Should I Sign This Contractor Agreement? Contractor or Employee, Super and Unfair Terms (Australia, 2026)

Prepared by Claim Done from the Fair Work Act 2009, the Independent Contractors Act 2006, the Superannuation Guarantee (Administration) Act 1992, the Australian Consumer Law, the Copyright Act 1968 and official Fair Work Ombudsman, ATO and ACCC pages listed under Sources. Last checked 7 November 2026.

Contractor agreements at a glance

Should I sign this contractor agreement?

Sign only once you know what it does to your pay, your super, your exit and your liability. The business usually writes the agreement, so check five things first:

1. Is it really contracting? Set hours, hourly pay, its email and uniform, and no right to send someone else can point to employment.
2. Who pays super? A clause saying “the rate includes super” does not decide the question. The law does.
3. How do you get paid? The invoice process, the due date, disputes, and whether payment depends on its own client paying first.
4. How does it end? The notice each side must give, and payment for work done up to the end.
5. What are you promising? Uncapped indemnities, insurance, intellectual property and restraints.

You can ask for changes before you are bound.

Am I a contractor or an employee?

It depends on the real relationship, not the title on the document. Under section 15AA of the Fair Work Act, whether someone is an employee is worked out “by ascertaining the real substance, practical reality and true nature of the relationship”. The Act says regard must be had not only to the contract terms but also to “how the contract is performed in practice.” The Fair Work Ombudsman says this new definition of employment applies from 26 August 2024.

Points that tend to suggest employment, which the review lists clause by clause: set hours and pay by the hour or day rather than for a result; no right to delegate or subcontract; the business’s tools, uniform or email; one client on an open-ended engagement; control over how the work is done; and no chance of profit or risk of loss.

Two limits matter. First, the Fair Work Ombudsman says this test “can generally only be used by constitutionally covered businesses”; sole traders, partnerships and other unincorporated businesses in New South Wales, South Australia, Queensland, Victoria and Tasmania “use the start of relationship test.” Second, the new Fair Work definition “doesn’t affect the meaning of ’employee’ and ’employer’ in other existing laws”, such as tax, super and workers compensation laws. Super has its own test, below.

The opt-out notice for high earners

If you earn above the contractor high income threshold, you can give an “opt out notice” so the whole-of-relationship test does not apply (s 15AB). “From 1 July 2026, the contractor high income threshold is $190,100” (Fair Work Ombudsman). Only one notice is allowed per relationship, and signing one gives up that test for it.

Sham contracting

An employer “must not represent to the individual that the contract of employment … is a contract for services” (Fair Work Act s 357(1)). Since 27 February 2024 the employer’s defence needs proof that it “reasonably believed that the contract was a contract for services.” It also must not dismiss an employee to re-engage them as a contractor for substantially the same work (s 358), or knowingly mislead them into switching (s 359). The review flags sham-contracting risk; it does not decide that you are an employee.

If the document is really an employment contract, the employment contract review reads it against the employee rules instead.

Do contractors get super?

Often, yes. Section 12(3) of the Superannuation Guarantee (Administration) Act says: “If a person works under a contract that is wholly or principally for the labour of the person, the person is an employee of the other party to the contract.” The ATO puts it plainly: “If you pay independent contractors mainly for their labour, they are employees for superannuation guarantee (SG) purposes.”

So “rate includes super” wording does not settle whether super is owed to your fund.

Personal services income

Tax is a separate question. Personal services income is “income produced mainly (more than 50%) from your skills or efforts as an individual” (ATO). The ATO’s results test needs you to be paid for a specific result, to provide your own tools, and to fix mistakes at your own cost; hourly or daily rates make the first unlikely. The review flags PSI risk; it does not work out your tax.

Unfair contract terms: what protects a contractor

There are three routes, and which one fits depends on your earnings, the contract date and who you contract with.

Under the Australian Consumer Law, a term is unfair if it would cause “a significant imbalance in the parties’ rights and obligations”, is not reasonably necessary to protect the legitimate interests of the party it favours, and would cause detriment (s 24(1)). The business must prove a term is reasonably necessary (s 24(4)). Terms setting the upfront price or the main subject matter are exempt (s 26).

Section 25’s examples include terms that let only the business end the contract, change the rate or scope, renew or not renew, penalise you for breaching or ending it, decide whether you breached it, assign it without your consent, or limit your right to sue. Only a court or tribunal can decide that a term is actually unfair; the review shows which clauses match the examples and which route may apply.

Other clauses that cost contractors money

Payment terms

Check the due date, disputes, late-payment interest and any right to withhold money. A clause paying you only once its own client pays moves its risk onto you.

Intellectual property

As the author, you own copyright in your work (Copyright Act s 35(2)); the employer-ownership rule in s 35(6) applies only to employment. An assignment of copyright “does not have effect unless it is in writing signed by or on behalf of the assignor” (s 196(3)). So the agreement itself is usually where you give it away. Watch for clauses that also take your pre-existing tools, templates and know-how, or that transfer ownership before you are paid.

Restraints and non-competes

There is no Commonwealth ban on non-competes in force: the government released draft legislation on 7 September 2026 to ban non-compete clauses for workers earning under $190,100 (whether it would cover contractors is not settled), and earlier said the reforms “will take effect from 2027”. Whether a restraint can be enforced is decided case by case on its reasonableness. The review quotes the area, length and activities each restraint covers so you can ask for it to be narrowed.

