2 min read

Do you need workers’ compensation insurance for contractors?

By Brihony Tulloch

Most contractors are responsible for their workers’ compensation insurance. However, if you engage contractors on a regular and systematic basis, those workers may be ‘deemed workers’ under workers’ compensation law. Therefore, your business will need to take out workers’ compensation insurance for them.

Failing to correctly insure deemed workers means your business may be exposed to penalties, including double premiums and additional penalties.

But it’s not a hard and fast rule across all states and territories.

Use the criteria below to determine whether a contractor is a deemed worker according to the legislation in your jurisdiction:

Australian Capital Territory:

  • Workers Compensation Act 1951.
  • Do not supply their own tools of trade or are not liable for the cost of rectifying any defect.
  • Individually, all the work they do on a regular and systematic basis requires insurance.

New South Wales:

  • Workers Compensation Act 1987 and the Workplace Injury Management and Workers Compensation Act (1988).
  • A contract to perform any work exceeding $10 in value is made with the contractor.
  • The work is not incidental to a trade or business regularly carried on by the contractor either in the contractor’s own name, or under a business or firm name.
  • They do not sublet the contract or employ any workers.

Northern Territory:

  • Return to Work Act.
  • They perform work or service of any kind for another person under a contract.
  • Under this contract they are considered an employee for PAYG purposes.


  • Workers’ Compensation and Rehabilitation Act 2003.
  • They make a contract for the performance of work that is not incidental to a trade or business regularly carried on by the contractor
  • They do not sublet the contract or employ a worker, unless the contractor also performs part of the work personally.
  • They are party to a contract of service with another person who lends or lets on-hire the worker’s services to someone else.

South Australia:

  • Return to Work Act 2014.
  • A person who performs work under a contract of service.
  • Or a self-employer worker.
  • Also includes a former worker and the legal personal representative of a deceased worker.


  • Workers Rehabilitation and Compensation Act 1988.
  • A contractor is a deemed worker when:
  • the work exceeds $100 and is not incidental to a trade or business regularly carried on by the contractor; and
  • the contractor does not sublet the contract or employ any workers.


  • Workplace Injury Rehabilitation and Compensation Act 2013, Accident Compensation Act 1985 Workers Compensation Act 1958.
  • They are in a contractual arrangement with you to provide services for reward.
  • Their services are not ancillary to the materials or equipment already provided by the contractor.
  • Their gross income from providing the services is at least 80% of the total gross income the contractor earned from similar services provided in the relevant period.

Western Australia:

  • Workers’ Compensation and Injury Management Act 1981.
  • They are engaged by another person under a contract of service to work for the purpose of that person’s trade or business.
  • They receive remuneration for their personal manual labour or services.
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