Who Pays for Pre-Employment Medicals in Australia?
The short answer is the employer pays. But there are nuances around labour hire arrangements, tax deductibility, and the rare situations where candidates cover the cost themselves.
The Standard Practice: Employer Pays
In the vast majority of cases in Australia, the employer pays for pre-employment medicals. This is standard practice across industries and has been for decades. If you are the one requiring the assessment as a condition of employment, you are the one who pays for it.
The logic is straightforward. The employer is requesting the medical to satisfy their own requirements - whether that is a workplace health and safety obligation, an insurance requirement, or an internal policy. The candidate has not yet been hired and is not yet earning income from the employer. Asking a candidate to pay for an assessment that serves the employer's interests is generally considered unreasonable.
This is particularly true for physically demanding roles where pre-employment screening is most common. The candidates applying for labouring, warehouse, construction, and transport roles are often in positions where a $200 to $400 out-of-pocket cost is a genuine financial barrier. Requiring candidates to self-fund the assessment creates a hiring bottleneck and reduces the candidate pool.
Is There Legislation That Mandates Who Pays?
There is no single piece of Australian legislation that explicitly states the employer must pay for pre-employment medicals. This is a point of confusion, so it is worth being clear about it.
The Work Health and Safety Act 2011 places a duty on the person conducting a business or undertaking (PCBU) to ensure the health and safety of workers, so far as is reasonably practicable. Pre-employment medicals are a tool employers use to meet this duty. While the Act does not specifically say "the employer must pay for the medical," the obligation sits with the employer, and by extension, so does the cost of the tools used to meet it.
The Fair Work Act 2009 does not directly address pre-employment medical costs either. However, Fair Work has made it clear in various rulings that unreasonable requirements imposed on candidates during the hiring process can be problematic. Requiring a candidate to pay several hundred dollars for a medical assessment that the employer has mandated could be viewed as an unreasonable barrier to employment, particularly for lower-paid roles.
Some modern awards and enterprise agreements contain specific provisions about employer-funded medicals. If your workforce is covered by an award or agreement, check whether it includes a clause on this point.
Practical takeaway: While there is no law that says "the employer must pay," the weight of practice, fairness principles, and the fact that the assessment serves the employer's purposes all point in the same direction. Employer pays is the accepted norm, and deviating from it carries risk.
Labour Hire: Host Employer vs Recruitment Agency
Labour hire arrangements create an additional layer of complexity. There are two employers involved - the labour hire agency (the legal employer) and the host employer (the client site where the candidate will work). Both have obligations, and the question of who pays for the pre-employment medical depends on the commercial arrangement between them.
Labour Hire Agency Pays
In most cases, the labour hire or recruitment agency pays for the pre-employment medical. The agency is the legal employer and is hiring the candidate for their pool of workers. The cost of screening is built into the agency's margin and is part of the service they provide to their host employer clients. This is the most common arrangement.
Host Employer Pays
Some host employers require specific screening that goes beyond the agency's standard assessment - for example, a site-specific functional capacity evaluation or additional testing required by the host's insurance or WHS policy. In these cases, the host employer often pays for the additional testing directly or reimburses the agency. This is typically negotiated as part of the commercial agreement between the host and the agency.
Cost-Sharing Arrangements
Some arrangements split the cost. The agency covers the standard pre-employment medical, and the host employer covers any additional site-specific testing. This is a pragmatic approach that keeps the base cost with the agency while allowing the host to mandate additional screening where their risk profile demands it.
Regardless of who pays, both the agency and the host employer share WHS obligations under the Work Health and Safety Act 2011. The agency has a duty to ensure the worker is fit for the type of work they are being placed in. The host employer has a duty to ensure the worker is fit for the specific conditions of their site. Both parties should be satisfied that the screening is adequate for the role before the candidate starts.
Tax Deductibility for Employers
Pre-employment medical costs are generally tax-deductible for the employer as a business expense. The cost is incurred in the course of running the business and is directly related to the employer's duty to ensure a safe workplace and a fit workforce. This applies to the assessment fee, any additional testing costs, and travel costs associated with on-site delivery.
