Jamal v Workers Compensation Nominal Insurer [2023] NSWCA 4

In April 2014 Mr Khaled Jamal was seriously injured while working in a small family run Mediterranean grocery store in Auburn, Western Sydney. Khaled was a cousin of the sole director of the company, Ms Jamal. In contravention of its obligations, the company did not hold a workers compensation policy. Companies who pay less than $7500.00 per year in wages are “exempt employers” and are not required to hold workers compensation insurance. The argument was raised that the company was exempt on this basis, as it did not have any paid employees prior to Mr Khaled commencing work. The Court found the company was paying family members through a mix of cash payment and grocery stock. On the basis of the number of weekly hours worked by the family, it did not qualify as exempt, despite its lack of formal employee and payroll records.


In absence of a workers compensation policy, Mr Khaled commenced his workers compensation claim against the “Workers Compensation Nominal Insurer”. The Nominal Insurer is a statutory body that receives a percentage of all workers compensation payments and takes the place of Insurer in workers compensation matters when the company has failed to insure itself. The Nominal Insurer is in turn permitted to recover any compensation paid either from the company or from a “culpable director”, where recovery from the company is not possible. In this case, the company had ceased trading, therefore, the Nominal Insurer sought financial recovery of more than $250,000 from Ms Jamal as a “culpable director”.


The Workers Compensation Act sets out that if at the time an injury occurred the corporation failed to hold compulsory workers compensation insurance and the insurance would have covered the corporation for the liability, the director at the relevant time is a “culpable director”.


There are exceptions to this rule upon which Ms Jamal sought to rely. Primarily, that she was unaware that the corporation had no insurance, was not in the position to influence a decision to take out insurance or used all due diligence to prevent the corporation from breaching its obligations. The District Court dismissed these arguments at first instance, a decision that was upheld by the Supreme Court. Ms Jamal was ultimately held to be a culpable director and liable to repay the Nominal Insurer the full amount of workers compensation damages awarded to Mr Khaled, the employee.


The two key messages here are, firstly, that employers must have workers compensation insurance or run the risk of being personally liable. Secondly, injured workers have the safety net of the Nominal Insurer scheme, if their employer has not properly taken out workers compensation insurance.