A group of franchisees have allegedly left carpet cleaning company Electrodry over their concerns a chemical used by the company, which has been endorsed by the National Asthma Council Australia’s Sensitive Choice program, could potentially pose a health risk to asthmatics or damage carpets.

SmartCompany understands franchisees were told by Electrodry during a 2010 conference getting the endorsement involved a vigorous nine-month testing process and would mean franchisees would be charged $11 per week for the endorsement.

The revelations come after the Australian Competition and Consumer Commission initiated legal action against the franchisor of the Electrodry Carpet Cleaning business, alleging it posted fake online testimonials in July last year.

One of the former Electrody franchisees told SmartCompany their issues with Electrodry began in July 2012, when a former storeman alerted a group of franchisees that a chemical called Tinopal CBX (an optical brightener) was added to the two main Electrodry cleaning products.

The former franchisee, who chose to remain anonymous, became concerned after reading articles on the internet, which included suggestions optical brighteners could reduce stain resistance in some carpets, have a tendency to yellow with age, and can cause respiratory issues.

In a sworn statement to the NSW Office of Fair Trading seen by SmartCompany, the former franchisee said the revelations appeared to contradict claims on the company’s website and in its training manual.

“The representations made to us at the time we entered into the franchise that cleaning was in accordance with Australian Standards was false at the time we entered the agreement… The manual received with our agreements state ‘our company’s certified technicians perform a four-step process that meets the Australian Standards for carpet cleaning’,” the franchisee said in the statement.

“The Electrodry websites stated the following... ‘We comply with the Australian Standards for carpet and upholstery cleaning’ and ‘The Electrodry system meets the strict requirements of the Australian Standards through a 4 step carpet cleaning process’ and also ‘Electrodry is one of the few companies who follow the stringent Australian standards for carpet and upholstery cleaning’.

“Based on the manual [and the website] we have always believed the claims to be factual, so in turn, have advised our customers that the service we provide as Electrodry Franchisees are in accordance to the Australian Standards. This was a great selling tool as we were always slightly more expensive than most carpet cleaners.”

The former franchisee said they received legal advice that they could potentially be liable as a result of any litigation from either damaged carpets or allergic reactions.

“We all sought legal advice as this was of great concern to us and what we, as Electrodry franchisees, were doing to our customers carpets and upholstery and that now we were aware we would be liable for any issues resulting in the use of this optical brightener Tinopal,” the franchisee said.

Upon the concerns being raised, the franchisee contacted Electrodry in a letter.

“The optical brightener can also damage carpets especially wool and is expressly advised as not to be used by all carpet manufacturers as it will void the warranty,” the franchisee’s letter said.

“Optical brightener is also regarded as an irritant and is mentioned on a number of asthma web sites as a chemical to be avoided.”

SmartCompany understands a solicitor claiming to act for Electrodry responded by sending franchisees a letter denying Electrodry’s products contain Tinopal CBX.

“The defamatory imputations arising from your statements are clearly actionable by our client, and you will not have any good defence to such an action,” the solicitor said.

“With respect to your constant references to Tinopal, our client denies the claims raised against it in this regard. If your clients believe that the actionable parts of the letter they authored and published (which relate to its claims about chemicals) are true, then they are open to run those defences (which are denied) in any proceeding our client may bring. Your letter fails to address the actionable imputations which relate to issues (other than chemicals), we take that as an admission that your clients do not deny imputations.”

Following the letter, the franchisee had a sample of Electrodry’s products tested at the Intertek West Footscray Laboratory, with the results coming back positive for Tinopal CBX.

The franchisee has since left Electrodry, citing their concerns about Tinopal CBX as one of the key issues.

In a statement, a spokesperson for the National Asthma Council Australia’s Sensitive Choice program told SmartCompany applications are considered by an independent (and voluntary) product advisory panel.

“Panel membership includes: a respiratory physician, a clinical and academic allergist, an industrial chemist, a general practitioner, a pharmacist and an engineer,” the spokesperson says.

“The Sensitive Choice program is a type of product endorsement program, although approved products and services must satisfy our independent Product Advisory Panel they do no harm and may offer relative benefits to people with asthma or allergies.”

According to the spokesperson, one of the aims of the program is to generate sponsorship funds to enable both the Australian and the New Zealand asthma organisations to continue their work in improving asthma care.

It also seeks to educate Australians and New Zealanders about the importance of managing their asthma, encourage businesses to produce products and services that are asthma-friendly, and “provide consumers with a way of identifying products and services that may benefit people with asthma and/or allergies”.

The spokesperson says the panel assesses the likelihood that a product or service may cause harm to people with asthma or allergies, as well as its potential benefits, either absolutely or relative to competing products.

“We do not conduct our own testing, but where provided testing is not considered sufficient, may ask the applicant to obtain specific testing,” the spokesperson says.

SmartCompany asked the spokesperson if they were aware of any of Electrodry’s cleaning products containing any optical brighteners, such as Tinopal CBX.

“Electrodry has advised us that its products do not contain optical brighteners,” the spokesperson says.

While acknowledging franchisees raised concerns the company’s products could contain Tinopal CBX, the spokesperson says “these [concerns] were investigated and addressed”.

“We cannot answer for all products, but in the context of the use of optical brighteners in cleaning chemicals at below 0.05% concentration, this is not considered to be a health risk. We understand the Australian Standard identifies optical brightener due to the impact it may have on carpet, not on health.”

“As a general comment, it is important to consider the percentage of any chemical used, and the way it is used, in a formulation. If one just looks at the warnings associated with the basic ingredients, one would not drink tap water (which contains fluoride – toxic at 100% strength, but beneficial at the tiny percentage used in drinking water).”

In a statement, Electrodry operations manager Grant Burchell told SmartCompany the company does not advertise its systems as meeting the Australian standards.

“We have stated that ‘All products are reviewed by the Sensitive Choice Product Advisory Panel comprising experts in allergy, respiratory medicine, pharmacy, general practice, industrial chemistry and consumer issues. Only products that may be a better choice for people with asthma or allergy are included on the Sensitive Choice register.’ We are not privy to the testing and investigative processes of the Sensitive Choice Product Advisory Panel and accordingly cannot make any further comment,” Burchell says.

When asked whether the company’s cleaning products contain any optical brighteners, such as Tinopal CBX, Buchell says: “Yes, one of our products does contain 0.00013% of Tinopal. i.e. Tinopal accounts for approximately one part per million in the product composition”.

“It is our position that our products are safe and effective. Almost all laundry products and most cleaning products use brighteners,” Buchell says.

“In 25 years of business operation, there has been no evidence that a carpet has been affected in any way the optical brightener used in the cleaning process. Our testing has shown that the Electrodry cleaning system does not damage carpets. We are aware that there has been some recent publications identifying potential health risks associated with optical brighteners. To our knowledge these studies are not conclusive and at this point we are not aware of any data giving guidelines on exposure levels. We also note that Tinopal is an FDA approved product. We are constantly reviewing this matter.”

Burchell acknowledges former franchisees have raised concerns Electrodry products could contain Tinopal CBX, but says “we subsequently reviewed the product composition and undertook a series of internal tests”.

“A former franchisee had previously filed a claim with the ACCC and the matter was dismissed,” he says.

Burchell says the company has a solid relationship with its existing franchisees.

Know more? Email News@SmartCompany.com.au.

A portable toilet delivery driver has won his job back after his employer fired him last year for a breach of safety regulations, following an incident where a portaloo got too close to live tram wires.

