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All employers in NSW (except exempt employers) must have a workers compensation policy. An employer is any business that employs or hires full-time, part-time or casual workers.

All employers in NSW (other than exempt employers) must have a workers compensation 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 does a workers compensation policy cover? A workers compensation 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.

The workers compensation guide for employers is currently being updated.

worker or contractor ('deemed worker')

Some people are 'deemed' to be workers for workers compensation purposes. These classes of 'deemed workers' include, but are not limited to:

  • outworkers
  • salespersons, canvassers, and collectors
  • contractors under labour hire service arrangements
  • rural workers
  • boxers, wrestlers, referees and entertainers.

See Schedule 1 of the Workplace Injury Management and Workers Compensation Act 1998 for a comprehensive list.

contractors and workers

Several factors need to be considered to distinguish an employee from a contractor and no single factor can be regarded as decisive.

a contractor is more likely to:

  • be engaged to carry out a particular task using their own skill and judgement
  • employ others, delegate or sub-let work to another
  • be paid on the basis of a quotation for the job
  • supply their own tools and materials
  • carry on an independent business in their own name or under a business or firm name.

Please note: An ABN by itself is not a definite indicator of a person(s) status.

a worker is more likely to:

  • be directed by the employer regarding work to be performed and the time and manner in which it is performed
  • be required to actually carry out the work
  • be paid on a time basis
  • have tools and materials supplied by the employer
  • work exclusively for a single employer
  • be affected by PAYG tax arrangements.

Please note: A person may have been hired as a contractor and be a contractor for other purposes such as tax, but still be a worker for the purpose of workers compensation. The status of a person for tax purposes bears no direct relationship to that person's status as a worker for workers compensation purposes.

SIRA’s Worker Status Service assists employers by providing certainty and clarity on the status of workers.

exempt employers – obligations

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

  • you pay $7500 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 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 an insurance agent immediately and take out a workers compensation policy.

understanding trusts and trustees

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 compensation 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.

further information


Volunteers and unpaid work experience students are not 'workers' under the Workers Compensation Act 1987 and you do not need to cover them with your workers compensation insurance policy. You still have a 'duty of care' to make sure volunteers and work experience students have a safe working environment.

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