Workers Comp for Plumbing Businesses: When You Hire Staff

The Moment Workers Comp Becomes Mandatory

You’ve been working solo as a plumber for years. Then work picks up and you decide to hire your first apprentice — or bring on a casual labourer for a big commercial job. That moment, the moment you become an employer, workers compensation becomes mandatory.

Workers comp is not optional and it’s not negotiable. In every Australian state and territory, if you employ someone, you must have workers compensation insurance. Failing to hold it carries penalties that range from hefty fines to personal liability for the full cost of a workplace injury — which can run into the millions for a serious accident.

The trigger is simple: you hire someone and you pay them for work. It doesn’t matter if they’re full-time, part-time, casual, or an apprentice working a few shifts a week. If you control what they do, when they do it, and how they’re paid, you need workers comp.

The only exception is if the person is genuinely a contractor operating their own business — and the distinction between employee and contractor is where many plumbing businesses get into trouble. More on that later.

What Workers Comp Actually Covers

Workers compensation pays for your employee’s medical expenses, rehabilitation costs, and a portion of their lost wages if they’re injured or become ill because of their work. It also protects you by limiting your liability — if an employee is injured and you hold valid workers comp, the employee generally can’t sue you for common law damages (except in limited circumstances for serious injuries involving employer negligence).

Coverage includes:

• Weekly payments to replace lost wages (usually a percentage of pre-injury earnings, capped)
• Medical and hospital expenses related to the workplace injury
• Rehabilitation services (physiotherapy, occupational therapy, psychology)
• Lump sum payments for permanent impairment
• Death benefits and funeral expenses
• Return-to-work programs and vocational retraining

For a plumbing business, the scenarios are real: an apprentice scalds themselves on a hot water system, a labourer slips on a wet bathroom floor and fractures a wrist, a qualified plumber develops a chronic back condition from years of heavy lifting. Workers comp covers all of these.

State-by-State Workers Comp: What You Need to Know

Australia doesn’t have a single national workers comp scheme. Each state and territory runs its own, with different insurers, premium structures, and rules. If your plumbing business operates across state borders, you need coverage in each state where your employees work.

New South Wales: icare

In NSW, workers comp is managed by icare (Insurance and Care NSW). Policies are issued through approved insurers, but icare sets the pricing and rules. Plumbing falls under a medium-risk classification, and your premium is calculated as your industry rate multiplied by estimated wages. NSW requires an annual wages declaration, and compliance checks are common in the construction and trade sector.

Victoria: WorkSafe

WorkSafe Victoria is the sole provider. Premiums are based on your industry, total remuneration, and claims history. Victoria has a strong focus on return-to-work outcomes, and employers who actively manage injured workers back to suitable duties can see premium reductions through the claims experience rating system.

Queensland: WorkCover Queensland

Queensland’s scheme is also a single-provider model. Premiums are calculated on wages paid and industry classification. One Queensland-specific point: working directors of plumbing companies may be required to cover themselves under the policy as well as staff. Check your obligations, as this catches some business owners off guard.

Western Australia: WorkCover WA

WA uses private insurers competing in a regulated market, meaning you can shop around. Plumbing businesses in WA should compare quotes — pricing differences between providers can be meaningful.

South Australia: ReturnToWorkSA

South Australia operates ReturnToWorkSA, a publicly-managed scheme. Premiums use industry classifications and claims experience. SA also has specific provisions around psychological injury claims updated in recent legislation.

Tasmania: WorkCover Tasmania

Tasmania’s scheme uses private insurers, but the smaller market limits the number of active insurers. Premiums follow the same wage-multiplied-by-rate structure.

If your plumbing business works across borders — say you’re based in Albury and take jobs in both NSW and Victoria — you need workers comp coverage in each state. Coverage doesn’t carry over. Talk to your insurer or broker about a cross-border arrangement.

Apprentice Coverage: Usually Employer-Paid, Sometimes Subsidised

Apprentice plumbers are employees, which means you as the employer are responsible for their workers comp coverage. The premium is calculated on their wages, though the lower wage means a lower absolute cost.

