UNOFFICIAL OHS DATABASE
WORKERS COMPENSATION and CONTRACTORS
Due to a number of legal cases, workers compensation insurance requirements for contractors are not clear cut. You can find information to clarify these issues from the WorkCover online publication, Principal Subcontractors and Information for principal contactors - subcontractors premiums
Some employers will require that employees become "contractors", with their own ABN, and paying for their own superannuation. Bear in mind that the Tax Office and WorkCover may define "employee" differently.
At times this is an attempt to simply avoid the responsibilities and taxation / workers compensation costs which are part of being an employer, and the "contractor" is little more than an employee with their own ABN number, still technically being an employee in the eyes of the law. Bear in mind that employers are not allowed to pass their workers compensation premium costs on to their workers. Ref: 233 of the Workplace Injury Management & Workers Compensation Act 1998.
Generally speaking, sole traders and partnerships who have no employees cannot take out workers compensation insurance in NSW because workers compensation insurance covers employees only.
If a sole trader or partnership establishes a company (Pty Ltd), the company becomes the 'employer' and a policy must be taken out under the company name to cover the 'working director/s' - formerly the sole trader or partners, plus any other employees they may have.
It is a good idea for sole traders and partnerships take out a personal accident & illness policy or an income protection policy in case they are unable to work, but it is not a legal requirement.
Owner-builders who do not employ workers, and will only have contractors working for them, should protect themselves from potential legal liability should a contractor be injured on the job by taking out a Minimum Premium Workers Compensation Policy ($120 pa).