Workers Compensation for Interstate Workers: the State of Connection Test

What it is

A builder based in Tweed Heads sends a crew to a job in Coolangatta. A Queanbeyan builder runs a project in Gungahlin. An Albury builder frames a house in Wodonga. In each case one question decides everything: which scheme covers that worker if they fall off a roof.

The answer is the state of connection. Every Australian state and mainland territory has enacted matching cross-border provisions, so a worker only ever needs cover in one jurisdiction. In New South Wales the test is section 9AA of the Workers Compensation Act 1987. In Queensland it is section 113 of the Workers Compensation and Rehabilitation Act 2003. In the ACT it is Part 4.2A of the Workers Compensation Act 1951. The wording is close to identical everywhere, because that was the point.

Two things get confused. Workers compensation follows the worker. Work health and safety follows the site. A NSW builder working in Queensland is covered by the NSW policy if NSW is the state of connection, but answers to the Queensland WHS regulator for what happens on that site.

The cascading test

Apply the tests in order. Stop as soon as one identifies a single state or territory.

1. Where the worker usually works in that employment. This is not a stopwatch test. Usually means habitual or customary, not the majority of hours. Look at the worker's history with you over the previous 12 months, the intended arrangements for the next 12 months and the terms of the contract.
2. Where the worker is usually based. This looks at the worker, not the business: the place they are expected to operate from, the place they routinely get day-to-day instructions, the place they collect materials, the place they report for administration.
3. Where the employer's principal place of business in Australia is located. If that is unclear, the ABN registered address decides it, then the ASIC record, then the business mailing address.
4. Ship registration, for a worker on a ship.
5. Where the worker was when the injury happened, if nothing above lands.

The six month rule

A temporary arrangement under which a worker works in another state or territory for a period of not longer than six months must be disregarded when you work out where they usually work. That is the rule that lets a builder send a crew across the border for a job without buying a second policy.

Once six months of temporary interstate work has elapsed, the employer must review. Either the arrangement is still temporary, in which case keep the documentation that proves it, or it is no longer temporary and the worker has a new state of connection. If the state of connection has changed, you must take out cover in the new jurisdiction.

Where this bites residential builders

The trap is not the short trip over the border. The trap is Test 1.

SIRA gives the example directly. A worker is employed by a NSW-based employer but performs all of her duties on ACT worksites, drives her own vehicle, brings her own tools and takes all instructions from the project manager on the ACT sites. She never attends the NSW premises. Her state of connection is the ACT, not NSW, even though her employer is a NSW business holding a NSW policy.

Read that as a builder. A Queanbeyan company that keeps a crew on Canberra sites full time may be insuring those workers in the wrong jurisdiction right now. Same for a Tweed builder whose framing crew only ever works in Currumbin.

The counter-example matters too. If the crew reports to your yard each morning, loads out of your NSW store and takes direction from a NSW supervisor, Tests 1 and 2 keep pointing home even though the work is done over the border.

What a builder must actually do

• Determine the state of connection for each worker, per contract of employment. If an arrangement changes materially, run the test again.
• Hold a policy in the state of connection, and declare that worker's wages only in that jurisdiction. Declaring the same wages twice is money thrown away. Declaring them nowhere is an uninsured worker.
• Tell your insurer about the interstate work, even where the state of connection does not change.
• Keep the paperwork that proves an arrangement is temporary: contracts and letters of offer, timesheets, site agreements, travel and accommodation records.
• Notify the WHS regulator in the state where a serious incident occurs, regardless of where the policy sits. Notify your own insurer within 48 hours as well.

Getting it wrong

Where an employer does not hold cover in the state of connection, the authority in that jurisdiction can take legal action and pursue penalty premiums, and in NSW can recover claim costs from the uninsured employer. There is a partial defence: a court may accept that the employer held a current policy in the state to which it reasonably believed the worker was connected. That defence relies on the documentation you kept at the time.