What are my rights as a contractor in Australia?
Most people in Australia are aware that employees have numerous protected rights, such as penalty rates, personal leave, annual leave, superannuation entitlements and notice requirements, however the waters surrounding contractors’ rights are murky at best.
Few people have a clear understanding of exactly what rights a contractor in Australia has.
Further, employers are able to take advantage of this unfamiliarity and uncertainty and often enter into a contractual agreement with someone who should be engaged as an employee pursuant to an employment agreement.
What entitlements do I have as a contractor?
Whilst as a contractor you do not have employee entitlements, nevertheless there are three main rights that you do have.
- Firstly, you have the right to apply to the Fair Work Commission on the basis that your relationship is truly that of an employee and not a contractor and seek remedies as a relief of an unfair dismissal claim.
- You can seek a remedy under the sham contracting provisions of the Fair Work Act 2009.
- Finally, breach of contract can be claimed and pursued in the common law courts.
What protections are there for me as a contractor under the Fair Work Act?
Under the Fair Work Act 2009 there are general protection provisions protecting contractors from adverse action, coercion and abuse of freedom of association.
As these are limited workplace rights, there are protections under the Fair Work Act to prevent employers abusing these limits by engaging someone dishonestly as an independent contractor rather than an employee. This is by way of provisions surrounding “sham contracting”. Gray J aptly summed up this concept as “the parties cannot create something which has every feature of a rooster, but call it a duck and insist that everybody else recognise it as a duck”: R e Porter; ex parte TWU (1989) 34 IR 179 at 184
The employer will not be able to disguise a genuine employer/employee relationship by merely labelling an employee as an independent contractor, nor dismiss an employee to “rehire” them as an independent contractor, or make misrepresentations to an employee so that they enter into an independent contractor arrangement. These protections are set out in sections 357-359 of the Fair Work Act.
A sham contract is unlawful. Generally, it is entered into by the employer with the intention to avoid paying employee entitlements such as superannuation, leave entitlements, workers compensation and payroll tax. The avoidance of these costs can mean a financial saving to an employer and therefore an incentive to enter into a contractual arrangement.
In most employee/ employer relationships, the employer is usually in a position of power and may attempt to coerce, threaten or mislead an employee to enter into a contract to perform work as an independent contractor.
Any contravention of the sham contracting provisions is treated seriously and penalties can include significant fines and compensation payments to employees. The courts can make orders to have the employee reinstated or to prevent the employer from dismissing an employee simply to re-hire them as an independent contractor.
How can I make an application to the Fair Work Commission for unfair dismissal as a contractor without an employment agreement?
If you believe that your contract has been unfairly terminated by the employer, then you may have actually been unfairly dismissed by the employer. If you are labelled as an independent contractor but your relationship with the employer is truly that of an employee then you will be entitled to make an application for unfair dismissal. The Fair Work Commission will consider the nature and circumstances surrounding your working relationship to determine if you are eligible to make an application. You should be aware that any application must be made within 21 days of your dismissal.
How can the Independent Contractors Act 2006 assist me?
The Independent Contractors Act 2006 provides further protection to you if you are a contractor who is covered by this legislation.
An unfair contract is a contract where you, as the contractor, is required to perform work on ‘harsh’ or ‘unfair’ terms. If you believe that the terms of your contract are unfair or harsh then mediation or negotiation is your first step to deal with an unfair contract. In fact, your contract may set out the dispute resolution process to follow.
However, if alternative dispute resolution does not resolve the dispute, then you have the right to lodge a claim under unfair contracts provisions of the Independent Contractors Act 2006.
In making a determination, the courts will consider the contract and the nature of the relationship as a whole and will take into account the terms of the contract, the bargaining positions of both parties, any undue influence, tactics or pressure, if the remuneration is equivalent to that of an employee and any other matters they determine.