When to take out workers compensation cover
In each state and territory of Australia, workers compensation legislation
provides owner builders with the following advice:
‘Homeowners who are building their own homes should take out a workers
compensation insurance policy to make sure they are fully covered. Any contractors
engaged by an owner builder may be deemed to be a worker of that owner builder.’
While the wording of this advice varies slightly from state to state the message
remains the same; owner builders need to take out a workers compensation policy.
Patrick Talty, from National Workers Compensation Services, has provided us
with a more detailed explanation:
1. If the local government body who issues planning permits requires you to have a
workers compensation policy as part of documents submitted to Council, you will need to
have a workers compensation policy in force for the duration of the project – end of story.
2. If a policy is not required as above, and if you are in NSW or Vic you may in some
cases be exempt from taking out a workers compensation policy if the value attributable to
labour is less than $7,500.
From the total estimated cost of the project, deduct the cost of materials, and also
payments to plumbers and electricians. These two trades in NSW/Vic at least are generally
exempt from considerations. Deductions can also be made for any contractor who is
incorporated (Pty Ltd). If the amount remaining exceeds $7,500, a workers compensation
policy should be taken out for the duration of the project.
If the amount attributable to direct labour is less than $7,500, the workers
compensation system (as of 30 June 2008) automatically holds the employer covered – if
an injured party
then succeeds in identifying himself as a deemed worker (and therefore
entitled to workers compensation), a policy |
automatically then comes into force and the
‘employer’ is asked to pay a nominal premium of $175 and the claim will be processed.
* If you are in any state other than NSW/Vic the above does not apply. You will have
the same requirement to take out a workers compensation policy even on small projects.
3. If you engage any workers who provide labour only (no materials), even if payments
for services are sometimes made in cash, ignore point 2 above. In these cases the
likelihood of them being shown to be a deemed worker are significantly greater, and you
should always obtain a workers compensation policy.
Please note that, while this information is currently accurate, workers
compensation legislation changes fairly regularly. You should always consult
with an expert prior to commencing your project.
Can’t I just confirm that contractors all have their own workers compensation
insurance?
This is a very common fallacy, perpetuated by word of mouth and even many
websites that provide advice like:
‘Generally, people carrying on their own business, or trades people, have their own
workers compensation insurance. To be sure that you are protected always check that any
licensed contractors you hire have their own workers compensation policy.’
This advice is why so many people get it wrong. It’s not actually that the
information is altogether incorrect, but it is ultimately wrong by way of omission.
It is vital for you to remember that when you take out a workers compensation
insurance policy it does not cover you,** it covers your workers. So by
|
having
the contractor show you his own insurance policy you only ensure that his
workers are covered if they claim against him. It does nothing to change your
potential responsibility for any injury to the contractor himself, or any other
‘deemed worker.’ It will not have any impact on your need to obtain a workers
compensation policy.
** The exception to this rule is where you engage incorporated companies (Pty Ltd) to
do the work, as discussed earlier. However it is very unlikely that you will be able to use
this type of contractor exclusively, so again this tends not to help.
Conclusion
If all of this has left your head
spinning you may get just a little comfort
from knowing that you’re not alone.
The following is all you really need to
remember – practically every owner
builder has an exposure to potential
claims under the workers compensation
system. If you are an owner builder
you must seek individual advice from
an expert who is dealing with owner
builder insurance on a daily basis. And
you will almost always need to get a
workers compensation policy in addition
to contract works, public liability (and
personal accident if applicable). You’ll
then have one significant thing less to
worry about while you get on with the
actual project.
Mark Adams has several years
experience as a specialist broker for
Owner Builder Insurance Australia-wide
and can be contacted on 1300 255 747 or
allrisk@westcourtgeneral.com.au
<- Previous Page
|
