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Workers Compensation Insurance

Hiring your first employee? This insurance is mandatory.

Workers’ Compensation isn’t optional; it’s the law. Every state requires it from the moment you hire staff. If your employee gets injured at work and you’re not covered, you may face fines, penalties, and personal liability for their medical costs.

Talk to us about Workers' Comp

What could go wrong

Workers’ Compensation is different from other insurance; you don’t choose whether to get it. It’s mandatory by law in every Australian state and territory to have an employee contract once you hire employees. Here’s why:

Scenario 1

The workplace injury

You hired your first employee 3 weeks ago. They’re carrying boxes in your warehouse, slip on a wet floor, and break their ankle.

They’re off work for 8 weeks. Medical bills: $12,000*. Lost wages: $15,000*. Rehabilitation: $5,000*. Total: $32,000*.

Without Workers Comp, that’s coming from your business, or your personal assets.

What Workers Comp covers

All their medical expenses, weekly wage payments while they’re off work, rehabilitation costs, and legal protection if they sue.

Scenario 2

The long-term injury

Your employee develops repetitive strain injury (RSI) from computer work.

They claim it’s a workplace injury. They need ongoing treatment, can’t work full-time anymore, and want compensation for permanent impairment.

Costs: Over $ 80,000* for several years.

What Workers Comp covers

Ongoing medical treatment, permanent impairment payouts, weekly payments for lost wages, and legal defence if the claim is disputed.

Scenario 3

The fine for not having it

You hired someone 6 months ago and didn’t get Workers’ Comp. An inspector visits your workplace (random audit or complaint-triggered).

You’re caught without insurance. In NSW, fines can be up to $55,000* for individuals and $220,000* for companies.

Plus, you’re personally liable for any claims from your employee during that uninsured period.

What Workers Comp covers

Massive fines, personal liability for all injury costs, criminal prosecution in serious cases, and you can’t legally trade with employees.

Scenario 4

The workplace mental health claim

Your employee claims work-related stress and anxiety caused by a difficult project. They’re off work for 12 weeks receiving treatment.

Mental health claims are increasingly common and fully covered under Workers’ Comp.

What Workers Comp covers

Mental health treatment, psychology sessions, weekly wage payments, and return-to-work support.

What this actually covers

Workers' Comp

Workers Compensation is legally mandated insurance that covers:

Medical and treatment costs:

  • Doctor visits, specialist appointments, scans, and tests
  • Hospital treatment and surgery
  • Prescription medications
  • Physiotherapy, rehabilitation, and occupational therapy
  • Mental health treatment (psychology, psychiatry, counselling)
  • Travel expenses to medical appointments

Lost wages (weekly payments):

  • Weekly payments while your employee can’t work (typically 95% of their pre-injury wage for the first 13 weeks, then reduces)
  • Continues until they can return to work or reach maximum compensation
  • Covers partial incapacity (if they return to lighter duties at reduced hours)

Permanent impairment:

  • Lump sum payments if the injury causes permanent disability
  • Compensation for loss of earning capacity
  • Pain and suffering compensation (varies by state)

Return to work support:

  • Modified duties and workplace adjustments
  • Retraining if they can’t return to their original role
  • Case management and rehabilitation coordination

Death benefits:

  • Compensation to dependents if a workplace injury causes death
  • Funeral expenses
  • Ongoing support payments to spouse and children

Legal costs:

  • Your legal defence if claims are disputed
  • Investigation costs for fraudulent claims
  • Administrative costs for claim management

State-based legislation

Workers’ Comp is state-based legislation. Rules differ depending on where you employ people.

  • Underwritten states (WA, TAS, ACT, NT):
    You choose from private insurers. Shop around for better rates and service.
  • Government scheme states (NSW, VIC, QLD, SA):
    Single government insurer. No choice but a standardised process.

