Australia workers compensation is a state-based system — each state and territory has its own workers compensation scheme, governed by its own legislation, with different insurers, different premium structures, and different entitlements. The schemes are funded by employer premiums and provide compensation to employees who suffer work-related injuries or illnesses, covering medical expenses, lost wages, rehabilitation, and lump-sum payments. The employer’s obligations include holding a workers compensation insurance policy, reporting injuries promptly, facilitating return-to-work programs, and not dismissing an employee during a period of compensation.
This guide covers the state-by-state scheme structure, employer obligations, the claim process, and the return-to-work requirements.
Key takeaways
- Workers compensation is a state-based system — each state and territory has its own legislation and scheme.
- Employers must hold a workers compensation insurance policy in each state where they have employees.
- Compensation covers medical expenses, lost wages (typically 80–100% of pre-injury earnings), rehabilitation, and lump-sum payments for permanent impairment.
- Employers must report workplace injuries to the insurer and facilitate return-to-work programs.
- Dismissing an employee during a period of workers compensation is restricted or prohibited in most jurisdictions.
State-by-state overview
| State/Territory | Legislation | Scheme type | Insurer |
|---|---|---|---|
| New South Wales | Workplace Injury Management and Workers Compensation Act 1998 | State insurer (icare/SIC) | icare |
| Victoria | Workplace Injury Rehabilitation and Compensation Act 2013 | State insurer (WorkSafe) | WorkSafe Victoria |
| Queensland | Workers’ Compensation and Rehabilitation Act 2003 | State insurer (WorkCover) | WorkCover Queensland |
| South Australia | Return to Work Act 1986 | State insurer (ReturnToWorkSA) | ReturnToWorkSA |
| Western Australia | Workers’ Compensation and Injury Management Act 1981 | State insurer (WorkCover WA) | WorkCover WA |
| Tasmania | Workers’ Rehabilitation and Compensation Act 1988 | State insurer (WorkCover Tasmania) | WorkCover Tasmania |
| ACT | Workers’ Compensation Act 1951 | State insurer (WorkSafe ACT) | WorkSafe ACT |
| Northern Territory | Workers’ Compensation (Transfer of Functions) Act 1995 | State insurer (NT WorkSafe) | NT WorkSafe |
Employer obligations
Hold insurance
Every employer must hold a workers compensation insurance policy in each state where they have employees. The premium is based on:
- The industry classification — higher-risk industries pay higher premiums.
- The remuneration — the total wages paid to employees.
- The claims history — employers with fewer claims pay lower premiums (Experience Rating).
Report injuries
When a workplace injury occurs, the employer must:
- Provide first aid and ensure the employee receives medical attention.
- Report the injury to the insurer — the timeframe varies by jurisdiction (typically 48 hours to 7 days).
- Complete a claim form — the employer assists the employee in completing the workers compensation claim form.
- Facilitate the claim — cooperate with the insurer’s assessment and provide requested information.
Facilitate return to work
In most jurisdictions, the employer has an obligation to facilitate the employee’s return to work — including providing suitable duties, modified work, or rehabilitation. The return-to-work program is a formal process that identifies the duties the employee can perform, the restrictions, and the timeline for full return.
Do not dismiss during compensation
In most jurisdictions, the employer cannot dismiss an employee during a period of workers compensation — or the dismissal is presumed to be related to the injury and the employer must show otherwise. The restrictions vary:
| State | Dismissal restriction |
|---|---|
| NSW | Cannot dismiss during first 6 months of weekly payments |
| Victoria | Cannot dismiss during period of WorkCover payments (with exceptions) |
| Queensland | Cannot dismiss during period of weekly payments |
| SA | Cannot dismiss during period of weekly payments |
| WA | Cannot dismiss without written authority from WorkCover WA |
| Tasmania | Cannot dismiss during period of weekly payments |
What compensation covers
Medical expenses
The insurer covers reasonable medical, hospital, and pharmaceutical expenses related to the work injury. The scope varies by jurisdiction but typically includes:
- Doctor and specialist consultations
- Hospital and surgical costs
- Physiotherapy and rehabilitation
- Medication
- Travel to and from medical appointments
Lost wages (weekly payments)
Weekly payments compensate the employee for lost earnings during the period of incapacity. The rate varies by jurisdiction but is typically 80–100% of pre-injury average earnings, subject to a maximum and minimum weekly amount.
| State | Weekly payment rate |
|---|---|
| NSW | 80% of average weekly earnings |
| Victoria | 95% of pre-injury average weekly earnings (first 13 weeks), then 80% |
| Queensland | 85% of pre-injury average weekly earnings |
| SA | 80% of average weekly earnings |
| WA | 80% of average weekly earnings |
| Tasmania | 85% of average weekly earnings |
Lump-sum payments
For permanent impairment resulting from a work injury, the employee may be entitled to a lump-sum payment. The amount is determined by the degree of permanent impairment, assessed using a medical assessment process specific to each jurisdiction.
Rehabilitation and return-to-work support
The insurer funds rehabilitation programs, including:
- Physical rehabilitation (physiotherapy, exercise programs)
- Vocational rehabilitation (retraining, job placement)
- Workplace modifications (ergonomic equipment, altered duties)
Common pitfalls
1. Not holding insurance
Operating without workers compensation insurance is a serious offence. Penalties vary by jurisdiction but can include fines, criminal prosecution, and personal liability for directors.
2. Not reporting injuries promptly
Late reporting delays the claim process and can result in the insurer refusing to accept the claim. Report injuries within the required timeframe.
3. Dismissing an employee during compensation
Dismissing an employee during a period of workers compensation is restricted in most jurisdictions. The employer must follow the return-to-work process and obtain the necessary authority before considering dismissal.
4. Not providing suitable duties
The employer has an obligation to provide suitable duties during the return-to-work process. Failing to do so may result in the insurer paying additional weekly payments or the employee claiming for aggravation of the injury.
Putting it into practice
Five steps to manage workers compensation:
- Hold the correct insurance policy in each state where you have employees — check with your broker.
- Report injuries promptly — set up a process that triggers the reporting obligation on the day the injury is reported.
- Engage with the insurer — cooperate with the claim assessment and provide requested information.
- Develop return-to-work programs — work with the insurer, the employee, and the treating doctor to identify suitable duties.
- Track compensation periods — know when weekly payments start and end so you can plan for the employee’s return.
A leave management system that tracks workplace injuries, manages the return-to-work process, and monitors compensation periods keeps the employer compliant with the state-based workers compensation requirements.
Sources
- NSW — Workplace Injury Management and Workers Compensation Act 1998
- Victoria — Workplace Injury Rehabilitation and Compensation Act 2013
- Queensland — Workers’ Compensation and Rehabilitation Act 2003
- Safe Work Australia (national guidance on workplace safety)
This article is general information, not legal advice. Workers compensation is state-based and the rules vary between jurisdictions — consult your state’s workers compensation authority or an employment lawyer for specific situations.