Workers Compensation for Residential Builders in South Australia

What it is

Work injury insurance in South Australia runs under the Return to Work Act 2014 (SA). It is administered by ReturnToWorkSA, which the Act calls the Corporation. The scheme pays income support, reasonable medical treatment and return to work services when a worker is injured, and protects the business owner from carrying the full cost of a workplace injury.

If you operate a business in South Australia that employs workers, it is likely you must register with ReturnToWorkSA. Businesses paying workers below an indexed total remuneration threshold are exempt, and that threshold is indexed each year.

Who must hold cover

Section 128 of the Return to Work Act 2014 says an employer must not employ a worker in employment to which the Act applies unless the employer is registered by the Corporation.

The maximum penalty is $10,000 for each worker so employed. No offence is committed if the employer applies for registration within 14 days after the obligation to register arises.

How premium is calculated

Premium is a formula, not a quote.

Section 141 puts every employer into a class of industry. Section 142 requires ReturnToWorkSA to fix an industry premium rate for each class, expressed as a percentage, by notice in the Gazette. The base premium is then:

• Base premium = remuneration x industry premium rate

Remuneration is what the employer pays its workers in that class of industry. Sections 143 and 144 then apply the premium order and premium stages, which adjust the base premium for the individual business, including its claims record.

The industry class drives the rate, so a change in business activity has to be reported to ReturnToWorkSA because it changes what you pay. And remuneration includes the wages of deemed workers, which is where the next section bites.

Worker or contractor

A worker under section 4 is a person by whom work is done under a contract of service, whether or not as an employee, plus anyone who is a worker by force of the regulations.

Regulation 5 of the Return to Work Regulations 2015 is the provision that catches builders. Building work, other than wall or floor tiling, is a prescribed class of work and therefore a contract of service where all of the following hold:

• The work is performed by one person to the contract, in the course of or for the purposes of a trade or business carried on by the other party
• That person performs the work personally, whether or not they supply their own tools, plant or equipment
• That person does not employ anyone else to carry out any part of the work
• The value of materials they supply does not exceed the greater of 4 per cent of the contract value or $120 (indexed)
• No single tool, or single item of plant or equipment, they own or lease for work purposes is worth more than $18,988 (indexed)

Read that against a typical sole-trader carpenter or plasterer working your site with their own nail gun and a ute. An ABN does not save them. Supplying their own tools does not save them, because the regulation says so in terms. They are a worker. Their payments are remuneration, and they belong in your premium return.

The ways out are narrow. A subcontractor who employs someone else on the job, or supplies materials above the cap, or owns a single item of plant above the plant cap, falls outside the deeming rule. Wall and floor tiling is carved out completely. Building work takes its meaning from the Building Work Contractors Act 1995 (SA).

There is a second trap. Regulation 5(8) prescribes, for section 4(4) of the Act, the circumstance where a principal contracts with a contractor who is not registered as an employer under the Act. In that case the principal is taken to be the employer of the workers employed by that contractor. Engaging an unregistered subbie who brings their own crew can make the builder the employer of that crew.

Notification and claims

Notice of a work injury must be given to the employer, if practicable within 24 hours after the injury and otherwise as soon as practicable.

An employer that is not a self-insured employer must send a copy of that notice to ReturnToWorkSA within 5 business days after receiving it. The maximum penalty is $1,500.

Work health and safety notification is a separate duty to a separate regulator. A serious work injury or dangerous incident must be reported to SafeWork SA immediately, and telling ReturnToWorkSA does not discharge it.

What to do about it

Run every sole-trader subcontractor through regulation 5 before the first invoice is paid, and file the answer with the contract. Declare deemed-worker remuneration in the annual return rather than waiting for an audit to find it. Tell ReturnToWorkSA when the business activity, contact details or work locations change, because those inputs feed the premium. And register within 14 days of first employing, because after that the exposure is $10,000 for every worker on the books.