Worker

Definition

Section 4 of the 1998 Act states:

Worker means a person who has entered into or works under a contract of service or a training contract with an employer (whether by way of manual labour, clerical work or otherwise, and whether the contract is expressed or implied, and whether the contract is oral or in writing).

There are also categories of ‘deemed workers’ (discussed on the next page) which are defined in Schedule 1 of the 1998 Act.

Contract of service

The words ‘contract of service’ simply mean that the relationship between the parties must be one of ‘employer and employee’, as opposed to a relationship of ‘independent contractor and principal’. (The latter relationship would be a contract for services, not a contract of service.) The following comments will assist you in understanding some of the major factors to be considered when determining whether or not a person is a contractor or employee.

You must weigh up all the features of the relationship, rather than focus on one particular test.

The following factors generally indicate that the relationship is likely to be one of employer and employee:

The person for whom the work is done (the putative employer) has the right to:

• control the manner in which the work is performed
• have a particular person do the work
• suspend or dismiss the person engaged
• the exclusive services of the person engaged
• dictate the place of work, hours of work and the like
• pays the person doing the work on a time basis rather than a task basis
• Deducts PAYG income tax from money payable to the person doing the work.

The following factors are more likely to indicate that the relationship is one of independent contractor and principal:

The person doing the work (the putative contractor):

• has his or her own work premises
• provides his or her own tools and equipment
• creates saleable assets and goodwill in the course of work
• does not have PAYG income tax deducted from payments received for the work
• includes GST in tax invoices issued for work done
• incurs business expenses which are deducted from any income received.

A person is not necessarily an independent contractor just because the person has an Australian Business Number. All aspects of the relationship need to be considered before you can say whether the person performing work is an employee or contractor.

We discuss on the next page situations in which an independent contractor may be considered a deemed worker.

Parties to the contract

The contract must be between a person and an employer. If the employer, for example, were making payments to a company of which the person was a director (i.e. the person was a contractor operating through his or her own company) then there is no liability to pay compensation because there is no contract between the person and the employer. The contract is between the company and the employer.

Working directors of a company will usually be considered employees for compensation purposes, and entitled to compensation benefits if they sustain injury. Therefore, the company must have workers compensation insurance for those directors, even if the company does not employ any other workers.

Section 4A of the 1987 Act provides that if an employer company is uninsured, the directors of that company are not entitled to compensation for injury.

Exclusions

The following people are excluded from the definition of worker in section 4 of the 1998 Act:

• Police officers who were contributors to the Police Superannuation Fund before 1 April 1988
• A person employed as a casual for no more than 5 days, who is employed for a purpose not part of the employer’s trade or business.
• An officer of a religious or other voluntary association in limited circumstances set out in the section.
• A registered player of a sporting organisation in limited circumstances set out in the section.

Deemed workers

Even though a person may not be a worker as defined in section 4 of the 1998 Act, the person may still be entitled to benefits if he or she is in any one of the categories of deemed workers set out in Schedule 1 to the 1998 Act.

The categories of workers covered by Schedule 1 are:

• Workers lent or let on hire
• Outworkers who do not employ other workers or subcontract the work
• Other contractors who do not employ other workers or subcontract the work (discussed in more detail on the next page)
• Contractors under labour hire services arrangements (discussed in more detail on the next page)
• Rural workers, e.g. supplying timber, felling or ringbarking trees, clearing land, cutting or transporting sugar cane, erecting or demolishing fences or yards on rural properties,
• Timbergetters
• Salespersons, canvassers, collectors and others
• Tributers (e.g. opal mine workers who share in the profits of working the mine)
• Certain mine employees
• Mines rescue personnel
• Jockeys and harness racing drivers
• Drivers of hire vehicles or hire vessels under a contract of bailment (e.g. taxi drivers)
• Caddies and others employed through clubs
• Shearers, cooks and others in pastoral/agricultural work
• Volunteer fire fighters in fire districts
• Workers at place of pick up
• Boxers, wrestlers, referees and entertainers
• Voluntary ambulance workers
• Ministers of religion (defined in the Regulation)
• Ministers of religion covered by policies
• Participants in training programs

You should check the precise terms of the definition in Schedule 1 whenever you have a claim by a worker who appears to fall within one of these categories.

