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Workers Comp for Cleaning Businesses

·12 min read

Workers Comp for Cleaning Businesses

Let’s cut straight to it: if you employ anyone in your cleaning business—even one casual cleaner—you need workers compensation insurance. No ifs, no buts, no “I’ll sort it out next month.” Every Australian state and territory makes it mandatory. And if you get caught without it, you’re looking at fines that can stack up faster than a vacuum bag on a carpet full of dog hair.

This isn’t just another insurance product you can afford to ignore. Workers comp covers your employees if they’re injured or become sick because of their work. For cleaners, that means slips, strains from lifting buckets, chemical burns, or even repetitive stress injuries from scrubbing day in, day out. Without it, you’re personally on the hook for medical bills, lost wages, and potentially legal action.

Let’s walk through everything you need to know—state by state, cost by cost, and trap by trap.

What Workers Compensation Actually Covers

Workers comp is straightforward: it pays for medical treatment, rehabilitation, and lost wages if one of your workers gets hurt or sick because of their job. For a cleaning business, common claims include:

The policy covers your workers, not you (more on that later). It also covers legal costs if a worker sues you for negligence—which they can do if you don’t have workers comp in place.

Why It’s Mandatory (And No, There Are No Exceptions)

Every Australian state and territory has its own workers comp scheme, but they all have one thing in common: if you employ anyone, you must have a policy. There’s no “small business exemption” or “only one employee” loophole. Even a single casual cleaner working two hours a week counts.

The penalties for not having workers comp vary by state, but they’re harsh everywhere. In NSW, fines can reach $220,000 for individuals and $1.1 million for companies. In Victoria, it’s up to $1.3 million. And in some states, directors can face personal criminal charges—meaning you could go to jail, not just pay a fine.

If a worker gets injured and you don’t have cover, you’re personally liable for all their medical costs and lost wages. That could easily run into the tens of thousands of dollars. For a small cleaning business, that’s a business-ending event.

Who Counts as a Worker? (The Tricky Part)

This is where a lot of cleaners get unstuck. The definition of “worker” isn’t just your full-time employees. It includes:

Each state has its own rules about who counts. In general, if you pay someone to do work for your business and you control how, when, and where they do it, they’re likely a worker for workers comp purposes. Even if you call them a “contractor” or pay them an ABN.

The key test is control. If you tell them what to clean, when to clean it, and how to clean it, they’re probably an employee. If they run their own cleaning business, have their own clients, and set their own hours, they might genuinely be a contractor. But the lines are blurry, and state regulators tend to err on the side of worker protection.

State-by-State Overview of Workers Comp Schemes

Each state runs its own scheme, with different regulators, rules, and rates. Here’s a quick run-through:

New South Wales – icare (formerly WorkCover NSW)

Victoria – WorkSafe Victoria

Queensland – WorkCover Queensland

Western Australia – WorkCover WA

South Australia – ReturnToWork SA

Tasmania – WorkSafe Tasmania

Northern Territory – NT WorkSafe

Australian Capital Territory – WorkSafe ACT

The important thing is: don’t assume your state’s rules are the same as your mate’s in another state. They’re not. Check with your state regulator or a good insurance broker.

How Premiums Are Calculated

Workers comp premiums aren’t random. They’re based on three main factors:

  1. Industry classification – Cleaning is considered a moderate-risk industry. You’ll be assigned a “rate” based on how risky the work is. For cleaners, that rate is usually between 2% and 4% of your total wages.

  2. Total wages – The more you pay your workers, the higher your premium. Simple as that. You report your wages at the end of each financial year, and your premium is adjusted accordingly.

  3. Claims history – If you’ve had claims in the past, your premium goes up. This is called “experience rating.” A clean claims history keeps your premium lower.

For a typical cleaning business with two or three casual staff working part-time hours, you’re looking at a ballpark premium of $1,500 to $4,000 per year. That’s not cheap, but it’s a hell of a lot cheaper than paying for a serious injury out of pocket.

