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

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    A former restaurant manager who claimed he was dismissed due to his sexual orientation has had his adverse action claim thrown out by the Federal Circuit Court.

    Felix Mak, who worked for Brasserie Pty Ltd until December last year, claimed his employment was terminated because of his relationship status.

    The business owners disputed this, arguing that Mak had trouble running the restaurant and had told them he was looking for work elsewhere.

    The court agreed, citing a text message Mak sent to his boss that asked for a $5000 payout figure during his “final week” of work.

    The former employee was unable to explain what he meant by the term “final week”.

    Because of this, Judge Alexander Street said he found the applicant’s evidence to be “unsatisfactory”.

    “I find that the reason why the applicant’s employment was terminated was because of the respondent’s concern as to his work performance, and it was not for any prohibited reason under the Fair Work Act,” Street said in his judgment.

    As a result, the adverse action claim was dismissed.

    Employment lawyer Peter Vitale told SmartCompany the business owner was successful in this particular case because the former employee did not produce credible evidence for his claims.

    “The employee failed to put forward even the basic degree of evidence required to establish his case,” Vitale says.

    “The evidence that his sexual orientation was the reason for his termination was considered unreliable by the judge because it seemed that he was trying to negotiate a payment to exit the employment in any event.”

    Vitale says if a business owner has performance concerns about an employee, they should document their concerns along with what they have done to address the situation.

    This is because in adverse action cases, the employer is the one that needs to prove they did not discriminate against the employee.

    “If you have performance concerns with an employee, then it’s not just for reasons relating to unfair dismissal laws that you need to be careful about,” Vitale says.

    “As this case shows, particularly with regard of the reverse onus of proof in adverse action cases, employers need to be in a position to demonstrate affirmatively what their reasons for the termination were.”

     


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    Pie Face is the latest Australian company to come under scrutiny for allegedly underpaying workers on 457 visas.

    The allegations have become public after officials from the Department of Immigration and Border Protection paid a surprise visit to a Pie Face operation in Sydney yesterday.

    However, Pie Face chief executive Kevin Waite told SmartCompany this morning the officials didn’t “swoop” in on the company or seize any documents, contrary to what he says is a “ridiculous” report by Fairfax on Monday.

    Read more: Inside the collapse of Pie Face: the business didn’t make a profit for 10 years

    According to Fairfax, the unannounced visit related to claims a group of workers at the Pie Face operation have been underpaid.

    Waite confirmed the visit took place but he said the officials were responding to an anonymous tip-off, which he believes was made by a disgruntled former employee.

    “They were incredibly professional and polite … they were responding to a call to their anonymous dob-in line, which they need to do. We take this very seriously,” Waite says.

    The two officials visited the Pie Face production facilities and interviewed each of the company’s six workers who are on working visas.

    According to Waite, the workers were found to be receiving their correct entitlements.

    “We are trying to rebuild this company and be very ethical and open,” Waite says.

    “All six of our employees on visa are some of our best employees. The minimum time they have spent with us is four years and the maximum is six years.”

    “It doesn’t make sense that they would only be reporting it now if they had been treated badly.”

    Waite says he welcomes the check-up from the department and will take on board any advice officials offer.

    A spokesperson for Michaelia Cash, assistant minister for immigration and border protection, told SmartCompany this morning the Department of Immigration and Border Protection “is aware of this allegation”.

    “As this matter is under investigation, it would be inappropriate to comment further,” the spokesperson says.

    A spokesperson for the Fair Work Ombudsman also told SmartCompany the Ombudsman’s office has received a number of enquiries from Pie Face employees since December 2014 in relation to entitlements they believed were owing to them.

    “The employees were provided with information and advice about workplace laws and advised to contact the administrators that had been appointed to the company,” the spokesperson says.

    Pie Face, which emerged from voluntary administration late in December 2014, joins a host of other Australian employers recently implicated in claims workers or contractors on working visas have been exploited.

