Who should I cover?
Who should I cover for workers' compensation?
This page provides useful information to help you determine who is a worker according to Workers' Compensation and Rehabilitation Act 2003 (the Act).
The Act lists specific inclusions and exclusions for who should be covered for workers' compensation.
This information should be used as a guide only. If you need help determining who to cover for workers' compensation insurance, please call WorkCover Queensland on 1300 362 128.
Who is a 'worker'?
From 1 July 2013, a worker is 'a person who works under a contract and, in relation to the work, is an employee for the purpose of assessment for PAYG withholding under the Taxation Administration Act 1953 (Cwlth), schedule 1, part 2-5' (s11 of the Act). The definition includes 'persons who are workers' under Schedule Two, Part One but excludes 'persons who are not workers' under Schedule Two, Part Two.
Under section 11 of the Act, a worker must be an individual. Therefore, if you engage a corporation they will not be worker as only an individual can be a worker. The same applies if you have entered into an agreement with a partnership or trust for the services of the worker. Sole traders are however engaged as individuals and may be a worker.
Please note a person/individual can be a worker even if they have an Australian Business Number (ABN) or are responsible for their own tax.
A person/individual can also be a worker even if they are working from home or telecommute.
A person who works under a 'contract of service' is a worker
A 'contract of service' is a standard employer and employee relationship. A large part of the workforce works under a contract of service. A worker is likely to be a person who performs the same work in the same way as an employee. Even where a person calls themselves a 'sub-contractor', if you engage them for work, they may be a worker under the Act.
Other person/s who are workers
A person who satisfies any one of the following criteria will also be a worker:
- some sharefarmers
- a sales person paid by commission
- a person engaged by a labour hire agency, group training organisation, or holding company is a worker of that organisation.
Further details on these inclusions can be found under Schedule Two, Part One 'Persons who are workers' of the Act.
Employee status is determined by considering the whole working arrangement across the following six key common law factors:
- the worker cannot subcontract the work – they cannot pay someone else to do the work
- the worker is paid hourly for the time worked, piece work or a commission
- the worker does not provide all or most of the tools, equipment and other assets required to complete the work or they do provide all or most but receive an allowance for this
- the worker is not legally liable for the cost of rectifying any defects. The employer is responsible
- the employer has the right to direct the way in which the worker performs their work
- the worker is not operating independently from the employer's business. They work within and are considered part of the employer's business.
Persons who are not 'workers'
The Act specifically excludes some people from workers' compensation coverage. A person who performs work under a contract of service for:
- a corporation of which the person is a director
- a trust of which the person is a trustee
- a partnership of which the person is a partner
Other people who are excluded include:
- people who perform work under a contract of service with the Commonwealth or a Commonwealth authority
- professional sportspeople
- members of the crew of a fishing vessel receiving wholly or mainly a percentage of gross earnings or profit
- people who use a motor vehicle for tuition
- a person who has a personal services business determination (PSBD) — this is explained further down the page
- people who participate in an approved program or work for unemployment payment under the Social Security Act 1991.
Further details about these exclusions can also be found under Schedule Two, Part Two 'Persons who are not workers' of the Act.
Contractor status is determined by considering the whole working arrangement across the following six key common law factors:
- the worker is free to pay someone else (subcontract) to do the work
- the worker is paid for a result achieved based on the quote they provided
- the worker provides all or most of the tools, equipment and other assets required to complete the work and does not receive an allowance for this
- the worker is legally responsible for their work and liable for the cost of rectifying any defects in their work
- the worker has freedom in the way the work is done subject to the specific terms of any contract or agreement
- the worker is operating their own business independently from the employer. The worker is free to accept or refuse additional work.
What is a personal services business determination?
A personal services business determination (PSBD) is written advice from the Australian Taxation Office confirming that the applicant is a personal services business. To determine whether a PSBD is in effect, you will need to give WorkCover Queensland a copy of the written determination issued by the Australian Taxation Office.
ATO worker decision tool
If the individual is not specifically included or excluded under Schedule Two, use the ATO decision tool to determine if a person is an employee or a contractor. We will accept that decision for WorkCover insurance and claims purposes.
What amounts should be declared to WorkCover as wages?
When calculating premium, WorkCover requires details of the actual wages paid during the last financial year and the estimated wages you expect to pay in the next financial year. The Wages definition manual provides detail about whether amounts paid to workers should be declared to WorkCover or not. Estimated wages can be determined using the same guidelines set out in this document.
If you would like more information or clarification on who you need to cover, please call us on 1300 362 128.
- Last updated
- 01 May 2018
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