New unfair termination protection for road transport contractors
Road transport contractors who have been performing work for a road transport business in the road transport industry for at least 6 months may be protected from ‘unfair termination’ pursuant to recent changes to the Fair Work Act 2009 (Cth) (Act) (see Part 1.2 Division 3A and Part 3A.3 of the Act).
Who is protected from unfair termination?
A road transport contractor is a person who performs all or most of the work under a services contract with a road transport business in the road transport industry. They are not an employee or employee-like worker and they need to have been engaged for at least 6 months.
Claims can be made from 25 February 2025, being 6 months after the new provisions commenced. Time worked prior to 25 February counts towards the minimum engagement period.
Termination
A road transport contractor has been terminated if the services contract was terminated by the road transport business, or because of something the road transport business did.
When will termination be unfair?
A road transport contractor can make an unfair termination application to the Fair Work Commission (FWC) within 21 days of termination.
The FWC will consider whether there was a valid reason and whether the Fair Work (Road Transport Industry Termination Code) Instrument 2024 (the Code) has been followed.
The Code will commence on 25 February 2025 and can be accessed here.
The Code establishes minimum requirements in respect of issuing warnings, following a show cause process and mandatory matters to be considered by the road transport business before terminating.
If it is established that the termination is due to serious misconduct, the termination will not be unfair.
Remedies
The primary remedy is reinstatement by way of a new services contract. The FWC has power to order a new contract on the same terms or with such variations as the FWC considers appropriate.
Compensation can be ordered and the criteria to be considered is materially the same as an unfair dismissal application.
Compensation excludes general damages and is capped at the lesser of 26 weeks remuneration under the services contract or half of the contractor high income threshold (the high income threshold is $175,000 at the time of this publication).
Consideration for Road Transport Businesses
The establishment of this new type of claim under the Act means the road transport businesses who engage road transport contractors should consider taking steps including:
- reviewing contractor agreements
- becoming familiar with the requirements established by the Code
- reviewing policies and practices around engaging, managing and terminating contractors.
This publication constitutes a summary of the information of the subject matter covered. This information is not intended to be nor should it be relied upon as legal or any other type of professional advice. For further information in relation to this subject matter please contact the author.
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