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Employee not contractor for compensation purposes

May 19, 2019

In a recent case the Supreme Court of Tasmania has allowed a contractor to claim compensation from a builder for a spinal injury sustained in the course of work.

This decision overturned the Workers Rehabilitation and Compensation Tribunal’s earlier finding that the contractor was not entitled to the compensation. 

The Tribunal stated that only employees are entitled to such compensation, and the contractor was not an employee because they had their own ABN, paid their own taxes, issued their own invoices, and also obtained their own income protection and public liability insurance.

The Tribunal also added that the contractor was also able to work for others, tell his employer when he was unavailable for work, and he was also aware that he was not entitled to sick or personal leave. 

The Supreme Court stated that the tribunal should have concentrated on the nature of the relationship between the contractor and the builder instead of the contractor’s business set up.

The Supreme Court found that the contractor was actually an employee because he only worked for the builder, he was paid for the amount of time worked instead of the result achieved, and took no commercial or business risk for the jobs completed.

There was also evidence that suggested that the contractor obtained their ABN and personal insurance because they were told to do so by the builder. 

The HIA reminds its members that even if most of the evidence suggests an independent contractor relationship, it can still be classified as an employment relationship if the contractor only works under the direction of the builder, does not take jobs from other clients, and is paid on an hourly basis. 

This case also highlights that there is no clear distinction between employment and independent contractor relationships.

This area can be murky as it highlighted by the tribunal and court reaching different conclusions on the same situation.

We advise our members to seek expert assistance if they are in doubt about the status of their contractors.  

For more information don’t hesitate to contact a HIA workplace adviser on 1300 650 620.