Legislation has been passed which expands the protections in unfair contracts legislation for benefit of Australia’s increasing number of independent contractors. Under Part 2-3 of the Australian Consumer Law, unfair terms of certain contracts are void and the courts have the power to issue remedies, such as compensation, when a party to the contract attempts to enforce an unfair term. Previously, Part 2-3 only applied to the terms of “consumer contracts”. However, on 12 November 2016 the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015 entered into force, which expanded the reach of Part 2-3 to include “small business contracts”. A “small business contract” is a contract for the supply of goods or services or the grant of interest in land, to which one party is a business that employs fewer than 20 people and the upfront price payable under the contract does not exceed $300,000.
As a consequence of these amendments, the performance of work by many workers who are classified as independent contractors will be amendable to the protections of the unfair contracts legislation. A contract will be unfair if it causes a significant imbalance in the parties’ rights and obligations, it is not reasonably necessary to protect a legitimate interest and its application would cause a detriment to a party. Examples of terms that might be unfair include one that allows one party (but not another) to avoid or terminate the contract, or one that allows one party to impose an unreasonable penalty on another.
The new laws only apply to contracts that are entered into or varied on or after 12 November 2016.