News & Security Advice

National

Security industry sub-contractors require their own insurance

At Ausure Macarthur we have been managing insurances for the  security industry and SPAAL members for over 12 years.

A common question we receive from those providing manpower and electronic security is “are my sub-contractors covered?”.

If you use sub-contractors in your security business, whether they’re sole traders or companies, you need to ensure that they have their own insurances. Typically, public & products liability and workers compensation. Let’s take a look at each separately.

Public & Products Liability

Public & Products Liability policies will exclude liability of sub-contractors. You will often be covered for your vicarious liability due to the actions of sub-contractors, however the sub-contractors themselves will not be covered.

For instance, you sub-contract crowd control security services for a national hotel contract to a regional security contractor. In the event that contractor causes injury whilst evicting a patron from a venue and a claim is brought forward, the sub-contractor will not find cover under your policy. You however may find cover if you are sued as well for the actions of your sub-contractor. For you to have any liability the claimant would need to demonstrate that you have been negligent in some capacity, but this may be an allegation that you did not ensure adequate training was being carried out, or perhaps they were working to your SOPs or wearing your uniform.

Whilst some underwriters will allow you to cover sub-contractors under your liability policy, usually only if they are specifically named on the policy, it is not recommended. Whether they work for you full-time or occasionally they are their own legal entity and liable for their own negligent acts and the costs associated with protecting themselves against claims. Also, any claims against sub-contractors named on your policy will affect your claims history and ability to negotiate competitive cover going forward.

So, you should ensure that all of your sub-contractors have a Public & Products Liability insurance policy, covering the activities they will be carrying out for you. You should sight their Certificate of Currency which confirms they have paid the premium. You should also have them note you as a “Principal” or “Interested Party” on their policy. This will provide a level of protection for you under their policy, where you may be sued due to the negligent actions of your sub-contractor whilst carrying out contract services for you.

Workers Compensation

If your sub-contractor is a company, they legally must have their own workers compensation policy. This will provide cover for workplace injuries sustained by their own employees – medical costs, rehab costs and loss of wages.

If your sub-contractor is a sole trader (or partnership) it is a little more complicated. Sole traders and partnerships do not qualify for workers compensation – that is, the sole trader or partners themselves. If they have employees, they must have a policy.

In some cases you will be liable for workplace injuries of these sole trader sub-contractors and you must include them in your own workers compensation declarations. Typically, if you pay them an hourly rate, if they are paid on a weekly or fortnightly basis like other employees, if you provide them a uniform & tools, if they are required to work regular & defined hours for you, they will be considered a “worker” under the Workers Compensation Act and you must include them in your own workers compensation declarations.

To determine if contractors are deemed workers, you can use the following test: http://workerstatus.workcover.nsw.gov.au/. Note this test is for NSW workers only, however the same principles generally apply to all other states as well. Contact us about other states and their requirements.

Where sub-contractors are liable for their own policies, you would be wise to have your sub-contractors submit a Sub-Contractors Statement – effectively, a declaration that the Sub-Contractor has paid all its obligations under the Workers Compensation Act, Payroll Tax Act and Industrial Relations Act. The Principal Contractor (i.e. you) may be liable for the payment of the workers compensation insurance premiums, the payroll tax and the entitlements of the employees unless the Sub-Contractor’s Statement is provided

Of course, there may be other insurance policies for you and your sub-contractors to consider. We recommend speaking with an insurance broker who will learn your business and provide tailored advice. At Ausure Macarthur, we can do just that.

Please do not hesitate to contact us on 1300 633 530 or www.ausuremacarthur.com.au with any questions.

SPAAL Member Insurance with AUSURE Macarthur – 5 Often Overlooked Insurance Policies

In business, anything can happen at any time. Someone can become injured, a disgruntled ex-employee might sue, your database may be compromised... and unfortunately, not everything will be covered by your basic business insurance policies.

Before you’re faced with skyrocketing expenses, major headaches and unplanned threats, find out what kind of insurance you may need that you have perhaps overlooked in the past.

SPAAL has partnered with AUSURE Macarthur to provide exclusive insurance services to members.

1. Management Liability insurance

Becoming more and more necessary, Management Liability insurance protects the company and the people who manage the company, such as the director/s and officers, against the risks and exposures of running the business – the intangible risks that you perhaps do not see.

The policy provides cover against allegations and acts of misconduct & legislative breaches; statutory fines & penalties; breach of duty; OH&S issues; unfair dismissal; sexual harassment and the like. It also protects a business against losses arising from dishonest acts of employees and third parties, including theft of money & stock and the costs of responding to an audit from the ATO, office of state revenue or other Government departments.

