NT WorkSafe’s employer bulletin, reviewed 5 January 2023, says an NT employer that employs a natural person meeting the employee test for PAYG withholding must arrange workers compensation cover with an approved insurer; calling the person a contractor does not change the result. The same bulletin says workers normally employed in the employer’s home jurisdiction and sent temporarily to the NT for no more than six months fall within the stated exception, and the employer should check that its existing home-jurisdiction insurance applies. It also says a breach can incur penalties of up to $179,000 for a company, while premium interest is payable if the premium is not paid in full within one month of receiving the insurer’s notice (figures checked 1 October 2026).
What are the key NT thresholds?
| Issue | NT WorkSafe rule in the bulletin reviewed 5 January 2023 |
|---|---|
| Temporarily transferred worker | Workers normally employed in the employer’s home jurisdiction may be excepted when sent to the NT temporarily for no more than six months. The employer should confirm that existing insurance covers them. |
| Company breach | Penalties can be up to $179,000. |
| Unpaid premium | Interest is payable if the premium is not paid in full within one month of receiving the insurer’s premium notice. |
What actually determines employee or contractor status?
The Australian Taxation Office’s guidance, published 17 December 2024, says the legal rights and obligations arising from the contract determine the working relationship. The label “independent contractor” does not determine or change that characterisation.
An employee serves in the business as its representative. An independent contractor provides services to the business while working to further their own business. The ATO also says the old multifactorial test is no longer used, but the same indicia remain relevant when assessed through the agreed contractual terms.
| Contractual feature | May point towards employee status | May point towards independent-contractor status |
|---|---|---|
| Control | The business has a legal right to control how, where and when the worker performs the work. | The worker can choose how, where and when the work is done, subject to reasonable direction. |
| Role | The worker serves in the business and must act as its representative. | The worker supplies services and performs work to further their own business. |
| Payment | Payment is for time worked, a price per item or activity, or commission. | The worker is generally engaged to achieve a specified result, is paid on completion and is often paid a fixed fee. |
| Delegation | The worker cannot delegate or subcontract and must perform the work personally. | The worker has a genuine contractual right to delegate or subcontract. |
| Tools and assets | The business supplies most tools or assets, or reimburses the worker. | The worker supplies most tools or assets without an allowance or reimbursement. |
| Commercial risk | The business bears the commercial risk of injury or defects. | The worker bears the commercial risk of injury or defects. |
| Goodwill | The hiring business benefits from goodwill generated by the work. | The worker’s own business benefits from that goodwill. |
These features are not a checklist, and no single feature determines the classification. They must be assessed together by reference to the legal rights and obligations actually agreed.
A contract may be written, wholly oral, or a combination of written terms, oral terms and terms implied from conduct. Conduct and work practices are not considered independently unless they are sufficient to vary the agreed contractual terms.
When does the employee test require NT cover?
For workers compensation purposes, NT WorkSafe describes a worker as a natural person who:
- performs work or a service for another person under a contract;
- is an employee for PAYG withholding assessment under the Taxation Administration Act 1953 (Cth), Schedule 1, Parts 2-5; and
- must be covered even if the employer is not withholding tax when it should be.
If those elements are met, the person should be covered even if the employer believes they are a contractor. If the natural-person requirement or the employee assessment is unclear, the employer should not decide the issue from the contract’s heading or label alone.
The ATO also says an employee must be a natural person. Companies, trusts and partnerships are always contractors for tax and superannuation purposes, and their directors, partners or employees are not employees of the hiring business. That tax classification does not remove separate NT obligations that may apply to labour hire businesses or principal contractors.
