To all employers, what happens if you do not have WorkCover insurance?

WorkCover Queensland provides accident insurance. Accident insurance will compensate workers when they suffer from work-related injuries or illnesses. All employers in Queensland must pay for a WorkCover insurance policy unless they are self-insured. Not having the proper insurance policy in place may lead to significant penalties when a work-related injury does occur. We have written this article to shed some light on who needs insurance and what are the consequences of not having WorkCover insurance.


1. Employers’ responsibility 

With the relevant Queensland regulations, all employers must provide accident insurance to all workers within 5 days of employing them. If there is no accident insurance policy in place, there may be significant fines and penalties.

If a worker had a work-related injury, WorkCover insurance will cover their medical costs and lost wages as well as payouts from possible common law claims.

You might find it interesting that unpaid interns are also covered under WorkCover. It must be noted that WorkCover insurance only applies to workers and not independent contractors.


To all employers, what happens if you do not have WorkCover insurance?


2. Workers vs independent contractors 

A worker is defined as:

  • a person who works under a contract
  • an employee for the purpose of PAYG tax assessments, and
  • must be an individual

There are numerous other distinctions between a worker and an independent contractor.

It has become very common to see some businesses asking their workers to register an ABN. Believing that with a registered ABN, it has transformed a worker into an independent contractor and therefore magically remove the need to pay WorkCover Premiums.

But in reality, this is not the case. The legal definition of a worker is quite broad. This means that just because a worker has an ABN, it does not make that worker an independent contractor. So, if a workplace injury occurred, the employer cannot escape their duty to compensate the injured worker.

We will be writing an article explaining the differences between a worker and an independent contractor. Please stay tuned, consider subscribing to our newsletter, so you can always stay up to date with the latest changes in the law.


3. What happens if the employer does not insure their workers?

According to the relevant Queensland laws, if an employer has failed to insure a worker after 5 days of employment, the employer can be given a fine of 275 penalty units (Please click here to see the current value of the penalty unit).  In 2021, it would equate to $36,698.75.

If a workplace injury does occur, and the employer is not insured, the claim will still be handled by WorkCover. This means that, even if the employers did not properly insure their workers, they still cannot escape their legal obligations to compensate an injured worker.

Under Queensland law, Workcover can then recover from the employers

  • the amount it has paid to the worker for compensation;
  • an additional penalty of up to 50% of the amount paid to the worker; and
  • the unpaid premium.


To all employers, what happens if you do not have WorkCover insurance?


4. A case study 

To help you better understand the consequences of not having the proper workers’ compensation insurance, we have created a case study below to demonstrate the financial consequences:

  • Weekly compensation and medical benefits paid: $100,000
  • Common law damages paid: $400,000
  • Total compensation: $100,00 + $400,000 = $500,000
  • Penalty: 50% of $500,000 = $250,000
  • You will have to pay WorkCover Queensland: $500,000 + $250,000 + unpaid premium + $36,698.75 (penalty for failing to insure)

Whereas, if you had the proper workers’ compensation insurance, you would be saving a significant amount of money. You would not pay $786,698.75 and premiums. You would only need to pay the premiums and excess if there is any.


5. Conclusion 

As an employer, you must have the correct insurance in place. Not having WorkCover insurance is not a risk worth taking, this should be clear after reading the case study. If you are unsure about your WorkCover obligations, give us a call and we can help you figure out the best way to achieve success with your business.



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Special notice: This article is for informational purposes only and cannot be regarded as legal advice. Please contact us for specific advice tailored to your situation.

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