Can a sub-contractor be a deemed worker?

Sek v Bell River Homes Pty Ltd [2023] NSWPIC 117 (21 March 2023)

The Applicant owned and operated a business known as Adrian Sek Building Constructions and Maintenance (the business) and sustained an injury to his right shoulder on 4 February 2022 whilst working under a “Sub-Contractor Agreement” with the Respondent.

The Respondent disputed that the Applicant was a “deemed worker” within the meaning of Schedule 1 of the Workers Compensation and Workplace Injury Management Act 1998 (the 1998 Act).

In February 2021, the Applicant was offered 90% of the Respondent’s work and was happy as this meant he received enough work and did not require to go out and advertise his services. Prior to this the Applicant was working for Eden Brae Homes. The Applicant worked for Eden Brae four times after commencing working for the Respondent to finalise jobs and transition to his new role. The Applicant last worked for Eden Brae Homes on 30 July 2021.

In October 2021, Mr Glendenning, a friend of the Applicant’s asked for some help at his business, All State. The Applicant worked for 28 days for All State whilst still performing work for the Respondent and this was approved by the Respondent.

The Applicant signed a sub-contractor agreement on 10 February 2021 and performed work for the Respondent from February 2021 to 4 February 2022.

Clause 2(1) of Schedule 1 outlines the deemed employment of other contractors as follows:

“(1)  Where a contract—

(a)  to perform any work exceeding $10 in value (not being work 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), or

…

is made with the contractor, who neither sublets the contract nor employs any worker, the contractor is, for the purposes of this Act, taken to be a worker employed by the person who made the contract with the contractor.”

The Applicant filed an Application to Resolve a Dispute claiming weekly payments and reasonably necessary medical expenses.

Issues for Determination

Whether the Applicant is considered to be a deemed worker within the definition of Schedule of the 1998 Act at the time of his injury.

The Applicant submitted that he had a special relationship with the Respondent. The Applicant did not “systematically and regularly accept work to be done under contract” with anyone other than the Respondent in accordance with the interpretation of a special relationship of Deputy President Roche in Malivanek v Ring Group Pty Ltd [2014] NSWCCPS 4. The Applicant submitted that working for someone else on occasions with the permission of the Respondent was not evidence that the work the Applicant was doing for the Respondent was incidental to his usual business.  He further submitted that the prohibition against other employment was not of itself determinative, and the Applicant regarded himself as the Respondent’s employee.  The Applicant also submitted that he was not required to have his own workers compensation insurance relying on Turner v Stewardson [1962] NSWR 137.

The Respondent submitted that the Applicant was injured whilst carrying out work which was incidental to the business regularly carried on his own business, as the Applicant performed work for Eden Brae Homes until August 2021 and from September 2021 performed work for All State. It was submitted that the Applicant was regularly performing contract work for others, which was inconsistent with the meaning of “deemed worker” as set out in Humberstone v Northern Timber Mills [1949] HCA 49.

Decision

Relying on the decisions in Malivanek, Humberstone and Wathen v AUT Holdings Pty Ltd [1977] 51 WCR 1, Member Toohey found that the Applicant did not “systematically and regularly” accept other work.  The Member accepted that the work he did for Eden Brae Homes was finishing prior jobs and the work he provided for All State was as a result of his friendship with Mr Glendenning. Member Toohey found that the work for Eden Brae Homes and All State did not alter the relationship with the Respondent and therefore, the Applicant was a deemed worker at the time of his injury and was entitled to weekly payments and reasonably necessary medical expenses.

Implications

This decision highlights circumstances where sub-contractors may be considered a “deemed worker” for the purpose of Schedule 1 of the 1998 Act. In this instance, a sub-contractor was found to be a deemed worker of the Insured despite having performed work for other companies whilst working for the Insured. Therefore, a thorough understanding of the sub-contracting relationship between the injured worker and the Insured is required to determine liability for injury.

Should you have any queries concerning a workers compensation matter, please contact our team on either (02) 4929 9333 or (02) 8297 5900.