Covering your workers

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

By keeping a current workers compensation insurance policy, you will ensure compliance with the Workers Compensation and Injury Management Act 2023.

See the Getting an insurance policy section for more details on how to cover your workers and your business against a workplace injury.

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 have an option as to whether working directors are ‘workers’ under the Act are to be insured)
  • contractors and subcontractors may also be defined as ‘workers’, depending on the circumstances of their working arrangement
  • worker receiving ‘payment in kind’.

This definition is broad and can be broken up into two 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.

Exclusions
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.
Avoidance arrangements
Employers cannot contract out of their liability under the Act by making a worker sign an agreement that says they are not entitled to claim workers compensation.

For more information, see ‘avoidance arrangements’ in the Compliance activities section.

Family members
Family members can be workers under the Act, even if they live in the family home.

You will be liable for the costs of a claim if a family member who is a worker suffers a compensable injury in the course of their employment with you.  As such, you must have workers compensation insurance covering your liability.

Contractors and subcontractors
Find out about the obligations to cover contractors and subcontractors, including subcontractors working as part of a ‘team’.

Go to Contractors and subcontractors.

Working directors
Find out about obtaining cover for working directors.

Go to Working Directors.

Interstate workers
Employers are legally obliged to obtain workers compensation insurance for all workers, however it is only necessary to cover a worker in one state or territory.

The workers compensation premium payable, and entitlements available, depend on the worker’s ‘state of connection’.