WHS Q&A with Alana Morris

Posted 9 August 2019

WHS Q&A with Alana Morris

Q: Do I need to take out Worker’s Compensation Insurance for my Contractors?

A: There appears to be some uncertainty, particularly in the construction industry, regarding this situation. Many contractors in the construction industry are being told they are required to 'take out' workers' compensation insurance to cover themselves when in fact, depending on their circumstances, a contractor may be considered a worker of the business contracting them.

The Workers Compensation Act 1951 (the Act) requires all employers in the ACT to have a workers' compensation insurance policy in place to cover their workers in the event of a workplace related injury.

An employer includes:

  • an entity; and,
  • the legal personal representative of a dead employer;
  • and if the services of the worker are temporarily lent or let on hire to someone else (the temporary employer) by the person (the original employer) with whom the worker has entered into a contract of service or apprenticeship, the original employer is for the Act, taken to continue to be the employer of the worker while the worker is working for the temporary employer.

For the purpose of workers compensation, the definition of a worker may also include regular contractors and casuals who work:

  • under a contract on a regular and systematic basis; or,
  • who have a reasonable expectation of the engagement continuing on a regular and systematic basis.

Additionally, under ACT legislation if a contractor (the principal contractor) subcontracts any part of the work, they may be liable to pay compensation for a worker employed by the subcontractor. This can occur when the subcontractor does not have adequate workers' compensation insurance to cover its workers. If the principal pays compensation to a worker of a subcontractor, they would be entitled to seek reimbursement from the subcontractor if they were deemed to be a person who would have been liable to pay compensation to the worker if they had held a compulsory workers' compensation policy.

Example one:

Freddy McKellar is a labourer and works for Tom Knight, a brick-layer, and has done for about seven weeks. Tom employed Freddy to assist him complete a job for DK Constructions. Tom Knight is Freddy's employer. If Freddy was injured during the course of employment, and Tom doesn't have a worker’s compensation policy, Freddy may claim compensation from DK Constructions as the principal. If Tim makes a claim for compensation against DK Constructions, DK Constructions is entitled to be indemnified by Tom Knight.

Example two:

Tim Jones is a carpenter. He is a sole trader and therefore unable to take out a worker’s compensation policy to cover himself. He has his own ABN, pays his own taxes and GST. His main source of income is from Mario of Mario's Building Services. He has worked for Mario for six months and works most Monday to Friday's for Mario. Mario has a contract with Tarango Constructions to do the carpentry at Complex 481, a block of apartments in the city. Tim has been working at the complex for Mario in the city for the past 4 & ½ months and the job is only half completed. Tim Jones would be considered a worker. Mario is Tim's employer. If Tim is injured, and both Mario and Tarango Constructions do not have a current workers compensation policy, Tim would need to make a claim under the safety net arrangements, the Default insurance fund (the Fund).

Where an employer fails to maintain a compulsory insurance policy, and a claim has been made to the Fund, the Fund is entitled to recover up to three times the amount of compensation paid to the injured worker and up to three times the premium that would have been payable to an insurer.

Access Canberra may also apply penalties for not maintaining a compulsory workers compensation policy in the ACT.

To avoid this situation, principal contractors should ensure that all subcontractors who employ workers have the correct workers' compensation insurance in place to cover those workers.


Q: Can you help me with developing meaningful and compliant SWMS?

A: Certainly!  I am more than happy to arrange a time to go through your SWMS, and provide guidance on development, compliance, implementation and monitoring.  You can come to MBA or I can come to you – just give me a call to arrange a suitable time.

Just a reminder that to access the WHS services provided by MBA, you will need to ensure that you are a financial member for the 2019/20 period.  If you aren’t sure if your membership is up to date, call Kalli on 6175 5900.


If you require any further information, or have any other WHS related enquiries, please don’t hesitate to contact me. If I am unable to answer your call, please leave a detailed message and I will get back to you as soon as possible.

Alana Morris
E: safety@mba.org.au
M: 0430 052 089

← Back to listing