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Business news, business advice and information for Australian SMEs | SmartCompany

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    The Supreme Court of New South Wales has found a former franchisee of the Blow Dry Bar hairdressing chain was misled into joining the business.

    The court ordered former franchisee John Giaimo, who operated the Blow Dry Bar outlet in Castle Hill, NSW, through his company Carazi Pty Ltd, is entitled to more than $700,000 in damages as a result of representations made about the expected profitability and suitable location of his business.  

    However, Blow Dry Bar founder and former owner Nathan Cuneen told SmartCompany the proceedings were “stayed” in court and the judgment has not been enforced.

    According to court documents, Giaimo applied to purchase a Blow Dry Bar in mid-2012 after being told on multiple occasions by Blow Dry Bar Franchising and its agent that all Blow Dry Bar stores were “doing well” and were turning a profit.

    “All our outlets are extremely profitable, require low investment and are usually cash flow positive within one month and have an average pay back period of one to two years to date per store,” said an email sent to Giaimo in April 2012.

    But evidence presented to the court showed there were Blow Dry Bars, including two in Melbourne, that were unprofitable at the time. The court heard Giaimo’s franchise never operated profitably, incurring a trading loss of $256,797 by June 30, 2013.

    Giaimo operated the franchise until September 2013, at which time he established another company De-Beaux Cheveux to take over the operation of the salon and improve the prospects of selling the business. The court heard a new owner for the business has been found but a formal contract is yet to be signed.

    The business was also scrutinised by the Fair Work Commission in February, after a former employee claimed he was unfairly dismissed from De-Beaux Cheveux.

    However, Fair Work deputy president Peter Sams found Giaimo has reasonable grounds to terminate the employment of former manager Glenn McDermott on the grounds of serious misconduct relating to an alleged failure to provide reports about the salon’s turnover and opening hours.

    Handing down the judgment early last month, Justice White ordered Giaimo damages of $732,697 against Blow Dry Bar Franchising, which was placed in liquidation earlier this year, and Cuneen, who is now the operator of Cherry Blow Dry Bar in the US.

    The ruling does not relate in any way to the current owners of Blow Dry Bar in Australia.

    The damages included set-up costs of $110,188 and trading losses, including loans to De-Beaux Cheveux from Carazi Pty Ltd of $622,509, plus interest.

    White said Giaimo may also be entitled to further damages if it “remains liable under its current obligations under the lease to pay rent and outgoings” and that matter is yet to be determined.

    White ruled misrepresentations made to Giaimo amounted to breaches of Australian Consumer Law and Giaimo was entitled to rescind his franchise agreement with the company because of the “fraudulent misrepresentation”.

    “Carazi is entitled to recover as damages all losses that flow directly from its having been induced to enter into the lease and the franchise agreement,” said White.

    Giaimo declined to comment on the case when contacted by SmartCompany as a ruling on the additional damages is still pending.

    While not commenting specifically on this case, Jason Gehrke, executive director of the Franchise Advisory Council, told SmartCompany misleading representations involving franchising are covered by the competition and consumer law, rather than the Franchising Code of Conduct.

    “You can’t recruit franchisees by saying they will make a certain amount of money or a level of profit without having some reasonable justification for it, whether actual or historical data,” Gehrke says.

    Gehrke points to another case involving a dispute between a franchisee and South Australian restaurant franchise Billy Baxter’s over the profitability of one of the chain’s restaurants in the Adelaide suburb of Glenelg.

    In 2012, Ross and Sue Pollard sued Billy Baxter’s for $1.2 million in damages over the failure of the franchise. They said they were led to believe the restaurant would turnover $1.3 million, which would allow them to pay their rent and make a profit.

    “Every franchisor should be very cautious of making representations about future earnings or the suitability of a location,” Gehrke says.

    And Gehrke says any prospective franchisees should investigate the information they are given before signing a franchise agreement.

    “Just because you are given information, it doesn’t mean the information is accurate,” he says.

    “Always undertake due diligence to check the facts and figures represented to you.”

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    Rarely a week goes by without a case of fraud hitting the media headlines around the country.

    From the accounts manager who was fined $1 million for swindling $1.42 million out of the gambling company she worked for, to the former chief executive who defrauded the company he worked for out of $8.7 million to pay his mortgage and gambling debts, Australian forensic investigators and judges are kept busy uncovering elaborate fraud schemes.

    But while the details are usually juicy — like the case of the Myer liar who scored a senior management gig with a falsified CV — behind the headlines are stories of desperate employees and employers left out of pocket to the tune of millions of dollars.

    It’s true that fraud can be perpetrated from those outside of any organisation, but more often than not, it is people within a company that orchestrate fraud.

    So what can your business do to prevent, identify and act on fraud? And what are the warning signs you may have a fraudster in your midst?


    The fraud triangle


    The best place to begin understanding fraud is the fraud triangle, says Grant Field, chairman of accounting firm MGI Australasia.

    In a general sense, fraud is an act of deception for personal gain, whether it is cash or goods or some other benefit, and for fraud to occur there needs to be three things: motivation, opportunity and rationalisation.

    Field says motivation to commit fraud can come from a variety of sources but is often related to personal financial troubles or individuals living beyond their means, such as struggling to meet their mortgage repayments, or addiction, including to gambling.

    The next point on the fraud triangle is opportunity: the fraudster must have the opportunity or access to cash or goods to prompt their fraudulent behaviour. Perhaps they are the person who signs off on payments to suppliers or they have specialist knowledge of how the company’s software works.

    Finally, Field says for fraud to occur, the individual acting fraudulently must be able to rationalise their behaviour.

    “In their own mind, they have to feel justified in committing the fraud,” Field says.


    What fraud looks like


    Just as there are many reasons why someone commits fraud, there is a multitude of ways that fraud can present itself inside a company.

    According to Field, in most cases, a fraudster has an opportunity to steal because there is a “lack of segregation of duties” in the company.

    “They might invent a bogus supplier,” Field says.

    “They have the ability to set up a supplier in the accounting system and create an invoice for goods the company usually consumes, like stationery. The employee then lists their own bank account details on the invoice and is able to conceal the payments.”

    Another type of invoice scam involves an employee raising a false invoice from a pre-existing, legitimate supplier, says Field.

    “It might be from a plumber you use all the time,” he says. “In this day and age, it is easy to copy an existing invoice but you change the bank details on the invoice. It looks like it is from an existing supplier and most people don’t check bank details.”

    A company’s payroll also presents an opportunity for fraud, with some fraudsters caught “ghosting” or adding a bogus employee to the payroll, says Field. Although this is more likely to occur in a large organisation with hundreds of employees or where the person responsible for adding new employees to the system is also responsible for authorising their pay each week.

    Likewise, fraudsters with access to the company credit card can load up personal expenses, which are then passed off as business expenses. Cash-based businesses are also vulnerable if sales staff choose not to process transactions through the till.


    How to prevent fraud


    The principles of managing the risk of fraud are the same regardless of the size of the company, according to Malcolm Shackell, fraud and forensics leader at PwC.

    “The most important thing for any organisation is setting the right ethical tone from the top of the organisation,” Shackell says.

    This involves regular communication about the company’s ethics, as well as a no tolerance approach to unethical behaviour. This should be communicated both to employees as well as suppliers.

    “Getting on the right foot is incredibly important,” he says.

    Andrew Morgan, forensic services partner at BDO Australia, has similar advice, telling SmartCompany a culture that allows fraud to happen within a company “is absolutely driven from the top”.

    “You have to walk the walk and talk the talk,” Morgan says. “You have to set the example and say, this is how we do business.”

    “You own the business, you own the risk. Identify it and manage it.”

    Shackell says for the vast majority of Australian businesses, if fraud occurs it will come from within the company, with the exception of the banks and finance providers, which may experience external fraud.

    It’s for this reason that prevention must start with recruitment, says Shackell.

    “Get the right people to start with, make an effort to screen employees,” he says.

    “If an employee has lied on their CV, they are more likely to commit fraud down the track.”

    According to Morgan, one in two people lie, cheat or fabricate part of their resume and there is a strong connection with people who misrepresent themselves in the recruitment process and those who go on to breach their employment relationship in some form in the future.

    “It shows from the very outset if they are willing to massage and bend the truth to achieve an ulterior motive,” Morgan says.

    Shackell says the next step is to ensure internal accounting controls, especially ones that relate to how money is moved around the business, must be rigorous. Companies should also identify the areas of the business most at risk of fraud and focus their attention in improving controls in that space.

