Contractor High Income Threshold is Set at $175,000
Posted
On 20 August 2024, the Federal Government published the Fair Work Amendment (Contractor High Income Threshold) Regulations 2024 set out the contractor high income threshold of $175,000. This is the final puzzle of the Closing Loopholes No.2 Act. This threshold is consistent with the current employee high-income threshold. It will be critical to determine whether a worker is an employee or contractor and which contractors can challenge unfair contract terms.
Opt-out of the new “employee” definition
The Closing Loopholes No.2 Act introduced an “opt-out” option for contractors who earn above the high contractor threshold to elect not to be covered by the new “employee” definition that will come into effect on 26 August 2024. That is, a worker/contractor who earns over $175,000 a year can choose to opt out of being covered by the new definition of “employee” under section 15AA of the Fair Work Act. The worker can exercise the opt-out either voluntarily or after being notified by a business of their opt-out option.
Right to challenge unfair contract terms
From 26 August 2024, independent contractors who earn below $175,000 will have the right to apply to the Fair Work Commission (FWC) to dispute terms in their service contractors that they believe are unfair. The FWC will have the power to make orders to set aside or vary the contract if unfair terms are found by the FWC.
If you have any questions regarding how these changes would impact on you and your business, please reach out to our Workplace Relations and Legal Team on 02 6175 5900.
