Q&A: Unfair contract terms

If you are an independent contractor and not an employee, and think your contract has unfair terms you can apply to the Fair Work Commission to cancel or set aside terms of the contract if:

• the contract was entered into on or after 26 August 2024;
• you earn less than the contractor high income threshold; and
• the contract has a “constitutional connection”.

This resource focuses on unfair contract terms applications in the Fair Work Commission.

Contractors who earn at least as much as the contractor high income threshold or entered into the contract before 26 August 2024 may instead have a remedy in the Federal Court under the Independent Contractors Act 2006 (Cth).

The Fair Work Commission can only cancel or vary some types of contractual terms. The contractual terms need to be terms that would normally be considered a “workplace relations matter” if the contract was an employment contract instead of an independent contracting arrangement.

This means generally, the Fair Work Commission can cancel or vary contract terms if they relate to work relations matters including:

• remuneration, allowances or other amounts payable to employees
• employees’ leave entitlements
• employees’ hours of work
• enforcing or terminating contracts of employment
• making, enforcing or terminating other agreements determining terms and conditions of employment
• industrial action by employees and employers (unless it affects essential services)
• disputes between employees and employers
• other matters that are substantially the same as matters that relate to employees or employers dealt with by or under the Fair Work Act 2009 or state or territory industrial laws.

However, the Fair Work Commission will not be able to cancel or vary terms that relate to things such as:

• preventing discrimination or promoting equal employment opportunity (unless contained in a state or territory industrial law)
• superannuation
• workers’ compensation
• occupational health and safety
• child labour
• public holidays (except rates of pay for public holidays)
• deductions from wages or salaries
• industrial action affecting essential services
• jury service
• professional or trade regulation
• consumer protection
• taxation

When determining whether contractual terms are unfair the Fair Work Commission will consider things such as:

• the parties’ relative bargaining power
• whether there is a significant imbalance in the parties’ rights and obligations under the services contract
• whether the contract term is reasonably necessary to protect the legitimate interests of a party to the contract
• whether the contract term imposes a harsh, unjust or unreasonable requirement on a party to the contract
• whether the services contract provides for total remuneration that is less than:
• what regulated workers performing the same or similar work would receive under a minimum standards order or minimum standards guidelines, or
• what employees performing the same or similar work would receive.

If you think your employer has engaged in sham contracting, you can make a complaint to the Fair Work Ombudsman (national system employees) or to Wageline (state system employees). You may have been underpaid entitlements, and may also have a sham contracting claim, for more information, see our publication: “Q&A: Contractor or employee for WA workers”.

If you want to make a claim, you may wish to also read our Claim Guide on unfair contract terms.

You can also visit the website of the Fair Work Commission to read their resources on making a claim to dispute unfair contract terms.