    Field has similar advice to Shackell, with many of the examples of fraud he mentions able to be prevented by having the proper processes established in the first place – or putting them in place now.

    When it comes to paying suppliers and wages to employees, this means separating out who can raise an invoice and who can pay it or creating a system where a second person is responsible for going over the payments that have been approved before the money leaves the company’s bank account.

    If you run a retail store where there is potential for employees to do cash sales without using the till, Field recommends creating a system where receipts are tallied up at the end of each week and reconciled with the takings in the till.


    How to detect fraud


    According to Shackell, many companies score well on the fraud prevention scorecard, but when it comes to detecting and monitoring fraud, they “leave the rest to trust”.

    But detecting fraud within your company means being vigilant and aware of the warning signs.

    One of the key ways to uncover fraud within a company is from the employees themselves. This is why the idea of some form of whistle-blower policy is gaining more traction for employers, says Shackell.

    While Shackell says larger organisations will have whistle-blower programs “with all the bells and whistles”, for a small business simply having a phone number that an employee can ring anonymously may be enough.

    “It might be the chief financial officer’s number that an employee can ring if they see a problem,” he says.

    “It is about empowering people to speak up if there is a problem. And the stats show increasing numbers of fraud are being discovered through people reporting them. It’s a simple, cheap way of detecting fraud and the mechanism also acts as a deterrent.”

    Another increasingly popular way of detecting fraud is through data analytics, says Shackell, who says there are now affordable analytic software programs that can capture the two highest areas of risk in a small business: procurement and payroll.

    “It is designed to look at a series of transactions to determine if something doesn’t look right,” he says.


    How to manage a fraud that has already occurred


    As a former police officer, Morgan knows a thing or two about running an investigation.

    “If it starts to pan out someone has done something criminal, the way you gather evidence in a criminal matter is important,” says Morgan, warning against removing evidence in a way that reduces its forensic integrity.

    “Get advice as soon as you suspect something. It costs nothing to ring someone and ask for advice.”

    Morgan says many people believe they are great investigators themselves, but it is essential to know and understand the framework of the investigation you are conducting.

    Shackell agrees, saying there is a “real science around investigating appropriately and fairly” but many SMEs “cannot hope to have that kind of expertise in house”.

    Nevertheless, he says the first place to start is to make a plan of how you would deal with a fraud and to ensure senior management are aware of the plan and “able to execute it quickly if a suspicion has occurred”.

    But the plan and the actions that follow must be done fairly. “Obtain evidence in an admissible fashion, consult with lawyers when you need to and work out a communication plan,” he says.

    Shackell says it is rare for a fraudster to turn themselves in as the longer a scheme plays out, the easier it becomes for them to rationalise their behaviour. It’s also likely that the transaction that tips the employer off will be just the “tip of the iceberg”.

    But if procedural fairness is lacking, you could end up with exactly the result you were trying to avoid in the first place.

    “If evidence is destroyed, the guilty get off and innocent people get dragged through the mud,” he says.

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    An engineering professor has failed to prove 53 claims of sexual discrimination and sexual harassment against her employer Monash University and some of its senior academic staff.

    Dr Qizhi Chen had claimed the discrimination and harassment occurred over a period of five years between 2008 and 2013, when she was employed by the university as a senior lecturer and, later, an associate professor.

    But the Federal Court dismissed the claims on February 27, finding Chen’s allegations to be unsubstantiated and “fanciful”.

    Judge Richard Tracey found Chen had “engaged in a subjective reconstruction of innocent events" after failing to fulfil her professional ambitions.

    Tracey went further to call Chen “a most unimpressive witness” who was “prone to giving long, unresponsive answers” to the court.

    “She was over-willing to interpret events in a way which reflected badly on those against whom allegations were made. She saw no problem in telling ‘white lies’ in order to assist her case,” said Tracey in the judgment.

    Chen’s allegations included that a male colleague had touched her breast whilst removing a microphone and had sexually inappropriate conversations with her, including saying “I like to see you happy” and “you can come to my office any time”.

    Although the incidents dated back to 2008, Tracey noted Chen had only made the allegations after she failed to secure a promotion in 2011. Chen told the court she had not considered the events to be discriminatory or to constitute harassment when they occurred.

    “It was only after the rejection of her promotion application in 2011 that she reviewed and reassessed what had previously occurred and placed a malign construction on these events,” Tracey said.

    Chen told the court the decision not to promote her amounted to sexual discrimination because three of her male colleagues had been promoted ahead of her.

    But having been presented with no supporting evidence for any of the claims, Tracey rejected all of Chen’s allegations. She was ordered to pay costs for the litigation.

    Employment lawyer and M+K Lawyers partner Andrew Douglas told SmartCompany the case, which raises the same issues addressed in the recent landmark harassment ruling against TRUenergy, is an example of why employers should act at the first sign of conflict.

    “This is another case where a person over a period of time has misconstrued the conduct of others and constructed in their own mind sexual harassment and discrimination,” says Douglas.

    “These feelings commenced at a time when [Chen’s] desires and future prospects at work were frustrated. The judge found there was just no evidence to support it,” he says.

    Douglas says the facts show Monash University had gone to incredible lengths to do the right thing but had failed to address the issue at the first sign of conflict.

    “The lesson here is that it was far too late. The answer is to go back to the moment you see [someone] in pain… and respond immediately to try to resolve that pain,” he says.

    Monash University released a statement to SmartCompany saying it is pleased the matter has now been finalised and welcomed the Federal Court judgment in support of the university and its academic staff.

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    Belle Gibson, founder of The Whole Pantry, has been accused of failing to donate money promised to charity and of fabricating cancer claims.

    The 26-year-old entrepreneur shot to prominence with The Whole Pantry app, which has been downloaded 300,000 times.

    The app costs $3.79 and was chosen by Apple as the best app of 2013 in the Food and Drink category.


    Read more: Making gifts to charities – beware of tax scams


    Gibson’s cook book, The Whole Pantry, was recently published by Penguin and she’s amassed a large social media following with 197,000 followers on Instagram and 35,000 Facebook fans.


    Allegations against Gibson


    But damning allegations have emerged that Gibson failed to hand over thousands of fundraising dollars promised to charities and that her “inspirational” cancer survival story is untrue.

    Fairfaxreports Gibson has publicly claimed to have given away 25% of her company's profits and in her book Gibson writes that "a large part of everything" earned is donated to various causes.

    “Last year she said $300,000 had already been given to charity but now says these contributions were never made because app sales were not as high as forecast,” it reports.


    Gibson hits back


    Gibson responded to the allegations on the Whole Pantry Facebook page saying Fairfax was selective with its information.

    “We have, like all startups, struggled with managing all facets of a new business, biting off more than we could chew, juggling internal and external priorities with little staff,” Gibson says.

    Gibson says The Whole Pantry has passed over its overdue records and accounts to an external business manager and accounts team “an issue we are reassured arises often with overwhelmed new businesses”.

    “We were advised by this team to follow their process and allow them to finalise the donations once all business keepings were accounted first and brought forward,” Gibson says. 

    In the post, Gibson says The Whole Pantry is a “for-profit” business but one with “great, enthusiastic intentions of giving back as much as possible to the organisations and charities which the TWP team and community support, respect and are passionate about.”

    Gibson claims she will honour all promised donations “as soon as finances are in order”.

    “Our books are taking longer to bring up to date than anticipated. TWP forecasted income in October 2014 which was not fulfilled, creating cash-flow issues and unforeseen delays on finalising three discussed charitable donations,” she says.

    Gibson has not responded to reports questioning the veracity of her claims to have suffered from cancer.


    Potential Fundraising Act breach


    A spokesperson for Consumer Affairs Victoria said in a statement to SmartCompany that a business which represents that it gives money to charities from its sales, but does not do so, may be obtaining financial advantage by deception under the Crimes Act 1956, which is a matter for Victoria Police but may also constitute a breach of the Fundraising Act 1998 or the Australian Consumer Law, which Consumer Affairs administers.

    “Consumer Affairs Victoria is currently making enquiries with Ms Gibson and her associated companies as to the nature of any fundraising appeals that may have occurred, including details of beneficiaries and net proceeds given,” the spokesperson said. 

    Under Victoria’s Fundraising Act businesses can be fined more than $28,000 and individuals face fines of more than $14,000 and 12 months’ imprisonment.


    Potentially misleading


    Rohan Harris, partner at law firm Russell Kennedy, told SmartCompany consumer authorities have fundraising registration procedures set up so people or businesses who do want to make donations to legitimate causes can be confident someone is registered as a legitimate fundraiser.

