Everything You Need To Know About Work Cover
Work cover is mandatory workers’ compensation insurance for Australian businesses. Learn who needs it, costs, coverage requirements, and reporting deadlines.
A short and sweet one today, covering a topic we get asked about all the time: work cover. A surprising number of business owners don’t realise that this is an absolutely *essential* piece of compliance that you must follow. Here are your questions answered to clear the whole thing up!
Top Highlights
- Employers must report total wages to the Work Cover insurer by 22 March (small businesses) or 27 Oct (large businesses).
- Work Cover or Mandatory Workers’ Compensation Insurance protects employees injured at work and covers medical bills, wage replacement, and rehab, while shielding employers from the full financial burden.
- Work Cover is a legal requirement for most Australian businesses. If you employ people and pay over $7,500/year in wages (in VIC), you likely need Work Cover.
What Is Work Cover? Definition And Purpose Of Work Cover
It’s insurance that pays for medical costs and income replacement costs when an employee is injured in the workplace.
Work Cover is a mandatory form of workers’ compensation insurance that provides financial protection to both employees and employers in the event of workplace injuries or illnesses. It ensures that injured workers receive appropriate medical treatment, rehabilitation, and wage replacement while they recover. Simultaneously, it protects employers from bearing the full financial burden of workplace accidents.
The primary purpose of Work Cover is to create a safer, more supportive work environment. It encourages employers to implement safety protocols and reduce the risk of workplace incidents. Additionally, it serves as a safety net for employees, providing reassurance that they will be supported if an injury occurs.
If you’re setting up a business or reviewing your compliance responsibilities, understanding your legal and financial obligations is crucial. For insights on choosing the best business structure, visit our comprehensive guide here.
Why Do You Need Work Cover?
It’s a legal requirement. If an employee gets injured on the job, you must provide payments which do things like cover any lost income and medical bills. Exactly what this looks like will vary case-by-case but the insurance covers you for any financial circumstance that may arise as a result of the incident.
Key Benefits Of Work Cover For Small Businesses
Work Cover is like a safety net for both your business and your employees. It provides financial support when workplace injuries happen, ensuring everyone is taken care of. Here’s how it helps:
- Financial Protection: Work Cover covers medical bills, lost wages, and rehab expenses, saving your business from unexpected costs.
- Legal Compliance: Staying insured means you meet state regulations, avoiding penalties and legal troubles.
- Employee Support: Injured workers get access to quality medical care and financial help, making their recovery smoother and faster.
- Workplace Safety Incentives: Businesses with fewer claims often enjoy lower premiums, motivating safer practices.
- Dispute Resolution: If disagreements arise, Work Cover offers fair solutions through structured dispute processes.
How Much Does Work Cover Cost?
The amount paid (premium) per year is based on the wages and benefits (the total remuneration) paid to employees. Remuneration has multiple components but the main two to consider are super and wages. The percentage applied to calculate the premium varies by industry classification and your business’s individual risk profile, businesses with fewer claims typically pay lower rates. You can find your industry rate via your state’s WorkSafe website linked above. The minimum cost in Victoria is $330.00 ($363.00 including GST).
Who Needs Work Cover? Understanding Eligibility
Eligibility Requirements For Small Businesses
Any business that employs trainees or apprentices, or if you have employees and pay more than $7,500 per financial year in remuneration (Victorian threshold). Although there are differences between inclusions and exclusions in each state, it is a required insurance throughout Australia. You can get state-by-state guidelines below.
Which Employees Are Covered By Work Cover?
Work Cover applies to a broad range of workers, ensuring protection across different employment types:
- Full-Time and Part-Time Employees: Whether your staff works regular hours or part-time, they are covered under Work Cover.
- Casual Employees: Even if someone works infrequently or without set hours, they are entitled to Work Cover protection.
- Trainees and Apprentices: Businesses employing trainees or apprentices must ensure they have Work Cover coverage.
- Independent Contractors and Freelancers: Depending on the nature of their agreement and how much control the employer has over their work, independent contractors may be eligible for coverage.
- Remote and Hybrid Workers: Employees working from home or in hybrid roles are covered if the injury occurs while performing work duties.