The Fair Work Commission last month ordered Coates Hire Operations to reinstate driver Adrian Harrington after he successfully brought an unfair dismissal case against the company in August last year.

At the time of the original case, Harrington was awarded eight weeks’ pay in compensation – which Coates successfully appealed – but last month Harrington further argued to get his old job back.

Harrington was dismissed from his role with Coates Hire following an incident in March 2014 where he was called out to move a vandalised portable toilet from a site adjacent to tram tracks on the Gold Coast.

Coates, which had been contracted by McConnell Dowell to work on the construction and delivery of a light rail network, had specific safety requirements in place to manage work near live tramlines, including maintaining a safe working distance of three metres from live wires.

But to move the portaloo at this specific site, Harrington told the commission he had to position his truck on the tracks and conceded he lifted the toilet closer than the minimum three metres distance to the live wires.

At some point during the removal of the toilet, a tram approached and signalled its presence by flashing its lights and sounding its horn. Harrington, on seeing the tram, hastened his loading and left the site.

After leaving the site, he was informed by a McConnell Dowell representative the site was live and his presence had resulted in the zone being isolated from power. Harrington argued this was the first he knew about the area being live and a hazard zone.

But Coates considered Harrington’s presence on a live site with a tram in close proximity a serious hazard and a breach of Coates’ safety requirements.

A few days later, Harrington was called into a meeting to discuss the incident and at a second meeting was shown CCTV footage of the event. He was given a show cause notice, indicating Coates was considering terminating his employment or taking other disciplinary action.

In his response to the show cause letter, Harrington detailed his otherwise good employment history with Coates and pointed out there had been no advice given to him or others about the site being live. He admitted the crane was operated within three metres of the overhead lines but reiterated his belief the wires were not live.

However, he acknowledged “in hindsight that I did the wrong thing and can only apologise for my error of judgement, and have learnt a very valuable lesson”.

Harrington was subsequently dismissed for serious misconduct in the form of a safety breach.

But Fair Work commissioner Anna Booth found Coates failed to properly take into account Harrington’s response to the show cause notice, instead “seemingly proceeding with its disciplinary process despite its content and obvious flagging of his view that dismissal would be disproportionate”.

“On the balance of probabilities, in my view, the conduct was not serious misconduct. The safety incident did not amount to a valid reason to dismiss Mr Harrington,” Booth said.

Coates argued reinstatement was impractical because the company had “lost trust and confidence” in Harrington, but Booth rejected that argument.

“Harrington struck me as an honest and very willing worker, albeit one who had, in his own words and with hindsight, done the wrong thing, an admission against interest that reinforces my conclusion,” continued the commissioner.

“Having regard to the whole of the relevant material, I conclude this is not a case where the reinstatement of Mr Harrington to his former employment, or to an equivalent position, should be regarded as impracticable.”

Employment lawyer Peter Vitale told SmartCompany the case is a reminder that employers have an obligation to consider all the salient facts and any response to a show cause notice in a dismissal.

“That’s really the heart of procedural fairness requirement,” Vitale says.

“The [Fair Work Act] specifically says you must give the employee the opportunity to respond to allegations of poor conduct or poor performance.”

Vitale says employers sometimes go into these meetings with a “predetermined attitude”.

“It is often argued by an employee that the employer’s mind was made up before they went into the meeting,” he says, reminding employers it is important to keep an open mind.

“One of the very critical things about managing performance is to ensure that as an employer, you take time to listen to what an employee has to say and to make it clear that you have taken appropriate steps to consider what they have to say and that that informs your decision.”

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

The draft unfair contracts legislation has come under scrutiny after business commenter Robert Gottliebsen claimed it shows Small Business Minister Bruce Billson has been “taken to the policy cleaners” and “will look very silly” amongst the SME community.

The unfair contracts legislation was first announced in the 2014 budget. Earlier this year, Billson revealed the protections will be available to enterprises with fewer than 20 employees and for transactions under $100,000 or multi-year contracts totalling less than $250,000.

But in Business Spectator yesterday, Gottliebsen said if the legislation is passed in its current form Billson should issue a public apology to every small business in Australia as he has “misled” them.

Gottliebsen says the $100,000 limit “is a ridiculously low level” which “utterly neuters” the legislation leaving it “completely useless”.

He says very few existing contracts will be covered, and every large business will write all its future contacts so they are not covered by the legislation.  

Gottliebsen says there should be no limit on the legislation and if a limit is required then $2 million would be a “more reasonable” figure.

“If the draft becomes government-supported legislation, Billson certainly should issue a public apology to every small business in Australia because he has misled them,” he says.

Billson hit back when he spoke to SmartCompany this morning and says the government is doing exactly what it said it would in its election commitments and “hasn’t strayed from it one iota”.

“We are not setting out to make the Commonwealth government contract nannies, it is not our goal to inject federal bureaucrats into contract negotiations into business,” he says.

“What we are saying is take-it-or-leave-it standard form contracts that are routinely forced upon small business can contain contract terms that can be cut out as it would be if the small business was a consumer.”

Billson says a $100,000 limit is appropriate as SMEs will seek advice on larger contracts.

“Responsible and savvy small businesses understand if they were going to commit to a significant contract they need to take advice,” he says.

“That’s different to the day-to-day contracts thrust before small business.”

Billson says the unfair contracts legislation is best suited to applying to contracts with telecommunications companies rather than lease agreements.

He says he welcomes debate.

“We’ve had lots of people constructively engaging arguing for a higher and lower threshold and some big businesses saying we shouldn’t go there at all,” he says. 

“This is an election commitment and one I feel strongly about.”   

The consultation process for the draft legislation is ongoing.

An Adelaide car sales manager who told his boss he was working but instead went to see his son’s cricket match in Melbourne has won his unfair dismissal claim before the Fair Work Commission and a payout of $7000 from his employer.

Paul Sibley was employed as a zone fleet sales manager by car and truck rental company Isuzu Australia for seven years before he was dismissed in December last year.

On November 30, a Sunday, Sibley emailed his boss telling him he would not be in the office on Monday or Tuesday, but would be available on mobile and email.

Isuzu, a company that employs 96 staff and has annual turnover of around $600 million according to commission documents, did permit its managers to work from home from time to time if they completed a full day of work and undertook all of the responsibilities of their position.

But that Sunday, Sibley flew to Melbourne to attend his son’s junior cricket matches on Monday, December 1 and Tuesday, December 2, 2014.

Sibley told the commission he decided to fly to Melbourne at the last minute and the decision was associated with the tragic death of Australian cricketer Phil Hughes and the potential impact upon his son.

Over the course of Monday and Tuesday, Sibley made a small number of work phone calls and forwarded one of a small number of work emails that he read at the time. He not did not attend or phone into a sales meeting that he was expected to be present at.

After another sales manager informed Sibley’s boss he’d taken two days off to go to Melbourne for the cricket match, he attended a meeting on December 4 and was dismissed.

Fair Work Commissioner Peter Hampton found Sibley did not directly deny being in Melbourne during the meeting but did suggest he was “working as normal”.

The commissioner agreed with Isuzu there was a valid reason for dismissal, but found there were procedural deficiencies in the company’s approach.

Hampton found Isuzu “already determined a default position to dismiss” upon holding the meeting with Sibley and, upon putting the allegation to him, did not give him a full chance to respond to allegations.

Kelly Thomas, associate at Maurice Blackburn, told SmartCompany because Isuzu had entered the meeting with a predetermined outcome in mind, the company hadn’t offered Sibley a real chance to provide “his side of the story”.

