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 and having an injury management system in place, you will ensure compliance with the Workers’ Compensation and Injury Management Act 1981.

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 who have some ownership of the company and 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
  • workers on salary or wages
  • workers supervised and controlled by an employer
  • workers who may be fired by an employer
  • workers who work for only one employer
  • workers with set hours of work.
Extended definition of a 'worker'
This covers any person who works under a contract for service. Many people who work as contractors or sub-contractors may be covered under this part of the definition, and it may cover workers who:

  • are paid on piece rates, hourly rates or per job
  • work for the employer on a ‘one-off’ or per job basis
  • do not have set hours of work
  • work for more than one employer
  • work unsupervised
  • pay 20 per cent prescribed payments (sub-contractor’s tax)
  • are covered by an industrial award or agreement.
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. See definition of worker.

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

Go to Contractors & 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’.

Go to the fact sheet Who covers interstate employees for workers’ compensation.