From 26 August 2024, the Fair Work Act definition of employee has expanded in response to issues related to the classification and treatment of independent contractors. The amendment is part of the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024.
Independent contractor or employee?
Independent contractors are a separate and distinct category of workers from employees. A true independent contractor performs work through their own business or enterprise, giving them greater flexibility but rendering them ineligible for most of the rights and protections afforded to employees under the Fair Work Act.
The amendments address this issue by extending certain protections to two types of regulated workers: 'employee-like' workers performing digital platform work in the gig economy, such as Uber, and contractors in the road transport industry. The Fair Work Commission will now be able to hear and determine what are effectively unfair dismissal claims from these regulated workers.
Employee-like workers
The Fair Work Commission now has the power to set conditions for employee-like workers working for a digital labour platform through a minimum standards order. Orders can be made at the Commission's initiative or by application from a relevant business, union, employer association, or the Minister.
A worker is considered 'employee-like' if they perform a significant majority of digital platform work as an individual party to a services contract and satisfy two or more of the following:
- they have low bargaining power in negotiating the contract for their services
- they receive lower remuneration than an employee would for similar work
- they have a low degree of authority over the performance of the work
- they have any other characteristics prescribed by regulations.
Minimum standards orders may cover a range of matters, including payment terms, working time, insurance, consultation and representation. They cannot change the form of a worker's engagement, i.e. by making them an employee.
Regulated road transport contractors
In terms of road transport, the amendments cover contractors performing a wide range of road transport work, primarily in the road transport and distribution, long distance haulage, waste management, cash in transit, and passenger vehicle transportation sectors. The intention is to develop an appropriate safety net of minimum standards for regulated road transport workers to ensure the industry is safe, sustainable and viable.
When exercising its new power to set minimum standards, the Fair Work Commission must go through extensive consultations, including publishing a draft of the proposed order and ensuring affected parties have a reasonable opportunity to provide feedback.
Making a claim
Under these changes, the Fair Work Commission will be able to deal with claims from an employee-like worker who has had their platform access unfairly restricted or suspended or who has been removed from the platform altogether, provided they have regularly worked for the platform for six months. Road transport contractors can lodge a claim for unfair termination of a service contract if they have provided services to the relevant business for at least 12 months.
Similar to an employee lodging an unfair dismissal claim, the worker will need to have an annual income that is less than the contractor high income threshold (currently $175,000) and submit their application within 21 days of the deactivation or termination.
In determining unfairness, the Commission will consider whether there was a valid reason for the deactivation or termination, procedural fairness, and whether the business complied with a Digital Labour Platform Deactivation Code or a Road Transport Industry Termination Code. If satisfied the deactivation or termination is unfair, the Commission can order for platform access to be restored or a new services contract and require the business to compensate the worker for pay lost because of the deactivation or termination.
In circumstances where reinstatement is not an appropriate remedy, road transport contractors can claim up to 26 weeks of earnings or half the high income cap as compensation.
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.