What's typically not covered

  • Injuries outside work hours (personal time)
  • Self-inflicted injuries or from illegal activities
  • Injuries from horseplay or intoxication
  • Contractors (they need their own cover)
  • Volunteers (separate insurance required)

State-by-state requirements

Workers’ Comp is state-based legislation. Rules differ depending on where you employ people.

New South Wales

Mandatory from: First employee
Scheme: icare (government scheme)
Fines: Up to $55,000 (individual) or $220,000 (corporation)
Premium calculation: Based on wages and industry classification

Victoria

Mandatory from: First employee
Scheme: WorkSafe Victoria (government scheme)
Fines: Up to $109,000 (individual) or $545,000 (corporation)
Premium calculation: Based on wages and industry risk rating

Queensland

Mandatory from: First employee
Scheme: WorkCover Queensland (government scheme)
Fines: Up to $22,500 per offence
Premium calculation: Based on wages and industry classification

South Australia

Mandatory from: First employee
Scheme: ReturnToWorkSA (government scheme)
Fines: Up to $12,500 (individual) or $100,000 (corporation)
Premium calculation: Based on wages and industry risk rating

Western Australia

Mandatory from: First employee
Scheme: WorkCover WA (underwritten market, you choose insurers)
Fines: Up to $12,000 (individual) or $60,000 (corporation)
Premium calculation: Based on wages and industry classification

Tasmania

Mandatory from: First employee
Scheme: WorkSafe Tasmania (underwritten market, you choose insurers)
Fines: Up to $26,000 (individual) or $130,000 (corporation)
Premium calculation: Based on wages and industry risk rating

Australian Capital Territory

Mandatory from: First employee
Scheme: WorkSafe ACT (underwritten market, you choose insurers)
Fines: Up to $300,000 (individual) or $1.5M (corporation)
Premium calculation: Based on wages and industry classification

Northern Territory

Mandatory from: First employee
Scheme: NT WorkSafe (underwritten market, you choose insurers)
Fines: Up to $150,000
Premium calculation: Based on wages and industry risk rating

Tasmania

Mandatory from: First employee
Scheme: WorkSafe Tasmania (underwritten market, you choose insurers)
Fines: Up to $26,000 (individual) or $130,000 (corporation)
Premium calculation: Based on wages and industry risk rating

When you need this

By founder stage

Start smart

Pre-launch to first year

You need this from Day 1 if:

  • You hire your first employee (full-time, part-time, casual, all must be covered)
  • The day before they start work (not after)
  • You’re paying anyone wages (not contractors, they’re different)

You don't need it for

  • Contractors with their own ABN
  • Yourself as a sole trader
  • Company directors working in the business
  • Volunteers (separate volunteer insurance required)

Scale strong

Growing and hiring

Your costs scale with your team:

  • Premiums based on total wages paid
  • Higher headcount = higher premiums (but you’re also earning more revenue)
  • Some states offer discounts for good safety records (no claims = lower premiums over time)

Consider injury management support

  • Return-to-work programs to get injured employees back faster
  • Workplace safety audits to reduce incidents
  • Mental health support and employee assistance programs

Stay protected

Established and optimising

Optimise your Workers Comp costs:

  • Review your industry classification (miscoded industries cost more)
  • Implement workplace safety programs (fewer injuries = lower premiums)
  • Manage claims proactively (quick return-to-work reduces costs)
  • Shop around at renewal if you’re in an underwritten state (WA, TAS, ACT, NT)
  • Consider self-insurance if you’re large enough (rare for small businesses)

Lowering your premium

  • Low-risk industry (office work, consultancy)
  • Good safety record (no claims for several years)
  • Proactive injury management (quick return-to-work)
  • Lower wages paid (smaller team)

Common questions

Founders actually ask

I'm hiring a contractor with an ABN, do I need Workers Comp for them?

No. True independent contractors need their own insurance.

However, be cautious: if they’re a genuine employee (working the same hours, under your control, with tools provided by you), you may still be liable, even with an ABN.

Misclassifying employees as contractors can result in huge penalties.