Insuring wages – Why is it so important

Roof damage in Cooroy - Photo Geoff Potter / Noosa News

My wife has 6 brothers and a sister all of whom along with their families mean the world to us. One of my brother-in-laws rang yesterday to wish my wife a happy birthday and during the course of the conversation it came out that his wife, the sole breadwinner for the family had lost her job due to damage to the shop in which she worked along with a number of others in the Queensland town losing its roof during the recent storms.

Putting family bias aside, I have known my sister-in-law for 40 years and know that she is very hard working and was a long standing, valuable employee for her employer. Despite all of this she now finds that through absolutely no fault of her own she is out of work.

She has been told it will be at least 6 weeks before the building can be repaired. Knowing local authorities and builders after a natural catastrophe this is in all likelihood an optimistic estimate. She has two options. She can wait till the building is reinstated and go back to her old job. She will probably have to wait 4 to 6 weeks to get any social security and I know the loss of wages will hurt her family. Her second option is to try and find a new job. This may help her in the short term but where does that leave the employer. He will have lost a key staff member, one he has been able to trust implicitly, one who does not quibble about working an extra shift when someone else does not turn up, one who trains the new staff etc etc. Will he find someone as reliable, trustworthy and until now loyal.

All this could have been overcome if the business owner had insured business interruption correctly and included 100% wages cover. The cost (a tax deduction) compared to the losses suffered both by the business owners and their employees would have been negligible. This storm in Cooroy Queensland is not an isolated incident nor is the adverse effect it will have on staff. Following the flooding in Newcastle in 2007, the Hunter Valley Research Foundation reported in a research paper titled: An Assessment of the Economic and Social Impacts of the 2007 Pasha Storm, that 1,170 lost their job due to their employer being incorrectly insured or not insured at all.

I would again urge business owners to consider the perceived cost saving compared to the risk to their business and to the lives of their employees when they elect not to insure correctly.

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