Would your business be covered for injury to a JobMaker?
This month the federal government announced its JobMaker Plan, to encourage businesses to hire workers in the 16 to 35 age bracket, through hiring credits of $100 or $200 per week, for 12 months. However, the way in which prospective workers are identified and engaged, may lead to a rise in liabilities for which many businesses may be uninsured.
The JobMaker Program
The government predicts that the JobMaker Hiring Credit program will create around 450,000 positions nationwide. The new recruits must be “eligible employees”. To be an eligible employee an employee must:
- “be aged either:
- 16 to 29 years old, to attract the payment of $200 per week; or
- 30 to 35 years old to attract the payment of $100 per week at the time their employment started;
- have worked at least 20 paid hours per week on average for the full weeks they were employed over the reporting period;
- commenced their employment between 7 October 2020 and 6 October 2021;
- have received the JobSeeker Payment, Youth Allowance (Other), or Parenting Payment for at least one month within the past three months before they were hired;
- be in their first year of employment with the employer, reflecting the hiring credit is only available for each additional job; and
- must be employed for the period that the employer is claiming for them.”
Using agencies to find eligible employees
But how will an eligible business know whether a job applicant has received one of the qualifying government benefits within the 3 months prior to hire?
Queue the training and apprenticeship agencies. With individuals pre-vetted for eligibility, agencies are already offering to pass on the JobMaker payments to businesses that engage workers through them.
So what’s the catch?
Workers’ compensation insurance
If a business hires a worker directly and that worker is injured, the business will be covered by the policy of workers’ compensation that it has in place for amounts payable to the worker (subject to the limits of the policy).
However, if a business engages a trainee or apprentice through an agency, the business probably won’t be the “employer” for the purposes of workers’ compensation. The agency will be.
Where a worker is an employee of a training and apprenticeship agency, the business will be the “host employer”. The business may hold both a policy of workers’ compensation insurance and a public liability policy. However, as the new hire would not be a “worker”, any injury they suffer in the course of their duties would not be covered by the host employer’s workers’ compensation policy.
Public liability insurance
So what about the host employer’s public liability insurance of the business? It is standard for public liability policies to contain an employers liability exclusion. The wording of such clauses varies from insurer to insurer but they generally exclude cover for injuries suffered by individuals to whom benefits are payable under workers’ compensation or, who are engaged under a contract of service. This means that (subject to the insurer’s policy wording) if a JobMaker is injured in the workplace of their host employer, the business may face an uninsured claim.
Liabilities in contract
There is also the problem of any liability in contract that a host employer may assume in an agreement with an agency. If, for example, the agency has a contractual indemnity in its favour and a workers’ compensation claim is made by the worker, the agency’s workers’ compensation insurer may call on that indemnity. Insurance policies do not generally respond to liabilities assumed in contract and so, the host employer may again, face an uninsured loss.
What should you do?
Businesses retaining individuals through the JobMaker Program, should review their workers’ compensation and public liability policies in consultation with an insurance broker to understand whether they have adequate cover. Additional cover may be available in the market that will address (at least in part) the risk of an injury to a JobMaker in the workplace – at a price. The terms of the agreement with any relevant agency should also be carefully considered, to understand whether the business is assuming liabilities in contract for which it holds no insurance. After taking into account training costs, increased insurance premiums and the potential for uninsured liabilities, it may be that the JobMaker juice is not, in fact, worth the squeeze for a post covid business, when individuals are retained through agencies.
For a consultation to discuss a legal interpretation of your policy wording or a claim, contact (07) 3067 3025 or book an appointment online. If you know a business operator who may find this information useful, please share.