b"CLOSING LOOPHOLESCONTRACTORS vsEMPLOYEES When: 26th August 2024Unfair Contractual Terms for Independent ContractorsKey Changes:Independent Contractors earning below the contractorContractor Denitionhigh income threshold will be able to dispute allegedlyunfair contract terms (UCTs) in the FWC, which is aA new denition of employee and employer wasmore cost effective, applicant friendly jurisdiction thaninserted into the Fair Work Act 2009 to determinethe Courts. who'swho,andinturn,whatprotections,rightsand The Fair Work Commissions Powers: entitlements they enjoy. In determining whether a term is an UCT, the FWC willThe meaning of employee and employer under thetake into account matters such as: new denition is to be determined by 'ascertaining therelative bargaining power real substance, practical reality and true nature ofwhether the term is reasonably necessary tothe relationship' between the parties. To do this, theprotect the legitimate interests of a party, and totality and true nature of the relationship must bewhether the contract term imposes a harsh, unjustconsidered having regard to the terms of theor unreasonable requirement on a party to thecontract and also to other factors such as how thecontract. contract is performed in practice. The FWC can make orders to: BUT WAIT, THERE IS A (DOUBLE) TWIST:set aside all or part of a services contract Independent contractors already engaged when amend or vary part of a services contractthe changes commence, and who earn above a No orders for compensation can be made by the FWCstill unspecied contractor high income in this jurisdiction. threshold ($183,100), will have a right to 'optout' of the employee / employer denition And then they will also have a right to revokethe original opt out! Practical Tips for Employers: 1)Employers will need to dust off their contractor vs employee checklists and keep them frontand centre to determine whether an individual is a contractor or employee.2)Essentially, employers must check that both Contract and practices are consistent with aContractor style engagement. 3)Employers should also check their Contractor Agreements to ensure they are fair to bothparties. State v Constitutional Differences:There is also a difference between the test used for state This includes sole traders, partnerships, otherreferred businesses and constitutionally covered unincorporated entities and non-trading corporations inbusinesses. NSW, SA, QLD, VIC, and TAS.A constitutionally covered business is a Pty Ltd company, Constitutional corporations use the whole of relationshipforeign corporation, trading or financial corporation test. State referred businesses use the start offormed within the limits of the Commonwealth (Cth), the relationship test. Both tests still consider various factorsCth, the Cth authority, body corporate incorporated in a of employment or contracting relationships, including:territory, and business or organisation conducted the amount of control over how work is performed principally in a territory or Cth place. It does not include financial responsibility and risk sole traders, partnerships, some state government who supplies the tools and equipment employees, and corporations whose main activity is not ability to delegate or subcontract work trading or financial. hours of work, andexpectation of work continuing.A State referred business is a business that is in the nationalworkplace relations system because the state it is based inreferred their powers to make workplace laws to theCommonwealth. Page | 10IR Update July 2025"