“Those are fundamental elements of procedural fairness,” Thomas says.

“It is really important for employers to understand they need to follow the fundamentals of procedural fairness so that at the end of the day, everyone is treated fairly.”

Thomas says this means it’s important for employers to keep an open mind when going through the dismissal process.

“That’s not to say there would have been a different outcome if they had listened to him – the commission made it clear there was valid reason to dismiss the employee – but if the process was followed, with a legitimate reason to dismiss, the employer would have protected themselves and saved time in front of the commission,” Thomas says.

Thomas says it’s important for employers to keep in mind the dismissal process can be stressful for employees, and following a clear and fair process can help limit the stress for all involved.

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

A former employee at alcohol promotion and distribution company Bacardi Lion has pleaded guilty to making thousands of dollars of personal purchases on a company credit card after initially trying to disguise her actions.

Canberra resident Jacqueline Louise McGowan is charged with using a corporate credit card to pay for swimming lessons for her two children, bathroom renovations, vet bills, groceries and even a $135 haircut.

However, the alcohol promoter tried to disguise her behaviour by claiming the haircut was actually a “gift basket” and the swimming pool expenses were because someone who worked at the swim school had worked on some bar shirts and aprons for a local venue she was promoting.

The Australian Capital Territory Supreme Court has also heard McGowan allegedly charged her son’s school fees to the company credit card – claiming she was purchasing an artwork for a nightclub that no longer exists, according to Fairfax.

The fraudulent behaviour was detected in 2011 and McGowan was immediately sacked. A forensic investigation found she had made 216 fraudulent transactions worth more than $120,000.

McGowan originally said she would fight the claims made against her, however, yesterday she pleaded guilty to four fraud charges.

Gary Gill, partner at KPMG’s forensics team, told SmartCompany this case highlights how businesses need to have a range of checks and balances in place in order to stop fraudulent transactions before they accumulate into thousands of dollars.

“We do see a lot of that type of fraud,” Gill says.

“It’s not usually particularly significant in terms of dollar value, though obviously it can rack up as it seems to have done in this case.”

Gill says the first thing companies should keep in mind is not to give credit cards to just any employee.

“Make sure you give it to people you know and trust,” he says.

“Hopefully you’ve done some sort of background check before you’ve brought them on as employees. Typically, if they’ve done this thing before they do it again.”

“There also needs to be a formal approval process in the business – obviously with credit cards you can’t pre-approve the purchases, but someone needs to do the post-processing approval on a regular basis. If you have a process where someone is reviewing the expenses on a regular basis, even if someone does go through it hopefully wont’ build up.”

Gill advises businesses to keep an eye on especially large transactions as it can be easy to “pick out the stuff that looks more personal in nature” on a credit card statement.

“Just be aware of people’s lifestyles and if you’ve seen an employee living a fairly lavish lifestyle that clearly isn’t being funded by what you’re paying them, you’ve clearly got to be questioning where the money’s coming from,” he says.

McGowan’s sentence is expected to be handed down in August.

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

Police want to talk to the owner and manager of a Victorian travel agency who has disappeared, after consumers complained their cash had been taken but their holidays had not been booked.

Victoria Police this morning confirmed to SmartCompany they are investigating alleged frauds relating to travel purchases through Ace Travel in Colac, after consumers made a number of complaints to police.

They wish to speak to Jordan Dittloff, the owner and manager of Ace Travel.

The Geelong Advertiser reportscustomers who had booked holidays through the agent, including P&O Cruises, were being informed by their holiday destinations that only their deposit had been received.

Janine Childs told Geelong Advertiser her friends had gone into the store to seek answers and were told the agent was missing, as was their money.

“P&O received the deposit but nothing else, other people’s were booked and then cancelled. It’s devastating,” said Childs.

Meanwhile, some customers have taken to Ace Travel’s Facebook page to post abusive comments, including labelling Dittloff a “f-cking asshole” and “f-ckhead”.

Speaking to SmartCompany this morning, Gary O’Riordan, general manger of the Australian Federation of Travel Agents, says he had been told Ace Travel is now completely closed, after staff were there helping affected customers as late as Wednesday.

O’Riordan says he has concerns based on information from police and had spoken to Dittloff’s mother, who herself was a travel agent for over 30 years. He says Dittloff had taken over the business from her and it had “grown too fast”.

He also raised concerns about the future of Ace Travel while its sole director was missing.

“We just need to track him down, we’ve got to locate him first,” O’Riordan says.

O’Riordan says the rate of agency closures in the travel industry is very low.

“We need to get on with promoting thousands of agents out there that do the right thing,” he says.

Rohan Harris, principal at law firm Russell Kennedy, told SmartCompany there are basic guarantees under Australian Consumer Law to protect consumers when paying for goods and services they don’t receive.

“[They] say service providers, including travel agents, must provide the basic level of service and deal with clients’ money appropriately,” Harris says.

Harris says credit card chargeback rights may protect consumers if they pay for holidays via credit card and some travellers may also be protected if they have appropriate travel insurance.

But Harris says the Travel Agents Compensation Fund that previously existed to protect consumers, ceased on June 30 last year.

SmartCompany attempted several times to contact Ace Travel but the calls were not answered.

Online forum Whirlpool has claimed victory in a lengthy legal battle with a Melbourne-based financial services provider over a series of negative online posts.

But WCS Group, which is based in the Melbourne suburb of Essendon and licensed through the National Australia Bank, has hit back by saying the resolution of the legal claim does not mean Whirlpool has “won”.

WCS Group initiated the legal action in the Supreme Court of Victoria in August 2014, alleging a series of posts in May 2014 by Whirlpool user ‘homemadecook’, who it believed was a competitor or disgruntled former employee or contractor, had damaged its reputation and caused financial losses.

The group said the comments were “false, misleading or deceptive or likely to mislead or deceive” and Whirlpool had contravened Australian Consumer Law by not removing them.

According to the statement of claim filed by WCS Group at the time, seen by SmartCompany, the posts by ‘homemadecook’ claimed WCS Group offered them its services for $18,000 and promised to reduce their mortgage to 10 years, based on claims the user’s income would increase over time. Another post said advice from other Whirlpool users helped them avoid using the group’s services.

WCS had previously contacted Whirlpool to request the posts be deleted and argued Whirlpool “derived a commercial benefit” from leaving the comments on the forum. However, it is well-known Whirlpool is not a commercial operation.

Whirlpool said in August it intended to “defend the case vigorously” and on Wednesday claimed victory in a statement provided to SmartCompany, saying WCS Group had discontinued its legal claim and will now be required to pay the forum’s legal costs, which its legal representatives estimated could amount to a total legal bill of more than $200,000.

Throughout the protracted legal battle, Whirlpool said it had taken a “precautionary step” of removing the posts by ‘homemadecook’ from public view after WCS chose to subpoena telecommunications records to attempt to prove who made the posts.

But Whirlpool director Simon Wright said in the same statement the case was not about the authenticity of the posts by ‘homemadecook’ but the implications under Australian Consumer Law of those posts remaining on Whirlpool.

“If WCS was successful in this argument, it would have meant that every website, forum and blog operating in Australia would need to delete any post on demand,” Wright said.

“Or alternatively be ready to prove the truthfulness of everything everyone has written and risk being sued by anyone who felt that their business has been painted in a negative light. The result would be an untenable curtailing of free expression and render meaningless the carefully considering balance achieved by Australia’s unified defamation laws”.

Referring also to a previous case involving accounting software firm 2Clix Australia in 2007, Wright said the result “sends a strong message to anyone thinking that they can bully Whirlpool into removing posts by threatening legal action”.

