Workers Compensation for Residential Builders in the ACT

What it is

Workers compensation in the Australian Capital Territory is the no-fault scheme that pays medical costs, weekly benefits and rehabilitation when a worker is injured at work. It sits under the Workers Compensation Act 1951 (ACT) and is regulated by WorkSafe ACT.

The ACT scheme is privately underwritten and market driven. There is no single government insurer. Insurers apply directly to WorkSafe ACT to become approved insurers, and a builder buys a policy from one of them. Sitting behind the market is the Default Insurance Fund, which pays claims where the employer was uninsured or where an insurer fails. Approved insurers must disclose the Default Insurance Fund levy on every premium notice.

Who must hold cover

An employer is anyone who hires workers under a contract. The contract can be written, verbal or implied. It makes no difference whether the worker is full time, part time or casual. If you have one or more workers in the ACT, you must hold a current policy with an approved insurer.

A Pty Ltd company must hold a policy if it has one or more workers. While the company remains a registered legal entity with an appointed office holder, that office holder must maintain a policy. Builders who wind a company down to a shell while the entity still trades in any form are exposed.

Worker or contractor

This is the question that catches builders out. In the ACT a worker is a person who performs work under a contract of service, and the definition expressly includes a subcontractor. Holding an ABN does not put a person outside the scheme.

The deeming rule goes further. A person engaged under a contract for service, who personally does part or all of the work and works on a regular and systematic basis, is deemed to be a worker. The chippy on your sites four days a week, invoicing you every fortnight and doing the work himself, is very likely a deemed worker.

The people who are not workers are narrower than most builders assume:

• A sole trader or a partner in a partnership
• A family member of an employer who lives in the employer's home
• A non-commercial volunteer, or a volunteer for a charity or club
• A person hired casually for work unrelated to the employer's trade, unless engaged through an employment agency

What the premium is based on

Approved insurers set their own rates. They price on industry type, claims history, the wages bill and the number of employees. Residential construction is a high-rate industry, so claims experience moves the number a long way. A clean record combined with good safety practice pulls the premium down at renewal. A poor return-to-work outcome pushes it up for years.

Builders must give the insurer the information it requires, including yearly wage reports. Deemed-worker payments belong in that wages figure.

Notification and claim timeframes

The clock is short and the penalty for missing it lands on the builder, not the insurer.

• Give the insurer a written injury notice within 48 hours of becoming aware a worker has been injured. If you give notice orally, follow it with written notice within 3 days.
• Forward the worker's completed claim form to the insurer within 7 days of receiving it.
• Record every injury in a register of injuries kept on site and accessible to workers, whether or not a claim is made.
• Provide suitable employment where the injured worker requests it within 6 months of the injury.

Miss the 48-hour notice and you are directly liable for weekly compensation from the end of the notification period until you notify. The insurer will not reimburse you for it.

What happens if you trade uninsured

WorkSafe ACT inspectors can issue an infringement notice to a person or a corporation. A default notice follows, giving 10 days to obtain a policy. If no policy is obtained, a second default notice and a further infringement notice issue. At 20 days a cease business order issues, giving 5 days before the business must stop trading. Continuing to trade uninsured after that can be prosecuted criminally.

The money side is worse than the fines. You have to pay the quoted premium for every period you were not covered. You can also be liable for up to double the premium avoided, going back as far as five years.

What to do about it

Run every new subcontractor against the contract of service test before the first invoice, and keep the assessment on the project file. Declare deemed-worker payments as wages at renewal. Display the notice showing your insurer and policy number, keep the injury register on site and appoint a return-to-work coordinator. Then diarise the 48-hour and 7-day clocks so a site injury never becomes a personal liability.