Australia’s workforce is undergoing a rapid transformation with some of the nation’s largest companies relying more on external contractors, labour hire and temporary staff, in preference to adding full-time staff to their books. It’s estimated there are now more than 1.1 million independent contractors or self-employed people in the Australian workforce.
There are many implications of this change, from industrial relations to labour laws. A common question that arises out of the increased use of independent contractors is whether they are covered under Queensland’s Workers’ Compensation and Rehabilitation Act 2003 (‘the Act’) if they are injured while working for a company. Under the law, are they ‘workers’ for the purposes of making a compensation claim?
All employers in Queensland must insure to pre-empt compensation or damages if a member of its workforce suffers a work-related injury or illness, either through a WorkCover insurance policy or under a licence as a self-insurer.
How is a worker defined in the legislation
The Act sets out a definition of who is considered a worker for the purposes of the workers’ compensation scheme:
- only an individual, not a corporation, partnership or trust (sole traders may be considered workers);
- a person who works under a contract and, in relation to the work, is an employee for the purpose of assessment for PAYG withholding;
- someone who works under a ‘contract of service’, like a sub-contractor. This worker may do the same work as an employee and could also be a worker under the Act.
A contract of service, it should be noted, is distinguished from a contact for services – the latter documenting the commercial arrangement between an employer and an independent or external contractor.
WorkSafe Queensland sets out of a number of common law tests to help employers and contractors distinguish between whether someone is a worker or a contractor for the purposes of a workers’ compensation claim.
For employees, a person is a worker if:
- the worker can’t pay someone else to do the work (i.e., subcontract the job);
- they are paid by the hour for the time they work, per piece of work or for a commission;
- they don’t provide their own tools or equipment for the job or, if they do, they are paid an allowance for this;
- they aren’t legally liable for the cost of fixing any faults. The employer is responsible;
- the employer has the right to tell the worker where and how to do their job;
- the worker works within and is considered part of the employer’s business.
By contrast, a person is considered a contractor if:
- they can pay someone else (i.e. subcontract out) to do the work;
- they are paid for a job done based on a verbal or written quote they provided;
- they provide their own tools and equipment for the job and don’t get an allowance for this;
- they are legally responsible for their work and for the cost of fixing any faults in the work;
- they can do the work in the way they see fit, subject to the specific terms of any contract or agreement;
- they operate their own business independently from the employer and are free to accept or refuse additional work.
Generally speaking independent contractors are not covered by the workers’ compensation policy of an employer with whom they have a contract for services, and instead must look after their own insurance arrangements to cover the possibility of work-related illness or injury. As a result, contractors can be left in a vulnerable position if they are injured in the course of their work and are uninsured. They may be forced to take extended time off work without income to recover, affecting their family’s welfare.
Do contractors have any other protection?
If an independent contractor can show that they were engaged to provide services to an employer, and were injured while performing that work due to the negligence of the employer or one of its employees, they may have a claim for damages under Queensland’s Personal Injuries Proceedings Act 2002 (Qld). This avenue is in the nature of a personal injury claim, beginning with a notice of claim to the employer, and could potentially result in a more significant amount to compensate for an injury than a workers’ compensation claim. The claimant may also be able to recover their legal costs as part of the claim.
The importance of expert legal advice
Workers’ compensation claims can become complex particularly when employers and insurance companies begin challenging the status of the injured person as a worker. Where they instead claim the injured party is an arm’s-length contractor not entitled to make a workers’ compensation claim for lost wages and the costs of medical treatment, the tests outlined above will come into play.
Consulting with legal professionals who possess an established track record in handling workers’ compensation matters is highly advisable. At GC Law, our workers’ compensation lawyers will clarify the issues involved in making a claim and advise you of your options should you be an independent contractor injured while working. Contact us today to discuss your case.