Who should I cover for workers' compensation?

The Workers’ Compensation and Rehabilitation Act 2003 (the Act) lists specific inclusions and exclusions for who should be covered for workers’ compensation.

This information should be used as a guide only. If you need help determining who to cover for workers' compensation insurance, please call us on 1300 362 128.

Who is a ‘worker’?
Under section 11 of the Act, a worker must be an individual. Therefore, if you engage a corporation, the Act will not define anyone working for that corporation as a worker.

Although a sole trader is an individual, the Act may also define a partner of a partnership as an individual (person).

A person can be a worker even if they have an Australian Business Number (ABN) or are responsible for their own tax.

A person who works under a ‘contract of service’ is a worker

A ‘contract of service’ is a standard employer and employee relationship. A large part of the workforce works under a contract of service. When deciding whether a person is a worker or not, consider whether you are engaging a person working:

• under a contract
• at piecework rates for labour only
• for substantially labour only.

A worker is likely to be a person who performs the same work in the same way as an employee. Even where a person calls themselves a ‘sub-contractor’, if you engage them for work and control the ‘what, when, where, and how’, they are likely to be a worker under the Act.

A person who is part of a genuine business is unlikely to be a worker

A person who satisfies any one of the following criteria will be a worker:

• a person who fails the results test or does not have a personal services business determination (PSBD)—these are explained later in this fact sheet
• some sharefarmers
• a sales person paid by commission
• a person is not regularly carrying on a trade or business, or who performs work outside their normal or regular trade or business
• a person engaged by a labour hire agency, group training organisation, or holding company is a worker of that organisation.

Holding an ABN does not automatically qualify a contractor as operating a business. Further details about these inclusions can be found under schedule two, part one (persons who are workers) of the Act.

Persons who are not ‘workers’

The Act specifically excludes some people from workers’ compensation coverage. A person who performs work under a contract of service with:

• a corporation of which the person is a director
• a trust of which the person is a trustee
• a partnership of which the person is a member

is not a worker of that corporation, trust or partnership. Partnerships are not considered to be an automatic exclusion.

Other people who are excluded include:

• people who perform work under a contract of service with the Commonwealth or a Commonwealth authority
• professional sportspeople
• members of the crew of a fishing vessel receiving wholly or mainly a percentage of gross earnings or profit
• people who use a motor vehicle for tuition
• people who participate in an approved program or work for unemployment payment under the Social Security Act 1991.

Further details about these and other exclusions can be found under schedule two, part two (persons who are not workers) of the Act.