The "sham contracting" problem in construction
It's extremely common in Queensland construction for workers to be told they're subcontractors when, legally, they're actually employees. This practice — sometimes called "sham contracting" — benefits the employer by avoiding WorkCover premiums, superannuation obligations, and other employment costs. But it leaves workers exposed when they get injured.
The test for whether you're a worker or a genuine contractor isn't based on whether you have an ABN, issue invoices, or signed a "contractor agreement." It's based on the reality of the working relationship.
Key factors in the employee vs. contractor test
Courts and WorkCover look at the totality of the relationship. Factors that suggest you're actually an employee (and therefore covered by WorkCover) include:
- The builder tells you when, where, and how to do the work
- You use the builder's tools, equipment, or materials
- You're paid hourly or daily (not per project result)
- You work exclusively or primarily for one builder
- You can't delegate the work to someone else
- The builder provides your PPE or safety equipment
- You don't have your own business insurance
If several of these apply to you, there's a strong argument you're an employee regardless of what your paperwork says.
What if you are a genuine subcontractor?
Even genuine independent subcontractors in Queensland may have workers' compensation coverage. Under certain circumstances, the principal contractor's WorkCover policy may "deem" you to be a worker for insurance purposes. Additionally, if you're a sole trader, you may be able to take out your own personal WorkCover policy.
The rules are complex and depend on your specific situation. This is one area where legal advice early can make a significant difference.
Subcontractor negligence claims
Regardless of your employment classification, if you're injured on a construction site due to another party's negligence, you may have a common law claim. The principal contractor has broad safety obligations to everyone on their site — not just their direct employees. If a builder's failure to maintain safe conditions caused your injury, you may be entitled to damages even as a genuine subcontractor.