Contractors Just Got a Pay Floor. The Line You Relied On Has Moved.
For the first time in Australian history, people who are not employees have legally enforceable minimum pay and conditions. It started with food delivery riders. It will not end there. Here is what the change means for any business that engages contractors.
On 17 August 2026, Australia set a legally enforceable pay floor for workers who are not employees. The Fair Work Commission made its first-ever minimum standards order, covering on-demand delivery riders and drivers engaged through apps. Rates run from $31.30 to $32 an hour, depending on the vehicle.
The rates are not the important part. The precedent is.
For a century, Australian workplace regulation rested on a single question. Is this person an employee or a contractor? Employees received minimum wages, leave and protections. Contractors received a rate and a risk. That binary has now been broken. A third category exists, and it carries enforceable minimum conditions without carrying employment.
This matters well beyond food delivery. The Commission is already considering applications covering rideshare drivers and last-mile parcel delivery. The same legislative framework applies more broadly to road transport contractors. For the accounting practice engaging a bookkeeper, the building company using subcontractors, the allied health clinic paying a contracted physiotherapist, or the not-for-profit engaging a programme facilitator, the question has changed. It is no longer only whether you have classified someone correctly. It is whether the category itself is about to be regulated.
The practical response is not panic. It is a contractor audit. Know who you engage, on what terms, and how exposed you are if the definitions shift. Businesses that can answer those questions quickly will adapt cheaply. Businesses that cannot will find out the hard way, as they always do.
THE MINIMUM STANDARDS ORDER AT A GLANCE
The minimum standards order commenced on 17 August 2026 and was made by an Expert Panel of the Fair Work Commission.
Covers employee-like workers engaged through an app who mainly deliver consumables or supermarket groceries, and the platform operators that engage them.
Minimum hourly rates of $31.30 for bicycles, e-bikes, e-scooters or no vehicle, $31.50 for motorcycles and combustion scooters, and $32 for cars and vans up to one tonne.
Rates apply to engaged time, averaged across an earnings period of up to 21 days, with a top-up payment if total earnings fall short.
Also covers insurance, vehicle costs, record-keeping, consultation, dispute resolution, delegates’ rights, and a mandatory information statement.
Digging Deeper
The detail below matters most to businesses that engage contractors, to advisers who classify them, and to anyone watching where Australian workplace regulation is heading. The minimum standards order itself is short. Its implications are not.
How the minimum standards order actually works
The headline figure is an earnings floor, not an hourly wage. That distinction carries real weight.
A platform multiplies a worker’s total engaged time by the applicable rate. If total earnings across the earnings period fall below that figure, the platform pays the difference as a top-up. The earnings period can run up to 21 days. So a rider can be paid less than the rate for an hour, a shift or a fortnight, and the platform still complies, provided the average holds by the end of the period.
Engaged time is also defined narrowly. It covers the period spent completing an engagement as recorded in the app, with certain periods expressly excluded. Time spent waiting for work to arrive is generally not counted. Time spent waiting at a restaurant for an accepted order is not counted.
Vehicle costs, fuel and fines remain with the worker. Compulsory third-party insurance stays the worker’s responsibility. The platform must provide and fund personal accident insurance.
Rates rise by 50 cents an hour from 1 January 2027 and are then adjusted annually in line with the Commission’s minimum wage review. Anyone reading this as a fixed number is reading it wrong. It is an indexed floor with a built-in escalator.
The terms that matter more than the rate
Commentary has fixed on the dollar figures. The structural terms will prove more consequential.
The minimum standards order establishes consultation obligations when a platform makes significant changes. It creates dispute resolution machinery. It recognises workplace delegates’ rights. It imposes record-keeping duties. It requires platforms to provide workers with an information statement outlining their entitlements.
Read that list again with an employment lawyer’s eye. Consultation, dispute resolution, delegate representation, records and mandated disclosure are the scaffolding of employment regulation. They have now been attached to a workforce that remains, in law, independent contractors.
A rate can be argued down at the next review. Structural rights, once established, tend to stay. They also tend to spread.
