Independent Contractors Legislation.

In late 2006, the Commonwealth Government passed new independent contractors legislation. This was the Independent Contractors Act 2006 (Cth) and the Workplace Relations Legislation Amendment (Independent Contractors) Act 2006 (Cth).
The object of this legislation is to recognise the fact that there are a growing number of independent contractors in the workplace.
It also allows independent contractors to enter into arrangements that are primarily commercial, rather than being regulated by workplace relations legislation. The legislation commenced on 1st of March 2007.

What are independent contractors?

There is no statutory definition in this Act or elsewhere, of what an independent contractor actually is and who falls into this category. This area has traditionally been determined by the common law. The common law has distinguished between independent contractors, who are employed on a contract for the provision of services and employees who are employed on the basis of a contract of service.
The High Court dealt most conclusively with this issue in the case of Hollis v Vabu Pty Ltd.1 This case derived a number of tests which involve comparing the working relationship that exists against a number of key indicia in order to distinguish
employees from independent contactors. Whilst this may sound simple, the reality is that many working relationships will have some of these key indicia, but not others. Each case must be decided on its own facts, as the new Act pointedly refrains
from defining what Independent Contractors are. According to Hollis v Vabu, the key indicia are:
• Whether the work provided is skilled labour or labour which requires special qualifications.
• The organisation’s degree of control or right to exercise control, for example over the manner in which work is performed, the place of work and hours of work. The notion of control is fundamental and an independent contractor must
have a certain amount of control over the manner of performing their work.
• Whether the worker performs, or has an entitlement to perform, work for others. Or, whether they are running their own business by way of performing work for a number of organisations.
• Another distinguishing feature is whether the employer produces pay summaries and whether there is any scope to bargain for the rate of remuneration. Whether the employer has the authority to dictate the rate of pay, the ability to hold
pay against overcharges, unpaid cash jobs or outstanding cash jobs. Additionally whether there is an ability for the employer to dictate when annual leave is able to be taken.
• Whether the worker provides and maintains significant tools or equipment. This factor is difficult, as the fact that a worker may supply and be responsible for their own tools and equipment does not necessarily create a relationship of
independent contractor. Although a more beneficial employer might supply these tools, the High Court found that there is nothing contrary to a relationship of employment if employees are required to provide their own equipment.
• Whether the work is able to be delegated or subcontracted by the worker.
• Whether the worker is presented to the public as an emanation or representative of the business. This would include whether the worker is required to wear uniforms bearing the company’s logo or other identifying markers of the company
in the course of their employment.