Using WorkCover Insurance For Business Owners/Directors In Victoria

Future Accounting
6 hours ago
3 min read

A common question we get from small business owners and company directors is: Do I need WorkCover insurance if I’m the only one on payroll? In this article, we’ll explain using WorkCover insurance for business owners/directors in Victoria, when it’s required, and how it applies if you’re paying yourself through payroll.

What is WorkCover insurance?

WorkCover insurance (also referred to as WorkSafe Insurance in Victoria) is a type of workers’ compensation insurance that protects both employers and employees when a worker is injured or becomes ill because of their work. It covers medical treatment, wage replacement, rehabilitation, and lump sum compensation in the case of serious injury. In Victoria, WorkCover is managed by WorkSafe Victoria, and registration is mandatory once your business meets certain conditions.

When is WorkCover insurance required?

You must register for WorkCover insurance in Victoria if you employ any workers and pay (or expect to pay) more than $7,500 in rateable remuneration in a financial year. You must also register if you employ apprentices or trainees, regardless of the wage threshold.

Do business owners and directors count as workers?

If you're a director or business owner, you’re not automatically classified as a worker under WorkSafe Victoria’s rules. That means payments to directors are not automatically considered rateable remuneration — unless that director is also performing duties under a contract of service, essentially acting as an employee. If directors are actively working in the business and being paid through payroll, they are typically deemed to be workers for WorkCover purposes.

Common scenarios for small business owners

In small to medium-sized businesses, particularly family-run businesses, directors are usually very hands-on. They may answer phones, manage client relationships, do bookkeeping, marketing or admin, and provide the core product or service themselves. In these cases, directors are working in the business rather than simply overseeing it. This generally means they fall under WorkSafe Victoria’s definition of a worker.

Example: restructuring from sole trader to company

Let’s say you operated as a sole trader, handling everything yourself — marketing, admin, sales, customer service, and delivery. You then restructure into a Pty Ltd company, and you’re the sole director and only worker in the business. You pay yourself a wage through payroll and work full-time in the business. In this scenario, WorkCover is generally required because you are considered a worker under a contract of service.

Key considerations for directors and payroll

The distinction is not just about your title — it’s about the work being done and how you are remunerated. If you are actively working in the business and paid through payroll with superannuation and PAYG applied, your remuneration is typically considered rateable for WorkCover. Conversely, if directors take drawings or director fees without employment contracts or payroll, WorkCover is generally not required.

What should you do next?

WorkCover obligations can be tricky, especially when you’re both the owner and the worker in your business. If you’ve restructured from sole trader to company, it’s especially important to review your obligations. Book an appointment with our team today.

Disclaimer  

This article does not constitute financial advice and is for general information only. It does not take into account any individual’s personal objectives, situation or needs, and is not intended as professional advice. Any similarity to an individual’s personal circumstances and the examples provided in this article is purely coincidental. Any person acting upon such information without receiving specific advice, does so entirely at their own risk.  

Authorisation under an Australian Financial Services Licence (AFSL) is not required in the provision of this article and the author plus Future Accounting Group Pty Ltd is not acting in its capacity as an Australian Financial Services Licence holder 

Liability limited by a scheme approved under professional standards legislation.