Worker's guidelines
Use these guidelines to work out if you need to take out a workers' compensation policy for a worker (contractor).
If a person is considered to be a 'worker', then that person has rights and obligations under the Workers' Compensation and Rehabilitation Act 2003, including the cover of a workers' compensation policy.
Note: These guidelines have been prepared for the building industry but they can be used by any industry.
The objective of the workers’ compensation scheme in Queensland is to maintain a balance between providing fair and appropriate benefits for injured workers while also ensuring reasonable premium levels for employers. Determination of ‘worker’ status affects both the premium the employer is required to pay to WorkCover Queensland for workers’ compensation insurance coverage and the decision by the insurer to accept a claim by a person injured in the course of their work.
Depending on the date of the injury sustained, the legislation in force at that time will apply to determine the criteria in assessing the claim. Merely because a claim may be allowable under current legislation, it does not necessarily mean that the same or a similar injury sustained under former legislation will operate to provide full cover for the entire period.
There are several tests relevant to the Workers’ Compensation and Rehabilitation Act 2003 that are used in determining the status of a person as a worker. These tests are:
- contract of service test
- labour only or substantially labour only test
- results test.
The application of these tests can be complex and the purpose of these guidelines is to provide guidance only - they are not intended as legal rules and they should be read in their entirety.
It is important to note:
- Your answers to the questions should relate to the actual day to day operation of the arrangements and not just the written words in any contract you might have.
- The questions in these guidelines provide a guide only to a contractor’s status and are not binding on WorkCover Queensland and QCOMP. WorkCover Queensland and QCOMP will use all the facts available to make a decision and will not be limited to the information provided in this guide.
- While these guidelines cover many of the criteria used to determine the ‘worker’ status of a person, each case is determined by WorkCover Queensland and QCOMP on a case by case basis.
- An answer to a question is not evidence that it is correct. The correctness of the answer may still need to be established through independent means in any determination by WorkCover Queensland or QCOMP.
- If you are unsure about the status of a contractor you should contact WorkCover Queensland for a determination.
- The operation of the working relationship with the person/s may change over time and this may affect whether they are a worker or not a worker for the purposes of workers’ compensation. This guide will assist you in determining and reviewing the ‘worker’ status of person/s.
- In instances where you do not agree with a determination by WorkCover Queensland you may, at no cost, have the person’s status reviewed by Q-COMP.
| Specific categories of non-worker | Yes | No |
|---|---|---|
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1. Is the person: a. engaged by a partnership of which they are a partner? (It is not sufficient that the business is referred to as a “partnership” – the business must be actually operating as a partnership). |
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| b. engaged by a company of which they are a non-working director? | ||
| c. engaged by a trust of which they are a trustee? | ||
| d. engaged by the Commonwealth? | ||
| e. holding a current Personal Services Determination from the ATO? |
If the answer is yes to any of the above questions, you do not need to continue - the person is not a worker.
Otherwise proceed to Question 2.
| Contract of service | Yes | No |
|---|---|---|
|
2a. Does the business have the right to specify the hours that the person works each week? (e.g. Is the business able to direct the person to start work at 7.30 am and finish at 4pm? The alternative would be that the person determines themselves the hours they work to complete the work). |
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| 2b. Does the business have the right to specify the process of how the work is to be done? (In this case the business would have the right to supervise the work to ensure that it is done in the way specified. The alternative being that the person has the right to work independently and determine themselves how the work is to be done). | ||
| 3. Is the business able to insist that the person perform the work themselves? (That is, the person is not able to delegate or subcontract the work to someone else). | ||
| 4. Is the person paid a time based rate (e.g. hourly, daily, weekly, etc.)? (As opposed to receiving progress payments/percentage of profits etc). | ||
| 5. Does the employer (business) pay any benefits on behalf of the person? (e.g. sick leave, holiday pay, superannuation contributions, fringe benefits tax etc) | ||
| 6. Does the person only perform work for the one business? | ||
| 7. Is the person prohibited from performing work for any other business? |
Question 2a and 2b relate to the employer’s right to exercise control over a person’s work, regardless of whether or not the employer exercises that right. An answer of yes to either 2a or 2b is considered an overall answer of yes to Question 2.
If the answer is yes to at least two of questions 2, 3, 4, 5 and 6 above, the person is likely to be a worker and there is no need to continue.
| Labour only | Yes | No |
|---|---|---|
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8. Does the contract remunerate the person principally for manual work performed? It may be the case that the person supplies some tools and equipment of their trade necessary for them to complete the work. The cost of this may form part of their remuneration or be claimed as a business expense but, for the person to be considered a worker, it should form only a minor part of the remuneration or be a relatively small business expense. The following are provided by way of examples of when a person is likely to be considered to be remunerated principally for manual work:
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If the answer to question 8 is yes and this is reflected in the contract and in the operation of that contract, then the person is likely to be a worker.
