An updated definition of a “worker” will end employers shirking their workers’ compensation responsibilities, according to ACT Industrial Relations Minister Katy Gallagher.

Clarifying what constitutes a worker is one of a number of changes implemented by the ACT Government to provide what it says is a “fair and equal distribution of workers’ compensation expenses”.

Law firm Sparke Helmore says an employee is now defined as a “worker” if they enter a contract of service that is “express or implied, oral or written”.

In addition to tightening loopholes for unscrupulous operators, the ACT Government is implementing a tougher penalty regime.

Employers who fail to obtain compulsory insurance cover face penalties of $137,500 for a corporation and $27,500 for an individual. Non-compliant employers must also pay an additional 30% of the premium payable once a policy is issued.

Fines for providing misleading information may now attract a $55,000 fine and 12 months imprisonment.

Employers who allow their workers’ compensation policy to lapse may also pay double the amount of premium normally payable for an approved policy.

Ms Gallagher says the practice of hiring workers as independent contractors to avoid paying workers’ compensation premiums is placing financial strain on the Default Insurance Fund (DFI), which was introduced in July 2006 to ensure all privately employed workers have access to workers’ compensation insurance.

Ms Gallagher says changes to the ACT Workers’ Compensation Act 1951 take effect from July 1.

“The protection of workers is not optional,” she says.

“However, an increasing number of individual labourers and tradespeople with an Australian Business Number have become a vehicle for contractors further up the chain to avoid paying workers’ compensation premiums and engage in sham contracting.”

From July all insurers are required to disclose the DFI levy on premiums, which the ACT Government believes will show the cost of non-compliance with mandatory workers’ compensation.

The ACT Government is also scrapping a requirement for insurers to appoint an approved rehabilitation provider for a worker suffering an injury. However, insurers are now required to appoint an external rehabilitation provider to assist a claim if an injured worker does not return within four weeks.