Worker determination tests

Is there a contract for performance of work (written or verbal)?

If the answer to this question is yes, you need to proceed to and apply the next test – Test 2: Specific exclusions.

What is not considered a contract for performance of work?

The following contracts are not considered to be a contract for performance of work. Therefore, any person engaged under such a contract is not a worker.

Contract of bailment

This is when one person (the ‘bailor’) delivers goods or property to another person (the ‘bailee’) for a particular use and for a fee, after which it’ll be returned.

A bailment has four main features relating to the goods or property:

1. The bailor is still the owner of it, even though the bailee has it in their possession.
2. The bailee can use it for their own benefit.
3. A hire price (usually money) is paid by the bailee for the right to use it.
4. The bailee must return it once the hire period has finished.

An example of this is taxi driving, where the driver will pay the taxi owner for use of the vehicle and keeps any profit made after paying the owner.

To help work out whether it’s a contract of bailment or not, WorkCover will ask for a copy of the contract as well as any invoices, dockets etc.

Granting a right to use property

Examples of these kinds of contracts include:

• hiring out a community hall
• licence to manage a venue
• granting rights to use copyright software.

Supplying or selling goods

A contract that is simply to transfer ownership of goods is not a contract for performance of work.

If a person isn’t specifically excluded as a worker under the Act, you have to work out if they are specifically included. To do this, go to the next test – Test 3: specific inclusions.

Directors, Trustees and Partners

The following people are excluded under the Act and are not considered workers:

• a person doing work for a corporation they’re a director of
• a person doing work for a trust they’re a trustee of
• a person doing work for a partnership they’re a partner of.

Note: If the contract is with a company then the company isn’t a worker as only an individual can be a worker. Basically, if the contract is with a company, trust or partnership, the person will not be considered a worker and insurance coverage isn’t needed.

Commonwealth employees

This includes:

• A person employed by the Commonwealth or a Commonwealth Authority.

Fishing vessel crew members

This includes:

• The crew of a fishing vessel who receive a percentage of the catch would receive a share of the gross earnings of the vessel and aren’t considered workers if this is their main way of being paid
• The crew of a fishing vessel who contribute to the running expenses of the vessel and receive a portion of the income are not workers.

Note: The crew of a fishing vessel who receive a wage are workers if this is their main remuneration. The crew of a fishing vessel who are paid by the number of fish they catch would also be considered workers as they’re receiving ‘piecework rates’.

Employment of crew on fishing vessels will often involve interstate or overseas arrangements.

Others

• Professional sportspersons – while they’re competing, training to compete, doing promotional work or travelling in relation to the above.
• Driving instructors who work under a contract, that isn’t a contract of service, and supply and use a vehicle for driving tuition.
• A person taking part in a work for employment payment program.
• A person with a written personal service business determination from the ATO.

If a person isn’t specifically included as a worker under the Act, you’ll need to apply the next test – Test 4: Contract of service test.

Who is specifically included?

• a sharefarmer who doesn’t provide or use powered machinery and is entitled to no more than 1/3 of the share farming gross proceeds (under written agreement with the farm owner)
• persons hired out by labour hire agencies or group training organisations (GTOs) to do work for other employers, with a contract of service in place
• salespersons; if they’re paid wholly or partly by commission, so long as the commission is not in connection with any work they might do for their own business
• a person working outside their trade of business may be considered a worker.

Other persons hired out

Persons hired out to other businesses by their employers (e.g. in the stevedoring industry) may be considered workers if:

• they have a contract of service with a person or holding company, and
• that person or holding company lends or lets on hire the persons services to someone else.

Group training organisations

An apprentice or trainee under a contract of service with a group training organisation is generally considered a worker whether their wages are paid solely by the group training organisation (GTO) or paid by both the GTO and the host employer.

However, the way the apprentice/trainee’s wages are paid will determine whether the GTO and the host employer both need to declare their wages or only the GTO.

If both host employer and group training organisation pay wages

Where the host employer agrees to pay the apprentice/trainee directly:

• the host employer is the employer of the apprentice/ trainee and must declare the wages paid
• an employment declaration, provided by the host employer and signed by the apprentice/trainee, must be provided to the Australian Taxation Office.

In this situation, the group training organisation:

• will declare the wages paid to apprentices/trainees for time spent on block release, and other on-costs, such as annual leave (if paid directly by the GTO)
• will be the employer of the apprentice/trainee for this period.

If the group training organisation pays all wages

Where the arrangement is that the group training organisation will pay wages directly to the apprentice/trainee and then bill the host employer, the group training organisation is the sole employer of the apprentice/trainee and must declare to WorkCover all the wages paid.

Make sure you’ve completed tests 1, 2 and 3 before applying this test.

For this test we look at the contrast between ‘contract of service’ and ‘contract for service’.

A contract of service is generally the contract between an employer and employee, such as in a PAYG arrangement.

A contract for service generally applies to an arrangement with an independent contractor.

To determine whether a worker is an employee or a contractor we need to consider the whole working arrangement, looking at the ATO’s 6 key common law principles.

If the ATO 6 common law principles determines a person is a contractor, we’ll accept this for WorkCover insurance and claims purposes.  You won’t need to include them in your insurance declaration.

Make sure you keep a copy of the report for your records.  You may need to give us a copy.

Learn more about cover for contractors.