The definition of “Worker” in under workers compensation legislation in Queensland has long been problematic. It creates confusion for employers, contractor and even WorkCover employees. The revised definition goes some way to clearing up the confusion and aligning with the ATO definition for superannuation and income tax purposes.
Companies are often caught off guard where a genuine contractor is considered a ‘worker’ for workers compensation purposes but not for income tax and superannuation purposes.
The new definition of worker is ‘a person who works under a contract and, in relation to the work, is an employee for the purpose of assessment for PAYG withholding under the Taxation Administration Act 1953 (Cwlth), schedule 1, part 2-5’. This applies to a person for whom PAYG tax instalments are required or would be required to be withheld by their employer.
A key change is that partnerships, trusts and companies will not be deemed “workers” under workers compensation legislation.
WorkCover says that there will be no change for the majority of workers who will continue to be covered for workers’ compensation.
The changes will mostly impact the construction and transport industries, where there are different contracting arrangements.
WorkCover provides the following examples of individuals who will no longer be covered for workers compensation:
- supply and operate their own plant, such as earthmoving equipment or trucks as part of their contract. (e.g. bob cat, back hoe, prime movers, taxi trucks, cement trucks, tow trucks)
- work mainly / substantially for labour only, quote for the job, provide their tools of trade, rectify defects at their own expense and subcontracts / employs labour
- have a personal services business determination (PSBD) from the ATO.
If this change affects you then we strongly recommend you review the WorkCover and ATO websites, and discuss with your accountant.