News & Insights

What are my obligations for protecting my business’s workers?

Published 27 February 2020

You might not think about it if you’re the owner of a small business, but workplace injuries and related illnesses cost billions yearly in insurance claims – and it is a legal requirement to have workers’ compensation insurance. Here’s what you need to know to ensure your business is compliant.

When you’re running a business and paying other people to help you do it, workers’ compensation insurance protects your enterprise and your workers if they are hurt at work or become ill as a result of workplace conditions and have to take a week or more off.

Workers’ compensation insurance pays your workers who are injured at work for lost wages if they’re unfit to work, and can also pay for doctors' and medical costs, and compensation for permanent impairment or death. The usual requirement is that workers’ compensation cover is arranged through an authorised insurer. Some states mandate the provider, others allow you to choose an insurer. 




Who’s eligible?

The legislation for workers’ compensation and safety applies to all employers. By law businesses in all Australian states and territories must have workers’ compensation for anyone they employ who meets the definition of a worker. Small businesses need to make sure that they understand and comply with their obligations to avoid penalties.

The definition of a worker covers

  • full-time workers on a wage or salary
  • part-time, casual and seasonal workers
  • workers on commission
  • contractors and sub-contractors (in some circumstances).

Casual workers

More than 2 million Australians are employed casually and this increasingly popular practice is especially prevalent in retail and the food and beverage sectors. Casual workers’ legal entitlements and rights to benefits include the right to a safe workplace and to apply for compensation in the event of an injury at work. 

What this means for employers

As a business owner you’re responsible for the safety of your workplace and for having a response plan if a safety incident occurs. Your plan might cover potential threats, first actions such as evacuation, or medical response resources and documenting the incident.

If an incident occurs you will need to implement changes in your workplace or procedures to ensure it doesn’t happen again. You also need to provide a return to work program for a recovering worker if they’re unable to resume their normal duties. This is an important aspect of your workers’ rights and can be a temporary or stepped arrangement, or permanent if the worker continues to be incapacitated.

Mental health disorders are now the primary cause of disability around the world and work stress-related claims have doubled over the past few years in Australia, with work pressure accounting for around 7% of all claims, according to SafeWork Australia data. These involve substantially higher costs and poorer recovery rates than other workers’ compensation claims, can take longer to resolve and call for a different approach from physical issues.

Sole traders and contractors

Sole traders are not eligible for workers’ compensation insurance to protect themselves, instead you’ll need to organise your own personal illness, death or disability insurance. 

The same situation may apply if you’re a contractor. For business owners employing contractors, obligations vary according to your state or territory so it’s best to check with the relevant authority.

Workers’ compensation authorities around Australia

New South Wales: State Insurance Regulatory Authority - mandated provider

Victoria: WorkSafe Victoria - mandated provider

Australian Capital Territory: WorkSafe ACT - optional choice of insurer

Queensland: WorkCover Queensland - mandated provider

South Australia: ReturnToWorkSA - mandated provider

Northern Territory: NT WorkSafe - optional choice of insurer

Tasmania: WorkSafe Tasmania - optional choice of insurer

Western Australia: WorkCover WA - optional choice of insurer

Get informed

Your safety obligations may vary, depending on your location so check with your local authority to find the latest on your state or territory.

Your broker, working with our Workplace Risk team, can help you with the right risk management and insurance solutions to help keep your employees protected, and advise on obtaining the right workers' compensation cover for your business.


Contact our Workplace Risk team now


Further reading

Workplace risk

Protect business productivity be proactive about workplace mental healt

Gallagher provides insurance, risk management and benefits consulting services for clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance and/or risk management perspective, and offer broad information about risk mitigation, loss control strategy and potential claim exposures. We have prepared this commentary and other news alerts for general information purposes only and the material is not intended to be, nor should it be interpreted as, legal or client-specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information may not include current governmental or insurance developments, is provided without knowledge of the individual recipient’s industry or specific business or coverage circumstances, and in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers’ control.

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