Who is covered, and who is not
Coverage is deliberately narrow. The minimum standards order applies to employee-like workers engaged through a digital labour platform whose work, over an earnings period, predominantly involves collecting and delivering consumables such as food, beverages and liquor, or supermarket groceries, for prompt delivery.
Vehicles with a carrying capacity above one tonne are excluded. Rideshare is not covered. Parcel and last-mile delivery are not covered. Traditional subcontracting arrangements in trades, professional services, allied health and community services are not covered.
That last point deserves emphasis, because it is where misreading causes harm. If your business engages a subcontractor directly rather than through a digital labour platform, this minimum standards order does not apply to you. Nothing about your existing arrangements became unlawful on 17 August.
The reason to pay attention is directional, not immediate.
Why a delivery order should interest a plumbing business
The Fair Work Commission has two further applications before it covering employee-like workers and road transport contractors performing last-mile delivery work. This first minimum standards order is expressly interim, and will be reviewed once those matters progress. A separate application concerns passenger transport. Another concerns a road transport contractual chain order for fuel cost recovery.
Taken together, these signal a regulatory programme rather than a one-off. The legislative machinery that produced the first minimum standards order can produce more. Each new minimum standards order tests the boundary between contracting and employment in a different industry.
The broader lesson for Australian business is simpler still. Regulators have decided that economic dependence, not contractual label, is the thing worth regulating. A worker who relies on one engager, takes direction through a system they do not control, and bears cost without bearing genuine commercial risk now attracts regulatory interest regardless of what the contract says.
Any business with contractors who look like that should be thinking about it now.
What this means across the SBAAS sectors
The exposure differs by sector, and the differences are worth stating plainly.
Trades and construction
Subcontracting is the industry’s operating model, which makes it the most exposed to any redrawing of the contractor line. Sham contracting provisions in the Fair Work Act already prohibit misrepresenting employment as a contracting arrangement, and penalties for that conduct increased substantially under recent reforms. Road transport falls within the same regulated worker framework that produced this order, so trade businesses running delivery or haulage arms have a direct interest. The practical risk for most builders and trades operators is not the new order. It is a long-standing subcontractor arrangement that would not survive scrutiny under the multi-factor test.
Allied health and NDIS providers
Contracted practitioners are common, and the sector already carries dense obligations under the NDIS Practice Standards and the SCHADS Award. Providers frequently engage physiotherapists, occupational therapists and support workers as contractors while directing their hours, their client allocation and their documentation. That combination invites the exact analysis the regulated worker framework applies. The Fair Work Ombudsman has also named disability support services as a current enforcement focus, so this is a sector already under the lamp.
Professional services
Firms engage contracted bookkeepers, consultants, paraplanners and marketing specialists, often on rolling arrangements that outlast most employment relationships. Professional services businesses tend to assume that a skilled, well-paid contractor is beyond question. Remuneration is not the test. A senior consultant who works exclusively for one firm, uses its systems and cannot substitute another person may be an employee on the established indicia, and no rate protects against that finding.
Not-for-profits
Community organisations engage sessional facilitators, trainers and project staff, frequently under short funding cycles that make employment feel impractical. Funding agreements increasingly require compliance attestations, and a misclassification finding can jeopardise both the grant and the organisation’s standing with its regulator. Boards carry the governance duty here. ACNC Governance Standard 5 requires responsible persons to act with care and diligence and to ensure the charity complies with Australian law, and workforce classification sits squarely inside that duty.
The global context
Australia is not moving alone, and the international pattern is instructive.
The European Union adopted a Platform Work Directive in 2024, introducing a presumption of employment for platform workers who meet certain criteria and requiring member states to transpose it into national law. Spain enacted its rider law in 2021, establishing presumptions regarding employment for delivery riders. The United Kingdom Supreme Court found in 2021 that Uber drivers were workers, a category between employee and self-employed that carries minimum wage and holiday entitlements. California has moved in both directions across a decade of legislation and litigation.
