Independent Contractors and the Fair Work Act 2009

Chapter 3 of the Fair Work Act 2009 (Cth) (“FW Act”) outlines the legislative rights and responsibilities of employees, employers, organisations, etc. 

In summary:

  • Division 3 protects workplace rights and the exercise of those rights
  • Division 4 protects freedom of association and involvement in lawful industrial activities
  • Division 5 provides other protections including protection from discrimination
  • Division 6 deals with sham arrangements
  • Division 7 sets out how to establish contraventions
  • Division 8 deals with compliance.

Division 3 – Workplace rights

A person must not take adverse action against another person that is in anyway related to a workplace right (section 340). 

“Person”

The use of the term “person” instead of “employer/employee” implies that the provision extends beyond employer/employee relationships to include independent contractors.  Further, when setting out the circumstances of adverse action, the Act specifically refers to the relationship of principal and independent contractor.

Prospective employees are also protected under the provisions (section 341(3)).   

“Workplace right”

A “workplace right” is defined to include (section 341(1)):

  • Any benefit, role or responsibility provided for under a workplace law, instrument or order;
  • The ability to initiate or participate in proceedings under a workplace law or instrument (e.g. in Fair Work Australia or other court proceedings); and
  • The ability to make a complaint or inquiry (either to an administrative body or to the employer if the person is an employee). 

“Adverse action”

Adverse action is defined to include inter alia (section 342(1)):

  • Dismissal, discrimination or prejudicial treatment of employees;
  • Refusing to employee or otherwise discriminating against prospective employees;
  • Terminating, injuring or prejudicially altering the contract of an independent contractor, as well as refusing to make use of, or supply to, the independent contractor. 
  • Refusing to engage or discriminating against a potential contractor.

Other protections

In addition to adverse action, a person must also not:

  • Coerce a person to exercise or not exercise a workplace right (section 343);
  • Exert undue influence on an employee when deciding whether or not to enter into an agreement (section 344); or
  • Make a false or misleading representation about a person’s workplace rights (section 345).

 

Division 4 – Industrial activities

A person must not take adverse action against another person that is in anyway related to industrial activity (section 346). 

Industrial activity

Industrial activity is designed to include (section 347):

  • Anything involving an industrial association; and
  • Participating in industrial action.

Other protections

A person must also not:

  • Coerce a person to engage or not engage in industrial activity (section 348);
  • Induce a person into membership action (section 350); or
  • Make a false or misleading representation about a an industrial association or activity (section 349).

 

Division 5 – Other protections (Discrimination)

An employer must not take adverse action against a person who is an employee or prospective employee because of the person’s (section 351(1)):

  • Race
  • Colour
  • Sex
  • Sexual preference
  • Age
  • Physical or mental disability
  • Marital status
  • Family or carer’s responsibilities
  • Pregnancy
  • Religion
  • Political opinion
  • National extraction or social origin

as provided for under anti-discrimination laws.

Temporary absence – illness or injury

An employer must not dismiss an employee because the employee is temporarily absent from work because of illness or injury (section 352). 

 

Division 6 – Sham arrangements (disguising employees as independent contractors)

An employer must not dismiss or threaten to dismiss an individual in order to engage the individual as an independent contractor to perform substantially the same work (section 358).

An employer that employs an individual to perform work must not make a knowingly false statement in order to persuade the person to enter into a contract for services under which the individual will perform substantially the same work for the employer (section 359).

Division 7 – Onus of proof

If an application alleges that an action taken by a person contravenes this Chapter, it is presumed that the action is contravening unless proved otherwise. 

Division 8 – Taking action in Fair Work Australia

If a person has been dismissed and believes the dismissal to be in contravention of this Chapter, the person may apply to Fair Work Australia to deal with the dispute (section 365).

Timing

An application under section 365 must be within 60 days after the dismissal took effect (section 366(1)).