Getting a policy

All employers in NSW (except exempt employers) must have a workers compensation policy.

The information below is general. Please call us or the insurer if you need more specific information.

An employer is any person or business 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.

Why get a policy?

If a worker suffers a work related injury or illness, the policy can pay for:

  • weekly benefits
  • rehabilitation services
  • medical and hospital expenses
  • some personal items damaged in a work related accident
  • a lump sum payment for death or permanent impairment

How do I get a policy?

You can obtain a workers compensation policy through a licensed insurer.

The licensed insurer is responsible for issuing policies, managing the collection of premiums and processing claims.

Our role is to regulate the system so that it is sustainable, affordable and provides support for injured workers.

Things to consider:

Declaring wages

All businesses must declare their wages to their licensed insurer.

This is to help ensure they are paying the correct premium.

This is done by filling out the wages declaration form supplied by your licensed insurer.

The wages definition manual provides a comprehensive guide of the wages that should be taken into account when calculating premiums.

Wages can include:

  • salary/wages
  • overtime, shift and other allowances
  • over award payments
  • bonuses, commissions
  • payments to working directors (including directors' fees)
  • payments to pieceworkers
  • payments for sick leave, public holidays and the associated leave loadings
  • value of any substitutes for cash
  • employer paid or payable superannuation contributions (including the superannuation guarantee levy)
  • grossed up value of fringe benefits (allowances subject to fringe benefits tax are counted at the grossed up value, that is the value of the benefit multiplied by the relevant Australian Tax Office fringe benefit formula)
  • long service leave payments (including lump sum payments instead of long service leave)
  • termination payments (lump sum payments in respect of annual leave, long service leave, sick leave and related leave loadings)
  • trust distributions  to workers where the distribution is in lieu of wages for work done for the trust

Wages do not include:

Who is an exempt employer?

As an employer, you’re not required to maintain a policy if:

  • you pay $7500 or less in annual wages (employers in certain industries will not be exempt regardless of the wage bill),
  • you don't employ an apprentice or trainee, and
  • you’re not a member of a group for premium purposes.

If you are identified as an exempt employer and an employee injures themselves in the workplace you or the worker are required to contact us on 13 10 50.

We will gain some information from you and allocate the claim to icare to determine liability and ongoing management of the claim.

Even if you are exempt, you still have the obligation to provide assistance with injury management and return to work.

Any claim against an exempt employer incurs a $175 administration fee.

If your conditions change in a way that affects your obligations (for example, your annual wages bill has grown larger than $7500), you must contact a licensed insurer immediately and take out a workers compensation policy.

Are they a worker, deemed worker, or contractor?

Some people are 'deemed' to be workers for workers compensation purposes. These classes of 'deemed workers' include, but are not limited to:

  • outworkers
  • salespersons, canvassers, and collectors
  • workers or contractors under labour hire service arrangements
  • rural workers
  • boxers, wrestlers, referees and entertainers
  • other contractors

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 a worker from a contractor.

These factors below are objective and no single factor can be regarded as decisive.

An ABN by itself is not a definite indicator of a person(s) status.

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.

Use the worker or contractor tool

The Worker Status Service can help you determine whether a person is a worker, a deemed worker or contractor (for workers compensation insurance purposes).

This tool is a guide only. To formally determine a worker’s status, you will need to lodge a private ruling application (see below).

Private rulings

If you're an employer, help is available from either us (the authority) or the Nominal Insurer (icare) to help you determine whether a person is a worker or contractor for premium calculation purposes.

If you want to apply for a private ruling you need to fill out this online application form.

A private ruling does not impact upon a person’s ability to lodge a workers compensation claim nor can it be used in any claims-related matters.

What about 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.

What about volunteers?

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'.

Certificate of currency

A certificate of currency provides evidence of an employer maintaining a current policy of workers compensation insurance. The certificate shows the NSW Workers Compensation Industry Classification for your business, the number of workers, estimated wages and the policy period covered.

The certificate of currency can be issued for a period up to 12 months, however it cannot extend beyond the expiry date of the current workers compensation insurance policy. You will need to request a new certificate of currency when you take out or renew a policy.

Exempt employers are not eligible for a certificate of currency.

To request a certificate of currency contact your licensed insurer. Your request should confirm the details of your estimate of wages, employee and contractor numbers and your business activity.

Working directors of a corporation

Working directors of a corporation are considered employees of the corporation.

How do I cancel a policy?

Your licensed insurer can cancel your policy in the following situations:

Ceased trading

Your policy can be cancelled if the business has ceased trading. You will need to provide evidence of having ceased trading to the insurance agent that holds the policy.

Liquidator/trustee in bankruptcy appointed

Your policy can be cancelled if a liquidator/trustee in bankruptcy has been appointed and the business has ceased trading.

Business is sold by employer

Your policy can be cancelled if the business is sold. The new owner must take out a new workers compensation insurance policy covering their employees.

Other situations

In all other situations you should discuss with your insurance agent the reason for wanting the policy cancelled. This may result in the matter being referred to us for a formal decision to cancel and a cancellation date.

Insurance agents cannot cancel a policy if:

  • you take out a new policy at a lower premium
  • you no longer have employees. In this case the policy can be cancelled at expiry of the policy period
  • a liquidator or administrator is appointed and the employer continues trading even if the liquidator or administrator attempts to take out a new policy

Further information

Failure to obtain and maintain a workers compensation policy can result in fines and penalties. The maximum fine that can be imposed by a court is $55,000 or six months imprisonment, or both.