A standard employment relationship consists of workers and employers. A worker, for workers compensation purposes, is defined as:
‘a person who has entered into or works under a contract of service or a training contract with an employer (whether by way of manual labour, clerical work or otherwise, and whether the contract is expressed or implied, and whether the contract is oral or in writing)'.
However, as many employment relationships are not standard, some people are also classified as deemed workers for workers compensation purposes. These classes of ‘deemed workers’ include, but are not limited to:
- outworkers
- salespersons, canvassers, and collectors
- contractors under labour hire service arrangements
- rural workers
- boxers, wrestlers, referees and entertainers.
See Schedule 1 of the Workplace Injury Management and Workers Compensation Act 1998 for a comprehensive list.
There are several factors which need to be considered to distinguish an employee from a contractor. These factors are subjective and no single factor can be regarded as decisive. All factors must be weighed up to determine a persons employment status.
A contractor is more likely to:
- be engaged to carry out a particular task using his or her own skill and judgement
- employ others, delegate or sub-let work to another
- be paid on the basis of a quotation for the job
- supply his or her own tools and materials
- carry on an independent business in his or her own name or under a business or firm name
- be affected by PAYG tax arrangements.
Please note that an ABN by itself is not a definite indicator of a person(s) status.
A worker is more likely to:
- be subject to direction from the employer as to the work to be performed and the time and manner in which it is performed
- be required to actually carry out the work
- be paid on a time basis
- have tools and materials supplied by the employer
- work exclusively for a single employer.
NOTE: A person may have been hired as a contractor and be a contractor for other purposes such as tax, but still be a worker for the purpose of workers compensation.
It should be noted that the status of a person for tax purposes bears no direct relationship to that person's status as a worker for workers compensation purposes.
WorkCover's
Worker Status Service assists employers by providing certainty and clarity on the status of workers.
A worker status
self-assessment tool has been developed to guide employers on the status of workers and is the first step in deciding if a private ruling may be needed. A self-assessment or private ruling is not needed if the person is a deemed worker as outlined above.
Call 13 10 50 for more information about a worker or contractor.