Scale strong › Hiring your first employee
What changes when you hire your first employee?
Transitioning from solo to a team is a significant step. Here’s what you need to know about Workers’ Compensation, liability changes, and keeping everyone protected.
The moment you hire, Workers' Compensation becomes mandatory
In Australia, if you employ anyone, full-time, part-time, casual, even if they’re family, you must have Workers’ Compensation insurance. There are no exceptions.
Important note: each Australian state and territory has their own arrangements. We can only arrange cover for you in WA, ACT, TAS and NT. For all other states, we can direct you to the right resources.
What Workers Compensation covers:
- Medical expenses if an employee is injured at work
- Lost wages while they recover
- Rehabilitation and support services
- Legal costs if an employee sues
What happens if you don't have it:
- Fines up to $55,000 (varies by state)
- Personal liability for all costs if an employee is injured
- Potential prosecution
- You can't legally employ anyone without it
How Workers Compensation works
It's state-based
Each state and territory has its own scheme and regulator. We’ll help you register with the right one.
Premiums are based on wages
You pay a percentage of your total wages, which varies by industry (higher-risk industries pay more).
It covers all employees
Full-time, part-time, casual, contractors (in some cases), if they’re on your payroll, they need to be covered.
What else changes when you hire
Your Public Liability may need updating
If employees are customer-facing or working on client sites, ensure your Public Liability policy covers their actions. Some policies automatically exclude employee-related incidents.
Your Professional Indemnity may need adjustment
If employees are delivering services, giving advice, or interacting with clients, they need to be covered under your PI policy. Make sure the policy explicitly covers “you and your employees.”
You nominate a sum insured
This is your estimated revenue for the indemnity period, plus fixed costs. Under-insuring here is common and costly.
Employee vs. contractor: Insurance differences
Employees:
- Must be covered by Workers Compensation
- Covered under your Public Liability and PI (if policy includes them)
- You’re responsible for their work and actions
Contractors:
- Should have their own Public Liability and PI
- Not covered by your Workers Compensation (unless deemed an employee by law)
- You should request proof of their insurance before engaging them
Before you hire:
- Contact us to set up Workers Compensation (we’ll help you register with your state scheme)
- Review your Public Liability and Professional Indemnity to ensure employees are covered
- Budget for increased premiums (Workers Comp + higher PL/PI costs)
- Decide if you need Employment Practices Liability
After you hire:
- Notify us of new employees as you hire them (affects Workers Comp premiums)
- Keep payroll records (required for Workers Comp reporting)
- Implement workplace safety policies (reduces Workers Comp claims)
- Review cover annually as your team grows
Common questions
From growing businesses
How much does Workers Compensation cost?
Varies by state and industry. We’ll give you a quote based on your expected wages and industry classification.
What if I hire a family member?
Can I add Workers Compensation mid-year after I hire?
What if my employee gets injured outside of work hours?
Do I need to tell you every time I hire someone new?
Useful resources for founders scaling strong
Guides:
Insurance When You Hire Your First Employee – What changes and what you need
How Much Coverage Do You Actually Need? – Decision framework for limits
What happens next
Once you’re launched and making sales, your needs will change. As you grow, you’ll add team members, increase revenue, and take on bigger risks. That’s when you move from Start Smart to Scale Strong.