If a Subcontractor Is Hurt on Your Job, Can You Be Held Liable?
"They're self-employed, so their safety is their problem" is one of the most common beliefs in Australian small business. It is also wrong, and the way it is wrong is expensive.
The belief, in your own words
You have probably said or thought some version of this: "My subbie runs his own business. He invoices me, he carries his own insurance, he does his own thing. If he gets hurt, that's between him and his insurer."
Here is the correction, as plainly as we can put it. Engaging someone as an independent contractor changes who employs them. It does not, on its own, end the responsibility you carry for how you run your own site and direct your own job. If a person is hurt doing work you directed, on a site you controlled, or walking into an unsafe situation you created or left there, the law can hold you responsible for that injury, at least in part, no matter whose ABN was on the invoice. And the lawyer acting for an injured contractor does not stop at the contractor's own company. They look at who controlled the job, and they serve them too.
Two different mechanisms, never to be blurred
Quick answerAn injured worker's claim can reach you through two completely separate doors. Workers compensation rules can treat a subcontractor as your worker even though you both call them a subbie, depending on whether the work is part of a trade or business they regularly carry on. And a genuine independent contractor, who was never your worker at all, can sue you in negligence, which is a public liability claim. Different laws, different policies, both capable of landing on you.
Door one: the "deemed worker". In Queensland, a subcontractor can count as your worker for workers compensation if the work you engaged them for is not part of a trade or business they regularly carry on, and any one of these is true: they do not sublet the job, they do not employ anyone, or they employ someone but still do part of the work themselves. The label on the invoice does not decide it. If that is your situation, the conversation is about your WorkCover position, and it is covered on our Trades Insurance page rather than re-explained here.
Door two: negligence, and this article's centre of gravity. Where the injured person is a genuine independent contractor, your workers compensation does not respond to them from your side. What they can do instead is sue you for negligence, alleging you owed them a duty of care and breached it. That is a personal injury claim against your business, and it is exactly the species of claim a public liability policy exists to answer, provided the policy was set up knowing this exposure existed. That proviso is the part almost everyone misses, and it is where this article is heading.
When are you actually exposed? The direction and control spectrum
Quick answerThe more you direct how, where and when the work is done, the more you control the site, and the more the danger was something you created or left in place, the stronger the case that you owed and breached a duty of care. A genuinely arm's-length contractor, doing their own work their own way on their own system, is a much weaker case against you. It is a spectrum, not a switch.
Think about the difference between these two ends of the spectrum.
At one end: a specialist contractor arrives with their own crew, their own equipment and their own method, does a defined job you do not supervise, and leaves. If they are injured through their own system of work, the case against you is weak.
At the other end: you told a subbie which day to come, what to do, in what order, using your scaffold, on a site you run, and the thing that hurt them was a hazard your job created or your site left unaddressed. Now the case against you is strong, because in every way that matters you were directing the work and controlling the environment, and the duty that follows direction and control was yours.
Most real jobs sit somewhere in the middle, which is exactly why "he's self-employed" settles nothing. The questions that decide these claims are: who directed the work, who controlled the site, and who created or should have fixed the hazard.
What this looks like on a real claim
On a house one of our building clients was constructing, a delivery driver engaged by another business was seriously hurt in a fall. He was not our client's employee, so this was never a workers compensation claim from our client's side. It arrived as a personal injury claim against the builder, through lawyers, exactly as the law above predicts.
Two things mattered in the first week. First, the builder's public liability policy carried two excesses: a standard one of $2,500, and a higher one of $10,000 for injury to any person engaged to work in any capacity. Because the injured man was claiming as someone working on the site, we told our client from day one to budget for the higher figure, and that is the one the insurer applied. Second, lodging properly and early meant the insurer's lawyers took over the defence, including pursuing the driver's own employer for a contribution.
The claim is still being defended, so there is no ending to report, and that is not the point. The point is that the builder faced it with no surprises, because the exposure and the real excess had been read before anyone needed them.
The policy trap nobody explains: the subcontractor question on your application
Quick answerWhen an insurer asks about your subcontractor payments, it is not just pricing your public liability. On many wordings, declaring subcontractor payments is what switches on your cover for injury to the subcontractors themselves. Owners who declare nil, then engage a subbie mid-year, can be carrying no cover for the exact exposure this article describes, and a direct insurer selling on general advice will never ring to tell them.
Here is the misread we see again and again. When asked about subcontractor payments, business owners assume the question is about extending their public liability to cover the subbie's work, damage the subbie might do to other people or property. What the declaration commonly governs is something closer to home: cover for your own liability when a person engaged to work for you is injured, the very claim in the story above. We regularly see direct-insurer wordings that exclude personal injury to subcontractors unless subcontractor payments were specifically declared. So the owner who declared nil at inception, took on a subbie in month four, and forgot, has created precisely the exposure their policy excludes, and nobody at the direct insurer's end is paid to notice.
There is a second half to that answer, and it explains why the question is on the form at all. The declaration does not only switch cover on, it is how the insurer prices the exposure. Follow the money and it makes sense. A business that engages contractors rather than employing people pays no workers compensation premium for them, so the cost of one of those people being hurt does not leave the system, it transfers to the public liability insurer, where it arrives as exactly the personal injury claim described above. Those claims are expensive to defend and expensive to settle, so insurers now charge for the exposure rather than absorbing it quietly, and the annual figure you pay subcontractors is the number they use to size it. The trade calls this worker to worker, and it is worth knowing the phrase, because it is often the wording sitting next to the larger excess on your own schedule.
