Deemed worker (workers comp)
Deemed worker is a contractor classified as employee for workers comp despite holding ABN. State tests: NSW Sched 1; Vic 80% test; others common-law multifactor.
Ask Chalkline about this →A deemed worker in workers compensation law is a contractor or sub-contractor who, despite holding an ABN and operating their own business structure, is classified as a worker for workers compensation purposes. The classification is made by state statute and overrides the contractual label “subcontractor” or “independent contractor”. The practical effect: the builder/PCBU who engaged the contractor must declare the contractor’s wages in their workers compensation premium calculation, and the contractor is entitled to claim against the builder’s policy if injured at work. Each state has its own deemed-worker rules (verified 2026-05-16).
State-by-state deemed-worker tests:
| State | Statute | Test |
|---|---|---|
| NSW | Workers Compensation Act 1987 Schedule 1 | List of categories deemed workers (e.g. salesperson on commission, share farmer, ride-share driver, certain owner-drivers); plus contractors providing substantially personal labour rather than supplying goods/equipment |
| VIC | WIRCA 2013 s.7 | 80% test: if ≥80% of the contractor’s gross income in the financial year comes from one principal, they are deemed a worker of that principal |
| QLD | Workers’ Compensation and Rehabilitation Act 2003 s.11 | Substantially personal labour, no employees, no business risk; multifactor test |
| WA | Workers’ Compensation and Injury Management Act 1981 Sched 1 | Various categories including outworkers, certain contractors |
| SA | Return to Work Act 2014 s.4 | Contract substantially for personal services, single principal |
| TAS | Workers Rehabilitation and Compensation Act 1988 | Similar to common-law multifactor |
| NT | Return to Work Act 1986 s.5 | Personal service contracts; specific categories |
| ACT | Workers Compensation Act 1951 | Common-law multifactor test |
The Vic 80% test (worked example):
A flooring subbie earns $200,000 in the FY 2025-26:
- $180,000 (90%) from Builder A.
- $20,000 (10%) from various other builders and a private client.
Under Vic’s WIRCA s.7, the subbie is a deemed worker of Builder A because the 80% threshold is exceeded. Builder A must:
- Declare $180,000 as deemed-worker wages on the WorkSafe Vic remuneration return.
- Pay workers comp premium on that $180k (typically 0.7-3% rate depending on industry classification → ~$1,260-$5,400 in premium).
- Treat the subbie as a worker for any injury claim on a Builder A job site.
The NSW Schedule 1 categories (high-relevance for builders):
| Category | Application |
|---|---|
| Contractor providing labour primarily (less than $5,000 of materials, equipment, etc.) | Carpenters, painters, labourers without their own significant tools/materials investment |
| Bricklayers, plasterers, tilers on small contracts | Schedule-1 trades providing personal labour |
| Owner-drivers with one principal | Transport contractors |
| Outworkers in clothing/textile | Not relevant to construction |
A subbie who buys all materials and supplies, owns their own van, employs apprentices, etc., is typically NOT a deemed worker under NSW Schedule 1. A subbie who turns up with hand tools and provides labour only is.
Why this matters for builders:
| Risk | Consequence |
|---|---|
| Failing to declare deemed-worker wages | Premium understated; underpayment of premium triggers regulator audit + fines |
| Believing “ABN = no workers comp” | Common misconception; ABN doesn’t override deemed-worker tests |
| Subbie injured on site | If deemed worker, they claim against builder’s policy; builder’s premium goes up |
| State Revenue Office and ATO cross-checks | A subbie classified differently for payroll tax and PAYG may also be deemed worker |
Distinguishing deemed worker from genuine contractor:
| Indicator | Genuine contractor | Deemed worker likely |
|---|---|---|
| Number of principals | Multiple, none dominant | One principal, 80%+ income |
| Equipment | Own significant equipment | Tools supplied by principal |
| Risk | Carries financial risk, profit and loss | Paid for hours worked |
| Insurance | Own PI, public liability, workers comp for own employees | None of the above |
| Hire of others | Employs own staff/subbies | Personal labour only |
| Business structure | Trading entity, accounts, BAS | Sole trader, often just ABN |
| Mode of work | Sets own hours, methods | Directed when, where, how |
Builder’s actions:
- Document the contracting arrangement: written subbie agreement specifying scope, payment basis, materials supply, equipment, schedule.
- Confirm subbie’s own workers comp if they employ anyone (request COI annually).
- Track payments per subbie for the FY to test the 80% threshold (Vic) or proportion-of-income (other states).
- Annual remuneration return to insurer: include deemed-worker wages where applicable.
- Audit-ready records: be ready to demonstrate the multifactor test position if challenged.
Common defects:
- “They have ABN, no problem”: ABN doesn’t avoid deemed-worker status.
- No tracking of subbie income concentration: Vic 80% test slips up annually.
- Subbie paid as employee (PAYG) but called “contractor”: regulator deems employee outright; not a deemed worker, an actual worker.
- Verbal contracts: regulator and courts typically look at substance over labels; a verbal arrangement with weekly hours, daily direction, supplied tools → employee or deemed worker regardless of what was said.
- Failure to renew workers comp annually: penalty exposure if subbie injured.
Also known as: statutory worker; deemed employee; non-employee worker; legislative worker; quasi-employee.
Category: Insurance.
Related
See also
Last updated: 2026-05-16. Verified: 2026-05-16. Quarterly review for currency.