A recent FWC decision provides practical guidance for businesses on how payment terms in contractor agreements may be assessed under the Fair Work Act’s unfair contract terms jurisdiction.

Businesses engaging independent contractors should not assume that an agreed contract term is beyond scrutiny. Part 3A-5 of the Fair Work Act 2009 (Cth) allows eligible contractors to challenge certain unfair terms in their services contracts before the Fair Work Commission (FWC).

A recent decision involving an adult entertainer highlights the potential risks of contractual provisions requiring contractors to forfeit payment for work already performed.

The case

In Tessa Bell v Diva Girl Pty Ltd trading as Delicious Entertainment, an adult entertainer was engaged as an independent contractor to perform a two-week circuit of venues in rural Queensland. Payment was to be made at the end of the circuit.

The contractor left before completing the circuit after becoming concerned for her safety when a stranger knocked on her motel room door at night.

She applied to the FWC to challenge several contractual terms. In particular, she challenged a provision requiring her to forfeit all remuneration and commissions if she did not complete the circuit, without an exception for leaving in reasonable response to a safety concern.

Deputy President Butler found the forfeiture requirement unfair and varied the contract so that the contractor was entitled to payment for time worked, reimbursement of her deposit and travel assistance despite not completing the circuit.

When can contractors challenge unfair terms?

The FWC’s jurisdiction applies to eligible services contracts entered into on or after 26 August 2024. The FWC’s jurisdiction only applies where the contract and parties fall within the scope of the Fair Work Act, and the contractor must also satisfy the income eligibility requirement. From 1 July 2026, the contractor high income threshold is $190,100.

The FWC can set aside, amend or vary contractual provisions that would relate to workplace relations matters if the contractor were an employee. This includes matters such as remuneration, hours of work and termination.

Under s 536NB, the FWC may consider the parties’ bargaining power, any significant imbalance in the contract as a whole, whether a term is reasonably necessary to protect a party’s legitimate interests, and whether it imposes a harsh, unjust or unreasonable requirement.

It may also compare the contract’s total remuneration with what employees or relevant regulated workers would receive for the same or similar work, and consider other relevant matters.

Takeaways for businesses

The practical drafting lesson is to focus on proportionality. Protecting a business’s interests should not depend on an unnecessarily absolute forfeiture provision. These recommendations reflect the statutory fairness considerations; they are not a guarantee that a particular clause will withstand review.

We recommend that businesses reviewing contractor agreements:

• Review payment-forfeiture clauses. Consider staged or proportionate payment arrangements where appropriate.
• Address reasonable grounds for early departure. Consider how the agreement should operate where safety concerns, illness or genuine incapacity prevent completion.
• Assess the commercial justification for restrictive terms. Identify the interest being protected and consider whether a less onerous provision could achieve the same purpose.
• Review templates across contractor engagements. Where the same provision appears in multiple agreements, assess its operation across those arrangements rather than addressing only the contract that prompted a dispute.

Case: Tessa Bell v Diva Girl Pty Ltd trading as Delicious Entertainment [2026] FWC 3283 (7 September 2026).

If you would like to discuss this or other workplace issues, please contact Andrew Bland or call 02 9412 3077.