    Labour hire companies in particular have come under fire, including AWX and its related entities, while poultry producer Baiada has also been accused of not adequately paying overseas workers, forcing them to work extremely long hours or requiring them to pay excessive rent for overcrowded and unsafe employee accommodation.

    Last month Australia Post was also drawn into claims some of its contractors were hiring foreign students to work in contravention of their student visas or were underpaying their sub-contractors.

    The spokesperson for Senator Cash says the government “takes any alleged breach of 457 visa sponsorship very seriously”.

    “If a sponsor is found to have failed to honour an obligation, the department take appropriate action, which may take the form of imposing administrative sanctions, issuing infringement notices, executing enforceable undertakings or applying to the federal court for a civil penalty order,” the spokesperson says.

    The spokesperson says sponsors found to be mistreating workers can also have their sponsorship cancelled and be barred from sponsoring other workers for up the five years.

    “Cancellation of sponsorship would have a significant impact on businesses as they would not be able to sponsor further workers and the department may consider cancellation of the visas of their current sponsored workers,” the spokesperson says.

    “The minister may also pursue civil penalties.”


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    A site manager at building company Metricon has lost his bullying claim before the Fair Work Commission, with the body ruling there was not enough evidence to support his claims.

    The worker, referred to in Fair Work documents as Mr Hammon, made a wide array of claims against Metricon and two of his managers.

    Hammon claimed increases in his pay were unfairly delayed, he was not given the opportunity to transfer to an area with greater career opportunities and was the subject of occupational health and safety breach allegations that came about because he was unfairly targeted by his managers.

    It was also alleged that Metricon failed to investigate several of his complaints about bullying and unfair treatment and the company created a “highly competitive and stressful environment” in which employees’ performances were constantly monitored and shared with others.

    The worker, who has been employed by the company since 2009 but is currently on leave, also said he was given an “unreasonable workload” by his managers.

    He also said that once it reached a point he was no longer able to continue reporting to the two managers that he alleged bullied him, the alternative positions he was offered involved either considerable extra travel or considerably lower pay.

    Fair Work Commissioner Julius Roe found several “unreasonable” incidents did occur, including Hammon being called a “lackey” while training as a site manager.

    In another incident, one of the managers was found to have suggested in an email that Hammon’s pay should be delayed to show him how building contractors feel when they don’t get paid if he fails to complete paperwork.

    There was also an incident at an end-of-year work function in which another employee allegedly threatened Hammon and a year later, the same employee challenged him to an arm wrestle.

    But while Roe said Metricon did not carry out reasonable management action in relation to these particular incidents, he found the specific events “were not the major issues raised by Mr Hammon”.

    Instead, he said the major issued complained about by Hammon did not constitute “unreasonable behaviour”.

    Nevertheless, while Roe said he was not able to issue a stop-bullying order, he said there are some “shortcomings in Metricon’s practices”.

    “I hope they will be addressed. I also recommend that Mr Hammon and Metricon meet to see to resolve outstanding issues,” he said.

    Employment lawyer Peter Vitale previously told SmartCompany in most cases, bullying claims reflect some aspects of the particular workplace.

    “More often than not when allegations of bullying are raised there will be some element of that in the workplace,” Vitale says.

    “The lesson for employers is really to keep your ear to the ground and try and work out whether there are any issues bubbling among staff that are causing any distress or personality conflict and step on it as quickly as possible.”

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


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    The amount of class action settlements in Australia has soared in the last year and SMEs are at risk, according to data published today by King & Wood Mallesons.

    The Review: Class Actions in Australia 2014-15, recorded Australia’s largest total for class action settlements to date, with a combined payout of $950 million in 2015.

    The report found class actions, including a trend towards mass consumer claims, are becoming more commonplace with 33 new class actions filed in the year to June compared to 18 for the previous period.

