Independent Contractor Agreement

What is an independent contractor agreement in Australia?

An independent contractor agreement is a legally binding contract according to which a client engages a freelancer or independent contractor to provide defined services or perform specified works in exchange for payment. Contractors agreement templates set out the scope of work, payment terms, confidentiality obligations, intellectual property ownership, and termination rights agreed between the client and the contractor.

When do you need an independent contractor agreement?

There are many situations in which having a solid independent contractor agreement template Australia is beneficial, including:

• hiring freelancers or consultants to provide professional services;
• engaging contractors for short-term projects to support an existing team;
• engaging professionals on results-based or deliverables-based work rather than hiring employees; or
• establishing a clear legal framework for working with an independent contractor, etc.

What are the key clauses to include in an Independent Contractor Agreement?

A well-drafted contractor agreement template Australia typically includes the following sections.

Information about the Parties

The parties to an agreement of independent contractor Australia are a client and a contractor. The text of a contract must clearly reflect:

• full names and business or mailing addresses of both parties;
• ACN number (if a party is a company) or ABN number (if a party is a registered business);
• signatures of both parties; and
• contact information of each party (e.g., mail address or phone number).

Description of Services

Every independent contractor contract agreement should clearly describe services to be provided, namely:

• the type and details of the services;
• if engagement of subcontractors is allowed;
• if professional insurance or licensing is required to hold before providing the services, etc.

Legal Disclaimers

It is typical for contractor agreement templates to include the following legal disclaimers:

• No Employment Relations. The text of a contract must specifically state that the parties to this contract are neither employees, agents, nor partners.
• Reasonable Care. A contractor is expected to provide services with reasonable care and skill as required from a contractor in its industry or field.
• Compliance with Laws. A contractor undertakes to perform requested services in compliance with regulation, legislation, delegated legislation, rules, codes and other requirements of federal, state or local authorities.

Limitation of Liability

A client under a contractor agreement template has a number of statutory consumer rights provided by the Australian Consumer Law. These rights apply where services are not provided with due care and skill or are not fit for their intended purpose. Those rights cannot be limited by the provisions of existing contracts and include the following:

• A client may request to supply services again;
• A client may request to return a payment already made for services in full.

Intellectual Property Rights

Parties to this independent contractor agreement must define to whom shall belong all IP rights created in the course of the provisions of services. IP rights include, for instance, plans, specifications, advice, analysis, reports, etc. As a general rule the rights created in the course of the provision of services shall belong to a client by default.

However, parties can change it by assigning all IP rights to its creator – i.e., to a contractor, or to both parties in equal parts.

Payment and invoicing terms

One of the most important pillars for a contractor agreement template Australia is the inclusion of clear payment and invoicing terms. All in all, the contract shall address the following important payment provisions:

• the fee structure (e.g., monthly, fixed, daily or hourly rate);
• invoicing frequency (e.g., every month, every week);
• accepted payment methods (e.g., Klarna, PayPal, direct debit).

Confidentiality

In the course of providing services or defined work under an independent contractor Australia, a contractor has access to a client’s sensitive information, including know-how, trade secrets, etc. To protect such information against unauthorised disclosure, parties need to have a solid confidentiality clause.

In brief, that said clause aims to prohibit a contractor from using or sharing obtained information with third parties during the whole period of duration of this contract and for some time after its termination. In Australia post-termination confidentiality obligations usually survive for one more year.

Parties can also sign a separate confidentiality agreement for advanced protection.

Governing Law

The parties to Independent Contractor Australia shall select applicable laws that will apply to the interpretation and execution of the present Agreement. Parties are free to choose any of 6 state laws and 2 territories, including:

• New South Wales
• Queensland
• Tasmania
• Victoria
• Western Australia
• South Australia
• Australian Capital Territory
• Northern Territory

In practice, the governing law is usually the law of the state or territory where the services are performed or where one of the parties is located or registered.

Independent Contractor vs Employee in Australia

An independent contractor agreement may appear similar to another contract known as an employment agreement. Indeed, both documents deal with contracting individuals for the performance of certain works. However, both documents differ dramatically from each other, and here is why.

• Legal Status. By virtue of the Independent Contractors Act 2006 (Cth), an independent contractor operates their own business and provides services independently, even though they may be entitled to payment and workplace health and safety protections. In contrast, under a Fair Work Act, an employee works under the control and supervision of their employers.
• Entitlements and Benefits. According to National Employment Standards, employees are entitled to a range of additional rights, including paid sick leave, paid public and annual holidays, redundancy payments and many more. On the other hand, independent contractors in Australia enjoy limited benefits like workplace safety protection.
• Regulatory Oversight. The Australian Department of Employment and Workplace Relations exercises prudent supervision and control over proper compliance with employment laws. As a result, a person under an employment contract enjoys a high degree of protection compared to those working under an independent contractor agreement.

What are the benefits of using a contractor agreement template?

Using a well-drafted independent contractor agreement Australia sample provides a number of practical and legal benefits. They include the following:

• establishment of a solid legal framework for working relations between a client and a contractor;
• ensure compliance with relevant Australian legislation, including the Fair Work Act and Independent Contractors Act;
• reduces the risk of disputes between the parties in the future by setting up parties’ mutual expectations;
• guarantees clarity of key terms such as scope of services, payments and obligations.

How to customise this independent contractor agreement at FasterDraft?

To get a fully customised legal document template, follow a few easy steps below:

1. Click the “Create Document” button.
2. Answer simple questions in the form.
3. Select a template’s format – independent contractor agreement Australia PDF or Word.
4. Make a payment.
5. E-sign, download, print