Employers should retain invoices from the assessment provider and record the expense under occupational health, workplace safety, or recruitment costs depending on their accounting structure. The ATO treats these costs as ordinary business deductions.
For employers who screen a high volume of candidates - labour hire companies, large construction firms, logistics operators - pre-employment medical costs represent a significant annual expense. Volume-based pricing from a single provider can help manage this cost, and the entire spend remains deductible.
When Candidates Pay: Rare but It Happens
There are a small number of situations where the candidate or worker pays for their own pre-employment medical. These are the exception, not the rule.
Self-Employed Contractors
Independent contractors who need a medical clearance to access a worksite may be required to fund their own assessment. Since they are not being employed by the site operator - they are providing services as a separate business - the cost sits with them. This is common in construction where self-employed subbies need site clearance. However, some principal contractors cover this cost as part of their site induction process.
Industry Licence or Certification
Some industry roles require the worker to hold a current medical clearance as a condition of their licence or certification. Commercial vehicle drivers, for example, need periodic medical assessments to maintain their licence. In these cases, the medical is tied to the individual's qualification rather than a specific employer's requirement, and the cost is typically borne by the worker. These are not technically pre-employment medicals but are sometimes conflated with them.
Candidate Offers to Pay
Occasionally a candidate who is keen to start quickly will offer to pay for their own medical to speed up the process. While this is the candidate's choice, employers should be cautious about accepting this arrangement as standard practice. If it becomes routine, it starts to look like a de facto policy of passing the cost to candidates, which creates fairness and perception issues.
What Happens If the Candidate Does Not Get the Job
The employer pays for the pre-employment medical regardless of whether the candidate is ultimately offered the position. The assessment is part of the hiring process, and the cost is absorbed by the employer whether the outcome is "fit for duty" or "unfit for this role."
Employers cannot request reimbursement from a candidate who is found unfit. The assessment served the employer's purpose - it provided information needed to make a hiring decision - and the employer bears that cost.
This is another reason why the scope of the assessment matters. Over-screening candidates for low-risk roles wastes money on unnecessary testing. Matching the assessment to the actual role demands keeps costs proportionate and ensures you are only paying for testing that adds value to the hiring decision.
Summary: Best Practice for Employers
The standard in Australia is clear: the employer pays for pre-employment medicals. This applies to direct hires, labour hire placements, and casual employees. The cost is a legitimate business expense and is tax-deductible.
For labour hire arrangements, clarify who pays as part of the commercial agreement between the agency and the host employer. For high-volume screening, negotiate volume-based pricing with your provider to manage costs. And match the scope of the assessment to the role demands - do not over-screen low-risk roles or under-screen high-risk ones.
If you need help setting up a pre-employment screening program or want a quote for your workforce, get in touch. We deliver pre-employment assessments on-site across Sydney.
Frequently Asked Questions
Does the employer always pay for pre-employment medicals in Australia?
In the vast majority of cases, yes. While there is no single law that mandates it, employer-funded pre-employment medicals are the accepted standard across Australian industries. The rare exceptions are self-employed contractors accessing worksites and workers who need medicals tied to personal licences or certifications.
Who pays for a pre-employment medical in a labour hire arrangement?
Typically the labour hire or recruitment agency pays, as they are the legal employer. If the host employer requires additional site-specific testing beyond the standard assessment, the host often covers that cost. The specifics depend on the commercial agreement between the agency and the host.
Can an employer ask a candidate to pay for their own pre-employment medical?
While not explicitly illegal, asking candidates to self-fund a medical assessment that the employer has mandated is widely considered unreasonable. It creates a financial barrier to employment, particularly for lower-paid roles, and may be viewed unfavourably in any Fair Work proceedings.
Key Takeaways
- Employer pays in most situations
- No specific law mandating who pays
- Labour hire: agency usually covers it
- Cost is tax-deductible for employers
- Candidates pay only in rare cases
- Self-employed contractors are the exception
- Volume pricing available for regular screening
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Content reviewed by Jovi Villanueva, AHPRA Registered Physiotherapist, SIRA Approved Provider, Principal Physiotherapist at Wellworx Workplace Solutions.
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