Management Liability is commonly overlooked because of a lack of understanding. It’s assumed that cover is provided in existing policies held by the company, such as a Business Package, Public Liability or Professional Indemnity policy and as the regulatory environment changes, directors are often unaware of their full responsibilities at law. Without sufficient protection, you could potentially risk losing not only your business, but your personal assets too. What does Management Liability Insurance cover you for?

  • Directors & Officers Liability
  • Covering the Directors and Officers (including where the company can reimburse the directors) for any claim alleging a Wrongful Act (negligence, breach of duty, misrepresentations, etc.) by a Director or Officer.
  • Employment Practices Liability
    Covering the Company for claims alleging employment breaches including wrongful dismissal, discrimination, harassment, deprivation of career opportunity, breach of contract, etc.
  • Statutory Liability
    Covering fines & penalties imposed under an Act of Parliament, i.e. WHS fine.
  • Crime / Fidelity
    Covering the company for theft by its employees (and sometimes) third parties, including money, stock and other property.
  • Tax Audit
    Covering the external costs in responding to a taxation audit and often payroll tax audits, workers comp audits and the like.
  • OH&S Defence Costs
    Covering the costs incurred to defend an OH&S claim or attendance at an investigation into your workplace health & safety.
  • And many other risks

2. Cyber Insurance

If you have a website for your business (especially an e-commerce website) or you store sensitive customer information on your computers or laptops (think personally identifiable information like names, addresses, dates of birth, ID documents, TFN, medical records, etc.), or your network is fundamental to your ability to trade, you should think about holding a Cyber policy.

Cyber Insurance protects your business in the event of a cyber-attack. Whether your website or network is hijacked & defaced, or held to ransom, or your sensitive data & client information is stolen, the costs of repairing the damage and the legal costs associated with a data breach can be devastating including penalties of up to $360,000 for individuals and $1.7 million for organisations for breaches of privacy legislation.

Effective 22 February 2018, the Privacy Act 1988 includes mandatory data breach notification requirements. In summary, the Privacy Amendment (Notifiable Data Breaches) Act 2017 requires all relevant organisations to:

  1. Report the data breach to the Government's Privacy Commission; and
  2. Notify all affected customers

Cyber Liability insurance protects your business from the impact of cyber threats and data breaches, specifically dealing with the costs & expenses associated with a data breach and any insurable fines that may be imposed for breaches of privacy legislation.

In addition to cyber-attacks, the policy will also respond to your legal liability for damage caused to third parties, i.e. you inadvertently send a virus, plus loss of your business income die to a cyber event occurring. Also, cover for cyber crime is available, i.e. social engineering and phishing scams which are becoming more and more common (think of an email sent to your accounts person pretending to be from you requesting the transfer of money to a third party account).

Cybercrime is a growing threat to many businesses in Australia, making it important to ensure your business is taking the right steps to safeguard it from potential attacks.

3. Business Interruption

Most small business owners like to prepare for unexpected events by insuring their physical assets, such as their premises, contents, stock, machinery and equipment. But have you thought about what would happen if you had to shut your doors for a few days, weeks or even months due to an insurable event, like fire, storm or theft?

Would your business survive? How would you continue to pay for things like rent, utilities, staff wages and other business expenses?

Business interruption insurance is designed to provide compensation for the financial impact of these events and help place your business in the same financial position it was before the chaos.

It is an important form of cover for small business owners, as the slightest hiccup can send your business into turmoil and cause chaos to your finances. It should definitely be considered by any business that relies on their premises to earn revenue, for instance: manufacturers, retailers, hospitality establishments and the like.

What’s typically covered?

  • Loss of turnover or gross profits due to damage to your own premises (or a suppliers’ premises) to help pay for ongoing operating expenses
  • Additional increased costs of working
  • Business relocation costs
  • Training costs for operators of replacement machinery
  • Claims preparation costs

4. Trade Credit Insurance

Trade credit insurance protects your business from bad debts, including unpaid invoices caused by customer insolvency or default. If you trade or sell goods on credit terms, you’re at risk of bad debt or non-payment by customers. This can disrupt your cashflow and leave you greatly out of pocket.

Trade credit insurance works by insuring you against your buyer failing to pay, so every invoice with that customer is covered for the insurance year. It’s used by businesses of all sizes to protect both international and domestic trade. Businesses also use credit insurance to help them secure finance and working capital with banks, explore new markets with confidence and attract new customers with favourable credit terms.

