Unfair Contract Terms & Independent Contractors

The Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth) introduced significant workplace reforms, including changes to Australia’s unfair contract regime. From 26 August 2024, the Fair Work Commission has had a new unfair contracts jurisdiction, allowing independent contractors earning below the ‘high income threshold’ to dispute the terms of their services contract.

The Commission can set aside or amend parts of a services contract if it finds unfair terms. Factors considered include the relative bargaining power of the parties, whether the term is necessary to protect a party's interests, and if the term imposes a harsh, unjust, or unreasonable requirement on a party.

Independent contractors who are consumers or “small businesses” and party to a ‘standard form contract’ can still access the existing ‘unfair contract’ regime under the Australian Consumer Law and the Australian Securities and Investments Commission Act 2001 (Cth).

The Federal Government's decision to give the Fair Work Commission new powers to resolve ‘unfair contract’ disputes may lead to more litigation. Businesses should regularly review and amend their services contracts with independent contractors to mitigate the risk of ‘unfair contract’ disputes. These amendments add to the risk factor for businesses, following changes to the unfair contract terms regime that commenced on 9 November 2023.

Businesses should seek legal advice and review their services contracts for potential unfair contract terms – please get in touch if you’d like to discuss the terms of your engagement of contractors.

This article is not legal advice, and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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