Group Income Protection Insurance, also known as Group Salary Continuance Insurance, is an essential risk mitigation strategy for employers. It ensures that you can meet your legal obligations and avoid potentially costly damages and reputational harm. It also helps you do the right thing by your employees if they are seriously ill or injured.
As any employer knows, staff absenteeism is simply an inevitable fact of workplace life. Each year, 2 out of every 110 working age Australians are hospitalised due to injury* and 45% of Australians experience mental health issues during their lifetime**.
The biggest causes for injury claims are falls (41%) and transport crashes (12%).
But what happens if an employee is absent for an extended period of time and seems unlikely to be able to return to work and fulfil their role? What are your legal obligations as an employer?
A complex legal process
It’s important to understand that you can’t simply decide to terminate an employee if they have been absent for a prolonged period and show no sign of being able to return to work soon. Whether their absence is due to injury or illness – including poor mental health – there is a complex process you must follow before you even consider termination. This process is governed by a complex framework of employment law, anti-discrimination law, privacy law, and Occupational Health and Safety and WorkCover regulations (if applicable).
Your obligations as an employer
Employers have a duty to ensure the health and safety of employees to the extent that it is reasonably practical to do so, including their psychological health. This includes assessing if an employee is at risk if they return to work.
Employment laws exist to prevent discrimination and unfair dismissal. Before terminating due to injury or illness, you must be satisfied that the employee is unable to perform the inherent duties of their own occupation. You must also demonstrate that it would be an unreasonable burden to you, as an employer, to bring them back to work with temporarily modified duties or a modified working environment.
This process is not only time-consuming but fraught with legal pitfalls. As one example, you will need your employee to provide written consent for their medical records, which they could be unwilling to do. It is also important to seek professional advice as to the format and content of any medical reports obtained to ensure that they comply with legal obligations. Reports and professional support from employment law advisors can be costly – at least $1,500 in professional fees and many cases are closer to $5,000 or more.
How Group Income Protection Insurance can help
General damages awards in discrimination claims are usually a minimum of $10,000 and can be more than $100,000. This does not take into account actual economic loss for the employee that may be awarded. The cost of an effective Group Income Protection policy is often less than half of one percent of a payroll but can protect you against such costly penalties and damaging actions, making it an incredibly cost-effective risk management strategy.
Working with an insurer gives employers free-of-charge access to medical specialists, employment law experts, and disability managers with experience in return to work programs, including capability assessments. It also gives your employee a financial incentive to comply with requests for medical records and return-to-work assessments. Early intervention and proper processes are also proven to return employees to work sooner and more effectively.
Ultimately, Group Income Protection Insurance protects you as an employer while ensuring the best possible outcomes for both your business and your staff.
Find out more about Group Income Protection Insurance.
If you could use financial advice on Group Income Protection Insurance or other financial advice or insurance needs we are always here to help. Call us anytime on (02) 8268 2900 for an obligation-free chat.
*SOURCE: Australian Institute of Health and Welfare. Trends in Hospitalised Injury Australia 2016-2017 (17 October 2019).
**SOURCE: Australian Bureau of Statistics (2009). National Survey of Mental Health and Wellbeing: Summary of Results, 4326.0 and referenced by the Black Dog Institute.
