What is workers compensation insurance in Australia?

Workers compensation insurance is compulsory cover for work-related injury and illness. It pays for medical treatment, part of a worker's wages, and rehabilitation while they recover. Every Australian employer generally needs it, and each state and territory runs its own scheme with its own regulator and rules.

If you employ workers, you generally need this cover in the state or territory where they work. That includes full-time, part-time, casual, apprentice and trainee workers. The system is no-fault: a worker does not need to prove you were negligent. They only need to show the injury or illness is connected to their work. Safe Work Australia confirms that employers must have insurance to cover their workers if they get sick or injured because of work.

Depending on the state, you may hear it called WorkCover, WorkSafe cover, or simply workers comp. These are different state names for the same type of compulsory scheme.

The cover can help pay for medical treatment, a portion of lost wages, rehabilitation, and lump sum payments for permanent impairment. It supports both sides. The worker gets financial support without needing to sue. The employer avoids carrying the full cost of a workplace injury claim.

At a glance

upcover arranges workers compensation insurance for eligible Australian employers.

Is workers compensation compulsory in Australia?

Yes. Every state and territory requires employers to hold workers compensation insurance, and in most cases the obligation starts once you employ your first worker. The Fair Work Ombudsman and Safe Work Australia both confirm the requirement. Registration timing, worker definitions, and penalties for going uninsured vary by state. For the full state-by-state rules and thresholds, see upcover's guide on whether workers compensation is compulsory in Australia.

Who needs workers compensation insurance?

Employers with staff

Any business that employs workers needs this cover. Full-time, part-time, and casual employees are all covered under the relevant state scheme.

Apprentices and trainees

Apprentices and trainees are treated as workers in most states. Cover is required from their first day, not after a probation period or minimum hours threshold.

Contractors

Some contractors are "deemed workers" for the purposes of these schemes. This happens when the contractor is engaged primarily for their personal labour rather than to deliver a specific result or supply goods. The rules vary by state and contract structure. If a contractor holds their own workers compensation policy, they are generally covered under their own arrangement. Keep a copy of their Certificate of Currency on file.

Sole traders

Sole traders are not employees of their own business, so the scheme does not cover their own injury or illness.

If you are a sole trader and want income support after a work-related injury, check personal accident and sickness insurance instead. That cover is designed for self-employed workers who cannot claim under an employer scheme.

State and territory schemes

Workers compensation is state-based. The rules, regulator, claims process, and premium calculation depend on where your workers are based.

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• NSW: regulated by SIRA, with icare acting as the Nominal Insurer
• Victoria: managed by WorkSafe Victoria
• Queensland: managed by WorkCover Queensland
• Western Australia: regulated by WorkCover WA, with approved private insurers
• South Australia: managed by ReturnToWorkSA
• Tasmania: regulated by the WorkCover Tasmania Board
• ACT: regulated by WorkSafe ACT, with private insurers
• Northern Territory: managed by NT WorkSafe

Check the relevant state or territory authority for current rules before arranging cover. For a national overview, see Safe Work Australia's workers compensation page.

How does a workers compensation claim work?

The claims process follows a similar path in every scheme, though timeframes and forms differ by state.

• The worker reports the injury or illness to the employer as soon as possible and seeks medical treatment.
• The employer records the injury and notifies the scheme or insurer within the required timeframe. For serious injuries, this is often within 48 hours to a few days.
• The worker lodges a claim form along with a certificate of capacity from their treating doctor.
• The insurer or scheme assesses the claim and decides liability, usually within set statutory timeframes.
• If the claim is accepted, benefit payments begin and a return-to-work plan is set up. Most schemes require employers above a certain size to have a formal return-to-work program in place.

The employer's role does not end at lodgement. Supporting early and safe return to work is a scheme obligation in most states. It is also one of the main ways employers keep future premiums down.

In practice, a claim can be as simple as this: a warehouse worker injures their back lifting stock. The scheme may help pay for medical treatment, physiotherapy and part of their wages while they recover. The employer reports the injury and supports the return-to-work plan.

What does workers compensation cover?

Workers compensation may help cover costs linked to work-related injury or illness, subject to the rules of the relevant state scheme.

Weekly wages

A worker unable to perform their usual duties may receive a portion of their pre-injury earnings. Most schemes pay a higher percentage in the first weeks and step down over time. The exact percentages and duration vary by state.

Medical and hospital expenses

Depending on the scheme and claim, this may include GP visits, specialist consultations, surgery, physiotherapy, medication and hospital stays.

Rehabilitation

Physical and occupational rehabilitation to help the worker recover and return to work safely. All schemes focus on supporting return to work as early as medically appropriate.

Permanent impairment

Lump sum payments for workers who sustain a permanent impairment from a workplace injury. The amount depends on the degree of impairment assessed under the relevant state's guidelines.

Death benefits

If a worker dies because of a workplace injury or illness, lump sum and periodic payments to dependants may be available under most schemes.

What is a workers compensation industry classification?

Every scheme assigns your business an industry classification based on its predominant activity. In NSW this is called a Workers Compensation Industry Classification, or WIC for short. Other schemes use their own classification tables built on similar principles.

