Establishing expectations with your independent contractors?

It is a common conversation I am having with clients. Do you have agreements in place for your employees and independent contractors?

Businesses usually have significant expectation management tools in place for their customers. Simply, it is good business practice to ensure that your customers are clear in regard to what will be delivered.

However, when it comes to the people working in and with their businesses, many businesses tell me they do not see “the need”.

Why do You “need” independent contractor agreements?

I think the same “needs” that exist for ensuring clear expectations with your customers exist with those working in your business

Independent Contractors are different to employees. They provide agreed services under a contract for those services. They work for a fee agreed with your company and can work for more than one company.

Defining whether a person is a contractor or employee can be a minefield. There are a number of separate and independent tests which can be applied. In addition, different organisations may apply these tests differently . You can see more about these tests on the Fair Work Ombudsman’s website:

Independent contractors – Fair Work Ombudsman

An agreement establishes the type of relationship you have – whether it is employment or contractor based. It provides evidence of the intentions of the parties to the agreement.

But an agreement provides more than this. An agreement can also establish the expectations of the contractor relationship including:

  • Who will do what and where;
  • Who will provide the tools;
  • Who is responsible for various aspects of the work being undertaken.

In addition, it can include clauses that protect your business – restrictions on contact with your clients for example.

A recent development

The High Court of Australia has recently handed down two decisions about independent contractor relationships. These decisions support the importance of agreements in these relationships – declaring them “paramount” when the:

“parties have comprehensively committed the terms of their relationship to a written contract”.

You can read more about these decisions through the following links:

Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 (9 February 2022) (austlii.edu.au)

ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2 (9 February 2022) (austlii.edu.au)

While this does not specifically protect your company in all circumstances (for example, other elements of the tests combined may indicate the true nature of the relationship), it provides some direction in regard to establishing the contractor relationship – put it in writing!

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