Depending on the policy, trade credit insurance cover can be either:

  • Comprehensive cover: Protecting your entire credit portfolio, including domestic and export customers
  • Excess of loss: Suitable for businesses with strong internal credit management processes who want cover for exceptional loss across their entire portfolio.

5. Corporate Travel

If you &/or your employees will be travelling for work, be it intrastate, interstate or internationally, you should consider an annual Corporate Travel policy. You will pay one annual premium and be covered for all trips taken during the year. Further, directors (and accompanying family) and quite often senior management’s private leisure travel will also be included.

The benefits of a Corporate Travel policy will usually be far greater than an individual travel policy you may obtain for each trip and you will find it more cost effective.

Cover will include cover for:

Weekly personal accident & sickness benefits in the event of accident or sickness whilst travelling

  • Medical expenses including hospital stays and evacuation costs
  • Lost baggage, personal property, money, documents, credit cards, etc.
  • Loss of deposits and cancellation costs
  • Kidnap, detention, extortion & ransom
  • Hire car excess expenses (no need to buy a cheaper excess)
  • Personal liability
  • Life Insurance
  • Travel & Emergency Assistance

By having the right insurance in place, a business can avoid a major financial loss due to a lawsuit or catastrophic event.

Call with us to find out what forms of insurance are advised for your type of business and put those plans in place as soon as possible.

Ausure Macarthur: 1300 633 530
www.ausuremacarthur.com.au

 

Ausure Insurance Brokers Macarthur Pty Ltd ABN 89 145 758 989 is an Authorised Representative of Ausure Pty Ltd T/As Ausure Insurance Brokers ABN 94 096 971 854 AFSL 238433. Any advice implied in this advertisement is general advice only. We have not taken into consideration your needs, objectives or personal circumstances. Before purchasing any insurance policy you should consider the Product Disclosure Statement or contact the Insurance Broker, Jarrod O’Brien on 1300 633 530.

FWO employer guide to family and domestic violence

The new guide helps employers understand their responsibilities towards employees experiencing family and domestic violence. It also helps them develop a workplace response to managing family and domestic violence.

Download Guide

National Centre for Vocational Education Research Report – ‘Do course durations matter to training quality and outcomes?

The National Centre for Vocational Education Research (NCVER) has released the attached report entitled ‘Do course durations matter to training quality and outcomes?

NCVER Report

 

FWO Penalty for underpayment of Sydney security guards

The Fair Work Ombudsman has secured a penalty of $39,090 against a former Sydney security company operator for underpaying dozens of security guards.

The Federal Circuit Court imposed the penalty on Sydney man John Lohr, who formerly operated Brookvale-based companies Safecorp Security Pty Ltd and Safecorp Security Group Pty Ltd. The companies are no longer operating.

Mr Lohr was involved in the companies, underpaying 45 security guards employed on a casual basis at various sites a total of $35,540.84.

The underpayments were largely the result of the guards being paid flat hourly rates of $20 to $25, which at times did not cover their casual loadings, weekend, night work, overtime and public holiday entitlements.

The Court has ordered that the penalty be used to repay affected guards.

Fair Work Ombudsman Sandra Parker said employers who pay unlawfully low flat rates risk facing court action.

“The use of low, flat rates that undercut lawful minimums has been a persistent problem in the security industry and employers in this sector need to get the message that it is completely unacceptable,” Ms Parker said.

Judge Nicholas Manousaridis found that Mr Lohr was aware an Award applied to employees of the Safecorp Security companies but decided to pay the employees flat rates, not knowing whether the rates would be sufficient to meet Award obligations.

This resulted in underpayment of the penalty rates as well as underpayment of casual loadings and a broken shift allowance under the Securities Services Industries Award 2010. The biggest underpayment of an individual employee was $9,756.

The Fair Work Ombudsman discovered the underpayments when it investigated complaints lodged by employees. Pay slip laws were also contravened

Judge Manousaridis described Mr Lohr’s decision to pay flat rates as “reckless” and said there was no evidence he had taken corrective action, exhibited contrition or cooperated to any significant degree with the Fair Work Ombudsman.

“The penalty should be set to signal to employers generally the importance of complying with the Fair Work Act and with complying with awards that cover them and their employees,” Judge Manousaridis said.

New Award Pay Guides from 1 July 2109

The pay guides have the current minimum pay rates for full-time, part-time and casual employees in an award. They apply from 1 July 2019. They also include all the monetary allowances and the most frequently used penalty rates for each classification.

