Do I need insurance
All employers in NSW (except exempt employers) must have a workers compensation policy.
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.
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 the support your injured worker might receive.
These can include:
- weekly benefits
- medical and hospital expenses
- rehabilitation services
- certain personal items (eg clothing, spectacles, if damaged in a work related accident)
- a lump sum payment for death or permanent impairment
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:
- 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.
Several factors need to be considered to distinguish an employee from a contractor. These factors are objective and no single factor can be regarded as decisive.
A contractor is more likely to:
- be engaged to carry out a particular task using his or her 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 his or her own tools and materials
- carry on an independent business in his or her own name or under a business or firm name.
Please note that an ABN by itself is not a definite indicator of a person(s) status.
A worker is more likely to:
- be subject to direction from the employer as to the 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.
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.
Our Worker Status Service assists employers by providing certainty and clarity on the status of workers.
If you're an employer who pays $7500 or less in annual wages, you don't employ an apprentice or trainee and you are not a member of a group for premium purposes, then you're not required to get an insurance policy.
But even if you are exempt you'll still have the same obligations to provide assistance with injury management and return to work. This includes notifying us on 13 10 50 of any workplace injuries.
Any claim against an exempt employer will incur a $175 administration fee. The claim will be assigned to one of the insurance agents. The same administration fee applies to each injury notified.
If your conditions change in a way that mean you might no longer be exempt (like you realise your annual wages bill has grown larger than $7500), then you must contact an insurance agent immediately to make arrangements to take out a policy.
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.
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 need to make sure that volunteers and work experience students have a safe working environment. This is known as 'duty of care'.