Other contractors

The most commonly encountered category of deemed employment is contained in Schedule 1 clause 2 – ‘other contractors’. This covers contractors who work solely or mainly for one principal (head contractor).

The contractor will be deemed a worker under Schedule 1 clause 2, if he or she can establish the following:

• the contractor agreed with the principal (the head contractor) to perform work for a payment of at least $10
• the contractor did not subcontract the work nor employ any worker
• the work performed was not incidental to a trade or business regularly carried on by the contractor in the contractor’s own name, or under a business or firm name.

The first two points are straightforward. The third point is more problematic because it is not always easy to identify what is ‘incidental to a trade or business regularly carried on by the contractor’. The approach of the courts is to look at whether the contractor holds himself or herself out to the public as carrying on a trade or business. For example, a person who advertises that he or she is free to accept work from the general public, and who performs work for a number of different customers, is likely to be regarded as carrying on a trade or business and therefore not a deemed worker. On the other hand, a person who does not advertise his or her services and who works solely or mainly for one ‘customer’ will not be regarded as carrying on a trade or business.

Contractors under labour hire services arrangements

Another common category of deemed employment is contained in Schedule 1 clause 2A – ‘contractors under labour hire services arrangements’.

This category of deemed employment applies to labour hire services contracts, defined as ‘a contract or arrangement (not being a contract of service or a training contract) under which one person (the labour hire agency) provides services to another person (the contractor) to facilitate the performance of work by that other person (the contractor)’.

The services that the labour hire agency might provide include finding work for the contractor, paying the contractor for work performed, and arranging insurance for the contractor.

Schedule 1 clause 2A provides that if a labour hire agency, under a labour hire services contract with a contractor, arranges for the contractor to perform work for a third person (the host employer), the contractor will be a deemed worker of the labour hire agency if:

• • the work performed is not incidental to a trade or business regularly carried on by the contractor in the contractor’s own name, or under a business or firm name, and
  • the contractor neither employs any worker, nor subcontracts with any person, to perform any of that work, and
  • the labour hire agency provides services to the contractor under the labour hire services contract during the performance of that work.

A contractor who uses the services of a labour hire service agency would not be a deemed worker of the labour hire agency if he or she conducted his or her own business and performed work for a number of customers, or employed other workers.

Injury

Section 4 of the 1987 Act provides the following definition:

Injury means personal injury arising out of or in the course of employment, and includes a disease injury which means:

a disease that is contracted by a worker in the course of employment, but only if the employment was the main contributing factor to the contracting of the disease, and

the aggravation, acceleration, exacerbation or deterioration in the course of employment of any disease, but only if the employment was the main contributing factor to the aggravation, acceleration, exacerbation or deterioration of the disease,

but does not include (except in the case of a worker employed in or about a mine) a dust disease as defined by the Workers Compensation (Dust Diseases) Act 1942, or the aggravation, acceleration, exacerbation or deterioration of a dust disease as so defined.

In practice, ‘personal injury’ usually refers to a physical injury, and a ‘disease injury’ is an ‘illness, sickness, or ailment’ (and includes psychological injury). There are some cases in which the distinction between physical injury and a disease is not clear cut, but some guidance may be found in the following observation made by Chief Justice Latham in the case of Hume Steel Limited v Peart: ‘There is a distinction, according to the common use of language, between getting hurt and becoming sick.’

Serious and Wilful Misconduct

A worker may not be entitled to compensation if the worker’s injury is ‘solely attributable to the serious and wilful misconduct of the worker’: section 14(2) of the 1987 Act.

