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Who counts as a worker for workers’ compensation?

For workers’ compensation, a worker is anyone you employ, including casuals, apprentices and trainees, plus some contractors that state laws treat as workers, such as labour-only subcontractors. Each state and territory has its own test, and an ABN doesn’t settle it. Sole traders and partners generally can’t cover themselves with workers’ compensation.

Written by COVRA · Updated · Sources

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Who counts as a worker.

Each state and territory has its own law. In all of them, your employees count, and so do some contractors.

  • Employees Anyone you pay to work for you, full-time, part-time or casual, under a written or verbal contract1. Victoria always treats apprentices, trainees, labourers and trades assistants as employees2.
  • Deemed workers Some contractors are “deemed” workers: the law treats them as yours. In NSW, that includes a contractor who doesn’t sublet or employ anyone, doing work that isn’t part of a business they run, and anyone paid wholly or partly by commission3.
  • An ABN Doesn’t settle it. icare, NSW’s insurer, says an ABN “by itself is not a definite indicator”, and someone can be a contractor for tax but still a worker for workers’ compensation4.
  • The signs A worker is more likely to be told what to do and when, be paid for their time, use your tools and work only for you. A contractor is more likely to quote for the job, bring their own tools, and be free to sublet or employ others. “No single factor is decisive”4.

NSW’s regulator, SIRA, has an online Worker or Contractor tool that suggests whether someone is a worker, a deemed worker or a contractor4. Workers’ compensation is separate insurance: business and public liability policies don’t include it5.

The test and threshold in each state.

Who counts as a worker, in short, and when an employer must hold a policy.

Who counts as a worker When you must insure
NSW Employees, plus deemed workers such as labour-only contractors and people paid by commission3 Unless wages are $7,500 or less a year and you have no apprentice or trainee1
Victoria Employees, and contractors, unless they’re an independent business you don’t control and that doesn’t depend on you2 If you pay over $7,500 a year, or have an apprentice or trainee6
Queensland Individuals who are employees for PAYG tax, plus some contractors the Act lists. Never a company, trust or partnership7, 8 Any worker, within 5 business days of employing them7
WA Employees, and individual contractors doing work that isn’t part of a business they run, who don’t sublet9 Any worker10
SA Employees, plus some contractors, such as in building and cleaning work11 If you pay $16,806 or more in 2026–27. Below that, once a worker is injured12
Tasmania Employees, plus contractors on jobs over $100 outside their own business who don’t sublet, unless they have their own personal accident cover13 Any worker13
ACT Employees, and contractors, unless they’re paid for a set result, supply their own tools and fix defects at their own cost14 Any worker5
NT Individuals who are employees for PAYG tax, even if you aren’t withholding tax15 Any worker15

A summary only: each scheme’s full test has more detail and more groups of deemed workers.

Sole traders, directors and family.

Workers’ compensation covers the people you employ. Whether it covers you, or your family, depends on the state and how your business is set up.

  • Sole traders and partners icare: “If you’re a sole trader, proprietor or member of a partnership, you can’t cover yourself with Workers Compensation insurance.” WorkCover WA says the same, “even if they are self-employed and have an ABN”1, 10.
  • Queensland’s option WorkCover Queensland sells Workplace Personal Injury Insurance to sole traders, partners, directors and trustees, from $1,650 a year. It isn’t income protection or 24-hour cover16, 17.
  • Directors In Victoria, “if your company employs you personally, then you are a worker of your own company”. In Queensland, directors aren’t workers. In WA, cover is optional for working directors6, 10, 16.
  • Family In WA, family members “can be workers under the Act, even if they live in the family home”. In the NT, live-in family of a sole trader or partnership are covered only if they’re disclosed to the insurer9, 15.

For a sole trader’s own injury or illness, such as income protection, see Do sole traders need business insurance?

Penalties

What happens if you don’t insure.

Some of the official penalties for an employer without a policy. Schemes also recover the premiums you avoided.

NSW, most employers $55,000

Court maximum, or a $5,500 penalty notice, plus up to double the premium avoided. SIRA, July 2026.18, 19

WA, per worker $10,000

Plus the premiums avoided over the past five years. WorkCover WA, January 2026.10

ACT $7,500

On-the-spot fine, plus up to double the premiums avoided. WorkSafe ACT.5

NT, a company $179,000

Maximum penalty, plus the cost of any claim. NT WorkSafe, January 2023.15

In Victoria and Queensland, the scheme recovers the unpaid premium plus a penalty of up to 100% of it, and can recover what it pays on a claim: in Queensland, plus 50%20, 21. In the three months to 30 June 2026, NSW’s regulator issued 126 penalty notices ($142,650) and 83 double-premium notices ($3.11 million)22.

Real cases: in September 2026, Vedu Harmi Pty Ltd, a WA fast food business uninsured for almost two years, was fined $38,000 and ordered to pay $8,087.24 in avoided premiums. It was also convicted of failing to notify a worker’s claim and to pay their income compensation23. In NSW, MOS Insulation Pty Ltd was fined $9,900 in 2025, with an $11,000 double-premium order and $5,500 in costs, and its director was fined $5,50024.