“Whirlpool has again demonstrated its resolve and willingness to defend itself so that our community remains free to post both positive and negative views about businesses, as long as they comply with our forum rules and Australian law,” Wright said.

However, WCS disputed Whirlpool’s claim to victory, telling SmartCompany this morning it has discontinued the proceedings against Whirlpool because the case had been a means of uncovering the identity of ‘homemadecook’.

WCS Group has subsequently launched legal action against a former contractor, George Papadopoullos, in relation to the posts.

“It is unfortunate that Whirlpool would not release this individual’s identity sooner and that WCS had to take them to court for such information,” WCS Group said in a statement to SmartCompany.

“Nevertheless this was the case and we are now happy to move on to the next step of commencing court proceedings against this former employee/contractor.”

WCS Group said the removal of the posts by ‘homemadecook’ by Whirlpool in November 2014 “was a success to WCS”.

“Whirlpool has not ‘won’ this case at all and WCS is very satisfied with the outcome,” the company said.

“WCS has not discontinued this proceeding against Mr Papadopoullos and although WSC strong believes that Whirlpool should properly verify information before they publish it, this case was never about Whirlpool, as Whirlpool would like to believe.”

“Whirlpool directed WCS to obtain a court order before they would hand over the identity of Mr George Papadopoullos (a former contractor of WCS Group) and this is what WCS did,” the company added. 

Business owners will now be able to compel employees to take annual leave if they have accrued an “excessive” amount, following a ruling by the full bench of the Fair Work Commission.

The decision, which is part of the employment watchdog’s review of annual leave provisions and applies to workers covered by all modern employment awards, is seen as a major win by employer groups who have long been arguing for a more flexible annual leave framework.

The Fair Work Commission also decided employees will be able to cash out a portion of their annual leave – should their employer agree – as long as the residual balance is no less than four weeks of leave.

In addition, employers paying their workers via Electronic Funds Transfer will be able to pay them in accordance with the usual pay cycle while on annual leave rather than prior to commencement.

Peter Strong, executive director of the Council of Small Business of Australia, told SmartCompany he welcomed the greater rights given to employers when it comes to compelling an employee to take annual leave.

“People need to take leave,” Strong says.

“The more they accrue the more you’ve got this cash net hanging over your head. You’ve got to account for it and every time there’s a pay rise that cash net goes up.”

However, Strong says he was concerned that the ruling was all about “big unions and big business”.

“It had little to do with the reality of our workplaces,” he says.

“Hard and fast rules might work in big business, but in small business we need to be able to have that ability to make the right decisions. They need to have special rules for small workplaces.”

For example, Strong says there could be more lenient rules for smaller players who are never going to be on an equal footing with one of the supermarket giants.  

“Even if it was for businesses with less than 20 employees,” he says.

“That would still catch around 90% of businesses. Just have a rule for small. End of story.”

Meanwhile, Australian Industry Group chief executive Innes Willox said the annual leave decision is good news for workplace flexibility.

“The decision provides important new rights for employers and important flexibilities for employers and employees,” Willox said in a statement.

“It is good news for all parties. When awards are varied to reflect the Full Bench’s decision, award-covered employees will be able to cash out any accrued annual leave in excess of four weeks’ accrued leave, by agreement with their employer and subject to various safeguards.”

Willox said employers will now have “enhanced rights” to make employees take annual leave when an excessive amount has been accrued.

“The lack of existing rights in this area has been a major headache for employers,” he said.

“The decision will provide welcome relief to employers and will give employees more incentive to take their annual leave.”

The Victorian Employers’ Chamber of Commerce and Industry also welcomed the decision, with chief executive Mark Stone describing the changes as a “reasonable” overhaul of annual leave provisions.

“VECCI acknowledges the Fair Work Commission has listened to the concerns of business in making these changes,” Stone said in a statement.

“We will continue to advocate for changes to our workplace relations system that support job growth, particularly given the fragility of our economy and persistently high unemployment, especially among young people.”  

A Melbourne teenager with entrepreneurial ambitions and a love of expensive fashion has been accused of convincing schoolmates from a string of elite high schools to invest $185,000 in his failed business venture.

The Herald Sun reports Alexander Beniac-Brooks, a former year 12 student at the exclusive Scotch College in Hawthorn, took money from a number of students across five private schools. He allegedly promised his peers they would get-rich-quick from investing in his business, which sold cheaply-made watches at a profit.

One student is believed to have paid Beniac-Brooks up to $150,000 to invest in the venture, while another investor told the Herald Sun he gave the teenager $1000 on the promise it would be more than doubled.

“Lot of my mates got heaps of money back and it was all working. [It] varied from $500 to $5000 to $10,000,” said the investor.

“The more you gave the more you got back.”

Victoria Police confirmed to SmartCompany Boroondara Crime Investigation Unit detectives are investigating a number of reports made regarding possible deceptions.

“A number of victims reported the matter to police yesterday,” said first constable Bernadette Smith in a statement provide to SmartCompany.

“Detectives will now assess the matter to determine whether any crimes have been committed,” she said.

As the investigation was still in its infancy, Smith said it would be inappropriate to make further comment.

The Herald Sun reports Beniac-Brooks took money from customers via PayPal and delivered all goods purchased. It is also reported the family of the teenager has since repaid any outstanding debts to his schoolmate investors.

The Facebook profile of Beniac-Brooks, who lives in the upmarket Melbourne suburb of Kew with his family, shows a love of sneakers and high fashion. He is the member of 40 online groups that buy and sell fashion through the social media platform.

The Herald Sun has published a video posted by the teenager, where he talks about his love of fashion and business.

“I want to do my entrepreneurship more, “ he says in the video, “expand businesses I already have and then move overseas; experience the culture, the style.”

The Herald Sun reports Beniac-Brooks was also involved in an online sneaker business.

SmartCompany has found the domain gandashoes.com registered to an Alexander Beniac-Brooks from Kew, Victoria, through web hosting company Melbourne IT. The site has been taken down and a Facebook page for G&A Shoes appears to have been recently disabled.

The Australian Securities and Investments Commission database shows no listing for G&A Shoes but does list Beniac-Brooks Pty Ltd as a registered business.

Rohan Harris, principal at law firm Russell Kennedy, told SmartCompany ASIC can take action against a managed investment scheme operated outside the Corporations Act, which states that anyone soliciting investment must have appropriate licences to do so.

“Speaking generally, if anyone offers an opportunity to the public to invest in a business opportunity, they need an Australian Financial Services license,” Harris says.

“Anyone asked to make an investment in a business opportunity must do the basic due diligence that anyone wanting to invest money should do, which includes making inquiries and asking further details about the opportunity,” he says.

SmartCompany contacted Scotch College but the school declined to comment.

As the Senate Economic References Committee (SERC) begins its public hearings into insolvency in the Australian construction industry, the vexed issue of phoenixing deserves to be highlighted.

It is generally believed that illegal phoenix activity - where a company is liquidated and rises again in a way that avoids paying creditors - is widespread in the Australian construction and building industry.

In fact, it is difficult to substantiate whether this is the case due to a paucity of reliable data. But anecdotal reports suggest such concerning behaviours as deliberately avoiding tax, the use of false statutory declarations and refusing to pay wages and entitlements, are commonplace.

In our submission to the inquiry, fellow researchers Professors Ann O’Connell and Ian Ramsay of Melbourne Law School, Associate Professor Michelle Welsh of Monash Business School and I argue that better detection and greater enforcement via existing powers might be the most effective way of dealing with this sort of illegal activity.

