Ensuring they're Insured - Contractor Insurances and Your
Obligations as a Hotel Owner or Licensee
29th September 2008
Chris Beasley, Smart OHS
Our industry is quite unique in that we, as employers, are
responsible for the health, safety and welfare of many, many people day in
day out. Due to the nature of our business, there are in general more
members of the general public frequently in our place of work than in any
And as our hotels have, for the most part, more pedestrian 'traffic'
running through them than in other workplace, there is generally a lot more
wear and tear on our hotels too, which requires the use of contractors to
assist us with ongoing general upkeep and security services.
This article examines the importance of ensuring that your hotel only uses
contractors who hold the necessary insurances, which will protect you and
your business to some extent in the event of something going wrong.
So, as a hotel owner or licensee, what are your obligations so far as
contractor insurances are concerned?
The NSW OHS Act 2000 highlights the fact that employers are
responsible not only for the health and safety of their employees in the
workplace, but also others, such as contractors, who come into the
Section 8(2) of the OHS Act requires employers to ensure that persons
other than their workers are not exposed to risks while in the employer's
workplace. These persons include contractors, customers
If there are significant risks in the workplace, there may be a need
for site induction training and procedures for managing people while on the
Source: WorkCover NSW
The NSW Workers Compensation Act 1987 highlights the point that
not all contractors will be deemed as 'independent' from the workplace in
the event of an incident (and a potential workers compensation insurance
What the Act points to is that some contractors may be a "deemed worker",
which means that for any claim, the contractor may be seen as an employee
of the "Principal's" (you) company, and therefore that company is liable
for any workers compensation claim that may arise.
This is why it is an excellent idea to firstly establish whether or not the
contractor/s you use in your business would be "deemed workers" under the
act, and secondly, to make sure that you have copies of that each of those
contractors current insurances.
Who may be a "deemed worker"?
A contractor who is a "deemed worker" is usually a sole trader and who does
not employ any staff, work for any other entity and does not subcontract
any part of the work and one who does not operate an independent business.
This is ordinarily a situation where the "Principal" (you) retains control
over all aspects of the work and provides the materials for the work to be
This contractor would normally work defined/regular hours exclusively for
the "Principal" and is paid a fixed/set rate per hour.
A contractor who is not a "deemed worker" is ordinarily an incorporated
company, or partnership or a sole trader who employs themselves and/or
others to undertake the work.
Where the contractor is not a "deemed worker" the "Principal" (you) should
ensure that this contractor has a current workers compensation (and public
liability and professional indemnity where applicable) insurance policy in
place with no overdue fees, premiums or charges owing as the "Principal" in
this case, under the law be held liable for:
· Any injuries to the worker/s (S 20 Workers Compensation Act 1987)
· Any insurance premiums and charges with respect to the work being
undertaken in connection with the contract (S 175B Workers Compensation Act
What do we need to know and (more importantly) what do we need to
do about contractors insurances?
Some Handy Tips on Contractor Insurances:
· As a hotel owner/licensee, you should hold copies of the Certificates of
Currency for (at least the) workers compensation and public liability
insurance policies for each and every contractor you engage for any work on
your premises securely on file.
· Enter into your diary, the dates each of your contractor's insurances
expire and get in contact with them to remind them to renew the policies
ahead of time
· Don't use a contactor for work in your hotel until you have sighted and
taken copies of their certificates of currency
· Don't accept a contractor telling you "…I'll get you the insurances
tomorrow, but I'll just finish the job today." It could be very expensive
to your business, both in terms of time and money spent if something were
to go wrong.
Three key types of insurance and what they cover:
Professional indemnity insurance
Covers against claims for professional advice, design, contract
administration and project management.
Public liability insurance
This covers the contractor if anyone is injured as a result of the work
being undertaken. If the contractor does not have this type of insurance,
you could be liable because you own/control the property.
or WorkCover insurance
Make sure all employees are covered by their employer for workers
compensation. This insurance covers employees who are injured at work.
If employees are not insured, you could be liable to pay the costs of any
claim. In some circumstances, under the Workers Compensation Act 1987,
these people can be regarded as your employees (See above).
Source: NSW Office of Fair Trading
The Smart OHS Safety Smart online system at
www.smartohs.com.au has a
unique Contractor Insurances tool, which allows registered members to enter
the details of all contractor insurances once with the expiry dates. When a
policy becomes due for renewal, the system sends an email to the member
reminding them to request the contractor to provide details of the new