Victoria’s average workers’ compensation premium will be cut from 1.29% of wages to 1.27% from July 1.

An additional 5% discount will apply for employers that pay their annual premium by August 1.

Premier Denis Napthine says the latest reduction – following a 3% cut in 2012/13 – will save employers $40 million next financial year.

However, Victoria will soon lose its status as the cheapest state for workers’ compensation premiums.

From July 1 Queensland will drop its average annual premium from 1.45% of wages to 1.2%.

WA will fall from 1.66% to 1.55%, while SA, at 2.75%, will have the highest average premium.