Consulting Agreement Lawyers Adelaide: Contractor Status, IP, Confidentiality and Restraints
Consulting agreements in South Australia
A consulting agreement decides what the client is buying and who owns the result. It also decides what the consultant may do for competitors once the engagement ends. A poorly matched agreement can leave a business with an employee it thought was a consultant, or with a report it cannot use. Talon Legal drafts and reviews consulting agreements for Adelaide consultants and advisory firms, and for the businesses that engage them. Book a same-day free 30-minute consultation or call (08) 7094 2021.
Consulting agreement key facts
| Issue | Position in South Australia |
|---|---|
| Consultant or employee | For Fair Work Act purposes, decided by the real substance, practical reality and true nature of the relationship, including how the contract is performed in practice (section 15AA, from 26 August 2024). |
| The earlier approach | Where a relationship was comprehensively committed to a written contract, the plurality of the High Court treated its terms as decisive (CFMMEU v Personnel Contracting at [43] to [44]). Section 15AA was enacted in response. |
| Sham contracting | An employer must not represent an employment contract as a contract for services, unless it reasonably believed the contract was one (section 357). |
| Converting employees | An employer must not dismiss an employee in order to engage them as an independent contractor for the same, or substantially the same, work (section 358). |
| Unfair terms | The Fair Work Commission can deal with them for contractors earning below the contractor high income threshold (sections 536NA and 536ND), and the ACL for small businesses on standard form contracts (section 23). |
| Who owns the report | The consultant as author, unless there is a written assignment signed by or for the consultant (Copyright Act sections 35(2) and 196(3)). |
| Confidential information | Protected in equity if identified with specificity, confidential in nature, received in confidence and misused without consent (Optus Networks v Telstra at [39]). |
| Restraints | Most cases turn on reasonableness, particularly the parties' legitimate interests (Peters (WA) v Petersville at [14]). |
| Payroll tax | Amounts paid for work under a relevant contract are taken to be wages, unless an exclusion applies (Payroll Tax Act 2009 (SA) sections 32 and 35(1)). |
| First step | Same-day free 30-minute consultation. Call (08) 7094 2021. |
Need a consulting agreement lawyer in Adelaide?
Our consulting agreement lawyers in Adelaide act for consultants and advisory firms, and for the businesses that engage them. A consulting agreement sets the services, the fees, ownership of the work, confidentiality, liability and how the engagement ends. The Fair Work Act 2009 (Cth) decides whether an individual consultant is really an employee, and the Copyright Act 1968 (Cth) decides who owns the reports. For a business that pays payroll tax, the Payroll Tax Act 2009 (SA) can treat consultant fees as wages. This page states the law current to 6 November 2026.
This guide is part of our professional services practice. Related guides cover service agreements and terms of business, confidentiality agreements and NDAs and web and digital contractor agreements.
Marketing and PR consultants can also see our guide to agency and PR agreements.
IT security consultants and testers can see our guide to penetration testing agreements.
Free Consultation. Send us the consulting agreement before the engagement starts. Book a same-day free 30-minute consultation or call (08) 7094 2021.
On this page
- What should a consulting agreement cover?
- Is a consultant an employee or a contractor?
- What is sham contracting?
- Can consultants challenge unfair terms?
- Who owns the consultant's work?
- How should confidential information be protected?
- Can a consultant be restrained from competing?
- Does payroll tax apply to consultants?
- How should fees, liability and guarantees be handled?
- How should the engagement end?
- How similar matters tend to play out
- How we act on consulting agreements
- Case law
- Frequently asked questions
What should a consulting agreement cover?
Start with the services and the money. Most consulting agreements work best as general terms plus a specification for each piece of work, setting out the deliverables and the fee for that job. If the client is paying for one person’s expertise, the agreement should name that person and say what happens if they become unavailable.
Variations should be agreed in writing before the extra work starts, with any change to the fee stated. For staged work, the agreement can treat a stage as accepted if the client raises nothing within a set number of days after notice.
