An NT principal contractor can be liable for claims by workers of its subcontractors and is entitled to indemnification from those subcontractors under NT legislation. The NT Government’s Workers compensation insurance requirements for employers, reviewed 5 January 2023, says breaching the legislation can incur penalties of up to $179,000 for a company; figures checked 1 October 2026.
Can an NT principal contractor be liable when a subcontractor employs the worker?
Yes. NT legislation makes the principal contractor liable for claims by workers of its subcontractors. It also provides a right to indemnification from those subcontractors.
For a plumbing principal contractor, that makes subcontractor coverage an important risk check. The indemnification right should not be treated as a reason to assume that a subcontractor is insured, financially capable of responding, or that the principal’s exposure cannot arise.
What cover should a principal contractor check?
Before accepting work from subcontractors, check the following:
| Check | Practical point |
|---|---|
| Subcontractor workforce | Make sure each subcontractor has workers compensation insurance for its workers. |
| Work in the NT | An employer employing workers specifically to work in the NT needs workers compensation insurance with an approved insurer in the NT. |
| Temporarily transferred workers | The exception applies to people normally employed in the employer’s home jurisdiction and sent to the NT temporarily for no more than six months. Check with the home jurisdiction that the employer’s existing insurance covers them. |
| Principal contractor’s own cover | NT WorkSafe advises principal contractors to maintain their own insurance in case of oversight involving subcontractors. |
A contract identifying a company as a subcontractor does not, by itself, settle whether an individual is covered. The worker classification still matters.
Does calling someone a subcontractor avoid the cover requirement?
No. NT WorkSafe describes a worker as a natural person who performs work or a service for another person under a contract and meets the employee test for PAYG withholding under the Taxation Administration Act 1953 (Cth), Schedule 1, Parts 2-5. That definition can still apply even if the employer should be withholding tax but is not.
If ATO guidance determines that a person is an employee, NT WorkSafe says the individual should be covered even if the employer thinks the person is a contractor.
The regulator’s page describes the ATO employee-or-contractor decision tool as being under review and currently unavailable. If the classification is uncertain, seek independent professional advice about tax and other employer obligations.
Which workers can be missed during a coverage check?
Some positions have specific disclosure or coverage conditions:
| Category | What to check |
|---|---|
| Company director | The director is covered only if the company has a policy with an approved insurer and the director’s personal details and remuneration have been disclosed to the insurer. |
| Sole trader or partnership | Immediate family members living with the owner or partner are covered only if their personal details and remuneration have been disclosed to the insurer. |
| Labour hire business | All individuals engaged by the labour hire business must be covered, whether they are employees or contractors. |
These are checks, not substitutes for reviewing the policy’s PDS.
Why should a principal contractor maintain its own insurance?
NT WorkSafe considers it prudent for principal contractors to maintain their own insurance in case a subcontractor arrangement contains an oversight. It also advises seeking guidance from an insurance broker or adviser.
The basic obligation still applies when a business employs a worker: an employer must arrange a workers compensation policy. A principal contractor should therefore check both sides of the arrangement—its own position and each subcontractor’s position.
Workers compensation insurance can be obtained by contacting an insurance broker. The NT WorkSafe page also refers readers to its list of NT approved insurers.
What happens if cover is missing or a premium remains unpaid?
The insurance penalty is only one part of the exposure:
| Issue | Potential consequence |
|---|---|
| No workers compensation insurance | The employer is responsible for the cost of any claim, which could amount to millions of dollars. This can threaten the business’s financial viability and, for a sole trader, personal assets. |
| Breach of the legislation | Penalties can be up to $179,000 for a company. |
| Premium not paid in full | Interest is payable if the full premium is not paid within one month after the employer receives the insurer’s premium notice. |
This is general information, not financial or legal advice. Check the current NT WorkSafe regulator page and the relevant policy’s PDS before relying on a coverage arrangement.
Sources
FAQ
Does a subcontractor’s insurance automatically remove the principal contractor’s liability?
No. NT legislation provides that the principal contractor can be liable for claims by subcontractor workers and is entitled to indemnification from those subcontractors. Subcontractors should have workers compensation insurance, and NT WorkSafe considers it prudent for principal contractors to maintain their own insurance as well.
Can a subcontractor be a worker even if PAYG tax was not withheld?
Yes. The worker definition can apply even when the employer should be withholding tax but is not. If ATO guidance determines that the person is an employee, the individual should be covered even if the business considers them a contractor.
How long may home-jurisdiction employees work temporarily in the NT?
The temporary exception applies to people normally employed in the employer’s home jurisdiction and sent to the NT for no more than six months. The employer should still check with the home jurisdiction that its existing insurance covers those workers.
What is the maximum company penalty for breaching the legislation?
NT WorkSafe states that a breach can incur penalties of up to $179,000 for a company. That penalty does not replace the financial exposure associated with a claim.
Where can an NT principal contractor obtain cover or advice?
Workers compensation insurance can be obtained by contacting an insurance broker. A principal contractor should also seek advice from a broker or adviser and check the regulator’s approved-insurer information and the policy PDS.
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