Employer Excess in Victoria, Explained

Employer Excess in Victoria

When one of your employees gets injured, there are many things to consider as an employer. First and foremost, you’ll want to make sure the employee is getting the care they need. You’ll want to secure early intervention from a workplace rehabilitation or injury management provider. You may want to seek guidance for legal or insurance matters. 

One thing that needs to be on your radar, if it isn’t already, is your employer excess. While it can seem like a confusing topic, it’s important to understand what this is and how it factors into the overall cost of a workplace injury. 

What is Employer Excess?

Put simply, an employer excess is the amount the employer pays to the injured worker or for the worker’s care while they are unable to work. The total amount is determined based on the employees weekly wages and a yearly rate set by Victorian legislation. 

If an employee suffers a work related injury and the claim is accepted, you are obligated to pay the first 10 days of their time out of work, as well as medical and like expenses, up to a set amount. For 2020/2021, that amount is $735. 

The medical and like expenses amount is indexed annually and updated on July 1. For the most recent figure, see the Employer Excess Table here. 

Calculating your employer excess

It may sound complicated, but calculating your employer excess is relatively simple. The amount of excess that you are responsible for is determined by the worker’s pre-injury average weekly earnings (PIAWE). This is the amount the worker earned each week, on average, for the 52 weeks prior to their injury. If the employee has been working less than a year, then the average weekly earnings of their time of employment is used. 

When calculating the PIAWE, don’t forget to include things like overtime, commissions, or non-pecuniary benefits as well. For example, rental accommodations or company vehicles may fall into this category. 

Once you have determined your employee’s PIAWE, the weekly payment amount is a simple calculation. For the first 13 weeks, the employee is entitled to 95% of their PIAWE. From 14 to 130 weeks, they are entitled to 80% of their PIAWE. 

This weekly payment plus the medical excess amount together make the total employer excess.


Each business and scenario is unique and your employer excess will likely adjust to fit the occasion. Many clients find it very helpful to have an injury management provider like Employer Health Solutions on hand to help navigate special circumstances. 

When calculating your employer excess, there are some considerations to keep in mind. If your employee receives non-pecuniary benefits, the monetary benefits of those will be deducted from your weekly payment amount. If the benefits begin during the excess period, they will also be deducted. 

Additionally, there is a maximum amount that a worker can receive. This limit is twice the average weekly earnings across Victoria. Even if the total excess is calculated to be above this amount, the worker will only receive up to the set limit. 

Excess Buyout Option

Employer Excess payments are an important way to support your worker after an injury, and are mandated by law. However, employers do have the option to participate in the excess buyout program which shifts the excess responsibility from the employer to their WorkCover insurance. 

As premiums are issued each July, employers will have until August 1 to let their WorkSafe Agent know that they wish to utilise the buyout option. By paying an additional 10% of their current premium, the employer will then no longer need to pay any excess amounts. 

If you elect for the buyout option, your WorkSafe agent will manage and pay for all claims from day one. Many clients find this an easy way to avoid the complicated process of paperwork, calculations, and payments. They are able to focus solely on the health and recovery of their employees. 

Regardless of how you handle your employer excess, a trusted employer health expert will be a valuable resource. Employer Health Solutions can help you understand your employer excess, evaluate your premium options, and guide you throughout the process.