Succession

Succession, for the purpose of WorkSafe Injury Insurance is where one workplace inherits the premium history, including the associated claims costs, of another workplace.

The two concepts used to identify the existence of succession are “predominant activity” and “relationship of control”. 

Succession applies when the predominant activity is carried on in substance and in succession from Workplace A (predecessor) to Workplace B (successor).  Succession will not apply if it is established that the new employer is unrelated to the previous employer.  The onus is on the employer to prove that there is no relationship between them and the predecessor employer.

Note: Succession applies:

  • where there is a continuation of predominant activity:
  • even if the activity may have been carried on at a different location;
  • even if the activity may have been carried on by a different employer;
  • even if the predominant activity is not the predominant activity of the new workplace (Workplace B);
  • irrespective of whether part of the former workplace ceases or whether part of the activity continues to be carried on by the former workplace;
  • even when there is a change in legal entity or legal status;
  • when a relationship of control exists (directly or indirectly).

Taking over existing workplaces or starting a business (Succession)

Succession occurs when one workplace inherits the claims history of another workplace. Succession can affect your premium. If you take over part or all of another employer’s business and you continue the same activity for the most part, you may inherit the claims history of that employer unless you can demonstrate that you, the new employer, are not associated with or connected to the previous employer.

If it is demonstrated that the new employer is not associated with or connected to the previous employer the claims history of the previous business will not be applied to the relevant workplace of the new employer. Thus succession is not applied if there is no relationship of control – i.e. new employer is at arm’s length to previous employer.

Note: Employers can not be at arm’s length if a “relationship of control” exists between them

  • at any time during the test period; or
  • since the start of the test period

The test period is made up of both the Predecessor period and the Successor period.

  • Test period for “predecessor”

From one year prior to the beginning of the policy year in which the transfer took place to the end of that policy year. i.e. 2 years

  • Test Period for “successor”

From beginning of the policy year in which the transfer took place to the end of the following policy year. i.e. 2 years

There are specific controlling interest tests which establish if a relationship of control exists. Controlling interest includes both direct and indirect controls. They consider interests held directly by an entity and indirectly by an entity’s associates.

If you require more information about succession rules, contact your WorkSafe agent.

Quicklinks