The classification sets the base rate applied to your wages, and it reflects the claims performance of your whole industry. A scaffolding business and a bookkeeping firm sit in different classifications because their injury risk is different. Your classification appears on your policy or renewal notice.

Classification is the single biggest driver of what you pay, so it is worth checking yours is right. If your business activity has changed, or the classification does not reflect what you predominantly do, contact your scheme or insurer to have it reviewed.

How much does workers compensation cost?

Premiums are calculated as a percentage of your total wages, based on your industry classification and claims history. Higher-risk industries pay higher rates, and each state publishes its own average rate annually. For current 2026-27 state rates, worked examples by industry, and per-employee estimates, see upcover's guide on how much workers compensation insurance costs.

What happens if you do not have workers compensation?

Operating without this cover can lead to serious consequences. Depending on the state or territory, this can include fines, backdated premium assessments, and liability for uninsured claim costs.

If a worker is injured while you are uninsured, you may need to fund the entire claim yourself. That means medical costs, lost wages, rehabilitation, and any compensation awarded. Workplace injury claims can become expensive quickly, and the business or business owner may be personally exposed.

Not having cover can also affect your ability to win contracts, pass audits, or satisfy client and contractor obligations. Many head contractors and commercial clients require proof of cover before engaging subcontractors or service providers.

Workers compensation vs other business insurance

This cover handles workplace injury and illness for employees. It does not cover everything. Employers liability insurance covers common law claims where employer negligence is alleged. Some workers compensation policies include this as an extension.

Personal accident and sickness insurance covers the individual, usually a sole trader or contractor. If you are self-employed without staff, personal accident is the cover to check instead.

Management liability insurance covers employment-related claims such as unfair dismissal, discrimination, and harassment. Some employers arrange both covers because they deal with different risks.

How to arrange workers compensation insurance

To arrange cover, you typically need your ABN, business name, and the state or territory where your workers are based. You also need your number of workers, estimated annual wages, industry classification, and claims history.

In some states, you register directly with the state scheme (icare in NSW, WorkCover in QLD). In others, you choose from approved private insurers or arrange cover through a broker.

If your business also needs management liability, public liability, or business pack insurance, upcover can help arrange multiple covers in one place.

About upcover

upcover is a digital-first insurance broker helping Australian small businesses arrange the right insurance online. upcover arranges workers compensation insurance for eligible Australian employers, with access to 80+ insurance partners.

70,000+ businesses covered across Australia. 4.9/5 customer rating. Instant Certificate of Currency on policy confirmation, where available for the relevant policy.

upcover is a Corporate Authorised Representative (CAR 1299211) of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078.

Arrange workers compensation insurance through upcover

Frequently asked questions

Is workers compensation insurance compulsory in Australia?

Yes. Employers in every Australian state and territory generally need workers compensation insurance if they employ workers. The rules, regulators, and premium structures differ by state.

What is WorkCover?

WorkCover is the name used for the workers compensation scheme or regulator in several states, including Queensland, Western Australia, and Tasmania. It is the same type of compulsory cover as workers compensation. The name changes by state, but the purpose is identical: supporting workers injured because of work.

Who needs workers compensation insurance?

Businesses with employees need workers compensation. Full-time, part-time, casual, apprentice, and trainee workers are all covered. Some contractors are treated as workers depending on state rules and contract structure.

Do sole traders need workers compensation?

Sole traders do not need this cover for themselves because they are not employees of their own business. If a sole trader employs other workers, those workers need to be covered. For personal injury cover, sole traders should check personal accident and sickness insurance.

What does workers compensation cover?

Workers compensation may help cover weekly wages while the worker recovers, medical and hospital expenses, rehabilitation, lump sum payments for permanent impairment, and death benefits for dependants.

How does a workers compensation claim work?

The worker reports the injury and sees a doctor, the employer notifies the scheme or insurer, and a claim form with a certificate of capacity is lodged. The insurer decides liability within statutory timeframes. If accepted, benefits begin and a return-to-work plan is put in place.

How much does workers compensation cost?

Premiums are a percentage of total wages, set by your industry classification, state scheme, and claims history. See upcover's guide on workers compensation insurance costs for current state rates and worked examples.

What happens if I do not have workers compensation?

Depending on the state or territory, you may face fines, backdated premiums, and liability for uninsured claim costs. If a worker is injured while you are uninsured, you may need to fund the claim from your own resources.

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_{The information in this article is general in nature and provided for informational purposes only. It does not constitute personal insurance, legal, employment, or business advice. Workers compensation rules, premiums, schemes, benefits, and penalties vary by state and territory and can change. Always confirm current requirements with the relevant state or territory workers compensation authority, a registered accountant, or a qualified adviser before acting. All insurance products arranged through upcover are subject to the terms, conditions, limits and exclusions contained in the relevant policy wording and Product Disclosure Statement. Before deciding whether a particular insurance product is right for you, please read the relevant PDS and consider your personal circumstances. upcover Pty Ltd ABN 17 628 197 437 is a Corporate Authorised Representative (CAR 1299211) of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078. upcover arranges insurance products with selected insurers and underwriters and does not compare all general insurers or insurance products available in the market.}