I​​ndependent Contractor Agreement Update: Now Available in Smarter Drafter

Independent Contractor Agreement updated in line with the Fair Work Act.

The latest updates to the Independent Contractor Agreement in Smarter Drafter reflect recent changes to the Fair Work Act 2009 (Cth), which have significant implications for independent contractor arrangements and their rights. Here’s what you need to know.

Overview of Fair Work Act Changes

On 26 August 2024, important amendments to the Fair Work Act came into effect, reshaping how independent contractor relationships are assessed and managed. Key changes include:

1. Real Substance Test: The introduction of section 15AA, which establishes a 'real substance, practical reality, and true nature of the relationship' test. This test is crucial in determining whether an individual is genuinely an independent contractor or if they should be classified as an employee under the Act.
2. Unfair Contract Terms: New provisions under Part 3A5 now allow contract workers to apply to the Fair Work Commission if they believe their services contract contains unfair terms. This right is subject to certain earnings and jurisdictional conditions.

What to Consider When Drafting Independent Contractor Agreements

Given these changes, it's more important than ever to carefully consider the structure and content of your Independent Contractor Agreements. When drafting these agreements, make sure that:

• Appropriate arrangement: The agreement accurately reflects the relationship between the parties. Misclassifying an employment relationship as an independent contractor arrangement can lead to penalties under the Fair Work Act (see sections 357-359).
• Fair Terms: The terms of the contract should not be unfair to the contractor, as they now have the right to challenge unfair terms.

Amendments to the Smarter Drafter Independent Contractor Agreement

In response to these legislative changes, our content team has thoroughly reviewed and updated the Smarter Drafter Independent Contractor Agreement. The key amendments include:

• New Provisions Outline: We've added a comprehensive outline of the new legislative provisions to assist you to ensure your agreements are fully compliant.
• Removal of Certain Clauses: We've removed the following provisions from our document:
  • The contractor covenant that prevented claims against the principal for any employee entitlements.
  • The optional contractor indemnity for losses suffered by the principal if the contractor is deemed an employee.

These updates ensure that your Independent Contractor Agreements are aligned with the latest legal requirements and provide fair, clear terms for all parties involved.

Ready to draft your next Independent Contractor Agreement? So is Smarter Drafter…