From 26 August 2024 changes to the Fair Work Act 2009 gave many contractors a new right to apply to the Fair Work Commission to cancel or change unfair terms in their contracts.
Which contractors can apply?
The new right applies where:
- an independent contractor is a party to a services contract entered into on or after 26 August 2024
- in that year, the independent contractor’s earnings are less than the contractor high income threshold of $175,000
- the services contract contains one or more unfair terms which would relate to workplace relations matters if the independent contractor were an employee.
Contracts entered into on or after 26 August 2024
The FWC can only accept applications that relate to services contracts which are made (entered into) on or after 26 August 2024.
Earnings are less than the contractor high income threshold
The contractor high income threshold for the financial year starting 1 July 2024 is $175,000. This figure is adjusted annually on 1 July.
When is a term ‘unfair’?
To assess if a contract term is unfair, the FWC can consider:
- The relative bargaining power of the contractor and principal
- Significant imbalances in their rights and obligations
- Whether the term is reasonably necessary to protect a party’s legitimate interests
- Whether the term imposes a harsh, unjust, or unreasonable requirement
- If the contract’s total remuneration is less than what an employee or regulated worker performing similar work would receive
- Other relevant matters.
What are ‘workplace relations’ matters?
‘Workplace relations’ matters that are terms the FWC can cancel or change include:
- Remuneration
- Allowances
- Other amounts payable
- Leave
- Hours of work
- Terminating the contract
- Disputes
Contract terms that are not workplace relations matters, and that the FWC cannot change or cancel, include:
- superannuation
- workers’ compensation
- occupational health and safety
- public holidays (except rates of pay for public holidays)
- deductions from wages or salaries
- taxation.
Other rights of application
Contractors that do not earn less than the high income threshold, or whose contract was entered into before 26 August 2024, may still apply to the Federal Court for unfair contracts orders under the Independent Contractors Act 2006.
Implications
Businesses should review the terms of their contractor agreements to assess if any terms could be at risk of being ‘unfair’.
Workers should assess their status under the new laws by checking when their contract was entered into, and if their pay is below the threshold.
At WorkLegal our experienced team can answer your questions and put you on the right track. A range of fixed-price Initial Consultations will suit most people’s needs in quickly learning what their options are.
Some more information is available here or you can book online for an initial no-obligation chat about reviewing an employment contract or contractor agreement.