    “If you make a promise you have to follow through on it fundamentally, otherwise what you are doing is misleading,” he says.

    “The solicitation of the donation itself can be misleading.”

    Harris says if businesses wish to donate a percentage of their revenue to charity the money should be set aside rather than put into general revenue.

    “The business has to follow through on its promise, otherwise you are soliciting the sale of goods and services on a false promise,” he says.

    Harris also says if businesses wish to hold themselves out as being associated with a particular charity businesses can’t just pass off the reputation of a charity.

    “If you want to use [a charity’s] logo or name you really need to have an arrangement with that charity,” he says.

    It is an offence to conduct a fundraising appeal unless you are registered or exempt. Registration requires a fundraiser to list its beneficiaries. Beneficiaries must be aware of and agree to this.

    SmartCompany contacted Gibson for comment but did not receive a response prior to publication.

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    Happy anniversary to the Privacy Act amendments. We’ve been together one year today. However, like most newlyweds, can we say that we really know each other yet?

    Take this quiz to see just how well you understand Australia’s privacy laws. Is your future rosy or is the honeymoon over?

    Answer “true” or “false” to each of the following:

    1. You are not allowed to send personal data overseas
    2. You can’t put personal data in the cloud
    3. You can’t share event attendee data with exhibitors
    4. You can contact existing customers for direct marketing purposes
    5. You can’t contact your database if you’re not sure whether you have their consent

    Answers are below (no peeking!):


    1. You are not allowed to send personal data overseas


    False – You can send data overseas. However, there are strict controls around how you do it. In short, unless you have someone’s clear and express consent to override the privacy laws you must ensure that any country that you send data to has substantially similar privacy laws to Australia. If not, you must replicate those provisions contractually and ensure that the contract can be enforced in the country concerned. Also, don’t forget that you are obliged to state whether data is being disclosed overseas and, where practical, to list countries where you are disclosing data.


    2. You can’t put personal data in the cloud  


    False – You can put personal data in the cloud provided you are compliant in how you do so.  There are different obligations at play depending on whether the provision of data constitutes a use or a disclosure. The APP Guidelines speak to these differences and the Privacy Commissioner has offered some further guidance with respect to the obligations surrounding APP 8. Further guidance from the Privacy Commissioner is expected during 2015 and ADMA will be focusing on this as a regulatory training area.


    3. You can’t share event attendee data with exhibitors


    False – You can share data with anyone provided you have the appropriate consent in place. Use of a properly worded and clearly placed Privacy Statement (aka Collection Notice) is key here and must be given at the time of data collection.


    4. You can contact existing customers for direct marketing purposes 


    This could go either way – The fact that someone is an existing customer is just one of the circumstances in which consent may be inferred. Other factors to consider: whether they have opted-out of or limited their consent to receive your marketing communications, whether they have consented to the content of the communication (a customer who regularly buys groceries from you is not going to expect communications about purchasing car insurance unless you have built that expectation) and whether they have consented to a particular communication channel.


    5. You can’t contact individuals on your database if you’re not sure whether you have their consent 


    False – Again this comes down to how you do things. Firstly you would need to understand the data profile (e.g. how long has the data been there, how was it collected etc.) and then it may be possible to contact the data list, depending on the circumstances and which communication channel you use. For example, the Privacy Act provisions differ to those in the Spam Act (which in turn differ from those in the Do Not Call Register Act). So it may be possible for you to make contact via direct mail in circumstances where email and telemarketing may not be possible.

    So, how did you go? Are you feeling that your privacy relationship may not be as rosy as you thought it was? If you need help, feel free to visit ADMA’s Spotlight on Privacy and ADMA members also have access to member-only regulatory resources including the Compliance Hub, an online repository of regulatory guidance.


    Jeannette Scott is the Director of Legal & Regulatory Affairs at the Association for Data-driven Marketing and Advertising.

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    The federal government has released the draft legislation to create an independent Australian Small Business and Family Enterprise Ombudsman, with the power to compel people to attend mediation with fines dropped from the proposed bill.

    The creation of a Small Business Ombudsman to better represent SMEs has been a long-standing policy for the Coalition, originally announced long before the 2010 election. It was officially announced as a replacement for the Small Business Commissioner as part of the 2014 federal budget in May last year.

    Bruce Billson told SmartCompany the ombudsman is designed to get timely, affordable and effective alternative dispute resolution for small businesses.

    “It’s another election commitment that we have delivered. This role recognises that when small businesses have a legal dispute with a big business, they often end up worse off. The legal process is often slow and costly, and can do a lot of harm to small businesses,” Billson says.

    “We’ve liaised with states and territories. We don’t want to overlap with what’s out there already out there – we want this to be complementary – and now we’re keen to get people’s feedback about it.”

    Under the draft legislation, the ombudsman will act as an advocate for small businesses, a concierge for dispute resolution, including its own limited dispute resolution service, and will contribute to the development of small-business-friendly federal laws.

    The ombudsman’s most important role will be as a single point of contact that can refer small businesses with an issue to the appropriate government agency for action, such as the Australian Competition and Consumer Commission, the Commonwealth Ombudsman or a state small business commissioner.

    “When you’re dealing with a dispute or a code, navigating the avenues that are open to you can be difficult,” Billson says.

    “So the ombudsman will act as a ‘concierge’ so – for example – if you’re in New South Wales and you have a dispute with your landlord, the ombudsman will be able to point you towards the right agency to get that resolved.”

    The ombudsman will also provide a limited dispute resolution service on request. However, while a discussion paper issued in May 2010 looked at extending these powers to investigate small business disputes and compel the parties to attend mediation, these powers have not been included in the legislation.

    “We thought applying fines was inconsistent with the sort of role we were trying to create,” Billson says.

    “Given it’s an alternative dispute resolution process that requires both parties to participate in the first place, it doesn’t make sense to threaten them with fines.”

    “That said there is scope if a party withdraws from the alternative dispute resolution process, and that matter ends up in court, for the other party to ask the ombudsman for what happened and to present that in a subsequent court appearance.”

    In terms of developing business-friendly laws, the ombudsman’s office will have the power to conduct inquiries into how laws, policies and government practices affect small businesses, and how these might be improved. It will have the power to compel a person to produce information or documents, with at least 10 business days’ notice with a penalty of $5100 for failing to comply.

    Areas the ombudsman could investigate include codes of conduct, fair trading provisions, the behaviour of regulators, and the effectiveness of government agency complaints mechanisms.

    Once a quarter, the ombudsman would be required to write a report for the Small Business Minister outlining the research it has conducted and inquiries made and details of any laws or policies that are having an adverse effect on small businesses.

    The ombudsman will be independent, with the draft legislation explicitly stating he or she must “not engage in any paid work outside the duties of the ombudsman’s office without the Minister’s approval”.

    “Within government, there’s a need to engage with small businesses. So this is an avenue for government departments to engage with small businesses by finding out through the ombudsman what’s happening on the ground,” Billson says.

    Peter Strong, executive director of the Council of Small Business of Australia, told SmartCompany the draft legislation for the ombudsman fulfils many of the aims he has been campaigning for.

    “The big gain is it will be able to change the culture of the public service, so when it puts tenders out, small businesses will have a chance,” Strong says.

    However, Strong says the removal of the ability to compel people to attend mediation is an issue COSBOA will address in its response to the draft legislation

    “That comes back to the skill of the ombudsman in compelling people to come along to the event. That said, [current Small Business Commissioner] Mark Brennan has very good skills in getting people to appear voluntarily,” Strong says.

    Small business owners interested in looking at the draft legislation or commenting can do so through the Treasury website, with submissions open until April 7.

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    A lawyer for the Bank of Queensland has lost a bullying claim she brought after being placed on a performance improvement plan (PIP).

    Annie Mac was placed on the PIP by the Bank of Queensland after concerns were raised she was too slow in completing work and failed to achieve the right balance between “the need to be commercial vs perfection”.

    Mac says when she was placed on the PIP she had a physical reaction and “felt ill”.

    “I felt powerless as if there was nothing I could do about it,” she says. “I felt like crying but could not because I work in an open plan environment.”

    Mac brought an application to the Fair Work Commission to stop bullying claiming that she was bullied by five of her colleagues after being placed on the PIP.

    But Fair Work Commission vice president Adam Hatcher declined to accept Mac had been bullied and said the Bank of Queensland’s decision to place Mac on a PIP was not unreasonable.

    The Fair Work Commission found shortcomings in Mac’s performance had been identified by her managers over a considerable period of time.