The fee clause should say how fees are charged and when invoices must be paid. Consultants commonly reserve a right to charge interest on overdue invoices and to suspend work until paid. Expenses need express terms, including whether the client must approve them in advance.
The rest of the agreement allocates risk: ownership, confidentiality, restraints, liability, insurance, termination and the return of materials. A consulting agreement lawyer will also read the draft for what it says about control and exclusivity, because those terms bear on whether the relationship is really employment. Superannuation and workers compensation tests are not covered here.
Is a consultant an employee or a contractor?
It depends on the real relationship. For Fair Work Act purposes, whether an individual is an employee in the ordinary meaning of that expression is determined by ascertaining the real substance, practical reality and true nature of the relationship (section 15AA(1)). The totality of the relationship must be considered, with regard to the contract’s terms and to other factors, including how the contract is performed in practice (section 15AA(2)). The section commenced on 26 August 2024.
In CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1, the plurality held that where a relationship is comprehensively committed to a written contract that is not a sham and has not been varied, the contract’s legal rights and obligations are decisive of its character ([43] to [44]). Section 15AA was enacted as a response to that decision and a companion case (section 15AA note). So for Fair Work Act purposes, a three-month review that has become two years of set hours in the client’s office is judged as it now runs.
What is sham contracting?
Misrepresenting employment as contracting. An employer must not represent to an individual it employs, or proposes to employ, that the contract of employment is a contract for services under which the individual works as an independent contractor (Fair Work Act section 357(1)). It is a civil remedy provision. It does not apply if the employer proves it reasonably believed the contract was a contract for services, and regard must be had to the size and nature of the enterprise in judging that belief (section 357(2) and (3)).
Re-engaging staff as consultants is a separate trap. An employer must not dismiss, or threaten to dismiss, an employee in order to engage them as an independent contractor to perform the same, or substantially the same, work (section 358).
Can consultants challenge unfair terms?
Yes, under two regimes. Under Part 3A-5 of the Fair Work Act, the Fair Work Commission may make an order about a services contract if satisfied it includes unfair contract terms that, in an employment relationship, would relate to workplace relations matters (section 536NA(1)). The matters it may consider include relative bargaining power and whether total remuneration is below that of employees or regulated workers doing similar work (section 536NB(1)). An application can be made only if the contractor’s annual rate of earnings is below the contractor high income threshold (section 536ND(2)).
The Australian Consumer Law protects small businesses. A small business contract is one for the supply of goods or services in which at least one party employs fewer than 100 persons or had turnover of less than $10,000,000 in its last income year (ACL section 23(4)). If it is a standard form contract, an unfair term is void (section 23(1)). A term is unfair if it would cause a significant imbalance, is not reasonably necessary to protect the legitimate interests of the party it advantages, and would cause detriment if applied or relied on (section 24(1)).
Since 9 November 2023, making a standard form small business contract that contains an unfair term the business proposed, or applying or relying on one, is also a contravention (section 23(2A) and (2C)). For a body corporate, the maximum penalty is the greater of $100,000,000 and three times the benefit or, if the benefit cannot be determined, 30% of adjusted turnover during the breach turnover period. For anyone else it is $2,500,000 (section 224).
The rule cuts both ways. A consultant signing a large client’s procurement terms is protected by it. A consultant that uses its own template with small business clients carries the risk.
Who owns the consultant’s work?
The consultant, unless the agreement says otherwise. The author of a literary work, such as a report, owns the copyright (Copyright Act section 35(2)). Work made under the terms of employment under a contract of service or apprenticeship belongs to the employer (section 35(6)), but a genuine consultant, engaged under a contract for services, is outside that rule.
Many consulting agreements leave ownership with the consultant and grant the client a licence to use the reports for its internal purposes. That suits a consultant who reuses methods across clients. It does not suit a client that plans to give the report to a lender or buyer. Reproducing, publishing or adapting the work without the owner’s licence infringes (sections 31(1)(a) and 36(1)), so the licence should match the use the client needs.
