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Independent contractors protected by new law.



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Hon Kevin Andrews MP

Minister for Employment and Workplace Relations Minister Assisting the Prime Minister for the Public Service 22 June, 2006

Media Release

Independent Contractors Protected By New Law

The Australian Government today introduced to Parliament a new Independent Contractors Bill to enshrine and

protect the status of independent contractors and encourage independent contracting as a wholly legitimate

form of work. This delivers on a key 2004 election commitment.

This is about the right of all Australians to choose to work for themselves - the right to be their own boss.

Under the Bill, the freedom to operate as a genuine independent contractor will now be protected from

inappropriate limits and constraints on the freedom to contract.

An efficient modern economy should have a dynamic mix of working arrangements with the flexibility to

respond to the changing demands of clients, consumers and competitors. Independent contractors are an

important part of this mix.

The existing regulation of genuine independent contracting across many of the states is a regulation of

entrepreneurship. Genuine independent contractors have taken the initiative to establish themselves as

businesspeople. They are not employees and should not be considered by industrial relations law to be

employees.

That is why the Government has introduced the Independent Contractors Bill to, amongst other things, protect

the freedom to operate as a genuine independent contractor.

The Independent Contractors Bill 2006 will:

z for the first time, recognise and protect the unique position of independent contractors in the Australian

workplace; z enshrine the freedom of independent contractors to enter into arrangements that are primarily

commercial relationships, free from prescriptive industrial relations regulation; z deliver on the Government’s commitment to ensuring that independent contracting is encouraged without

excessive regulation; and z be built on the principle- a principle the Government believes in - that genuine independent contracting

relationships should be governed by commercial not industrial law.

This Bill moves genuine independent contracting relationships away from the realm of industrial relations law

and clearly into the commercial sphere. It will reduce the current arbitrary restrictions on how independent

contractors are to be treated under the law.

It is essential that, as well as improving the way the workplace relations system works, the Government also

makes sure that workplace relations laws do not intrude into areas of economic activity where they have no

legitimate place.

The legislation also contains:

Protections from ‘sham’ contracting

The legislation protects genuine employees from "sham" contracting arrangements, sometimes used by

unscrupulous employers to avoid payment of legitimate employee entitlements. The Office of Workplace Services

will have jurisdiction to investigate and enforce penalties.

Protections for owner-drivers in NSW and Victoria

Notably, protections for owner-drivers in New South Wales and Victoria, the only two States with such

legislation, will be maintained by the legislation.

A review will be undertaken with a view to rationalising and achieving nation wide consistency of these types of

laws. This will involve a public consultation process with a discussion paper from the Department of

Employment and Workplace Relations and will begin in 2007.

Protection of Textile, Clothing and Footwear outworkers

The legislation will maintain the status of Textile, Clothing and Footwear (TCF) contracted outworkers as

employees under state legislation. This is consistent with the Government’s approach under the WorkChoices

legislation.

The Government recognises that outworkers need additional protection and this legislation provides that. The

Australian Fair Pay and Condition Standard will apply to contracted TCF outworkers in States and Territories

where they are not covered by a law providing for some form of remuneration guarantee.

Three year Transitional Period

For independent contractors who have previously been "deemed" employees, there will be a three year

transitional period to give businesses and workers time to adjust to the new legislation.

Regulation of Unfair Contracts

The Bill also provides a more balanced approach to the regulation of unfair contracts. Provisions in the Bill will

replace the existing federal unfair contracts legislation (currently in the Workplace Relations Act) and make it

more accessible by providing that remedies may be sought in the Federal Magistrates Court.

This approach will retain access to a fair and reasonable federal remedy for genuine cases where unfair or harsh

conditions have been imposed in a contract. This national approach to unfair contracts will be achieved by

overriding State unfair contracts legislation using the corporations power.

For further information contact:

Brad Burke 0421 586 478