    Hatcher identified a list of features that might constitute bullying: "My list included the following: intimidation, coercion, threats, humiliation, shouting, sarcasm, victimisation, terrorising, singling-out, malicious pranks, physical abuse, verbal abuse, emotional abuse, belittling, bad faith, harassment, conspiracy to harm, ganging-up, isolation, freezing-out, ostracism, innuendo, rumour-mongering, disrespect, mobbing, mocking, victim-blaming and discrimination."

    He found Mac had not alleged her colleagues had engaged in any of this behaviour and as a corporation the Bank of Queensland could not have engaged in bullying under the terms of the legislation.

    A spokesperson for the Bank of Queensland declined to comment to SmartCompany.

    Employment lawyer Peter Vitale says the basis on which the claim was dismissed was the PIP and performance criticisms were found to be not unreasonable.

    “One very important aspect of this decision is the acknowledgment by the commission that processes don’t have to be perfect and don’t have to meet some idealistic notion of what a proper PIP should be as long as it can be considered reasonable,” he says.

    Andrew Douglas, partner at M&K Lawyers, told SmartCompany the case demonstrates that employers should not be afraid of performance managing employees.

    “All the cases on bullying show the Fair Work Commission has a very robust view on what is performance management and believe employers must be able to have authority over the way people behave, and if they use appropriate processes they will back the employer every time,” he says.

    “All the fears people have about this jurisdiction making it impossible for people to manage people; I think we can put that to rest.”

    Douglas has three tips for employers looking to put performance management plans in place:  


    1. Be objective


    “Always look objectively at the behavior and don’t get distracted by the noise and personal relationship issues that sit around it,” Douglas says.


    2. Put the right processes in place


    “Ensure you have the right processes in place such as appropriate policies and procedures,” he says.

    “Make sure the person who is going to undertake the performance management is skilled at it.”


    3. Be nice


    “Always be generous to the affected employee as there is no upside to being rude to them,” Douglas says.

    “If you are going to performance manage, why not be nice?”

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    The Australian Competition and Consumer Commission has issued a warning to businesses in the debt collection, private health insurance, and medical and health services sectors that it is planning to shine its spotlight on them this year.

    Cartel conduct in government procurement and truth in advertising will also come under particular scrutiny, the ACCC’s chairman Rod Sims warned during the announcement of the watchdog’s priority areas for 2015.

    Read more: Competition watchdog wants tougher penalties – $100 million fines in its sights

    That means now is the time for companies in those industries to take steps such as reviewing all marketing material for potentially misleading or deceptive content in order to safeguard themselves.

    Every year the ACCC publishes a revised Compliance and Enforcement Policy setting out the areas that it intends to focus on during the coming year, having regard to both competition enforcement and consumer protection. 

    Sims launched the 2015 Compliance and Enforcement Policy in a speech given at the CEDA conference held in Sydney recently. In his speech, he announced that cartel conduct in government procurement, truth in advertising, competition and consumer issues in the health sector and implementation of and compliance with industry codes would be key priorities for the ACCC in 2015. 

    Sims made particular mention of the proposed Food and Grocery Code, which is a voluntary code that governs certain conduct by grocery retailers and wholesalers in their dealings with suppliers.  The implementation of this code is, according to Sims, a major focus area for the ACCC in 2015.

    Other priorities listed in the ACCC’s policy are[i]:

    (a)           working with industry to improve product safety through minimising the supply of unsafe goods, by focusing on good practice in the manufacture, sourcing and quality assurance of consumer products;

    (b)          emerging systemic consumer issues in online marketplace;

    (c)           competition and consumer issues in highly concentrated sectors, including issues identified through the ACCC’s monitoring of the fuel industry;

    (d)          in conjunction with other agencies, disruption of scams that rely on building deceptive relationships which cause severe and widespread consumer or small business detriment;

    (e)          finalising its role in ensuring that carbon tax cost savings are being passed through to consumers;

    (f)            consumer protection issues impacting on Indigenous consumers;

    (g)           consumer protection issues impacting on vulnerable and disadvantaged consumers with a particulars focus on older consumers and consumers who are newly arrived in Australia.

    In previous years, the Compliance and Enforcement Policy has listed specific industries to be “targeted” by ACCC during the coming year. For example, in the 2014 Compliance and Enforcements Policy the ACCC announced that it would focus its resources on the telecommunications and energy, supermarket and fuel industries. This focus was demonstrated by the ACCC issuing infringement notices and taking court action in 2014 against supermarket and various telecommunications and energy sector operators.

    Also of particular note in 2014 was the ACCC’s focus on the comparator website industry and credence claims. This focus led to the ACCC taking action against a number of “free-range” egg producers, as well as others in the food industry, arising out of misrepresentations about the origin of the products, the types of products used and the methods of farming used to produce those products. 

    Notwithstanding the new priorities announced for 2015, the most recent Compliance and Enforcement Policy states that “given the significant outcomes achieved in the areas of credence claims and door to door sales [relating primarily to marketing and sales of energy and telecommunications sector products], the ACCC will remain vigilant in these areas to ensure that unlawful practices do not re-emerge.”

    Sims announced in his CEDA speech that a new program of reviews of selected industry sectors had already begun, with the debt collection and private health insurance sectors currently under review. The debt collection section in particular is seen as being an area where vulnerable consumers are most at risk from practices that are potentially in conflict with the consumer protection provisions of the Australian Consumer Law.

    It is also notable that the ACCC has already:

    (a)           issued proceedings in the Federal Court against the manufacturer of Nurofen, alleging that it made false or misleading claims on its packaging and its website that its Nurofen Specific Pain Products were each formulated to treat a specific kind of pain, when in fact the products are identical; and

    (b)          commenced an investigation in relation to capped price servicing offered by car manufacturers. In February 2015 the ACCC secured an agreement from Kia to amend its terms and conditions to ensure that its servicing prices were genuinely capped. Prior to this agreement the terms and conditions provided that Kia could amend its service charges at any time.


    Lessons for business


    The ACCC has been very direct in alerting the industries which it views as potentially problematic about their increased focus in 2015. Businesses in those industries need to take the opportunity now to:

    (a)           review their standard clause contracts for unfair terms;

    (b)          review their websites, packaging and any other advertising material for potentially misleading or deceptive content;

    (c)           to ensure that all pricing information is clear and transparent; and

    (d)          ensure that its staff are trained in relation to trade practices compliance issues.




    Sims also spoke in his CEDA speech about the difficulties faced by the ACCC in terms of enforcement as a deterrent, because there was a perception that some of the penalties handed down by courts during 2014 were not large enough, having regard to the size of the corporations penalised.

    The maximum penalty able to be levied against a corporation in breach of, for example, the unconscionable conduct provisions of the Competition and Consumer Act is $1.1million per breach.

    Sims confirmed in his speech that the ACCC would continue to advocate for the courts to impose penalties of appropriate deterrent value in each case.

    Tanya Jackson is a senior associate at law firm Holding Redlich.

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    Small businesses across the country were coerced into purchasing first aid kits and safety wall charts by a company purporting to be a government agency, the Federal Court has ruled.

    The Australian Competition and Consumer Commission initiated legal proceedings against Safety Compliance Pty Ltd in 2012, after warning small business operators in 2011 against doing business with the company, which it believes was engaging in misleading or deceptive conduct.

    The ACCC accused Safety Compliance, which was subsequently placed in liquidation, of misrepresenting to small businesses that workplace health and safety laws required them to maintain the kind of safety wall charts and first aid kits supplied by Safety Compliance between December 2010 and May 2012.

    During the same time frame, Safety Compliance was also accused of falsely representing to customers that it was a state or territory workplace health and safety agency, or was affiliated with one.

    And in November 2011, Safety Compliance was found to have contacted a number of Video Ezy franchisees and falsely told the franchisees someone from the Video Ezy head office had agreed to purchase the products.

    In a judgment handed down on March 13, Federal Court Justice Farrell ruled in the ACCC’s favour, finding Safety Compliance contravened the Australian Consumer Law and the Competition and Consumer Act by making false or misleading representations and engaging in misleading or deceptive conduct.

    Justice Farrell also found three individuals associated with Safety Compliance – Dean King, Shane Black and Fiona Schimmel – were knowingly concerned with the misrepresentations regarding health and safety laws and that Safety Compliance was connected to a government agency.

    Orders for relief will be decided by the court at a future date. The ACCC is seeking pecuniary penalties, injunctions, costs from Safety Compliance. In regards to King, Black and Schimmel, the ACCC will seek to have them banned from managing corporations in the future.