Defining illegal phoenix behaviour

It’s important to note that not all phoenix activity is illegal. Our ongoing research identifies five categories of phoenix activity - only three of which are illegal.

For instance, it is reasonable to expect that a failed business person will try to start their next business in the same industry and will want to buy assets from the failed company. In the construction industry, it is common for each large building project to be executed by a separate company that forms contracts with its subcontractors.

Each project succeeds or fails on its own merits without affecting other projects or the parent company’s solvency. Therefore high rates of company formation and liquidation do not automatically equate to high levels of illegal behaviour or improper exploitation of the corporate form.

In Australia, one of the difficulties in assessing the incidence, cost and enforcement of phoenix activity is the general paucity of reliable data. The mere fact of company creation and liquidation is not evidence of illegality.

Australian Bureau of Statistics data about company registrations and insolvencies reveals that the total number of insolvencies in the construction industry for the period of 2013-2014 was 1,802.

Not all of these insolvencies would have involved illegal phoenix activity. While this is a large number, it represents only 0.54% of the total number of companies that were operating in that sector at the start of the 2013 financial year. There are eight other sectors where the number of insolvencies as a percentage of registered companies was greater than it was in the construction sector.

This is not to deny the prevalence of illegal phoenix activity in the construction industry; rather it should prompt better data collection from relevant regulators.

The bad forcing out the good

People associated with the industry warn that when the incidence of illegal phoenix activity reaches a critical point, other companies in the industry will face a difficult choice between succumbing to the same illegal behaviour or else risking being priced out of business.

We have heard of “net of tax tendering”, where it is so well understood that taxes will not be paid that quotes are calculated on that basis. In these instances it is likely that the head contractor or client knows that the tender does not allow for tax to be paid; otherwise, the contract would be unprofitable. Within corporate groups, the apparent use of labour hire companies, created purely to accrue PAYG(W) and payroll tax debts before being liquidated, is also concerning.

There are also some characteristics of the construction industry that make debt recovery particularly difficult. The sub-contracting system is a key feature of major building works. The head contractor undertakes to perform the contract and is paid for it by the client. Work is then contracted out through layers of sub-contractors.

The various layers of sub-contractors must complete statutory declarations that they have paid their employees and other debts, in order to receive payment from the contractor above them. We have heard that the use of false statutory declarations is common in the industry, and ASIC is currently investigating this.

Recovery of unpaid wages and other entitlements is also fraught. Employees may not be sure of the company name of their employer which may change from payslip to payslip, remaining unaware that their employment is now with a new employer who has no liability for wages or other entitlements accrued previously.

The industry employs high numbers of temporary migrant workers whose knowledge of their entitlements may be minimal. Backpackers on 457 visas can lose their employment and their employer’s sponsorship if they question the payment of their entitlements, and are then forced to return home. Recovery of redundancy entitlements is especially problematic in the construction industry.

Law reform

It might be assumed from this discussion that law reform is required, and that at the very least, a specific phoenix offence should be introduced. We urge caution. Directors’ duties already capture the essence of illegal phoenix activity.

There are also other mechanisms – director disqualifications and director penalty notices amongst them – which are available to regulators even in the absence of proof of improper intent. Better detection and greater enforcement via existing powers should be considered first.

Helen Anderson is Associate Professor at University of Melbourne.

This article was originally published on The Conversation. Read the original article.

A motor mechanic has lost his unfair dismissal bid before the Fair Work Commission after he was sacked for an alleged abusive outburst at his boss over work Christmas drinks.

Jeremy Ryman was employed at Wisharts Automotive Services in Orange, New South Wales, for three-and-a-half years before the incident in December 2014.

Wisharts Automotive Services is a small family business, employing just five people. Although the business had not previously taken issue with the work of Ryman, the owners – Mr and Mrs Wishart – did tell the commission they had noticed his ”increasingly moody behaviour” in the lead up to the incident.

On the afternoon of December 19, the last day of the working week before Christmas, the Wisharts had organised Christmas drinks for staff.

The commission heard a conversation took place between Ryman and Mrs Wishart, after she asked him what food and drinks he would like.

Ryman and Wishart gave different evidence to the commission regarding the interaction, with Ryman saying he had simply replied to Wishart’s statement with: “Nothing thanks. I don’t think I’ll go.”

But in Wishart’s version of events, Ryman yelled: “I’m not fucking going because I’m not fucking drinking with fucking Captain Klepto!”

Commissioner Ian Cambridge favoured the employer's version of the event, finding Ryman’s “level of cordiality” in his version was “so unrealistic as to be fanciful”.

“An examination of the applicant's witness statement reads as if the applicant conversed in a manner displaying the courtesy and diplomacy of a Sunday school teacher,” said Cambridge.

Cambridge found the outburst therefore represented serious and wilful misconduct sufficient to justify the summary dismissal under the Small Business Fair Dismissal Code.

Employment lawyer Peter Vitale told SmartCompany under the code, a small business employer needs only to prove they have a reasonable belief their employee’s actions warranted summary dismissal.

“What the decision really shows is the code is capable of affording some flexibility for small businesses,” Vitale says.

“The commission has emphasised the stringent tests that might be applied to other employers in determining what conduct justifies summary termination, those tests are not applied in the case of the code.”

But Vitale says even though the code has ultimately protected Wisharts Automotive Services in the outcome of this case, it still has likely meant a costly and time-consuming process for the small business.

“It seems the disappointing aspect of the case is the fact a full hearing was required in order to determine the matter,” Vitale says.

“So in a practical sense, the code hasn’t offered the employer any relief in the costs and the inconvenience of unfair dismissal.”

SmartCompany contacted Wisharts Automotive Services but the company declined to comment.

A former employee of global IT firm Capgemini is suing the company for sexual discrimination, according to a report by Fairfax.

Documents seen by Fairfax show Shelley Oldham, the former senior vice president head of public sector at Capgemini, is suing the firm and former chief executive Paul Thorley, claiming she was denigrated, marginalised and sexually discriminated against.

Oldham has also reportedly accused Thorley of encouraging a “hostile working environment for women”, including claims he labelled the need to promote women in leadership roles at Capgemini as a "feminist campaign" that could "reflect badly on him".

She also alleges Capgemini gave preferential treatment to male colleagues, required her to work up to 100 hours a week and failed to provide reasonable adjustments to her work hours and conditions after she developed stress-related shingles.

SmartCompany understands the case is currently before Justice Debbie Mortimer in the Federal Court, with Holding Redlich representing Oldham.

SmartCompany also understands there was a period of mediation between Capgemini and Oldham since she filed the claim last year but mediation has since failed.

Oldham is seeking compensation for lost remuneration, bonus payments, medical expenses and damage to her reputation, as well as for pain, suffering, hurt and humiliation.

Speaking generally about sexual discrimination to SmartCompany, employment lawyer Peter Vitale said in order to avoid discrimination of employees on the basis of their sex, employers have an obligation to treat men and women the same.

“The key is that you need to ensure that men and women both get the same opportunities,” Vitale says.

Vitale says employers also have an obligation under workplace heath and safety laws to maintain a safe work environment that does not put health, including mental health, at risk.

“That duty is imposed on all employees, male and female … the employer is obligated to ensure the workplace is free from sex harassment and any other sort of marginalisation or bullying.”

Vitale says one of the most important things for smaller employers to keep in mind when considering their sexual discrimination obligations, is when a female employee returns from maternity leave.

