What Insurance Does a Labour Hire Company Need?
A labour hire company typically needs public liability, professional indemnity and management liability insurance, plus workers’ compensation for the workers it employs. Because agencies place workers at sites they don’t control, each policy must specifically cover on-hired workers. Most host clients also ask for $10 million to $20 million in public liability, with a principal’s indemnity extension, before your workers can start.
This guide explains each cover, the limits clients ask for, how cover works between the agency and the host, what isn’t covered, and the licensing rules that sit alongside your insurance.
Labour hire insurance at a glance
| Insurance | What it covers | Who needs it |
|---|---|---|
| Public liability | Injury or property damage to third parties caused by your on-hired workers or business activities | Every labour hire agency |
| Professional indemnity | Financial loss to a client caused by a negligent placement or a placed professional’s error | Agencies placing skilled, technical or professional staff |
| Management liability | Claims against the business and its directors, including employment disputes, regulatory investigations and employee theft | Every incorporated agency |
| Workers’ compensation | Injuries to the workers you employ and place | Every agency with employees, under the state scheme |
| Cyber | Data breaches and loss of candidate or client information | Agencies holding personal data |
What does public liability insurance cover for a labour hire company?
Public liability covers your legal liability when an on-hired worker, or your own business activities, cause injury or property damage to a third party. That includes a host’s customer injured by a placed worker, or a worker damaging a client’s equipment, plus the legal costs of defending the claim and any compensation you’re found liable for.
It doesn’t cover injuries to your own on-hired workers, which fall under workers’ compensation. It also doesn’t cover financial loss from a placed professional’s advice or errors, or accidents involving registered vehicles on public roads, which are covered by CTP and commercial motor insurance.
Does labour hire public liability cover damage to the host’s property?
Usually, if your worker was negligent and the policy treats the host’s property as third-party property. Two details matter:
- Care, custody and control: property your worker is directly working on, or has in their control, is often excluded unless the policy is extended to cover it.
- The service agreement: check how it allocates risk between you and the host, and make sure your policy wording matches it.
What public liability limit do labour hire companies need?
Most labour hire agencies carry $10 million or $20 million. $10 million is a common minimum for commercial clients, while construction sites, hospitals, councils and government contracts typically require $20 million. Major infrastructure, mining and industrial projects can ask for more. Supplying manual and site workers carries more risk than supplying office staff, so limits and premiums are usually higher for blue-collar placements.
What is principal’s indemnity in labour hire insurance?
Principal’s indemnity is a policy extension that covers the host client (the principal) under your public liability policy for liability arising from the work your placed workers do. If one of your workers injures someone on the host’s site and the host is sued, the host can claim directly on your policy instead of relying only on the indemnity clause in your contract.
Most commercial labour hire agreements require it, and standard policies don’t include it automatically. Hosts should ask for a certificate of currency that confirms principal’s indemnity is in place.
Do recruitment agencies need professional indemnity insurance?
It isn’t compulsory by law, but most corporate and government clients require it. Professional indemnity covers claims that your agency caused a client financial loss, for example by:
- placing a candidate without proper reference, qualification or visa checks
- placing an unsuitable worker whose errors cost the client money
- a placed professional, such as an engineer, accountant or nurse, making a costly mistake
Limits commonly range from $1 million to $10 million, depending on the roles you fill and what your contracts require.
What is management liability insurance for a labour hire business?
Management liability covers the business and its directors for claims about how the company is run, rather than the work your placed workers do. Because a labour hire agency employs every worker it places, its exposure to employment disputes and regulatory investigations is high. A typical policy includes:
- Directors’ and officers’ liability: claims against directors and managers for wrongful acts or breaches of duty.
- Employment practices liability: claims from employees or on-hired workers alleging unfair dismissal, bullying, harassment or discrimination.
- Statutory liability: legal costs of regulator investigations and prosecutions, and insurable fines.
- Crime: losses from employee theft or fraud.
- Tax audits: professional fees for responding to an ATO audit.
What is statutory liability insurance?
Statutory liability insurance covers your legal costs, and some fines and penalties, if you unintentionally breach legislation such as WHS, Fair Work, privacy or environmental laws. It’s often included in a management liability policy.
It has an important limit. Victoria, NSW, Western Australia, Queensland and the ACT prohibit insuring WHS fines, so in those states the policy can’t pay the fine itself, although it can still cover your legal defence costs. Deliberate or reckless breaches aren’t covered anywhere.
Who pays workers’ compensation for labour hire workers?
The labour hire agency, because it’s the legal employer. The agency must hold a workers’ compensation policy covering every worker it places, in every state it operates in:
- Government schemes: NSW (icare), Queensland (WorkCover Queensland), South Australia (ReturnToWorkSA) and Victoria (WorkSafe Victoria).
- Approved private insurers: Western Australia, Tasmania, the ACT and the Northern Territory.
The host’s own workers’ compensation policy doesn’t cover labour hire workers. However, if a host’s negligence, such as unsafe equipment or poor supervision, contributes to an injury, the host can still face a claim.
Does a host employer’s insurance cover labour hire workers?
Not for their injuries, since those sit under the agency’s workers’ compensation. A host’s public liability policy may respond to claims involving labour hire workers on its site, but only if the policy covers the host’s use of on-hired staff, so hosts should tell their insurer they use labour hire. In practice, hosts rely on three things: their own public liability, the agency’s public liability with principal’s indemnity, and the indemnity clauses in the service agreement.