    The liquidator of Safety Compliance did not participate in the court hearings and SmartCompany was unable to contact the company. Comment from King, Black and Schimmel’s lawyers was not available prior to publication.

    Melissa Monks, special counsel at King & Wood Mallesons, told SmartCompany while a majority of the ACCC’s enforcement proceedings related to the Australian Consumer Law appear to be aimed at protecting consumers from harm, “the ACCC does also increasingly use these provisions in the interest of small business”.

    “This is particularly so where there will be substantial detriment, there is a blatant disregard for the law and the defendant has a history of previous contraventions of fair trading and consumer protections laws,” Monks says.

    Monks points out Dean King was previously involved in another business in 2008, which the Supreme Court found had made misleading representations about billing to small businesses.

    “Safety Compliance was also the subject of a warning notice – a ‘naming and shaming’ power the ACCC has – over similar conduct to that which the Federal Court has now found to be misleading,” she says.

    “Safety Compliance had forewarning that the ACCC was monitoring but continued with what seems to be deliberate misleading conduct designed to coerce small businesses to buy their products and therefore it is unsurprising that the ACCC took action.”

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    A former executive of Ernst & Young has been handed an 11-year jail sentence for his role in an elaborate tax fraud that involved a mysterious company in the Cayman Islands and one of Australia’s largest banks.

    Anthony Dickson was last week given a combined 11-year jail term in the New South Wales Supreme Court for two fraud charges, relating to a scheme that was perpetrated in 2005 and 2006 and involved a company he founded, Neumedix Health Australasia. The non-parole period is seven years.

    Dickson, who was a principal at EY for four years prior to operating the scheme, was accused of claiming $750 million in false tax deductions for medical technologies allegedly held in the Cayman Islands by another company he owned, Athenahealth Patents.

    The claims were connected to a leaseback deal organised by Dickson in partnership with ANZ Investment Holdings Ltd. Under the deal, ANZ clients Bluescope Steel, Incitec Pivot and collapsed timber company Gunns sold property assets under deals that were financed by ANZ.

    Dickson and a business associate were accused of using the leaseback arrangements to claim $450 million in depreciation on rights to three medical technologies held in the Cayman Islands but if the scheme had not been uncovered, the total value of claims could have been as high as $750 million.

    The scheme is estimated to have cost the Australian Tax Office $135 million in lost revenue.

    Justice Robert Beech-Jones said it was Dickson’s “unshakeable belief in his intellectual superiority to all those around him and the ATO” that was his “undoing”.

    “One can have sympathy for the position of the offender,” Justice Beech-Jones said.

    “He finds himself broke, professionally ruined and incarcerated. He was a person who had much to lose and he has now lost it. The consequences for him and his family are severe.”

    “However, this situation is not a product of circumstances but of a conscious decision on his part to pursue a dishonest and fraudulent tax scheme on a large scale.”

    A spokesperson for EY confirmed to SmartCompany EY is not involved or implicated in the fraud as the offences occurred after Dickson had left the firm. 

    Andrew Morgan, forensic services partner at BDO Australia, told SmartCompany there are a number of different types of fraudster, but based on Justice Beech-Jones comments, it appears Dickson falls into the category of the “narcissistic offender”.

    “The person is extremely clever, extremely well-placed, with great experience,” Morgan said.

    “What makes a tremendous executive is also what makes a tremendous criminal.”

    Morgan says, according to the theory of the fraud triangle, perpetrators of fraud need motivation, opportunity and the ability to rationalise their behaviour. In this case, he says Dickson had all three.

    “Part of the motivation in this case might have been his need or desire to keep demonstrating how clever he is,” Morgan said.

    “He clearly had the opportunity to perpetrate the fraud and the ability to rationalise his own behaviour is the final piece in the jigsaw.”

    Morgan says it is relatively easy for fraud investigators to “catch the non-sophisticated crooks” as they often “leave a trail” and their desire or capacity to cover up their actions is not as well-developed.

    But he also said “sophisticated criminal activity is incredibly hard to detect”.

    Morgan says the lesson for companies is to always be absolutely aware of what is happening within your business and to ensure you have the appropriate structure and people in place.

    “You have to be able to put your hand on your heart and say, ‘we’ve got this covered’,” he said.

    SmartCompany contacted Neumedix but did not receive a response prior to publication.

    *This article was updated on March 24 at 3.12pm to include a response from EY. 

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    Two Adelaide businesswomen are fighting a messy social media defamation battle in the South Australian Supreme Court over YouTube videos.

    Kayla Itsines, the founder of fitness business Bikini Body Guide, has accused Leanne Ratcliffe, the founder of raw food and fitness business Banana Girl, and her partner Harley Johnstone of defaming her and her partner Tobias Pearce through a series of YouTube videos, according to The Advertiser.

    The legal stoush comes just weeks after two Gold Coast bikini fitness gurus faced off in court – proving there’s plenty of money to fight over in the bikini social media game.

    Ratcliffe yesterday appeared in court with a group of her followers, who she asked to attend court via a YouTube video, who chanted their support, according to The Advertiser. Itsines did not appear.

    Ratcliffe, who is known by her social media profile name Freelee the Banana Girl, has more than 223,000 Instagram followers and 120,000 fans on Facebook. She is well known for advocating bananas, having posted a viral clip of her eating more than 50 bananas in one day.

    Itsines has more than 2.4 million Instagram followers and 1.3 million Facebook likes, and owns and operates the Bikini Body Training Company.

    Itsines claims Ratcliffe and Johnstone posted YouTube videos making false claims that her Bikini Body program starves people and that her partner Pearce uses steroids. Ratcliffe and Johnstone maintain their comments were made under “free speech”.

    Itsines obtained an injunction for the videos from the Supreme Court earlier this month, but is now claiming the videos weren’t completely removed from the social media network.

    Johnstone admitted he had set the videos to private in case he “needed” them or the comments posted on them as “evidence”, according to The Advertiser.

    Judge Withers ruled the matter should proceed immediately to trial, giving the case the potential for special classification so that it could be fast-tracked through the courts.

    Paul Gordon, senior associate at NDA Law, has been following the case and told SmartCompany the courts were taking the matter very seriously.

    “This is serious, it’s not just people having a little tiff,” said Gordon.

    “There is some justification because it does have a big impact on business. They have a phenomenal number of followers, so it’s not an insignificant amount of money we’re talking about.”

    Gordon says personal trainers now have the opportunity to make a significant amount of money through social media, where they once did not, and the amount at stake is “big business”.

    He says the YouTube call to arms of supporters to show up at the court steps is further evidence of how social media can have a powerful “amplifier effect”, even on court matters.

    But Gordon says there is also a misconception in Australia about free speech and warns other business owners about making a potentially defamatory comment on social media.

    “Free speech is not a defence to defamation in Australia. If not true, then you may well be sued defamation,” he said.

    SmartCompany contacted Bikini Body Guide but did not receive a response prior to publication. Banana Girl declined to comment when contacted by SmartCompany.

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    Ice-cream and hot-dog chain Wendys is facing potential legal action on a new front, after the company allegedly abandoned its headquarters in Adelaide late last year.

    Following the acquisition of the company by Global Food Retail Group in September 2014, Wendys moved out of its rented headquarters on Fullarton Road in the southern Adelaide suburb of Fullarton in December. Its operations are currently being run from its ice-cream factory, which is located in the south-eastern Melbourne suburb of Keysborough.

    SmartCompany understands the landlord for the Fullerton Road office complex was not told about the move by Wendys in advance. The landlord only found out after being alerted by a news item on Seven News on Saturday November 8 that said the company was considering relocating its head office to Melbourne.

    The move came despite Wendys still having just over four years remaining on its lease for the building, which it had used for decades. It has only paid rent and outgoings via a bank guarantee, which is due to expire in the next few months.

    Despite its relocation, Wendys still lists the Fullarton Road offices on the “contact us” page on its website.

    The matter is now likely to end up in court, with the landlord and Wendys currently in talks over the matter through solicitors.

    A second source connected to the company told SmartCompany Wendys closed its offices in Adelaide over Christmas. While there was an offer to staff to relocate to Melbourne in order to keep their jobs, only a few employees took up the offer.

    "The Seven News story was an embarrassing leak and the new Wendys owners hastily moved into damage control. An internal email in the early hours of Sunday morning was sent to their franchisees and staff in an attempt to quell the unrest. The email tried to paint a rosey picture to the network that all was well and promised transparency every step of the way," the source says.

