A working director (in relation to a company) means a director who executes work for, or on behalf of, the company, and whose earnings as a company director by whatever means, are in substance for personal manual labour or services.

It is optional for a working director’s company to cover their directors for workers’ compensation.

What process does a working director go through to obtain insurance?

1. The director’s company applies for insurance on the basis that their director is a ‘working director’ as defined in the Workers’ Compensation and Injury Management Act 1981 (the Act).
2. The company provides information to the insurer concerning the working director’s remuneration when issuing or renewing the insurance policy.
3. Once the policy is in effect, the working director is deemed a worker under the Act.

Contact your insurer if you would like to seek workers’ compensation cover for ‘working directors’.

Can the insurer dispute whether a person is a working director of the company?

There is a mechanism for determining disputes as to whether a director is a ‘working director’ prior to the policy of insurance being issued. You or your insurer may lodge an application with the Conciliation and Arbitration Services (CAS).

Once a policy has been issued, an insurer cannot decline to indemnify you on the basis that the working director is not a ‘worker’, or the company is not the employer of the working director.

However, liability can be declined should the information provided by the company, in respect of the director when applying for the policy or contract of insurance, be false or misleading in a material particular and the decision of the insurer to issue the policy was materially affected by that misrepresentation.

Can non-working directors or public company directors be covered?

Non-working directors are excluded. A director registered under the Corporations Act 2001 of the Commonwealth must be a working director, as defined by the Act.

Public company directors are also excluded. Only a company, as a separate legal entity, may apply to insure a working director and the definition of company, contained in section 10A of the Act, excludes public companies from obtaining cover for its directors.