Part 3: Deductions and statements

15. Deductions from remuneration

1. Section 24 of the Act places certain restrictions on hirers requiring contractors to pay any amount, or from making deductions from money payable to contractors, in respect of services or equipment provided to contractors by hirers or any other person. Under section 24, any amount deducted must be –
   1. specified in the contract; and
   2. a direct and proper reflection of the actual cost of the services or equipment in respect of which the costs are charged.
2. Section 24 also requires the hirer to give the contractor a reasonable opportunity to obtain the services or equipment from another supplier.
3. Section 23 also requires a hirer seeking to make deductions for insurance to have an insurance policy in force and to have provided a copy of the policy to the contractor.
4. Under section 65 of the Act, any term of a contract that is contrary to, or inconsistent with, anything in the Act, the regulations or this Code is void to the extent that it is contrary or inconsistent. There are also strict requirements under the Financial Services Reform Act 2001 of the Commonwealth concerning who is allowed to offer insurance policies.

MANDATORY REQUIREMENT

If a hirer makes deductions from a contractor’s invoiced fees for services, or the use of equipment, provided by the hirer or any other person, the hirer must provide a written statement to the contractor setting out the nature of the equipment used or services provided and the amount deducted for the equipment or service.

EXAMPLE 15

Russell works for a taxi truck company. The company starts to deduct an “insurance fee” of 5% of turnover from all its contractors. Russell already has his own insurance coverage that is much cheaper, but the company says he must also participate in its “self-insured” scheme. The hirer is in breach of sections 23 and 24 of the Act. Russell and his colleagues could notify a dispute to the Small Business Commission.

16. Deductions for the use of the hirer's equipment and technology

A range of new technology, such as vehicle monitoring technology, GPS devices and electronic invoicing equipment or other communications and monitoring equipment is now available. This technology may provide a benefit to the contractor or the hirer, or to both parties, in terms of improved efficiency, safety, client loyalty or productivity.

EXAMPLE 16

A construction company negotiates with its owner drivers to install new vehicle monitoring technology to obtain government permission to operate more heavily loaded vehicles on certain roads. The equipment costs $1500 to install with a weekly monitoring fee of $30. The company has calculated that the additional load capacity would allow the contractors to earn an extra $200 a week. As the contractor obtains a significant financial benefit from using the equipment, it is unlikely to be an unjust contract term if the contract allows the hirer to deduct the costs from the contractor’s payments, provided the contractor agrees and the deduction is no more than the actual cost of the service and equipment provided.

17. Penalties

MANDATORY REQUIREMENT

A hirer must not require a contractor, or include a term in a contract requiring a contractor, to make any payment which is in the nature of a penalty. A “penalty” is a payment that must be made by a party for an amount in excess of the amount necessary to remedy the actual loss or damage suffered as a result of the conduct.

EXAMPLE 17

Fang Shan’s contract states that she must pay $100 to the company if she is more than 10 minutes late in a delivery. The inclusion of this contract term is in breach of this Code, and Fang Shan could notify a dispute to the Small Business Commission.