Contracts

If you are an independent contractor, your entitlements and obligations differ from an employee.

The independent contractor laws provide protection for independent contractors who may be subject to an unfair or sham contracting arrangement. 

Best practice contracts

Before making a contract, you can find tools and guides on the business.gov.au website that outline your rights and responsibilities as an independent contractor. This includes the Independent contractors: contracts made simple guide that explains how to minimise business risks and negotiate good contracts.

Sham contracts

A sham contracting arrangement occurs where an employer attempts to disguise an employment relationship as an independent contracting arrangement. This usually occurs to avoid their responsibility for employee entitlements.

Under the sham contracting provisions of the Fair Work Act 2009, an employer cannot:

  • intentionally disguise a person’s employment as an independent contracting arrangement 
  • dismiss an employee to re-engage them as an independent contractor 
  • make a false statement to persuade an employee to become an independent contractor.

There are serious penalties for an employer behaving in any of these ways.

To find out more or to complain about a sham contracting arrangement, contact the Fair Work Ombudsman.  

If you are part of the building and construction industry, Fair Work Building and Construction enforces workplace relations laws.

Unfair contracts

A contract may be considered 'unfair' under the Independent Contractors Act 2006.  When determining whether a contract is unfair or harsh, a court may consider:

  • the bargaining positions of the parties
  • whether undue influence or unfair tactics were used
  • whether the total remuneration is less than that for an employee performing similar work 
  • other matters considered relevant.

If a court finds that a contract is unfair or harsh, it may order that:

  • the terms of the contract be re-written
  • parts of the contract will have no effect
  • the contract ceases to operate.

Unfair contract claims must be brought to the Federal Magistrates Court or the Federal Court of Australia. It is strongly recommended that you obtain legal advice before lodging a claim.

Independent contractors: contracts made simple contains more information about unfair contracts and best practice contracting.

Contract disputes

While most contracts run smoothly, sometimes you might find yourself in a dispute with a hirer. There are resources available to provide advice on steps you can take to resolve a dispute:

Australian Small Business Commissioner

The office of the Australian Small Business Commissioner commences on 1 January 2013.

The Commissioner will act as a first stop shop for small business people, representing their concerns and interests directly to the government.

Small business owners will be able to access information and advice, and referral to external services such as dispute resolution services.

As an independent contractor, Getting help provides a full range of resources.

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