Solving the 5 most common problems in automatically calculating workers compensation payments


So your internal processes have been correctly followed and you have recorded an incident in your

WHS Software, captured the details of the injured worker and a claim for workers' compensation has

been lodged. But now that the claimant needs to be paid, you have two options.


1) Grab a piece of paper or spreadsheet and work out all the details manually

2) Automate it


Number 2 sounds easy when you write it in two words, but in reality, very few systems can actually

do this for you. Luckily, I work for a company that has been automating the calculation of incapacity

payments for 20 years, so for those of you lucky enough to have a robust payroll system like SAP, here is

how SafetySuite WHS Software will solve the 5 most troublesome issues for you.


The accurate and automated calculation of incapacity payments requires the ability to do these 5

things well:


1. Provide automated access to Payroll Results data to derive PIAWE

2. The ability to alter leave balances

3. Obtain accurate daily time data for hours worked

4. Configure Jurisdictional, EBA and other complex rules for those tricky circumstances that

rarely come up (but are wickedly complex when they do)

5. Retrospective Calculations


Let’s start with the first one and work through the list

1 - Automated Determination of PIAWE

If you jump onto any Workers Compensation web page that tells you how to calculate PIAWE they

will casually say you just need the last 52 weeks' earnings for the employee and then exclude certain

components. Sounds easy until you realise that you now have to get a member of the payroll team

to run that report manually and then determine which jurisdiction the employee claim relates to and

understand what those state-based rules say about what to include/exclude (because they are all

different) before you get your PIAWE value. For most companies, this is a completely manual and

frustrating process, especially in very large organisations where there are multiple claims of this

nature. Without deep integration between your Payroll and WHS Software systems, it will always be

a largely manual task.


The Solution: SafetySuite directly interrogates the SAP payroll results table and compares the data against the

configured jurisdictional rules and automatically calculates PIAWE in less than a second.


2 – Update and Manage Leave Balances

In our example, your injured worker was originally on sick leave for three weeks before the claim

was lodged. Now you need to recredit those 3 weeks of sick leave, create new wage payments for

those three weeks as Workers Compensation, and perhaps swap out a provisional Workers

compensation entry with actual workers comp when you get a valid medical certificate from the

employee. This is usually a set of manual notes or instructions to the payroll team to create these

manual entries and reversals. And don’t forget that Workers Compensation is paid out at a different rate to the sick leave. You need to understand that and make decisions around recouping the

overpayment.


The Solution: SafetySuite has a fully featured Absence Conversion process integrated into your SAP Payroll

solution. Simply add in the medical certificate as a Workers Compensation absence for the whole

period of the injury and the system will make all the accrual adjustments and reversals

automatically. It will also recalculate the difference between the sick leave and workers comp

payments automatically for you.


3 – Obtain accurate time data for hours worked

To correctly calculate payments for a person with partial incapacity you need to know what hours

they have actually worked in the period. Many payroll systems will only receive summarised data,

such as “Jane worked 12 hours this week”. No details as to what hours she worked on each day.

This is critical data for the correct calculation of her incapacity payments, as each day has to be

individually calculated.


The Solution: With SafetySuite’s WHS Software and SAP, detailed daily data can be received from the rostering or timekeeping system so that SafetySuite can examine each day individually to use actual daily data

for the determination of CWE, a key element to be combined with workers compensation payments.


4 – Those tricky rules that can fall through the cracks

If you work in the industry, you know the types of tricky rules and exceptions I’m talking about. It

might be that the period defined by the state regulator is different from your pay period, and your

employee also works on a night shift which not only crosses days but also pay periods as well. Or

you pay your incapacitated fortnightly workers a week in advance and a week in arrears and then

need to make several manual adjustments when the actual work hours are presented. The list goes

on.


The Solution: Complex configuration within SafetySuite supports all the trickiest rules and exceptions that we have seen in the last 20 years, and we have seen a lot of them! Once configured, the system will interpret

the problem and solve it even if you were not even aware the exception existed. So many errors are

made in this area where claims managers are either not aware of the rule, or it's too hard to work

out and so inaccurate payments are made in order to get it in before the pay run.


5 – The new EBA is retrospective back to last January

You may have been paying your injured worker correctly for the last year, but now the EBA has been

renegotiated and the employee needs to get an additional $1.23 per hour as of last January. And

the shift penalty went up as well, so that will affect the last 40 weeks. Break out the manual report

and calculator and work out what needs to get paid and when. Don’t forget superannuation. And

like some of our customers who have hundreds of open claims, this would be a massive undertaking

to get right if done manually.


The Solution: Just enter the new award value with an effective date of last January and do the same for the new shift penalty. That’s it. Now the system knows what the rate should have been, it will automatically

recalculate everything for you, looking at the rate change impact of each day in the last year on CWE

etc, and bring all relevant adjusted payments into the next period.


Fully automated Workers Compensation payments. It could not be easier.