Please note that certain key terms are defined at the end of these guidelines.

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1 WorkSafe Contractor Guidelines Owner Drivers These guidelines apply from 1 July 2013 Preamble These guidelines are made under section 7A (4) of the Act and explain when an owner driver is considered to be carrying on an independent trade or business and what percentage deductions apply for the purposes of determining deemed remuneration. For WorkSafe insurance purposes, an unincorporated owner driver is a deemed worker of their hirer unless WorkSafe determines that the owner driver is carrying on an independent trade or business in accordance with these guidelines. The amount paid or payable to a deemed worker for the performance of transport services less the applicable percentage deduction under these guidelines is deemed remuneration. A hirer must declare the applicable deemed remuneration amounts under its WorkSafe Insurance policy. In addition, under section 5A(6) of the Act, an owner driver s pre-injury average weekly earnings for compensation purposes must be calculated by WorkSafe with reference to the amounts payable to the owner driver and deemed to be remuneration. Please note that certain key terms are defined at the end of these guidelines. Guidelines Will an incorporated owner driver be deemed to be a worker of a hirer for WorkSafe insurance purposes? Where an incorporated owner driver enters into a contractual arrangement with a hirer: the individual or individuals that perform, or can be expected to perform, the transport services under that arrangement will not be deemed to be a worker of the hirer; and the amounts paid or payable to the owner driver s company under that arrangement are not required to be declared as remuneration under the hirer s WorkSafe Insurance policy. The incorporated owner driver will need to obtain and keep in force a WorkSafe Insurance policy if it pays, or expects to pay more than $7,500 per financial year in remuneration, or if it hires apprentices or trainees. Will an unincorporated owner driver be deemed to be a worker of a hirer for WorkSafe insurance purposes? For a test period under a contractual arrangement between an unincorporated owner driver and a hirer, the unincorporated owner driver will be deemed to be a worker of the hirer unless WorkSafe considers that the arrangement is part of the owner driver s independent trade or business during that period. 1

2 When will WorkSafe consider that an unincorporated owner driver is carrying on an independent trade or business? WorkSafe considers that an unincorporated owner driver is carrying on an independent trade or business for a test period where the unincorporated owner driver enters into a contractual arrangement with a hirer (the relevant hirer) and any of the following conditions apply for a test period relief drivers perform or are to perform at least 20% of the goods transport services: under the contractual arrangement, the unincorporated owner driver engages, or is to engage, under that arrangement, relief drivers or sub contracted drivers (other than a member of a family) who perform at least 20% (by gross contractual income) of the goods transport services; or less than 80% of overall services income is or is to be earned from the relevant hirer: the unincorporated owner driver has performed, or is to perform, under contractual arrangements, goods transport services for the relevant hirer and at least two other hirers and does or will not earn more than 80% of their overall goods transport services income from any one hirer; or goods transport services are or are to be performed on less than 180 days for the relevant hirer: under contractual arrangements, the unincorporated owner driver provides, or is to provide, goods transport services to the relevant hirer and at least one other hirer during the test period; and to the relevant hirer on less than 180 days in that test period and has also provided those services to that hirer on less than 180 days in the previous test period; or services are performed on less than 3 days a week for the relevant hirer: under contractual arrangements, the unincorporated owner driver provides, or is to provide, goods transport services to the relevant hirer and at least one other hirer during the test period; and the unincorporated owner driver performs or is to perform goods transport services for the relevant hirer on less than 3 days a week for at least 26 weeks during that test period. What is the deemed remuneration amount for a deemed worker? If an owner driver is a deemed worker, then the deemed remuneration amount must be calculated in accordance with the following formula: Deemed remuneration for a deemed worker = (1 (D 100)) x P P means the amounts paid or payable to the deemed worker for the period under the contractual arrangement. D means either the applicable standard percentage deduction or the applicable non-standard percentage deduction for the period. What is the applicable standard percentage deduction for a deemed worker? The applicable standard deduction for a deemed worker for a period depends on the type of vehicle provided by the deemed worker during that period. The applicable standard deductions are: 2

