Workers compensation insurance for Australian employers
Workers compensation provides statutory protection when an employee suffers a work-related injury or illness. RMA Insurance Brokers helps businesses review worker and remuneration information and identify the scheme arrangements that may apply.
Workers compensation insurance at a glance
Workers compensation is a statutory system designed to provide benefits and support to eligible workers who suffer an injury or illness arising from their employment.
Depending on the applicable scheme and circumstances, benefits can include income support, medical and hospital expenses, rehabilitation and lump-sum compensation.
Workers compensation arrangements are not identical throughout Australia. Each state and territory operates its own scheme, alongside Commonwealth schemes, and requirements can differ in areas such as who is covered, benefit entitlements, premiums and return-to-work obligations.
Key areas
- Work-related injury
- Work-related illness
- Weekly income support
- Medical treatment
- Rehabilitation & return to work
- Statutory benefits
Who needs workers compensation insurance?
Workers compensation obligations apply broadly to Australian employers, but the precise requirement depends on the jurisdiction, business structure, people engaged and applicable statutory definitions.
- Full-time employees
- Part-time employees
- Casual employees
- Apprentices and trainees
- Seasonal and agricultural workers
- Contractors who may be treated as workers under the relevant scheme
It should not be assumed that calling someone a contractor means they fall outside workers compensation.
Depending on the jurisdiction and working arrangement, some contractors or subcontractors may still be treated as workers for workers compensation purposes. This distinction can be particularly relevant to farming, construction, transport and regional businesses that use seasonal labour or contractors extensively.
What can workers compensation provide?
Weekly income support
Where an eligible worker cannot work, or has a reduced capacity for work because of a work-related injury or illness, the relevant workers compensation scheme may provide weekly payments.
The amount, duration and calculation of benefits depend on the applicable scheme and the worker’s circumstances.
Medical & hospital expenses
Workers compensation may meet eligible medical, hospital, medication and treatment expenses associated with an accepted work-related injury or illness.
Rehabilitation & return to work
Workers compensation schemes generally place significant emphasis on rehabilitation and helping injured workers return to suitable employment.
Depending on the jurisdiction and circumstances, this can involve treatment, rehabilitation services, workplace adjustments and return-to-work planning.
Permanent impairment benefits
Where a worker suffers an eligible permanent impairment, a statutory lump-sum benefit may be available.
How permanent impairment is assessed and the amount payable differ between jurisdictions.
Death & dependency benefits
Workers compensation schemes can also provide statutory benefits where a work-related injury or illness results in death.
The benefits available to dependants and the way entitlement is calculated depend on the relevant jurisdiction.
Other scheme-based benefits
Other eligible expenses or benefits may be available depending on the scheme and injury.
These can include certain rehabilitation expenses, treatment-related costs and other statutory benefits. They should not be assumed to apply uniformly because eligibility and limits are determined by the relevant legislation and scheme.
Workers compensation is different in each jurisdiction
Australia does not operate one national workers compensation insurance policy for every employer.
There are separate statutory arrangements across the states and territories, together with Commonwealth schemes. This means a business operating in more than one state may need to consider:
- where employees usually work
- where the business operates
- interstate and cross-border workers
- which scheme a worker belongs to
- whether more than one workers compensation policy or registration is required
- different definitions of workers and contractors
- different wage or remuneration declarations
- jurisdiction-specific return-to-work requirements
How workers compensation cover is arranged also differs between jurisdictions. In some jurisdictions employers obtain cover through a statutory scheme or scheme-appointed or authorised service arrangements rather than choosing from an open market of insurers. In others, employers may select from approved or licensed insurers. RMA Insurance Brokers can help identify which arrangement applies and what assistance is available in each case.
Jurisdiction matters. The scheme rules that apply to a business, and to each worker, should be checked rather than assumed.
Who is treated as a worker under the scheme?
One of the most important workers compensation questions is not simply how many employees the business has. It is who is treated as a worker under the applicable scheme.
Depending on the jurisdiction and working arrangement, people described by a business as contractors or subcontractors may still be treated as workers for workers compensation purposes.
Relevant factors can include:
- how the person is engaged
- whether they work personally or can subcontract the work
- how they are paid
- who controls how the work is performed
- whether they operate a business of their own
- the legal structure through which they provide services
Businesses relying heavily on contractors should review these arrangements rather than assume every contractor carries their own workers compensation responsibility.
How workers compensation differs from management liability and public liability
Workers compensation is designed around work-related injury or illness suffered by eligible workers.
Management liability insurance, including an employment practices liability section where provided, deals with a different type of employment exposure, such as certain allegations involving dismissal, discrimination, bullying or harassment.
Public and products liability insurance generally deals with third-party personal injury or property damage rather than statutory workers compensation benefits owed to employees.
One policy should not be assumed to replace another. For employers, workers compensation, workplace liability and employment-practices exposures may all need to be considered separately.
What information may be needed for a workers compensation review?
When reviewing workers compensation arrangements, we may need information about:
- legal entity and ABN
- state or territory of operation
- business activities
- number of workers
- estimated or actual remuneration
- apprentices or trainees
- contractor and subcontractor arrangements
- interstate workers or multiple workplaces
- previous workers compensation policy and claims information
The particular scheme may require additional information.
When should workers compensation arrangements be reviewed?
A review is particularly worthwhile when a business:
- first employs staff
- starts operating in another state or territory
- materially increases wages or worker numbers
- engages apprentices or trainees
- begins using contractors or subcontractors
- changes its principal business activity
- acquires another business
- restructures its legal entity
- begins employing interstate workers
- experiences a significant workplace injury or change in claims experience
Employers should also keep remuneration and business information current.
