Understanding WorkCover Coverage in Queensland: Who Needs to be Covered? – The Worker Determination Tests

As an employer in Queensland, it is essential to understand the requirements of Workcover and ensure that all workers are appropriately covered.

1. The Definition of Worker

The Workers’ Compensation and Rehabilitation Act 2003 defines a worker as an individual who works under a contract and is an employee for the purpose of assessment for PAYG withholding. However, the scope of coverage extends beyond traditional employees. Let’s take a closer look at who needs to be covered under Workcover:

1.1 Employees

Employers must ensure that all their employees, including full-time, part-time, and casual workers, are covered under Workcover. Regardless of the type of employment contract, employees are considered workers and must be insured for workers’ compensation.

1.2 Apprentices

Apprentices are also included in the category of workers who need to be covered. Employers who engage apprentices must provide workers’ compensation insurance for them.

1.3 Unpaid Interns

Even though unpaid interns may not receive a regular wage, they are still considered workers and must be covered under Workcover. Employers should ensure that appropriate insurance is in place for unpaid interns.

1.4 Contractors and Subcontractors

In some cases, contractors and subcontractors may also fall within the definition of a worker and require Workcover coverage. It is important to carefully assess the nature of the contract and consider several factors to determine if a contractor qualifies as a worker.

2. Worker Determination Tests

To determine whether an individual qualifies as a worker and needs to be covered under the Workcover system, several tests are applied. These tests are designed to provide a clear assessment of the worker’s status. It is important to apply these tests sequentially and proceed to the next test only if the previous one does not establish the person as a worker.

Test 1: Contract for Performance of Work

The first test to consider is whether there is a contract for the performance of work, regardless of whether it is a written or verbal agreement. If a contract exists, it is necessary to move on to the next test – Test 2: Specific Exclusions.

Certain types of contracts are not considered contracts for the performance of work and therefore do not classify the individuals engaged under them as workers. These contracts include:

• Contract of Bailment: This type of contract involves the delivery of goods or property from one person (the ‘bailor’) to another person (the ‘bailee’) for a specific use and fee. The key features of a contract of bailment are as follows:
  1. The bailor retains ownership of the goods or property.
  2. The bailee can utilize the goods or property for personal benefit.
  3. The bailee pays a hire price for the right to use the goods or property.
  4. The bailee must return the goods or property after the hire period ends.

An example of a contract of bailment is taxi driving, where the driver pays the vehicle owner for the use of the taxi and keeps the profit made after paying the owner. WorkCover may request a copy of the contract, as well as any invoices or dockets, to determine whether it falls under the category of a contract of bailment.

• Granting a Right to Use Property: Contracts that involve hiring out a community hall, granting a license to manage a venue, or granting rights to use copyrighted software are not contracts for the performance of work.
• Supplying or Selling Goods: Contracts that solely involve the transfer of ownership of goods do not qualify as contracts for the performance of work.

Test 2: Specific Exclusions

If a person is not excluded from being a worker under the Act, the next step is to determine if they are specifically included. If they are not specifically excluded or included, proceed to Test 3: Specific Inclusions.

The following individuals are excluded from being considered workers under the Act:

• Directors, Trustees, and Partners: Individuals who perform work for a corporation of which they are a director, a trust of which they are a trustee, or a partnership of which they are a partner are excluded. It is important to note that if the contract is with a company, trust, or partnership, only individuals can be considered workers. In such cases, insurance coverage is not required.
• Commonwealth Employees: This category includes individuals employed by the Commonwealth or a Commonwealth Authority.
• Fishing Vessel Crew Members: Crew members of fishing vessels who receive a percentage of the catch or contribute to the running expenses of the vessel and receive a portion of the income are not considered workers. However, crew members who receive a wage as their main form of remuneration or are paid based on the number of fish they catch are considered workers. It’s important to note that employment arrangements for crew members on fishing vessels often involve interstate or overseas arrangements.
• Others: There are several other categories of individuals who are considered workers and need to be covered under Workcover. These include:

• Professional Sportspersons: Professional sportspersons are considered workers while they are competing, training to compete, doing promotional work, or traveling in relation to their professional activities.
• Driving Instructors: Driving instructors who work under a contract, which is not a contract of service, and provide driving tuition using their own vehicle are considered workers.
• Participants in Work for Employment Payment Programs: Individuals participating in a work for employment payment program are considered workers.
• Individuals with a Written Personal Service Business Determination: Individuals who have obtained a written personal service business determination from the Australian Taxation Office (ATO) are considered workers.

Test 3: Specific Inclusions

If an individual is not specifically included as a worker under the Act, the next step is to apply Test 4: Contract of Service Test.

The following individuals are specifically included as workers:

• Sharefarmers: Sharefarmers who do not provide or use powered machinery and are entitled to no more than 1/3 of the share farming gross proceeds under a written agreement with the farm owner are considered workers.
• Persons Hired Out by Labour Hire Agencies or Group Training Organisations (GTOs): Individuals hired out by labour hire agencies or GTOs to work for other employers, with a contract of service in place, are considered workers.
• Salespersons: Salespersons who are paid wholly or partly by commission, as long as the commission is not related to any work they might do for their own business, are considered workers.
• Persons Working Outside their Trade or Business: Individuals who work outside their trade or business may still be considered workers.

Test 4: Contract of Service

It is essential to complete Tests 1, 2, and 3 before applying this test. The distinction between a “contract of service” and a “contract for service” is crucial in determining whether a worker is an employee or an independent contractor.

• A contract of service typically refers to the contract between an employer and an employee, such as in a PAYG (Pay As You Go) arrangement.
• A contract for service generally applies to an arrangement with an independent contractor.

To determine the worker’s status, it is necessary to consider the entire working arrangement and apply the Australian Taxation Office’s (ATO) six key common law principles. The ATO’s online decision tool can also be used to provide further guidance in determining whether a person is classified as a contractor. If the ATO decision tool determines that a person is a contractor, this determination is accepted for WorkCover insurance and claims purposes. It is important to keep a copy of the report for records and potential submission to WorkCover.

Remember, it is crucial for employers in Queensland to accurately assess who needs to be covered under Workcover to fulfill their legal responsibilities and provide appropriate workers’ compensation and rehabilitation support.