Australia has chosen a different mechanism. Rather than reclassifying platform workers as employees, the Fair Work Act creates a separate regulated worker category and empowers the Commission to make a minimum standards order within it. The workers stay contractors. The conditions arrive anyway.
That is arguably the more durable design, because it avoids the binary fight that has consumed other jurisdictions. It is also the reason Australian businesses should not assume that keeping someone outside employment means they are outside the regulatory framework. Those two things have now been formally decoupled.
What sensible businesses do next
None of this calls for restructuring on the strength of a minimum standards order that does not yet apply to you. It calls for knowing your own position.
- Build a contractor register. List every contractor, what they do, how long they have been engaged, who directs their work, and whether they work for anyone else.
- Apply the multi-factor test honestly to each one. Control, ability to delegate, provision of tools, commercial risk, integration into the business and basis of payment all matter. Where the answer is uncomfortable, that is information worth having early.
- Check your written agreements match reality. Since the 2024 reforms, the whole relationship is assessed, not just the contract. A well-drafted agreement that describes something other than what happens in practice offers little protection.
- Review contractor rates against the equivalent employee cost. If your contractor rate sits below what an employee would cost you, including on-costs, expect that gap to attract attention.
- Confirm your insurance position. Workers’ compensation obligations for deemed workers vary by state and are a common blind spot in contractor-heavy businesses.
- Watch the pending applications. The rideshare and last-mile matters before the Commission will indicate how far the regulated worker framework extends.
A business that can produce that register and defend each classification is in a strong position whatever comes next. A business that cannot is carrying an unpriced liability.
The honest assessment
The Commission itself described the considerations for and against this minimum standards order as finely balanced. That candour is worth respecting, because reasonable people disagree about whether a 21-day averaging window and a narrow definition of engaged time deliver a meaningful floor.
What is not in dispute is the shift in method. A minimum standards order can now reach people who are not employees at all. Australia has demonstrated that it can impose enforceable minimum conditions on non-employees without calling them employees. Whatever one thinks of the rates, that capability now exists and has been used.
The businesses that will handle the next decade well are the ones treating contractor arrangements as a live governance question rather than a settled administrative one.
Frequently Asked Questions
Does the new minimum standards order apply to my subcontractors?
Almost certainly not. The minimum standards order covers only workers engaged through a digital labour platform who mainly deliver food, beverages, liquor or supermarket groceries on request. Direct subcontracting arrangements in trades, allied health, professional services and community services fall outside it. The relevance for those businesses is what the order signals about future regulation, not any immediate obligation.
What is an employee-like worker?
It is a category created by 2024 amendments to the Fair Work Act. An employee-like worker is an independent contractor engaged through a digital labour platform who displays some characteristics of employment, such as low bargaining power, low authority over their work, or pay at or below comparable employee rates. They remain contractors in law but can be covered by enforceable minimum standards.
Do gig workers now get superannuation and leave?
No. This minimum standards order does not create superannuation, annual leave or personal leave entitlements. It sets a minimum earnings floor and a set of conditions covering insurance, costs, records, consultation, representation and dispute resolution. Workers remain independent contractors and are responsible for their own tax and superannuation arrangements.
How do I know if my contractor is really an employee?
Australian law applies a multi-factor test looking at the whole relationship. Relevant factors include how much control you exercise, whether the person can delegate the work, who supplies tools and equipment, whether they carry genuine commercial risk, how integrated they are into your business, and how they are paid. Since August 2024, the practical reality of the relationship is assessed rather than the contract wording alone. Where the position is unclear, get advice before a dispute forces the question.
What are the penalties for getting classification wrong?
Consequences can include back-payment of wages, leave and superannuation, interest, and civil penalties. Sham contracting attracts separate and substantially higher penalties, and accessorial liability provisions mean directors, managers and advisers involved in a contravention can be personally exposed. Unpaid superannuation also triggers a separate Australian Taxation Office regime with its own charges.
Will these rules extend to rideshare and parcel delivery?
Applications covering those categories are currently before the Fair Work Commission. The minimum standards order made in August 2026 is expressly interim and will be reviewed once those matters advance. It is reasonable to expect further orders, though their scope and timing are not yet settled.
