Workers comp premiums range from 0.84% to 2.09% of payroll

By Jonas Valenti · 2026-08-04

The formula behind every premium

Workers compensation insurance is mandatory across Australia, and every employer's premium starts with the same basic mechanism: multiply your total payroll by your industry rate, then let your own claims history push that figure up or down. The rate itself is not a guess. Each state and territory regulator sets industry rates using historical claims data for defined classifications, so the number on your invoice reflects what workers in your sector have actually cost the scheme over time.

Victoria's Premiums Order makes this explicit. In Victoria, an employer's WorkCover premium is calculated using rateable remuneration and an industry rate set by WorkSafe Victoria to reflect the claims experience of each industry classification.^[1] Two businesses with identical payrolls but different industry codes will pay different premiums, often by a wide margin, regardless of how either owner describes their safety culture.

What the national numbers actually show

The standardised average premium rate across Australia was 1.59% of payroll in 2023-24, up from 1.42% the prior year.^[4] That 0.17 percentage point increase translates into real money: on a $1 million payroll, the annual premium bill rises by $1,700 just from scheme-wide drift, before any claims adjustment applies to an individual employer.

The Safe Work Australia comparison report breaks those figures down by jurisdiction for 2023-24.^[4] South Australia at 1.89% and Tasmania at 2.04% both sit well above the national average, while Queensland at 1.25% and Comcare at 0.84% anchor the lower end. The Northern Territory's 2.09% is the highest standardised rate recorded across any jurisdiction in that dataset.

Industry classification is doing most of the work

Jurisdictional averages obscure the real driver of premium variation: what your business actually does. Every scheme groups employers into industry classifications, each carrying a rate built from the long-run claims experience of that sector. A professional services firm in a CBD office and a concrete construction company both pay premiums using the same payroll-times-rate formula, but the rates they face sit in an entirely different order of magnitude.

As at 31 December 2025, the highest published industry rate in NSW was 15.49% for Concrete Construction Services, according to Safe Work Australia's comparison report.^[4] Set against a national average of 1.59%, that rate is almost ten times higher. On a $1 million payroll, the difference between a concrete construction classification and a low-risk office classification is not a rounding error; it is a six-figure line item.

Regulators calculate how much injury and illness claims have actually cost across a defined industry group over a rolling period, then set a rate that covers expected future claims. High-frequency, high-severity industries such as construction, manufacturing and transport accumulate claims costs that low-frequency industries like finance or professional services do not, and the rate reflects that history rather than the intentions of any individual business owner.

What each scheme is doing right now

The jurisdictional rates in the Safe Work Australia dataset are 2023-24 figures, and several schemes have moved since. icare confirmed an average 8% increase to workers compensation premiums for 2025-26 in NSW. An icare spokesperson said: "Workers compensation schemes across Australia are responding to inflationary pressures, higher numbers of complex claims, and investment volatility. icare's average premium increase of 8% responds to the economic environment and helps support a strong and sustainable workers compensation scheme for more than 338,000 public and private sector employers in NSW and 3.5 million workers across New South Wales."^[6]

WorkSafe Victoria has set the average premium rate for 2026-27 at 1.8% of rateable remuneration.^[2] That is down slightly from Victoria's 2023-24 standardised rate of 1.87% in the Safe Work Australia comparison data, suggesting some moderation in that scheme's trajectory. WorkCover WA's actuarial assessment for 2025-26 recommended increasing the average premium rate by 5.3% to 1.823% of wages, up from 1.732% the previous year.^[5]

Queensland is the outlier moving in the other direction. WorkCover Queensland held its target average net premium rate at $1.343 per $100 of wages for 2025-26, and that freeze was extended into 2026-27.^[3] For Queensland employers, two consecutive years of rate stability is a meaningful contrast to the upward pressure visible in NSW and Western Australia.

What actually moves your individual rate

The industry classification sets the baseline, but individual employer premiums are adjusted from there. Claims history is the main lever: an employer with a sustained record of significant claims will attract an experience-rated loading above the base industry rate, while an employer with few or no claims may receive a discount. The size of that adjustment depends on the scheme's formula, which differs by jurisdiction, and typically phases in over several years rather than swinging sharply from one year to the next.

Payroll accuracy is the second variable employers can actually control. Premiums are calculated on declared remuneration, and an employer who under-declares wages faces a retrospective adjustment when the true figure emerges. An icare spokesperson said employers should "ensure their actual wage declarations are submitted on time, talk through options with their broker, or simply visit our website for helpful guidance." Late declarations can also affect renewal timing and, in some schemes, trigger penalty provisions.^[6]

The same icare spokesperson also said that "Employers with a higher risk workplace should consider how a growth in injury claims within their industry may result in an increase above the average rate. Similarly, lower risk workplaces may receive a premium increase below the 8% average."^[6] Scheme-wide cost pressures, including rises in long-duration mental health claims across most jurisdictions, are feeding into industry rates across the country.

What does not move the rate

Many employers believe a strong safety culture, or simply a clean record in recent months, will produce an immediate premium reduction. The formula does not work that way. Industry rates are set on multi-year claims data and recalculated annually at the scheme level; an individual employer's safety investments show up in experience adjustments over time, not in next year's base rate.

Anecdotal comparisons between businesses in different states are also mostly noise. The same activity, performed by the same kind of worker, can attract materially different base rates depending on how each jurisdiction has drawn its classification boundaries and what claims have accumulated within those boundaries over time. A labour hire firm placing workers across multiple classifications faces this complexity acutely, because misclassification, placing a worker under the wrong industry code, can result in a retrospective premium adjustment that arrives long after the original work was performed.

Jonas Valenti

Jonas Valenti writes about search and how businesses get discovered. He has spent years watching what makes a company visible online, and is unsentimental about tactics that no longer work.