Workers Compensation for Residential Builders in the NT

What it is

Workers compensation in the Northern Territory runs under the Return to Work Act 1986 (NT) and is administered by NT WorkSafe. It is a no-fault scheme covering medical treatment, weekly payments and rehabilitation for a worker injured in the course of employment or by an incident arising out of employment.

Like the ACT, the NT scheme is privately underwritten. There is no government insurer. Employers buy a policy from an NT approved insurer, and that insurer runs the claim. NT WorkSafe sits over the top as regulator.

Who must hold cover

An employer must hold a policy with an approved insurer if it employs a worker. The NT does not run a separate multi-factor worker test. It borrows the tax one.

Under the Return to Work Act, a worker is an individual who performs work or a service under a contract and who, in relation to that contract, is an employee for the purpose of PAYG withholding under Schedule 1 of the Taxation Administration Act 1953 (Cth). The Act catches the person even where the employer is not withholding tax but should be. In practice the ATO employee or contractor decision tool is the test. If the tool says employee, the person must be covered, whatever the subcontract says.

Three NT-specific traps for builders:

• A company director is only covered if the company holds a policy and the director's personal details and remuneration have been disclosed to the insurer.
• Where the business is a sole trader or partnership, family members living with the owner or partners are only covered if their details and remuneration are disclosed.
• A labour hire business must cover every individual it engages, employee or contractor, without exception.

What the premium is based on

Approved insurers set their own rates. They price on industry type, claims history, payroll and the number of employees. Residential construction sits high on the industry scale, so claims experience is where a builder actually moves the number. Employers must keep seven years of wage records, and those records are what an insurer audits against the declared payroll.

Claim and decision timeframes

The NT timeframes are tight, and the employer has to move first.

• A worker has 6 months from the date of injury to lodge a claim form, with limited exceptions for mistake, ignorance of a disease or absence from the Territory.
• The employer completes its part of the claim form and submits it to the insurer within 3 working days of receiving it from the worker.
• The insurer must make an initial decision within 10 working days of the employer receiving the claim. It can accept, dispute or defer.
• If the insurer defers, weekly payments still start within 3 working days of the deferral decision and continue while the insurer takes up to 56 days to make a final call.
• If no decision is made within 10 working days, liability is deemed accepted. The same deeming applies if a deferred claim is not resolved within 56 days.

Weekly payments are made by the employer and recovered from the insurer. They are based on normal weekly earnings for an aggregate of 26 weeks of incapacity, then drop to 75 per cent of normal weekly earnings.

Return to work

The employer must take all reasonable steps to provide the injured worker with suitable employment. Where an injury causes incapacity of more than 28 days, the employer must put a written return-to-work plan proposal to the worker and agree it with them. An NT employer also cannot dismiss an injured worker for 6 months from the date of injury unless the worker has ceased to be incapacitated in that time, or the dismissal is for serious and wilful misconduct.

What happens if you trade uninsured

If an employer does not hold the required policy, NT WorkSafe has the power to order that employer to stop all aspects of its business until the position is fixed. A stop-work order on a residential site is a liquidated damages problem, a subcontractor problem and a client problem all at once.

On top of that, penalties of up to $179,000 for a company apply for breaching the legislation, and the employer wears the full cost of any claim the insurer would otherwise have paid. For a serious site injury that can run into the millions and take a sole trader's personal assets with it.

What to do about it

Run every trade you engage through the ATO employee or contractor decision tool, print the result and keep it with the subcontract. That document is what defends the wage declaration if the insurer audits. Disclose director remuneration and any live-in family member remuneration to your insurer, because the cover does not exist otherwise.

Keep seven years of wage records. Diarise the 3-working-day claim lodgement so a claim form sitting in a ute never becomes a deemed acceptance. And note that motor vehicle journey claims on a normal trip to or from work fall outside the NT scheme and sit with the Motor Accidents Compensation scheme instead.