    Securities, financial product and investment claims made up just under half of new class action filings, with 16 such new class actions filed in the year to June.

    Of the remaining class actions filed in the period, the largest single group were consumer claims relating to household business names including Cash Converters and Pizza Hut.

    Report co-author, KWM partner Moira Saville, said class actions are becoming an increasing risk for Australian businesses across a range of sectors.

    She said class actions now “one of the first responses to unexpected events across a wide range of industries”.

    “The combination of increasing numbers of cases and increasingly large settlements is creating a perfect storm for corporate Australia,” Saville said.

    Fellow report co-author Peta Stevenson today told SmartCompany that class actions are increasingly attractive and part of a “mature market” comfortable with the idea of such litigation.

    She says SMEs are most likely to be impacted by the increase in class actions in areas of consumer protections and product liability.

    “It’s not so much about the size of an entity but the entity’s ability to respond to a claim,” she says.

    “For all companies, what is more important is that they need to develop strategies for responding to unexpected events.

    “Be up front so you’re best placed to deal with mediating a situation.

    “Also put yourself in the best position to be proactive and have a strategy.”

    Professor of commercial law at Melbourne University, Ian Ramsay, today told SmartCompany the report highlights the growing importance of class actions in Australia.

     “Not only in terms of a significant increase in the number of class actions filed in the courts in the past year, but also in terms of the large sums that are being paid by defendants to settle these claims,” he says.

    “One reason why class actions are increasing is the role of litigation funders – who are prepared to shoulder the financial risk of bringing these legal claims on the basis that if a claim is successful, the funder will receive a significant percentage of the compensation.”

    Ramsay says for small companies, one notable feature of the study is the number of class actions based on alleged breaches of consumer protection laws. 

    “They cover a broad range of industries – including tourism, financial services and food retail,” he says.

    “We are therefore in a challenging environment for small business where we are seeing regulators focus on enforcement of the laws but also increasing private litigation.

    “And where this private litigation is a class action rather than an individual action brought by one plaintiff, the costs to the company, including the payment of legal fees where the class action is either successful in court or settled, can be very high.”


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    Small businesses and consumers are being warned against using a UK-based retail business that purports to sell GPS and other navigation systems for cars in Australia after the New South Wales Fair Trading Commissioner warned it is most likely a scam.

    NSW Fair Trading Commissioner Rod Stowe issued the warning yesterday, saying his office has received a number of complaints about the website, which goes by the name of Navigation Systems Australia, from customers who have paid for advertised products but received faulty or non-comparable products.

    The website’s domain name, www.navigationau.com, suggests the business is based in Australia but NSW Fair Trading said it is actually based in Guildford in the UK.

    Navigation Systems Australia is not a registered business name and the business does not have an Australian Business Number.

    Commissioner Stowe said customers had paid for the goods by direct debit into a bank account but the trader has refused to replace faulty or non-comparable products or provide refunds.

    Stowe said efforts to resolve customer complaints and ensure compliance have so far been unsuccessful.

    Catherine Logan, principal at Legal Vision, told SmartCompany this morning the business name and domain name could be confusing for consumers and other small businesses.

    “A lot of Australian-based operators who are business owners do use .com rather than com.au,” she says.

    “It’s easy to see how someone dealing with this would think… they would be dealing with someone in Australia.”

    Logan says any faults with the website’s GPS or navigation products raise significant safety concerns, but another big issue for customers of the site is that because they are not dealing with an Australian business, they would not have the same rights under Australian Consumer Law.

    “It is very difficult when these sorts of schemes are perpetrated by offshore entities,” she says.

    “It is difficult or impossible to enforce our consumer law (in this case).”

    Logan says publicising and issuing these warnings was unfortunately about as much as NSW Fair Trading can do.

    “There is very little they can do in a jurisdictional sense,” Logan says.

    “Really it’s a case of warning consumers in terms of the risks of dealing with companies that don’t have a well-known reputation on the internet.”

