Many Australians find the idea of becoming a sole trader or an independent contractor appealing. As a sole trader, you can enjoy better control over your time, be your own boss, and determine the direction of your business. However, being a sole trader or contractor also means you are at risk of injury, ill-health, or accidents just like employees. This raises an important question: can sole traders get workers compensation? Understanding workers compensation for self-employed individuals is crucial to ensure you are protected.
Are contractors covered by workers compensation? It’s essential to explore the options available for workers compensation for contractors, especially in NSW, where specific regulations apply. Knowing your rights and responsibilities regarding sole trader workers compensation can help you safeguard your livelihood in case of illness or injury.
What is workers compensation
Workers’ compensation is a vital insurance that provides a safety net for individuals who suffer injuries or illnesses related to their work. In Australia, it’s mandated by law for employers to carry insurance that covers their employees in the event of work-related sickness or injury. This insurance offers financial support through weekly benefits, medical expenses, hospital costs, and various other benefits to aid in the worker’s recovery.
Employers have to take out workers compensation to cover their employees for lost wages due to injuries or health issues. All businesses in Australia are legally required to have workers compensation insurance for:
- Full-time employees
- Part-time employees
- Casual workers
- Contractors and sub-contractors (under certain circumstances)
In some cases, the employee or worker may receive a lump-sum payment for permanent disability.
Are contractors covered by workers compensation?
Contractors or subcontractors can be covered by workers compensation if they are deemed to be working for a client. For instance, a bricklayer hired by a builder or a painter engaged by a decorator can be considered workers and should be covered by workers compensation. Therefore, both the principal employer and the contractor have a responsibility to ensure that subcontractors and their employees are adequately insured under workers compensation policies.
As a contractor, you collaborate with clients to provide materials and services or complete specific jobs. Subcontractors, while working for contractors, differ from employees in that they set their own hours and wages. The main distinction is that subcontractors report to contractors rather than directly to clients.
Many people believe that because a contractor is not an employee, there is no obligation for employers to invest in workers compensation. However, this is not always the case. Both principal employers and contractors may be responsible for providing workers compensation coverage. An injured or ill worker may be eligible to claim compensation from either the contractor or the principal employer, or from both.
Can sole traders get workers compensation?
Sole traders own their businesses independently and do not have partners. As a sole trader, you are not eligible for workers compensation since you are not classified as an employee. However, there are alternative solutions to protect yourself from sickness, injury, and loss of income.
For instance, investing in income protection insurance can help cover lost earnings in case of ill-health or injury. This type of insurance can also provide coverage for injuries incurred outside of work. If you are registered as a working director, you may qualify for workers compensation, but it’s mandatory to secure workers compensation for any employees you hire to cover their injuries, medical expenses, and lost wages.
Additionally, sole traders might consider obtaining life insurance, trauma insurance, or total and permanent disability insurance for extra protection against unforeseen circumstances. These options can help ensure financial stability in the face of unexpected challenges.
Get In Touch With a Personal Injury Lawyer
If you’ve been injured during work, please contact Owen Hodge Lawyers on 1800 770 780 for expert guidance regarding workers compensation. We will help clarify your legal position as a contractor, subcontractor or sole trader. Our experienced personal injury lawyers specialise in helping victims of workplace injury pursue the benefits that they’re entitled to receive.