If you’re self-employed and are injured at work, many people are unclear whether they can make a workers’ compensation claim or not.
The answer to that question will depend on a number of factors, including how you supply your labour to other people, whether your business is incorporated, what sort of insurance policy you are covered by, and whether you may in fact be classified as an employee.
In Australia, essentially, if you’re an employee of a business you will be covered by its mandatory workers’ compensation policy and able to make a claim for loss of income, medical and rehabilitation expenses, etc., if you’re injured during the course of your employment. If you’re a business or a contractor (i.e. self-employed) to another business, you will in most cases be responsible for your own workers’ compensation.
We’ll provide an overview of each of these situations in this article but if you’re self-employed, experience injury at work and are unsure of your next steps, contact compensation specialists BPC Lawyers today.
In what circumstances can you make a claim – some examples
As an example take a plumber, Dave, who runs his own incorporated business, Dave’s Plumbing Pty Ltd, and is contracted to do the plumbing on a new house built by home building company ABC Building Pty Ltd. The contract for the job is between Dave’s Plumbing and ABC Building. If Dave injures himself after falling down a hole on the site, therefore, his company is responsible for any workers’ compensation claim, not ABC Building. This is because the contract is between two companies, not between an employer and an employee.
Dave’s ability to make a claim for compensation, however, will hinge on whether he is an employee of Dave’s Plumbing Pty Ltd. This is the case for many tradespeople and other self-employed people, who are commonly termed ‘working directors’. It’s imperative that a company such as Dave’s Plumbing ensure that its workers’ compensation policy specifically covers working directors, in order for Dave to make a claim after being injured.
What if Dave operates as a sole trader with no employees? In this situation, Dave can’t take out workers’ compensation insurance to cover himself in case of injury. Instead, Dave would need to look to income protection, personal accident insurance, or total and permanent disability (TPD) policies to cover him in the event of a work injury. Income protection policies will usually cover you for loss of income arising from serious injury as the result of an accident, or if you contract a serious illness, while personal accident insurance will cover for loss of income as a result of an accident but not illness.
Similarly, people in an unincorporated partnership are unable to take out workers’ compensation to cover work-related injury to the partners themselves. Both sole traders and partnerships, however, are required to take out a workers’ compensation policy if they have employees.
A worker or a contractor?
Employers are required to maintain a workers’ compensation policy which covers their workers, but not self-employed contractors. Some contractors, however, are ‘deemed’ workers for the purpose of workers’ compensation.
Some of these classes of workers may include outworkers, salespersons, rural workers and contractors under labour hire service arrangements. Someone may be hired as a contractor and treated as such for payment of tax, but still, be considered a worker for the purpose of workers’ compensation insurance. Invoicing with an ABN is not a definitive indicator of a person’s status as either worker or contractor.
Whether someone is a self-employed contractor or an employee/worker is often at the heart of disputes in workers’ compensation claims.
In the simplest terms, a contractor is more likely to:
- be carrying out a particular task which requires using their own skill and judgment;
- employ others, delegate or sub-let work;
- provide a quotation for the job;
- supply their own tools and materials;
- carry on a business in their name, or through a business name.
By contrast, workers are more likely to be paid for working a specific time period, have materials and equipment supplied by an employer, work exclusively for the employer, and be subject to the PAYG tax regime.
An employer who hires subcontractors needs to be clear about whether they are classified as contractors or employees, and therefore about the ability of those workers to make a claim for worker’s compensation under the employer’s policy in the event of work injury.
Speak with the experts
At BPC Lawyers, we are specialists in workplace injury claims, whether they involve a workers’ compensation claim or for self-employed people who need to make their own claim for damages.
Being injured at work when you’re self-employed can be a scary and stressful experience. If you’re not able to claim workers’ compensation, you may be wondering how you’re going to pay the bills and look after your family if you’re not able to work. We will help clarify the issues for you and advise on the best course of action in making a claim.
If you’re setting up a new business, or are already operating one, we can also advise on the types of insurance you should have and what to look out for in assessing policies.