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Making ACC levy rates fairer for self-employed

16 August 2006

Law change planned to make ACC levy rates fairer for self-employed

ACC Minister Ruth Dyson has announced plans for a law change to treat self-employed and employers the same when setting ACC levy rates.

Legislation will be introduced shortly to amend the Injury Prevention, Rehabilitation and Compensation Act 2001, to allow a merger of the ACC Self-Employed Work Account and ACC Employers’ Account, effective from 1 April 2007.

"The reason the accounts were separated in the first place was due to privatisation – that is not on the agenda anymore. This Labour-led government is committed to a fair and simple ACC scheme," Ruth Dyson said.

"The account merger will ensure that ACC levies paid by businesses are fairer, as they will be based on injury risk rather than business structure. It will also ensure that the levies are more stable, for both self-employed and employers.

"The proposed law change will allow a greater focus on reducing the risk of injury based on industry and occupational type rather than on business structure, and encourage industries to better co-ordinate health and safety across their workplaces," said Ruth Dyson.

Under the present levy structure, levy payers are allocated to the Self-Employed Work Account or Employers' Account on the basis of their business structure derived from tax information.

"Differing levy rates have resulted for businesses carrying out similar activities entailing similar risks. For example, a self-employed plumber currently pays a different levy rate to a sole-trading plumber who has set themselves up in a company structure, even though they face the same risk of workplace injury.

"Small businesses particularly have cited levy instability creating problems for their business cost planning. This Labour-led government acknowledges this is unfair, and we are moving to remove these inequities," said Ruth Dyson.

BACKGROUND

The Employers’ Account is funded by employers to provide entitlements under the Injury Prevention, Rehabilitation, and Compensation Act 2001 (the IPRC Act), for employees/shareholder-employees who suffer work-related personal injuries.

The Self-Employed Work Account is funded by self-employed people to provide entitlements to those injured in self-employment. This Account was created in 1999 when it was compulsory for employers to purchase workplace cover from the private insurance industry. The self-employed could choose to stay with ACC.

The merged Account will still maintain the existing industrial classification and levy risk group system. This system groups industry activities according to injury risk and allocates costs proportionately to industry groupings with higher injury risk. There are 127 levy risk groups.

CoverPlus Extra for both self-employed and shareholder employees will be retained. CoverPlus Extra provides for an agreed level of weekly compensation for self-employed and shareholder employees, in the event of injury.

ENDS


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