Work compensation obligations for NSW employers

Last updated: December 2020 | 4 min read

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All employers in NSW have obligations under the Workers Compensation Act 1987 and the Workplace Injury Management and Workers Compensation Act 1998.

This article explains the main responsibilities.

The basics

All NSW employers must have a current workers compensation policy that covers all of their workers.

This is a document that sets out your policy on compensation should an accident occur. Of course it must comply with the law in regards to minimum standards of compensation. It might provide for a higher compensation bracket if you like.

What are my occupational health and safety responsibilities?

Under the Occupational Health and Safety Act 2000, employers have responsibilities for their workers and any other persons who may be present at their workplace.

Responsibility to workers

Under section 8(1) of the OHS Act ‘an employer must ensure the health, safety and welfare at work of all employees of the employer’.

This requires that the employer ensure that:

  • Safety risks are eliminated or controlled;
  • Workers are provided with any safety gear needed to perform their tasks;
  • Information, training (including induction) and supervision are provided;
  • Safety procedures are developed for any equipment or substance that is used in the Workplace;
  • The workplace itself, or the workplace layout, does not put workers at risk – areas that should be considered are noise, dust, lighting, ventilation, uneven or slippery surface, electrical installation and leads, traffic movement and general housekeeping;
  • Facilities for workers – such as kitchen, toilet, washing and changing facilities (if appropriate) – are adequate.

Division 2 of the OHS Act requires employers to consult with their workers when decisions that may affect their health and safety are being considered.  There are three options for consultation:

  • OHS committee;
  • OHS representatives;
  • Other arrangements agreed between the employer and workers.

Employers are required to consult their workers when:

  • Risks in the workplace are being assessed and measures to   control these risks are being considered. This is because it is often the workers who know more about the risks and who have ideas for minimising them seeing as they work there more than the employer;
  • Changes to the workplace are being considered;
  • Work systems or work tasks are being introduced, reviewed or changed;
  • Purchasing new equipment or substances for the workplace;
  • The adequacy of workplace amenities is being considered.

Responsibility to others 

Section 8(2) of the OHS Act requires employers to ensure that persons other than their workers are not exposed to risks while in the employer’s workplace.  These persons include contractors, customers and visitors.


Workers compensation premiums

All NSW employers are required to pay basic workers compensation premiums.

The NSW Workers Compensation Scheme is funded by the premiums paid by employers and provides medical and financial support to injured workers.

Workers compensation insurance premiums are based on a number of factors, including the industry in which you operate and the amount of your annual wages and the dust diseases levy. As you will be aware, the money you pay goes towards paying the compensation for workers who are injured and unable to work for whatever reason.

Wage records

Employers are required to provide their worker with a wage estimate within two months of the start of the policy period. Employers are required to provide a declaration of actual wages paid within two months of the end of the policy period. All employers must keep a record of wages paid for the previous seven years.

Who is defined as a`worker'

Generally, a worker has a broader definition than an ‘employee’.

A worker is someone who receives wages or commission, regardless of the number of hours worked each week, and includes workers who work away from the employer’s premises.

If a person or business employs or hires workers on a regular, casual or contract basis, they are considered to be an employer and must have a workers compensation insurance policy.

Some people working as contractors are also treated as workers for workers compensation purposes, depending on the individual circumstances.

If there is a workplace injury a contractor may be entitled to receive workers compensation. In some cases the employer (or principal contractor) must cover the contractor for workers compensation and declare any payments made as wages.

Injury management responsibilities

When there is an injury at work all employers must:

  • Attend to the injured worker as soon as possible;
  • Notify your insurer or agent within 48 hours and complete your incident report form as soon as possible;
  • Cooperate and participate with the insurer or agent to develop an injury management plan for the injured worker;
  • Implement and monitor a return to work plan for the injured worker.

Employers who notify their insurer (within 5 days) and ensure the register of injuries has been updated will have their claims excess waived. The claims excess payment is the equivalent of one week of the worker’s weekly compensation.


Employers who do not have a workers compensation policy, or who provide false information can incur penalties including a fine of up to $55,000 and or six months imprisonment.

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