Who needs workers insurance

If you employ people in NSW, you probably need a workers insurance policy.

A workers insurance policy covers any of the employer's workers in the event of them suffering 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.

Exempt employers

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

  • you pay $7500 or less in annual wages and
  • you don't employ an apprentice or trainee and
  • 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 one of our insurance agents. 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 $7500), you must contact icare immediately and take out a workers insurance policy.

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.

What to do when

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.

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

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.

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.

Examples

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.

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.