If you want to get a quick quote, you can compare options online. For example, you can get a quote through BizCover and see what your state’s scheme would cost you.

The Subcontractor Trap

This is the single biggest mistake cleaners make with workers comp. You hire a “subcontractor” who has their own ABN, you pay them per job, and you think they’re not your employee. But under workers comp law, many states treat certain subcontractors as workers.

The test varies by state, but generally, if the subcontractor:

…then they’re probably a deemed worker. That means you need to include their wages in your workers comp calculations. If you don’t, and they get injured, you’re on the hook.

In some states, like Queensland and NSW, the rules around subcontractors are particularly strict. In Victoria, the definition of “worker” is broad enough to catch most cleaners working under your direction.

The safest approach: assume any subcontractor who works regularly for you is a worker unless you have a written contract that clearly shows they’re running their own independent business. Even then, check with your state regulator or a broker.

What Happens If You Don’t Have Workers Comp

Let’s be blunt: not having workers comp is a gamble that can destroy your business and your personal finances. Here’s what can happen:

There’s no upside to skipping workers comp. It’s not optional. It’s not a “nice to have.” It’s the law.

Sole Traders and Workers Comp

If you’re a sole trader with no employees, you generally can’t take out a workers comp policy to cover yourself. Why? Because workers comp is designed to cover employees, not business owners. You can’t be both the employer and the employee.

So what do you do if you get injured? You need personal accident and illness insurance (also called income protection or accident cover). This pays you a benefit if you can’t work due to injury or sickness. It’s not the same as workers comp, but it’s the closest thing for sole traders.

Some states allow sole traders to opt into the workers comp scheme voluntarily (e.g., Victoria’s “optional cover” for sole traders). But it’s expensive and often not worth it compared to personal accident insurance.

If you’re a sole trader who hires casual staff, you still need workers comp for them. Your own cover is separate.

How to Get Workers Comp Insurance

The process is straightforward:

  1. Check your state’s scheme – Go to your state regulator’s website (listed above) and find out who the approved insurers are.
  2. Get a quote – You can apply directly to the state insurer (like WorkCover Queensland or icare in NSW) or use a broker. Some states, like WA and Tasmania, use private insurers.
  3. Provide your payroll details – You’ll need to estimate your total wages for the year. You can adjust it later.
  4. Pay your premium – Most schemes let you pay annually, quarterly, or monthly.
  5. Display your certificate – You’ll get a certificate of insurance. Keep it on file and display it if required.

If you want to compare options quickly, you can get a quote through BizCover and see what’s available in your state. They cover a range of business types, including cleaning.

FAQ: Workers Comp for Cleaning Businesses

1. Do I need workers comp if I only have one casual employee? Yes. Every state requires it if you employ anyone, even one casual worker. There’s no minimum hours threshold in most states.

2. Can I cover myself as a sole trader under workers comp? In most states, no. Workers comp is for employees. You need personal accident insurance or income protection instead. Some states offer optional cover for sole traders, but it’s usually expensive.

3. What if my subcontractor has their own ABN? That doesn’t automatically make them a contractor. If they work mainly for you and you control their work, they may be a deemed worker for workers comp purposes. Check your state’s rules.

4. How much does workers comp cost for a cleaning business? Ballpark $1,500 to $4,000 per year for a small business with 2-3 casual staff. It depends on your wages, industry classification, and claims history.

5. What happens if I don’t have workers comp and a worker gets injured? You’re personally liable for all medical costs and lost wages. You can also face fines, legal action, and in serious cases, criminal charges.

6. Can I get workers comp through my business insurance broker? Yes, many brokers handle workers comp. You can also go directly to your state’s scheme insurer or use an online comparison service.

Standard Disclosure

This article provides general information only and does not constitute financial or legal advice. Workers compensation laws vary by state and territory, and your individual circumstances may affect your obligations. You should consult with a licensed insurance broker or your state’s workers compensation regulator for advice tailored to your situation. Always read the product disclosure statement (PDS) before purchasing any insurance policy.

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