Commonwealth independent contractor laws came into effect in 2007 giving independent contractors greater flexibility in how they run their businesses.
Below is information designed to explain how these laws impact on independent contractors and the businesses who engage their services.
Independent Contractor Laws
On 1 March 2007 the Independent Contractors Act 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Act 2006 came into effect.
The independent contractor laws:
- stop state laws from requiring independent contractors to be treated as if they were employees
- established a ‘transitional’ period which expired on 1 September 2011
- keep state laws protecting textile, clothing and footwear outworkers
- do not affect New South Wales, Victorian, and Western Australian laws specifically dealing with owner-drivers
- replace New South Wales and Queensland unfair contracts laws with a new federal unfair contracts jurisdiction
- make it illegal for an employer to disguise an employment relationship as an independent contracting arrangement, and
- make it illegal for employers to threaten or mislead employees to get them to change their status to independent contractors.
Visiting Medical Officers
While the 'transitional' period has ended, this does not apply to a visiting medical officer (VMO) with a service contract entered into, or continuing from, the time the Independent Contractors Act commenced. This preserves existing arrangements for the delivery of services by VMOs, while national health reforms are implemented.
Who is covered by the independent contractor laws?
To determine if these laws apply to you, you must first establish whether you are an independent contractor.
The Department has developed an online Decision tool for independent contractors, employees, employers and hirers. It will help you understand whether a person is likely to be an independent contractor or an employee at common law.
It is important to be aware that several other pieces of legislation have a different definition of who is an ‘independent contractor’, including those relating to workers compensation.
At a practical level, this means if you are an independent contractor covered by the independent contractor laws, you will not necessarily be a contractor for other laws.
For further information you can contact the Independent Contractors Hotline on 1300 667 850.
Protecting independent contractors
The Commonwealth independent contractor laws provide protection for employees and independent contractors who are subject to a sham contracting arrangement or are pressured to opt-in to the federal laws during the three year transitional period.
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Sham contracting arrangements
A sham contracting arrangement occurs where an employer attempts to disguise an employment relationship as an independent contracting arrangement, usually for the purposes of avoiding responsibility for employee entitlements. Under the sham contracting provisions of the Fair Work Act 2009 (the Act), an employer cannot:
The Act provides serious penalties for breaches of these provisions. Employees and independent contractors can request assistance from the Fair Work Ombudsman on 13 13 94 or fwo.gov.au if they feel their rights have been breached.
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Independent Contractors Publications
For more information on contracting, download the relevant publications or call the Independent Contractors Hotline on 1300 667 850.
- Independent Contractors: the essential handbook [
PDF 2.55MB]
- Independent Contractors: contracts made simple [PDF 2.05MB]
- Independent Contractors [ PDF 1.56MB]
- Unfair Contracts [ PDF 232KB]
- Protection against sham contract arrangements [ PDF 147KB]
Independent Contractor Legislation
The Commonwealth independent contractor laws came into effect on 1 March 2007.
View the:
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Independent Contractor Links
Australian Taxation Office
The Australian Taxation Office can provide information regarding your tax obligations as an independent contractor.
Fair Work Ombudsman
The Fair Work Ombudsman is an independent agency which ensures the rights and obligations of workers and employees are understood and enforced fairly.
Office of the Australian Building and Construction Commissioner
The Office of the Australian Construction Commissioner ensures workplace relations laws are enforced in the building and construction industry.
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Contact Us
To speak to an advisor directly call the Independent Contractors Hotline on 1300 667 850.
People with a hearing and/or speech impairment can contact the National Relay Service on 133 677 or freecall 1800 555 677.
Non-English speakers can contact the Translating and Interpreting Service on 131 450.