If you are a sole trader and you suffer a work-related injury while hustling with pup and keep cup in your new day job-from-home, you may find yourself out of pocket for your treatment and recovery costs. Shocked? You should be.
While it’s exciting to be the master of your own destiny, you might want to ensure you are protected financially in the event you’re injured at work. Here’s how sole proprietorship affects your eligibility for workers’ compensation.
The rise in sole proprietorship
Even before coronavirus rocked Australia’s employment levels, more people were taking the leap to start their own business. In 2018-19, sole proprietors accounted for 55.9% of total growth in businesses (source: Australian Bureau of Statistics).
While the 19-20 Counts aren’t yet available, globally, some are tipping that freelancing and independent consulting opportunities will grow as a result of COVID-19. Before you do your happy dance, don’t get caught out.
It’s important for you to know that while you might have gained freedom and responsibility for your time and creative outputs, you’ve also gained responsibility for your health and wellbeing in the event you experience a physical or psychological injury at work.
Who is covered by workers’ compensation?
An employee.
A worker is legally defined as ‘a person who works under a contract and, in relation to the work, is an employee for the purpose of assessment for PAYD withholding under the Taxation Administration Act 1953 (Cwlth), schedule 1, part 2-5’ (s11 of the Act).’
It is compulsory for all companies who employ staff to have a workers’ compensation insurance policy to cover their workers in the event they are injured at work.
So, sole traders aren’t covered?
Generally speaking, it’s unlikely a sole trader of their own business will be covered by workers’ compensation if injured, as they aren’t deemed a ‘worker’ under the relevant laws. However, this can depend on the nature of the contract of service, so it is best to seek legal advice just in case.
How can a sole trader protect themselves financially after suffering a workplace injury?
To protect yourself in the event you suffer an injury at work (or even personally), you could consider taking out suitable coverage, such as;
- personal injury or illness insurance
- personal income protection.
Generally speaking, if a sole trader slips, trips and falls resulting in injury and downtime, or you contract an occupational or psychological illness that attracts treatment costs and prevents you from working, you’ll need to rely on your own savings, personal insurance or income protection coverage for financial support while you recover.
Want to arrange a free case review?
There is a difference between contractors, sub-contractors and sole traders in the workplace. Therefore, if you’ve been injured while on the clock and you’re unsure of your rights, it could be worth exploring if compensation is an option.
Get in touch to arrange your free case review with one of our qualified compensation lawyers for help understanding your rights.