icare Workers Compensation: The basics for NSW businesses

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icare Workers Compensation: The basics for NSW businesses

Workers’ compensation can feel complicated, particularly when deciding who must be covered and what information needs to be reported. Understanding a few core responsibilities can make the process easier for NSW businesses. 

There are two areas that are especially important for NSW businesses: knowing when a policy may be required and declaring wages correctly. 

Do you need a policy? 

If you employ workers in NSW, workers compensation insurance is compulsory unless an exemption applies. The policy provides cover when an employee experiences a work-related injury or illness and may assist with weekly compensation, medical expenses and rehabilitation services. 

An employer may be exempt from holding a workers compensation insurance policy when the following conditions are met:

• Pays $7,500 or less in wages during the financial year
• Does not employ an apprentice or trainee
• Are not a member of a group of related businesses for premium purposes
• Are not involved in certain industries such as taxi driving, hire car driving, horse racing, professional boxing, wrestling or combat sports.

Who is considered a worker? 

Workers: include full-time employees, part-time employees, casuals, apprentices, labour hire, cash-in-hand workers and working directors of companies who perform normal employee duties.

Might be Workers: Interstate workers and Contractors - these require closer consideration because their circumstances and working arrangements affect whether they are covered. Some contractors are deemed workers, despite having an ABN or contractor status for tax.

Why are wage declarations important? 

Employers with a policy are legally required to report actual wages after each policy period. Actual wages must be submitted within four months of the renewal date and are compared with the estimated wages previously provided. This comparison may result in an additional payment or refund. 

Submitting accurate wage information helps icare calculate a fair premium. Late declarations may also lead to a 30% loading on the wages used to calculate the renewal premium and could affect eligibility for the Safe Employer Reward. 

The key is to review your workforce, keep wage records current and submit declarations on time. If you are uncertain whether someone is a worker or whether your business needs a policy, seek guidance before making a decision, WDF accountants and bookkeepers are always here to help.