What is Workers Compensation Insurance?
If a work-related accident or illness occurs, work health and safety (WHS) laws require that workers can access first aid, workers’ compensation and return-to-work rehabilitation. Workers’ compensation is a type of insurance that can pay the wages and medical costs of employees who have been injured due to their employment.
Do you need it?
Any business that employs or hires workers on a full-time, part-time or casual basis, under an oral or written contract of service or apprenticeship, must have workers compensation insurance that covers all workers.
Workers’ compensation protects you and your business from financial claims when a worker sustains a work related injury or disease. It provides injured workers with weekly payments to cover loss of earning capacity and payment of reasonable medical and vocational rehabilitation expenses, where necessary, to help them remain in or return to gainful employment.
Why is it important?
If you don’t have workers’ compensation insurance, your company will be liable for the cost of the statutory benefits under the legislation if one of your workers has a work related injury or industrial disease. This could cost in excess of $600,000, plus legal costs involved in court action, and you may also be liable for the cost of any action taken at common law. Offences and fines vary for each State or Territory.
If you are uninsured, you are also liable to pay fines of up to $5000 per worker, as well as an amount equal to any avoided premiums going back five years. If you continue to be uninsured after the date of your conviction, you will commit a separate and further offence for every week you do so.
What are your obligations as an:
It’s your responsibility as an employer to:
• maintain a safe workplace
• maintain current and adequate workers’ compensation insurance
• protect yourself and your workers from financial hardship in the event of a workplace injury.
As an employer, you need to maintain current and adequate workers’ compensation insurance to protect you and your workers against financial hardship as a result of a workplace accident.
In most cases, you must provide accident and sickness insurance for your employees or workers’ compensation through an authorised insurer.
Independent contractors may require their own insurance. See our Independent contractors’ topic for more information.
If you employ a contractor to perform duties for your business, check with the workers’ compensation authority listed in your state or territory.
As a sole trader, you can’t cover yourself as an ‘employee’ with workers’ compensation insurance. This means you’ll need to consider your own personal death, illness and disability insurance.
You can cover yourself for accident and sickness insurance through a private insurer. This policy will compensate you for loss of revenue while you recover.
If you have any questions in regards to implementing or understanding WorkCover/WorkSafe/Return to Work policies and obligations, speak to a TRAX accountant here.
For more detailed information, visit your State/Territory Compensation body below:
• Australian Capital Territory: WorkSafe ACT – workers’ compensation
• New South Wales: SafeWork NSW – workers’ compensation and injury management
• Northern Territory: NT WorkSafe – workers’ compensation
• Queensland: WorkCover QLD – accident, household workers’ and workplace personal injury insurance
• South Australia: Return to work SA – insurance
• Tasmania: WorkCover Tasmania – What to do about workers compensation?
• Victoria: WorkSafe Victoria – WorkCover insurance
• Western Australia: WorkCover WA – covering your workers