    "As a testament to the culture of this organisation they did not even inform their own landlord that they were vacating his property. They paid rent up until December, got rid of all the staff, shut the office and left. The building now sits vacant with over four years outstanding on the lease. The landlord is taking legal action to recover what he is owed."

    The news adds to growing concerns about the viability of Wendys franchise stores and the company’s treatment of franchisees under previous owners Navis Capital.

    As SmartCompany previously reported, 116 Wendys stores have either collapsed or been taken over by management over the past eight years. By late last year, Victorian stores were being advertised with an asking price as low as $59,000.

    One Wendys franchisee told SmartCompany the fast food chain refused to allow her to take maternity leave after giving birth to her second child. Another claimed Wendys repossessed all his stock, fittings and equipment without paying him any compensation after failing to renegotiate a lease.

    Tragically, in at least two cases, the failure of a Wendys franchise eventually led to a suicide.

    The incidents appear to have taken place between 2006 and 2014, when Wendys was owned by Malaysian private equity firm Navis Capital. But the source says there are still concerns for Wendys franchisees.

    "I hold grave fears for those struggling franchisees that still remain. Stores continue to close and nothing of any substance has been done to address the lack of profitability for their franchisees. It continues to be a case of profits before people despite the reassuring overtures of the new regime," the source says.

    While not speaking specifically about the case, founding principal of Rotstein Commercial Lawyers, Hamish Rotstein, told SmartCompany in general there are more protections for landlords under commercial properties than for retail leases.

    “Usually, there’s a covenant in commercial leases that says a property must be occupied during business hours. If the tenant vacates, they are in breach of their lease,” Rotstein said.

    “If they vacate, the landlord can either accept the breach and withstand any losses from leasing it out again, or keep leasing an empty building, which is probably not a good thing for a landlord.”

    In such a situation, Rotstein says landlords have the right to mitigate their losses by suing the tenant for the difference between the rental of the old tenant and the new one

    “In some cases, landlords have also been known to sue tenants for loss of goodwill – obviously a building that’s empty is not as marketable as one that’s being leased, especially if the tenant was a big-name company,” he said.

    SmartCompany contacted a Wendys spokesperson about the matter; the company declined to comment.

    “Wendys declines to comment on the specifics of the matter as it forms part of ongoing negotiations,” the spokesperson said.

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    Two Australian small businesses will face off in the Federal Court over allegations one of the builders has been trading off the other’s designs and marketing material.

    Family-owned builder Ian Cubitt’s Classic Home Improvements has initiated proceedings in the Federal Court against Granny Flat Projects, which it claims has been trading off its copyrighted designs, brochures and lawn signs for granny flats or secondary dwellings.

    In a statement issued to SmartCompany, Cubitt’s said it has previously come across other companies trading off its designs and material, but that these operators have responded to quickly to warnings.

    However, in the case of Granny Flat Projects, Cubitt’s said the company originally agreed to remove the copyrighted material from its marketing, but material owned by Cubitt’s again appeared in new versions of Granny Flat Projects’ marketing.

    Cubitt’s is seeking all profits made by Granny Flat Projects on projects in which the disputed material was used, as well as profits on projects undertaken by Granny Flat Projects for clients that came to the firm after they had been exposed to the material in question.

    “Essentially, this will be all the profits made by Granny Flat Projects,” said Cubitt’s.

    Cubitt’s will also seek an injunction from the court to prevent Granny Flat Projects from using the material, as well as the destruction of all offending hard-copy and online material.

    According to the statement of claim, seen by SmartCompany, the material in question includes lawn signs featuring a floorplan for a granny flat; a presentation that incorporates the same floorplan as well as others, computer generated images of the floorplans and text explaining what is included in the plans; and promotional brochures including one or more of the floorplans and accompanying text. 

    “Our lawyers tell us a couple of things,” a Cubitt’s spokesperson said in the same statement.

    “This type of breach is aggravated and special damages apply in addition to basic damages and that in order to establish the scope of the basic damages before the aggravation is taken into account, a complete forensic investigation of the culprit’s business will be undertaken for which the perpetrator will have to pay the cost in addition to the damages and ordinary costs of the court case.”

    The spokesperson said alleged copyright breaches are common in the construction industry.

    “Cubitt’s alone has now had at least three examples of people trading off our intellectual property,” the spokesperson said.

    “At some point, we have to put a stop not only to this example but the others who might do the same and let the industry know we will not tolerate it.”

    “Not to put too fine a point on it, using someone else’s intellectual property to get a sale is stealing.”

    SmartCompany contacted Granny Flat Projects but did not receive a response prior to publication.

    NDA Law director and partner John MacPhail told SmartCompany it is not unusual to see instances of builders or architects alleging their designs or floorplans have been “ripped off” by others.

    “Those cases are relatively straightforward and the courts have dealt with them before,” MacPhail said.

    However, in this case, MacPhail says Cubbitt’s is also alleging Granny Flat Projects has traded off copyrighted marketing material, in addition to its designs.

    MacPhail says there is no reason why a lawn sign for a property could not be subject to copyright, providing it is long enough and original enough.

    Based on the comments by Cubbitt’s about “aggravated” damages, MacPhail says it is likely the company will allege Granny Flat Projects did not inadvertently breach its copyright, but instead acted in a sneaky or under-handed way.

    However, MacPhail says it may be difficult to prove before the court that all profits made by Granny Flat Projects are the result of the alleged use of Cubitt’s copyrighted material.

    While he says there is the presumption of lost sales in most intellectual-property cases, Cubitt’s are “drawing the bow slightly longer” to claim every sale made by Granny Flat Projects was a consequence of the use of the material.

    “It would be very difficult to show,” MacPhail said.

    “A court would normally discount profits on the basis of those types of damages and assume some sales would have been made anyway.”

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    Collapsed professional cleaning franchise Coverall Melbourne has been taken to the cleaners, with the Federal Court fining the company $500,000 for breaches of the Australian Consumer Law in relation to the company’s dealings with prospective franchisees.

    The court found Coverall Melbourne, the trading entity of South East Melbourne Cleaning Pty Ltd, engaged in unconscionable conduct in its dealings with two prospective franchisees, making false or misleading representations, and contravening the Franchising Code of Conduct.

    Justice Murphy also found Coverall Melbourne engaged in unconscionable conduct by failing to pay the franchisees for the work they had completed, yet continued to demand payment for the initial franchising fee.

    The case was initiated by the ACCC in July 2014, with deputy chair Michael Schaper describing the decision as “important for all involved in the franchise industry”

    “By imposing a penalty of $500,000, the court is seeking to deter other franchisors from engaging in similar conduct,” Shaper said.

    “This is a clear message that franchise businesses must ensure they comply with their obligations under the Australian Consumer Law and Franchising Code of Conduct.”

    Alphatise accounts leak following collapse

    Documents and accounts from collapsed tech startup Alphatise have been leaked, showing the Rich Lister-backed shopping site has lost $3.2 million before tax off just $278,566 in revenue so far during the 2015 financial year.

    The documents, published by Business Insider, show Alphatise spent $1.8 million during financial year 2015 on staff, $366,318 on public relations, $245,063 on investor induction and consultants, as well as $117,879 on travel and vehicles.

    Last financial year, the company accumulated a net loss before tax of $1.071 million, with just $9211 in revenue.

    Earlier this month, Alphatise, whose shareholders include Rich Lister and Western Australia-based technology entrepreneur Zhenya Tsvetnenko, appointed Deloitte as administrators.

    The online shopping company made headlines in September last year for hijacking the Australian launch of Apple’s iPhone 6, with the company claiming at the time it was gearing up for international expansion.

    Shares up on open

    Aussie shares have traded slightly higher this morning, despite falls on Wall Street overnight.

    But Tristan K’Nell, head of trading at Quay Equities, said in a statement a lack of local economic data releases is giving investors “little incentive” to push the index higher.

    “Market turnover into lunch was average at $1.281 billion,” K’Nell said.

    “We could be set to continue this flat trend into the afternoon session with limited economic news around the region. The only piece set for release is the China Westpac MNI Consumer Sentiment data but this is unlikely to be market moving.”

    The S&P/ASX 200 benchmark was up 6.4 points to 5975.5 points at 11.57am AEDT. On Tuesday, the Dow Jones closed 104.9 points lower, down 0.58% to 18011.1 points. 

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    A Victorian worker has won a civil lawsuit against her employer after the Victorian Civil and Administrative Tribunal (VCAT) this week found she was discriminated against for having morning sickness.