However, if the injury results in ‘death or serious and permanent disability’ to the worker, compensation will still be payable despite the worker’s misconduct.

Self-inflicted Injury

An intentionally self-inflicted injury will not be covered by workers compensation under any circumstances: section 14(3).

Arising out of or in the Course of Employment

A personal injury must:

• • arise out of employment (i.e. be related to employment), or
  • be sustained in the course of employment (i.e. while performing work duties or something incidental to those duties).

A disease injury must be:

• • contracted in the course of employment, or
  • aggravated, etc., in the course of employment.

In the NSW Court of Appeal decision of Badawi v Nexon Asia Pacific Pty Ltd [2009] NSWCA 324, it was said: ‘An injury arises out of employment if the fact that the claimant was employed in the particular job caused, or to some material extent contributed to the injury. The phrase involves a causative element and is to be inferred from the facts as a matter of common sense.’

The High Court of Australia in Haztimanolis v ANI Corporation [1992] HCA 21, noted: ‘Whether an injury had been sustained in the course of employment ultimately depended upon whether the workman was doing something which he was ‘reasonably required, expected or authorized to do in order to carry out his actual duties’. …

As to activities outside normal working hours during ‘an overall period or episode of work’, the High Court stated: ‘It should now be accepted that an interval or interlude within an overall period or episode of work occurs within the course of employment if, expressly or impliedly, the employer has induced or encouraged the employee to spend that interval or interlude at a particular place or in a particular way.’

Employment a Contributing Factor

For an injury to be compensable the employment must have been a contributing factor. In summary:

Personal injury

For a personal injury (not being a disease injury) section 9A of the 1987 Act requires that employment must be a substantial contributing factor to the injury.

Section 9A(2) of the 1987 Act provides examples of the factors to be taken into account, including:

• • the time and place of the injury
  • the nature of the work performed and the particular tasks involved
  • the duration of the employment
  • the probability that the injury or a similar injury would have happened anyway, at about the same time or at the same stage of the worker’s life, if he or she had not been at work or had not worked in that employment
  • the worker’s state of health before the injury and the existence of any hereditary risks
  • the worker’s lifestyle and his or her activities outside the workplace.

The employment does not have to be the sole or main contributing factor, provided it is ‘real and of substance’.

Employment will generally be a substantial contributing factor if the injury occurs while the worker is performing his or her work duties, or activities incidental to the work.

Section 9A does not apply to: a disease injury, an injury sustained on a journey as defined in section 10, during a recess covered by section 11, or sustained by a trade union representative as provided in section 12.

Personal injury on a journey

Section 10 of the 1987 Act provides that a personal injury received by a worker on any journey to which the section applies is deemed to have arisen out of or in the course of employment.

However, if the journey is to or from a worker’s place of abode, there must be ‘a real and substantial connection between the employment and the accident or incident which results in the injury’.

The injury sustained by the worker must be a personal (physical) injury. A worker on a journey covered by this section who contracts or aggravates a disease is not entitled to compensation.

The journeys covered by section 10 include those between:

• • the worker’s place of abode and his or her place of employment;
  • the worker’s place of abode or employment and an educational institution which the worker is required by the terms of his or her employment, or is expected by his or her employer, to attend;
  • the worker’s place of abode or place of employment and a place to where he or she is travelling in order to obtain a medical certificate or treatment for a work injury;
  • one place of employment to another place of employment with another employer.

‘Place of abode’ includes not only a worker’s usual residence, but also the place where a worker spent the night before commencing a relevant journey, and the place where the worker is intending to stay the night following a relevant journey.

A journey from a worker’s place of abode commences at, and a journey to a worker’s place of abode ends at, the boundary of the land on which the place of abode is situated. If the worker lives in a house this will be the boundary line (the fence line). If the worker lives in a unit this will be the boundary line of the land on which the block of units is situated.

