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Independent Contractors Act 2006: Basics of the Act

23 June 2006

  • Definition: The common law definition of an independent contractor is used. This applies to individuals, partnerships and directors of small corporations.
  • Constitutional application: Independent contractors secure rights under the Act if they have a contract with (a) a corporation (b) the Commonwealth or Territory (c) a non-corporation that is established or headquartered in a Territory.
  • Overrides State IR laws: State laws that pull independent contractors into their provisions are overridden by the Act and do not apply.
However:
  • Not Outworkers & Owner-drivers: State IR laws covering clothing outworkers and NSW and Vic owner-drivers have not been overridden.
  • Three-year Transition: It will take three years for State IR laws covering independent contractors to be overridden. This is to give time for businesses and others to adjust and alter their arrangements.
But
  • Opting ability: Independent contractors, with their clients, can jointly choose to opt into the Independent Contractors Act and exclude the State IR provisions from their individual arrangements, except for NSW and Victorian Owner-Drivers.
  • Only IR issues: The Act does not apply to laws such as taxation, equal opportunity, workers' compensation, occupational health and safety and so on.
  • Unfair contracts: Unfair contract applications can be made to the Federal Magistrates Court.
    • 'Harsh' or 'unfair' have established common-law meaning. However, a contract paying less than the total remuneration of an employee can be considered 'unfair'. Consideration of what is 'less' must take account of market realities---that is, what is being paid generally across industry sectors, etc.
    • The Federal arrangements override State unfair contracts provisions--- for example, those in NSW and Queensland.
    • Large companies are not able to use the provisions.
    • Applicants have to cover their own costs unless a claim is 'vexatious'.



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