    VCAT senior member Ian Proctor ruled the employer, Telco Business Solutions in Watergardens, failed to make "reasonable adjustments" to accommodate the pregnant worker’s severe morning sickness, which he ruled was in fact a “disability”.

    Stephanie Bevilacqua, who had been diagnosed with a severe form of morning sickness called Hyperemesis Gravidarum, alleged managers at Telco Business Solutions had made comments relating to her pregnancy, sick leave, lifting boxes, sitting and toilet breaks that amounted to discrimination.

    Bevilacqua told the court she suffered migraines, back pain, ankle pain and foot pain as a result of her condition.

    When the employee advised her manager she could not work, VCAT heard the store’s manager texted her saying, "I'm f--king sick of this", and "You better f--king come in".

    Proctor found Telco Business Solutions had breached the state's Equal Opportunity Act.

    He also found the employee’s manager had directly discriminated against her by commenting on her toilet breaks, but he threw out her other discrimination claims.

    VCAT is yet to determine damages.

    Employment lawyer and M+K Lawyers partner Andrew Douglas, who has been following the case, told SmartCompany the employer’s actions were clearly discriminatory.

    “Health, gender and pregnancy are all relevant attributes under discrimination legislation,” says Douglas.

    “If someone is adversely affected by being pregnant, businesses are required to make such adjustments to accommodate those changes.”

    Douglas says if an employee with morning sickness can’t undertake the inherent duties of their role, an employer must provide reasonable assistance to help them undertake those tasks. He says the best way to do so is to have a conversation with staff.

    “Where is the conversation of support, rather than criticism?” he says.

    Douglas also says it is not appropriate for an employer to comment on a woman’s pregnancy in a negative way.

    “There is a culture that exists in the Australian community where women are given a somewhat special status,” he says.

    “We commonly see women who return to work after maternity leave be made redundant, we see adverse actions or people believing it’s OK to comment on women’s health – it’s really just not acceptable.”

    Douglas says it is not wise for an employer to alienate women.

    “Women, just like men are a valuable resource in an organisation. The biggest problem we have right now in the workforce is retention of highly skilled people, so doing something to damage that retention with half the population is undermining a core plank of business.”

    SmartCompany contacted Telco Business Solutions, but did not receive a response by publication.

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    A Darwin business has been forced to back-pay 16 employees almost $40,000 after they did not receive night-shift penalty rates for three years.

    The employees, who were trainees at the business, did not receive their full entitlements because their employer thought only qualified workers were entitled to penalty rates for working night shifts.

    The business was sprung by the Fair Work Ombudsman earlier this month. However, it cooperated fully with Fair Work inspectors and promptly reimbursed all of the money it owed to its employees.

    The incident was the largest recovery following a series of investigations conducted by Fair Work across Darwin and Alice Springs.

    The operator of a caravan park in Alice Springs was also stung by the employer watchdog, agreeing to back-pay 26 reception and cleaning staff $13,000 for missing out on weekend penalty rates and their minimum hourly rates between 2013 and 2014.

    Ten shop assistants at a Darwin sandwich bar also received back-pay from their employer after they missed out on $11,800 in minimum hourly rates and weekend penalty rates.

    Overall, more than $94,000 in lost wages and entitlements was back-paid by more than six businesses in the recent crackdown.

    Ben Tallboys, senior associate at Russell Kennedy Lawyers, told SmartCompany while there are exceptions – such as vocational placements – trainees performing work should be treated the same as qualified workers.

    “An organisation should make sure they obtain advice before deciding to not classify a trainee as an employee, because the consequences of getting it wrong can be severe as this situation shows,” he says.

    Sarah Lock, principal consultant at Workplace Law Specialists in Brisbane, agrees.

    “As a trainee they get the same entitlements as other employees, such as annual leave, sick leave, public holidays and breaks under Modern Awards,” Lock says.

    “Employers also need to know about entitlements for their training, like whether they get paid to attend training and who pays for the training fees. An employee can’t be paid trainee pay rates just because they are new to a job or are being trained in a new task.”

    But Tallboys points out that the recent back-payments in the Northern Territory show the employer watchdog is willing to take a less adversarial approach for businesses unknowingly breaking the law.

    “This is also another reminder that the ombudsman is focused on co-operative outcomes when dealing with employers who honestly get things wrong,” he says.

    Fair Work Ombudsman Natalie James said in a statement she was confident the underpayments were “genuine mistakes” and it was pleasing that all of the employers have now put in place processes to make sure the underpayments are not repeated.

    “When we find mistakes, our preference is to educate employers about their obligations and assist them to put processes in place to ensure future compliance,” she said.

    “A small mistake left over time can easily result in a hefty bill for back-payment of wages – so it is important employers get it right in the first place.”

    James pointed out that while a number of businesses in the Northern Territory were stung, the majority of employers do the right thing by their workers and “get it right” when it comes to complying with workplace laws.

    “We find that most mistakes are due to a lack of awareness of workplace laws, rather than employers deliberately doing the wrong thing,” she said. 

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  • 03/29/15--04:59: How to think like a lawyer
  • There is a very good reason why a law degree is highly coveted, and why it has surpassed Arts as the generalist tertiary qualification: law teaches you to think in a beneficial way.

    "Thinking like a lawyer" can practically assist you in everyday life, through minimising risks, maximising success and avoiding costly decisions: costly both financially and emotionally.

    Here are four ways you can use "legal thinking" skills without actually being a lawyer, and reap the benefits:

    1. Never compromise your values. Honouring sacred values of integrity, courtesy and loyalty are fundamental to the legal professional. Yes, there are a few rotten apples (like in any industry) but the values that form the basis of lawyers' professional obligations are critical to achieving justice. Never lose sight of what your core values are: reputations take many years to acquire but can be surrendered in a split second, depending on the decisions that you make. No job is worth compromising your values for: jobs and bosses will come and go, but you will have to live with your conscience long afterwards. Be true to yourself and your internal compass will always point in the right direction.

    2. Know the rules. Whatever career path you're following, whatever organisation you're working for, the most powerful weapon you'll have is knowledge about how and why things are done. Diligently understanding your target market will demonstrate your competence, as well as enable you to confidently find the loopholes that you can exploit to your advantage. A lawyer should never go to court unprepared; whatever your career or life ambitions are, do your homework so you're fully equipped with the intel you need to achieve your goals.

    3. Identify and address risk. Progress in life is impossible without taking risks. Every move we make involves taking a risk of some kind. Potholes can appear suddenly, but if you know what they look like, it's far easier to avoid them. Be actively prepared for what could go wrong – literally write down the worst case scenarios and create strategies that you can implement if necessary. This is very much the essence of what lawyers do, especially those working in-house. There are various tools to mitigate risk, including insurance, savings and timing, but ultimately you need to be comfortable with the decisions you make.

    4. Think strategically. Always have a Plan B – and if possible Plans C and D too. That way, you can have a back-up strategy ready to go if you don't get there the first time around. Approaching it from a helicopter perspective will encourage you to think more laterally and creatively. Sometimes you may have to sacrifice impulsiveness, but it can also mean being ready to accept an exciting, unexpected opportunity if it fits into your long-term strategic plan. There are various ways to achieve an ultimate career goal - a vertical career trajectory isn't the only way to do it: secondments and "horizontal" opportunities can equip you with skills and experience vital to achieving your ultimate destination. Having a strategy to guide you is the key.

    Note: the above is general information and should not be considered as legal advice. Kate Ashmor is the principal of her own law firm, Ashmor Legal, focusing on conveyancing and property. When she's not toddler-wrangling or tweeting, she serves as Chairman of Caulfield Park Bendigo Bank and as a board member of Alola Australia. She's the immediate past president of Australian Women Lawyers and Women's Agenda's chief legal columnist. This story originally appeared on Women's Agenda.

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    Energy providers Origin Australia and EnergyAustralia have been hit with a combined $3 million in penalties by the Federal Court of Australia over dodgy sales practices.

    It is not the first time either company has found itself in hot water over misleading conduct, after the Australian Competition and Consumer Commission instituted proceedings in regard to Origin's ‘DailySaver’ plan last May.

    The court this week found Origin and its marketing company SalesForce Australia had engaged in a range of unlawful conduct in breach of the Australian Consumer Law when selling its electricity contracts door-to-door in New South Wales, Victoria, Queensland and South Australia in September 2013.

    The court found the actions of sales representatives in two instances constituted unconscionable conduct, including one sales representative who continued to negotiate with the consumer after they had become aware the consumer had difficulty understanding English. This included prompting the consumer to say “yes’” to questions on a phone call to confirm an electricity contract with Origin.

