Workers Compensation

In some states such as in NSW – if you trade under a company (i.e. Bill Smith Pty Ltd rather than as a sole trader – Dr Bill Smith), then Bill Smith Pty Ltd pays Dr Bill Smith a wage (or director’s fees). The end result is Dr Bill Smith’s “wage” is required to be included in the workers compensation calculation. So even if Dr Bill Smith is the only employee, Bill Smith Pty Ltd will still need to take out workers compensation.

If Dr Bill Smith was structured as a sole trader (and assuming there were no employees, Dr Bill Smith would not be required to take out workers compensation – as a sole trader is not an employer of themselves.

In Queensland, the rules are different and company directors are not included in workers compensation. Contact us to discuss your circumstances.

You need to review your circumstances carefully. Workers compensation legislation may define a contractor as a ‘deemed worker’. If your ‘contractor’ is paid on a time basis, is under your direction in how the work is performed and work exclusively for you, then they are likely to be a deemed worker.

If Dr Bill Smith was structured as a sole trader (and assuming there were no employees, Dr Bill Smith would not be required to take out workers compensation – as a sole trader is not an employer of themselves.

In Queensland, the rules are different and company directors are not included in workers compensation. Contact us to discuss your circumstances.

Workers Compensation doesn’t necessarily cover employees travelling to or from work in NSW, VIC, WA, SA or Tas. For example in NSW for workers compensation to apply, there needs to be “a substantial connection between the person’s employment and the incident out of which the injury arose”. You can purchase a separate ‘journey insurance policy’ to ensure you and your employees are protected. While it is not compulsory to hold a policy, our experience is that employees expect to be covered.

Check the category carefully the insurer places you in. Is it the right one? We assisted a group of specialists contracted to run a speciality department for a private hospital. They contracted to the hospital as a Pty Ltd company, hence the need for workers compensation. When the client commenced this structure, they were placed into “Specialist Medical Services” category and paid a rate of 0.541% of wages. (This class includes employers of registered medical practitioners….)

On their renewal, the scheme agent re-classified them into “Hospitals (Except Psychiatric Hospitals)” 2.046%

And hence their rate increased from 0.541% to 2.046% Their premium rose from $2,500, to $10,000

We helped the client craft a ‘dispute notice’ letter to the agent on the basis:

• the client did not have the same exposure as a hospital (they didn’t employ cleaners, nurses, ward staff etc.).
• that an independent company providing services to a hospital such as an engineering firm, contract cleaners, or electrical firm -would not be classified as being a hospital, so why should our client.
• that the client is not a hospital and is not ‘operating a hospital’. The client is responsible under its contract with the hospital to ensure there are specialist medical practitioners available to manage the department. The hospital still employed the support staff such as nursing and other hospital staff.

As the client followed the dispute notice process, the scheme agent was obliged to review the case and they subsequently returned the client back to the ‘Specialist Medical Services” category and pricing.

Business owners in particular should have their own income protection. Income protection covers you 24/7 for accident or illness which prevents you from working. Policies can be structured to cover your lost income (usually 75%) up to age 65. Workers Compensation only covers work related issues and often for only defined periods. One advantage of workers compensation is it will cover associated medical costs.