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Employment Law - Contractors independent of employment law
The distinction between an independent contractor and an employee has always been an important one at law. The categorisation of a worker as either a contractor or an employee has significant consequences for superannuation, taxation, termination of employment and liability for damage occurring in the course of work.
In recent times we have seen growing numbers of independent contractors which is part of an increasing trend in self employment and growth in small independent businesses. This may be in part due to the uncertainty caused by changes to workplace laws but also a result of workers choosing alternative forms of work to suit their individual needs.
Employers seeking to build a flexible and cost effective labour force have also contributed to the increase in the use of independent contractors, which offer the opportunity to adjust the number of workers according to the needs of their business.
The federal government supports and promotes the right of independent contractors to enter into commercial agreements which are outside the workplace relations system. The government introduced the Independent Contractors Bill 2006 into Parliament in June. The objects of the Bill are to:
- protect the freedom of independent con-tractors to enter into services contracts;
- recognise independent contracting as a legitimate form of work arrangement that is primarily commercial; and
- prevent interference with the terms of genuine independent contracting arrangements.
The Bill includes provision for a national services contract review process for independent contractors. The Minister for Employment and Workplace Relations claims that dispute resolution procedures in relation to unfair contracts will be more accessible under the new provisions through increased jurisdiction in the Federal Magistrates Court.
A second Bill, the Workplace Relations Amendment (Independent Contractors) Bill 2006, amends the Workplace Relations Act and will provide penalties for sham contracting arrangements aimed at denying employees their entitlements. Such contracts will be investigated and penalties enforced.
The progress of the Bill will be watched with interest as yet another chapter in work-place reform unfolds.
More information
Useful web links
http://parlinfoweb.aph.gov.au/piweb/browse.aspx?NodeID=62
http://mediacentre.dewr.gov.au/mediacentre/MinisterAndrews/Releases/NewprotectionsinIndependentContractorsBill.htm
Disclaimer: The information in this article is not intended to be a complete statement of the law relating to the issues raised. Accordingly, no person should rely on this information without first obtaining specific advice from Brendan Kelly of our office. | 