- Labour Hire Workers: If you use a labour hire company, the company providing the workers is typically responsible for providing Work Cover.
Employers should always clarify their responsibilities and ensure compliance with state-specific regulations to guarantee proper coverage.
Common Misconceptions About Work Cover Eligibility
There’s a lot of confusion when it comes to who qualifies for Work Cover. Some small business owners mistakenly think they’re off the hook if they have only a few employees. However, if your payroll exceeds state thresholds, Work Cover is a legal requirement — no exceptions.
Another common myth is that sole traders don’t need to worry about Work Cover. While it’s true that sole traders aren’t typically covered unless they have employees, they should still explore other insurance options to protect themselves.
Part-time and casual employees are sometimes assumed to be ineligible, but that’s not the case. Work Cover applies to them just like full-time employees. The same goes for remote workers — as long as they’re injured while carrying out work-related tasks, they are generally protected.
Contractors often assume they’re responsible for their own insurance, but if their work arrangement resembles that of an employee, they might qualify for coverage. The key factor is how much control the hiring business has over its tasks.
By clearing up these misconceptions and staying informed, both employers and workers can ensure they’re protected and compliant with Work Cover requirements.
How Does Work Cover Work?
Work Cover is designed to provide quick and effective support when workplace injuries occur. Here’s how the process generally works:
- Report the Injury: Employees should inform their employer immediately after an injury occurs. Quick reporting ensures the claim process starts without delay.
- Record the Incident: Employers must document the incident in an injury register, noting details like date, time, and cause.
- Lodge a Claim: Employees complete a Work Cover claim form and provide medical evidence. Employers submit it to their insurer for assessment.
- Claim Assessment: The insurer reviews the claim, including medical reports and incident details, before making a decision.
- Receive Support: If approved, employees can access medical expense coverage, wage replacement, and rehabilitation support. Employers may collaborate on return-to-work plans.
Each state has their own authority and the application is made online on the relevant WorkSafe website. During the application process you will potentially be required to choose the claims agent (businesses like Gallagher Bassett, EML Allianz, Zurich, DXC Claims), depending on the state. Head back to the websites linked above to find the guidelines most relevant to you.
Important note: If your employee works for you in multiple states, you only need to insure them in one state or territory, typically the state where they primarily perform their work. If unsure, consult your insurer or state WorkSafe authority for guidance on which jurisdiction applies.
Any Other Considerations To Know About?
Each year you must report your total employee remuneration to the Work Cover insurer. In Victoria, this is due by 22 March for small employers (total remuneration under $200k) or 27 October for larger employers. Note that reporting requirements and deadlines vary by state, check your state’s WorkSafe website for specific dates and processes. In Victoria, reporting is done through WorkSafe Online, while other states may use different systems or insurer portals.
How you report also varies: in Victoria, reporting is done through WorkSafe Online, while in other states like NSW, you may report directly through your chosen insurer’s portal. Always confirm the process with your state authority or insurer to ensure compliance.
FAQ
1. Are sole traders required to have Work Cover insurance?
Sole traders are usually not covered under Work Cover unless they employ others. However, they can consider other types of insurance for personal protection.
2. How long does it take for a Work Cover claim to be processed?
The timeframe varies depending on the complexity of the case and state regulations. Typically, claims are assessed within 20 business days.
3. Does Work Cover cover psychological injuries?
Yes, Work Cover may cover psychological injuries like stress, anxiety, or depression if they are primarily related to work. However, coverage varies by state, and claims may not be accepted if the injury results from reasonable management action (such as performance reviews or disciplinary processes). It’s important to seek advice specific to your state’s regulations.
4. Are remote workers eligible for Work Cover?
Yes, employees working from home or in hybrid roles are generally covered if the injury occurs while performing work-related tasks.
5. Can a Work Cover claim be denied?
Yes, claims can be denied for various reasons, such as lack of evidence, non-work-related injuries, or late reporting. Employees have the right to appeal a denied claim.
Can’t be bothered adding work cover to the list of things to do? No worries, give us a call and we can sort it out for you.
