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AITKEN WILSON LAWYERS > Current Issues - Employment Law

Employers, Employees and Workcover - News Article 03/04/09

A recent Court decision revolved around whether or not a particular person was a worker for the purposes of Workcover legislation. This decision is a timely reminder for all employers of the business ending ramifications of not having in place appropriate insurances for employees and considering whether employees fit within the definitions in the legislation.  The decision has meant that the company is now in liquidation due to the major creditor of the company being Workcover with the debt arising resulting from an injury to a ‘worker’. 

The Court had to consider with the person injured was a worker under the legislation and if the company was the ‘employer’. The company employed labourers under contract and did not consider them as 'employees'. But the employees were hired under a contract of service for the provision of labor only, and therefore were ‘workers’ under Section 11, Schedule 2, Part 1, (1) of the Workers Compensation and Rehabilitation Act 2003. Section 48 of that Act says that every employee must be insured.

48(1) Every employer must, for each worker employed by the employer, insure and remain insured, that is, be covered to the extent of accident insurance, against injury sustained by the worker for--
(a) the employer's legal liability for compensation; and
(b) the employer's legal liability for damages.

The injured party was a worker under the Act, as he worked under a contract of service as defined by the Act. The employer had an obligation to have its workers insured. At the time of the accident, it did not have any insurance, believing that it did not have to do so, as the people it hired were not 'employees'. The accident was deemed to have occurred in the course of that employment and the company was held to have liability.

The particular ‘employee’ was working for another party when the accident occurred.  A supervisor for the employer had used the company’s people and equipment (with agreement from company) to do that work. But that 'on-hiring' of workers did not alter the insurance position and the company remained for the purposes of the legislation the ‘employer’ and responsible for the insurance cover. The company knew that the job would be done on that day, that these workers would be doing that work, and the company paid the workers for the day.

Employers of casual labor and employees who occasionally work for other people need to be aware that the responsibility to insure and liability for injuries suffered on that work may still rest with them. Employers in these positions need to ensure that they maintain Workcover insurance that covers these situations, or seek legal advice if they believe that they are not responsible for insurance.