Workers Compensation NSW: A Guide for Australian Employers

By Mohammad Barzegar, Director, TQN Personnel · Reviewed by Mohammad Sakhvidi · Updated October 2026 · 8 min read

Workers compensation NSW is the insurance system that pays for medical treatment, lost income and recovery support when a worker is injured or becomes ill because of work. Employers must hold a workers insurance policy with icare or another licensed insurer unless an exemption applies. This guide covers who needs cover, what happens after an injury and where mistakes occur, and it supports our psychosocial hazards guide.

What is workers compensation NSW?

It is a no-fault scheme, so a worker can claim without proving the employer did anything wrong.

Term	Meaning	Why it matters
Workers insurance policy	The employer's insurance that responds to work injury claims.	Without it, the employer may face fines and carry the cost personally.
icare	The NSW agency that oversees workers insurance for many employers.	It is the first place to check for policy and claim information.
Wages declaration	The annual statement of wages used to set the premium.	Under-declaring wages can cause premium adjustments and penalties.
Injury management	The plan for treatment and return to work after an injury.	Early, supportive contact usually leads to better recovery outcomes.
Psychological injury	A work-related mental health injury, such as from bullying or trauma.	It is a compensable injury and a psychosocial hazard to be managed.

Who needs workers compensation NSW insurance

Most NSW employers need a policy, and the exemption is narrow.

Employer situation	Policy needed?
Pays more than $7,500 in annual wages	Yes.
Pays $7,500 or less but employs an apprentice or trainee	Yes. The exemption does not apply.
Pays $7,500 or less and is part of a group for premium purposes	Yes. The group is treated together.
Pays $7,500 or less, no apprentice or trainee, not in a group	Not required, but the owner may still choose to hold cover.
Labour hire provider	Yes. The provider is the employer and covers its placed workers.
Sole trader with no employees	Not required for themselves, but check how workers are classified. An ABN does not decide the question.

Workers compensation NSW penalties for having no policy

The consequences for missing cover are serious, and they fall on the employer.

• Operating without a required policy can lead to fines of up to $55,000 and/or 6 months' imprisonment.
• An uninsured employer may have to pay a worker's claim costs directly.
• Renew the policy before it lapses and keep the certificate of currency where site managers can find it.
• Declare wages accurately each year, including superannuation and allowances where they count as wages.
• Check that the policy matches how you really operate, including any labour hire workers, apprentices and casuals you engage during busy periods.

What workers compensation NSW covers

Cover depends on the policy and the claim, so check the details with icare or the insurer.

• Medical and hospital treatment related to the work injury, as approved under the scheme.
• Weekly payments while the worker cannot work, subject to the scheme's rules and medical evidence.
• Rehabilitation and return-to-work support, including suitable duties where available.
• Psychological injury claims, such as those arising from workplace bullying. See workplace bullying.
• Travel for treatment where the scheme allows it, with receipts kept for every trip.

What employers should do after a workplace injury

1. Make sure the worker gets first aid or medical help straight away, and make the area safe.
2. Notify SafeWork NSW immediately if the incident is notifiable, such as a serious injury or dangerous incident.
3. Record the incident in the register, including the time, place, witnesses and what happened.
4. Notify your insurer and lodge the claim documents promptly, and do not delay while you investigate.
5. Contact the worker, offer support and agree a return-to-work plan with the treating doctor.
6. Review the cause and fix the hazard, then update the risk assessment. See the HR compliance checklist.

What workers should do after an injury

1. Tell your supervisor or employer as soon as possible, and make sure the incident is recorded.
2. See a doctor and say the problem is work-related, then ask for a certificate of capacity.
3. Keep copies of certificates, receipts, emails and any incident report.
4. Lodge a claim with the employer or the insurer, and follow up if you do not get a response.
5. Stay in contact about return to work, and raise any concerns about suitable duties in writing.

• Your employer must not dismiss you, or pressure you not to claim, because of a work injury.

Workers compensation NSW for labour hire, casuals and small business

The employer carries the policy, and the employer is not always who workers expect.

• Labour hire workers are employed by the provider, so the provider normally holds the policy, while the host shares safety duties.
• Casuals are covered in the same way as permanent employees, whatever their hours.
• Small businesses should check the exemption carefully. See HR support for small business.
• Apprentices and trainees count, so an apprentice removes the small-wage exemption.
• Ask for the provider's certificate of currency before a placement starts.

Prevention, return to work and fitness for work

The best claim is the one that never happens, and an early return to suitable work helps recovery.

• Manage psychosocial hazards under the Code of Practice: Managing psychosocial hazards at work (SafeWork NSW, 2021).
• Adopt a clear fitness for work policy, covering fatigue, alcohol and medication.
• Use a trained HR business partner or advisor to manage return-to-work plans where you do not have an HR team.
• Recognise safe behaviour. See employee rewards and recognition.

Common workers compensation NSW mistakes to avoid

• Assuming a casual or labour hire worker is not covered.
• Letting the policy lapse, then discovering it when a claim arrives.
• Under-declaring wages to reduce the premium.
• Delaying the report to the insurer while arguing about fault.
• Treating a psychological injury as less serious than a physical one.

Workers compensation NSW FAQ

Do all employers need workers compensation insurance in NSW?

Most do. Cover is compulsory unless you pay $7,500 or less in annual wages, do not employ an apprentice or trainee and are not part of a group for premium purposes. Check your position with icare before relying on the exemption.

What is the penalty for not having workers insurance?

Operating without a required policy can lead to fines of up to $55,000 and/or 6 months' imprisonment. An uninsured employer may also have to pay claim costs directly, which can be far more than a premium.

Are casual and labour hire workers covered?

Yes. Casual employees are covered in the same way as permanent staff. Labour hire workers are employed by the provider, which normally holds the policy, while the host and provider share work health and safety duties.

Can you claim for a psychological injury at work?

Yes, psychological injuries can be claimed where they are work-related, such as those from workplace bullying. Report the problem, see a doctor and keep records. Employers must manage bullying as a psychosocial hazard under the Code of Practice.

Next step: get workers compensation NSW cover right

Confirm your policy is current, your wages declaration is accurate and your return-to-work steps are written down. At TQN Personnel, we place workers across Sydney and can help you find workers who are inducted before they start. This is general information, not legal, tax or financial advice, so check icare, SafeWork NSW or an employment lawyer for your situation.

Related guides

• Psychosocial hazards
• Workplace bullying
• Fitness for work policy
• HR compliance checklist
• HR business partner
• HR support for small business
• Employee rewards and recognition