A client that needs ownership needs an assignment in writing, signed by or on behalf of the assignor (section 196(3)). An agreement signed by the consultant before the work begins can assign the future copyright, which vests in the client as the work is created (section 197(1)). The consultant’s existing frameworks and templates should be carved out and licensed for use in the deliverables.
How should confidential information be protected?
By a clear clause, backed by equity. A consultant usually sees the client’s financials, customer lists, pricing and plans. The agreement should define what is confidential and limit its use to the engagement, with return or destruction at the end. Consultants have confidential information too, so the obligations are often mutual.
Equity protects confidential information alongside the contract. In Optus Networks Pty Ltd v Telstra Corporation Ltd [2010] FCAFC 21, the Full Court set out the elements of a breach of confidence: information identified with specificity, with the necessary quality of confidence, received in circumstances importing an obligation of confidence, and actual or threatened misuse without consent ([39]). It held that the exhaustive definition of confidential information in the parties’ agreement did not indicate an intention to exclude equitable obligations ([29]). Parties may also agree that a party alleging misuse can elect between contract damages and an account of profits ([37]).
Can a consultant be restrained from competing?
Only within limits. Clients often want a consultant not to work for competitors during the engagement, or not to solicit their staff and customers afterwards. Clauses like these usually operate as restraints of trade.
In Peters (WA) Ltd v Petersville Ltd [2001] HCA 45, the joint judgment observed that most reported decisions on the doctrine turn on the reasonableness of the restraint, particularly in relation to the legitimate interests of the parties ([14]). Threshold questions may come first, including whether there is a restraint at all, which is answered by its practical working rather than merely its legal form ([14]). As Callinan J described the presumption, restraints of trade are contrary to private and public interests and unenforceable unless the person who benefits demonstrates otherwise ([51]).
The practical rule is to draft the restraint no wider than the interest it protects. A clause that stops a consultant soliciting the clients they dealt with is tied to something the client can point to. A clause that keeps them out of their field altogether is much harder to justify, and exclusivity can also make the relationship look more like employment under section 15AA.
Does payroll tax apply to consultants?
It can, for a business that pays South Australian payroll tax. Under the Payroll Tax Act 2009 (SA), a relevant contract includes a contract under which a person, in the course of a business it carries on, supplies services to another person, or is supplied with the services of another person, for or in relation to the performance of work (section 32(1)). Amounts paid or payable by an employer during a financial year for or in relation to the performance of work relating to a relevant contract are taken to be wages paid or payable in that year (section 35(1)).
The exclusions, in summary (section 32(2)). A relevant contract does not include a contract of service, or a contract under which the business is supplied with services:
- ancillary to the supply of goods;
- of a kind it does not ordinarily require, performed by a person who ordinarily performs such services to the public generally;
- of a kind ordinarily required for less than 180 days in a financial year;
- provided for not more than 90 days in aggregate in the financial year, subject to conditions;
- that the Commissioner is satisfied are performed by a person who ordinarily performs such services to the public generally in that year;
- where the work is performed by two or more persons employed by, or providing services for, the contractor (with variants for partnerships and individuals); or
- for certain goods conveyance, insurance procurement and door to door sales.
The exclusions do not apply if the Commissioner determines the contract was entered into with an intention, directly or indirectly, of avoiding or evading tax (section 32(2d)). A business with long-term consultants on rolling agreements should test each engagement against them while it is running.
How should fees, liability and guarantees be handled?
Expressly, and with the statutory limits in mind.
Late cancellation fees, common for booked sessions, need care. Where a sum is payable on default, the question is whether it is out of all proportion to the interests of the party the provision is meant to protect, and those interests may be business or financial ones (Paciocco v Australia and New Zealand Banking Group Ltd [2016] HCA 28, Kiefel J (French CJ agreeing) at [29]). A fee scaled to the notice given, and to the time the consultant cannot resell, is easier to defend than the full fee at any notice.