Indemnities and insurance

Look for an uncapped indemnity, an indemnity for the business’s own negligence, and insurance levels that cost more than the job is worth.

What our review checks

Upload the agreement and get a plain-English report, written for the contractor, usually about 5 minutes after you pay. It:

• reads the whole agreement from the contractor’s side
• lists the clauses that point towards employment or towards genuine contracting
• checks whether super may be owed to you, and flags “rate includes super” wording
• notes the contract date, the other party and your likely earnings, so you know which unfair-terms route may apply
• finds one-sided termination, variation, penalty, indemnity, payment and IP clauses, and any opt-out notice
• quotes any restraint, with its area, duration and scope
• gives you the specific changes to ask for before you sign

The report explains what the agreement says and what the law provides. It is not legal advice, and it does not say a clause “is void” or that you “are” an employee. Those are questions for a court or tribunal. You decide what to sign.

Get your contractor agreement reviewed – $49

Questions people ask

Should I sign a contractor agreement without changes?

Only if you understand and accept every clause. Most agreements are drafted by the business, so check super, payment terms, termination notice, indemnities, IP and restraints first. You can ask for changes before signing, and a one-sided term is easier to fix then than after a dispute starts.

How do I know if I am a contractor or an employee?

Look at the real relationship, not the label. Since 26 August 2024 the Fair Work Act looks at “the real substance, practical reality and true nature of the relationship”, including how the contract works in practice. Set hours, hourly pay, no right to delegate and the business’s tools point towards employment.

Do contractors get super in Australia?

Yes, if they are paid mainly for their own labour. The ATO says contractors paid mainly for their labour “are employees for superannuation guarantee (SG) purposes”, and “It doesn’t matter if the independent contractor has an Australian business number (ABN).” Mainly means more than half the dollar value of the contract.

My contract says the rate includes super. Is that allowed?

The wording does not decide whether super is owed. If you are paid mainly for your labour under a contract with you personally, the business owes 12% super to your fund, and the ATO says paying that amount to you as cash “does not count as a super contribution.” Ask the business to confirm how it handles super.

Do I get super if I contract through my own company?

Generally not from the business that hires your company. The ATO says: “If you enter into a contract with a company, trust or partnership, you do not have to pay super for the person they employ to do the work.” Where super is owed to you personally, it is due within 7 business days of the invoice being paid.

Can a contractor agreement have unfair terms?

Yes. If you are a small business (fewer than 100 staff or turnover under $10 million) on a standard form contract, an unfair term is void under the Australian Consumer Law. One-sided termination, variation, renewal and penalties are the statutory examples. A court or tribunal makes the final decision.

What is sham contracting?

Sham contracting is an employer presenting an employment relationship as a contract for services. It is prohibited by section 357 of the Fair Work Act. Since 27 February 2024 an employer can rely on the defence only if it proves it reasonably believed the contract was a contract for services.

Can my employer make me become a contractor?

Not by dismissing you to do it. An employer must not dismiss or threaten to dismiss an employee in order to engage them as a contractor for the same or substantially the same work (Fair Work Act s 358), and must not knowingly make a false statement to persuade them to switch (s 359).

Who owns the work I create as a contractor?

You do, unless you assign it. The Copyright Act makes the author the owner, and the employer rule applies only to employment. An assignment must be in writing and signed by you. Check whether the agreement assigns your work, your pre-existing tools, or ownership before you are paid.

Can a contractor agreement include a non-compete?

It can, and there is no Commonwealth ban in force as at 7 November 2026; the government has released draft legislation for workers under $190,100. Whether a restraint can be enforced depends on its reasonableness, decided case by case. Ask for any restraint to be limited in area, time and activity.

Is the contractor agreement review legal advice?

No. It is a plain-English report that explains what your agreement says, what the law provides and what to ask the business to change. Claim Done is not a law firm.

Related guides

• Independent contractor or employee: why your service agreement needs to get this right
• Independent contractor didn’t get paid: how to recover your invoice
• Should I sign this NDA?
• Non-compete clauses in Australia

Claim Done is not a law firm and does not give legal advice; this page is general information about Australian law as at 7 November 2026. Whether you are an employee, or whether a term is unfair, is for a court or tribunal to decide.

Sources (checked 7 November 2026)

• Fair Work Act 2009 (Cth), Compilation No. 73 (ss 15AA, 15AB, 357-359, 536NA-536ND)
• Independent Contractors Act 2006 (Cth) (ss 12, 15, 16)
• Superannuation Guarantee (Administration) Act 1992 (Cth) (ss 12(3), 17A)
• Competition and Consumer Act 2010 (Cth), Schedule 2 (Australian Consumer Law) (ss 23-27)
• Copyright Act 1968 (Cth) (ss 35, 196)
• Fair Work Ombudsman: independent contractor changes
• Fair Work Ombudsman: opting out of the whole-of-relationship test
• Fair Work Ombudsman: contractor entitlements and support
• ATO: super for independent contractors
• ATO: contractors, when to pay super under Payday Super
• ATO: personal services income
• ATO: the results test
• ACCC: unfair contract terms law changes
• Treasury ministers: draft non-compete legislation (7 September 2026)
• Australian Government media release: non-compete reforms (25 March 2025)

Related guides: indemnity clauses, liability caps.