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Understanding your rights as a contractor

April 1, 2020
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Understanding your rights as a contractor
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Dispute resolution
minute read

Discover what rights contractors have in construction disputes

The Australian workplace is made up of a range of workers and employees who are engaged to work under many different conditions. This article is dedicated to exploring what rights contractors have in construction disputes, and explaining where you stand as a contractor.

Are you a contractor who needs help resolving a dispute? AANDI Lawyers handle legal disputes about construction for clients across Australia.

What's the definition of a contractor?

The Australian Government has a set of guidelines which explain the difference between someone who is an employee and someone who is a contractor.


Contractor

Employee

Delegating or subcontracting work

Can subcontract work or delegate — that is, they can pay someone else to do the work

Cannot subcontract or delegate the work; they are employed to complete the task.

Payment

Paid according to a result based on a quote or agreement. Does not receive superannuation or leave entitlements.

Paid for time worked, per item or activity, or on a commission base. Eligible for superannuation and leave entitlements.

Equipment and tools

Supply tools and equipment needed to get the job done — no reimbursement for the cost of equipment.

Tools and equipment are provided to get the job done. Reimbursement provided for additional tools/equipment expenses.

Commercial risks

Takes on commercial risks.

Takes on no commercial risks — the employer is responsible for any defects.

Control over the work

Contractor has freedom to complete work subject to any specific terms in a contract or agreement.

Employer has the right to dictate how work should be completed.

Independence

Contractor operates independently of a business and is free to accept or refuse additional work.

Operates within and considered part of your business.

As you can see, a contractor is someone who has a great deal of control over how work is done, and has the capacity to subcontract work out to another party. A contractor runs their own business and negotiates their own fees.

Protection at work for contractors

Contractors perform work for other parties in a range of environments. All people working in Australia under relevant Commonwealth laws are entitled to general workplace rights and protections. This extends to contractors under the Fair Work Act 2009, where contractors are protected in a range of situations, including:

  • Abuses of freedom of association - a contractor is free to join (or refuse to join) a union or employer group.
  • Adverse action - a business cannot terminate a contract because the contractor makes a complaint about workplace rights.
  • Coercion - a business cannot take action against a contractor to discourage them to exercise their workplace rights.

As a contractor you are also entitled to protections against discrimination and undue influence in a workplace.

Unfair contracts

In some cases, contractors may find that they have entered into a contract that is deemed to be unfair, or harsh in its outcome or application. If this is the case, you are eligible to have this contract reviewed under the Independent Contractors Act 2006. The contract will be reviewed by a court examining:

  • The terms of the contract.
  • The bargaining power of each party when the contract was made.
  • Whether there was any undue influence used to get someone to enter the contract.

The court will consider whether the contract provides payment which is less than what an employee would make, and will look at any other matter the court considers relevant.

For example: A newly-accredited contractor engages in a contract with an experienced builder to perform plumbing works on three building sites over a period of six months. The contractor is reluctant to sign the contract, as the pay seems less than what she should be getting, but the builder puts pressure on her to sign, stating that there are others waiting to take the work on if she does not agree to the rates. The contractor would likely be able to contest this contract on the basis of it being an unfair contract.

Risks for contractors

As a contractor, you are exposed to a range of risks, just as you would be as an employee. When working on a construction site, you need to know you have protections in place so that if you are injured, you can seek compensation.

  • Contractors must take reasonable care for their own health and safety and must ensure that their acts do not affect the health and safety of others.
  • Contractors must also be inducted onto a worksite and provided with information about emergency procedures and health and safety procedures.

In some cases, a contractor will be engaged to perform works in a way that more closely resembles that of an employee. If this is the case, you may be engaged in what is known as a sham contracting agreement — which is illegal.

Methods of employment

If you have a great deal of control over your hours, conditions, performance, and tools, then it is likely that you are a contractor. However, if your working conditions more closely resemble that of an employee, then you may need to seek help from the Fair Work Ombudsman to have your working conditions rectified.

  • Contractors are not eligible for superannuation or sick leave payments from their employer.
  • If you are working as if you were an employee then leave and superannuation benefits should be paid to you.

It is worth noting that employers may contest a statement that a contractor is an employee, in which case you may need dispute resolution assistance from a legal professional.

Seek help with your contractor construction dispute today

AANDI Lawyers are experienced in working with contractors in a range of dispute matters, in various circumstances. Our dedicated team can be relied upon for support, legal guidance, and help with navigating construction disputes.

Call our team on [phone] for a confidential discussion about your rights, and find out where you stand.

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