When engaging contractors (who have workers) to undertake work in NSW, it is a requirement to obtain a Subcontractor’s Statement (Statement) each time they seek payment from you.
What is a Subcontractor’s Statement
The Statement is a document completed by the subcontractor declaring that the subcontractor has met their obligations under certain laws. The Statement states that:
- they have, if required, workers compensation to cover their workers, and paid the appropriate premiums as required by the Workers Compensation Act 1987;
- they have paid all payroll tax due in respect of employees who performed work under the contract, where required by the Payroll Tax Act 2007;
- they have paid appropriate remuneration to relevant employees per the Industrial Relations Act 1996; and
- they have been given a written Statement, if they are also a principal contractor in connection to the project (they may have contractors themselves and should have received a Statement from their subcontractor/s).
A copy of the Statement can be accessed here.
Who needs to provide the Statement?
A contractor (subcontractor) who enters a contract to provide a service to a principal contractor, must provide the Statement if they have workers (or deemed workers).\
For example: a builder engages a carpenter contractor to undertake works. The carpenter is a sole trader but has an apprentice and a qualified carpenter on the books. The carpenter would need to provide the Statement as he is an employer and may have obligations (such as workers compensation for his workers).
A builder engages a plumbing business to undertake plumbing works on a job. The plumbing business is a company and therefore the employer of the plumber who is the working director and comes to site to perform the works. The company is the subcontractor and needs to provide the Statement.
Note: if subcontractor is a sole trader or partnership business and does not have any workers engaged (including deemed workers) then the Statement is not required. A sole trader may choose to fill out the form for the principal contractor to advise the contractor of his/her status.
What is the purpose of the Statement?
The Statement allows a subcontractor the right to work and be compensated for working on the principal contractor’s project while taking full responsibility for any non-compliance to the law.
If completed correctly, the Statement will absolve a principal contractor of liability for workers compensation premiums, pay-roll tax and remuneration due or payable by the subcontractor.
If a subcontractor fails to provide the Statement, the principal contractor may be responsible for covering unpaid premiums, wages, and payroll tax for the period the subcontractor provided services. As a result, the principal contractor has a right to withhold payment from the subcontractor.
A subcontractor who provides false information to its principal contractor in the Statement may be subject to an offence.
When does the Statement need to be provided?
The Statement is to be provided to the principal contractor each time an invoice is submitted for the works performed by the subcontractor.
Whilst many builders will seek workers compensation details, including a copy of the certificate of currency from their contractors at the start of an engagement, this does not meet the requirements of the Statement.
The Statement is a declaration by the subcontractor that they have met their obligations during the period they performed services for the builder, to which an invoice relates, and as a result, payment should be made.
What needs to be supplied with the Statement?
For the Statement to be complete and comply, the Certificate of Currency for workers compensation insurance must be attached to the Statement.
How long does the Statement need to be kept by the principal contractor?
A copy of the Statement must be kept by the principal contractor for a period of seven years.
To find out more, contact HIA's Workplace Services team on 1300 650 620.
Craig Jennion
Housing Industry Association
Executive Director - Hunter