Deemed workers

Posted on.
By Watkins Tapsell.

Every business is different in the way they hire workers. Some hire permanent or casual employees, some use labour hire companies, and some utilise the system of independent contractors.

Each business has different needs and will meet those needs with different types of workers. And different types of workers have different entitlements and obligations. But is it really that simple?

Let’s say you have hired an independent contractor. You have made very sure that you have your contract in place and have checked all the Fair Work Act and ATO requirements and you are sure that they are a genuine contractor. On this basis, you pay them in accordance with their contract and presume they will be responsible for all their own taxation, superannuation and workers compensation insurance.


What if that contractor is a sole trader? What impact does that have, you may ask? They still have an ABN, a business name, they still invoice you for work done… does that change anything?

Under the Workers Compensation Legislation, if a contractor provides services of value to your business, and that contractor does not employ another worker to do those services, and does not have their own workers compensation insurance they may be a deemed worker for the purposes of workers compensation, and should be included in your insurance.

It is vital that, when you are engaging workers, you review all aspects of their entitlements and your obligations and be sure whether they are deemed workers for the purposes of the Workers Compensation Act. There are significant penalties for non-payment of workers compensation..

For further information contact our Workplace Law Team

banner icon

Related Articles