As of 2021, there are over 1.1 million independent contractors working in Australia. If you’re unsure as to whether or not you are one of these 1.1 million, then it might be in your best interests to find out. Since, whether you are a subcontractor, or an employee, is an important distinction that significantly affects the benefits you recieve if you are injured at work.
Workers Compensation insurance indicates that “employees” are financially covered following an injury or illness which occurs as a result of their job. In the case of subcontractors, it depends on whether or not the subcontractor is deemed as a ‘worker’ or not.
Why Is It Important?
Businesses are required to cover employees for workers compensation, but people who are self-employed or engaged as a contractor are generally expected to cover their own. So, in short, for workers compensation claims, you must be an employee, or deemed an employee, in order to receive compensation.
What happens if you use an ABN and work exclusively for the deemed employer, but have no discretion over the work you perform? Would you be able to claim worker's compensation benefits if you get injured?
Each claim is determined on its own facts.
Here are some factors to help you determine whether you are in a deemed employee/employer relationship.
Does the worker wear a uniform?
Does the worker use his own tools?
Is the worker able to subcontract the work to another person?
Does the worker work exclusively for the deemed employer?
Does the worker have any discretion in the work performed for the deemed employer?
When Do Subcontractors Need Their Own Workers Compensation Insurance?
If a subcontractor works for themself with no employees, workers compensation insurance is not likely required. However, there are some instances where it is needed. For example, a contract may specify you are required to have the insurance in place. If you lodge a claim for workers compensation and the insurer declines your claim for this reason, you may be a deemed worker and can claim workers compensation benefits from the employer.
*Disclaimer: This is intended as general information only and not to be construed as legal advice. The above information is subject to changes over time. You should always seek professional advice before taking any course of action.*
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