Queenslanders who are injured at work can be entitled to significant benefits under the WorkCover scheme, including replacement wages, medical treatment and rehabilitation and possibly, where the injury has occurred due the fault or negligence of the employer, a claim for common law damages.
Fundamental to these entitlements is that the injured person is a “worker” as defined by the Workers Compensation and Rehabilitation Act 2003 (the “WCRA”). In the majority of cases this will be obvious and straightforward, but in some instances the question can be more complex, and will require careful consideration.
These more complex scenarios most often arise where the injured person is claimed to have been working as a contractor rather than as an employee. This claim is most often made by the employer/principal – in reliance, for example, upon the manner of payment for the work performed, or on the injured person being described as such in initial hiring documents (letters, emails, and even contracts).
As lawyers acting for injured persons in these scenarios, we are usually asserting that our client is not a contractor but a “worker” as defined in the Act, and is therefore entitled to the benefits referred to above. Here we set out some of the considerations involved in resolving such a dispute.
To start with the definition, under section 11 of the WCRA a person is a worker if:
- They work under a contract; and
- In relation to that work, they are an employee for the purpose of PAYG withholding under the Taxation Administration Act 1953 (Cth);
The WCRA also provides for particular inclusions and exclusions via Schedule 2 (Part 1 and Part 2) — i.e. some people are explicitly deemed to be workers in certain circumstances, and some persons are expressly not workers.
Turning to the first requirement of the definition – working under a contract – this is usually straightforward. Both employees and contractors work under contracts, which can be in writing or oral. Such contracts can even be implied, for example where someone volunteers to help out and ends up being paid on an ongoing basis, although little or nothing might be said between the employer and the worker.
Sometimes there will be no contract, such as in real life example from our own experience where an injured person attended a job site to assist a friend (who was an employee) without payment and without the knowledge of the employer.
But in the vast majority of cases there will be no difficulty identifying a contract. The more complex issues arise with the second requirement – whether the injured person is an employee for tax purposes.
Obviously enough, where the employer is actually withholding PAYG tax, that will be a compelling factor in favour of the injured person being a “worker” but of course, in these scenarios where the issue of “worker” is in dispute, that will rarely be the case. Rather, there will be no PAYG tax withheld and the question is: do these parties have the kind of relationship that requires PAYG tax to be withheld?
In these disputes it generally will not matter how the parties have described themselves in contractual documents, emails or other communications. There are examples of parties going to great lengths in written contracts to describe a relationship of one of principal and contractor, only for it to be determined that the relationship is truly one of employer and employee. The key is what the relationship is in substance, rather than how the parties describe it. Even payment to a person working and rendering invoices under an ABN will not necessarily prevent the conclusion that person is a “worker”.
Resolution of these disputes lies in examining the overall relationship. Over the years the courts have developed a range of criteria to consider and weigh. Some of these include:
- Control: Does the engaging party control how, when, and where the work is done?
- Integration: Is the person integrated into the business (e.g. supplied with tools, included in work schedules)?
- Risk and reward: Does the person bear the risk of profit or loss? Do they supply their own equipment or incur expenses?
- Ability to subcontract or delegate: Can they subcontract or employ others to do the work?
- Payment method: Are they paid by the hour, by task, or a lump sum? Is there withholding?
- Provision of tools/equipment: If they provide large plant or their own machinery, this suggests independent contracting.
No one of these factors by themselves is necessarily decisive but, taken together, they can assist in deciding whether, in substance, the person is more like an employee (and thus a “worker” entitled to the benefits under the WCRA) than a contractor.
As previously noted, irrespective of whether if an injured person is a “worker” on the above criteria, they may yet be expressly included or excluded under Schedule 2. For example, salespersons on commission, labour hire workers, and unpaid interns may be treated as workers; conversely, a person working for a company who is a director of that company, professional sportspersons, and fishers sharing in the profits of a fishing ship may be excluded.
These are just some of the basic considerations that will assist in determining whether an injured person is a “worker” under the WCRA. As with all legal issues with important consequences, there is no substitute for expert legal advice tailored to your particular circumstances.
