Over the years, many owner-drivers have complained about ‘unfair’ terms in their contracts.
While there are a variety of laws that deal with unfair contract terms (UCTs) a lot of these are complex, and require owner-drivers to engage lawyers or get involved in expensive court proceedings.
From August 26, the Fair Work Commission has new powers to make orders in relation to UCTs in services contracts, offering remedies accessible to contractors with limited bargaining power for whom the costs of going to court would probably be unaffordable, NatRoad told its members in a bulletin this week.
Here’s what else you need to know about the Closing Loopholes legislation and the procedures for dealing with UCTs that are quick, flexible and informal, said NatRoad.
When do these changes start?
These new changes come into effect on August 26, 2024. The laws only apply to services contracts entered into after this date.
When can the FWC make an order in relation to a UCT?
The FWC can make an order if it is satisfied that the services contract includes one or more UCTs which relate to matters like rates, hours of work, termination or disputes.
Orders can only be made upon application. In considering whether to make an order, the FWC must take into account fairness between both parties to the contract.
The FWC may also only make an order where the income of the applicant is below the ‘contractor high income threshold’. This threshold has not yet been set, and consultation with the road transport sector and other interested parties is underway.
It is unclear at this point how this figure is to be calculated (eg, net or gross income, or averaged over a period of time), but this, along with the figure itself, will be set out in the yet to be made regulations.
What matters will be considered by the FWC in deciding whether a term is unfair?
In determining whether a term of a services contract is unfair, the FWC may take into account:
• the relative bargaining power of the parties;
• whether the contract as a whole: o displays a significant imbalance between the rights and obligations of the parties; o provides for a total remuneration for performing work that is:
▪ less than contractors performing the same or similar work would receive under a minimum standards order or minimum standards guidelines; or
▪ less than employees performing the same or similar work would receive;
Whether the contract term under consideration:
- is reasonably necessary to protect the legitimate interests of a party to the contract;
- imposes a harsh, unjust or unreasonable requirement on a party to the contract; and
- any other matter that the FWC considers relevant.
What types of orders can be made when a term is found to be unfair?
The types of orders which the FWC may make are:
• an order setting aside all or part of a services contract; or
• an order amending or varying all or part of a services contract.
How will all of this this happen in practice?
An application must be made to the FWC by a person who is a party to a services contract, or an organisation representing the industrial interests of a party to a services contract.
Note that a ‘person’ can include a company. As discussed above, an application can only be made by a person who earns less than the contractor ‘high income threshold’.
The FWC may conduct a conference or hearing in relation to the application.
Where can I get more information?
You can read more about these new laws here, or watch a short video below.