It is important to note that the requirement is for there to be a real and substantial connection between employment and the accident or incident—not between the employment and the injury. For many journey claims between home and work, this connection between employment and the accident is difficult to establish.

Disease injury

For a disease injury (including aggravation to a disease) section 9A does not apply. Instead, section 4(b) of the 1987 Act requires employment to be the main contributing factor to the contraction of a disease or the aggravation of a disease.

Contraction of a disease

Employment must be the main contributing factor to the contraction of a work-related disease. That is, the tasks and incidents of the employment must initiate the pathological condition. For example, a building worker who has in the course of employment been exposed to asbestos dust when working with asbestos insulation or flat sheeting, may develop mesothelioma. The exposure to asbestos dust is known to be the main (if not the only) cause of that particular disease.

Aggravation to disease

In relation to injuries which have aggravated a disease, it is important to note that the disease itself need not be work-related, but employment has to be the main contributing factor to the aggravation of the disease.

In many cases where a worker alleges that employment has aggravated a pre-existing disease, the employment will be the only factor contributing to the aggravation, even though the disease itself may have had many other factors contributing to its pathology. However, each case will need to be considered on its own facts and expert medical evidence.

In the case of Sirikci v Hewlett Packard Australia [2015] NSWWCCPD 45. the President of the Commission dealt with an appeal by a worker who alleged that her bipolar disorder had been aggravated by alleged bullying during her employment. An independent psychiatric report obtained by the insurer observed:

“There is a possibility that she was stressed in the workplace by her boss which ordinarily would have resulted in a person moving on without any mental health problems if they did not have underlying vulnerability or were not already unwell, or may have resulted in an adjustment disorder with anxious and depressed mood which, if they did not have significant underlying vulnerability then one would expect that this would have resolved fairly quickly. … In my opinion, far more likely is the scenario that she was already prodromal [i.e. the condition was present but not diagnosed] and somewhat unwell when she joined, and that the stress of work over several weeks be it with a boss causing her no significant problems or a boss that she perceived to be abusive … then resulted in her going off work because she was actually already unwell and not able to cope in the workplace.”

The President accepted this medical opinion and confirmed the arbitrator’s decision that “it was more likely that what occurred at work was the manifestation of an existing bipolar disorder” without any aggravation by the employment.

Heart attack and stroke

Just because employment may have contributed to a heart attack or stroke will not be sufficient to make the injury compensable. A heart attack or stroke (and injury associated with a heart attack or stroke) is only compensable if the nature of the employment concerned gave rise to a significantly greater risk of heart attack or stroke than had the worker not been employed in employment of that nature. This may in some cases require specialist epidemiological evidence to prove that workers in certain types of employment are recognised to be at a greater risk of having heart attacks or strokes than the general population. For example, there are studies which indicate that motor vehicle examiners and tunnel workers exposed to high concentrations of carbon monoxide have an increased risk of developing cardiovascular disease.

Section 9B of the 1987 Act provides comprehensive medical definitions of those conditions considered to involve a heart attack or stroke.

Do not assume that occupations which are stressful or physically demanding will necessarily increase the risk of heart attack or stroke—e.g. the physical demands of a job may in fact improve a worker’s fitness.

Diseases presumed work-related

Section 19 of the 1987 Act provides that certain diseases are presumed to be work-related without the need to prove that the disease was contracted in the course of employment or that employment was a substantial contributing factor.

The diseases and their corresponding employments are listed in Schedule 1 to the Workers Compensation Regulation 2016. For example, workers employed in an abattoir who contract brucellosis are presumed to have contracted the disease in the course of their employment (subject to a positive blood test for the disease).

However, the presumption that the prescribed diseases are work-related can be rebutted, if the employer/insurer can prove that the disease was not in fact contracted at work.