Liability caps and warranty exclusions meet the consumer guarantees, which can apply to business clients. A business is a consumer of services if the amount paid or payable did not exceed $100,000 (ACL section 3(3)(a) and regulation 77A). The services must then be rendered with due care and skill (section 60), and a term that purports to exclude, restrict or modify the guarantees is void to that extent (section 64(1)). For services not ordinarily acquired for personal use, liability may be limited to supplying the services again or the cost of having them supplied again (section 64A(2)), unless the client establishes that relying on the limit is not fair or reasonable (section 64A(3)).
Insurance should sit behind the cap. Professional indemnity cover suits advice and public liability cover suits work on site. The agreement can require evidence of both.
Guarantees close the gap. Where the client is a company with few assets, a consultant can ask a director to guarantee payment and performance, with an indemnity. Where the consultant is a company, the client may ask its director for the same.
How should the engagement end?
With a clear notice period and a handover. The agreement should set the notice each party must give and allow termination for a breach not remedied within a set time after notice. On termination, the client should pay for work done to date, and each party should return or destroy the other’s confidential material. The agreement should also say which obligations survive.
An action for unpaid fees founded on a simple contract must be commenced within six years after the cause of action accrued (Limitation of Actions Act 1936 (SA) section 35).
How similar matters tend to play out
Three illustrations of how the law on this page combines on ordinary facts. They are not predictions, and a real outcome depends on the documents and evidence.
Lower range. A marketing consultant prepares a brand strategy for an Adelaide retailer under an exchange of emails. The retailer later wants a franchise partner to use it. The consultant owns the copyright (section 35(2)) and nothing was assigned in writing (section 196(3)), so copying the strategy for the partner needs the consultant’s licence (section 36(1)).
Middle range. An engineering firm that pays payroll tax engages three specialists on rolling monthly consulting agreements for most of the year. Each agreement is likely to be a relevant contract (section 32(1)). Work required all year does not fit the exclusions for services ordinarily required for less than 180 days, or provided for not more than 90 days (section 32(2)). Unless another exclusion applies, the fees are taken to be wages (section 35(1)).
Upper range. A company makes its operations manager redundant and, the same week, offers her a consulting agreement to run the same operations. Dismissing an employee in order to engage them as an independent contractor for the same work is prohibited (section 358), and section 15AA will look at how she actually works.
How we act on consulting agreements
We act for consultants and advisory firms, and for the businesses that engage them. For a consultant, the aim is a clear scope and prompt payment. For a client, it is a relationship that is genuinely contracting and the right to use what it pays for.
| Stage | What happens | What we do |
|---|---|---|
| Structure | The parties decide how the engagement will work. | Test the arrangement against section 15AA and the payroll tax exclusions. |
| Drafting | The consulting agreement is prepared or reviewed. | Draft the scope, fees, IP, confidentiality, restraint, liability and guarantee terms. |
| Negotiation | One side's standard terms are on the table. | Identify unfair or one-sided terms and propose workable changes. |
| Operation | The engagement grows or changes. | Review whether the practical reality still matches a consulting relationship. |
| Dispute or exit | The parties fall out over money or ownership. | Advise on the dispute and recover unpaid fees. |
We cannot promise an outcome, and no lawyer can. We can make sure the agreement matches the relationship.
Before you sign. Book a same-day free 30-minute consultation or call (08) 7094 2021.
Consulting case law
None of the decisions below concerned a consulting agreement; each decided a point that applies to one.
| Case | Court | Principle | Pinpoint |
|---|---|---|---|
| CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 | High Court | Written contract decisive of employment status; section 15AA now governs for Fair Work Act purposes | [43], [44] |
| Optus Networks Pty Ltd v Telstra Corporation Ltd [2010] FCAFC 21 | Full Federal Court | Elements of breach of confidence; contract did not exclude equity | [29], [37], [39] |
| Peters (WA) Ltd v Petersville Ltd [2001] HCA 45 | High Court | Restraints: threshold questions and reasonableness; the presumption as Callinan J described it | [14], [51] |
| Paciocco v Australia and New Zealand Banking Group Ltd [2016] HCA 28 | High Court | When a sum payable on default is a penalty (Kiefel J, French CJ agreeing) | [29] |
Case notes
CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1
The plurality held that where a relationship is comprehensively committed to a written contract that is not a sham, and has not been varied, waived or made the subject of an estoppel, the contract’s legal rights and obligations are decisive of its character ([43] to [44]). The worker was declared an employee (orders). For Fair Work Act purposes, section 15AA now requires the whole relationship to be considered.
