You may be a small business owner seeking to engage in contracting work with independent contractors. Or perhaps you are an independent contractor offering your services to business owners. In both of these scenarios, understanding your legal rights and protections under the Independent Contractors Act 2006 (Cth) is key to helping prevent any future conflicts.
Independent Contractors Act
Put simply, the Independent Contractors Act seeks to establish any legal obligations, liabilities and entitlements which may arise in an employment contract between a business and independent contractors. It also recognises that these arrangements are entered into for “primarily commercial” purposes.
An independent contractor can be both an individual or a business entity. For the services contract to be recognised under the law, at least one party to the contract must be:
- A constitutional corporation i.e. foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth, or
- The Commonwealth or a Commonwealth authority, or
- A body corporate incorporated in an Australian Territory.
The bulk of problems regarding contractors agreements will arise from a contract being unfair.
The Independent Contractors Act provides a number of unfairness grounds, These provide the scope for raising unfairness proceedings under a contractor agreement, where the contract is:
- Harsh or unconscionable;
- Unjust; or
- Against the public interest.
An issue that may give rise to unfairness proceedings is sham contracting. To find out more what about this constitutes, have a look at our legal guide on sham contracting.
What The Court Can Do
In response to a finding of unfairness grounds, the court can review the contract and may subsequently enforce orders.
1. Review The Agreement
Parties have the ability to request for the Court to review the services contract based on the grounds that the contract is unfair or harsh.
The Court will then examine factors such as the bargaining positions of the parties and whether there was undue influence in contracting. If applicable, the amount of remuneration paid to contractors will be assessed against others in a similar industry, performing similar work.
2. Enforce Orders
If the Court finds that a services contract has been in breach of fairness grounds, one or more of the following orders can be made to:
- Set aside the whole or part of the contract
- Vary the contract
- Enforce an injunction, which can prevent a party from breaching contract laws
An awareness of the Independent Contractors Act will benefit both businesses and independent contractors seeking to engage in work with each other. However, many of the legal issues and topics discussed in the Act speak of problems that arise from communication and drafting. Always ensure that every party involved in a contract understands their legal rights and obligations.
Transparency is the key to success and avoiding expensive litigation. If you would like an existing contractors agreement reviewed, LawPath can connect you with an experienced employment lawyer.
Looking to hire contractors? Contact a LawPath consultant on 1800LAWPATH to learn more about customising employment contracts, as well as other legal documents and obtaining a fixed-fee quote from our network of 600+ expert lawyers.