Workers Compensation for Residential Builders in Victoria

What it is

WorkSafe Victoria runs the workers compensation scheme for Victorian employers under the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic). A residential builder that pays rateable remuneration above the threshold or employs an apprentice must hold a WorkCover insurance policy. The policy covers medical costs, weekly payments and lump sum entitlements for workers injured in the course of their employment.

WorkCover sits separately from public liability, contract works and home warranty. A builder needs all four to operate legally on residential sites in Victoria.

When cover is required

Cover is mandatory if the builder either:

• Pays rateable remuneration over 7,500 dollars in a financial year
• Employs any apprentice or trainee regardless of remuneration paid

Once either threshold is crossed, the builder must register with a WorkSafe agent within 60 days and hold a policy for as long as workers remain on the books. Operating without cover is an offence under the Act with maximum penalties exceeding 100,000 dollars for a body corporate plus liability to repay any claim that arises.

How premiums are calculated

The 2025-26 WorkCover Insurance Premiums Order sets the formula. The average premium rate for 2025-26 is 1.8 per cent of state-wide rateable remuneration. The actual rate a builder pays depends on:

Industry classification

Each business is assigned a WorkSafe Industry Classification (WIC). Residential construction trades sit in WIC 30190 (House construction) or related codes for specialist trades such as plumbing, electrical and roofing. Each WIC has an industry rate published in the Premiums Order. Higher-risk codes attract higher rates.

Rateable remuneration

Wages plus super plus fringe benefits plus contractor payments where the contractor is a deemed worker. The threshold above which experience rating kicks in is 200,000 dollars of rateable remuneration.

Claims experience

Where remuneration is above the experience rating threshold, the premium is adjusted using the builder claims costs over the three years ending 31 December of the preceding year. A builder with claims well below the WIC average pays less. A builder with claims above the WIC average pays more.

Who is a worker for premium purposes

Direct employees are workers. Apprentices and trainees are workers.

Contractors are included in rateable remuneration where the contract has the substance of a contract of service. WorkSafe applies tests similar to the ATO multi-factor approach. The most common contractor pulled in is the labour-only subbie paid by the hour who does not run a separate business.

Labour hire is treated differently. Where a licensed labour hire agency supplies workers to a builder, the agency holds the policy and pays the premium. The builder pays the agency invoice including a margin that funds that premium.

What is excluded from rateable remuneration

Genuine independent contractors who run their own business and meet the contractor exclusion are not included. Common exclusions:

• Contractor provides services for less than 10 days in a financial year
• Contractor advertises and provides services to the public
• Contractor engages employees of its own to perform the work
• Contract is for a result rather than ongoing labour

The builder must hold supporting evidence such as ABN records, public liability certificates and a written contract for a fixed scope.

Claims and obligations

When a worker is injured the builder must:

• Provide first aid and call emergency services if required
• Record the injury in the register of injuries
• Notify WorkSafe immediately for any serious injury or notifiable incident under the OHS Act 2004
• Lodge a Worker Injury Claim Form with the WorkSafe agent within 10 days of receiving it
• Engage with the return-to-work coordinator process if the worker is off for more than 5 days
• Pay the first 10 days of weekly compensation as an excess (current scheme rule)

The builder cannot dismiss a worker because they have lodged a claim. Doing so attracts penalties under the Act and exposes the business to a discrimination claim.

Common errors in residential construction

The leading mistake is treating long-term hourly labour-only subbies as outside the scheme. WorkSafe routinely reclassifies these payments on audit and back-charges premium for up to four years. A second error is forgetting to add apprentices. The apprentice trigger applies from the first day of the indenture regardless of total payroll.

A third area of risk is failing to declare director salaries or working family members. If they perform work and draw wages, they are workers for scheme purposes unless the company has lodged a written declaration that the director is excluded from cover. That declaration must be in place before any injury.