Who needs a policy

If you have employees in NSW, you probably need a workers insurance policy.

A workers insurance policy provides an employer coverage in the event one of their employees suffer a work related injury or illness.

The policy will insure your business against the cost of supporting your injured worker and may include:

  • weekly compensation benefits 
  • medical and hospital expenses
  • rehabilitation services
  • certain personal items (eg; clothing or spectacles, if damaged in a work related accident)
  • lump sum payment for death or permanent impairment.

It’s compulsory for all employers in NSW, unless you are considered an ‘exempt employer’.

If you don’t have one, your business may be fined or penalised up to $55,000 and/or six months’ imprisonment.

The minimum premium payable is $225.

Who is an employer?

An employer is any person or business entity that employs or hires workers on a full time, part time or casual basis, under an oral or written contract of service or training contract.

Working directors of a corporation are considered employees of the corporation.


  • a household who hires a babysitter or a nanny is an employer
  • a farmer who hires a farmhand and provides accommodation and meals in lieu of wages to the farmhand is an employer

Strata body corporates and other businesses should verify that contractors performing work on their premises have a valid workers insurance policy to ensure they do not become liable as a 'principal' to pay workers compensation for uninsured contractors.

Exempt employers

As an employer, you’re not required to get an insurance policy if:

  • you pay $7,500 or less in annual wages 
  • you don't employ an apprentice or trainee
  • you’re not a member of a group for premium purposes.

Even if you are exempt, you still have the obligation to provide assistance with injury management and return to work. This includes notifying icare workers insurance on 13 44 22 of any workplace injuries.

Any claim against an exempt employer incurs a $175 administration fee. The claim will be assigned to a claims agent. The same administration fee applies to each injury notified.

If your conditions change in a way that affects your obligations (for example, your annual wages bill has grown larger than $7,500), you must contact icare immediately and take out a workers insurance policy.

If you are still unsure if you need to take out a policy, call icare on 13 44 22 between 7am–7pm, Monday to Friday to discuss your circumstances.

What to do when an injury occurs

You have an obligation to provide assistance with injury management and return to work, whether or not you have a workers insurance policy or are an exempt employer.

This includes notifying icare workers insurance on 13 44 22 of any workplace injuries.

Workers and contractors

Not all workers covered by workers insurance are employees. Some people are 'deemed' to be workers for workers insurance purposes.

These can include people who are working for you on a contract or through a subcontractor arrangement.

The State Insurance Regulatory Authority (SIRA) has a tool to help guide you as to whether a person is a worker, a deemed worker or contractor for workers compensation insurance purposes.

Learn more about classifying workers

Sole traders and proprietorships

Sole traders / proprietors, or members of a partnership are not considered as workers. Hence they cannot take out workers insurance to cover themselves for injuries.

For sole traders and partnerships, a suitable alternative may be a personal accident and illness policy, or an income protection insurance policy. However, it's not a legal requirement to take out one of these policies.

If you’re not an exempt employer you will still need to take out a workers insurance policy to cover any workers you might have.

If you’re hired as a worker by a sole trader or partnership, then your employer may need to take out a workers insurance policy to cover you.


Barry the electrical contractor

Barry operates an electrical contracting business. Barry is a sole trader with no workers. Barry is not eligible to take out workers insurance.

Steve and Jason the tilers

Steve and Jason are tilers who conduct their business as a partnership and employ an apprentice. They are required to take out workers insurance to cover the apprentice. The workers insurance does not cover Steve and Jason.

Small employers

If your average performance premium (that’s total wages multiplied by your industry rate) is $30,000 or less, you’re considered a small employer for workers compensation insurance purposes.

This means your premium will not be directly impacted by your claim's costs, but you may not be eligible for the Safe Employer Reward if weekly benefits have been paid on a claim in the three years prior to renewal.

However, if you have an average performance premium of $30,000 or less but are a member of a group, then your employer category is based on the group’s average performance premium.

In that instance, your claims costs will impact your premium, unless the group average performance premium is $30,000 or less.

Grouping insurance

Medium to large employers

Medium and large employers that have an average performance premium greater than $30,000 are ‘experience-rated’.

Experience-rated means we’ll factor in your claims history, which may affect your premium.

Your claims performance rate (CPR) rewards you with a lower premium if you have a good record of managing worker safety and recovery at work. Your CPR is calculated by comparing your claims performance with other NSW businesses. If your claims performance is better than the Scheme average, then your premium will be lower than your average performance premium.

If you’re a large business, you have the option of moving to a Loss Prevention and Recovery (LPR) product to reduce your premiums.

Loss Prevention and Recovery

Trusts and trustees' obligations

A working beneficiary of a trust (who has PAYG tax deducted from any payments or receives a superannuation contribution from the trust) is considered to be a worker of the trust.

Any beneficiary who works for an incorporated trust is also considered a worker of the trust.

A working beneficiary who suffers a work related injury is entitled to claim workers compensation.

Certain trust distributions are counted as wages. Where a payment to a worker is made in lieu of wages (regardless of the terminology used to describe that payment) then the payment is counted as remuneration for the purposes of calculating workers insurance premiums.

Distributions to beneficiaries who are not workers of the trust are not counted as wages. These individuals are not entitled to workers compensation in the event of an injury. 

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