Under the Independent Contractors Act 2006, there is a transitional period of four years and six months where certain state or territory laws may continue to apply to an independent contractor and their principal.

Note: The transitional period started on 1 March 2007 and ends on 1 September 2011.

The transitional period was initially 3 years and was then extended by an additional 18 months. The transitional period allows parties with contracts currently covered by state or territory contracting laws more time to arrange their affairs and familiarise themselves with independent contracting requirements before the relevant State and Territory laws cease to apply.

Reform opt-in agreements

A reform opt-in agreement is a written agreement, which is made during the transitional period, between a contractor and their principal stating they no longer want state or territory contractor laws to govern their contract.

Protections under the Independent Contractors Act

To make sure parties choosing to sign a reform opt-in agreement are protected, the Independent Contractors Act 2006 provides protections, such as a person must not:

• take (or threaten to take) any action to coerce someone to sign, or not sign, a reform opt-in agreement
• not take, or threaten not to take any action to coerce someone to sign, or not sign, a reform opt-in agreement.

Also, a person must not knowingly make a false statement to persuade or influence another person into signing, or not signing a reform opt-in agreement.

Penalties

The Independent Contractors Act 2006 provides serious penalties when these laws aren't followed.

Independent contractors can ask the Fair Work Ombudsman for help if they feel their rights haven't been met under the Act. If they are in the building industry, they can ask the Australian Building and Construction Commissioner (ABCC) for help.

Fair Work Inspectors may take an employer to court if they find the employer refuses to follow the Independent Contractors Act (ie. their actions contravene the Act).

The courts may order the employer to pay a penalty of up to $33,000 for each contravention.

Need help? Call the Independent Contractors Hotline on 1300 667 850.