Optus Networks Pty Ltd v Telstra Corporation Ltd [2010] FCAFC 21
The Full Court held that the exhaustive definition of confidential information in the parties’ agreement did not exclude equitable obligations of confidence ([29]), accepted that parties can agree an election between contract damages and an account of profits ([37]), and set out the four elements of breach of confidence in equity ([39]).
Peters (WA) Ltd v Petersville Ltd [2001] HCA 45
The joint judgment observed that most restraint of trade decisions turn on reasonableness, and that threshold questions may come first, including whether there is a restraint at all, judged by its practical working ([14]). Callinan J described the presumption that restraints of trade are unenforceable unless the person who benefits demonstrates otherwise ([51]).
Paciocco v Australia and New Zealand Banking Group Ltd [2016] HCA 28
Kiefel J, with whom French CJ agreed, said the question is whether a provision for payment of a sum on default is out of all proportion to the interests of the party it is meant to protect, which may be of a business or financial nature ([29]).
Frequently asked questions
Is a consultant an employee or a contractor?
It depends on the real relationship. For Fair Work Act purposes, the real substance, practical reality and true nature of the relationship decide it, including how the contract is performed in practice (section 15AA).
Can a business turn an employee into a consultant?
Not by dismissing them in order to engage them as an independent contractor for the same or substantially the same work, which is prohibited (Fair Work Act section 358).
Who owns a report a consultant writes?
The consultant, unless the copyright is assigned in writing signed by or for the consultant (Copyright Act sections 35(2) and 196(3)). The assignment can be agreed before the work starts (section 197(1)).
Can a client use a consultant's report however it likes?
Only within its licence, if the consultant owns the copyright. Reproducing, publishing or adapting the report without the owner’s licence infringes (sections 31(1)(a) and 36(1)).
Can a consulting agreement stop a consultant working for competitors?
Only within limits. Most restraint cases turn on reasonableness, particularly in relation to the parties’ legitimate interests (Peters (WA) v Petersville at [14]). As Callinan J described the presumption, restraints are unenforceable unless the person who benefits demonstrates otherwise ([51]).
Do consultant fees attract payroll tax in South Australia?
They can. For a business that pays payroll tax, amounts paid for work under a relevant contract are taken to be wages, unless an exclusion in section 32(2) applies (Payroll Tax Act 2009 (SA) sections 32(1) and 35(1)).
Can a consultant limit its liability?
Yes, within limits. Where the consumer guarantees apply, a term excluding them is void to that extent (ACL section 64(1)), but liability for services not ordinarily acquired for personal use may be limited to resupply or its cost (section 64A(2)).
Can a consultant charge a cancellation fee?
Yes, if it is properly framed. Where the fee is payable on default, the question is whether it is out of all proportion to the interests the provision protects (Paciocco, Kiefel J (French CJ agreeing) at [29]).
Can a consultant challenge unfair terms in a client's contract?
Yes, before the Fair Work Commission if their earnings are below the contractor high income threshold (sections 536NA and 536ND), and under the ACL if they are a small business on a standard form contract (section 23).
Do I need a consulting agreement lawyer?
For any engagement where ownership of the work matters or the relationship will be long, yes. A consulting agreement lawyer can match the agreement to how the engagement will actually run and settle ownership before the work starts. A free 30-minute consultation will tell you where you stand.
Related professional services guides
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- Quotes and variation agreements
- Confidentiality agreements and NDAs
- Personal services agreements
- Health practice associate agreements
- Web and digital contractor agreements
- Website content and copyright
- Technology IP and IT disputes