We have recently been appointed liquidators of a company. The company’s major creditor is Workcover and the debt arose because of an injury to an ‘worker’. The word worker is important because whether or not the person injured was actually a worker as defined in the Act, and whether the company was an ‘employer’ at the time, was the subject of some debate.
The company employed labourers under contract and did not consider them as ’employees’ in the common sense. But the employees were hired under a contract of service for the provision of labor only, and therefore were ‘workers’ under Section 11, Schedule 2, Part 1, (1) of the Workers Compensation and Rehabilitation Act 2003. Section 48 of that Act says that every employee must be insured.
48(1) Every employer must, for each worker employed by the employer, insure and remain insured, that is, be covered to the extent of accident insurance, against injury sustained by the worker for–
(a) the employer’s legal liability for compensation; and
(b) the employer’s legal liability for damages.
The injured party was a worker under the Act, as he worked under a contract of service as defined by the Act. The employer had an obligation to have its workers insured. At the time of the accident, it did not have any insurance, believing that it did not have to do so, as the people it hired were not ’employees’. The accident was deemed to have occurred in the course of that employment and the company was held to have liability.
The main part of the dispute to liability was that the employee was (apparently) working for another party when the accident occurred. In effect, the supervisor on the job also had his own business doing the same type of work, and used the company’s people and equipment (with agreement from company) to do that work. But that ‘on-hiring’ of workers did not alter the insurance position.
Schedule 3 of the Act says:
(1) A person who lends or lets on hire the services of a worker who is party to a contract (regardless of whether the contract is a contract of service) with that person continues to be the worker’s employer while the worker’s services are lent or let on hire.
Workcover had to decide whether the employees were lent or hired to the supervisor’s business, and hence whether the company remained the ‘employer’ and responsible to maintain insurance. Workcover made that assessment based on the evidence – especially that the company knew that the job would be done on that day, that these workers would be doing that work, and the company paid the workers for the day.
Employers of casual labor and employees who occasionally work for other people need to be aware that the responsibility to insure and liability for injuries suffered on that work may still rest with them. Employers in these positions need to ensure that they maintain Workcover insurance that covers these situations, or seek legal advice if they believe that they are not responsible for insurance.