Workers Compensation for Residential Builders in WA

What it is

Workers compensation in Western Australia is a no-fault statutory insurance scheme that pays medical costs, weekly income replacement and lump sum compensation to workers who suffer a work-related injury or disease. The scheme is regulated by WorkCover WA under the Workers Compensation and Injury Management Act 2023 (WA), which replaced the 1981 Act on 1 July 2024.

For residential builders the scheme covers carpenters, apprentices, labourers, site supervisors and anyone else who falls within the definition of "worker" in the 2023 Act. Coverage attaches to the work, not the worksite, so a worker injured driving between sites or loading a ute at the yard is still covered if the activity was for the employer.

Who must hold a policy in WA

Every employer with at least one worker must hold a current workers compensation policy with a WorkCover WA approved insurer before the worker starts. The 2023 Act, like the 1981 Act before it, treats failure to insure as a strict-liability offence and allows recovery from an uninsured employer of any compensation paid through the Workers Compensation Insurance Commission. The penalty regime is set out in Part 8 of the 2023 Act dealing with insurance, licensing and uninsured employers, and is supplemented by the regulations. Builders should confirm current penalty levels against WorkCover WA guidance, because the dollar amounts are indexed and the exact maximum penalties for failure-to-insure offences sit in the Act and Regulations rather than at a fixed advertised figure.

Sole-trader builders without workers do not need a policy for themselves. The moment they put on an apprentice or a casual labourer the obligation kicks in. Family members who genuinely work in the business are workers if they receive wages.

Subcontractors and the deemed worker rule

The 2023 Act keeps the long-standing "deemed worker" provisions in the schedules to the Act. A subcontractor who personally performs work and is not running a genuine business of their own can be deemed a worker of the head contractor for workers compensation purposes. That means the builder who hired them may end up paying the premium and the claim if they get hurt.

The test looks at how the work is contracted, who supplies the materials and tools, whether the sub holds their own ABN and policy, and whether they hire others. Residential builders who use lots of single-trade subbies should ask each one for a current certificate of currency before letting them on site.

How premiums are calculated

Premiums in WA are set by individual insurers using the WorkCover WA recommended rates as a guide. Recommended rates are published each financial year by industry classification. Residential building construction sits in a residential construction classification under WorkCover WA's published industry rates. The exact classification code and the recommended rate for the current year should be confirmed against the latest WorkCover WA Premium Rates Recommendation document, because codes and rates change each policy year and historic codes have been re-issued under the modernised scheme.

The base rate is applied to the employer's estimated wages roll for the policy year. Insurers then load or discount the premium based on the employer's claims experience. A builder with a clean three-year run will pay materially less than one with several lost-time injuries.

What counts as wages

Wages for premium purposes includes gross salary, overtime, allowances, the value of non-cash benefits like a work ute, and superannuation contributions. It also includes payments to deemed workers under the Act. Underdeclaring wages is fraud and triggers a back-charge plus penalty interest at the end-of-year wages declaration.

Claims process

When a worker is injured they give the employer a notice of claim with a first medical certificate. The employer has five working days to forward the claim to the insurer. Under the 2023 Act the insurer must give a liability decision notice or a deferred decision notice within 14 days of receiving the claim, otherwise liability is taken to be accepted. If a deferred decision is given but no liability decision follows within 120 days, liability is again taken to be accepted. These time bars are set in the claims-handling provisions of the 2023 Act and are reinforced by WorkCover WA's Blueprint for Liability Decisions and Provisional Payments.

If liability is accepted, weekly payments begin at the worker's pre-injury average weekly earnings, capped at the prescribed amount which is indexed each 1 July. Medical and allied health expenses are paid directly to providers. The worker keeps receiving weekly payments while they have a current capacity certificate.

Return to work

The 2023 Act imposes a positive duty on the employer to provide injured workers with the pre-injury position where reasonably practicable, or a suitable position comparable in status and pay, for at least 12 months from the day the worker becomes incapacitated. Employers must also establish and implement an injury management system and a return-to-work program in consultation with the worker. For residential builders that often means light office work, supervising rather than swinging a hammer, or running material take-offs. Refusing to provide suitable duties without good reason exposes the employer to separate compliance action and can extend the claim cost.

Penalties and audits

WorkCover WA conducts periodic compliance audits, often triggered by a claim coming in for a worker the insurer has no record of. Penalties for uninsured operation are recovered through the Magistrates Court and the regulator routinely names offending businesses. Builders also face exposure under the Work Health and Safety Act 2020 (WA) for the underlying safety breach that caused the injury. Builders should check the current WA WHS legislation reference and any consequential amendments, as the WA WHS regime moved from the Occupational Safety and Health Act 1984 to the Work Health and Safety Act 2020 in March 2022.