    Logan says she often advises clients thinking of setting up new importing businesses in Australia to be aware of their responsibilities under Australian Consumer Law, particularly in terms of product liability cover.

     “We look at this and say you have to be all over your obligations as an importer,” she says.

    “People who are importers often do not appreciate... laws in Australia.”


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    Four men allegedly involved in a boiler room scam have been charged with defrauding around 150 people into handing over more than $4 million.

    The deception allegedly occurred over an 18-month period and involved the sale of computer software and investment schemes.

    Gold Coast residents Steifan Ceitinn, Aaron East, Daniel East and Neil McKenny have been charged with aggravated fraud, according to the ABC.

    Three of the so-called “Irish boys” appeared in court yesterday and successfully applied for bail on the condition they would give up their passports.

    Andrew Morgan, forensic services partner at BDO Australia, told SmartCompany a boiler room scam can take many different forms, but essentially it is fraudulent behaviour designed to trick people into buying products or making an investment.

    “You get people in Nigeria, the Philippines, Australia or wherever it might be and they set up the most basic of call centres,” Morgan says.

    “They get access to lists of individuals and businesses and just start working through them with a script, saying I have this investment opportunity for you that’s all wonderful.

    “They might even set up a glossy website full of people endorsing the product or investment. It’s all designed to get unwilling or unwitting people to depart with their money.”

    Morgan says individuals involved in such scams will often ask people or businesses to invest in software, particular shares or even racehorses.

    “Essentially the ‘boiler room’ component is there’s a whole lot of people working the phones or the internet to send out thousands of messages and maybe they’ll get three bites,” Morgan says.

    “It plays on people who don’t do the background work to validate the information they’ve got. There’s legitimate businesses that cold-call and there’s some absolutely good businesses that do that. But what they do is give you the capacity to check.”

    Morgan says Google should be a business owner’s best friend when they are cold-called by someone they suspect of doing the wrong thing.

    “Look for proper websites and validation that these places exist,” he says.

    “Look for online forums – places like Whirlpool where people have been hit up by these scams. Look for the bricks-and-mortar, look at the White Pages. And remember if it’s too good to be true, it is too good to be true.”


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    A gourmet food company that delivers produce to small businesses across NSW has gone into voluntary administration.

    Fearocious Buying Co, which trades as The Fearocious Feed, has been distributing food products and ingredients to restaurants, delis, cafes and caterers since it was founded by owner Ian Feary in 1997.

    Feary built up the network of small business operators that the company supplied to and expanded operations from Sydney’s CBD to other parts of NSW and the Australian Capital Territory.

    The business cites Nudie juices, Charlies Honest Drinks, Pastabilities pasta, Barossa Fine Food and Three Chillies among its suppliers.

    Graeme Beattie and Aaron Lucan of Worrells Insolvency were appointed as administrators of The Fearocious Feed on August 14.

    The first meeting of the company’s creditors will take place in Parramatta on August 26.

    Lucan confirmed to SmartCompany this morning the business is still trading but was not able to provide further details.

    “We are currently trading the company’s business for a limited period in order to assess the financial position and ongoing viability of the business,” Lucan says.

    SmartCompany contacted The Fearocious Feed but did not receive a response prior to deadline.


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    The New South Wales Court of Appeal has upheld a decision by the Workers Compensation Commission to award a former employee at a photography studio compensation after she injured herself at a work party.

    In 2004 Kathryn Hills, an employee at Pioneer Studios Pty Ltd in Sydney, fell over a railing while one of her work colleagues was celebrating his birthday.

    The incident occurred at around 2am at Pioneer Studios as the business had given one of Hills’ work colleagues permission to have a birthday party on the premises.

    The birthday party also doubled as a farewell party for one of the employees and Hills had previously been asked by her boss if she was attending.

    The Workers Compensation Commission found Pioneer Studios was liable to pay for Hills’ medical costs in July last year, however the business decided to appeal the decision.

