WorkCover is a no-fault insurance scheme

WorkCover (in its various state forms: WorkSafe Victoria, icare NSW, WorkCover Queensland, ReturnToWorkSA, WorkCover WA) is a statutory workers compensation scheme. The employer of record pays a premium based on wages and industry risk. If a worker is injured in the course of work, the worker makes a claim against the employer’s WorkCover policy. This is no-fault: the worker does not need to prove negligence to receive weekly payments, medical costs, and rehabilitation.

For a labour hire worker, the employer of record is the labour hire agency. The worker is paid by the agency, the agency is named on the Certificate of Currency, and the agency lodges the claim.

WHS is a duty-based framework

Work health and safety law is different. It is based on duties held by every person conducting a business or undertaking (a PCBU). Both the agency and the host are PCBUs. Both owe duties. The duties overlap and reinforce each other. Safe Work Australia is explicit on this point: the labour hire PCBU and the host PCBU cannot contract out of or transfer their WHS duties to each other or to another party. The duty is personal and statutory.

Reference: Safe Work Australia – Host or labour hire PCBU.

Why this matters

If a worker is injured on a host site, three things happen in parallel:

• The agency lodges a workers compensation claim with its state scheme. Weekly payments and medical costs flow to the worker.
• The WHS regulator (WorkSafe VIC, SafeWork NSW, Workplace Health and Safety QLD, SafeWork SA, WorkSafe WA, WorkSafe ACT) investigates the incident. The investigation can lead to improvement notices, infringement notices, or prosecution.
• The worker may have common law rights to sue one or both parties for negligence, depending on the state and the facts.

The workers compensation claim goes to the agency. The WHS prosecution can land on either party or both. The civil action can follow any party whose negligence contributed.

Section 19: primary duty of care

A person conducting a business or undertaking must ensure, so far as is reasonably practicable, the health and safety of workers engaged by the PCBU, and workers whose activities in carrying out work are influenced or directed by the PCBU.

The second limb is the one that catches host businesses. The host engages the worker through the labour hire agency, but the worker’s activities are directed by the host. The host influences how the work is done. The host’s duty under section 19 applies.

Workers defined broadly

“Worker” under the WHS Act includes employees, labour hire workers, contractors and subcontractors, employees of contractors, apprentices, work experience students, and volunteers. A host that has no direct employees but uses labour hire still has the full range of WHS duties.

The shared duty

Where more than one PCBU has a duty in relation to the same matter, each PCBU must, so far as reasonably practicable, consult, cooperate, and coordinate activities with the other PCBU. The WHS Act does not allow duty-splitting. Each PCBU owes the full duty.

Victoria has its own framework

Victoria’s Occupational Health and Safety Act 2004 (Vic) predates and remains separate from the harmonised WHS model. It operates on similar principles (employer and host duties, duty to third parties) but the section references are different. WA moved to harmonised WHS in 2022. NSW, QLD, SA, ACT, NT, and the Commonwealth use the model law.

State-by-state WorkCover framework

The workers compensation scheme applying to a labour hire worker is the scheme of the state where the work is performed.

In every jurisdiction, the workers compensation policy is held by the labour hire agency. A host business does not pay WorkCover premium on labour hire workers because the workers are not employees of the host.

This has two practical implications:

• The host’s WorkCover premium does not go up if a labour hire worker is injured on site.
• The agency’s WorkCover premium does go up, through experience rating in states where it applies.

The premium impact sits with the agency. The WHS prosecution risk sits with both.

What happens when a worker is injured

Step 1: Incident response

Both parties have reporting obligations. Under WHS law, the host PCBU must report notifiable incidents (death, serious injury or illness, or dangerous incident) to the state WHS regulator immediately. The agency, as the employer, must also be notified and typically supports the reporting.

Incident scene preservation: the host must preserve the site where the notifiable incident occurred until a regulator inspector arrives or authorises disturbance.

Step 2: Claim lodgement

The worker lodges a workers compensation claim through the agency. The agency (or its insurer) manages the claim, including weekly payments, medical costs, and rehabilitation.