What may not be covered?
Workers compensation entitlement is determined under the relevant scheme and legislation.
It should not be assumed to provide benefits for:
- a person who does not meet the applicable definition of a worker
- an injury or illness that does not satisfy the relevant statutory connection with employment
- a sole trader or business owner’s own injury where they are not an eligible worker under the scheme
- payments or expenses outside the statutory benefits available
- non-work-related injury or illness
- contractors who genuinely fall outside the scheme’s worker definition
Eligibility, exclusions and benefit limits vary considerably between jurisdictions. This is not a complete list.
Example: a repetitive work injury requires treatment and time away from work
Illustrative example
An employee in a regional manufacturing business performs repetitive manual duties as part of their normal work. Over time, they develop a condition that affects their ability to continue performing those duties.
Medical assessment identifies a connection between the condition and the employee’s work. The employee requires treatment, rehabilitation and a period away from their normal duties.
A workers compensation claim is lodged under the applicable state or territory scheme. Depending on the scheme, accepted claim and circumstances, benefits may include eligible weekly payments, medical treatment and rehabilitation support. The employer also reviews the workplace tasks and return-to-work arrangements to reduce the risk of further injury.
Example provided for general illustration only. Eligibility and benefits depend on the applicable workers compensation legislation, scheme and circumstances.
Workplace safety and workers compensation work together
Workers compensation provides financial and rehabilitation support after an eligible workplace injury or illness. It does not replace the employer’s responsibility to provide a safe workplace.
For farms and agricultural businesses, our Insight on farm safety from an insurance perspective discusses how machinery, vehicles, livestock, contractors and workplace controls can interact with insurance and claims.
Workplace safety measures can reduce injury risk, while accurate worker records and appropriate workers compensation arrangements help ensure the business is prepared if an incident occurs.
Workers compensation across Australia
RMA Insurance Brokers assists businesses across rural, regional and metropolitan Australia.
We work with employers operating in industries including agriculture, professional services, retail, construction, transport and other regional businesses.
We also work closely with rma network Livestock & Property Agents, many of whom employ staff and operate businesses subject to state-based workers compensation requirements.
Our services are not limited to rma network Members. Businesses across Australia can contact RMA Insurance Brokers for assistance understanding their workers compensation arrangements.
Because scheme rules differ between jurisdictions, the applicable requirements should always be checked for the state or territory in which the business and workers operate.
Why RMA Insurance Brokers?
Workers compensation can involve more than simply renewing an annual policy.
The business needs to understand who should be treated as a worker, which jurisdiction applies and whether the information being declared still reflects the workforce.
RMA Insurance Brokers can help you:
- review the business and workforce structure
- identify the relevant state or territory arrangements
- review worker and contractor classifications
- review remuneration information
- consider interstate workforce issues
- assist with policy and renewal information where applicable
- support the business when workers compensation questions or claims arise
The insurer, statutory authority or scheme administrator remains responsible for determining eligibility and claim entitlements under the applicable legislation.
Frequently asked questions
Is workers compensation insurance compulsory?
Workers compensation obligations apply broadly to employers throughout Australia, but the precise registration and insurance requirements vary between jurisdictions. Each state and territory has its own workers compensation scheme and statutory rules, and some exemptions or thresholds can apply.
What does workers compensation insurance cover?
Depending on the applicable scheme and circumstances, workers compensation can provide eligible workers with weekly income support, medical and hospital expenses, rehabilitation services and certain lump-sum benefits following a work-related injury or illness. Benefits and limits differ between jurisdictions.
Are contractors covered by workers compensation?
Sometimes. Whether a contractor is treated as a worker depends on the relevant legislation and how the working arrangement operates in practice, not simply whether the person is called a contractor or holds an ABN. Some contractors can be deemed or treated as workers for workers compensation purposes.
Does workers compensation cover business owners?
It depends on the business structure, jurisdiction and whether the person falls within the scheme’s definition of a worker. Sole traders, partners, company directors and working owners can be treated differently, so their position should be checked under the applicable scheme rather than assumed.
Do I need workers compensation in more than one state?
Potentially. Businesses employing people across state or territory borders may need to consider cross-border provisions and the jurisdiction to which each worker is connected.
Related insurance
Management Liability Insurance
Insurance considerations for directors, employment practices allegations, statutory matters and other management exposures.
Business Insurance
Broader insurance for business property, interruption, theft, equipment and other commercial risks.
Liability Insurance
Public and products liability insurance for third-party injury and property damage exposures.
Farm Insurance
Insurance for farm property, machinery, livestock, crops and the liability exposures of a working farm.
Commercial Motor Insurance
Cover considerations for work utes, vans and other commercial vehicles used in day-to-day business operations.
Claims Support
RMA Insurance Brokers support for businesses managing insurance claims and insurer communications.
Review your workers compensation arrangements
Workforces change. Staff numbers increase, contractors are engaged and businesses begin operating in new jurisdictions.
RMA Insurance Brokers can help you review whether your workers compensation arrangements and workforce information still reflect the way your business operates.
The information on this page is general information only and does not take into account your objectives, financial situation or needs. Cover is subject to the terms, conditions, limits and exclusions of the relevant policy. Insurance products and available cover vary between insurers. Please review the relevant policy documentation and obtain advice appropriate to your circumstances before making a decision.