When a subbie isn’t insured.

A principal contractor can end up paying for a subcontractor’s workers, or their premiums.

  • NSW A principal is liable for a subbie’s unpaid premiums for the work, including double premiums, unless it holds the subbie’s written statement. It can hold back payment until it gets one, and must keep it for 7 years25. Revenue NSW’s form is the OPT01126.
  • WA For work that’s part of the principal’s business, on a site it controls, the principal and the contractor are both liable for compensation to the contractor’s workers, “right down the contractual chain”27.
  • SA If a contractor who employs workers isn’t registered, the principal can be treated as those workers’ employer28.
  • Tasmania and the NT The principal is liable for compensation to a contractor’s workers, and can recover it from the contractor13, 15.
  • Victoria WorkSafe says you “may be liable if the contractor is injured while performing work for you”29.

Our tradie insurance guide covers licence rules, public liability and tools cover for trades.

FAQ

Common questions.

Is workers compensation compulsory in Australia?

Yes, for most employers, under each state and territory’s own law. NSW and Victoria exempt employers who pay $7,500 or less a year and have no apprentice or trainee, and SA exempts those paying less than $16,806 in 2026–27.

Do I need workers compensation insurance for subcontractors?

It depends on the state’s test and how they work for you. A subbie who supplies only their labour, doesn’t sublet and isn’t running their own business can count as your worker, and in NSW a principal can owe an uninsured subbie’s premiums.

Are contractors with an ABN covered by workers compensation?

They can be. An ABN doesn’t decide it: someone can be a contractor for tax but still a worker for workers’ compensation, depending on how they work for you.

Does a sole trader need workers compensation insurance?

Not for themselves: sole traders and partners generally can’t cover themselves with it, although Queensland sells optional cover. A sole trader who employs someone, or engages a contractor who counts as a worker, generally needs a policy for them.

Do I need workers compensation for family members?

It depends on the state. In WA, family members can be workers even if they live at home. In the NT, live-in family of a sole trader or partnership are covered only if they’re disclosed to the insurer.

What happens if you don’t have workers compensation insurance?

You can be fined, made to pay the premiums you avoided plus a penalty, and made to pay the cost of a claim. In NSW, a court can fine most employers up to $55,000.

Still have a question? A broker can talk it through with you.

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Covers in this guide.

Our guides to what each cover generally does, what it costs and the rules that apply.

Public Liability Insurance Professional Indemnity Insurance

Sources.

  1. Who needs a policy, icare, 2026
  2. Understanding who is and isn’t your worker, WorkSafe Victoria, 2 December 2024
  3. Workplace Injury Management and Workers Compensation Act 1998 (NSW), Schedule 1, NSW Legislation, version from 1 July 2026
  4. Classifying workers or contractors for Workers Compensation purposes, icare
  5. Who needs workers’ compensation insurance, WorkSafe ACT, 28 September 2023
  6. Do I need to register for WorkCover insurance?, WorkSafe Victoria, 19 May 2026
  7. Workers’ Compensation and Rehabilitation Act 2003 (Qld), sections 11 and 50, Queensland legislation, current
  8. Determining who is a worker, WorkCover Queensland, 9 June 2026
  9. Covering your workers, WorkCover WA, 3 February 2026
  10. Employer FAQs, WorkCover WA, 21 January 2026
  11. Who is a worker?, ReturnToWorkSA, 27 April 2026
  12. Register for cover, ReturnToWorkSA, 22 July 2026
  13. Workers Rehabilitation and Compensation Act 1988 (Tas), sections 4B, 29 and 97, Tasmanian legislation, version from 1 December 2025
  14. Workers Compensation Act 1951 (ACT), section 8, ACT Legislation Register, republication 88, 26 November 2025
  15. Workers compensation insurance requirements for employers, NT WorkSafe, 5 January 2023
  16. Who your policy needs to cover, WorkCover Queensland, 28 June 2026
  17. Workplace personal injury insurance, WorkCover Queensland, 1 June 2026
  18. Key changes for employers: workers compensation legislative reform 2026, SIRA, 28 July 2026
  19. Key employer obligations and penalties, SIRA, 29 July 2026
  20. Premium compliance, WorkCover Queensland, 26 November 2025
  21. Premium guideline: failure to register for WorkCover insurance, WorkSafe Victoria, 1 July 2014
  22. Quarterly regulatory update (period ending 30 June 2026), SIRA, 2026
  23. Compliance activities (prosecution results), WorkCover WA, 25 September 2026
  24. SIRA cracks down on insurance fraud in the Workers Compensation and CTP schemes, SIRA, 16 December 2025
  25. Workers Compensation Act 1987 (NSW), section 175B, NSW Legislation, version from 1 July 2026
  26. Subcontractor’s statement (OPT011), Revenue NSW, June 2026
  27. Contractors and subcontractors, WorkCover WA, 27 July 2026
  28. Who is a worker? (guide), ReturnToWorkSA
  29. Your WorkCover insurance responsibilities as an employer, WorkSafe Victoria, 13 June 2023