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From the Desk of the Executive Director

Ken Phillips is co-founder and Executive Director of Independent Contractors of Australia. He is a published authority on independent contractor issues and directs research on related commercial and trade practices issues. Through his numerous articles in newspapers and think-tank and academic journals, Ken is known for approaching issues from outside normal perspectives and is frequently sought out for media comment.

Why the new unfair contract laws are good news for soloists

Monday, August 08, 2016

Brendan is a persistent fella. He’s a highly skilled IT consultant. Don’t ask me what he actually does. He tried to explain to me once but it was way beyond me.

What I do know with Brendan is that he has a high sense of justice. He gets really angry when a client ‘screws’ him over.

On one occasion he had one of those ‘standard form’ contracts big businesses usually require you to sign when you do work for them. He had a nine-month contract to do a high level analysis of software programming that was in trouble. The client was a large Commonwealth government department.

They needed him urgently and his full attention and time. He dropped other work and stopped looking for additional work.  

But two months into the work a new department manager turned up and told him he was no longer needed. Someone had stuffed up the budget and they couldn’t afford him.

Brendan was furious. The contract they had him sign said the work was for nine months and if he was to stop the work he had to give two months notice. However the department could cancel the contract at any time. Brendan contacted me for some assistance and we discussed his options. Not good!

He decided to take on the department. With the help of a lawyer buddy he prepared an action in the magistrates court. He used information and evidence from the ICA website as part of his case.

The magistrate required Brendan and the department to conduct an ‘Alternative Dispute Resolution’ process before going to court. This involved an informal discussion with a mediator to try and reach a settlement. What a joke!

The department turned up with a solicitor, barrister and two department managers. It was supposed to be ‘informal’. Ha! I went with Brendan for support. Then an even bigger joke! The department/s barrister asked what I was doing there and were we trying to intimidate them! Us intimidate them?

After this process failed Brendan went to the magistrates court but lost his case. The sting of course is that he spent over $15,000 on legal fees.

If this situation had happened after 12 November this year Brendan would not have had all this trouble. From this date new unfair contract laws start that would have stopped the department.

The new laws are the same laws that started for consumers in 2012. Now small business people, particularly solo operators, will have protections from unfair contracts.

The new laws would for example make it illegal for the department Brendan had worked for, to have its one sided contracts. That is they could not have a contract that let them cancel it at any time unless Brendan could also cancel at any time.

The new laws are about making sure that commercial contracts with small business people have a balance of ‘rights.’ That’s fair!

Here’s a list of what those rights are. If a contract has these illegal clauses, the clauses are ‘void,’ that is they can be ignored and should be taken out of the contract.

The new laws apply to contracts up to $300,000 in value or $1 million for contracts longer than a year. This makes the new protections available to huge numbers of sole operators.

I admire Brendan because he is a fighter who sticks up for his rights. But he shouldn’t have had to go through the wringer he did. The department had an unfair contract and behaved unfairly.

The news laws won’t stop all bad behaviour from big business toward small business people. What the new laws will do however is create a strong measure of fairness. That’s a good thing because it will make business better for solo travellers.

[First published in Flying Solo, August 2016]

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