Contractor Opt Out Notice
This Notice can be given by a contractor who meets the high income threshold to ensure that they will not be classified as an employee under section 15AA of the Fair Work Act.
(0 reviews)
Last updated December 19, 2024
Under 5 minutes
Suitable for Australia
Written by
Edwin Montoya Zorrilla
Reviewed by
Damin Murdock
Document Overview
Opt Out Notices
National system businesses and individuals are subject to the whole of relationship test to determine a worker's status as either a contractor or an employee. This assessment method is based on the employment definition effective from 26 August 2024, and outlined in section 15AA of the Fair Work Act. For more information on this test, see Lawpath's article.
Workers earning above the contractor high income threshold can elect to bypass the whole of relationship test for classification purposes. This is achieved by submitting a written opt out notice to their engaging business. Consequently, the start of relationship test becomes the determining factor for the worker's classification. For more information on the start of relationship test, see the Fair Work Ombudsman website.
Contractor High Income Threshold
As of 1 July 2024, the contractor high income threshold is set at $175,000.
Implications of Opting Out
Choosing to opt out may lead to a worker being classified as a contractor under the start of relationship test, even if they would be considered an employee under the whole of relationship test.
Should a worker's status change, they should evaluate how this affects their entitlements from the point of status change.
Process for Opting Out
When a worker submits a written opt out notice to the business, the start of relationship test will be applied to their working relationship from that date, replacing the whole of relationship test.
The notice must indicate the worker's belief that their earnings for work performed under the relationship exceed the contractor high income threshold at the time of submission.
Cancelling Opt Out Notice
A worker can cancel their opt out notice at any time by providing written notice to the business. Upon cancellation, the whole of relationship test is reinstated from the day of notice withdrawal.
Workers are limited to one opt out notice per working relationship.
Informing Workers of Opt Out Notices
The engaging business may notify a worker of their ability to opt out if:
- The business believes the worker might be classified as an employee under the whole of relationship test
- The worker's earnings surpass the contractor high income threshold
The business must provide this notification in writing.
Workers wishing to opt out have a 21-day window to submit an opt out notice to their engaging business.
The Legal Risk Score of a Contractor Opt Out Notice Template
Our legal team have marked this document as low risk considering:
- The document lacks specific details about the terms of engagement between the contractor and the client, which could lead to misunderstandings or disputes about expectations and responsibilities.
- The document mentions an income threshold but does not specify the amount, which could lead to confusion or misinterpretation about eligibility to opt out of certain legal protections.
- Opting out of section 15AA of the Fair Work Act 2001 might expose the contractor to fewer legal protections, potentially affecting their rights in the workplace.
Contractor Opt Out Notice Checklist
Complete your free Contractor Opt Out Notice with our checklist
Verify Income Threshold
Ensure that the specified income in the document exceeds the high income threshold as mentioned.
Legal Review
Have the document reviewed by a lawyer on the Lawpath platform to ensure all legal implications of opting out of section 15AA are understood and correctly applied.
Clear Communication
Discuss the terms of the opt-out with the client to ensure both parties have a mutual understanding and agreement on the conditions set forth in the document.
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