What penalties for an employer with no insurance?
In NSW an employer must have a workers compensation insurance policy or face a fine of 500 penalty units (currently $55,000), or imprisonment for up to six months, or both.
In addition to these penalties, an uninsured employer whose worker suffers compensable injuries may need to reimburse the WorkCover Authority of NSW for compensation it pays to, or on behalf of, the worker. In some instances this can exceed $100,000.
The WorkCover Authority can issue a notice to an uninsured employer to reimburse compensation it pays out. The notice will specify a time period for any response. Currently, the relevant time period is 28 days from the serving of a notice.
However, the Commission has a broad discretion to adjust the rights of the employer and the WorkCover Authority as it thinks fit. In a recent case a carpenter who carried on a one-man operation was assisted by a neighbour on a job. The neighbour fell from a ladder and suffered significant injuries. He claimed compensation from the carpenter who denied an employment relationship.
The court found that the neighbour was a worker and awarded compensation, but declined to make an order for the carpenter to reimburse WorkCover.
It was important to the court that the working arrangement between the two was “very casual” and lasted only for a few hours on the date of the injury. As such, the carpenter was not seen as reasonably expecting to be the employer of the neighbour.
The court pointed out that the Industrial Commission has discretion to waive the liability of an uninsured employer to reimburse WorkCover for compensation paid to an employee, because of the “personal position” of the employer, but it needs to be done within the time period specified in the notice. Contact us if you need further information.