Solving the 5 most common problems in automatically calculating workers compensation payments
Updated: Feb 14
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
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
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.
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
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.
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
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.
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
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.
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.
Frequently Asked Questions
What is the purpose of automatically calculating workers compensation payments?
The purpose of automatically calculating workers compensation payments is to ensure that employees receive the appropriate amount of compensation in a timely and efficient manner. Automated calculation of workers compensation payments can reduce the risk of errors, save time and resources, and ensure that employees receive the support they need.
What are the considerations when implementing an automatic workers compensation payment system?
A workers compensation platform should be properly integrated with other systems, including payroll and HR management. There should also be the right user training and support in place to help the team understand.
What are the benefits of automatically calculating workers compensation payments?
Benefits include reducing risk of errors, improving data management, and improved customer satisfaction.