Can labour hire companies get insurance for mine and construction sites?
Yes, but it needs to be arranged specifically. Standard business packages often exclude or restrict underground work, mine sites, heavy machinery and other high-risk work, so declare every industry you supply into. Mine operators and principal contractors also check certificates of currency and limits before workers can go on site, often through contractor management platforms.
What does labour hire insurance not cover?
Common exclusions and gaps include:
- Injuries to your own workers: these fall under workers’ compensation, not public liability.
- Wage and award claims: underpayment and other industrial law claims aren’t covered by liability policies.
- Faulty work: the cost of redoing a placed worker’s poor-quality work.
- WHS fines: uninsurable in Victoria, NSW, Western Australia, Queensland and the ACT.
- Penalties for unlicensed operation: fines for providing or using labour hire without a licence in a licensing state.
- Undeclared industries or subcontracted labour: work you didn’t tell the insurer about can be excluded.
- Cyber incidents: not covered unless you add cyber cover.
- Asbestos and pollution: usually excluded.
How much does labour hire insurance cost?
Labour hire insurance is quoted individually, because premiums depend on:
- the industries you supply workers into, with construction, mining and healthcare costing more than office roles
- your total wages and number of placed workers
- the limits your clients require
- the states you operate in
- your claims history
White-collar agencies generally pay less than agencies supplying manual, site or high-risk workers.
Who insures labour hire and recruitment agencies?
Labour hire is a specialist risk, so cover is usually arranged through a broker with access to insurers and underwriting agencies that write labour hire and recruitment, rather than through a standard off-the-shelf business package. Coverscope arranges labour hire insurance for agencies and recruitment businesses, including public liability, professional indemnity and management liability.
Which states require a labour hire licence?
Victoria, Queensland, South Australia and the ACT run mandatory labour hire licensing schemes, and in all four it’s also an offence for a business to use an unlicensed provider. NSW, Western Australia, Tasmania and the Northern Territory don’t currently have one.
| State or territory | Licensing scheme? | Regulator |
|---|---|---|
| Victoria | Yes | Labour Hire Authority |
| Queensland | Yes | Labour Hire Licensing Queensland |
| South Australia | Yes, all industries since 29 January 2026 | Consumer and Business Services |
| ACT | Yes | WorkSafe ACT |
| NSW, WA, Tasmania, NT | No | WHS regulator only |
Insurance and licensing are separate requirements. A licence doesn’t replace insurance, and holding insurance doesn’t satisfy licensing. A provider based in a non-licensing state still needs a licence to supply workers into Victoria, Queensland, South Australia or the ACT.
What changed in labour hire licensing in 2026?
- South Australia now covers all industries. From 29 January 2026 the scheme covers all labour hire providers, and since 29 July 2026 penalties apply to unlicensed providers and the businesses that use them.
- Victoria strengthened its scheme. From 1 June 2026 the Labour Hire Authority gained stronger powers, including an expanded fit and proper person test and financial viability requirements. From 1 October 2026, supply-chain intermediaries need a licence even if they never directly employ the workers they supply.
- NSW is moving towards a scheme. A NSW parliamentary inquiry reporting in August 2026 recommended NSW urgently introduce licensing. The NSW Government says it prefers a national scheme but is examining all options, and in September 2026 the NSW Anti-slavery Commissioner published a draft Labour Hire Licensing Bill.
What happens if a business uses an unlicensed labour hire provider?
In a licensing state, a host that uses an unlicensed provider faces the same maximum penalties as the provider, and insurance won’t cover them.
| Victoria (2026–27) | Queensland | |
|---|---|---|
| Maximum penalty, corporation | $669,120 | $518,100 |
| Maximum penalty, individual | $167,280 | $178,571.80 or 3 years’ imprisonment |
Regulators are actively prosecuting. In May 2026, Victoria’s Supreme Court ordered an unlicensed company and its director to pay $830,000, the largest total penalty for labour hire breaches in Australian history. In Queensland, courts have imposed $2.42 million in fines across 32 prosecuted breaches since the scheme began.
Do labour hire providers and host businesses share safety duties?
Yes. Under the WHS laws in most states and territories, the agency and the host are each a person conducting a business or undertaking (PCBU), and each owes the worker a duty of care at the same time. Victoria has its own OHS laws, but hosts there also owe safety duties to labour hire workers. Neither party can contract out of its duties, and the two must consult and cooperate on inductions, hazards and emergency plans. If a worker is injured, both can face action for the same incident.
What risks should a business consider when using labour hire?
Before engaging a labour hire provider, a host business should check:
- Licence status: confirm the provider holds a current licence on the regulator’s register in any licensing state.
- Insurance: get a certificate of currency showing public liability at the limit you need, with principal’s indemnity, and professional indemnity where relevant.
- Workers’ compensation: confirm the provider’s policy covers the workers it supplies.
- Your own cover: tell your insurer you use labour hire so your public liability responds.
- Safety: plan inductions, supervision and hazard controls with the provider, because you share the duty.
- Pay and conditions: a host knowingly involved in a provider’s underpayment can be held liable too.
This article provides general information only and doesn’t constitute legal or personal financial advice. Labour hire laws vary by state and change regularly, so confirm your obligations with the relevant regulator.
