Independent contractors legislation has created a federal unfair contracts jurisdiction for independent contractors which overrides existing state and federal laws.
The Independent Contractors Act (IC Act) has established a national, uniform system to resolve unfair contract disputes. Under the new laws, contractors who feel their services contract is unfair can apply to the Federal Court or the Federal Muagistrates Court to have it set aside or changed. The Office of the Australian Building and Construction Commissioner (ABCC) may provide representation to a building industry participant in unfair contract proceedings.
What is an unfair contract?
The IC Act defines an unfair contract as a contract that is harsh or unfair.
The IC Act applies to ‘services contracts’ which are contracts for services:
- to which an independent contractor is a party
- that relates to the performance of work by the independent contractor, and
- that has a constitutional connection.
A services contract will have a constitutional connection if at least one party is:
- a constitutional corporation as defined by the WR Act
- the Commonwealth or a Commonwealth Authority or
- a body corporate incorporated in a Territory.
What are unfair contracts laws?
Unfair contracts laws allow a court to review the terms of a contract between an independent contractor and the person or business who hires them (the ‘principal’).
If a court finds that the contract was unfair or harsh, it can re-write or strike it out.
The courts also have the power to order a principal to make additional payments or to meet certain additional requirements.
What will be overridden?
The IC Act overrides State and Territory laws that allow a court, commission or tribunal to amend, vary, set aside, declare void or find unenforceable terms of a services contract on an ‘unfairness ground’.
This overrides the unfair contracts jurisdictions in New South Wales and Queensland, and some South Australian and West Australian laws.
The IC Act also overrides State and Territory laws that deem independent contractors to be employees, or which give employment-like rights to independent contractors.
This is relevant to some laws in New South Wales, Queensland, South Australia and Tasmania.
However, there are transitional provisions that allow existing contracts and the State laws relevant to them to continue to operate in some cases for up to 3 years. If you have an existing contract, you can enter the new protections by signing an ‘opt in’ agreement.
How many times can a contract be reviewed?
A contract may only be reviewed once. Proceedings cannot be brought under existing unfair contracts law and then under the IC Act.
What factors does the court consider?
In deciding whether a contract is unfair or harsh, the court will consider the terms of the contract as made. Other factors that may be considered by the court are:
- the relative strengths of the bargaining positions of the parties to the contract and, if applicable, any persons acting on behalf of the parties
- whether any undue influence or pressure was exerted on, or any unfair tactics used
- whether the contract provides total remuneration that is, or is likely to be, less than that of an employee performing similar work and
- any other matter that the court thinks is relevant.
Further information
You can download a printable version of this fact sheet here: Unfair Services Contracts (PDF - 98KB)
Department of Education, Employment and Workplace Relations
The Office of the Australian Building and Construction Commissioner
The information contained in this fact sheet is correct as at 26 February 2008.
This material is for general information only. You should seek legal advice in relation to your particular circumstances. The Australian Government, its employees and agents do not accept any liability for action taken in reliance on this document and disclaim all liability arising from any error or omission. ABN 68 003 725 098
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