Being self-employed as a tradie offers a lot of benefits. You get to choose your own jobs and hours and you can take on as much (or as little!) work as you like. It can also be financially rewarding as the financial rewards come directly to you, rather that you receiving a wage. However, it also means that you need to consider the practical side of running a business, which includes workers compensation insurance. To make life easier, we’re here to share our guide to workers compensation insurance for the self-employed.
What is workers compensation insurance?
Workers compensation insurance is a compulsory cover for employers who hire employees as part of their business. If an employee suffers from a work-related injury or illness, workers compensation insurance can help pay for expenses such as ongoing wages, medical bills and rehabilitation costs. Employees may also be eligible for a lump-sum payment in the event of permanent impairment. Workers compensation insurance schemes will differ depending on the state or territory that you live. In Queensland, the scheme is run solely through the government. In South Australia, NSW and Victoria, insurers operate on behalf of the government, while in Western Australia, Tasmania, Northern Territory and the ACT, the scheme is run privately through insurers.
Is it required if you have no employees and only hire subcontractors?
In some cases, your business might be small enough that you have no employees and only hire subcontractors from time to time. If this sounds like you, then you generally don’t need to worry about workers compensation insurance. However, it’s important to be aware that there are certain situations where your subcontractor is legally considered a ‘worker’. This means that you’ll need to make sure they’re covered under your policy. Some circumstances when a subcontractor is considered a worker include if a subcontractor is performing their work under the direct control of an employer and have a fixed hours and salary, they may be considered a worker. The definition of a worker will also differ depending on the state or territory you work in. Speak with your insurance broker if you’re unsure whether workers compensation insurance is required.
What happens if employers don’t arrange workers compensation insurance?
As we’ve already mentioned, workers compensation insurance is compulsory if you have employees. If you don’t have cover in place, you could face a hefty penalty. It’s not just the potential penalty you need to consider – the costs associated with a workers compensation claim can be very high and you’ll be liable for all of these costs. Workers compensation insurance not only provides financial peace of mind for employees but also for employers that you’ll be covered for the costs associated with a claim such as medical bills, rehabilitation costs and ongoing wages. This could include ongoing specialist appointments, physical therapy and equipment such as a wheelchair or crutches.
How is workers compensation insurance calculated?
When you ask for a quote from your insurer for workers compensation insurance, they’ll ask for a wages declaration so the insurer knows how much you in remuneration to your employees. Your industry will also have a classification based on the general risk in your area of work. Additional factors will also be considered such as the location of your work, your claims history and any particular safety issues. Remember to update your insurer with any changes, such as new employees or a change in the type of work that you undertake.
All Trades Cover provide convenient and cost-effective insurance for tradies across Australia. We have experience with the business of all sizes and we understand the specific risks that tradies face. With that in mind, we’ve developed our trade insurance package to ensure that you’re protected financially when things go wrong. To make life easier, we also offer convenient monthly payment options.
To arrange workers compensation insurance for your small business, contact All Trades Cover today on 1300 826 850.