In Australia, it is compulsory for most employers to take out a workers insurance policy to cover their employees. Workers’ compensation is a form of insurance payment to employees if they are injured at work or become sick due to their work. Workers’ compensation includes payments to employees to cover their lost wages while they are unfit for work and reasonably necessary medical expenses etc.
All workers in NSW are covered for work-related injuries or illness under the Workers Compensation Scheme, and if an employer is uninsured or does not hold a valid workers compensation insurance policy, employees can lodge a claim through the Uninsured Liability Scheme which is managed by Icare.
However, you need to be classified as an employee or worker. An employer is generally not responsible for workers compensation benefits for those who are engaged as a contractor.
Can I claim workers compensation as a contractor?
In some cases, yes you can. Just because an employer calls you a contractor does not mean that you are considered to be such at law. It is not surprising that some employers often falsely categorise workers as contractors and tell a worker that they are an independent contractor to avoid their employer obligations and shirk paying employee entitlements.
Whether a person is a contractor, or an employee is determined by the nature of the relationship, and not by what the arrangement is called. It may be the case that, under workers’ compensation legislation, you are actually a ‘deemed’ worker and not a contractor. If the characteristics of your job resemble those of an employee, then your employer should treat you as an employee, and you should be entitled to claim workers compensation.
When is a contractor a ‘deemed worker’?
Contractors, also known as independent contractors, have different rights and obligations to employees. They provide goods or services according to the agreed terms of a contract they have negotiated with an employer.
Some people are ‘deemed’ to be workers for workers compensation purposes even though they have been hired as a contractor. In other words, they are a contractor for tax purposes but deemed as a worker for workers compensation purposes.
Many factors can be used to determine whether someone is a ‘deemed’ worker or a contractor. Below is a condensed version of Schedule 1 of the Workplace Injury Management and Workers Compensation Act 1998, which sets out some of the common indicators to help tell the difference between a worker or a ‘deemed’ worker and an independent contractor.
| A worker would be a person who: | A contractor would be a person who: |
| is performing work under the direction and control of their employer.is required to actually carry out the work.is paid on a time basis.has tools and materials provided by the employer.works exclusively for a single employer.is affected by PAYG tax arrangements. | is engaged to carry out a particular task using their own skills and judgment and having a high degree of control over how the work is done.is free to subcontract out some of the work to others.is paid on the basis of a quotation for the work, instead of receiving an hourly, weekly or monthly wage.provides their own tools, equipment and materials.is free to perform services or work for other clients.carries out work under an ABN or a business they own. |
The legal determination of whether a person is a deemed worker or a contractor can be a complex legal task. There is usually no one decisive indicator and all the factors need to be considered together. For example, just because someone has an ABN or issues invoices does not automatically mean that person is a contractor.
Here is an example to better illustrate the above
One of our clients at Alliance, Mr Kim, has been working as a welder for about 6 months. When he commenced work, his boss told him that he would be an independent contractor and should get an ABN and invoice them. In the 6 months since Mr Kim started working, his employer has been providing all the tools and materials required, setting his hours of work (8:30AM to 5:00PM, from Monday to Friday, 5 days per week) and has required him to work exclusively for them.
In this instance, Mr Kim would be considered a deemed worker. We successfully assisted him lodging a workers compensation claim against his employer’s workers compensation insurer and he has been receiving his entitlements to weekly compensation and medical expenses.
Implications for workers’ rights in the ‘Gig Economy’
The basis for gig employment is the one-off provision of labour at a specified time, and the term ‘gig economy’ workers usually refer to food delivery drivers and riders working for companies like Uber Eats, Doordash, Deliveroo, Hungry Panda, and Easi etc.
Currently, the workers compensation scheme does not provide protection to most individuals working in the gig economy. This is because they do not clearly fit within the definitions of worker or deemed worker under current workers compensation legislation. They have been considered as contractors, instead of employees.
However, there is appetite for change on this front. In a recent high-profile case of Diego Franco v Deliveroo Australia Pty Ltd [2021] FWC 2818, the Fair Work Commission has found that despite the food delivery rider being labelled as a contractor, the conditions of his work meant he was an employee in the eyes of the law.
Having weighed up various factors regarding the proper characterisation of the relationship between the claimant and Deliveroo, the Commission ultimately determined that the claimant has been unfairly dismissed on the grounds that he was an employee of Deliveroo and thus entitled to greater protection. Deliveroo however, does indicate that it will be appealing the decision and is confident that its riders are engaged as contractors.
Nevertheless, this decision does indicate the movements on this legal issue and is likely to have significant ramifications for gig workers more generally in the future.
Unsure of your rights? Contact Alliance
If you think you might be an employee and are experiencing a difficulty with your employer to claim workers compensation, our workers compensation experts at Alliance Compensation & Litigation Lawyers can help. Our lawyers can explain your legal situation and help you claim compensation on a No Win No Fee basis or even at no cost at all.