Some states offer subsidies or rebates for apprentice workers comp premiums. These change periodically with state budgets, so check your state’s current position. In some cases, the subsidy effectively eliminates the workers comp premium for first and second-year apprentices. Don’t assume the subsidy is automatic — you typically need to apply for it or nominate apprentices on your annual wage declaration.

The Contractor vs Employee Minefield

This is where many plumbing businesses get into serious trouble. You hire a “subcontractor” who works exclusively for you, uses your tools, follows your schedule, wears your uniform, and drives your van. You call them a subcontractor. Then something goes wrong.

The ATO — and workers comp regulators — look at the substance of the arrangement, not the label. If the worker is actually an employee under the law, calling them a contractor doesn’t change anything. The consequences of getting this wrong are severe:

• You’re liable for unpaid workers comp premiums plus penalties
• If the worker is injured, there’s no workers comp policy, meaning you’re personally on the hook for their medical costs, lost wages, and potential common law damages
• You may face ATO penalties for unpaid superannuation, PAYG withholding, and payroll tax
• Sham contracting penalties can run into the hundreds of thousands of dollars

The test isn’t what you call them — it’s the day-to-day reality. Do they set their own hours? Provide their own tools? Can they send someone else to do the work? Do they have other clients? If the answer to most of these is “no”, you’re probably looking at an employee, not a contractor.

If you’re unsure about a worker’s status, get advice from an accountant or employment lawyer before you engage them. A few hundred dollars now can save tens or hundreds of thousands later.

What Workers Comp Costs for Plumbing Businesses

Workers comp premiums are calculated using a simple formula: industry rate × assessable wages × experience rating adjustment.

The industry rate for plumbing varies by state but typically falls between 3% and 8% of wages. The exact rate depends on your sub-classification, state, and insurer. Domestic plumbing might attract a lower rate than commercial construction plumbing due to different risk profiles.

Your experience rating — your claims history — pushes that rate up or down. A plumbing business with no claims for several years might get a 10-20% discount. A business with multiple claims might pay a loading.

Let’s run a rough example. You employ three plumbers paying $75,000 each plus one apprentice at $35,000 — total assessable wages of $260,000. At an industry rate of 5%, your annual premium would be $13,000. With a 10% no-claims discount it drops to $11,700. With a 15% loading for a recent claim it jumps to $14,950. These are illustrative figures only — your actual rate depends on your specific circumstances.

You can purchase workers comp directly through your state scheme. If you’re also reviewing your broader business insurance — public liability, tools cover — it can be efficient to compare options. BizCover is one platform that lets you compare business insurance options, though workers comp is generally handled directly through state schemes rather than comparison platforms.

Penalties for Not Having Workers Comp

The penalties for failing to hold workers comp when legally required are severe:

• Back-payment of unpaid premium for the uninsured period (plus interest)
• Financial penalties from the state regulator, which can exceed $50,000 in some states
• Personal liability for any workplace injuries during the uninsured period — you pay medical bills, rehabilitation, and lost wages out of your own pocket
• Potential prosecution for serious or repeat offences
• Inability to tender for government or large commercial contracts, which universally require a workers comp certificate of currency

If one of your workers is seriously injured and you don’t have workers comp, the financial consequences can bankrupt your business and follow you personally. This isn’t an area to cut corners.

Sole Trader and Director Coverage

If you’re a sole trader plumber with no employees, you generally don’t need workers comp for yourself — income protection or personal accident insurance fills that gap. Some states allow sole traders to voluntarily opt in, but it’s not mandatory.

If you operate through a company structure and you’re a working director (on the tools, not just in the office), the rules vary:

• Some states require working directors to be covered
• Some states make it optional
• Some states deem working directors to be “workers” if they receive wages from the company

If you’re a director who does plumbing work for your company, check your state’s specific rules. Assuming you’re not covered when you actually are is a common and expensive mistake.

How to Reduce Your Workers Comp Premium

Workers comp premiums respond to two things: your wages and your claims. Focus on claims management.

Safety management systems are the most effective way to reduce premiums. Documented safe work procedures, regular safety training, appropriate PPE, and incident reporting systems demonstrate to the insurer that you’re actively managing risk. Many offer premium discounts for formal safety systems.

Return-to-work (RTW) programs keep injured workers connected and facilitate faster return in suitable duties. An employee who returns to light duties within weeks costs far less in claims than one off work for six months. RTW coordination is often provided through the insurer at no additional cost.

