Quick Summary for Independent Contractors
- Independent contractors in Australia don’t receive traditional employee entitlements like minimum wage, annual leave, or redundancy pay unless negotiated in contracts.
- New “whole of relationship tests” determine employment status based on actual working arrangements, not just contracts.
- Sham contracting (being misclassified as a contractor when you’re really an employee) is illegal and you can seek help from Fair Work.
If you’re working as an independent contractor in Australia, the landscape shifted significantly in 2024. While contractors have always occupied a different space than employees, recent changes mean you now have more protections and clearer rights. Let me walk you through what you’re entitled to, what you’re not, and the game-changing updates you need to know about.
What Contractors DON’T Get (Unless You Negotiate It)
Let’s start with the reality check. Unlike employees, independent contractors don’t automatically receive:
- Minimum wage rates – You negotiate your own pricing
- Annual leave, sick leave, or personal leave – No paid time off unless it’s in your contract
- Maximum weekly working hours protection – You control your schedule (and workload)
- Notice of termination – Contracts can usually be ended with whatever notice is specified
- Redundancy payments – No safety net if work dries up
- Public holiday pay – You don’t get paid for days you don’t work
This might sound harsh, but remember: contractors typically charge higher rates precisely because they’re covering these gaps themselves.
What Contractors DO Get
Even though contractors miss out on traditional employee benefits, you still have important rights:
Workplace Safety
All workers in Australia, including contractors, are entitled to a safe workplace. Your clients must still comply with work health and safety laws, regardless of your employment status.
Superannuation Entitlements
Here’s a big one that catches many contractors off guard: if you’re paid mainly for your labour (rather than delivering specific outcomes), your client might need to pay super contributions for you. This applies when:
- More than half your contract value is for your time and skills
- You can’t delegate the work to someone else
- You’re paid for your labour rather than achieving a specific result
Having an ABN doesn’t change this – it’s about the actual working relationship.
Protection from Sham Contracting
It’s illegal for businesses to misrepresent an employment relationship as a contracting arrangement. If you’re working like an employee but being treated as a contractor, you may be entitled to employee benefits and back-payments.
The Game-Changer: Protection from Unfair Contract Terms
Since 26 August 2024, contractors earning below the high income threshold ($183,100 from 1 July 2025) can apply to the Fair Work Commission if they believe contract terms are unfair. This is huge – it’s similar to unfair dismissal protections for employees.
The 2024 Changes That Affect You
The contractor landscape changed dramatically in August 2024. Here’s what you need to know:
New Relationship Tests
Some businesses now use a “whole of relationship test” to determine if someone is an employee or contractor. This is important because it looks at your entire working relationship, not just what’s written in your contract.
Key factors include:
- How much control the business has over your work
- Whether you’re integrated into their business operations
- If you can delegate work to others
- Whether you’re taking commercial risks
- How dependent you are on this client for income
Regulated Workers: A New Category
A new category called “regulated workers” now exists, which includes:
- Digital platform workers (like Uber drivers, food delivery riders)
- Some road transport contractors
If you’re a regulated worker, you get additional protections including help from the Fair Work Commission if your platform unfairly deactivates you.
Enhanced Unfair Contract Protections
The Fair Work Commission can now help contractors challenge unfair contract terms that relate to workplace relations matters like:
- Hours of work
- Pay rates
- Leave entitlements (if they exist in your contract)
- Termination conditions
To be eligible, you need to earn less than the contractor high income threshold and your contract must have been made on or after 26 August 2024.
How to Know if You’re Being Misclassified
Think you might actually be an employee rather than a genuine contractor? Here are the warning signs:
- Your client controls how, when, and where you work
- You work set hours dictated by them
- You can’t send someone else to do the work
- You’re paid by the hour rather than for completing specific tasks
- You use their equipment and work from their premises
- You’re integrated into their business operations
- They provide training like they do for employees
- You only work for this one client
If several of these apply, you might be in a sham contracting arrangement and could be entitled to employee benefits.
What About International Contractors?
If you’re a temporary resident working in Australia (backpacker, student, temporary skilled worker), you’re generally still entitled to super contributions if the work meets the criteria. The same contractor vs employee rules apply regardless of your visa status.
For Australian contractors working overseas, the rules get more complex depending on tax treaties and bilateral agreements. If you’re regularly working internationally, it’s worth getting specific advice.
Challenging Unfair Contract Terms: How It Works
Since August 2024, contractors can apply to the Fair Work Commission if they believe a contract term is unfair. The Commission will consider:
- Whether there’s a significant power imbalance between you and the business
- Whether the term is reasonably necessary to protect legitimate business interests
- Whether the term would cause detriment to you
You can only challenge terms that would relate to workplace relations matters if you were an employee (like pay, hours, or working conditions).
When to Get Help
If you think you’re being misclassified as a contractor when you’re really an employee, or if you believe your contract terms are unfair, there are places to get help:
- Fair Work Ombudsman (13 13 94) for general advice and sham contracting issues
- Fair Work Commission for unfair contract term applications (since August 2024)
- ATO for super guarantee entitlement questions
- Legal advice for complex situations
Your Rights Moving Forward
The 2024 changes represent a significant shift toward better protection for contractors, especially those in potentially vulnerable situations. While you still won’t get traditional employee benefits unless you negotiate them, you now have:
- Better protection against truly unfair contract terms
- Clearer pathways to challenge misclassification
- Enhanced rights if you’re a regulated worker
- Stronger protections against sham contracting
The Bottom Line
Being an independent contractor in Australia means taking on more risk and responsibility, but it also means having more control over your work and potentially higher earnings. The 2024 changes have strengthened your position without undermining the fundamental contractor model.
The key is understanding your rights, recognising when you might be misclassified, and knowing where to get help when you need it.
Remember: your working relationship should genuinely reflect contracting, not just be labelled that way. If it walks like employment and talks like employment, it probably is employment – regardless of what your contract says.
Need Advice on Your Situation?
Whether you’re questioning your contractor classification or want to understand how the 2024 changes affect you, getting proper advice can save you time, money, and stress down the track.
Get in touch to discuss your specific circumstances. I work with contractors across various industries and can help you understand your rights and obligations.
Remember: This information is general in nature and doesn’t replace personal advice. Every situation is different, so always get professional advice for your specific circumstances.