Closing the Loopholes No 2 – Gig Contractor Changes and Unfair Contract Terms

This is the fourth and last article in our Closing the Loopholes No 2 series. In this article we will discuss two more of the major changes to workplace legislation. The first being changes for employee-like workers and the second being changes to how unfair contract terms are dealt with. Both of these changes will come into effect from 26 August 2024.

Gig Contractors

Under these changes, the Fair Work Commission (FWC) will be given the power to make determinations in relation to minimum standards for ‘employee-like’ workers that work in the gig economy. The purpose of the changes is to have in place a number of minimum standards that apply to non-employees.

An employee-like worker will be defined as a person who performs work for a digital labour platform through a services agreement. There will be a number of factors that are taken into consideration when making an assessment of a worker, these include but are not limited to:

  • Bargaining power of the worker;
  • Level of remuneration and whether this falls below that of an employee performing a similar role; and
  • The level of authority that the company has over the performance of the worker.

Determinations in relation to employee-like workers and their entitlements will be made through Minimum Standards Orders (MSOs). These orders may include, but are not limited to determinations in relation to:

  • Record-keeping;
  • Superannuation;
  • Penalty rates;
  • Payment terms; and

An MSO can be made on the FWCs own fruition or be made following an application by a company that represents a worker (e.g. Union). These orders will also include provisions that give the relevant parties a mechanism for settling disputes in relation to the matters that arise out of the MSO.

It is important to note that the Act clearly states that persons to which an MSO applies will not be considered an employee and will continue to be classified as an independent contractor.

Unfair Contract Terms

A new mechanism will be introduced to deal with unfair contract terms for those people who are a party to a service contract. It will not matter whether the person is classed as an employee-like worker or not, however those that earn above the contractor high income threshold will not be eligible to make an application to the FWC.

The FWC will take into account the following when determining whether a term of a contract is unfair or not:

  • Bargaining power of the parties;
  • Whether the whole of the contract presents a disproportionate balance between the rights of the parties;
  • If the term of the contract is deemed reasonably necessary to protect the legitimate interests of the party to the contract;
  • If the term is deemed to be a harsh, unjust or unreasonable requirement on one of the parties to the contract; and
  • Whether the contract provides for monetary compensation that falls below that of an employee performing a similar role.

The FWC will have the power to hold hearings and conferences where an application is made. If the FWC makes a determination that a term of a contract is unfair, they will have the power to set aside all or parts of the agreement, as well as the power to amend and/or vary parts of the agreement.

The goal of this amendment is to ensure that disputes in relation to contract terms can be resolved quickly, cheaply and fairly as opposed to commencing proceedings in court.

Lessons for Employers

  • Employers will need to monitor Minimum Standard Orders to ensure compliance. MSOs will specify a class of regulated worker rather than an individual. This means that determinations arising out of another organisations conduct may have an impact on a whole industry or class of employee;
  • Employers should conduct an analysis of their independent contractors, ensuring that their rights and entitlements are in line with industry standards. This will aim to decrease the burden on the company should an MSO be issued in relation to the industry;
  • Employers should review their agreements with independent contractors and make an assessment of whether they believe there are any unfair terms, proactively amending them to avoid disputes when the provisions come into force.

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

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Closing the Loopholes (No.2) – Casual Employment and Independent Contractors
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Fair Work Minimum Wage Increase Decision for 2024