Independent Contractors legislation summarised

The new Federal independent contractor’s legislation commenced operation from 1 March 2007.


The Common Law test of an independent contractor remains applicable. The new Act is intended ‘to recognise independent contracting as a legitimate form of work arrangements that is primarily commercial; and to prevent interference with the terms of genuine independent contracting arrangements.’

The new Act will override provisions of State laws that deem certain classes of independent contractors to be employees and provisions that deal with unfair services contracts.

Court review

Under the new Act, the Federal Court or the Federal Magistrates Court will have the power to review a contract that relates to the performance of work by an independent contractor where at least one of the parties to the contract is a constitutional corporation or the Commonwealth or a Commonwealth Authority or a Body Corporate incorporated in a Territory in Australia.

The court may determine that the services contract is either unfair or harsh or both. In reviewing the contract the court is to have regard to the relative strength of the bargaining positions of the parties to the contract, whether any undue influence or pressure was exerted on either party or whether the contract provides total remuneration that is or is likely to be less than that of an employee performing similar work. The court may have regard to any other matter that the court thinks is relevant.

The court may make an order setting aside all or part of the contract or an order varying the contract. Under transitional provisions to the Act contracts made before the new laws take effect or contracts that continue the terms of the previous contracts may continue to be dealt with under State and Territory contractor laws until such a contract is replaced by a contract made under the new Act or for three years from the date that the new Act takes effect, whichever comes first.


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