Pursuing an unfair contract claim for independent contractors
Independent contractors do not have access to unfair dismissal or general protections claims under the Fair Work Act. However, they can seek review of unfair contracts under the Independent Contractors Act 2006 (Cth) or, in NSW, Part 9 of the Industrial Relations Act 1996. The court can void, vary, or set aside terms that are harsh or unfair.
This is an 8-step workflow for pursuing an unfair contract claim on behalf of an independent contractor in Australia. The Independent Contractors Act 2006 (Cth) allows a court to review and vary a services contract that is harsh or unfair. In NSW, the Industrial Relations Act 1996 Part 9 provides similar protections for work contracts.
Before you start
- The services contract (written or oral) that is alleged to be unfair
- Details of the terms alleged to be harsh or unfair
- Evidence of the bargaining positions of the parties at the time the contract was entered
- Assessment of whether the worker is genuinely an independent contractor (not a sham arrangement)
The workflow
Confirm the worker is an independent contractor
Assess whether the worker is genuinely an independent contractor and not an employee. If the worker is an employee, the unfair contract provisions do not apply — employee claims are made under the Fair Work Act. Consider the multi-factorial test from Personnel Contracting and Jamsek.
Identify the applicable legislation
Determine whether the claim falls under the Independent Contractors Act 2006 (Cth) or a state equivalent such as the Industrial Relations Act 1996 (NSW) Part 9. The Commonwealth Act applies to services contracts; the NSW Act covers "contracts whereby a person performs work in an industry."
Establish that the contract is unfair
Build the case that the contract (or specific terms) are harsh or unfair. Relevant factors include: unequal bargaining power, whether the terms are unconscionable, whether the contractor had access to legal advice, and whether the contract was presented on a take-it-or-leave-it basis.
Identify the remedy sought
Determine the appropriate remedy: the court can void the entire contract, set aside or vary specific unfair terms, or make any order it considers just. Frame the application to seek practical relief — for example, varying an unreasonable restraint of trade or adjusting payment terms.
Prepare the application
Draft the application for review of the unfair contract. Under the Commonwealth Act, the application is made to the Federal Court or Federal Circuit and Family Court. Under the NSW Act, the application is made to the Industrial Relations Commission. Include a supporting affidavit with evidence of unfairness.
File and serve the application
File the application with the correct court or commission and serve it on the respondent. Comply with any applicable time limits — some state regimes require the application to be filed within a specified period of the conduct complained of.
Attempt conciliation or mediation
Most unfair contract proceedings involve a conciliation or mediation phase before hearing. Prepare the client for conciliation with a clear understanding of their best and worst outcomes. Many matters resolve at this stage.
Present the case at hearing
If the matter does not resolve at conciliation, present the case at the hearing. Lead evidence of the unfair terms, the parties' bargaining positions, and the remedy sought. Respond to any arguments that the terms were freely negotiated or commercially reasonable.
What you will have at the end
A court or commission order varying or setting aside the unfair contract terms, or confirming the contract is fair and dismissing the application.
Common issues
- The worker being found to be an employee rather than a contractor, making the unfair contract provisions inapplicable
- Insufficient evidence of unequal bargaining power or the take-it-or-leave-it nature of the contract
- Confusing an unfair contract claim with an unfair dismissal claim (different statutory regimes)
- Not identifying the correct court or commission for the application
- Seeking unrealistic remedies that the court is unlikely to grant
Run this workflow on a real matter
Quillio analyses contractor agreements and identifies terms that may be harsh or unfair under the Independent Contractors Act. See /practice-areas/employment-lawyers or start a free trial.
This workflow covers unfair contract claims for independent contractors. Employees have different remedies under the Fair Work Act. The distinction between employees and contractors is a threshold issue that must be resolved first.
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Quillio can run this workflow on a real matter, with citations to current AU authority on every step. The free trial requires no credit card.
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