Otherwise please proceed to question 9.
| Results | Yes | No |
|---|---|---|
| 9. Prior to any work commencing was a contract negotiated requiring the person to complete a set task e.g. paint a house? | ||
| 10. Does the contract stipulate that payment to the person will be for a pre-agreed price based on completing the set task or progress towards the set task? (The quote may be on a piece rate basis e.g. per 1,000 bricks or per square metre of tiles but payment is based on the complete job). | ||
| 11. Does the person submit invoices to you for payment which you pay on completion of the work or as a pre-agreed progress payment, that is, payment is not based on an hourly, daily or weekly rate? | ||
| 12. Does the person provide all the necessary tools, plant, material and equipment to undertake and complete the contract? | ||
| 13. Does the person personally bear the cost of the complete rectification of any defects in the set task or for any damages that might result from the work? |
If the answers to questions 9, 10, 11, 12, and 13 are all yes and this is reflected both in a contract and in the operation of that contract, then the person is not likely to be a worker and there is no need to continue. If you require further clarification please contact WorkCover Queensland.
If the answer to any of questions 9, 10, 11, 12, and 13 is no then you should contact WorkCover Queensland to discuss the worker status of the person.
Examples
The following examples provide three different set of circumstances to highlight the application the different tests in determining the status of a person as a worker:
Example 1A
John Smith is a plasterer engaged by a building company to install cornices on a townhouse development. The terms of Mr Smith’s engagement are:
- Mr Smith was engaged for a short period of only two months.
- He was paid at an hourly rate for the duration of the two months.
- He was an experienced plasterer and provided his own hand tools of trade.
- He is required to complete the work himself and is not to sub contract it to someone else.
- He performed the work at his own discretion subject to the overriding contractual timeframes for completion of the townhouses.
- He provided invoices for work which referred to his ABN and included GST.
- He was not provided with holiday pay, sick leave or any other entitlements.
- He had flexible hours and was not required to fill out a time sheet.
- There are no other relevant considerations.
Mr Smith is paid at an hourly rate for his own work and while he provides his own tools they are hand tools only. Therefore he is remuneration is principally for his manual labour. He is a worker under the workers’ compensation legislation as he is working under a contract for services for substantially labour only.
Example 1B
Keith Jones is a plasterer engaged by a building contractor to install cornices on a townhouse development. The terms of Mr Jone’s engagement are:
- Mr Jones is engaged to complete the task of installing cornices in the townhouse.
- Mr Jones provided a set price quote for installation of the cornices.
- The terms of the contract state that payment to Mr Jones will only be made once all cornice work has been completed.
- The terms of the contract also state that Mr Jones bears the cost of fixing any defects in the cornice work.
- Mr Jones provided all the tools of his trade required to complete the work.
- He performed the work at his own discretion subject to the overriding contractual timeframes for completion of the townhouses.
- He was not provided with holiday pay, sick leave or any other entitlements
- He had flexible hours and was not required to fill out a time sheet.
- On completion of the work Mr Jones submitted an invoice for the original amount quoted and which referred to his ABN and included GST.
- There are no other relevant considerations.
Mr Jones is contracted to achieve a set result, provides his own tools and is responsible for fixing any defects in his work at his own cost. Therefore he is not a worker under workers’ compensation legislation as he engaged as independent contractor for the completion of a set task.
Example 1C
Brian Black is a plasterer employed by a building contractor to install cornices on a townhouse development. The terms of Mr Black’s engagement are:
- Mr Black is paid at an hourly rate based on the appropriate award rate.
- He has entitlements to sick leave and holiday pay amongst others.
- He is required by the building contractor to commence work at 7.30am and finish at 4pm.
- He works under the supervision of the site foreman.
- He has worked exclusively for the building contractor for the past 3 years.
- There are no other relevant considerations.
Mr Smith is a worker under workers’ compensation legislation as he is working under a contract of service or contract of employment.
The following additional scenarios also illustrate the application of the definition of worker for workers’ compensation.
Example 2
A gang of four concreters are working together on a house slab and being paid an agreed price of $250 each per day. They are being paid individually by the builder. none of the four concreters satisfy the first element of the results test as they are all working together to achieve the result. Therefore the builder/employer must cover these four concreters under a Workcover policy.
Example 3
Bob and Bill are both tilers and both have a BSA licence, an ABN and both are engaged on a Period Subcontract (Bob on a square metre rate and Bill on an hourly rate), and a work order form.
Bob and Bill are working on tiling bathrooms in a six pack of units for the builder.
Bob and Bill work together to tile the bathrooms and invoice the builder $250 and $275 respectively at the end of the day.
The builder cannot walk into the bathroom of Unit 3 with a marker pen and identify which tiles were laid by Bob and which tiles were laid by Bill. This is because the builder cannot identify each individual’s clear result. Therefore Bob and Bill do not meet the results test and the builder should cover them for workers’ compensation.
Alternatively:
Bob works on tiling Units 1, 2 and 3 and Bill works on tiling Units 4, 5, and 6.
Again Bob and Bill both have a BSA licence, an ABN and both are engaged on a written subcontract and a work order form.
The builder can clearly identify the individual result of each tiler, each tiler details accordingly on their invoice, for example tiling services Units 1, 2 and 3 at 48 Black St and the builder pays the tilers according to their invoices.
The builder can clearly direct Bob or Bill to come back and fix a broken tile as they are responsible for rectifications to the work they have completed.
Bob and Bill pass the results test and the builder does not have to cover them for workers’ compensation purposes.