Anybody who operates a trade or business and employs workers and /or engages contractors who are or may be deemed workers, is obliged to effect and maintain a current workers compensation policy.

(See also question below "If I engage only contractors, do I need a workers compensation policy?").

All employers have a legal liability to pay compensation to workers who are injured in the course of their work and employers are required by law to hold a current workers compensation insurance policy from a licensed Workers Compensation insurer.

Every employer must take out and keep up to date a workers compensation insurance policy covering all their workers. The penalty for non-insurance is a fine of up to $55,000 and/or six months imprisonment. There is also the additional penalty of double premiums as well as the cost of any claims paid on the employer's behalf.

Worker definition:.

The Workplace Injury Management and Workers Compensation Act 1998 firstly defines a worker to be: .

A person who works under a contract of service or apprenticeship with an employer whether by way of manual labour, clerical work or otherwise and whether the contract is expressed or implied, and whether the contract is oral or in writing.

This is essentially the conventional legal definition of an employee.

The Act then extends the definition of a worker to include certain classes of individuals who are not employees in the conventional sense, but are "deemed" as workers for the purposes of the Act. This includes outworkers, taxi drivers, some contractors, and others.