New legislation has redefined the ‘worker’ in Australian law, after a decision which could impact future worker's compensation claims.

Legislation effective from July 1 has brought the definition of a ‘worker’ into line with the Australian Taxation Office’s PAYG test requirements.

The adjusted definition says that a worker is "a person who works under a contract and, in relation to the work, is an employee for the purpose of assessment for PAYG withholding under the Taxation Administration Act 1953, schedule 1, part 2-5". It applies to anyone who needs to pay PAYG tax installments or would have them withheld by an employer.

There will be no noticeable change for many workers, however those in the construction and transport industries show pay close attention. Workers will now no longer be covered by compensation if they supply and operate their own plant (including earth-moving equipment and trucks), if they work mostly for labour only, quote for the job, provide tools of their trade and rectify defects at their own expense, or hold a personal services business determination form the ATO.