Do Sole Traders Need Workers Compensation Insurance?

Key Takeaways:

• Workers Compensation insurance protects employees from workplace injuries and illness.
• Sole traders working alone can’t have it, so you’re not covered.
• As soon as you hire someone (even casually), Workers Comp is legally required in most states.
• Subcontractors may still count as employees, even if they’ve got an Australian Business Number (ABN).
• In WA, Workers Compensation insurance can be arranged directly with All Trades Cover.
• Sorting the right cover early helps avoid fines, confusion, and costly mistakes.

If you’re running your own trade business by yourself, it’s easy to wonder: ‘Do sole traders actually need Workers Compensation insurance? Or is it just one more thing I can skip?’

Good question. Because the truth is, it depends on how you operate.

You could be in the clear today, but if you take on an apprentice, hire a casual, or bring in regular subbies, the rules can shift fast, especially under WA’s Workers’ Compensation regulations. And the fines for getting it wrong aren’t pretty.

We’ll walk you through it so you know exactly where you stand, and what to do if things change.

What is Workers Compensation insurance?

Workers Compensation (or ‘Workers Comp’) is a type of insurance that covers your employees if they get injured or sick because of their work.

It helps pay for:

• Wages while they’re off work
• Medical bills and treatment
• Rehab or return-to-work support

In Australia, especially WA,  it’s a legal requirement if you employ anyone.

But here’s the thing: if you’re a sole trader working solo, that rule changes.

When do sole traders need Workers Compensation insurance?

If you work alone:

If you hire anyone:

This is a different story.

If you bring on:

• An apprentice
• A part-time worker
• A casual labourer
• Even an admin assistant

…you’re now legally required to have Workers Compensation insurance in place.

Even if you’re a carpenter bringing on an extra set of hands, a contractor needing builders’ liability insurance, or a structural steel contractor with a small team, it doesn’t matter, as the same rules apply.

In WA, it doesn’t take much to change the answer to ‘do sole traders need Workers Compensation insurance?’ Even hiring one casual worker can flip the rules, and yes, you may need to register for it. Each state and territory has their own rules:

• WA & NT: You can arrange cover directly with us at All Trades Cover. We’ll make sure it ticks all the boxes under WorkSafe WA requirements
• Other states (VIC, NSW, QLD, TAS): Your requirements vary and may involve government schemes or specific insurers. Our team can offer information and point you in the right direction.

It’s much easier to get it right up front than to scramble during a claim.

What if I just use subcontractors?

This is where a lot of tradies come unstuck.

You might think: ‘He’s got his own ABN, he’s not my employee.’

But legally? That might not be enough.

Each state applies its own test to figure out if your subcontractor counts as a worker. They’ll look at things like:

• Who controls how and when they work
• If they use your tools or equipment
• If they work mainly for you
• If they wear your uniform or operate under your brand

A mining contractor in WA hiring the same crews each month, or a welding business paying a subbie a day rate and handing them a uniform, could both be seen as employers in the eyes of the law.

If they tick enough boxes, that responsibility could fall on you.

The result? If they’re injured and you don’t have Workers Comp (especially in WA, where it is enforceable), you might be forced to pay:

• All of their medical bills
• Their wages while they’re off work
• Fines or penalties for not being insured

It’s worth checking your setup before you’re caught short.

Public Liability vs Workers Comp vs Personal Accident

Public Liability, Workers Compensation, and Personal Accident insurance are all important, but they cover very different risks. And depending on how your business is structured, you may need more than one type of protection.

• Public Liability covers damage to third parties; think clients, passers-by, or their property. If someone trips over your gear or you accidentally damage a wall or a driveway, Public Liability is what saves your back pocket. But it doesn’t help if you, or anyone on your crew, gets hurt.
• Workers’ Compensation kicks in when an employee is injured on the job. It’s not optional but mandatory as soon as you take on staff. That includes apprentices, part-timers, and sometimes even your subcontractors. It covers medical bills, lost wages, and rehab costs. 
• Personal Accident Insurance is for tradies who work alone. If you hurt yourself on-site (or even off the job), it can provide a weekly income while you recover, so you’re not scrambling to pay the bills.

A good way to think about it:

• Public Liability = damage to others
• Workers’ Compensation = injury to employees
• Personal Accident = injury to you

Most sole traders, like arborists, electricians, or roof installers, need at least two: Public Liability and Personal Accident. And when you hire people? Workers’ Compensation becomes non-negotiable.

Why it pays to be covered

When thinking about whether sole traders need Workers Compensation insurance, the real answer often shows up in the stories tradies share, and you’ve probably heard a few of these from mates or been through something similar yourself.

Tom’s a builder hired an apprentice during the busy season. Week two: twisted knee getting off a ladder. Tom had Workers Comp sorted from day one. Claim handled. No dramas.

Kylie runs a landscaping crew and brought in a subbie for a few weeks. He only worked for her, used her tools, and wore her logo. When he injured his shoulder lifting pavers, he counted as an employee. No Workers Comp meant she was out-of-pocket big time.

Mick runs his own show with strong plumbing insurance and a solid client base. One weekend, he broke his wrist unloading the ute. Thanks to Personal Accident cover, he got a weekly payout while recovering and avoided scrambling to keep up with bills.Dave’s a civil contractor who hired a machine operator to help hit a tight deadline. Mid-project, the operator rolled an excavator and was injured. No Workers Comp? He was staring down legal action, project delays, and major financial stress.

The right cover, when it counts

Still wondering, do sole traders need Workers Compensation insurance in WA? You’re not alone, and the answer can shift quickly depending on how you work.

At All Trades Cover, we help WA sole traders and business owners figure out what they actually need to stay protected and compliant. No cookie-cutter policies. No pushy upsells. Just honest advice from a team that knows how the job works, because we’ve been there ourselves.If you’ve taken on someone, even casually, or you’re not sure how your setup stacks up, contact us today and let’s get it sorted properly. Get real advice, fast quotes, and cover that holds up when it matters.

Frequently Asked Questions

• I only bring in help every now and then. Do I still need cover?

Yes. Even a few hours of paid help can land you in ‘employer’ territory. If someone’s working under your direction, even for one weekend, you could be responsible for their wages, medical bills and more. In WA, you’ll likely need Workers Comp.

• Is Workers Compensation insurance tax-deductible?

Most of the time, yep. It’s considered a business expense, just like Public Liability or Tools cover. That said, your accountant is the best one to confirm what you can claim.

• Can I get Workers Comp cover for myself as a sole trader?

Not through Workers’ Compensation specifically; you’re not considered an ‘employee.’ But you can (and should) look at Personal Accident Insurance. That’s the cover that steps in if you’re off the tools with an injury or illness and still need to pay the bills.

• What if my worker is injured off-site?

If it’s still a work-related task (like picking up materials, quoting a job, or even grabbing lunch if it’s work-related), it might still be covered under Workers’ Comp. It all comes down to the details; that’s why having a proper policy in place matters.

• Do I need to tell the insurer if I stop employing someone?

Yes, and it can actually save you money. If your crew shrinks or you’re back to working solo, let your insurer or broker know. Your premium is based on wages paid, so it can be adjusted to reflect your actual setup.

• They’ve got an ABN, do I still need Workers Comp for them?

Not always. But if they’re mainly working for you, using your tools, following your schedule, or wearing your brand, they could legally count as your worker, especially under WA law. If they’re injured and not covered, the costs fall on you. When in doubt, it’s worth checking because getting it wrong can cost you.