Unfair Contract claims – and the Gig Economy
Published on September 15, 2025 by Selwyn Black
With effect from 9 November 2023 the earlier Unfair Contracts regime in the Australia Consumer Law (ACL) was extended by changes to the ACL and the Australian Securities and Investment Commission Act 2001 (ASIC Act).
The Unfair Contract Term (UCT) regimes under those laws apply to standard form contracts (as defined) which are either consumer or small business contracts.
In the case of a small business contract, the contract has to be for the supply of goods or services where at the time of entering the contract at least 1 party employs fewer than 100 full-time equivalent employees or has an annual turn-over of less than $10M.
In the case of the ASIC Act the contracts have to have an upfront price of less than $5M and have at least 1 party that employs fewer than 100 full-time equivalent employees or has a turnover of less than $10M.
The laws helpfully provide some examples of Unfair Contract Terms as well as a general tests:
(a) the unfair term must cause a significant imbalance in the parties’ rights and obligations;
(b) it must not be reasonably necessary to protect the legitimate interests of the party advantaged by the terms; and
(c) the term imposes a detriment (whether financial or otherwise) if relied on.
Examples of terms which may be caught include terms which:
- limit or exclude the liability of one party;
- provide for wide indemnities or automatic rollovers; or
- give one party the right to unilaterally vary or terminate the contract without reasonable cause.
Courts have a wide range of orders they can make in relation to Unfair Contract Terms. However, in the case of small business contracts, only the Federal Court system is directly invested with powers. In the case of Consumer Contracts, appropriate State Courts also have powers.
Another option that might be pursued by some gig service providers is to seek remedies under the so-called “Gig Economy” terms in the Fair Work Act (FWA). The FWA provides that the Fair Work Commission (FWC) can make an order giving an unfair contract remedy if satisfied that the services contract includes one or more contract terms which, in the employment relationship, would relate to workplace relations matters. The FWA remedy applies to service contracts entered into on or after 26 August 2024, and only apply if the supplier’s annual rate of earnings is less than the Contractor High Income Threshold.
Subsequently an Uber driver commenced proceedings under section 536MC of the FWA, claiming that it was unfair that:
(a) their contract with Uber does not hold Uber accountable for ensuring its platform functions properly;
(b) the contract permits Uber to penalise contractors through metrics such as cancellation rates even where cancellations are due to app malfunctions beyond the contractor’s control; and
(c) Uber’s contract allows the company to impose restrictions on platform access based on accusations even where the accusations are unsubstantiated or incorrect;
the applicant sought that those provisions of the terms be set aside, amended or varied to for example insert a clause requiring Uber to maintain a functional platform and address the other matters.
This is an interesting case to watch.
Whilst we have a number of reported decisions under the ACL, the hearing of Unfair Contract claims under the FWA is just starting, and so the respective approaches have yet to be fleshed out.
Our preliminary view is that where a person has remedies available under both options, a Gig Economy type claim be better (from the viewpoint of the applicant) brought under the FWA in the FWC since the FWC will have some procedural advantages to an applicant, and be more familiar with workplace-like rights and situations.
We propose to keep an eye on developments and update this article as the case law develops.
Selwyn Black advises in contracting, employment and business matters.
This article was published on 15 September by Carroll & O’Dea Lawyers and is based on the relevant state of the law (legislation, regulations and case law) at that date for the jurisdiction in which it is published. Please note this article does not constitute legal advice. If you ever need legal advice or want to discuss a legal problem, please contact us to see if we can help. You can reach us on 1800 059 278 or via the Contact Us page on our website.
