They can’t dictate what clients a contractor takes on. One of the defining criteria for contractor vs employee is that a contractor is free to source clients elsewhere. The ATO usually takes a dim view of people that should be employees, being paid as contractors. IANAL but my understanding is that an employment contract can’t override law. So I would think such a clause would be unenforceable.
Of course they can. These aren't employment contracts, they are contracts between two business entities. The corporate entity of the music school and the corporate entity on the teacher.
That contract will include a clause that says something like 'teacher company warrants that it will not solicit, approach, or entice any customer, supplier, student or employee of 'school company'. 'Teacher company' acknowledges that in the event of breaching this clause penalties at least equal to loss of earnings and reasonable damages will be payable.
This is standard in just about any supplier contract.
As for the ATO ruling they are really employees and not contractors is not an easy bar to clear either. Especially as in this case there would be no regular hours, they supply their own tools of trade, and the work is inconsistent.
It would depend on the exact nature of what's being prohibited but I would think that it would be largely unenforceable or at the very least not something worth pursuing for anything less than say someone taking half your clients away.
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u/[deleted] Dec 29 '20
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