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MARCH 2012
Employer wins appeal against hefty workers' comp premium hikes


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Victorian employer United Petroleum has successfully appealed against a decision to change the industry classification of its Melbourne-based national head office to "service stations", and more than quadruple its workers' compensation premiums.

The Supreme Court heard that prior to a Victorian WorkCover Authority premium audit in 2008, which led to the change, United Petroleum Pty Ltd's head office had been classified as a "business service" for about seven years.

The employer sought a review of the 2008 change, but in May 2010 WorkCover affirmed the reclassification.

In 2010/11, the average industry rate for a business service was 0.345 per cent of payroll, compared to 1.495 per cent for service stations.

Petrol not "provided by" head office

The employer told the Court that its head office provided the United Petroleum Group with "general management and support services, such as IT, accounting and auditing, legal, secretarial, human resources and insurance".

It said the 242 service stations that operated under the "United" banner in Australia were run by commission agents and franchisees, and that no United Group employees worked in them.

WorkCover argued the head office carried out the "functions and operations" of a petrol retailer because it "provided" petroleum products by buying fuel wholesale and selling it through its service station network.

But Justice Robert Osborn said petroleum goods were not "provided by" the operations of the company's head office.

"Rather, their provision is planned, promoted, managed and arranged [there]," he said.

Justice Osborn went on to find that the predominant activity of the head office should be characterised as the "management and administration of the sale of petroleum products from retail outlets located throughout Australia".

The proper industry classification, he said, was "petroleum products agencies", which paid an average premium rate of 0.31 per cent of payroll in 2010/11.

United Petroleum Pty Ltd & Anor v Victorian WorkCover Authority [2012] VSC 51 (23 February 2012)

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