In KSW Insight in September 2022 we discussed the Deliveroo case where it was confirmed that the terms of the written agreement are what determines whether it is an employee or contractor arrangement.
This determination is obviously important for many employment law situations, but it is also important for workers’ compensation purposes.
Workers’ compensation is based on employees (workers). Most contractors are excluded. However, some contractors can be deemed to be workers, who will then be included in your worker’s compensation cover, which will affect the calculation of your worker’s compensation premium (including deemed workers’ notional superannuation).
Contractors who are companies are excluded as they cannot be deemed to be your workers. However, sole traders and partnerships can be deemed to be your workers in certain circumstances.
Whilst the terms of the written agreement are important, it is currently also the actions of the parties that determine whether a contractor is a deemed worker for workers’ compensation purposes.
We recently had a new client in the construction industry selected for a workers’ compensation audit (due to not submitting their actual wage declarations for 3 years). The auditor requested a large range of information, including copies of the written independent contractor’s agreements for all sole traders and partnerships. They then reviewed the agreements and the party’s actions.
In some of the relationships, the auditor determined that the parties were not acting in accordance with the written agreements and deemed the contractors to be workers.
One of the important determining factors for a deemed worker finding was whether the contractor held themselves out to the public as running their own business. For example, did they have their own website, did they advertise (paid advertising, not just social media – this is very contentious in the modern world) and did they have numerous clients during the year.
It is interesting to note that the Deliveroo case (and CFMMEU v Personnel Contracting [2022] HCA 1 and ZG v Jamsek [2022] HCA 2) found that the reality of the working relationship and how the parties interact is irrelevant and more importance is to be given to the practical and contractual terms agreed between the parties.
Al the above issues lead us to an underlying important factor regarding contractors. Whether it is for workers’ compensation purposes, income tax, or employment law purposes, it is important to have a written independent contractor’s agreement and for the parties to act in accordance with that agreement. Taking these actions will ensure that you are not left with an unexpected result when it comes to workers’ compensation.
If you have any queries in relation to your contractors don’t hesitate to contact your client manager to discuss.
Author – Zane Grigg
*Correct as of 27 October 2022
*Disclaimer – this article has been produced by Kreston Stanley Williamson as a service to its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas contained in this article, it is imperative you seek specific advice relating to your particular circumstances. Liability limited by a scheme approved under professional standards legislation.