Security Services Industry Award 2010 [MA000016] Pay Guide

Transport (Cash in Transit) Award 2010 [MA000042] Pay Guide

Electrical, Electronic and Communications Contracting Award 2010 [MA000025] Pay Guide  

New Security Award Pay Guides from 1 July 2019

The pay guides have the current minimum pay rates for full-time, part-time and casual employees in an award. They apply from 1 July 2019. They also include all the monetary allowances and the most frequently used penalty rates for each classification.

Security Services Industry Award 2010 [MA000016] Pay Guide

Transport (Cash in Transit) Award 2010 [MA000042] Pay Guide

Electrical, Electronic and Communications Contracting Award 2010 [MA000025] Pay Guide  

Fair Work Ombudsman – Commonwealth Games security guards underpaid

Ten security guards from the 2018 Gold Coast Commonwealth Games have received more than $24,000 in unpaid wages, following a Fair Work Ombudsman (FWO) audit of security providers for the event.

The FWO conducted the audits in response to requests for assistance from security guards who were concerned about receiving their correct pay and entitlements.

Security arrangements for the Commonwealth Games were contracted out by the Gold Coast 2018 Commonwealth Games Corporation to four principal providers who in turn used sub-contractors to provide security for the 11-day event. This formed what is known as a labour supply chain.

Fair Work Ombudsman Sandra Parker said the FWO audited nine employers providing security services to the games, including principal providers and sub-contractors, and found none were compliant with workplace laws.

“The consistent issue we discovered was guards not being paid until well after they had completed their shifts. In some instances, guards had to wait months to get paid properly. This was a breach of employers’ obligations under the Fair Work Act to pay their employees on time,” Ms Parker said.

“The delays were caused by shortcomings in the electronic record keeping system used to record work hours, which meant guards’ shifts had to be manually reconciled before they could be paid.”

The FWO also found two security providers failed to properly pay overtime, weekend and public holiday penalty rates, which led to the underpayments for ten guards. Three of the audited security providers also did not keep proper employment records or provide correct pay slips.

In addition to recovering lost wages for affected guards, the FWO issued: four Infringement Notices, totalling $12,600 in penalties for record-keeping and pay slip breaches; contravention letters to all the audited businesses that required them to take action to rectify their non-compliance; and one Formal Caution, putting a security provider on notice about possible legal action for any future breaches.

“Large-scale events can provide challenges for some businesses to ensure they are properly meeting their lawful workplace obligations. It’s vital they recognise and plan around this complexity to ensure their staff are paid in full and on time,” Ms Parker said.

“Ensuring workers in labour supply chains get their correct pay and entitlements is a priority area for the FWO and businesses can expect more compliance and enforcement action in this area.”

Minimum Wage Review 2018-19

The Fair Work Commission has announced a 3.0% increase to minimum wages following its 2019 Annual Wage Review.

The increase applies to the base pay rates from the first full pay period starting on or after  1 July 2019

SPAAL will provide members with  the new Award pay guides when published by the Fair Work Commission.

ATO Tax deduction information for security workers

Designed to publish on your company website or display in staff rooms, this handy one-page poster outlines what security workers can and can’t claim at Tax Time.

Security workers work-related expenses poster

The following how-to guides describe what steps security workers need to take to correctly claim a range of common deductions. They are useful references to have on-hand not just during Tax Time but throughout the year, and help workers keep good records when making work-related purchases.

National Labour Hire Registration Scheme recommended for the Security Industry

The Migrant Workers’ Taskforce was established as part of the Government’s response to the revelation of significant wage underpayments in certain industry sectors.

The Government has accepted in principle the establishment of a National Labour Hire Registration Scheme for the security industry which was named as one of the four high risk industry sectors. The report's recommendations include extending criminal penalties for serious breaches of the Fair Work Act.and accessorial liability rules currently in place for franchisors be extended to "also cover situations where businesses contract out services to persons".

The National Labour Hire Registration Scheme would be an industry-specific, ‘light touch’ regulatory model to provide government with an important tool to better direct the enforcement of current laws by the existing regulators of labour hire operators. It would act as a form of negative licensing to prohibit labour hire businesses that contravene relevant laws from operating. Critically, it would complement other new and existing government measures that address the drivers of workplace exploitation.

The objectives of the Scheme should be to:

  • gain visibility and accountability of labour hire operators operating in high-risk sectors
  • extend accountability to hosts
  • provide a means for government to encourage compliance and behavioural change
  • reduce exploitation of vulnerable workers by labour hire operators and in supply chains.

Migrant Workers’ Taskforce Report

Back to All News