Step 3: Regulator investigation

The WHS regulator may investigate the incident. Investigation can include site inspections, document production notices, interviews with supervisors and workers, and review of training and induction records. Both the host and the agency can be investigated for the same incident.

Investigation outcomes include:

• No further action
• Improvement notice
• Prohibition notice
• Infringement notice (on-the-spot fine)
• Enforceable undertaking
• Prosecution (category 1, 2, or 3 offence)

Serious breaches of WHS duty, particularly where the breach causes death or serious injury, can attract substantial penalties and, in the case of category 1 offences, imprisonment.

Step 4: Return to work planning

Return to work is a shared process. The agency has the primary return-to-work obligation as employer, but the host usually supplies the modified duties that enable graduated return. A refusal by the host to offer suitable duties can expose the host to scrutiny under return-to-work legislation and can result in the agency’s premium rising.

Safe site induction

Every labour hire worker must receive a site-specific induction before starting work. Generic agency induction is not a substitute. The induction should cover:

• Site layout, emergency exits, first aid stations
• Specific hazards (forklift traffic, chemicals, heights, heat, noise)
• PPE requirements and where to find it
• Site rules and behaviour expectations
• Supervisor contact details
• Emergency procedures, assembly points, evacuation

Document the induction. Keep a signed record.

PPE provision

PPE is a host responsibility where the hazard arises from the host’s work. The host knows the work. The host must supply the correct PPE, verify its fit, and train workers in its use. Transferring PPE cost to the agency in the charge-out rate is fine for shared items (hi-vis, basic gloves), but task-specific PPE should always be host-supplied where the host knows the hazard.

Supervision

Labour hire workers are under the day-to-day direction of the host. Someone on the host side must be the nominated supervisor. Supervisory responsibility includes:

• Briefing the worker on the specific task
• Monitoring performance and correcting unsafe behaviour
• Responding to reports of unsafe conditions
• Supporting the worker’s welfare on site

SWMS and risk assessments

High-risk work requires a Safe Work Method Statement (SWMS). The host must have SWMS in place for high-risk activities, and the labour hire worker must be briefed on the relevant SWMS before commencing. This is standard practice in construction and increasingly common in warehousing and manufacturing.

Worker’s capability confirmation

Before start, the host should confirm:

• The worker holds any required licences (forklift, working at heights, asbestos, confined space)
• The agency has verified the physical copy of the licence, not just the card number
• The worker has the actual experience claimed, not just the tick in the box
• English language proficiency is sufficient for the safety-critical task

A common WHS failure is a host accepting “the agency said she has a licence” at face value. The host’s duty is not discharged by the agency’s assurance.

Red flags in a labour hire arrangement

If any of the following apply, walk away from the provider:

• Agency asks the host to pay worker wages directly. The agency is the employer of record. If the host pays the worker, the worker may be reclassified as a host employee (with PAYG, super, workers comp consequences).
• No WorkCover certificate of currency available. Ask for it at onboarding and annually.
• No public liability insurance (minimum $20 million industry standard).
• Charge-out rate excludes a WorkCover line item. WorkCover is a real cost. If it is not in the rate, someone is not paying it.
• The agency refuses to provide incident reporting support or return-to-work cooperation.
• Licence scope (in VIC, QLD, SA, ACT) does not cover your industry.

Each of these is a signal that the arrangement will not hold up if anything goes wrong.
Read Also:
Labour Hire Licence Victoria: The Complete Guide for Employers
Labour Hire vs Contractor: Legal, Tax, and Practical Differences

Public liability versus WorkCover

Separate point worth making clearly. WorkCover covers the worker’s injury. Public liability covers third-party loss (property damage, injury to non-employees, damage to the host’s goods). A labour hire provider should hold both.

• WorkCover: statutory requirement in every state. The agency must have it.
• Public liability: commercial insurance. Not mandatory but practically essential. $20 million cover is standard.
• Professional indemnity: for white-collar placements. Not typically needed for warehouse or logistics labour hire.

Ask for certificates of currency for each. Keep them in your supplier file. Diarise the renewal dates.