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Are contractors covered by WorkCover compensation?

Published on 29 August 202217 January 2023

Please note that this post was written for Queensland audiences and the information within may not apply to other regions.

When you think of WorkCover workers’ compensation, you may automatically assume that everyone with a job is entitled to it.

Truth is, not everyone injured on the job can claim WorkCover in Queensland – like business owners, partners, or trustees and in most cases self-employed sole traders and contractors.

This is because it’s generally only available to employees who are considered “workers” under workers’ compensation legislation. Though there may be some cases where a contractor, for example, could still be entitled to workers’ compensation.

It all comes down to what capacity the contractor or subcontractor is employed to work and whether they meet the definition of a “worker”.

How is a “worker” defined in the WorkCover legislation?

Not all people tasked to do a job are considered “workers” under the workers’ compensation legislation.

And, as touched on above, you need to be considered a “worker” to be covered by a workers’ compensation policy held by a principal employer (though the legal definition can be complex and there are exceptions to the rule).

As defined in the Workers’ Compensation and Rehabilitation Act 2003 (Qld), a worker:

Is an individual
Works under a contract of service; and
Is an employee for the purpose of PAYG withholding

What is the difference between a contractor, a subcontractor and an employee?

In 2021, there were more than 1.1 million independent contractors working in Australia.

Whether you’re a subcontractor, a contractor or an employee/worker is an important distinction when it comes to determining what benefits you may receive if you’re injured at work.

While each claim is assessed on individual merit, some factors that may help figure out your contractual working relationship may include:

The type of contract you signed (i.e. for service or of service)
Whether or not you wear a uniform or use your own tools
If you’re able to subcontract the work to someone else, or are a contracted by a contractor
If you have any discretion in the work you do
How you’re paid (i.e., hourly, per job or by a verbal or written quote)
Who’s legally liable for fixing any faults
Whether you can operate as your own business or are considered part of someone else’s

Generally, a contractor is a person or a company with employees that is hired by a client for a service. Whereas a subcontractor is a contractor who is hired by another contractor to help complete the work. In saying this, either or may still be considered a “worker” in certain circumstances.

Use this helpful tool from the ATO to help determine if you’re an employee or contractor.

When is a contractor or subcontractor considered a “worker” for workers’ compensation purposes?

As mentioned above, there are certain factors that can help determine your working relationship and whether you’re considered a “worker” as a contractor.

While the main difference in determining whether a contractor is a “worker” or not lies in the type of contract you have, i.e., a contract for service, or a contract of service (the latter being a definite) – other reasons when a contractor is generally considered a worker may include if:

Equipment is provided by the employer
You’re subcontracted by a labour hire company
You’re told what to do and how to do it
Someone else is responsible for fixing defects
You’re paid by the hour or job

Essentially, if you’re a contractor who’s providing a one-off service or working under a contract for service, the person hiring you is not likely required to cover you with workers’ compensation insurance.

Whereas if you’re doing ongoing or contracted work under a contract of service, you are most likely covered (regardless of if you’re an employee or not).