Workers’ Compensation (and Employer’s Liability) by State/Territory

Here’s a breakdown of the workers’ compensation schemes and average premium rates (as percentages of total wages) for the most recent financial years where data is readily available. Note that these are average rates and can vary significantly for individual businesses based on industry, claims history, and other factors.

Key Concepts:

• Workers’ Compensation: A no-fault scheme providing financial support (medical expenses, lost wages, rehabilitation) to employees injured or becoming ill due to work. It’s mandatory for employers.
• Employer’s Liability (Common Law Damages): This part of the Workers’ Compensation policy covers the employer’s legal liability to pay damages to an injured worker if the worker can prove the employer’s negligence (e.g., failure to provide a safe working environment) was the cause of the injury. This is usually in addition to the no-fault benefits.

Average Premium Rates (as a percentage of total wages for 2023-24 or 2024-25, where available):

• New South Wales (NSW): 
  • Scheme: Regulated by the State Insurance Regulatory Authority (SIRA), with icare as the nominal insurer for most employers. Some large employers can be self-insurers.
  • Average Premium Rate (2024-25): The average rate is set to increase by 8% for 2024-25, in line with a statutory direction to cap increases at 8% per annum for three consecutive years (2023-24 to 2025-26). The average rate for 2023-24 was around 1.6%.
  • Coverage: Covers statutory benefits and common law claims for negligence.
• Victoria (VIC): 
  • Scheme: WorkSafe Victoria is the primary insurer.
  • Average Premium Rate (2024-25): The average premium rate is 1.8% of the state’s rateable remuneration. This was an increase from 1.272% in 2022-23.
  • Coverage: Covers statutory benefits and common law claims.
• Queensland (QLD): 
  • Scheme: WorkCover Queensland is the sole government-owned insurer.
  • Average Premium Rate (2024-25): The average net premium rate will move from $1.29 to $1.343 per $100 of wages (or 1.343%) after discounts for 2024-25. Queensland often boasts one of the lowest average premium rates.
  • Coverage: Covers statutory benefits and common law claims.
• Western Australia (WA): 
  • Scheme: Regulated by WorkCover WA, with a competitive market of licensed private insurers.
  • Average Premium Rate (2024-25): The average recommended premium rate for 2024-25 is 1.732% of total wages, a slight increase from 1.727% in 2023-24.
  • Coverage: Covers statutory benefits and common law claims.
• South Australia (SA): 
  • Scheme: Regulated by ReturnToWorkSA, which is the sole insurer.
  • Average Premium Rate (2023-24): Around 1.85%.
  • Coverage: Covers statutory benefits and common law claims.
• Tasmania (TAS): 
  • Scheme: Regulated by WorkSafe Tasmania, with a competitive market of licensed private insurers.
  • Average Premium Rate (2023-24): Around 1.9%.
  • Coverage: Covers statutory benefits and common law claims.
• Australian Capital Territory (ACT): 
  • Scheme: Regulated by WorkSafe ACT, with a competitive market of licensed private insurers.
  • Average Premium Rate (2023-24): Around 2.1%.
  • Coverage: Covers statutory benefits and common law claims.
• Northern Territory (NT): 
  • Scheme: Regulated by NT WorkSafe, with a competitive market of licensed private insurers.
  • Average Premium Rate (2023-24): Varies significantly by industry; historically can be higher for some high-risk sectors.
  • Coverage: Covers statutory benefits and common law claims.
• Commonwealth Schemes (Comcare and Seacare): 
  • Comcare: Covers Commonwealth government employees and certain national employers.
  • Seacare: Covers seafarers.
  • Premium rates and coverage vary based on the specific industry and employer under these schemes.

Factors Influencing Individual Premiums:

Beyond the state average, your business’s specific premium will be determined by:

• Industry Classification: Higher-risk industries (e.g., construction, manufacturing, mining, healthcare) have higher premium rates.
• Total Wages Paid (Remuneration): This is the primary basis for calculation in most states.
• Claims History: Businesses with a poor claims history will pay significantly higher premiums (experience rating).
• Safety Performance and Return-to-Work Programs: Employers who demonstrate strong safety records and effective injury management often receive discounts or incentives.
• Excess/Deductible: Some schemes allow for options that can influence the premium.

Coverage of Workers’ Compensation (including Employer’s Liability)

Generally, Workers’ Compensation schemes (and the embedded Employer’s Liability) cover:

• Statutory Benefits (No-Fault): 
  • Weekly Payments: For lost wages while the worker is incapacitated due to a work-related injury or illness.
  • Medical and Hospital Expenses: Costs for treatment, medication, surgery, and rehabilitation.
  • Rehabilitation Services: Programs to assist the injured worker in returning to work.
  • Lump Sum Payments: For permanent impairment (a permanent physical or psychological disability).
  • Death Benefits: Financial support for dependents in the tragic event of a work-related fatality.
• Common Law Damages (Employer’s Liability): 
  • This covers the legal liability of the employer if an injured worker can prove that the employer’s negligence (a breach of duty of care to provide a safe workplace) caused or contributed to their injury.
  • These claims are typically for “pain and suffering,” economic loss beyond statutory benefits, and future medical expenses, and are usually pursued if the injury is significant.
  • The Workers’ Compensation insurer will typically manage the defence and payout of these common law claims up to the policy’s limits.

Important Note: While the common law “Employer’s Liability” is included in Workers’ Compensation policies, it’s crucial to understand that it generally only covers claims made by your employees for negligence. It does not cover:

• Contractors: If contractors are genuinely independent, they may not be covered by your Workers’ Compensation, and you might need Public Liability insurance for injuries they sustain that are not your direct responsibility. However, the definition of “worker” can sometimes extend to certain contractors depending on the state legislation.
• Third-party Claims: If a member of the public or a client is injured on your premises, that falls under Public Liability insurance.
• Fines and Penalties: Fines imposed by Work Health and Safety (WHS) regulators for breaches of safety laws are generally not insurable.
• Intentional Acts: Deliberate acts of wrongdoing by the employer.

Given the complexity and state-specific nature of Workers’ Compensation in Australia, it is highly recommended that businesses consult with an insurance broker or the relevant state/territory Workers’ Compensation authority to ensure they have the correct and adequate coverage for their operations.