Workers Insurance in NSW
Overview:
- Workers insurance provides coverage for employers if an employee suffers a work-related injury or illness.
- This policy covers costs such as weekly compensation, medical expenses, rehabilitation services, and lump-sum payments for death or permanent disability.
Legal Requirements:
- Mandatory Coverage: Most employers in NSW are required to have workers insurance.
- Penalties for Non-Compliance: Businesses without insurance may face fines up to $55,000 and/or imprisonment for up to six months.
- Minimum Premium: The base premium is $225.
Definition of Employer:
- An employer is any person or entity that hires workers on a full-time, part-time, or casual basis, including working directors of a corporation.
- Examples:
- A household hiring a babysitter or nanny.
- A farmer who hires a farmhand and provides accommodation and meals instead of wages.
- Strata bodies or businesses that need to ensure contractors have valid workers insurance to avoid liability as a ‘principal’ for uninsured contractors.
Exemptions:
- Insurance is not required if:
- Annual wages total $7,500 or less.
- The employer does not have apprentices or trainees.
- The employer is not part of a premium group.
- Even exempt employers must assist with injury management and report injuries to icare.
- Claims against exempt employers incur a $175 administration fee.
Handling Injuries:
- Employers must notify icare of any workplace injuries, regardless of their insurance status or exemption.
Workers vs. Contractors:
- Certain contractors and subcontractors may be considered workers for insurance purposes.
- Use the State Insurance Regulatory Authority (SIRA) tool to classify workers correctly.
Sole Traders and Partnerships:
- Sole traders and partnership members are not covered for their own injuries under workers insurance but may consider personal accident or income protection insurance.
- They must obtain workers insurance for any workers they employ.
- Examples:
- Barry the Electrical Contractor: Barry operates his electrical contracting business as a sole trader with no employees. As he does not have any workers, Barry is not eligible for workers insurance.
- Steve and Jason the Tilers: Steve and Jason run a tiling business as a partnership and employ an apprentice. They are required to have workers insurance to cover the apprentice, but this insurance does not cover Steve and Jason themselves.
Small Employers:
- Employers with an average performance premium of $30,000 or less are classified as small employers.
- For small employers, claims costs generally do not directly affect premiums.
Medium to Large Employers:
- Employers with an average performance premium over $30,000 are experience-rated, meaning their premiums can be influenced by their claims history.
- A good safety record can lead to lower premiums through the Claims Performance Rate (CPR).
- Large businesses can opt for Loss Prevention and Recovery (LPR) products to reduce premiums.
Trusts and Trustees:
- Working beneficiaries of a trust, who have PAYG tax deducted or receive superannuation contributions, are considered workers and are entitled to compensation.
- Distributions counted as wages affect insurance premiums.
- Distributions to non-working beneficiaries do not count as wages, and these individuals are not covered for work-related injuries.
Want to know more?
If you’d like to discuss any of the content in this article and how it may apply to you, please call me on 1800 668 153.
You can also book a discovery call thru our live calendar.
We love hearing from our readers! Please send us your questions, feedback or interest topic by clicking here.
Author Profile: Jeffrey Liu, JP, is the founder and principal adviser of Hippo Wealth, with a deep expertise in wealth protection. His extensive experience includes roles in the wealth management divisions of Westpac, ANZ, and a local multi-family office. As the host of “Riches Talk,” a podcast dedicated to cultivating personal and business growth, Jeffrey has established himself as a thought leader in developing life riches. His insights have been featured on SBS, The Australian, and Channel 7. Notably, he was a semi-finalist on Australia’s Got Talent in 2010. Learn more at http://www.hippowealth.com.au.