If you operate a business in any one of the states and territories across Australia, you understand that you need to cover your employees, should they be injured on the job. Workers' compensation schemes are very established and help protect individual employees to recover lost wages and pay for their medical expenses and any long-term care required. In the past, you may have been used to taking on staff on a full or part-time basis and clearly understood that they were employees, by definition. You knew that they had to be covered and had the right insurance in place, but now you're thinking about taking on contractors instead. What about insurance here?
Digging Deeper
This is an area where caution is advised. Some people think that contractors are fully independent and need to take care of all their requirements, including insurance. You don't need to account for their professional liability insurance, business overheads, Social Security payments or similar things, so why should you be liable under the workers' compensation scheme? The reality is that you may be.
Clear Definition
The Workers' Compensation and Injury Management Act clearly defines that a worker may, in certain circumstances, be a contractor or subcontractor.
In order for this individual to be covered by your insurance, they must be engaged to work for the "purpose of your trade or business." If you pay them to perform a specific task, they will automatically fall into the same category as a full- or part-time employee and must be covered appropriately.
Even Further Liability
Furthermore, if such a contractor brings in a subcontractor to help them perform these duties for you, then you also have exposure here. Both you and the contractor need to ensure that workers' compensation is valid, and in legal terms, you are jointly and severally liable.
Too Big a Risk
This is eye opening to some business owners, but it can be problematic if they are not adequately prepared. They should ensure that the paperwork is all in order and that they have a clear understanding with any contractors and subcontractors on site. If not, this will inevitably lead to unwanted costs, fines or other issues, all of which could have been avoided with attention to detail.
Getting It Right
Sometimes, grey areas can exist but, in your case, they shouldn't remain grey for very long. If you're unsure, you should definitely get in touch with an insurance provider to learn more about workers' compensation insurance.
Hello there. My name is Sean White and this is my blog about commercial insurance. Everyone in my family owns a business except for my youngest brother who, just like the cliche, became a comedian. I guess I learnt the hard way that it is important not to scrimp on business insurance. When I was ten years old, my father's shop burned down. Without proper insurance, our family did it tough for quite a while. Now that my own children are branching out into various businesses, I am always researching the best types of commercial insurance and encouraging them to get professional advice. If, like me, you are passionate about the importance of commercial insurance, this blog may provide some inspiration. Please stay a while and browse.