(1) Where a principal, in the course of or for the purposes of the principal's trade or business, contracts with a contractor otherwise than as a tribute for the execution by or under the contractor of the whole or a part of the work undertaken by the principal, the principal is liable to pay an employee employed in the execution of the work the compensation under this Act which the principal would have been liable to pay if that employee had been immediately employed by the principal.

(2) Where compensation is claimed from or proceedings are taken against the principal, then, in the application of this Act, references to the principal shall be substituted for references to the employer, except that the amount of compensation shall be calculated with reference to the earnings of the employee under the employer by whom the employee is immediately employed.

(3) A principal liable to pay compensation under this section, is entitled to pay compensation to the employee independently of this section.

(4) Where a claim or an application for compensation is made under this section against a principal, the principal shall give notice of the claim or application to the contractor who shall then be entitled to intervene in an application made against the principal.

(5) This section shall not be construed as preventing an employee recovering compensation under this Act from the contractor instead of the principal.

(6) This section does not apply where the accident occurred elsewhere than on, or in, or about premises on which the principal has undertaken to execute the work or which are otherwise under the principal's control or management.

(7) This section does not apply where a contract is made by an employer with a person who is granted permission to win minerals, receiving a proportion of the minerals won by that person or the value of the minerals.