From 26 February 2025, independent contractors can file claims in the Fair Work Commission (FWC) to set aside unfair contract terms.
In addition, while eligible employees have long had unfair dismissal protections, some gig workers and contractors are able to apply to the FWC under new unfair deactivation and termination provisions.
Set out below is a brief guide to the FWC’s new powers.
Varying unfair contract terms
Independent contractors can now apply to the FWC to set aside unfair contract terms about ‘workplace relations matters’. ‘Workplace relations matters’ include remuneration, allowances, leave entitlements, hours of work, disputes, and enforcing and terminating agreements. It does not include things such as superannuation, workers’ compensation, OHS and tax. The full list of workplace relations matters can be found here.
Contractors are eligible to apply if they earn less than $175,000 p.a., and the contract terms are in a services contract (with a constitutional connection). A union or employer association can also make the application to the FWC on behalf of the contractor.
The FWC may set aside or change ‘unfair’ terms. The FWC will assess matters, including relative bargaining power, imbalance in parties’ rights and obligations, whether the contract term is necessary to protect legitimate interests, and whether the term imposes harsh, unjust or unreasonable requirements.
Eligibility to claim ‘unfair deactivation’
To be eligible to make a claim, a person engaged through a digital platform who has been ‘deactivated’ must:
- be an ‘employee-like worker’, meaning they have two or more of the following characteristics:
- low bargaining power;
- pay at or below the rate received by an employee doing the same work; or
- low degree of authority over the performance of work;1
- perform work either:
- through a digital labour platform operated by a digital labour operator; or
- under a services contract facilitated, arranged or managed through a digital labour platform operated by a digital platform operator;
- be earning a yearly income of less than $175,000 (contractor high-income threshold);
- have worked on a regular basis for a period of at least 6 months after 26 August 2024; and
- apply within 21 days of the deactivation.
Where the deactivation is found unfair, the FWC can order the worker’s re-activation or make an order for money lost due to the de-activation but cannot order compensation instead of re-activation.
Deactivation will not be unfair if it is for 7 days or less, or the FWC was satisfied on reasonable grounds the worker behaved fraudulently, dishonestly, suspension was necessary for investigation, or the worker lacked the proper license.
Eligibility to claim ‘unfair termination’
To be eligible to make a claim, transport contractors whose contracts have been terminated must:
- be a ‘regulated road transport contractor’, being a person who 2:
- works in the road transport industry (which reflects the definitions in the modern awards covering the road transport industry);
- is party to a services contract as an individual, director, trustee or partner;
- performs all or most of the work under the services contract; and
- is not working as an employee or an ‘employee-like worker’ (defined above);
- perform work under a services contract where a road transport business received the services under the contract (whether or not that business is party to the services contract) not in the digital platform gig economy;
- be earning a yearly income of less than $175,000 (contractor high-income threshold);
- have worked on a regular basis for a period of at least 6 months after 26 August 2024;
- have their services contract terminated by, or because of something the road transport business did; and
- apply within 21 days of the contract termination.
Where the termination is found to be unfair, the FWC can order that the contractor be re-engaged by entering into a new contract. The FWC can also make orders for compensation.
Assessing unfair deactivation/termination claims
To decide whether a deactivation or termination was ‘unfair’, the FWC will consider similar factors that would be considered in an employee unfair dismissal claim, including whether there is a valid reason for the deactivation/termination related to the person’s capacity or conduct, the process followed, and any other matters the FWC considers relevant.
On 3 December 2024, the Minister for Employment and Workplace Relations made the Fair Work (Digital Labour Platform Deactivation Code) Instrument 2024 (Cth). This code sets out procedural factors for consideration when deactivating workers utilising digital platforms.
On 5 December, the Minister made the Fair Work (Road Transport Industry Termination Code) Instrument 2024 (Cth) for the termination process for a road transport business terminating services contracts of a regulated road transport contractor.
The Codes provide some clarification on how the above claims will be assessed, including what will constitute a valid reason for deactivation/termination e.g. absence of a licence, serious safety breach, fraudulent/dishonest conduct, and the internal processes for businesses when terminating or deactivating workers e.g. usually providing a warning before terminating for poor behaviour/conduct.
Conclusion
Businesses should not assume that terminating arrangements with gig workers and road transport operators who are not employees can be carried out only in accordance with contractual terms. It is now incumbent upon businesses to consider the FWC’s legislative powers to hear disputes on these matters and to ensure any end of engagement is conducted with the FWC’s expectations and the applicable Code above, in mind.
If you have any questions about how these new powers impact your business, please speak to a member of our Workplace Relations group.
References
1. More characteristics may be prescribed by regulations, see section 536LD of the Fair Work Act 2009 (Cth).
2. See section 15Q of the Fair Work Act 2009 (Cth) for a full definition of a ‘regulated road transport contractor’.
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