Protecting Your Workforce Overseas: How Far Does Your Workers’ Compensation Cover Reach?

One of the biggest impacts of the COVID pandemic has been a widespread shift to remote working. While this change was introduced by restrictions in response to health and safety risks, many businesses are choosing to continue offering remote, flexible and hybrid working arrangements to help employees make positive choices for work/life balance.

Keeping employees protected

While some workers are opting to spend more time working from home, others are taking advantage of having the freedom to work from anywhere to spend time living interstate or overseas. But this comes with a number of practical questions for employers, including what happens if an employee is injured while going about their work? Will an existing workers’ compensation policy still apply if they’re working from home, interstate or overseas?

What the legislation says

An employee will be a ‘worker’ if they’re under a contract of service with an Australian entity, as defined by the legislation. While each Australian State or Territory has their own workers’ compensation legislation, generally there are three tests used to define the location where an employee is a ‘worker’:

1. The State in which the worker usually works in that employment – this means employees working from home in the same State or Territory where they usually work should continue to benefit from cover under existing workers’ compensation insurance cover.
2. If no one State is identified by (a), the State in which the worker is usually based for the purpose of that employment.
3. If no one State is identified by (a) or (b) the state in which the employer’s principal place of business in Australia is located.

Timing matters

For workers relocating overseas or interstate for six months or less, you may not need additional workers’ compensation insurance. But even when employees are working from a different country for a short time, it’s still important to look at local workers’ compensation requirements to make sure your policy complies. Arranging local workers’ compensation coverage or an extra territorial workers’ compensation policy can help to cover any gaps in cover.

Arranging treatment and payment

For an employee to be covered under a workers’ compensation policy, their claim must arise from an injury sustained out of or in the course of their employment. Treatment must be considered ‘reasonably necessary’ by workers’ compensation legislation and costs will be paid by the insurer in line with the prescribed amount for that jurisdiction.

If an employee is being treated for an injury in a different country, your insurer may not be able to pay the provider directly. may need to arrange reimbursement from the insurer and there may be a ‘gap’ between their out-of-pocket cost and costs covered by the insurer.

Travel insurance: a solution for temporary cover

Another way to insure workers based overseas for the short-term is your Business Travel or Personal Accident policy. This can be a good alternative to workers’ compensation and can also cover an employee for costs of an illness or injury even if it’s not work-related.

While providing this type of cover would not be a way to meet or replace Workers Compensation insurance obligations, it may be a way to provide cover as an alternative form of insurance for key expenses such as medical costs.

Things to consider

To help you weigh up these different options for insuring your remote workers, here are five things to consider:

• How many employees are working remotely? – is there a way to estimate the number of employees who will be working overseas and needing insurance cover?
• What are their plans? – how long are employees planning to be based overseas?
• What are the likely costs of medical care? – is there an equivalent of Medicare available locally to cover costs?
• What can your insurer cover? – will your business travel policy insurer agree to include cover for remote workers and for how long?
• Who will pay?

Looking for the best insurance solution for your remote workers? We can support you with extensive data and insights on workforce mobility and a range of workers’ compensation solutions.