SmartCompany contacted Capgemini, Oldham and Holding Redlich but did not receive a response prior to publication.

People often wonder whether verbal contracts hold much, if any, weight.

The recent decision of the NSW Supreme Court in Yulema Pty Ltd & Anor v Simmons & Anor is a reminder that spoken words can be worth just as much as their written counterparts.

However, the road to proving what was said, implied or intended is one which is much more difficult to travel.

In Yulema, Justice Michael Slattery upheld the contractual obligations imposed by a verbal agreement made in October 2009, despite circumstances where one of the parties to the contract and one of the people involved in its negotiation were unable to give evidence because they had passed away. The outcome of the decision was that the defendant owed the plaintiff approximately $350,000, plus interest on that amount from May 2011.

Background

The issue in these proceedings arose out of a side agreement made on 25 October 2009 during negotiations in relation to an intra-group buy-out by one interest of all other interests in the group of companies known as the ADC/EDC Group. The key facts are as follows:

• In October 2009, the first plaintiff, Yulema Pty Limited owed one of the Group’s subsidiary companies, Paltara Pty Ltd, a debt of approximately $1.04 million. As Yulema was owned by some but not all of the interests in the ASC/EDC Group, one of the contentious issues during the negotiation of the Buy Out Agreement related to the post-completion effect of the enforceability of the debt.
• To get the Buy Out Agreement signed, Mr David Roche (one of the interests with no control of Yulema) agreed to partly reimburse Yulema if Yulema were required to repay any part of the debt (Side Agreement). The Side Agreement was a classic collateral contract, the consideration for which was entry into the Buy Out Agreement itself.
• The Side Agreement was oral and made between Yulema and Mr Roche. Mr Guy Reynolds (representing the Yulema interests) and Mr David Munt (a solicitor representing Mr Roche) agreed on the terms of the Side Agreement as follows:
  • if the Buy Out Agreement were executed; and
  •  if the Debt was satisfied, either in whole or in part; then,
  • David Roche would pay Yulema one third of the amount of the Debt so satisfied.
  • Yulema asserted that it satisfied the Debt on 6 May 2011 and, pursuant to the Side Agreement, that it was entitled to be repaid one third of the Debt from Mr Roche.
  • The dispute concerned another alleged term of the Side Agreement. The defendants (David Roche’s executors), argued (and the plaintiffs disputed) that it was an express, or in the alternative an implied, term of the Side Agreement that the payment of one third of the Debt was subject to settlement occurring pursuant to the Buy Out Agreement. In particular, the defendants contended that Mr Roche expressly agreed to repay one third of the Debt to enable the Buy Out Agreement to be signed “and proceeded with”.
  • Both Mr Roche and Mr Munt had passed away by the date of the hearing. The only person available to provide evidence for Mr Roche’s side of the transaction was Mr Roche’s accountant, Mr Michael Shearer, who was present during the Buy Out Agreement negotiations. Mr Reynolds gave evidence on behalf of the plaintiffs.

The decision

The Court ruled that the Side Agreement:

• did exist;
• was enforceable;
• did not contain the phrase “and proceeded with” as an express term. Justice Slattery noted that such an expression would be brimming with uncertainty and accepted Mr Reynolds’ evidence that he would have sought further clarification if that phrase had been used; and
• did not contain an implied term to the effect that Mr Roche’s obligations were “subject to settlement occurring pursuant to the Buy Out Agreement”, as such a term was:
  • neither reasonable or equitable (as it would ultimately place the obligation to make payment within the control of the payer (Mr Roche));
  • not necessary to give business efficacy to the Side Agreement (as the Side Agreement would be perfectly effective without it); and
  • neither obvious nor capable of clear expression. Justice Slattery observed that such an expression was “replete with ambiguity” and that a term of that sort “would be more a source of debate than clarity”.

Having found that the Debt was wholly satisfied in accordance with the Side Agreement by May 2011, the court ordered the defendants to pay Yulema $347,632.67 (being one third of the Debt), interest on that amount from 6 May 2011 and Yulema’s costs of the proceedings.

Lessons for business

This case contains some important lessons for all businesses.

• Verbal agreements can be just as enforceable as written agreements.
• Where possible, avoid making verbal agreements or representations in business discussions and ensure that your employees and agents are aware of this.
• Best practice is to ensure that your agreement is in writing. For example, if your contract is of special importance, involves a large sum of money, or if there is a possibility of a dispute in the future, it is advisable to have a written agreement to rely on.
• If you do make a verbal agreement:
  • give as much clarity to the terms as possible in order to avoid uncertainty;
  • take file notes of the conversation; and
  • ensure that there are suitable witnesses to the making of the verbal agreement.
  • Do not rely on the passage of time to water down verbal contractual obligations.
  • Note that some contracts are legally required to be in writing, including contracts for the sale of land, credit contracts and consumer leases, contracts for the performance of domestic building work, contracts for the sale of second hand motor vehicles and unsolicited consumer agreements.

Nadine Domalewski is a senior associate at Holding Redlich.

Fair Work Ombudsman Natalie James is calling on the nation’s largest poultry provider to publicly declare it has “an ethical, moral and social” responsibility to clean up the practices at its work sites, following the release of a damning report by the ombudsman into the Baiada Group.

Baiada Group holds around 20% of the Australian poultry market, producing the Lilydale Select and Steggles chicken brands that are sold to prominent retailers including Coles, Woolworths, IDA, Aldi, McDonald’s, KFC, Pizza Hut, Red Rooster, Nando’s and Subway.

Fair Work launched its investigation into the poultry producer in November 2013 after receiving complaints from workers who said they were being underpaid, forced to work extremely long hours and required to pay excessive rent for employee accommodation that was overcrowded and unsafe at three Baiada poultry processing sites in Beresfield, Hanwood and Tamworth in New South Wales.

Similar complaints were levelled against the company by the Australian Meat Industry Employees’ Union and local community groups, and the company’s practices have been the subject of investigative reports by ABC programs, Lateline and Four Corners.

The investigation has backed up many of these claims, with Fair Work concluding a labour pool made up of predominately overseas workers on 417 working visas were exploited.

The employment watchdog also found widespread non-compliance with federal workplace laws and supply chain governance arrangements that were either very poor or non-existent.

Releasing the findings of the lengthy inquiry, James invited the company to enter into a compliance program with her office.

“I am deeply concerned by the findings of this inquiry, particularly the behaviour of Baiada and its contractors who failed to engage with us about serious concerns about compliance with workplace laws on the company’s sites,” James said in a statement this morning.

“In my view, Baiada and others in this supply chain now need to consider the legal, moral and ethical implications of continuing to operate in a manner that fails to deliver workers their minimum entitlements.”

James’ report found employees working at the Baiada sites are not being paid their lawful entitlements and “hundreds of thousands of dollars” could not be accounted for in a complicated supply chain, which includes multiple contracting firms that have since closed or been placed in liquidation.

Fair Work uncovered up to 34 entitles in the supply chain, including six principal contractors and at least seven other second-tier entities, some of which then sub-contracted work to two or three other entities.

The system did not include written agreements and was therefore operating “on high levels of trust”. But during the course of the inquiry, four of the six principal contractors and 17 other sub-contractors stopped trading.

Fair Work said Baiada and its labour-hire companies did not co-operate with the inquiry and in some cases, either failed to provide “significant or meaningful” documentation or produced documentation that was inaccurate or fabricated.

Fair Work inspectors concluded much of the work done at the three processing plants was completed “off the books” and the amount of money allegedly paid to contracting companies did not match the number of workers they provided.

