Workers Compensation Insurance

It also pays to be aware that contractors and sub-contractors may also be entitled to Workers’ Compensation if they are defined as workers under the Workers’ Compensation and Injury Management Act 1981 (the Act).

The Act has both a primary and extended definition of a worker.

The primary definition covers those who are employed under a contract of service – the relationship being one of employer-employee.

The extended definition broadens the scope of who is considered as a worker under the Act to include independent contractors engaged under a contract for service where the remuneration they receive is in substance for personal manual labour or services. (The term ‘in substance’, is explained later in this document).

In some circumstances where a contractor’s workers are under the control and direction of a principal contractor, that principal contractor may also be liable (jointly with the contractor) for the contractor’s workers.

A workers’ compensation liability may also arise where a worker is engaged under contractual arrangements contrived so that the employer can avoid his or her liabilities under the Act; for example, by requiring the worker to incorporate.

A ‘working director’ is a director of a company who executes work for or on behalf of the company and whose earnings as a director are in substance for personal manual labour or services.

A company must apply to an approved workers’ compensation insurer to cover their working directors. If this action is not taken, working directors are not covered for any claim made by the working director on the company.

Some working directors may work in more than one employment and be employed or engaged directly by some other employer. If employed or engaged directly, that other employer may have a liability for the working director.

Reference: www.workcover.wa.gov.au