Truckies finally recover damages in first unfair contract
The Federal Magistrates Court has finally ordered transport
company Riteway Transport Pty Ltd
("Riteway") to compensate three truck
drivers under the Independent Contractors Act 2006
("Act"). The order is the third and
final stage of what is understood to be the first proceedings to
test the Act.
The case is a significant victory for independent contractors as
well as an important lesson for businesses that engage independent
Facts of the case
The case concerns three truck drivers who supplied line haul
trucking services as independent companies to Riteway. The three
truck drivers did not have written contracts with Riteway and the
terms of their commercial contract were taken to be the terms of an
agreement between Riteway and the Transport Workers Union
In early 2007, Riteway informed the truck drivers that they had
to spend $100,000 each to upgrade their trucks into B-doubles or
else their services would be terminated. The truck drivers were
prepared to upgrade on the condition that they were paid a higher
amount per run to cover the cost of the upgrades.
Riteway offered $1,412 per run (which amounted to a pay rise of
about $218 per run). The truck drivers argued that this was
unreasonable as the rise in pay per run would not cover the costs
of paying off the upgrades. Negotiations failed between the parties
and the truck drivers went on to pursue an unfair contracts action
under the Act in the Federal Magistrates Court.
The proceedings were conducted in three stages.
In the first stage of the proceedings, the truck drivers
unsuccessfully sought interim orders under section 16(3) of the Act
against Riteway to prevent Riteway's imminent termination of
In the second stage, the truck drivers sought relief on the
basis that their contracts were unfair or harsh. On 22 August 2008,
it was found that the contracts were unfair because they allowed
Riteway to unilaterally require that the truck drivers provide a
truck that was considerably different from the one they had already
provided under the contract without providing any financial
compensation. On 5 May 2009 the Court ordered the terms of the
contract be changed to remove the unfairness.
On 16 June 2010, in the third and final stage, the Court
ordered compensation for loss of earnings by failure to give
reasonable notice and loss of goodwill by an award of $30,800,
$29,000 and $38,000 plus interest to each of the three truck
The Act came into force in 2007 and aims to recognise and
protect independent contractors in the Australian workplace.
The Act applies to services contracts which are defined for the
purposes of the Act to be contracts:
to which an independent contractor is a party; and
that relate to the performance of work by an independent
which have the required constitutional connection - that is, at
least one party to the contract is either the Commonwealth or a
corporation incorporated in Australia or has the stipulated
The Act provides the Federal Court and the Federal Magistrates
Court with the jurisdiction to review a services contract if that
contract is alleged to be unfair or harsh. The Act provides that
the Court may make an order to set aside whole or part of a service
contract or make orders to vary the service contract. The Court may
also make interim orders to preserve the positions of the parties
while the matter is being determined.
By enabling the option to bring actions through the Federal
Magistrates Court, the Act provides independent contractors easier
access to remedial actions.
What implications does the result have?
Keldote Pty Ltd -v- Riteway Transport Pty Ltd is the first case
where the unfair contract provisions of the Act have been tested.
The result shows that independent contractors can successfully
address contractual problems they may have with companies (and in
particular large companies with which independent contractors have
reduced bargaining power) through the Act. The case serves as a
warning to all businesses that engage independent contractors.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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