The ombudsman has also raised concerns about how overseas workers were recruited by the labour hire companies to work at the Baiada plants, with applicants asked for details of their nationality, height and weight. The job ads were found to be potentially discriminatory.

As a result of the inquiry, Fair Work has made a series of recommendations for Baiada, including commissioning an independent, external specialist to review its labour-recruitment practices and implement policies and protocols to improve its governance arrangements.

Fair Work also wants to see Baiada introduce an electronic time-keeping system to properly record its workers’ start and finishing times; ensure its sub-contractors are able to properly identity all workers; set up a formal complaint and dispute resolution process; and prepare induction materials for workers.

Baiada has responded to the report by saying “most” of the recommendations made by the ombudsman are already in place or are being initiated.

“We have already responded to the report’s authors in detail and look forward to meeting them to provide an accurate account of our company’s operations,” Baiada said in a statement.

“We agree that it is very important to establish an on-going collaboration on this very important matter and we look forward to engaging with the FWO in the future.”

Baiada said it is “deeply concerned by the reports that came to light detailing workers poor treatment at the hands of some contractors”.

“Like many businesses across Australia, Baiada uses contract labour for some of its operations,” the company said in a statement.

“At all times we expect that those contractors will conduct their activities in accordance with the relevant legal and ethical standards, and in particular workplace laws or requirements.”

The Californian employer watchdog has determined that an Uber driver should be classified as an employee, not an independent contractor, and therefore entitled to reimbursements.

The decision by the California Labor Commissioner's Office means former Uber driver Barbara Berwick is entitled to more than $4000 in expenses, according to Reuters.

Uber refers to its drivers as “partner drivers”, and claims they are independent contractors and therefore should pay their own expenses such as fuel.

The fast-growing startup – currently valued at around $US40 billion – is appealing the decision.

Employment law specialist at Swaab Attorneys, Warwick Ryan, told StartupSmart that the ruling is unlikely to have an impact in Australia.

Despite this, he points out that Australian startups still need to be aware of potential issues around whether or not someone is an employee or independent contractor because it is a “constantly litigated area of the law”.

“It’s possibly the most vexed question in employment law,” he says.

“One of the factors that would tempt the court to deem these people as employees is if the terms and conditions are standard. When you’re a sub-contractor, say, renting your vehicle, you can theoretically negotiate rates. Your capacity to negotiate rates is seen as a factor. So if everyone is being paid the exact same amount, then that’s a factor that pushes you back towards more of the idea of being an employee.”

Ryan says when determining if someone is a contractor, the courts tend to look for people “taking a risk in running their own business” and whether or not someone is advertising their services.

However, the fact that Uber and Lyft drivers use their own vehicles is likely to count in the company’s favour, according to Ryan.

“The courts would be less prone to see it as a business because people have cars anyway,” he says.

“If you buy a ute and then go cart things around – that’s seen more as a business and an investment for business purposes.”

This article originally appeared on Startup Smart.

A Port Macquarie man has been convicted of managing a company while bankrupt and fined $1100 in a local court, after his daughter was found to have been taking instructions from him on how to run the business.

Macquarie Local Court confirmed to SmartCompany Grant John Hives pleaded guilty on June 18 to making business decisions while being a disqualified person between June 26, 2013, and March 7, 2014.

Hives had become bankrupt as a result of a creditor’s petition in May 2013, meaning he was disqualified from being a director of his civil excavation and haulage company, TH Tippers Pty Ltd.

But after filing for bankruptcy, Hives nominated his 18-year-old daughter as the sole director of TH Tippers.

A subsequent investigation by the Australian Securities and Investments Commission found Hives had communicated instructions or wishes to his daughter knowing that she would act in accordance with them.

As such, ASIC found Hives was making the decisions that affected the whole or a substantial part of the business and was in breach of the Corporations Act.

Rohan Harris, partner at law firm Russell Kennedy, told SmartCompany bankrupts are not eligible to be a director of a company and it is an offence to manage a corporate entity whilst bankrupt.

“Managing can also include effectively managing the company through the involvement of the other person,” Harris says.

Harris says ASIC keeps across all new director appointments and would generally take notice when a director is appointed who is seemingly related to a disqualified person.

“In situations where someone with the same surname as the person who is disqualified is added, there is an obvious case where that person could be a close relation to the disqualified person and have the potential to help them manage the company,” he says.

Harris says business owners need to let go of control of a company if they declare bankruptcy.

“You do need to step back. There are serious consequences that flow from a bankruptcy,” he says.

“Some people think they can declare bankruptcy and walk away unscathed because they think, ‘there’s no assets personally in my name’. They see it as a get out of jail free card, but if you’re in the business of of managing corporations, then it’s a serious impediment on your ability to do that – unless you’re prepared to break the law.”

SmartCompany attempted to contact TH Tippers but the company could not be reached.

Three Toll employees have won their jobs back before the Fair Work Commission after they were sacked for stealing work uniforms.

Sione Amiatu, Franke Ioane and Marcello Mastroianni won their unfair dismissal claim and secured an order to be reinstated by the transport giant after they were terminated in October last year.

The three men were dismissed after they were captured on CCTV footage taking two Toll vests, one Toll jacket and one Toll beanie from a box of uniforms they found whilst working an afternoon shift at Toll’s Altona Road depot in Victoria.

Believing they had not done anything wrong, the men wore the stolen items to work the following day.

But after seeing the CCTV footage, Toll managers considered the employee’s actions as theft, which Toll treats as serious and wilful misconduct, and commenced an investigation and disciplinary procedures.

But the matter was further complicated when a Transport Workers Union (TWU) organiser convinced the men, two of whom were of Samoan heritage and whose English skills were “mildly inhibited”, to resign rather than be sacked.

The TWU organiser, Peter Banbury, had told the workers “they are going to sack you and call the coppers” and told them they had no other choice but to quit. Banbury then supplied paper and dictated resignation letters for the workers to handwrite.

However, Commissioner John Lewin found Banbury had organised with Toll for the men to resign rather than be sacked without consulting the men and without their authorisation. He subsequently found the men had not resigned of their own accord and had in fact been dismissed.

Lewin then looked at whether the dismissal was harsh, unjust or unfair. He ruled the employees’ actions were not theft and therefore could not be serious and wilful misconduct.

“I am not convinced that the evidence is of sufficient quality to establish a dishonest intention on the part of the applicants, nor is the evidence of sufficient quality to enable me to be satisfied that the applicants intended to permanently deprive Toll of the items of uniform work clothing,” said Lewin in his judgment.

“Nor do I consider that theft, as a reason for the dismissal of the applicants, to be a sound, defensible or well founded reason on an objective analysis of the evidence before me.”

Lewin consequently ordered Toll to reinstate the employees.

Employment lawyer Peter Vitale told SmartCompany the commission found the workers were only given a choice to resign or be sacked and as such there was not a full investigation into their actions.

Vitale says the case is a reminder for employers to conduct full and proper investigations, especially if the allegation is as serious as theft.

“The commissioner makes the observation that, with an allegation of this nature, you need evidence that is better quality than say, the type of evidence you might put forward in the instance the employee has been a poor performer,” he says.

“That standard of evidence won’t be enough when allegations are much more serious. One lesson for employers in these circumstances is to ensure that their investigations are sound.”

Vitale also adds that, without casting doubt on the commissioner’s judgement, it is “unfortunate” Toll appeared to be acting in good faith by working with the TWU representative. He says employers should make sure any third party is acting on the advice from a worker and not on their own interests.

