Why your Independent Contractors agreements need updating?
Tradies use Contractors on a regular basis. Contractor’s rights increased under the Fair Trading Act 1986 in August 2022 in an attempt to address significant imbalances that existed in contractor/ agreements of the past.
“Unconscionable conduct” and “unfair contract terms” are now prohibited in small trade contracts.
What is a Small Trade Contract?
A standard form small trade contract is a contract between two parties and trade, where no more than $250,000 is paid.
What is Unconscionable Behaviour
Unconscionable conduct is behaviour that is harsh and oppressive.
What will the Court Consider?
The court will look at the parties;
- bargaining power
- good faith
- the contract
- whether pressure to sign and accept the terms of the contract was applied unfairly.
What are the fines for violating the Act?
If a business is found in violation of these rules, they can be fined up to 600,000.
Other options available to the court;
- include damages
- injunctions
- cancelling or changing the contract
What is an unfair term?
Any term in this contract will be considered
unfair if;
- it causes a significant imbalance in the parties’ rights and obligations,
- it is not needed to protect the interests of the other party, or
- it causes harm to one of the parties when used
Examples of unfair clauses include:
- a rule that punishes one party but not the other
- a rule that limits one parties’ right to sue the other
- a rule that allows only one party to change the contract terms without the other’s agreement
- a rule that allows one party, not the other, to give part of their contract to somebody else.
What should the Contractor do
- Any breaches of the Independent Contractor Agreement should be brought up with the Employer first.
- If prudent discussion and solutions prove impossible, the affected party can file in the Disputes Tribunal up to a breached value of $30,000.
We encourage all employers using Contractors to review their standard contractor agreements to identify any terms that may breach the Act and update negotiation and induction procedures.
We can help you with this.
- Ring us 022 562 0069 or
- tune into our bi weekly free questions session Monday 7:30 on Zoom. Email hello@welovetradiesHr.co.nz for the link.
Disclaimer!
We Love Tradies HR Ltd blogs contains only general information about legal matters. It is not intended to be legal advice and should not be treated as, or relied on, as such. For legal advice specific to your set of facts, please contact a lawyer appropriate to your legal issue.
