Will I Be Entitled To Make A Claim For Worker’s Compensation As A Contractor Under The Workers Compensation And Injury Management Act 2023?

The Workers Compensation and Injury Management Act 2023 (‘the new act’), brings an array of changes and reform to the state-based legislation for statutory entitlements for injured workers.

A key change is the exclusion of entitlements for contractors who previously may have fallen within the extended definition of worker pursuant to Workers Compensation and Injury Management Act 1981 (‘the old act’), specifically within the definition of Section 5(b):

any person engaged by another person to work for the purpose of the other person’s trade or business under a contract with him for service, the remuneration by whatever means of the person so working being in substance for his personal manual labour or services

Section 12(2) of the new act defines a worker as an individual who has:

entered into a contract of service or works under a contract with a person (this contract can be implied, written or oral); or

entered into a contract of service or works under a contract to work as an apprentice; or

entered into a contact with a person to perform work for a person; and

is not work in the course of or incidental to a trade or business regularly carried on by the individual in the individual’s own name or under a business or firm name; and

the individual does not sublet the contract; and

if the individual employs a worker, the individual performs part of the work personally.

There is no material change to the definition of worker being an individual who has entered into or works under a contract of service, or an individual who has entered into a work and training contract as an apprentice.

However, the new act has modified the way contractors are covered. From 1 July 2024, individuals who are contracted by principals to perform work which is incidental to a trade or business regularly carried on by the individual in their own name (i.e., a sole trader) or under a business name may not be covered under the principal’s workers’ compensation insurance.

For example, if you are bricklayer operating under an ABN in your own name or under a business name and you are contracted to perform bricklaying work for a principal, from 1 July 2024, if you sustain injury during the course of your work with that principal, you may not be covered under the principal’s workers’ compensation insurance. 

Parliament in the explanatory memorandum have outlined the definition is now consistent with other states and territories and contractors running their own business will not be covered under the new act.

The High Court has considered a comparable provision in the Victorian legislation and the term ‘work incidental to a trade or business regularly carried on by the contractor in his own name or under a firm or business name’ in the decision of Humberstone v Northern Timber Mills [1949] HCA 49, 79 CLR 389. Sir Owen Dixon explained that the purpose of exception or exclusion was to confine the cover to individuals who work for a principal but have no independent trade or business or individuals who, through carrying on an independent trade or business undertake a contract outside the scope or course of that trade or business. There being a distinction between the former and individuals who are holding themselves out to the public under their own name, firm or business name as carrying on such a trade or business.

In relation to the issue of ‘work in the course of or incidental to a trade or business regularly carried on by the individual in the individual’s own name or under a business or firm name’, Courts in other jurisdictions have considered, amongst other things:

• the contractor’s earnings including taxation deductions and assessments prior to the injury;
• how the contractors hold themselves out to the public;
• the contractor’s status at the time of the injury; and
• the period of work performed for the principal.

Ultimately, whether a contractor will fall within the definition of worker under the new act will be a matter of fact and consideration of the totality of the relationship between contractor and principal will be required.

Certain conditions apply to workers who hold public office, religious workers and NDIS support workers.

If you operate as a sole trader or under an ABN or company name and you are not employed on a PAYG basis, consultation with an insurance broker or advisor is recommended for advice surrounding the most appropriate insurance policies for you to ensure you are adequately covered in the event of an injury.

If you have been injured at work and you are unsure whether you are a ‘worker’ or entitled to compensation, contact Brand Barristers & Solicitors today for an obligation-free meeting to assist in determining if you have an eligible claim and the appropriate next steps.