Cross-border workers

Where a worker undertakes work across more than one State or Territory (i.e. where they are a cross-border worker) the 'State of Connection' provisions determine the jurisdiction in which an employer is required to obtain (and maintain) workers' compensation insurance for that worker.

In the ACT, the test for determining workers' compensation coverage for cross-border workers is set out in Part 4.2A of the  Workers Compensation Act 1951 (the Act). Under section 36B(1) of the Act compensation is only payable where a worker's employment is connected with the ACT. This is referred to as the 'State of Connection'.

Section 147 of the Act sets out the circumstances in which an employer may be found to have committed an offence if they do not hold a compulsory insurance policy issued by an approved insurer for their workers, including any cross-border workers that they engage. There are tests that apply to determine whether, for workers' compensation purposes, an individual's employment is connected with the ACT.

The State of Connection test is made up of five steps which need to be considered in order. It is important that you always start with step 1. After that, it is only necessary to consider the next step if the previous step does not decide a worker's State of Connection.

It is important to note that these steps apply to a particular contract or term of employment for a worker. If employment circumstances change, the test should be revisited.

Step 1 - Where does the worker usually work?

This step focuses on the State or Territory in which an individual 'usually' works. For these purposes, 'usually' means the State or Territory in which the worker works in their employment with their employer.

If....then...
the worker usually works within a single State or Territory,that State or Territory is the worker's State of Connection because the worker usually works in that State or Territory.
step 1 does not decide the State of Connection,you need to consider step 2.

Consider the following factors and examples in deciding where a worker usually works:

  • the worker's work history with the employer over the previous 12 months;
  • the worker's proposed future working arrangements;
  • the intentions of the worker and employer;
  • the terms of any contract of employment between the employer and the worker;
  • any period during which the worker in a State or Territory (a relevant place) or was in a relevant place for the purposes of employment, whether or not the worker is regarded as working or employed in the relevant place under the workers compensation law of the relevant place; and,
  • where the worker actually performs the work rather than where the work is required to be performed.

In determining where a worker usually works, section 36B(6)(b) of the Act provides that consideration should not given to any temporary working arrangement of six months or less that may arise under the contract between the employer and the worker.

Step 2 - Where is the worker usually based?

This should only be considered if step 1 does not identify a single State or Territory in which the worker usually works.

The focus of step 2 is on the subjective employee circumstances rather that the employer's business activities.

If....then...
the worker usually works for the employer in more than one State or Territory but is provided with a place which they are expected to operate from, the worker is usually based at that place and the State or Territory in which the base is located is the State of Connection.
the above do not decide the State of Connection, but there is a place from which your worker routinely receives day to day work instructions or directions, the worker is usually based at that place and the State or Territory in which the base is located is the State of Connection.
the above do not decide the State of Connection, but there is a place the worker attends to collect materials for the purposes of their employment, the worker is usually based at that place and the State or Territory in which the base is located is the State of Connection.
the above do not decide the State of Connection, but there is a place where the worker reports for administrative, human resources and other non-specific related employment issues, the worker is usually based at that place and the State or Territory in which the base is located is the State of Connection.
the above do not decide the State of Connection, step 3 must be considered.

Step 3 - Is there a State or Territory in which the employer's principal place of business in Australia is located?

You only need to consider step 3 if steps1 and 2 fail to identify a single State or Territory.

If....then...
neither step 1 nor step 2 decides the State of Connection and there is a State or Territory in which the employer's principal place of business in Australia is located, that State or Territory is the worker's State of Connection.
step 3 does not decide the State of Connection, step 4 must be considered if the worker works on a ship or step 5 for all other types of workers.

The location of an employer's principal place of business in Australia is the most important or main place where the employer conducts the main part or majority of its business in Australia.

The following test must be applied when deciding the employer's principal place of business in Australia:

If....then...
the employer's main place of business in Australia cannot be clearly identified, the address registered on the Australian Business Register in connection with the employers ABN is the State of Connection.
the employer is not registered for an ABN, the State or Territory registered by ASIC as the jurisdiction in which the employers business or trade is carried out.
the employer is not registered for an ABN or with ASIC, the employer's business mailing address.

Step 4 - What if steps 1, 2 and 3 do not decide the State of Connection and the worker works on a ship?

Step 4 need only be considered if the worker's State of Connection is not decided by steps 1, 2 or 3 and they work on a ship.

If....then...
the worker's State of Connection is not decided by steps 1, 2 or 3 and the worker works on a ship, the worker's State of Connection, while working on a ship, is the State or Territory in which the ship is, or most recently became registered.
the worker's State of Connection is not decided by steps 1, 2, 3 or 4, step 5 must be considered.

Step 5 - What if steps 1, 2, 3 and 4 do not decide the State of Connection and the worker is injured?

Step 5 applies if a worker's State of Connection is not decided by steps 1, 2, 3 or 4 and the worker is injured in the course of their employment.

If....then...
steps 1 to 4 do not decide the State of Connection and the worker has suffered a workplace injury or illness in a State or Territory, unless the worker is entitled to compensation for the same injury under the laws of a place outside Australia, then the State of Connection is the State or Territory in which the injury or illness was suffered.

However, compensation is not payable under the Act in relation to a worker's injury to the extent that compensation (external compensation) under the workers compensation law of an external Territory or a place outside Australia has been received in relation to the same injury.

If a person receives compensation under the Act from an employer in relation to a worker's injury and later receives external compensation in relation to the same injury, the employer is entitled to recover from the person the 'recoverable amount'.

Under the Act, the lesser of the following amounts is the recoverable amount:

  • the amount of ACT compensation; or,
  • the amount of external compensation.

If an amount of ACT compensation is paid in relation to a lump sum claim, the amount of ACT compensation applies as if the reference to the amount of ACT compensation paid by the employer included a reference to any legal costs as between party and party that the employer is liable to pay in relation to the claim.

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