There are many benefits to becoming a contractor or sole trader, including flexible working conditions and the ability to control your own hours. Employers can also reap the benefits of hiring sole traders or contractors, for instance at times there may not be a consistent, steady flow of work to be able to justify employing full-time staff for occasional tasks or specific projects. However, while the arrangement of contracting, sub-contracting or hiring sole traders can be mutually beneficial for both parties, sole traders and contractors need to be aware of their safety at work and consider how they would protect themselves and their income if they were injured while working.
What does it mean to be a contractor or a sub-contractor?
A contractor is hired directly by their client to provide a service, complete a job, or deliver materials. Both an individual or a company can be a contractor.
While a contractor may be undertaking work for the client they are usually not considered an employee. Of course, all workers are entitled to safe and healthy workplaces, but this does not automatically mean their insurance has been taken care of and usually they will be responsible for organising their own insurance cover. This can sometimes mean having to take out policies that cover both workers compensation and liability insurance, but this will be dependent on the arrangement between the contractor and the client.
A sub-contractor is, in essence, also a contractor. Their contracts will contain significant differences, though. Where they also differ greatly is in relation to their relationship with the main client. Sub-contractors primarily deal with the contractor who has hired them, rather than directly with the client who has hired the contractor.
I’m a sole trader. Can I get WorkCover?
In general terms, because a sole trader is not considered to be a worker they cannot take out workers compensation insurance to cover themselves in case of an injury occurring in the workplace.
Sole traders who want to protect themselves against loss of income due to a work-related injury would benefit from taking out an insurance policy such as personal accident and illness, or an income protection policy that suits their personal circumstances.
If you are a sole trader who employs contractors or sub-contractors, it is important to remember that you are responsible for taking out a workers compensation insurance policy that will cover those contractors. This is additional to any cover they are required to have for themselves.
I’m a contractor or sub-contractor. Am I covered by workers compensation?
In Australia, it is compulsory for all employees to be covered by workers compensation. In Queensland, the compensation scheme is called WorkCover.
As a contractor or sub-contractor, you will be covered by a workers compensation policy, however, the policy you are covered by is generally the one that has been taken out by your principal employer, not the client. For example, if you are employed as an electrician by a small electrical business and you are injured while working on-site at an accounting firm, you would not be covered by the accounting firm’s workers compensation policy, you would be covered by the electrical business’ policy.
It is recommended that, as a contractor or sub-contractor, you have visibility over who is responsible for workers compensation insurance prior to the commencement of the job.