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Individuals can take advantage of the unfair contract provisions unless they are performing private or domestic work. Corporations that are independent contractors may have their contracts (excluding those for private or domestic services) reviewed where the work is wholly or mainly performed by the corporation’s director or members of the director’s family.

The Independent Contractors Act 2006 (Cth) replaced various State and Territory unfair contract laws with a new national system. The legislation establishes a process in which the Federal court or the Federal Magistrates Court can review contracts, and vary or set aside the contract if the contract is found to be unfair or harsh. There is no transitional period for those laws.

In deciding whether a contract is unfair or harsh the Court must consider the following:

  • the relative bargaining strengths of the parties to the contract;
  • any undue influence, pressure or unfair tactics which may have been used;
  • whether the total remuneration paid to the independent contractor is less than an employee doing the same work would have received; and
  • any other relevant matters.

Fair Work Act 2009 (Cth) – Sham contracts

The Fair Work Act 2009 (Cth) (FW Act) continues the protections against sham contracting that were contained in the Workplace Relations Act 2006 (Cth). The FW Act imposes civil penalties if an employer does any of the following:

  • any undue influence, pressure or unfair tactics which may have been used;
  • dismisses an employee in order to angage the individual as an independent contractor to perform the same, or substantially the same, work;
  • represents an employment relationship as independent contractingl or
  • makes false statement in order to influence or persuade an individual to enter into an independent contract.

Penalties of up to $33,000 (for corporations) or $6,000 (for individuals) apply.

A Fair Work Inspector, an employee or a union can commence legal proceedings in respoect of a sham contract arrangement.

Workplace inspectors from the Office of the Australian Building and Construction Commissioner (ABCC) are empowered to investigate suspected sham contract offences.

For Further Information

Master Builders Australia
Level 1, 16 Bentham Street Yarralumla ACT 2600
PO Box 7170 Yarralumla ACT 2600
Telephone: (02) 6202 8888, Fax: (02) 6202 8877

Master Builders Association – Australian Capital Territory
1 Iron Knob Street, Fyshwick ACT 2609
PO Box 1211, Fyshwick ACT 2609
Telephone: (02) 6247 2099, Fax: (02) 6249 8374;

Master Builders Association – Newcastle
Level 1, 165 Lambton Road Broadmeadow NSW 2292
PO Box 266 Hunter Regional Mail Centre NSW 2310
Telephone: 02 4953 9400, Fax: 02 4953 9433

Master Builders Association – New South Wales
52 Parramatta Road Forest Lodge NSW 2037
Private Bag 9 Broadway NSW 2007
Telephone: (02) 8586 3555, Fax: (02) 9660 3700

Territory Construction Association – Northern Territory
Cnr Winnellie Road and Hickman St Winnellie NT 0820

PO Box 37121 Winnellie NT 0821
Telephone: (08) 8922 9666, Fax: (08) 8922 9600

Master Builders Association – Queensland
417-419 Wickham Terrace Brisbane QLD 4000
Telephone: (07) 3225 6444, Fax: (07) 3225 6545

Master Builders Association – South Australia
47 South Terrace Adelaide SA 5000
PO Box 10014 Adelaide SA 5000
Telephone: (08) 8211 7466, Fax: (08) 8231 5240

Master Builders Association – Tasmania
34 Patrick Street Hobart TAS 7000
GPO Box 992K Hobart TAS 7001
Telephone: (03) 6234 3810, Fax: (03) 6234 3860

Master Builders Association – Victoria
332 Albert Street East Melbourne VIC 3002
GPO Box 544 Melbourne VIC 3001
Telephone: (03) 9411 4555, Fax: (03) 9411 4591

Master Builders Association – Western Australia
35-37 Havelock Street West Perth WA 6005
PO Box 167 West Perth WA 6872
Telephone: (08) 9476 9800, Fax: (08) 9476 9801

Disclaimer: This information is provided as general advice on the workplace relations system. It does not constitute legal advice and it is always advisable to seek further information regarding specific workplace relations issues.

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