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Home | Employment & Industrial Relations | Independent Contractors

What are Independent Contractors?

An increasing number of workers are no longer direct employees, but are engaged as sub-contractors. Our specialist team of employment lawyers has extensive expertise in acting for independent contractors in relation to work related issues.

We can assist and provide advice with the following:.

  • Contractual Negotiation & Advice
  • Breach of Contract
  • Unfair contracts
  • Sham Employment Contracts


Rights of independent contractors

Rights of independent contractors

Often independent contractors do not have many of the protections available to employees, therefore the terms of their contracts are paramount.

Unlike employees, independent contractors don’t have the protections of awards, enterprise agreements or the Fair Work Act.

For most independent contractors the terms of their arrangement are at least partially in the form of a written contract. It is important that these contracts fairly represent the agreement reached, and protect the parties positions.

The contracts will often be prepared by lawyer retained by principal contractors. Small and independent subcontractors should obtain their own, independent legal advice as to issues such as:

  • the meaning of effect of contractual terms and obligations
  • potential risks and dangers in proposed contracts;
  • protections in the contract in relation against unilateral termination, imposed capital expenditure and other similar terms;
  • terms that not included in the contract that should be included.

Turner Freeman Lawyers has expertise in provide straightforward, pragmatic advice in a cost effective manner.

When is a contract breached?

When is a contract breached?

When a legal dispute arises between the independent contractor and the principal, any redress will likely be by way of a claim for breach of contract. A claim for breach of contract may relate to:

  • termination of the agreement in breach;
  • a failure to pay amounts owing under the contract;
  • a failure to provide work as provided for by the contract.

The remedies for breach of a contract include an injunction to prevent further breaches and damages. Damages are measured by reference to the loss suffered as a result of the breach of contract.

What is a sham employment contract?

What is a sham employment contract?

A sham employment contract is an agreement that purports to be an independent contractor agreement but is in reality a contract of employment. Sham contracts are sometimes presented to employees so as to deny an employee their proper entitlements.

The Fair Work Act prohibits sham contracting. Under the Fair Work Act, an employer may not:

  • disguise an employment relationship as an independent contracting arrangement;
  • dismiss an employee and re-engage them as a contractor;
  • knowingly make a false statement to persuade an employee to become an independent contractor.

A corporation in breach of the sham contractor provisions of the Fair Work Act may be liable to a fine of $33,000.

Am I a contractor or an employee?

Am I a contractor or an employee?

The question of whether a person is an employee or subcontractor is a difficult and complex question of law. Issues such as the degree of control over the person, their capacity to work for others and the manner of payment are all relevant. Many people who are treated as contractors by an entity may in fact be employees at law. These people will often have claims for entitlements due as employees, but no payable to contractors such as:

  • Superannuation;
  • Allowances and penalty rates;
  • Payments (such as redundancy payments) due on termination;
  • Annual, long service and sick leave.

What is an unfair contract?

What is an unfair contract?

The Commonwealth Independent Contractors Act empowers the Federal Magistrates Court and Federal Court to review the contracts of independent contractors. If appropriate, the Court can vary the contracts to render them fair.

The Independent Contractors Act (ICA) empowers the Federal Magistrates Court to examine contracts between independent contractors and principal contractors to determine if, on their terms, the contracts are fair and reasonable.

If the Court determines that the contracts are harsh or unfair, the Court can then vary the contract so as to render it fair. It then has power to consider any breach of the contract as amended and award damages for that breach.

What is the process under the Independent Contractors Act?

What is the process under the Independent Contractors Act?

A claim seeking relief under the Independent Contractors Act can be brought by an individual or corporations (where the corporate entity operates a for a single person (or family) undertaking work.

The claim initially seeks a declaration from the court that the contract between the independent contractor and the principal was an unfair contract at the time of its inception. The court will consider a number of factors in making a determination as to whether a contract is unfair including whether the contract is:

  • harsh or unconscionable;
  • unjust;
  • against the public interest;
  • designed to provisions of the Fair Work Act;
  • provides for remuneration at a rate less than a comparable employee would receive;
  • otherwise unfair.

In the event that a Court makes a determination that a contract is unfair, it is then permitted to vary the contract from the point of the creation of the contract. The variation may be to delete, add or amend terms that will remove the harshness or unfairness that previously existed in the contract.

A claim may then be brought for breach of the contract as varied.

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