'Adverse action' against independent contractors

The Fair Work Act provides by section 340(1) that a person must not take adverse action against another person because the other person:

• has a workplace right;
  
  
• has, or has not, exercised a workplace right; or
  
  
• proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right.

Adverse action is a wide concept.  It includes not only the ‘prohibited’ mainly discriminatory reasons under the Act, but also conduct such as a warning, allocation of duties or discipline.

Section 342 of the Act extends the scope of adverse action to cover action by a principal against an independent contractor contracted to the principal and by the principal against an employee of that independent contractor.

Adverse action in relation to independent contractors was considered by Fair Work Australia (FWA) in a late 2010 case involving Centrelink.  The applicant to FWA had been retained in both his personal capacity as an independent contractor and by a separate independent contractor company to provide sessional interpreter services at a Centrelink service centre.  Due to a complaint Centrelink received about the applicant, Centrelink requested the company that employed the interpreter not to allocate him to Centrelink for future interpreting work.  Centrelink also advised the interpreter that his name had been removed from the register of approved Centrelink interpreters and translators.

In the course of its decision, FWA stated as a ‘provisional view’ that adverse action under section 342 encompasses ‘a refusal to make use of services offered by an independent contractor in the form of services provided by that contractor through a particular employee of, or subcontractor to, that contractor’.

The potential for the Act to be applied in the way quoted above has far-reaching consequences for principals in every industry in Australia.  It emphasises that the scope of the Act is not entirely restricted to a direct employer/employee relationship.  It also highlights the fact that principals are not immune from applications to FWA even though there may exist between the principal and the contractor, a genuine independent contractor relationship.

Employers who are principals in relation to independent contractors need to take particular care about their obligations to independent contractors where ‘adverse action’ may become an issue.

Should you wish to know more about this topic, please contact either Ian Curlewis, Partner, on 9288 6756 / ian.curlewis@lavanlegal.com.au or Michael Jensen, Senior Associate, on 9288 6944 / michael.jensen@lavanlegal.com.au.