On the business pack wording we usually place, personal injury to subcontractors is generally covered automatically, and we confirm it as best practice. Where a client's risk has to go to an insurer whose wording does not include it automatically, we either have it noted on the documents or include a nominal subcontractor payment on the application so the cover is switched on. Not all brokers do this. It is a two-minute piece of broking that decides whose problem the story above becomes.
Work health and safety duties sit alongside all of this
Quick answerSeparately from any injury claim, work health and safety law makes a business responsible for the health and safety of the workers it engages or directs, and "workers" includes contractors and subcontractors. A WHS prosecution is its own risk: since 2024 a Queensland WHS monetary penalty cannot be insured or indemnified, and what the right cover pays is the cost of defending you, which is substantial on its own.
The negligence claim and the WHS prosecution are different animals from the same incident. The first is the injured person seeking compensation, answered by public liability cover. The second is the regulator, and while no policy can pay the fine itself in Queensland, statutory liability cover inside a management liability policy pays the defence costs, which on a serious incident can rival the fine. The full picture lives on Management Liability Insurance.
What to actually do about it
Quick answerThree layers. Run and document a safe system of work, because direction and control is where the duty comes from. Sight every subcontractor's certificate of currency, and where possible have your business noted as a principal on their policy. And make sure your own public liability is sized, worded and declared for the reality that people who are not your employees work on your jobs.
- Control the site like the duty is yours, because it may be. A documented safe system of work, real inductions, and hazards fixed rather than tolerated do double duty: they prevent the injury, and they are the evidence if a claim comes anyway.
- Paper the subcontractor relationship. Sight certificates of currency before the subbie starts, every time, and where you can, have your business noted as a principal on their policy. If their insurance is real and responding, the pressure on yours drops.
- Get your own policy read by someone who knows what to look for. The subcontractor declaration handled properly. The worker-to-worker or engaged-persons excess found and told to you before a claim, not after. A limit that reflects a personal injury claim, not a fender bender. This is the check most online forms never make and most owners never know to ask for, and it is the exact reason to have a broker on jobs where subbies set foot. Start at Public Liability Insurance, or, if you run a trade business, For Business Owner Tenants and Trades Insurance.
FAQ
Am I liable if my subcontractor gets injured on my site?
You can be. Their self-employment means they are not your employee, but if you directed the work, controlled the site, or created or left the hazard that hurt them, the law can find you owed them a duty of care and breached it. That claim arrives as a personal injury lawsuit against your business, which is a public liability matter.
Doesn't their own insurance cover them?
Their income protection or personal accident cover, if they hold any, responds for their loss of income. It does not stop them suing you for negligence, and plenty of contractors carry no injury cover at all, which makes a claim against the business that engaged them more likely, not less. That is exactly what happened in a live claim we describe above.
Is a subcontractor covered by my workers compensation?
Sometimes, whether you meant it or not. In Queensland, a subcontractor can count as your worker for workers compensation if the work you engaged them for is not part of a trade or business they regularly carry on, and any one of these is true: they do not sublet the job, they do not employ anyone, or they employ someone but still do part of the work themselves. The label on the invoice does not decide it. A genuine arm's-length contractor doing the work of their own trade generally sits outside that, which is why their path to you is a negligence claim instead. If you are unsure which side of the line your subbies sit on, that is a conversation worth having before an incident, and we have that conversation with trade clients.
What excess applies if a worker is injured on my site?
Often a much higher one than you expect. Many liability policies carry a standard excess for most claims and a separate, larger excess for injury to anyone engaged to work, sometimes called a worker-to-worker excess. On a real claim we handled, that difference was $2,500 against $10,000. Check your own schedule for it, or ask us to.
Why does my insurer ask about subcontractor payments, and what happens if I say nil?
Two reasons, and the second is the one nobody explains. On many wordings that declaration switches on your cover for injury to subcontractors. It is also how the insurer rates that exposure: a business that engages contractors instead of employing people pays no workers compensation for them, so the cost of one of them being hurt transfers across to the public liability insurer, and those claims are costly, which is why the annual figure you pay subcontractors is the number used to price the risk. Declare nil, engage a subbie mid-term, and you can be uninsured for the exact exposure this article describes. If your circumstances change mid-year, tell your broker; switching the cover on is straightforward when someone knows to do it.
Can I insure against a work health and safety fine?
In Queensland, no; since 2024 a WHS monetary penalty cannot be insured or indemnified. What you can and should insure is the defence: statutory liability cover within a management liability policy pays the substantial legal costs of responding to a WHS investigation or prosecution. See Management Liability Insurance.
Related reading
Public Liability Insurance, the cover that answers a contractor's negligence claim, and the page carrying our real claim capsules. Trades Insurance, where the deemed-worker and turnover-declaration traps live. Management Liability Insurance, for the WHS defence-cost thread. Why Use an Insurance Broker, for the wider case that someone should be reading these wordings before you need them.