My business uses delivery platforms as a customer. Am I affected?
Not directly. The obligations under the minimum standards order sit with the platform operator, not with the restaurants, grocers or retailers whose goods are delivered. You may see cost changes flow through platform pricing over time, which is worth factoring into margin planning if delivery represents a meaningful share of your revenue.
Where to From Here
Contractor classification is one of those issues that stays quiet for years and then arrives all at once, usually attached to a claim, an audit or a funding review. The businesses that handle it well are the ones that looked at it before anyone made them.
If you engage contractors and you are not certain where you stand, that is worth an hour of proper attention. SBAAS works with trades businesses, allied health and NDIS providers, professional services firms and not-for-profits across Australia on exactly these questions. You can learn more about the team and how we work at https://sbaas.com.au/about-us/.
IMPORTANT INFORMATION
Published 26 August 2026.
This article is general information only. It does not constitute legal, financial or professional advice, and it does not create an advisory relationship between SBAAS and any reader.
Workplace classification is fact-specific. The description of the employee and contractor test in this article is a simplified overview of a complex area, drawing on the Fair Work Act 2009 (Cth), including amendments that commenced in August 2024, and on common-law principles that continue to develop in the courts. Whether a particular worker is an employee or an independent contractor can only be determined by assessing the full circumstances of that engagement. This article should not be used to classify a worker.
The Interim On-Demand Delivery Employee-like Worker Minimum Standards Order is, as its title indicates, an interim instrument. The Fair Work Commission has indicated it will review the order in connection with related applications currently before it, including matters concerning rideshare and last-mile delivery work. Rates referred to in this article are scheduled to increase from 1 January 2027 and are subject to further annual adjustment.
Information is current as at the publication date shown above. Regulatory positions, pending applications and monetary figures may change without notice, and SBAAS does not undertake to update this article after publication.
Sources and links are provided for reference only. SBAAS is not responsible for the content of external websites.
Readers should obtain advice specific to their own circumstances before acting on anything in this article.
Sources
Fair Work Ombudsman. (2026). On-demand delivery workers’ minimum pay rates and other standards start today.
Fair Work Ombudsman. (2026). New minimum standards for on-demand delivery workers.
Fair Work Commission. (2026). Minimum standards order and decision made.
https://www.fwc.gov.au/about-us/news-and-media/news/minimum-standards-order-and-decision-made
Fair Work Commission. (2026). TWU applications for regulated worker minimum standards orders (MS2024/1-3).
Fair Work Ombudsman. (2026). Employee-like workers.
DLA Piper. (2026). New minimum standards introduced for gig delivery workers in Australia.
Staffing Industry Analysts. (2026). Australia introduces first minimum standards for gig delivery workers.
SmartCompany. (2026). Food delivery workers are getting new minimum hourly pay rules.
The Conversation. (2026). From Monday, food delivery workers will get minimum hourly pay. Here’s why it matters.
SBS News. (2026). Gig worker minimum pay: New rules for Uber Eats and DoorDash delivery drivers.
Eric Allgood is the Managing Director of SBAAS and brings over two decades of experience in corporate guidance, with a focus on governance and risk, crisis management, industrial relations, and sustainability.
He founded SBAAS in 2019 to extend his corporate strategies to small businesses, quickly becoming a vital support. His background in IR, governance and risk management, combined with his crisis management skills, has enabled businesses to navigate challenges effectively.
Eric’s commitment to sustainability shapes his approach to fostering inclusive and ethical practices within organisations. His strategic acumen and dedication to sustainable growth have positioned SBAAS as a leader in supporting small businesses through integrity and resilience.
Qualifications:
- Master of Business Law
- MBA (USA)
- Graduate Certificate of Business Administration
- Graduate Certificate of Training and Development
- Diploma of Psychology (University of Warwickshire)
- Bachelor of Applied Management
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International Think Tank Member and Sponsor - Australian Institute of Company Directors – MAICD
- Institute of Community Directors Australia – ICDA
- Australian Human Resource Institute – CAHRI
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