Workers Comp Insurance: Compulsory Legal Requirement
Jul 14, 2023In Australia, it's a legal requirement for businesses that engage staff and some contractors to have workers' compensation insurance. In the instance that they don't, harsh penalties apply!
Remember, each State has slightly different Health & Safety Legislation within Aus!
I've heard of workers' compensation before, but what is it?
- It is a form of financial compensation that is provided to employees who are injured while conducting duties related to their employment.
- Any worker who is injured while at work and needs to take time off and/or required medical treatment is therefore entitled to claim workers' compensation.
- Workers' compensation insurance is mandatory for businesses as it protects them from the financial costs associated with potential claims.
- As we mentioned, businesses that don't have insurance can be fined up to $5,000 per worker that was employed during the time the business was uninsured (that doesn't include any extra premium payments)!
Who is covered by workers' compensation insurance?
- To determine who is covered, businesses will first need to identify if any of the people they employ are defined as 'workers', according to the relevant Act.
- 'Workers' can include:
- full-time workers on a wage or salary
- part-time, casual, and seasonal workers
- workers on commission
- piece workers
- working directors (this is optional depending on your policy)
What about contractors or sub-contractors?
- Contractors and sub-contractors may be deemed as 'workers' if they are engaged to provide a service to a business or trade in return for a payment in substance for their personal manual labour or services.
- If a contractor is employed by another business, then they would be covered by their other employer's workers' compensation insurance.
- If a contractor is a working director and covered by their own insurance, then they would be covered by their own policy BUT you should have a copy of their certificate of currency to be safe.
!! Workers’ compensation and common law claims can cost in excess of $1,000,000 so it’s simply not worth the risk !!
For more information on the provisions surrounding workers' compensation in WA, click here.
Author: Chelsea Finlay (HR Officer)
