In most cases, no. business.gov.au states that workers compensation insurance does not cover a sole trader, and WorkSafe Victoria says a sole trader who employs no workers does not need to register for WorkCover at all. If you are injured and cannot work, there is no WorkCover weekly payment unless a business you contract to counts as your employer under WorkSafe’s worker test. The usual way to replace that income is a private accident and sickness policy that pays a weekly benefit while you recover.
What WorkSafe Victoria says about WorkCover for sole traders
WorkCover is an employer’s insurance. It pays workers injured at work, and the premium is set on the wages a business pays. A sole trader has no employer. WorkSafe Victoria’s guidance on who must register says a sole trader, an individual in a partnership or an individual trustee of a trust does not need to register if they employ no other people as workers.
business.gov.au, the federal government’s business site, states the result plainly: if you are a sole trader, workers compensation insurance does not cover you. Hiring staff changes your obligations but not your own position. Registering because you employ an apprentice covers the apprentice. It does not turn the owner into a worker.
That is the short answer on WorkCover for sole traders, and it is not unique to Victoria, though each scheme has its own rules. business.gov.au lists a workers compensation regulator for every state and territory. If you take work interstate, check that state’s rules rather than assume Victoria’s apply.
When a sole trader can still count as someone else’s worker
There is an exception that matters for trades and contractors. WorkSafe Victoria’s guidance on who is and is not a worker says a business’s workers can include a contractor or subcontractor, including one who operates as a sole trader, a partner or a company director. Two questions decide it:
- Does the business that hired you have the legal right to control not only the result of the work, but also what work is done and how?
- Does your business depend on that business for its existence?
If the answer to both is no, WorkSafe says you are not that business’s worker. If either answer is yes, you may be, and its WorkCover policy could respond to your injury. A plasterer who works for one builder, on the builder’s hours and to the builder’s instructions, sits in a different place from a plasterer who quotes for a dozen clients a year.
Do not plan around this. The test looks at the whole working arrangement, it is often argued after the injury rather than before, and a sole trader who quotes for several clients will rarely meet it. A weekly payment you might be entitled to, after a dispute, is not a plan for the mortgage.
Partners, trusts and company directors
Partners and individual trustees sit with sole traders under WorkSafe’s registration guidance: no workers, no need to register.
A company is different. WorkSafe says that if your company employs you personally, you are a worker of your own company and the company needs to register. A director who is only an office holder, appointed without an employment contract, is treated differently from a director employed under a service contract, and WorkSafe tells directors who are unsure which they are to get their own legal advice. WorkSafe also exempts a business that has no apprentices and pays no more than $7,500 in remuneration in a financial year, so a small company paying its owner very little may still sit outside the scheme.
Changing from sole trader to company can change your position. That is a structural decision for your accountant, not a way to buy injury cover.
What fills the gap: accident and sickness cover
business.gov.au points sole traders to accident and sickness insurance from a private insurer, which pays for loss of income while you recover. It is a general insurance product. It typically pays a weekly benefit while injury or illness stops you working, plus lump sums for defined permanent injuries. Many policies respond to injuries at work and away from it, which suits a sole trader whose income stops wherever the accident happened.
It is a different product from income protection, which business.gov.au lists separately and which is usually sold inside a life insurance product with a monthly benefit. Accident and sickness cover is written more quickly and often sits beside a business insurance pack, but it usually runs for a shorter benefit period. If a long illness worries you more than a broken wrist, compare the two before you choose.
It also pays income, not treatment. Medical and rehabilitation costs are covered only where the policy includes that optional section.
Setting it up so it pays when you need it
- Weekly benefit. Underwriters compare the benefit you ask for with what you actually earn. Pick a figure your tax returns and records support, because those records are what the insurer reads at claim time.
- Waiting period. This is the stretch at the start of each claim before benefits begin. A longer one lowers the premium. Count the savings and booked work that would carry you through the first weeks before you pick it.
- Benefit period. This is how long benefits run once they start, from a set number of weeks to several years. A sprained ankle and a back injury are different problems.
- Occupation. Policies are rated on whether your work is manual, mixed or office based. The occupation on the schedule should match the work you do on site, not the title on your business card.
- Existing conditions. Pre-existing conditions are a usual exclusion. Declare old injuries when you apply.
Head contractors sometimes ask subcontractors to show they hold accident and sickness cover before starting on site, alongside a certificate for public liability insurance. The two are often confused. Public liability pays for injury or damage you cause to other people. It pays nothing when you are the one hurt.
What FRS does: we compare how insurers define your occupation, the waiting and benefit periods on offer and the exclusions, and set the weekly benefit against your actual earnings. If you already hold cover through your super, we check the two so they do not pay for the same week. When you are hurt, we lodge the claim, submit the income evidence and handle the insurer’s questions.
For cover details and the usual exclusions, see our personal sickness and accident insurance page.
Frequently asked questions
Can a sole trader get WorkCover for their own injuries?
Not in Victoria. WorkCover is taken out by a business to cover its workers, and WorkSafe Victoria says a sole trader with no workers does not need to register. Registering because you employ staff covers those staff, not you. A private accident and sickness policy is the usual way to replace your own income after an injury.
Does a head contractor's WorkCover cover me as a subcontractor?
Possibly. WorkSafe Victoria says a business’s workers can include contractors, and asks two questions: whether the business controls what work is done and how, and whether your business depends on it to exist. If both answers are no, you are not its worker. The test looks at the whole arrangement, so do not rely on it without checking.
Is accident and sickness insurance the same as income protection?
No. Accident and sickness cover is a general insurance product that pays a weekly benefit while injury or illness stops you working, usually for a shorter benefit period. Income protection is usually sold inside a life insurance product and pays a monthly benefit. Compare the waiting period, benefit period and occupation definition before choosing between them.
Do company directors get WorkCover in Victoria?
It depends on the arrangement. WorkSafe Victoria says that if your company employs you personally, you are a worker of your own company and it must register. A director who is only an office holder, without an employment contract, is treated differently. WorkSafe suggests directors who are unsure which applies get their own legal advice.
Questions about your own cover? Call 03 7046 3766 on weekdays between 9:30am and 6pm, or send us an enquiry.
