Interstate workers: Supreme Court clarifies workers’ compensation state of connection test

Since the early 2000s, there has been consistent workers’ compensation legislation in the states and territories of Australia for determining which state/territory a worker’s employment is most closely connected with. The relevant legislation in Queensland is section 113 of the Workers’ Compensation and Rehabilitation Act 2003.

In Covill v WorkCover Queensland [2022] QSC 171, the Supreme Court of Queensland clarified an important aspect of how the state of connection test operates. Essentially, the Court determined that regard must be had to:

1. The entirety of an employee’s work with an employer, even if they have performed earlier work under separate contracts of employment; and
2. Whether there is an ‘expectation’ of further work in the future.

Before this decision, it was generally thought that only the subject contractual period of employment needed to be considered. Therefore, this case potentially has significant ramifications for employers and insurers where employees are working across multiple states/territories.

Facts in Covill

Ms Covill worked for Atlas People Pty Ltd for two discrete periods of employment, under separate contracts of employment:

• in New South Wales from mid 2019 until August 2019.
• in the Northern Territory from 26 August 2019 to 17 December 2019.

She sustained injury on 17 December 2019 (i.e. while working in the NT).

Ms Covill lodged an application for compensation with WorkCover Queensland which was accepted and ran, without issue, through to completion of the statutory claim.

She subsequently commenced a common law claim in Queensland. WorkCover Queensland defended the claim on the basis that her employment was not most closely connected with Queensland per section 113. Instead, WorkCover Queensland suggested that the claim should be met by the workers’ compensation scheme in the NT.

Arguments in Covill

WorkCover argued that ‘the employment’ for the purposes of section 113(3)(a) was the ‘discrete independent employment’ comprised solely of Ms Covill’s employment in the NT. It highlighted that clause 4 of the ‘Conditions of Assignment’ document stated that Atlas was under ‘no obligation to offer [Ms Covill] further assignments’ (at [38]). On that basis, it said that Ms Covill’s employment was most closely connected with the NT.

Ms Covill argued that section 113 is cast in terms broader than the employment contract and, because there is conceptually a difference between a contract of employment and the employment relationship, the Court needed to consider the entirety of Ms Covill’s employment with Atlas, including those covered by different contracts of employment. Therefore, she argued that, because she usually worked in multiple states/territories and was not usually based anywhere for the purposes of her work, her employment was most closely connected to Queensland because that is where the employer was located.

Decision in Covill

Justice Applegarth of the Supreme Court of Queensland ultimately found for Ms Covill, agreeing with her submission that section 113 allowed a consideration of the broader period of employment, and agreed that her employment was most closely connected to Queensland because that is where the employer was located.

The Court noted (at [17]):

[Ms Covill] was told that Atlas could not guarantee a subsequent assignment after that one ended, but that if she did well then there would likely be another contract […]and this gave her the expectation that so long as she did well, she could continue working for Atlas on different assignments in different locations around Australia on an ongoing basis.

Importantly, the Court also noted (at [34]-[35]):

The [WCRA] does not preclude having regard to other circumstances that are not mentioned in s 113(6) which may be relevant in the particular case. For example, s 113 does not preclude having regard to the probability that the worker will be offered future work by the employer and the probability that the worker will accept such an offer. The expected duration of a contract that applies at the time of injury may be relevant to ascertaining the worker’s employment. So too may be the availability of future work there or in other places. Expectations based on representations made by one party to the other may be relevant even if they do not constitute a contractual term or a binding legal promise. Any pattern that emerges from the worker’s work history with the employer is relevant. The likelihood or improbability that the employer will offer the employee work in the future, along with the likelihood that the employee will accept such an offer, may also be relevant in determining the relevant employment.

As to work history, s 113(6) of the Act does not provide that regard must be had to the worker’s work history with the employer over a certain period. In the absence of a statutory framework that compels having regard only to a specific period prior to the date in question, it would appear to be a matter for the trial judge to work out, having regard to the particular circumstances of the case, what an appropriate frame of reference is.

It remains to be seen whether WorkCover appeals the decision.

As a result of the Court’s decision in Covill, when applying the state of connection test, employers and insurers alike must take into account both:

1. The entirety of an employee’s work with an employer, even if they have performed earlier work under separate contracts of employment; and
2. Whether there is an ‘expectation’ of further work in the future.

This is particularly important when employers are determining where insurance coverage is required and insurers are determining where statutory or common law claims should be brought. Getting it wrong could be costly:

• Failing to obtain proper insurances in the right states/territories could result in employers finding themselves uninsured for potentially large claims, and potentially also being subjected to civil penalties.
• Failing to ensure claims are brought (and accepted/paid) in the correct states/territories could result in insurers erroneously paying large sums of money which may not be able to be recovered, with inevitable premium implications for employers.

Please contact a member of our team if you require further assistance with this issue.