Home Building Tips for Builders in NSW

Do I have to cover my Subbies under
Workers Compensation?

This E-News Bulletin follows on from one earlier this year that covered subcontractors and superannuation.  Here is the same scenario again:

You have a carpenter who wants to contract to you as contractor.  You draw up a contract that makes it clear that the carpenter is a contractor.  But do you have to cover that person under your Workers Compensation insurance premium?

Generally speaking, the answer is no if your contract is with a corporation (i.e proprietary limited company) that is supplying the services of the worker.  This is because that corporation itself has to cover its own employees under workers compensation laws, including the person who is going to perform the work.

However, if the contract is with the individual directly (i.e sole trader), it becomes a bit more difficult, particularly if they do not employ any workers themselves.

Under workers compensation laws, a person / contractor can become a ‘deemed worker’ even if they person operates under the belief that they are a contractor.

The fact that the carpenter has an ABN and invoices you for his or her services is irrelevant - instead, the first question you need to ask yourself is whether the person is technically an employee under the law.  If yes, then you will most likely have to cover that person under your workers compensation insurance policy.

Remember, though, if the relationship is one of employment, you cannot change that fact by merely having the written contract state that the person is a contractor.

The following factors might point to a contractor relationship:

• The person operates an independent business and provides services to multiple builders
• Payment under the contract is conditional upon satisfactory completion of work (i.e based on work performed rather that time worked).
• The worker has their own insurance and indemnity policies.
• The worker provides their own tools and equipment and pays all business expenses

What happens if my contractor is deemed a worker?

If your business is audited, and one or more contractors that you have engaged are deemed to be your workers, you may be required to ‘back pay’ workers compensation premiums on the contract fees you have paid these people for the last three years.  This can potentially add up to thousands of dollars.

For example,
if over the last three years you have engaged five (5) contractors on a regular basis, and have paid each of them a total of $70,000 plus GST per year, an audit may add a total of $350,000 to your wages bill each year, for the last three years.

If the workers compensation premium percentage for the construction industry is 10%, then you may be liable for additional workers compensation premiums of $35,000 per year (being 10% of the additional ‘wages’), for three years – a atotal of $105,000.

UPCOMING CPD SEMINARS All of our CPD Seminars are 6 hours in length and allow you to claim 12 CPD Points in ONE DAY. Builders now have nine (9) different CPD Seminars to choose from.

To REGISTER for a CPD Seminar, complete the attached Registration Form or visit www.homebuildingonline.com.au

Online CPD Courses

We have 4 NEW Online CPD Courses to choose from – a total of 24 Online CPD Courses that are now available for builders in NSW.

Listed below are our available Online CPD Courses – click on an Online CPD Course to view further information about that Course:

1. Liability of Building Professionals - NEW
   
2. Construction Management Tips - NEW
   
3. Safety Hazards On Site (Part A) - NEW
   
4. Safety Hazards On Site (Part B) - NEW
   
5. Project Management
   
6. Preparing Business Documents
   
7. Financial Management
   
8. Going Green with Building Sustainability
   
9. Builder’s Summary of the Home Building Act
   
10. Security of Payment Laws 
    
11. Do It Yourself Debt Recovery
    
12. Tendering Tips in Home Building 
    
13. Home Building Contracts in NSW 
    
14. Dealing with Sub-Contractors      
    
15. Running a Small Building Business 
    
16. Tax Summary for Small Business
    
17. Tips on Playing the Building Game 
    
18. Basics of the Employment Relationship            
    
19. Basic Contract Law            
    
20. Fair Work Laws – A Summary 
    
21. Handling Home Building Disputes 
    
22. Understanding Workers Compensation 
    
23. Builder’s Guide to OHS 
    
24. Bullying on the Building Site