Workers compensation in Victoria

In Victoria there are two tests which are used to decide if contractors will be classed as ‘workers’ under workers compensation laws.

Test one

Contractors are classed as ‘workers’ if the contractor is a natural person (as opposed to a company) and:

  • the work is not part of a trade or business regularly carried on (see below for what is meant by carrying on a business) by them under their name or a business name; and
  • the person either performs all of the work; or
  • subcontracts or employs workers for some of the work and performs the rest of the work personally.

Note: If the contract is with a partnership and one or more of the partners do the work, the contractor will be classed as a ‘worker’ under workers compensation laws.

What is meant by ‘carrying on a business?’

The ‘Indicative Test’ is used to help to decide if a contractor has been carrying on a business. The test takes a number of variables and weights them according to a scale to show the general practice of the contractor in a given financial year.

The test is very complex and contract principals who are uncertain as to whether the contractor can be classified as carrying on business should contact the Victorian WorkCover Authority or their individual WorkCover agent who will help them apply the Indicative Test.

Test two

The aim of the second test is to ensure that bona fide contractors who provide services to the public generally will not be regarded as ‘workers’ under workers compensation laws. The test is complex and there are a number of exemptions. Advice should be sought from the Victorian WorkCover Authority or individual WorkCover agent before entering into any contracts which are for work alone (no goods being provided) if the contractor does not contract to the public generally as part of their business.

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What about the contractor’s employees in Victoria?

Regardless of whether the contractor is classed as a ‘worker’, if any of a contractor’s employees are injured and the contractor does not have insurance, the contract principal (the farmer) will be taken to be the employer and be liable under the workers compensation laws. It is therefore extremely important to insist upon seeing evidence of workers compensation insurance before any work begins.

Share farmers in Victoria

In Victoria, share farmers are classed as ‘workers’ under workers compensation laws if either of the following apply:

  • they are not entitled to more than ⅓ of the gross income (in kind or in cash or both) which is earned from the property or
  • the share farming agreement specifically provides that the owner of the land will pay workers compensation payments.

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