What are the options for sole traders if they suffer an injury? Find out what forms of compensation or insurance are available to you.
Sole traders are on the rise in Australia and when it comes to workers compensation, you may be wondering whether sole trader work cover exists. The answer is not straight forward and needs to be looked at on a case by case basis, with consideration to your particular industry and the nature of your employment.
Are you a sole trader or an employee?
A sole trader in Australia is defined as an individual running a business. It’s as simple as that. You are the owner as well as the manager of the business. Whether or not you are required to take out a workers compensation policy for yourself depends on the structure of your business. If you are trading as a sole trader or in a partnership, you are not an employee of the business. However, if the business is incorporated, you can take out a workers compensation policy as an employee.
Depending on the circumstances for which you are hired, you could also be deemed an employee of the person that hired you. When a court looks at whether you have been hired as an employee or hired as a contractor, they will look at the following:
- Your ability to subcontract/delegate
- Basis of payment
- Whether you own the equipment, tools and other assets
- Whether you undertake any commercial risks
- Control over the work
As a general rule the more freedom and flexibility you are offered the less likely that you would have access to workers compensation.
Special deeming provisions also apply if you work in the following industries:
- Workers lent or on hire
- Contractor carrying out work not usually performed in it’s own name
- Contractors under labour hire services arrangements
- Rural work
- Salespersons, canvassers, collectors and others
- Mine employees
- Mine rescue personnel
- Jockeys and harness racing drivers
- Drivers of Hire-vessels- contract of bailment
- Caddies and others employed through club
- Shearers’ cooks and others
- Firefighters in fire districts
- Workers at place of pick-up
- Boxers, wrestlers, referees and entertainers
- Voluntary ambulance workers
- Ministers of religion
- Ministers of religion covered by policies
- Participants in training programs
If you are unsure about your situation or have recently suffered a workplace injury, you can speak to a legal expert and ensure your sole trader rights are upheld.
What other forms of compensation are available to sole traders?
If you cannot take out a workers compensation policy against your business as a sole trader, the good news is there are other forms of compensation available that will ensure you are not left out of pocket if you find yourself unable to work due to injury. This protection comes in the form of insurance.
You may choose to take out:
- Personal income protection insurance: this cover gives you financial support if you are unable to work due to injury or illness and will cover part of your regular salary or business share while you recover.
- Personal injury or illness insurance: similar to personal income protection, this cover also gives you financial support while you are unable to work but in the form of a one-off payment.
The differences between the two insurance covers will depend largely on the insurer. Nevertheless, taking out either form of insurance ensures you are not forced to rely on your savings alone in the event you are unable to work for a period of time, short term or long term.
Do I need public liability insurance as a sole trader?
As a sole trader, you also need to think about whether you need public liability insurance. Although there is no specific workers compensation you can take to insure yourself in the event of injury, you may be required to pay compensation to others.
Public liability insurance will cover situations where an accident occurs due to the activities of your business and ensures you have an appropriate level of cover to pay legal fees and payouts if claims are made against you.
Examples can include:
- Damage to personal property like laptops or other electronic equipment in the course of a consultation.
- Injuries resulting from unattended equipment.
Although sole traders do not generally have access to workers compensation, there may be exceptions depending on the nature of your situation. Masselos & Co Lawyers are here to help and can offer experienced advice on workers compensation and alternative solutions. Book a free consultation today.
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