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This is a complex area. The opinion and proposals provided herein should not be construed as legal advice. This is an area where individual choirs must assess their specific circumstances including the nature of any contracts, employment agreements or job descriptions relating to positions that the choir engages. Fundamentally, a choir’s obligations to take out Workers Compensation Insurance (WCI) turns on 2 factors. If your choir engages anyone on a Contract of Service basis then your choir is considered to be the employer of that person and is obliged to take out WCI. If your choir engages anyone on a Contract for Services basis you will be considered as that person’s employer only in a specific set of circumstances but not others. So, what’s the difference and what are the circumstances, in the latter scenario, that determine if your choir is considered to be an employer and your contracted Director and/or Accompanist, employees for whom you are obliged to take out Worker’s Compensation Insurance for? Contract of Service This is broadly an employment contract which is between an employer and an individual who then becomes employed by the organisation/company. The employed person is in effect providing themselves to the employer for any services the employer may require. Generally an employee will be paid on the basis of a timesheet. A contract of service arrangement definitely obliges the employer to take out WCI. Contract for Services A contract for services is a legal term to describe the relationship between a principal and contractor. The contractor is a self-employed person or company/organisation that provides a finite amount of work (scope) for a consideration (fee). There are other tests that may be applied though to ensure that people are not being denied employment entitlements only by virtue of the title of the arrangement. There are practical considerations that legislators have imposed to ensure that a de facto employer/employee relationship does not, in fact, exist; “There are many factors which may point to a contract being a contract of employment, with their relative importance varying with the circumstances. Control of the employee exercisable by the employer is a prominent factor, but not the sole criterion, and is one of a number of possible indicia of employment, including but not limited to “the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and the provision of holidays, the deduction of income tax and the delegation of work by the putative employee” (Stevens v Brodribb Sawmilling Company Proprietary Limited (1986)) It has been found that “The rendering of invoices is usually “quite foreign to an ordinary employment relationship”: Climaze Holding Pty Ltd v Dyson & Anor (1995). Most choirs will engage their directors and accompanists on a Contract for Services basis. Notwithstanding this arrangement, the legislation provides that a person is considered to be a worker (and hence an employee for whom you must take out WCI) if the following relationship exists;
the individual has contracted with a person for the performance of work by the individual and —
(i) the work is not work in the course of or incidental to a trade or business regularly carried on by the individual in the individual’s own name or under a business or firm name; and
(ii) the individual does not sublet the contract; and
(iii) if the individual employs a worker, the individual performs part of the work personally.
Most directors and accompanists satisfy items (ii) and (iii) which means that they must not also satisfy item (i) or they will be considered as workers under the act and you, their employer, will be obliged to take out WCI. The challenge is to figure out what the hell item (i) is trying to say! Basically, to not satisfy item (i), the work that the Director or Accompanist is doing for you must be work that is in the course of the business the Director or Accompanist undertake in their own name or business name. Generally this will be the case so most choirs will not be required to carry WCI. However, perhaps perversely, if you engage your Director or Accompanist to, for example, drive your bus or undertake some bookkeeping you will satisfy item (i) and be liable, as their employer, for any injury that they may suffer while undertaking that work. If you don’t have WCI and misfortune befalls your employee then the state government agency responsible for managing Workers Compensation will pay the compensation and/or damages awarded and seek to recover that from your choir organisation. The bad news is that, if your organisation lacks the funds to cover those costs, the government agency may seek to recover those costs as follows (this example from the WA Legislation); “(1) If a body corporate was uninsured in respect of a liability to which a payment from the DI Fund under section 266 or 267 relates and WorkCover WA has judgment for the recovery from the body corporate of the amount paid, WorkCover WA may sue for and recover from a responsible officer of the body corporate any amount of the judgment that is not recoverable from the body corporate. (2) A person is a responsible officer of the body corporate if the person was a director or other officer concerned in the management of the body corporate at the time the body corporate was uninsured.” Your incorporated association is a body corporate and executive members of your management committee will be considered to be responsible officers. This exposure of officers of incorporated associations to being sued for debts of the organisation is not common. Generally incorporation protects officers from the recovery of debts. It would appear that governments hold a special power unto themselves when it comes to Workers Compensation. The consequences of getting these arrangements wrong could be very serious. While it shouldn’t be hard to avoid these negative consequences, be sure to apply the necessary rigour and discipline in your engagement practices.