3 Vehicle Supplied Prime Movers Motor vehicles at least 10 tonnes GVM (excluding Prime Movers) Motor vehicles from 3 tonnes GVM to less than 10 tonnes GVM Couriers motor vehicles less than 3 tonnes GVM Couriers motor cycles Standard Deduction (D) 60 per cent 50 per cent 40 per cent 30 per cent 10 per cent Example Standard percentage deduction: For a period, a deemed worker who provides a 3 tonne GVM vehicle is paid $60,000 by their hirer. In this example, the deemed remuneration amount for the deemed worker for the period = (1 - (40 100)) x $60,000 = $36,000. What is the applicable non-standard percentage deduction for a deemed worker? The applicable non-standard deduction for a deemed worker for a period is calculated according to the following formula: D = (C P) x 100 P means the amounts paid or payable to the deemed worker for the period under the contractual arrangement. C means the costs for the period that are necessarily incurred by the deemed worker in the performance of the transport services under the contractual arrangement (excluding any expenses that are reimbursed by the hirer) in relation to: vehicle lease costs or vehicle depreciation costs vehicle registration, permits and TAC fees comprehensive vehicle insurance Insurance goods in transit Insurance public liability Fuel Tyres Vehicle servicing, repairs and maintenance There must be appropriate written evidence for these costs. Written evidence can be: A document from the supplier of the goods or services, showing: o the name of the supplier o the amount of the expense o the nature of the goods or services o the date the expense was incurred o the date of the document Copies of the owner driver s tax return. Example Non-Standard percentage deduction: For a period, a deemed worker who provides a 3 tonne GVM vehicle is paid $60,000 by their hirer. During that period, the costs that were necessarily incurred by the deemed worker in the performance of the transport services (C) were $25,200. These costs are supported by appropriate evidence. In this example, the non-standard deduction (D) for the deemed worker for the period = ($25,200 $60,000) x 100 = 42%. Accordingly, the deemed remuneration amount for the deemed worker for the period = (1 - (42 100)) x $60,000 = $34,800. 3

4 Definitions Contractual arrangement Contractual arrangement means a contract for the performance of goods transport services (other than an employment contract) or a series of such contracts ( whether the contract is express or implied, is oral or is in writing) between an owner driver and a hirer during a test period. Deemed Worker Deemed Worker means an unincorporated owner driver who is deemed to be the worker of a hirer under section 7A of the Act. Goods transport services Goods transport services means the transport and delivery of goods and any other services must be ancillary or secondary to this purpose. Gross contractual income Gross contractual income means the amounts paid or payable to an unincorporated owner driver under a contractual arrangement before that owner driver s expenses, deductions or taxes are accounted for. GVM GVM (gross vehicle mass) of a vehicle means the maximum loaded mass of the vehicle. Hirer Hirer means any business structure (e.g. an individual, company, partnership, sole trader, trustee) that operates a business and enters into a contractual arrangement with an owner driver for the purposes of that business. A hirer does not include a non-commercial party such as private householder. This includes any person who is a member of the same group as the hirer within the meaning of section 66 of the Accident Compensation (Workcover Insurance) Act Accordingly, the guidelines are to be applied as if the group is the hirer. Incorporated owner driver Incorporated owner driver means an owner driver that operates under any incorporated business structure (e.g. a company registered under the Corporations Act 2001 or a trust with a company as the trustee). Overall goods transport services income Overall goods transport services income means the overall gross contractual income earned by the unincorporated owner driver from all hirers during a test period for the performance of goods transport services. Owner Owner includes a part owner and also includes a person who has the possession and use of the vehicle under or subject to a hire-purchase agreement or a bill of sale or like instrument or under or subject to a written hiring agreement (not being a hire-purchase agreement) which requires that person to register the motor vehicle or trailer in that person's name, in accordance with the Road Safety Act For the purposes of these guidelines, the hirer must make no contribution, whether directly or indirectly, to the capital or running expenses of the vehicle. 4

5 Owner driver Owner driver means a contractor who drives a motorcycle, car or truck ( the vehicle ), of which he or she is the owner, for the purposes of providing goods transport services. Member of a family Member of a family means the partner, father, mother, grandfather, grandmother, step-father, stepmother, son, daughter, grandson, grand-daughter, step-son, step-daughter, brother, sister, half-brother, half-sister, uncle, aunt, nephew, niece, cousin and any person who stands in the place of a parent in relation to another person or that other person in accordance with the Act. Pre-Injury average weekly earnings Pre-Injury average weekly earnings has the same meaning that it has under the Act. Remuneration Remuneration has the same meaning that it has under section 5 of the Act. Test period Test period in relation to goods transport services provided under a contractual arrangement means the financial year in which those services are or are to be provided; or if those services are, or are to be, provided in two or more consecutive financial years a. the twelve month period beginning on the date on which those services are first provided under the contractual arrangement ; or b. the twelve month period ending on the date on which those services cease to be provided. The Act The Act means the Accident Compensation Act Unincorporated owner driver Unincorporated owner driver means an owner driver that is not an incorporated owner driver. WorkSafe WorkSafe means either the Victorian WorkCover Authority or its authorised agent. Disclaimer Unless otherwise specified within these guidelines, this guideline is WorkSafe s interpretation of the law as it has operated to date and continues to operate. Guidelines do not have the force of law. Each decision is made on the merits of each individual case having regard to any relevant guidelines. It is an employer s responsibility to ensure that they are using the current version of a guideline. 5