that business, succession will apply. The WorkCover premium rate will be transferred to the employer and is fixed for 18 months. After 18 months, the rate is calculated by using the EBR formula.