Insurables — Australian business risk, sourced and dated

Employing workers in more than one state

In short

  • A worker who works in more than one state is not automatically covered twice; schemes apply a "state of connection" test to settle which single scheme applies.
  • The test looks first at where the worker usually performs the role, then at where they are usually based, before falling back to the employer’s principal place of business.
  • Where the worker lives is not part of the test — a common and understandable assumption the test does not actually use.

A business with staff who cross state lines for work quickly hits a genuine structural question: does workers compensation duplicate for that worker, or is there one scheme that applies? Australian schemes answer this with a shared mechanism, called the state of connection test.

This page explains the test using WorkSafe Victoria’s own published version of it, which mirrors the approach schemes agreed between themselves.

The state of connection, not the state of residence

The test is not about where a worker lives. It exists to determine which single state or territory scheme covers a worker who performs the same employment in more than one place, and it deliberately looks past a worker’s home address to where the work itself sits.

Getting this distinction settled early avoids the natural but wrong assumption that a worker’s postcode decides which scheme applies.

How the test actually runs

The test is applied as a sequence, moving to the next step only if the previous one does not produce an answer. First: where the worker usually — meaning regularly — performs that employment. If that does not identify a single state, the test moves to where the worker is usually based for the purposes of the job, looking at things such as the location named in the employment contract, where they report for direction, where equipment or materials are collected, and where wages are paid from.

If neither step produces an answer, the test falls back to where the employer’s own principal place of business in Australia is located.

One policy, not several

Once the state of connection is identified, an employer generally needs a workers compensation policy in that one state for that worker, rather than a separate policy in every state the worker happens to physically work in during the year. That is the practical payoff of running the test properly: it prevents both an accidental gap and unnecessary duplicate cover.

Because each scheme administers its own version of this test, the safer approach for a genuinely borderline case is to put the facts to the scheme the business already deals with and ask, rather than guessing from the general shape of the rule.

Questions

My worker lives in one state and works in another. Which state’s scheme applies?
Where they live is not part of the test. What matters is where they usually perform the role, then where they are usually based for the job, then the employer’s principal place of business if neither of those settles it.
Do I need a policy in every state my worker visits?
Generally no. Once the state of connection is identified, one policy in that state is the general position, rather than a policy for every state touched during the year.
What if my worker splits time evenly between two states?
The test is not a simple time count. It works through the sequence of usual place of work, then usual base, then the employer’s principal place of business — and a close split is exactly the case worth confirming directly with the relevant scheme.

Sources

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