The contractor ‘killing fields’ - life, death and liability for a contractor - Part 2

The use of contractors in business is becoming more commonplace through:

• Labour hire contracts;
• Short-term casual contracts;
• Major contracts involving large expenditure and long periods on site; or
• Limited-access contracts (eg, delivering goods or repairing equipment).

While there are benefits of a contractor relationship, each of these situations can introduce another layer of risk to businesses. From OHS and IR perspectives, the fact that a contractor is only on site for a short period of time or limited purpose doesn’t absolve the business of its duty to minimise health and safety risks towards contractors, nor eliminate the possibility of industrial action.

Under the FW Act, an independent contractor is protected against ‘adverse action’ taken by a principal. Adverse action is defined as various actions taken by an employer or principal against an employee or contractor which prevent the exercise of a particular workplace right. Adverse actions arise where a principal prevents a contractor from exercising his/her/its rights with respect to:

• Terminating the contract;
• Injury of the contractor under the terms of the contract; or
• Prejudicially altering the position of the independent contractor.

Adverse action is prohibited by the FW Act and protects the rights of independent contractors just as it does employees. Therefore, a principal who engages in any of the above acts will be in contravention of the FW Act, thereby risking heavy civil penalties.

The FW Act also protects individuals against ‘sham arrangements’, where employers misleadingly characterise employees as independent contractors to bypass their obligations to employees. The FW Act prohibits employers from:

• Knowingly representing to an employee that the services which he/she performs under an employment contract are performed as an independent contractor under a contract for services;
• Dismissing or threatening to dismiss an employee in order to engage them as an independent contractor to perform the same work; or
• Knowingly making a false statement to persuade an employee to enter into a contract for services, where the employee will perform the same work for the employer.

Part 3 will conclude the series by addressing the implications of current and future OHS legislation on contractor relationships.

*Andrew Douglas, Douglas Workplace and Litigation Lawyers.