What changes with labour hire or subcontracting?
| Arrangement | Relevant position |
|---|---|
| Labour hire business | NT WorkSafe says a labour hire business must cover all individuals it engages, whether they are employees or contractors. |
| Hiring business paying a labour hire firm | For tax and superannuation purposes, the hiring business contracts with the labour hire firm. The firm is responsible for PAYG withholding, superannuation and fringe benefits tax obligations for the worker. |
| Principal contractor using subcontractors | NT legislation makes the principal contractor liable for claims by subcontractors’ workers and entitles it to indemnification from those subcontractors. |
A principal should confirm that each subcontractor has workers compensation insurance for its workers. NT WorkSafe also advises principal contractors to maintain their own insurance in case of an oversight and to seek advice from an insurance broker or adviser.
What should an employer do if the classification is uncertain?
- Collect the agreed terms. Check the written contract, oral terms and any terms implied from conduct.
- Identify the business’s essential activities. Compare what the business actually does with the rights and obligations granted under the agreement.
- Review the whole working arrangement. Look at control, integration, payment, delegation, equipment, risk and goodwill together rather than applying a single-factor test.
- Apply the employee assessment. Confirm whether the counterparty is a natural person and whether the relationship meets the PAYG employee test incorporated into the NT worker definition.
- Check for relevant tax and superannuation rules. Correct classification matters for those obligations as well as workers compensation, and an incorrect decision may lead to penalties.
- Seek independent professional advice. NT WorkSafe specifically recommends advice on tax and other employer obligations when it is unclear whether cover is required.
NT WorkSafe’s 5 January 2023 bulletin says businesses engaging and paying workers should use the ATO employee-or-contractor decision tool, but it also reported that the tool was under review and unavailable. Check the regulator page for its current status.
Are directors and immediate family members automatically covered?
No automatic coverage should be assumed.
| Person | Additional requirement stated by NT WorkSafe |
|---|---|
| Company director | The company must have a workers compensation policy with an approved insurer, and the director’s personal details and remuneration must be disclosed to the insurer. |
| Immediate family member living with an individual or partnership owner | Their personal details and remuneration must be disclosed to the insurer for coverage. |
What can go wrong if cover is missing or unpaid?
Without workers compensation insurance, the employer is responsible for the cost of a claim, which NT WorkSafe says could amount to millions of dollars. That can threaten the viability of the business and, for a sole trader, expose personal assets.
A breach can also incur the company penalty set out in the table above. If the premium is not paid in full within the stated one-month period after the insurer’s notice is received, interest is payable.
How can an employer arrange and verify cover?
Workers compensation insurance can be obtained by contacting an insurance broker. The NT WorkSafe page directs employers to a list of NT approved insurers.
Before arranging or relying on cover:
- check the current NT WorkSafe regulator page;
- confirm the insurer is approved for the relevant NT cover;
- read the policy’s product disclosure statement (PDS);
- check whether any personal details or remuneration must be disclosed; and
- for a temporary worker sent from another jurisdiction, confirm that the home-jurisdiction policy remains applicable.
This is general information, not financial or legal advice. Classification and coverage can depend on the particular contract and facts, so check the current regulator page and the policy’s PDS.
Sources
- Workers compensation insurance requirements for employers | NT WorkSafe
- Difference between employees and independent contractors | Australian Taxation Office
FAQ
Does calling someone an independent contractor make them one?
No. The ATO says classification depends on the contractual legal rights and obligations between the parties, not the label used in the contract.
Must an NT employer cover a natural person when PAYG tax should have been withheld?
NT WorkSafe says the person should be covered when they meet the PAYG employee test, even if the employer thinks they are a contractor or is not withholding tax when it should.
What happens when an employee is temporarily sent to work in the NT?
The stated exception applies to workers normally employed in the employer’s home jurisdiction who are sent to the NT temporarily for no more than six months. The employer should confirm that its existing insurance covers them.
Does using a labour hire firm remove the need for workers compensation cover?
No. NT WorkSafe says a labour hire business must cover all individuals it engages, regardless of whether they are employees or contractors.
What should I do if I cannot determine the worker’s status?
Seek independent professional advice about the contract, tax treatment and other employer obligations. Also check the current NT WorkSafe guidance and the proposed policy’s PDS.
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