Psychological injury

Psychiatric or psychological injuries are defined in section 11A of the 1987 Act as:

• • a recognised psychiatric or psychological disorder
  • contracted or aggravated in the course of employment
  • to which employment was a substantial contributing factor
  • and includes the physiological effects of such disorder (such as raised blood pressure, facial tics and insomnia).

However, section 4(b) of the 1987 Act adds a further requirement that the employment must be the main contributing factor to contracting a psychiatric/psychological disease.

The purpose of section 11A is to limit the prevalence of vaguely defined ‘stress’ claims. Being emotionally upset, disappointed, angry or feeling overworked will not constitute an injury for the purposes of the Act.

To reinforce this purpose, section 11A (7) provides that the medical certificate, in support of a claim for psychiatric injury must use accepted medical terminology and not words such as ‘stress’ or ‘stress condition’. Section 11A (8) provides that if a claim is deficient because acceptable terminology has not been used, and the insurer as soon as practicable notifies the worker in writing of the deficiency, including what is necessary to rectify it, then the claim will not be duly made until a properly completed medical certificate is provided.

The Court of Appeal in State Transit Authority NSW v Chemler [2007] NSWCA 249 considered a claim by a worker who perceived that actions taken by other employees represented harassment and victimization, and that these actions caused a psychiatric injury. The employer had argued that there was in fact no harassment or victimization, and that the events which had occurred in the workplace were misperceived by the worker. It was said that, “for there to be the relevant connection with the employment … the events perceived must be ‘real’ and not ‘imagined’.“

However, the Court noted that there had been events in the workplace which, although not intended to be offensive were interpreted by the worker that way. The Court commented that “the proper focus in this context is the consequence of conduct on the claimant and not, even in a limited sense, the motivation, intention or other mental state of the co-worker or supervisor. …If conduct which actually occurred in the workplace was perceived as creating an offensive or hostile working environment, and a cognizable injury followed, it was open to the Commission to conclude that causation was established.”

Exemption for employer action – section 11A

In psychological injury cases, even if employment is the main contributing factor, compensation will not be payable if the injury was ‘wholly or predominantly caused by reasonable action taken or proposed to be taken by or on behalf of the employer with respect to transfer, demotion, promotion, performance appraisal, discipline, retrenchment or dismissal of workers or provision of employment benefits to workers’: section 11A (1) of the 1987 Act.

That might sound like a very broad range of situations where liability to pay compensation is potentially excluded but,

in practice, it is very difficult to establish the grounds for declining liability for psychological injury caused by the employer’s action (which also includes an employer’s inaction) because the employer/insurer has to establish that:

• the action was the whole or predominant cause of the psychological injury, and
• the action was reasonable.

For example, you may be able to establish that a worker’s psychological injury was precipitated by the worker being made redundant, and that the redundancy was implemented fairly. But if the worker also alleges that for a lengthy period of time before that redundancy she had been bullied by her immediate supervisor, and that bullying had a significant impact on her psychological health, then the redundancy may no longer the whole or predominant cause of the psychological injury.

An employer’s action may be considered unreasonable if, for example, during a performance review the employer’s criticism of a worker was abusive or derogatory in tone, or a grievance process was not conducted in accordance with employer policies, or a dismissal was not implemented using fair procedures.

In Reichardt v Aurrum [2016] NSWWCCPD 39, the worker was subject to an investigation by the employer regarding a complaint made against her. The President confirmed the arbitrator’s decision that the employer’s conduct was reasonable, and that the employer could rely on section 11A. The President stated that:

“The question of reasonableness is one of fact, weighing all the relevant factors. The test is less demanding than the test of necessity, but more demanding than a test of convenience. The test of ‘reasonableness’ is objective, and must weigh the rights of employees against the objective of the employer. Whether an action is reasonable should be attended, in all the circumstances, by a question of fairness.” The reasonableness of the employer’s action is to be “determined by the facts known to the employer at the time or that could have been ascertained by reasonably diligent enquiries.”