Where a strata manager or strata company has employees such as gardeners, cleaners and concierges, to do work on common property, it is relatively clear that they are obliged to act as responsible employer. This means ensuring that the workplace is safe and that the employees are adequately trained to do their jobs in a safe and competent manner.
But the majority of strata schemes do not have the luxury of employees doing such jobs. Instead, various suppliers are engaged to help maintain common property. These gardeners, swimming pool maintenance contractors and cleaners might be self-employed, or part of a company providing services to the strata company via the strata manager.
It is therefore important to know whether the strata manager (and by extension the strata company) is responsible for the health and safety of such workers. And if they are injured, is the strata manager (or strata company) who engaged them liable under the Workers’ Compensation and Injury Management Act 1981 (WA) (the Act)?
There are a couple of strategies for managing the risk associated with engaging people to do work on common property. One is around insurance and the other is around scope of work.
These things turn on legal questions such as whether the person doing the work is considered to be a ‘worker’ under the Act. They also turn on whether the person who engaged them is considered to be an ‘employer’ under the Act.
So a strata manager or strata company might become liable to pay workers’ compensation to someone held to be their worker under the Act – even though there is no contract of employment between the two.
Who is considered to be a ‘worker’?
The Act primarily defines a ‘worker’ as someone who works under a contract of service (i.e. a contract of employment) with an employer. [1] In other words, an employee is a ‘worker’ for these purposes.
The Act goes on to include an extended definition of ‘worker’. As a result, the term extends to individuals who work under a contract for service. [2] This would include people who provide personal manual labour or services under a contract, sub-contract or casual basis. Such people might therefore be considered ‘workers’ under the Act even though they are not employees of the strata manager or strata company.
Who is not considered to be a ‘worker’ under the Act?
One indicator that a person might not be considered a ‘worker’ under the Act, is if he or she has their own workers’ compensation insurance. Another indicator might be where the ‘worker’ is a director of a company which has a number of employees. Yet another might be if the strata manager does not supply the tools. If a dispute arises, then each case would need to be considered on its own facts.
Note that the Act will not recognise any written agreement that seeks to describe someone as not being a ‘worker’ if they actually fall within the definition under the Act. The Act is therefore designed to weed out sham agreements.
Mitigating the risk
Strata managers and strata companies can mitigate their risk of exposure to workers’ compensation claims by only hiring contractors who are not considered to be a ‘worker’ under the Act.
In general, when a principal engages another party to do work, both will be liable under the Act to cover their employees and sub-contractors and must each have a workers’ compensation policy. [3] Therefore, it is in the best interests of the principal (in these cases, the strata manager or strata company) to ensure that whoever they engage has valid and appropriate insurance cover.
Strata managers (or strata companies) should also take out an appropriate workers’ compensation policy to cover everybody who does work on common property. The relatively small cost of paying a higher premium will give peace of mind and should be weighed against the financial exposure of possible workers’ compensation claims.
In this context, note that strata managers cannot authorise individuals to perform any function other than repair or maintenance work as an agent, employee or contractor of the strata manager or company. [4] For example, a strata manager cannot engage a person to control and manage the common property, as this is a function that the strata company can authorise only the strata manager to perform.
This raises other legal problems, such as whether the worker legally engaged to do work in an unauthorised role would be covered by the workers’ compensation of either the strata manager or the strata company. Another legal problem would revolve around whether the strata company would escape responsibility because the strata manager had no power to engage the worker to do unauthorised functions.
Being appropriately insured and being clear about the role of the person engaged to do work on common property is an exercise in prudent management. And prudent management strategies such as these will go a long way to protecting the strata manager, the strata company, and ultimately the lot owners from unnecessary risk.
For assistance with strata issues contact:
Managing Principal
Tel: 9200 4900
Article first published in The WA Strata Magazine April 2022
