NSW Work Injury Claim

NSW Work Injury Claim

Working Directors, Company Owners and Sole Traders After a Work Injury

Owning or directing a business does not produce one automatic workers compensation answer.

A working director may perform services for a company under an employment relationship and remuneration arrangement, while a sole trader cannot simply assume they are their own employee. The entity, contract, policy and payments must be checked.

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The position in practical terms

Separate the individual from the business entity. Identify who contracted with whom, how the person was remunerated, whether the policy declared the working director and whether another principal or deemed-worker provision may be relevant.

Decision factors and useful evidence

FactorWhy it mattersUseful evidence
Business structureA company is legally separate from its director; a sole trader is not separate from the individual. Partnerships and trusts add different relationships.ASIC extract, business registration, trust/partnership documents and organisational records.
Contract and day-to-day workA working director’s service, control, duties and remuneration should be identified rather than inferred from title alone.Employment/service agreement, board minutes, position description and work records.
Policy and declared remunerationPolicy schedules and wage declarations may help show whether a working director was included, but coverage still depends on the legal position.Policy schedule, wage declaration, premium records and broker correspondence.
Payments and other contracting relationshipsSalary, director fees, drawings, dividends and invoice income are not interchangeable. Work for another principal may raise a separate worker/deemed-worker issue.Payroll, BAS, accounts, bank records, invoices and contracts with principals.

Which employer or insurer may be involved

  • Identify whether the potential employer is the company, another principal, a labour-hire business or no employer at all.
  • Ask the insurer to identify the policy, declared entity and legal basis for accepting or denying working-director status.
  • A sole trader may need to examine personal accident, income protection, TPD or other insurance separately from workers compensation.

Evidence checklist

  • Company and business structure documents.
  • Employment, service and contracting agreements.
  • Workers compensation policy schedule and wage declarations.
  • Salary, director fee, drawing, dividend and invoice records kept separately.
  • Board or management records showing day-to-day duties.
  • Incident and medical evidence.
  • Any personal accident, income protection or TPD policy documents.

Earnings and PIAWE issues

  • If the person is a worker, PIAWE uses legally relevant earnings rather than total business turnover, profit or drawings without analysis.
  • Director remuneration and related-party records can require accounting evidence. Do not enter company revenue into a PIAWE calculator as if it were wages.

Reporting and jurisdiction

  • Notify the company’s insurer promptly even if ownership creates uncertainty, and record the report formally.
  • For work across states, apply the state-of-connection test to the relevant employment, not merely the company’s registered office.
  • If no workers compensation path applies, time limits under another insurance policy may still require prompt notification.

Common reasons for dispute

  • The insurer says the director was an owner only and not engaged as a worker.
  • The policy or wage declaration omitted the working director.
  • Payments are characterised as dividends or drawings rather than remuneration for work.
  • A sole trader assumes company-style cover exists without checking the actual policy and legal entity.

Practical next steps

  1. Obtain the company, contract and policy documents.
  2. Separate each payment type and identify what was paid for work.
  3. Report the injury to every potentially relevant insurer without conceding the legal classification.
  4. Review any principal-contracting or deemed-worker relationship separately.
  5. Consider advice on other insurance if the statutory scheme does not apply.

Illustrative example

A director working full time in the business

A director performs daily site work, receives payroll salary and is injured using company equipment. The policy exists, but the insurer asks whether the director was declared and whether the payments were wages or owner drawings.

  • The company’s separate legal identity, service arrangement and actual duties need to be documented.
  • Payroll, wage declarations and policy records should be reconciled.
  • Ownership does not by itself prove or disprove worker status.
  • This example does not establish coverage without the actual legal and policy documents.

Common questions

Can a company director be a worker?

Potentially. A working director’s contract, services, remuneration, company structure and policy position must be examined.

Can a sole trader claim against their own business?

A sole trader is not a separate legal employer from the individual. Other worker/deemed-worker relationships or private insurance may need consideration.

Does a workers compensation policy automatically cover every director?

No. The legal relationship, policy terms and wage declarations should be checked. Do not rely only on the existence of a policy.

Are drawings or dividends used as PIAWE?

Not automatically. The calculation concerns legally relevant earnings from the employment. Business and accounting records may require manual analysis.

Related guides

Unsure whether your work arrangement is covered?

Send the contract or engagement records, a short injury chronology and any insurer decision. We can assess the workers compensation issue and whether an ILARS funding application may be available, subject to eligibility, merits and IRO approval.

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Legal service provider

NSW workers compensation help from Stephen Young Lawyers

NSW Work Injury Claim is the workers compensation service of Stephen Young Lawyers. Stephen Young Lawyers provides the legal service. Stephen Young Lawyers.

Stephen Young Lawyers was established in 2012. The firm is led by Stephen Young, Principal Solicitor and Accredited Specialist in Personal Injury Law.

Workers across New South Wales can arrange telephone or video appointments. In-person appointments can be arranged at the Sydney office when appropriate.

NSW Work Injury Claim enquiries: (02) 7233 3661

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Key legal sources

This information is general in nature and is not legal advice. You should obtain advice about your own circumstances.

This page provides general information about NSW workers compensation. It is not legal advice. Worker status, jurisdiction and entitlement depend on the actual relationship, evidence and law applying to the claim.

Primary sources