“When dealing with any third party representative, such as solicitor or union organiser, be absolutely sure what is being told accurately reflects the interests of the employee,” he adds.

SmartCompany contacted Toll but the company declined to comment.

A Cairns tour company and its owner have been fined close to $100,000 for underpaying five backpackers, despite the businessman threatening Fair Work inspectors by telling them they would “not get a cent” from his business.

Leigh Alan Jorgensen was fined $12,000 and his tour company Trek North Tours was slapped with a further $55,000 penalty in the Federal Circuit Court in Brisbane. Trek North Tours was also ordered to back-pay the five employees $29,956 in underpaid wages and entitlements.

It is the latest penalty resulting from action taken by the employment watchdog after a petrol station operator was fined $120,000 at the start of the month.

The Fair Work Ombudsman found five backpackers in Australia on 417 working holiday visas from Hong Kong, the Netherlands, Italy and Taiwan, were underpaid between August, 2013 and April last year.

The workers were employed as tour desk agents at flat rates of between $10 and $16.37 an hour, when they were entitled to at least $17.98 for normal hours and up to $39.56 an hour for shifts attracting penalty rates.

The ombudsman also found Jorgensen had refused to return a $500 bond to one worker after she resigned.

Following the Fair Work investigation, Trek North Tours was issued with three compliance notices requiring it to back-pay the workers and a notice to produce documents.

But Fair Work Ombudsman Natalie James said in a statement the watchdog “was left with no option but to commence legal action after Jorgensen refused to cooperate”.

According to James, Jorgensen then told Fair Work inspectors “you will not get a cent” and went on to claim Trek North Tours had never even employed three of the five backpackers.

“We made extensive efforts to resolve the matter without going to court, but we were ultimately left with no option but to commence litigation to recover the money owing to these workers,” James said.

“The Court’s decision in this matter shows that employers who refuse to promptly rectify underpayments of workers can face significant fines in addition to back-payment orders.”

But Jorgensen this morning told SmartCompany he believed the matter had
“not been heard and a default judgment was ordered due to a technicality”.

“This matter will be annulled as there has been no trial,” said Jorgensen.

However, a Fair Work Ombudsman spokesperson confirmed to SmartCompany a court has ruled on the matter and the regulator has detailed the outcome in its press release.

Employment lawyer and M+K Lawyers partner Andrew Douglas told SmartCompany antagonising the Fair Work Ombudsman by refusing to cooperate is never a god idea, given the regulator is unlikely to prosecute if a company agrees to oblige and rectify the situation.

“It’s like poking a police officer in in the eye when they pull you over for speeding, you couldn’t do anything more stupid,” Douglas says.

“Why would you do something that is actually inviting prosecution?”

Douglas says the case also highlights the “utterly unacceptable” practice by some Australian employers to exploit workers on holiday visas.

“There has been a growing habit from employers to use people on holiday visas to work and pay them exploitative wages,” he says.

“The Fair Work Ombudsman has been very serious about pursuing those employers, and so they should be … Not only are they depriving local workers of jobs because they think they can pay them less, the morality of that behaviour is so poor and really disgusting.”

One of Australia’s most popular car seat companies Maxi Cosi has recalled more than 10,000 of its car seats off shop shelves due to safety concerns.

About 6000 units of Maxi-Cosi's Euro Convertible Car Seat A2 model are to be officially recalled from sale this Friday, while 5000 units of Maxi Cosi’s A4 model were removed from sale last Friday.

The A2 model was recalled after a video by a seat fitter went viral showing the straps could loosen during driving, while the A4 was released without the requisite safety certification.

Maxi-Cosi’s Facebook page has been inundated with unhappy customers complaining.

“Brought Maxi-Cosi for its safety and brand name, but instead got a $600 dud that can potentially kill and injure my newborn baby in an accident?” one customer posted.

A spokesperson for Maxi-Cosi said in a statement that it will arrange replacements for consumers who have already purchased the A4 product.

“We regret any confusion in the market around Maxi-Cosi A4 convertible car seats and the inadvertent release before the certification process was completed,” the spokesperson said.

“To that end we have instructed the removal of Maxi-Cosi A4 car seats with three height markers from sale until the certification is complete.”

Gerry McCusker, online reputation management expert at Engage ORM, told SmartCompany Maxi-Cosi needs to move swiftly to assuage consumers concerns.

1. Put yourself in the consumer’s shoes

McCusker says consumers are likely to judge Maxi-Cosi harshly after it admitted it was lacking safety verification for a product sold at a premium price.

“Put yourself in the consumer’s shoes, emotionally they feel cheated,” he says.

“Trust, safety and credibility are all critical.”

2. Act swiftly

McCusker says in this situation, businesses such as Maxi-Cosi have to be “quicker than the NBN broadband”. 

He recommends having a crisis plan in place before problems arise in order to move swiftly.

“You need to have the plan in place beforehand so you are not trying to figure out what do we do at the time,” he says.

3. Explain your solution clearly

Maxi-Cosi has posted product recall information prominently on its website and Facebook page, which McCusker says is a good move by the business.

In particular, he highlights the use of a flow chart diagram where consumers can tell if they are affected. 

“There is some thought and intelligence in the way they have tried to advise stakeholders,” he says.

4. Have some empathy

But McCusker says Maxi-Cosi has failed to have empathy in its response.

“Clipped legalese product recall language only goes so far,” he says.

“Because we are dealing with an issue of trust and child safety the response has to be very emotionally empathetic and intelligent.” 

He says Maxi-Cosi is dealing with a “highly emotive issue” and needs to monitor consumer sentiment closely. 

McCusker says Maxi-Cosi has to be prepared to acknowledge there will be disappointment and outrage.

“The next step is to say how do we acknowledge that we have let them down and make it right,” he says. 

“The next phase is about empathy, expression and a commitment to making it good. It’s not just about products off shelves, that’s a minimum.”

It’s taken six years but the federal government has finally passed the employee share scheme reform legislation.

The startup industry has been calling for reform since 2009 when the federal Labor government made changes to employee share option legislation, which essentially rendered them useless to startups.

Employee share schemes are valuable tools for startups, who by nature have limited capital, thus offer upside in the form of equity as a way to lure talented employees. The 2009 changes, which were aimed to stop executives earning over $180,000 from dodging tax, meant that share options were taxed when they were awarded rather than later when they were sold.

In what Labor has since admitted was an unintended consequence, one they should have foreseen, employee share options became useless to startups because employees were taxed up front for shares they had yet to, and may never, realise any value from.

The new laws, which passed the Senate today, see the tax on options paid when the option is converted to a share. The government has also introduced a new incentive that will allow further deferral of the taxing point where eligible startup companies issue shares or options to their employees at a small discount.

Minister for Small Business Bruce Billson says he expects the new laws to be a massive boost to the startup sector.

“We need to be able to compete with other countries such as the UK and the USA to land new enterprise and livelihood opportunities here – and these latest changes will help us do that,” he says.

“They will allow innovative Australian firms to attract and retain high quality employees in a globally competitive labour market.”

StartupAUS chief executive officer Peter Bradd welcomed the changes and says the debate about why reform was required actually ended up increasing government engagement on issues facing startups and entrepreneurs.

“I’ve been very impressed with the government’s efforts to make changes. They’ve done awesome things in terms of the way they’re engaging with the community, particularly Minister for Small Business Bruce Billson,” he says.

“The amount of conversation it’s created in parliament, around why it needs to happen, has put everything else on the table as well. We’re having conversations very different to those we were having a year ago."