Workers Compensation Insurance

You must provide workers compensation for anyone you employ who the legislation defines as a ‘worker’, including cover for claims at common law. 

Workers compensation law states that employers must have workers compensation coverage for anyone who is defined in the legislation as a ‘worker’.

Definition of a worker

The legislation provides a very broad definition of a ‘worker’. It covers:

• full-time workers on a wage or salary
• part-time, casual and seasonal workers
• workers on commission
• piece workers
• working directors (companies now have an option as to whether working directors who have some ownership of the company and are ‘workers’ under the Act are to be insured)
• contractors and sub-contractors may also be defined as ‘workers’, depending on the circumstances of their working arrangement
• worker receiving ‘payment in kind’.

The definition of ‘worker’ may be broken up into two main parts: Primary and Extended.

Primary definition of a 'worker'

This covers any person who works under a contract of service or apprenticeship with you. The contract may be expressed or implied, oral or written. A large part of the workforce is covered under this part of the ‘worker’ definition, including:

• full-time and part-time workers
• casual workers
• seasonal and piece workers.

Some indicators a worker may work under a contact of service include:

• working for salary or wages
• the employer withholds PAYG tax
• working whilst supervised and controlled by an employer
• having the capacity to be fired by an employer
• working for only one employer
• working with set hours of work.

Extended definition of a 'worker'

An individual not employed under a contract of service may still fall under the extended definition of worker in the Act if contracted to perform work. This may include contractors and sub-contractors.

The Act provides an individual is a worker if:

• the individual has contracted with a person for the performance of work by the individual, and
• the work is not work in the course of or incidental to a trade or business regularly carried on by the individual in the individual’s own name or under a business or firm name, and
• the individual does not sublet the contract, and
• if the individual employs a worker, the individual performs part of the work personally.

The person with whom the worker has entered into the contract, or for whom the worker works under the contract, is the worker’s employer.

Generally, individual workers cannot cover themselves for workers’ compensation, even if they are self-employed and have an ABN. 

***An exception is when an individual is a working director of a company and then it is optional whether they choose to be covered for workers’ compensation insurance.

If you are injured, follow these steps to make a claim for workers compensation.

• Immediately seek first aid and report the injury to your employer.
• As soon as possible, see a doctor of your choice and ask for a First Certificate of Capacity.
• Fill out a Workers Compensation Claim Form. If you have difficulty completing the form, speak to your employer.
• Make copies of the Certificate and Claim Form for your records and give the original documents to your employer.
• Your employer has seven days to complete their section of the Claim Form and lodge both documents with their insurer. Penalties can apply for failing to lodge the claim within seven days.
• The insurer will notify you within 14 days after receiving your claim form.

Some acceptable costs that would be covered include:

• First aid and ambulance
• Medicines
• Medical or surgical attendance
• Treatment by specialists
• Charges for hospital treatment
• Other approved treatment (dental, physiotherapy, chiropractor, osteopathy, clinical psychology, occupational therapy, speech pathology, exercise physiology etc).

• Perhaps some travel costs - for example your visits to medical appointments. However it is recommended that you keep detailed records of the kilometres travelled, dates, appointment times, receipts for public transport etc.

Under the legislation and accompanying Principles and Standards, insurance brokers cannot access a worker’s personal information for existing and future claims from an insurer without the worker’s informed consent in line with privacy laws and principles.

In order for Avoca Insurance Brokers or any broker to assist with the claims process, all insurance companies require written informed consent from the injured party to share the worker’s personal health or financial information with a broker.  

Workers’ Compensation Claim
Insurance Broker Consent Authority Form CAN BE ACCESSED here

A contractor or sub-contractor may be defined as a ‘worker’ if the contractor/sub-contractor is engaged by another person to do work for the purpose of the other person’s trade or business, and the contractor/sub-contractor is paid for his/her personal manual labour or services.

Principal and contractor are both deemed employers

If a worker suffers an injury from employment working for a contractor, and the contractor has contracted with a principal for the execution of work by or under the contractor:

• both the principal and the contractor are taken to be employers of the worker
• both the principal and the contractor are jointly and severally liable to pay any compensation that the contractor would be liable to pay if the contractor were the sole employer.

A worker may claim compensation from the contractor or principal, or both.

When principal is liable

A principal will only be liable for compensation to a contractor’s worker if:

• the work being done at the time of the injury is directly a part or process in the principal’s trade or business, and
• the injury arises in respect of premises on which the principal has undertaken to do the work or that are otherwise under the principal’s control or management.

This liability applies right down the contractual chain. For example, if a principal head contractor on a building site engages various contractors who engage sub-contractors, then all parties (principal, contractor and sub-contractor) are liable to cover any workers the sub-contractor may employ.

A working director (in relation to a company) means a director who executes work for or on behalf of the company, and whose earnings as a company director by whatever means, are for personal manual labour or services. It is optional for a working director’s company to cover their directors for workers compensation.

If you don’t have workers compensation insurance, your company will be liable for the cost of the statutory benefits under the legislation if one of your workers has a work-related injury or dust disease. This could involve significant legal costs involved in court action, and you may also be liable for the cost of any action taken at common law.

If you are uninsured, you are also liable to pay fines of up to $10,000 per worker, as well as an amount equal to any avoided premiums going back five years. If you continue to be uninsured after the date of your conviction, you will commit a separate and further offence for every week you do so.

A cancellation form must be filled out if you wish to cancel a workers compensation policy.

Please note that "A current policy of workers compensation insurance is required if the policy holder employs ‘workers’ as defined under the Workers Compensation and Injury Management Act 2023."

Reason for cancellation must be selected, For example, either your business has ceased employing (your business has been restructured or  has been sold) OR you are insured elsewhere.

If there is more than one policy holder insured under the policy and the reason for policy cancellation is the same for all, you must attach a list of all policy holders and their ABNs and signatures.

You can access the EMPLOYER POLICY CANCELLATION
REQUEST FORM here