If you work as a contractor or even a subcontractor, who is responsible for WorkCover? Do you need to take out a WorkCover policy of your own, or does this fall onto the employer?
Determining where WorkCover obligations lie comes down to one key question. Are you classified as a *worker* or a *contractor*? The fact is, regardless of whether or not you have an ABN and issue invoices, the employer may still be responsible for covering you for workers’ compensation.
So, how do you determine where you stand?
Uncovering *worker* myths
Don’t be fooled by common misconceptions that contractors can’t be workers. The fact is a worker can:
Have an ABN.
Work on commission, an hourly rate, for time worked or per item.
Telecommute or work from home.
Claim to be a subcontractor.
Breaking down the term, *worker*
In Queensland, a worker is defined as:
Working under contract.
An employee for the purpose of PAYG withholding.
Look out for *worker* indicators
You may be classified as a worker if:
You cannot subcontract the work. That is, you cannot pay someone else to do the work.
You are paid hourly for the time worked, piece work or a commission.
You do not provide all or most of the tools, equipment and other assets required to complete the work or you do provide all or most but receive an allowance for this.
You are not legally liable for the cost of rectifying any defects. The employer is responsible.
The employer has the right to direct the way in which the worker performs their work
You are not operating independently from the employer's business. You work within and are considered part of the employer's business.
It’s as simple as ABN
Only an individual or sole trader can be a worker, so if you are registered as a partnership, trust or company, then the employer is not responsible for covering workers’ compensation.
Head to the ATO website
The Australian Taxation Office (ATO) has a free employee/contractor tool to help determine whether you are classified as a worker of contractor. Click here to check it out.
Lead by example
Wrapping your head around *worker versus contractor* can be a complicated. Here are some examples from the Work Safe Queensland website.
A sole trader Bob has his own ABN and is engaged to lay concrete, clean and maintain the concrete pumps and machinery on a daily basis. Bob has agreed to provide his services at $30p/h and invoices Pro 1 Concreting at the end of each month based on the hours spent on the job. Bob would be a worker even though he has his own ABN and provides his own invoices. He would be required to be covered by Pro 1 Concreting workers compensation insurance policy.
A sole trader Tommy has his own ABN to provide formwork and oversee the pouring of concrete. Tommy has a written agreement and provides an upfront quote for all work undertaken and is also responsible for defects. Furthermore, his contract with Pro 1 Concreting allows him to engage others. Tommy presently engages Bill, who is paid $20 p/h to assist him. Tommy is a contractor according to the ATO Contractor Decision Tool. He does not have to be covered by Pro 1 Concreting’s WorkCover policy. Tommy would however be required to take out a WorkCover policy to cover Bill. If Tommy wanted to cover himself for WorkCover injuries he could take out WorkCover workplace personal injury insurance policy or alternatively take out an income protection policy.
Concrete World Pty Ltd provide and pour pre-mixed concrete on allocated jobs. Concrete World Pty Ltd will not be considered a worker as anyone working under company, trust or partnership entity types are automatic exclusions from the WorkCover scheme under the Act. Only an individual (i.e. sole trader and/or PAYG employee) can be a worker under the Act.
(WorkSafe Queensland, 2017)
If in doubt, seek advice
If you are unsure whether or not you are classified as a worker or a contractor, if you are liable to pay workers’ compensation or if you have a different WorkCover query, get in touch with our team for tailored legal advice relevant to your specific situation. Contact Jeremy and Noel on (07) 4632 0480 or through our online contact form.