Claims history monitoring matters — a single large claim can push your premium up for years. Sometimes it’s worth paying minor medical costs out of pocket rather than lodging a small claim that will increase your premium for 3-5 years (check with your insurer — some require all incidents to be reported even if you pay privately).

Correct classification can save money if you’ve been placed in a higher-risk category than your work justifies. If you’re a domestic plumber classified under commercial construction rates, get a review.

Workers Comp vs Personal Accident Insurance: The Overlap

If you employ staff, you need workers comp — it’s the law. But some employers also provide personal accident insurance as a top-up, or employees take it out through their super fund.

Workers comp weekly payments are typically capped at around 90-95% of pre-injury average weekly earnings initially, then step down to around 80% after a set number of weeks (varies by state). Personal accident insurance can top up the shortfall so the worker isn’t financially worse off while recovering.

Personal accident insurance also covers injuries outside work, which workers comp doesn’t. If your employee injures themselves playing sport on the weekend, workers comp doesn’t pay — personal accident insurance does.

For you as the business owner, workers comp covers your employees but not you (unless you’re a working director who has opted in). Personal accident insurance or income protection fills the gap.

When You Don’t Need Workers Comp (And When You Still Might Want It)

You don’t need workers comp if:

• You’re a sole trader or partnership with no employees where all partners work in the business (check state rules)
• Everyone who works for you is genuinely a contractor with their own ABN, insurance, and business independence
• You’re a company director who doesn’t perform physical work and doesn’t draw a wage

Even when not mandatory, you might still want workers comp if you’re a working director wanting injury coverage, you want peace of mind, or you’re planning to hire soon and want to establish your insurance history.

Getting Covered: The Process

Getting workers comp is relatively straightforward:

1. Determine your obligations based on your state and worker classification
2. Gather your estimated wages for the year ahead
3. Get a quote from your state scheme or approved insurer (in states with choice)
4. Lodge your application and pay the premium (many insurers offer monthly payments)
5. Receive your certificate of currency — keep this, you’ll need it regularly
6. Lodge your annual wage declaration to reconcile estimated vs actual wages

Most insurers now offer online quoting and policy management, so you can get covered the same day.

For plumbing businesses looking to compare workers comp alongside other insurance needs, BizCover provides a platform to compare quotes from multiple insurers without going through a broker.

FAQ

Do I need workers comp for an apprentice I’m only paying a small weekly wage?

Yes. Apprentices are employees, and the workers comp obligation kicks in regardless of how much you pay them. The premium will be lower because it’s calculated on their actual wages, but the requirement to hold cover is the same. Some states offer premium subsidies or rebates for apprentices — check what’s available in your state.

What if my employee gets injured on the way to work?

Generally, yes. Most workers comp schemes cover injuries during “journeys” between the worker’s home and their workplace, or between work sites. There are exceptions — reckless behaviour, significant detours for personal reasons, or being under the influence — but the standard commute is typically covered.

Can an employee sue me even if I have workers comp?

In most cases, no. Workers comp is a “no fault” system designed to provide benefits without proving employer negligence, and in return, employees give up their right to sue. However, there are exceptions for serious injuries involving proven employer negligence, which can lead to common law damages claims in addition to workers comp benefits. These are handled through your workers comp insurer.

I’m a sole trader plumber. Should I opt in to workers comp?

It depends on your situation. If you have income protection or personal accident insurance, those may provide better coverage. Workers comp for sole traders typically only covers work-related injuries (not 24/7 like income protection), but it can be cheaper. Compare coverage, waiting periods, and benefit amounts before deciding. This is general information only — your circumstances will determine the right choice.

What happens to workers comp if I sell my plumbing business?

Workers comp policies are not transferable. If you sell the business, the new owner needs to arrange their own workers comp from the settlement date. You’re responsible for any claims from injuries that occurred while you owned the business. Keep your old workers comp records for at least 7 years after selling.

Disclosure: This article contains general information only. It does not constitute financial advice. You should read the relevant Product Disclosure Statement (PDS) before making any insurance decision. plumberinsurance.au may earn a commission from BizCover if you purchase a policy through the links on this page. This does not affect the price you pay.