Don't forget your sub-contractors

17 November 2009

Most employers in Queensland understand that they must have a WorkCover Queensland Accidents and Insurance Policy (WorkCover Policy) in accordance with the Workers’ Compensation and Rehabilitation Act 2003 (Qld) (the Act).

Unfortunately, some employers do not appreciate that sub-contractors (or “subbies”) may need to be covered under the employer’s WorkCover Policy.

Employers must ensure that all persons they engage that fall within the definition of “Worker” under the Act are covered under their WorkCover policy.

Generally, a person will be a “Worker” unless they satisfy all of the following 3 elements:

1. They are engaged to achieve a specified result or outcome.  That may occur where they are engaged to complete a specific task and their remuneration is an agreed price based on the achievement of the specified result (as opposed to, say, an hourly rate).
2. They must provide their own plant, equipment and tools.
3. They are legally responsible for the cost of rectifying any defects in, or substandard performance of, tasks they were engaged to perform. 

A person who performs labour only (or a substantial part of their work involves the provision of labour) will also be a Worker under the Act.

A person may render tax invoices with an ABN and be responsible for paying their own tax and superannuation and still be considered to be a Worker.

A person who is not covered under an employer’s WorkCover Policy may still make a claim under the Act.

If their claim is accepted, WorkCover may recover from the employer:

1. The entire costs of the injured Worker’s claim plus a penalty of up to 50% of those costs; and
2. The difference between the premium actually paid and the premium that should have been paid, plus a penalty of up to 100% of that shortfall.

The costs of the claim may include:

1. A proportion of the Workers’ wages;
2. Medical expenses;
3. Rehabilitation costs;
4. Lump sum compensation if there is a permanent impairment; and
5. Damages and legal costs if the injured person makes a “common law claim”. 

Every employer must regularly review and consider whether or not each person they engage is a Worker under the Act. 

An employer who does not do so is breaking the law and placing themselves at risk of serious adverse financial consequences.

For further information, please contact:

Greg Shaw | Associate
Mullins Lawyers
t +61 7 3224 0265
f +61 7 3224 0230
gshaw@mullinslaw.com.au