RLC comes across contractors who haven’t been paid or who are having difficulty securing payments on invoices they have raised.
So many issues arise for independent contractors that we’ve put the Independent Contractors Act 2006 under the microscope to help people avoid some common pitfalls.
Harsh and unfair contracts
If you think your contract is harsh or unfair, you might have a legal remedy. It’s hard to know what ‘harsh’ or ‘unfair’ means, because every contract is different, and courts assess them independently.
Generally, courts look at two things to make their decisions. They look at the terms of the contract, and the way in which it was made, such as pre-contractual negotiations.
Timing
A court can only step in if the terms of the contract were unfair from the outset. This means that even if a contract becomes unfair, courts usually won’t take into account any conduct or events that happened after entry into the agreement.
A court will only look at events or behaviour after a contract to demonstrate that the terms of the contract were unfair.
Negotiations
For a contract to be fair, people involved have to genuinely negotiate and shape the agreement. In some situations, contracts need proper negotiations rather than just a “take it or leave it” kind of offer.
However, this doesn’t mean that if a contract is more advantageous to one party that a court will find it to be harsh or unfair – that might just be a bad bargain.
It’s also important to remember that the contract doesn’t have to be in writing – in can be spoken, and some terms can be implied.
Pressure, undue influence and unfair tactics
There are many ways that one contracting party can take advantage of the other.
If one person is in a position of power, and takes advantage of that in the contract or in negotiations, this might be undue influence or unconscionable conduct. If someone threatens, bullies or intimidates another person into signing a contract, this might be economic duress.
Rates of pay
A contract is unfair if it doesn’t promise to pay at least the award rate for work. However, the contract might be fair if, instead of award wages, it includes other benefits like flexible working hours, or other long-term financial benefits to balance it out.
What will the court do?
Once a court has decided a contract is unfair, they have several options. They can order the whole contract to be set aside. They can also vary any term of the contract – so long as it puts the parties in a position where the contract is no longer harsh or unfair.
More information
The Australian Government has put together a booklet for independent contractors, which can be found here.
RLC has also developed a factsheet on ‘sham contracting’ to help the public identify common pitfalls when entering into an independent contractor agreement with an employer.
