The Act protects subcontractors engaged in contractual arrangements which involve more than one entity.
Principal and contractor are both deemed employersIf a worker suffers an injury from employment working for a contractor, and the contractor has contracted with a principal for the execution of work by or under the contractor:
- both the principal and the contractor are taken to be employers of the worker
- both the principal and the contractor are jointly and severally liable to pay any compensation that the contractor would be liable to pay if the contractor were the sole employer.
A worker may claim compensation from the contractor or principal, or both.
A principal will only be liable for compensation to a contractor’s worker if:
- the work being done at the time of the injury is directly a part or process in the principal’s trade or business, and
- the injury arises in respect of premises on which the principal has undertaken to do the work or that are otherwise under the principal’s control or management.
This liability applies right down the contractual chain. For example, if a principal head contractor on a building site engages various contractors who engage sub-contractors, then all parties (principal, contractor and sub-contractor) are liable to cover any workers the sub-contractor may employ.
If you have further queries, contact our Advice and Assistance Service on 1300 794 744.
