Workers compensation insurance requirements for employers

Do you need workers compensation insurance?

Employers must arrange a workers' compensation policy if they employ a worker.

A worker is a natural person who, performs work or a service of any kind for another person under a contract and is in relation to the contract and employee for the purpose of assessment for PAYG withholding under the 'Taxation Administration Act 1953 (Cth)', Schedule 1, Parts 2-5, even if the employer is not withholding tax when they should be.

If it is determined a person is an employee using Australian Tax Office (ATO) guidance (even if the employer thinks they are a contractor) then the individual should be covered for workers' compensation.

If you, as an employer, are unsure if you require a workers' compensation policy, then you should seek independent professional advice on tax and other employer obligations.

An on line tool is available on the ATO website to assist employers to find out whether your worker is an employee or contractor for tax and super purposes. If your business engages and pays workers, you should use this decision tool. (The tool is under review by the ATO and is currently unavailable).

If you are a director of a company, you are only covered if your company has taken out a workers’ compensation policy with an approved insurer and your personal details and your remuneration have been disclosed to the insurer.

If the business is owned by an individual or partnership (not a company) immediate family members who live with those individuals or partners are only covered if their personal details and their remuneration are disclosed to the insurer.

If you are a labour hire business, all individuals engaged by you, must be covered regardless of whether they are an employee or contractor.

If you don’t have workers’ compensation insurance

• You will be up for the cost of any claim which could amount to millions of dollars
• You risk the financial viability of your business and if you are a sole trader, your personal assets
• Penalties of up to $179,000 (for a company) for a breach of the legislation.

If I have workers compensation insurance interstate do I need insurance in the Northern Territory?

Yes, if you are employing workers specifically to work in the Northern Territory (NT) you will need to take out workers compensation insurance with an approved insurer in the NT.  The exception would be those persons that are normally employed by you in your home jurisdiction and who are sent to work in the NT on a temporary basis for not more than six months. However always check with your home jurisdiction that these workers are covered by your existing insurance.

If you are a Principal Contractor

The Northern Territory legislation provides that the principal contractor is liable for claims by workers of their sub-contractors. It also provides that the principal contractor is entitled to be indemnified by those subcontractors. To avoid being responsible for claims of workers of your sub-contractors, make sure that your sub-contractors have workers’ compensation insurance for their workers. In case of oversight it would be prudent for Principal Contractors to also maintain their own insurance and advice on this should be sought from your insurance broker or advisor.

How do I arrange insurance?

You can obtain workers compensation insurance by contacting an insurance broker.

Refer to the following list of Northern Territory approved insurers.

Note: Interest is payable by an employer if the premium is not paid in full within one month of receiving the premium notice from the insurer.

Contact us

For further information please contact us on 1800 250 713, via email at datantworksafe@nt.gov.au or go to the NT WorkSafe website at www.worksafe.nt.gov.au

Workers Compensation Insurance requirements for employers (v1.4 – 29/07/2020)

Document reviewed on 5/01/2023