Are You Covered By Workers Compensation As A Sole Trader Or Contractor in Western Australia?
Quick Answer: Are You Covered by Workers Compensation as a Sole Trader or Contractor in WA?
- No, sole traders are NOT automatically covered under WA’s workers compensation laws.
- Contractors may be covered if classified as a worker under WA law.
- Employers must provide workers compensation for subcontractors who meet the legal definition of a worker.
- Sole traders and all employers must arrange workers compensation insurance for their employees—failure to do so is illegal.
- Employers without workers compensation insurance face significant penalties.
🔎 Not sure if you qualify? Find Out with a Free Claim Review – It Takes 2 Minutes
Who Needs Workers’ Compensation in WA?
WA law requires workers compensation insurance for:
- Employees (full-time, part-time, casual).
- Apprentices and trainees.
- Contractors and sub-contractors, if deemed workers under WA law.
- Subcontractors in high-risk industries, such as construction and mining.
Need help to make sens of WorkCover claim in WA? Read our WorkCover WA guide.
Who Is Not Automatically Covered?
- Sole traders are not considered employees unless they purchase their own workers compensation insurance policy.
- Independent contractors, unless they meet the deemed worker test.
- Business owners who do not pay themselves wages.
💡 For official WA government guidance, visit WorkCover WA.
What Are the Penalties for Not Providing Workers Compensation in WA?
WA law states that employers must provide workers’ compensation for their employees, including sole traders and contractors who meet the legal worker classification. Failure to comply can result in fines and liability for compensation cover.
Legal Consequences Under WA Workers Compensation Law
WorkCover WA has the authority to:
- Fine employers for failing to provide workers compensation insurance.
- Hold employers liable for compensation for lost wages and medical expenses of injured workers.
- Recover unpaid premiums and impose additional penalties on businesses that fail to compensate workers.
📌 Key Takeaway for WA Employers: If you hire a contractor, ensure you understand your workers compensation insurer obligations. Failure to comply can result in severe financial consequences. Learn about employer obligations in WA with this guide.
Insurance Comparison Table: Are You Covered?
| Worker Type | Workers’ Compensation Coverage? | Alternative Coverage Needed? |
|---|---|---|
| Sole Trader (No Employees) | Not Covered by their own business. Working Directors can elect into the workers compensation scheme. | Income Protection / TPD Insurance (Please note this is not a legal requirement) |
| Independent Contractor | Maybe (Depends on classification) | Check if you’re a “worker” under WA law |
| Subcontractor (Works for Another Business) | Maybe (If deemed a worker) | Employer may need to provide workers’ compensation insurance |
| Employee (Full-Time or Part-Time) | Covered | No additional coverage needed |
Can Sole Traders Get Workers Compensation in WA?
Sole traders are generally not able to obtain workers compensation policy coverage for themselves.
The definition of worker includes an individual has contracted with a person for the performance of work by the individual and the work is not work in the course of or incidental to a trade or business regularly carried on by the individual in the individual’s own name or under a business or firm name; and the individual does not sublet the contract; and if the individual employs a worker, the individual performs part of the work personally.
If you’re a sole trader or contractor, you are NOT automatically covered under WA’s workers compensation laws.
Workers compensation insurance applies only to “workers,” and sole traders must consider other insurance options. If you are a working director you may be able to choose to opt into the workers compensation scheme.
How Can Sole Traders Protect Themselves?
- Workers Compensation Insurance – Not available unless you are a working director of a company.
- Income Protection Insurance – Helps cover weekly compensation in case of injury.
- Public Liability Insurance – Protects against claims from third parties.
- Total & Permanent Disability (TPD) Insurance – Provides a lump sum compensation for severe injuries.
Sole traders and contractors must take compensation insurance for their employees to cover any potential financial risks.
When Is a Contractor Considered a Worker?
A contractor may qualify for workers’ compensation if they:
- Work under a contract for a principal employer.
- Do not control how the work is done (e.g., hours, methods, tools).
- Do not subcontract work to others.
- Are hired by a contractor and primarily paid for labor.
Hypothetical Scenario: When a Contractor May Be Deemed a Worker
A self-employed electrician works exclusively for one builder and suffers a fall on-site. Under WA’s workers compensation laws, they may be deemed a worker if they:
- Follow the principal’s work schedule.
- Use tools provided by the principal.
- Receive payments regularly, similar to wages or salary received by employees.
If a contractor meets these conditions, they may be able to claim workers compensation under WA law for a work-related injury or illness.
Need Help? Contact Foyle Legal for an obligation-free initial consultation. We are one of the best-rated compensation law firms in Perth, and we represent qualified personal injury clients on a No Win, No Fee basis.
Employers Misclassifying Workers – Avoidance Arrangements
Some businesses misclassify employees as contractors to avoid providing workers’ compensation.
Employers Can Face Legal Action If They:
- Hire workers as “independent contractors” but control how and when they work.
- Require workers to have an ABN but do not allow them to work elsewhere.
- Shift responsibility for workers compensation insurance while still treating them as employees.
Employers must provide workers’ compensation coverage to workers even if they are labelled contractors, as per WA’s compensation insurance rules.
If you’ve suffered a work injury as a FIFO mining worker or in a construction accident, contact Foyle Legal to ensure you’re not misclassified as a contractor and get the compensation you deserve.
How to Make a Workers Compensation Claim If Denied
Many sole traders and contractors believe filing a workers compensation claim guarantees approval. However, claims can be denied, especially if there is unclear employment classification.
Steps to Take If Your Claim Is Denied:
- Request a Written Explanation – Insurers must provide a written reason for rejection under WA’s workers compensation laws.
- Gather Evidence – Include medical reports, work contracts, and statements from co-workers.
- Confirm Your Status Under WA Law – If a deemed worker, you are eligible for compensation.
- Seek Legal Advice – Workers compensation lawyers can review your case.
- File a Formal Dispute – WorkCover WA allows workers to challenge denied claims.
Takeaway: Discuss your worker’s compensation claim with a WorkCover WA lawyer today if you believe you are eligible for workers’ compensation but were wrongly denied.
Final Thoughts: Don’t Get Caught Out
Workers’ compensation for contractors and sole traders in WA is complex.
- If you’re a sole trader, you often will not be eligable for workers compensation insurance.
- If you’re a contractor, ensure you understand your rights.
- If you’re an employer, comply with WA law to avoid penalties.
If you are unsure about your coverage, Foyle Legal offers a FREE claim check to help you understand your rights.
Find Out if You Qualify for Workers’ Compensation – Free Claim Review (Takes 2 Minutes!)
