When WorkSafe Looks Beyond Workers’ Compensation
Our analysis of WorkSafe investigations across states shows a clear pattern: outcomes vary significantly by where an incident occurs.
Where multiple parties share responsibility, WorkSafe assesses each party individually based on the evidence and their legal obligations. As a result, a single incident can lead to very different liability outcomes for those involved.
In practice, this means identical workplace injuries can produce entirely different liability determinations depending on the state.
And more often than not, the principal contractor ends up in the spotlight.
The Joint Liability Trap
In Western Australia, the law takes a broad view. Both the principal and the contractor can be held jointly and severally liable for compensation—as if each were the sole employer.
Consider a typical construction scenario: a principal contractor engages contractors, who in turn engage sub-contractors. Under this framework, every party in that chain may be liable for the workers employed by the subcontractor.
Liability doesn’t simply flow downstream. It sits across the entire structure.
The 986,000-Person Gray Area
There are roughly 986,000 independent contractors in Australia. That’s nearly a million working arrangements where liability isn’t always clear-cut.
Legally, the duty of care a principal owes to contractors can mirror the duty owed to employees. In other words, classifying someone as an independent contractor doesn’t remove responsibility.
A hands-off approach isn’t an option—the duty of care remains.
We see this particularly in construction. Projects valued over $250,000 automatically trigger principal contractor obligations under WHS regulations. This threshold brings stricter safety requirements and increased exposure, which directly affects insurance considerations.
Why Claims Shift to General Liability
There are three main drivers behind claims moving from workers’ compensation into General Liability:
- The deemed worker test
In Victoria, a contractor may be classified as a deemed worker if 80% of their work and income comes from a single principal. This shifts the obligation into workers’ compensation rather than General Liability.
- WorkSafe discretion
Each state applies its own standards when determining liability. The same incident could lead to different outcomes in Queensland versus Western Australia.
- The nature of the relationship
Courts look beyond labels and assess the full working relationship. In Queensland, principals may avoid liability if they engage competent independent contractors who control their own systems of work—but this defence relies heavily on strong documentation and clearly defined contractual arrangements.
What This Means for Your Clients
Many brokers are finding it difficult to clearly explain these exposures to principal contractor clients—and it’s easy to see why. The regulatory landscape is inconsistent and often unpredictable.
There are three key takeaways:
Workers’ compensation alone isn’t enough. General Liability exposure exists regardless of how workers are classified.
Jurisdiction matters. The same business model can carry very different risks depending on the state.
Documentation is critical. Contracts, safety systems, and evidence of contractor competency form the backbone of any defensible position.
How We’re Responding
At Australasia Underwriting (AUPL), our General Liability solutions are designed with these complexities in mind.
Our approach is grounded in understanding risk at a granular level—because that’s what this environment demands. We’re comfortable operating in complex spaces because we invest the time to understand the specific risks your clients face.
If you’re working with principal contractors who need clarity around bodily injury exposure, we encourage you to get in touch. Clear, transparent underwriting—explaining both decisions and their impact on coverage and cost—is central to how we operate.
We’re here to help you navigate that reality.
