Workers compensation insurance: WorkCover Insurance for Contractors

Businesses are generally aware that they need to obtain Workers Compensation insurance for their employees. But did you know that you may have to obtain Workers Compensation insurance for your independent contractors?

When is insurance required?

Workers Compensation insurance is required in circumstances where contractors are classified as workers of an employer. Under Victorian Workers Compensation legislation, contractors are deemed to be workers of an employer where:

• The principal engages a contractor to provide them with services,
• The contract is predominantly for the provision of services and not ancillary to the provision of material or equipment,
• At least 80% of the services under the contract are provided by the same individual, and
• At least 80% of the income the contractor receives from providing their services comes from the principal.

The exception to the above is where WorkCover determines that the contractor is carrying on an independent trade or business.

If your contractors work predominantly for you, in most circumstances you will need to insure them under your Workers Compensation insurance. This is the case even if your contractors have their own Australian Business Number (ABN) or are operating their business through their own company.

When are you not required to include contractors on your insurance policy?

Situations where you typically would not need to include contractors on your Workers Compensation insurance policies include:

• Where your contractors work for other businesses in addition to yours, or
• Where you engage a business that uses a number of its own employees to complete work for you (in this case, the contractor’s business would need to obtain its own Workers Compensation insurance).

Industries typically covered by Workers Compensation Insurance

In addition, the legislation makes special provision for certain types of individuals to be deemed workers for the purposes of Workers Compensation, including:

• Door to door sellers,
• Timber contractors,
• Certain taxi drivers and other drivers of commercial passenger vehicles,
• Certain couriers, and
• Share farmers.

You can find out more information on the WorkSafe website.

If your business engages contractors, you should also be aware of your superannuation obligations to your contractors and ensure that your contractors are, in fact, contractors and not employees.

Need further assistance?

If you are an employer and you need advice on any of these matters, please call Principal and Accredited Specialist in Commercial Law, Mitchell Zadow, on 1300 205 506 or alternatively complete the form below.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

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