    Rohan Harris, principal at law firm Russell Kennedy, told SmartCompany companies must be aware of Australian Consumer Law when dealing with vulnerable customers.

    “Anyone dealing with consumers who have some sort of obvious inability to understand English or understand what they’re committing to, need to be particularly wary,” says Harris.

    Harris says the ACCC is likely to have included Origin’s past breaches of consumer law in its submission and the court would have considered these when allocating the $2 million fine, the highest to have been ordered against an energy retailer, according to the ACCC.

    The penalties, which also include a $325,000 fine for SalesForce Australia, follow a similar fine of $1 million last week against EnergyAustralia over its phone sales tactics.

    In action brought against the company by the consumer watchdog, the court found EnergyAustralia had made false or misleading representations and had engaged in misleading or deceptive conduct when calling consumers to sell its electricity and gas plans. EnergyAustralia self-reported the matter. 

    The court also fined its former telemarketing company, Bright Choice Australia, a further $100,000 for contraventions.

    The court found Bright Choice Australia had signed up a number of consumers in Victoria, NSW, and Queensland on behalf of EnergyAustralia over the phone without their knowledge or consent.

    Sales consultants told consumers they were not being signed up to an energy agreement and would only be sent information, following which they could decide whether or not to sign up to an energy agreement.

    But Bright Choice in fact recorded consumers as having agreed to the contract and “Welcome Packs” subsequently sent to them actually contained contractual documents.

    It is also not the first time EnergyAustralia has been fined over its sales methods, after it was fined $1.2 million in April last year for dodgy door-to-door sales.

    Harris says the ACCC has got energy providers in its crosshairs.

    “I think they’ve definitely had a focus on the energy companies. Not just in terms of unconscionable conduct, but also unsolicited consumer agreements,” says Harris.

    “If you’re dealing with consumers on an unsolicited basis, if you’re making appeals to them, you need to understand all the laws that apply to that sort of conduct.”

    Harris says companies need to be aware of permitted calling hours, need to tell consumers why they’re calling, give consumers the option to ask them to leave and tell consumer about cooling off and termination periods.

    Origin Australia issued a statement to SmartCompany apologising to customers who were affected by the behaviour.

    “We’re extremely disappointed that a number of customers had a poor experience, and while the conduct in question was performed by a third party on our behalf, it’s our duty to ensure that anyone who represents us reflects our behaviours and values,” said the Origin spokesperson.

    EnergyAustralia released a statement saying the conduct occurred without EnergyAustralia’s knowledge and was in contravention of contractual, training and scripting requirements.

    “Firstly, we would like to say sorry to anyone affected by this matter,” said Angela Jaric, general manager of regulation and compliance.

    “Our customers are our priority and we have implemented a remediation program which involved contacting impacted customers to confirm they had agreed to sign up with EnergyAustralia, and to give them options for their ongoing gas and electricity supply."

    “Internally, we’ve learned valuable lessons and have made improvements including increased training for staff and enhanced monitoring, reporting and measurement of third party vendors"

    “We have also established a quality assurance program to ensure any third party vendors abide by all relevant legislation, laws, regulations, standards, codes and internal policies."

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    An employer who trafficked an illiterate Indian cook into Australia and kept him in “conditions akin to slavery” has been ordered to back-pay him more than $186,000.

    The Federal Circuit Court ruled last week Divye Kumar Trivedi, owner and operator of D&D Indian Fine Food, had falsified the restaurant’s time records, pay slips and information provided to the Australian Tax Office and Immigration Department in relation to the worker’s employment.

    Trivedi had approached 45-year-old Indian national Dulo Ram to work in Australia in 2007, sponsoring him as a cook through the 457 Visa program.

    Ram, who spoke no English, began work at Trivedi‘s Mand’s Indian Restaurant in the Sydney suburb of Eastwood seven days a week, 12 hours a day for more than 16 months. During that time he was paid only $6,958.88.

    Ram told the court he lived in a small storeroom, next to the restaurant’s kitchen, and said he was forced to bathe in the kitchen, using buckets of hot water.

    The court heard Ram eventually “escaped” and went to the police.

    Judge Rolf Driver said Trivedi went to great lengths to deceive the authorities.

    “[Trivedi] built a façade upon sham documents, to deceive the Department of Immigration and the ATO and attempted to deceive this court, in an effort to create the illusion that there was an employment arrangement in accordance with Australian law,” said Driver.

    “Mr Ram was kept by his employer in conditions akin to slavery. When the Department of Immigration eventually investigated his circumstances, its officials were fobbed off with lies and fabricated documents.”

    Driver also slammed Trivedi’s “grotesque abuse” of the 457 Visa program.

    He ordered Trivedi to pay Ram $125,431.22 in back-pay, plus more than $60,000 in interest, and said he will hear from the parties in relation to further penalties at a later date.

    Employment lawyer and M+K Lawyers partner Andrew Douglas told SmartCompany while he did not think similar occurrences were very common in Australia, the case brought to light the very serious issue of human trafficking across the globe.

    “There are certainly people trafficking issues, in the food industry and in prostitution, that we really need to be alive to,” says Douglas, pointing out these issues are common in many third world countries.

    “It’s not surprising that bad people exist in all countries and I think we need to be mindful and approach the issue strongly,” he says.

    “Organisations need to be mindful of their obligations under the law. Just because you have employed someone on a travel visa, doesn’t mean you can pay them beneath what they’re entitled and you can’t use that as a point of leverage.”

    SmartCompany attempted to contact Mand’s Indian Restaurant in Eastwood, but was told by the owner of an unrelated Mand’s Indian Restaurant in Randwick Trivedi’s business had closed.

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    The former chief operating officer of surfwear brand Piping Hot has filed a writ in the Victorian County Court against his former employers over the termination of his employment in October last year.

    Just days before the home-grown brand was acquired by New York-based retail group Saban Brands, Andrew Kahofer filed a writ against the company’s previous owners on March 18.

    However, SmartCompany understands the writ has not yet been served to Piping Hot. For the matter to proceed, Piping Hot must have the opportunity to submit a response to the writ.

    According to the Herald Sun, Kahofer joined Piping Hot on March 19 last year but received a letter from the company’s solicitors on October 1, informing him his employment had been terminated.

    Kahofer alleges he was defamed in an email sent to a wholesaler by Piping Hot employee Kristian Johannsen, the son of the managing director at the time, Mark Johannsen.

    The email allegedly suggested Kahofer had “acted illegally” or “engaged in fraud while performing his duties with Piping Hot”.

    Kahofer is seeking unspecified damages over the alleged defamation, in addition to a claim for $184,000 in damages related to the termination of his employment.

    In the writ, Kahofer argued he should have received nine months’ notice of the termination, partly because of the “difficulty in obtaining a position as chief operating officer” within the industry.

    Anthony Massaro, principal in the employment and workplace relations team at Russell Kennedy Lawyers, told SmartCompany for small business owners, employee fraud “can certainly be grounds for termination of employment”.

    “But before you take action, it’s important to properly investigate the allegations or what you suspect has happened to ensure you have a solid case that can stand up to scrutiny,” Massaro says.

    But when it comes to defamation claims, Suzanne Rieschieck, senior associate at Russell Kennedy Lawyers, told SmartCompany there are a number of tests to determine if a statement is defamatory.

    In the first instance, a court will consider if the statement has been published to someone else other than the person it is about. For a statement to be defamatory it must also personally identify the individual and finally, the imputation of a statement or comment must be proven to have injured or diminished the individual’s reputation or standing on a personal level.

    If all these criteria are satisfied, Rieschieck says a defamation claim can proceed and compensation damages may flow.

    Rieschieck says the level of damages available in defamation cases is subject to a statutory cap, which is indexed each year. At the current level, general damages are capped at $366,000 per publication but individuals can apply for “aggravated” damages as well if they believe the defamation was malicious.

    For small business owners, Rieschieck says it is important to understand there are a number of defences to defamation claims.

    The first and one of the most common defences is truth or justification, in which the defendant can prove the statement was “true in fact and in substance”.

    “For example, if this company is able to prove an employee has committed fraud, it could defeat a claim of defamation,” says Rieschieck.

    Other defences include qualified privilege, in which, for example, a complaint is made to the person within a company who is responsible for handling complaints, or fair comment, in which the defendant would have to prove the statement was a comment and not a statement of fact.

    SmartCompany contacted Saban Brands but did not receive a response prior to publication.

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