Am I entitled to claim workers’ compensation benefits if I am injured whilst at work, or in the course of my work?
This is a question to which the answer may have changed for a number of individual contractors, particularly in the transport and building industry. This follows a recent amendment to narrow the definition of a ‘worker’ for the purposes of the workers’ compensation legislation in Queensland, which came into effect on 1 July 2013.
Up until 30 June 2013 the definition of a ‘worker’ under the Workers’ Compensation & Rehabilitation Act 2003 (The Act), captured many individual contractors. This included tradespeople, owner drivers and persons who worked under a contract mainly, or substantially, for labour only. This definition and classification of a ‘worker’ was irrespective of the fact that many of these contractors were often not considered employees for any other purpose, such as leave entitlements and superannuation.
However under the amended definition of a ‘worker’, which applies from July 2013, a ‘worker'(1) is now considered a person who:
(a) works under a contract; and
(b) in relation to the work, is an employee for the purpose of assessment for PAYG withholding under the Taxation Administration Act 1953 (Cth), schedule 1, part 2-5.
Application of the ATO employee/contractor tool in determining whether a party is a ‘worker’
This new definition of a ‘worker’ relies on the tax status of the person carrying out the work. Accordingly, WorkCover Queensland in assessing workplace injury claims post June 2013, will now rely(2) upon the ATO’s online employee/contractor decision tool (The ATO Tool) and ATO guidelines in considering whether a party is a ‘worker’ for the purposes of The Act. The ATO Tool is based on Taxation Ruling TR 2005/16 and the Superannuation Guarantee Ruling SGR 2005/1 that discuss the various indicators the Courts have considered in determining if a person, engaged by another individual or entity, is an employee within the common law meaning of the term.
In making this determination the Courts have considered the level of control exercised, or capable of being exercised, over the work as being a fundamental consideration in determining the nature of the working relationship. However, the Courts have consistently outlined that it is the totality of the working arrangement which must be considered.
As such, there are numerous other factors which are to be taken into account when determining the status of the working relationship. These factors are also considered in the ATO Tool in addition to the issue of control. Key considerations in determining whether a party is an employee/’worker’ under the ATO Tool, include inter alia:
(i) Does the agreement allow the worker the right to pay another person to do the work instead of them (right to delegate work);
The power to delegate or subcontract (in the sense of the capacity to engage others to do the work) is a significant factor in deciding whether a worker in an employee or independent contractor. If a person is contractually required to personally perform the work, this is an indication that the person is an employee/’worker’.
(ii) The basis on which the worker is paid;
If the individual is paid to achieve or produce an agreed or predetermined result, and the achievement of that result is what entitles the individual to be paid, then this is generally indicative of an independent contracting relationship.
(iii) Who is responsible for providing the plant and equipment and/or tools of trade needed to perform the work?
The provision of assets, equipment and tools by an individual and the incurring of expenses and other overheads is an indicator that the individual is an independent contractor.
If an individual provides all or most of the plant and equipment and/or tools of trade needed to perform the work, and does not receive an allowance or reimbursement for the cost associated with this, then under the ATO Tool the individual is generally considered to be providing the plant and equipment and/or tools of the trade needed to perform the work.
The application of this criterion can be complication in circumstances where the individual contractor provides certain tools or equipment and the principal contractor provides the remaining items. The ATO, to offer guidance in consideration of this criterion, has provided that following practical examples(3):
Example 1: Individual not considered to be providing plant and equipment and/or tools of trade
An individual works at a golf club as a greenkeeper. He is responsible for the upkeep of the golf course greens, tees, fairways, rough and surrounds, and general landscaping maintenance.
The individual brings along a few inexpensive hand tools of his own, which he prefers using. The golf club provides all the other equipment, tools and assets to complete the work, including:
• greens mower
• line trimmer.
Although the individual provides some tools, the golf club is considered responsible for providing the majority of the equipment, tools and assets needed to perform the work.
Example 2: Individual considered to be providing plant and equipment and/or tools of trade
An individual is a garden maintenance worker who has a contract with a business to maintain their lawns and gardens, on a fortnightly basis.
The individual provides all his own equipment and tools to complete the job including; a lawnmower, line trimmer, blower vac, hedge trimmer and garden hand tools. He also has his own vehicle and trailer to transport the equipment and tools to the business’s premises.
Each fortnight, when the lawns and gardens are maintained to the agreed standard, the business will pay the individual the amount specified in the contract (they do not provide any other payments to Jeff).
The individual is considered to be responsible for providing the equipment, tools and other assets as he:
• has provided all his own equipment, tools and vehicle to complete the job
• does not receive an allowance or reimbursement from the business.
(iv) Is the worker liable for the cost of rectifying any defect in the work performed?
If an individual bears little or no risk of the costs arising out of injury or defect in carrying out their work, he or she is more likely to be considered an employee/’worker’. On the other hand, an independent contractor generally bears the commercial risk and responsibility for any poor workmanship or injury sustained in the performance of work.
Those most likely to be impacted by the narrowing in the definition of a ‘worker’
It is clear from the new definition of a ‘worker’ under The Act and the application of the ATO Tool, that the following types of contracting individuals are most likely to fall outside of the narrowed definition of a ‘worker’ under The Act; and as such no longer be covered under a principal’s workers’ compensation policy:
•Individuals who supply and operate their own plant, such as earthmoving equipment or trucks, as a part of their contract;
•Individuals who work mainly or substantially for labour only, quote for the job, provide their tools of trade or rectify defects at their own expense;
•Individuals who have a personal services business determination for the Australian Taxation Office.
Myths about entitlement to claim as a ‘worker’
Despite the changes to the definition of a worker reducing the workers’ compensation scheme for certain individual contractors, such as those referenced above, it is important to remember that the following factors, when considered in isolation, do not necessarily mean that a contracting individual cannot be considered a ‘worker’ under The Act:
• The worker has their own ABN;
• The worker has a registered business name;
• The written agreement in place between the worker and employer states that the worker is not an employee;
• Under the working arrangement no tax is withheld from the workers earnings by the party they work for.
Not all is lost
Whilst it is most unfortunate that access to the Workers Compensation scheme in Queensland will no longer be available to certain contracting individuals, not all is potentially lost. As in the event that a contracting individual is injured in the course of their work, and does not meet the narrowed definition of a ‘worker’, they may still have recourse to claim against the principal contractors that they were working for, or any other third party, under the public liability regime, in the event that their injuries were caused by the negligence of that party.
We can help
If you are unsure if you are still legally a ‘worker’, or if you have a personal injury that you would like to discuss, please contact the expert lawyers at Gouldson Legal.
Gouldson Legal operates on a No Win No Fee basis. That means you are entitled to a no-obligation consultation with one of our lawyers! In this consultation, a lawyer will personally answer all your questions and discuss the merits of your case.
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