Understanding your rights under the Independent Contractors Act

The Independent Contractors Act 2006 (Cth) (Act) seeks to establish the legal obligations, liabilities and rights that arise in service contracts between independent contractors and businesses. In certain circumstances, it allows the Federal Court to review contracts and make appropriate orders where the terms are deemed unfair, harsh or unconscionable, unjust or against the public interest.

To what does the Act apply?

The Act generally applies to services contracts, being contracts for services:

1. to which an independent contractor is a party; and
2. that relates to the performance of work by the independent contractor.

For example, service contracts that have fallen underneath the Act’s jurisdiction include contracts for employee recruitment[1], warehouse management services[2] and trucking services.[3]

There is no statutory definition for an independent contractor. Instead, the courts consider the specific circumstances of each case (including degree of control over how work is performed, hours of work and expectation of work and risk) to determine whether a person or entity is an employee or independent contractor.

When can you seek review of a contract?

An application can be made to the Court to review a services contract on either or both of the grounds that the contract is unfair or harsh. In reviewing the contract, the Court may have regard to:

1. the terms of the contract when it was made;
2. the relative strengths of the bargaining positions of the parties to the contract or their agents;
3. whether any undue influence or pressure was exerted on, or unfair tactics were used against, a party to the contract;
4. other matters as existing at the time when the contract was made; and
5. any other matter that the Court considers relevant.

For example, contract terms deemed to have been unfair include terms allowing one party to unilaterally impose, without making financial compensation to the other party, a significant change in equipment required to service the contracts.[4]

Orders the Court can make

If the Court considers the contract is unfair or harsh, it may make an order setting aside the whole or a part of the contract or varying the contract. An order may only be made for the purpose of placing the parties to the contract as nearly as practicable on such a footing as to no longer be unfair or harsh.

If you are unsure of your rights and obligations under the Act, you should consider speaking to us.

[1] Informax International Pty Ltd v Clarius Group Ltd (2012) 207 FCR 298.

[2] Fabsert Pty Ltd v ABB Warehousing (NSW) Pty Ltd (2008) 176 IR 169.

[3] Keldote Pty Ltd v Riteway Transport Pty Ltd (2008) 176 IR 316.

[4] Ibid.