Working it out: When a contractor will be considered a worker under the VIC Workers Compensation Scheme

• Published date: 15 November 2022
• Subject Matter: Employment and HR, Contract of Employment, Employee Benefits & Compensation
• Law Firm: Carroll & O'Dea
• Author: Mr Martin Slattery

1. INTRODUCTION

An employer who hires a contractor needs to consider whether the individual who actually does the work is likely to be a "worker" for WorkCover insurance purposes. This is not always clear cut and can be complicated by factors such as the structure of the entity who contracts with the employer.

This article looks at circumstances when an injured contractor will be considered a worker of the employer, with a focus on the WorkSafe Victoria Guidelines titled "Contractors and workers guideline" (the Guidelines).¹ These Guidelines examine when a contractor engaged to carry out work is to be considered a "worker" for WorkCover insurance purposes.

*Note at the time of writing this article they were last updated as of 29 July 2022.

2. STATUTORY DEFINITION OF 'WORKER'

A "worker" is defined under the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic) (WIRCA) as an individual:²

(a) who-

• (i) performs work for an employer; or
• (ii) agrees with an employer to perform work- at the employer's direction, instruction or request, whether under a contract of employment (whether express, implied, oral or in writing) or otherwise; or

(b) who is deemed to be a worker under this Act;

The Guidelines look at how WorkSafeVic approach applying this in practice subject to the exclusions detailed below.

3. OVERVIEW OF THE GUIDELINES

The term "contractor" as outlined by WorkSafe in the Guidelines covers a wide variety of individuals who may operate as sole traders or through companies, partnerships, or trusts.

3.1 The two steps

The Guidelines outline two main steps that can assist in determining if the individual will be viewed as a worker or not. The relevant steps which need to be considered depend on the type of entity who contracts with the employer:

• Step one, is relevant where the contracting entity is a sole trader and related to a finding of a worker as a common law employee; and
• Step two, must be considered in all cases and relates to whether an individual will be deemed a "worker"

3.2 Exclusions

The Guidelines are subject to exceptions, and do not apply if the employer obtained the services of an individual through a labour hire (or on-hire) firm and pays that firm for the work undertaken in their business. Furthermore, the Guidelines do not apply to:

• owner drivers;
• door-to-door sellers;
• timber contractors;
• taxi drivers;
• share farmers;
• outworkers; or
• sporting contestants.

4. STEP ONE - IS THE INDIVIDUAL A COMMON LAW WORKER?

4.1 Overview

Step one looks at when an injured person argues that they are a "worker" at common law in accordance with the definition contained in the applicable Victorian workers compensation legislation³. Under the Guidelines, WorkSafeVic will need to consider step where the contractor hired to do the work is a...