    The Court of Appeal found the commission had made the right decision given that Pioneer Studios was a small business and it would be reasonable for Hills to conclude that it was necessary to attend the event for work purposes.

    “The matters raised under these grounds do not establish error in point of law,” Justices Ruth McColl, John Basten and Carolyn Simspon ruled in their judgment.

    “The assessment that Ms Hills’ employment was a substantive contributing factor to her injury was a finding of fact, unreviewable in this Court.”

    Andrew Douglas, principal at M+K Lawyers, told SmartCompany the courts will consider any environment, including a party, to be a workplace if a business has an actual or implied control over the situation.

    Alternatively, action condoned by a manager or boss is considered to be a workplace. An example of this is having a sales meeting at a pub.

    “Here, it’s being held at the premise with the approval from the owners,” Douglas says.

    “So it’s definitely a workplace.”

    Douglas says it is crucial for businesses to have a policy in place that outlines the behaviour expected from employees.

    “That may be policies and training around when you travel,” he says.

    “Define what a workplace is. Underneath that, there needs to be value-based training about expected behaviour so people know what the policies are.

    “And if it is [for] a workplace, there needs to be appropriate supervision. An example of that is a Christmas party… you would ensure your staff act in accordance with respectful behaviour. It doesn’t change because you’re drinking outside of business hours.”

    Douglas says businesses also need to be aware the courts are always going to be generous when it comes to extending the definition of what a workplace is.

    “It doesn’t work the other way,” he says.

    “When you go to punish somebody, the courts are beneficial to the person you are trying to punish – so it’s not a very fair game unless you have the structures in place. Generally, it’s whoever is bringing the claim that will be treated most generously.”

    SmartCompany was unable to contact Pioneer Studios Pty Ltd as the business is no longer trading.

    Pioneer Studios Pty Ltd does not have a connection to Sydney-based business Pioneer Studio.


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    A fast food restaurant in the Melbourne suburb of Box Hill that was found to have underpaid about eight workers $46,000 over the course of a little more than a year claims it had no idea about minimum wage rates, according to the Fair Work Ombudsman.

    The operator of Mr Kitchen Box Hill, a company called DM&G, was found to have paid eight current and former workers, which included international students from China and Taiwan, a flat rate of around $1.50 an hour under the minimum wage rate.

    A former employee tipped off the Ombudsman to the underpayments, which occurred between December 2013 and January 2015.

    The restaurant has entered into an enforceable undertaking at the Ombudsman’s request and will have to pay the underpaid amounts to the workers.

    A second associated outlet in Doncaster, called Mr Kitchen The Pines, will also enter into an agreement with the Ombudsman after it admitted paying flat rates to its workers and not paying proper entitlements.

    Fair Work Ombudsman Natalie James said while she did not believe the underpayments were deliberate, the company’s conduct demonstrated an ignorance of workplace law.

    Rachel Drew, partner at TressCox Lawyers, told SmartCompany this morning the underpayments can be considered “a very expensive exercise” for the small business.

    “The Fair Work Ombudsman has identified a very large unpaid wages bill, particularly for a fast food business in a food court,” she says.

    “They will have to figure out how to pay that.”

    Drew says the business has also had to agree to range of other arrangements, which would see them paying some additional costs.

     “They’ve agreed to undertake external workplace relations training, they also have to undertake some self-auditing and reporting… they will have to meet those costs,” she says.

    Drew says while it is not clear if the relationship between Mr Kitchen Box Hill and Mr Kitchen The Pines is one of a formal franchise or a “loose arrangement”, it should act as a warning for others.

    “It’s important for business owners to understand it is their responsibility to find out about wages, entitlements and obligations,” she says.

    “There is a lot of information readily available to assist small business, but ultimately it is the responsibility of individual business owner to apply it correctly.”

    Drew says there are also opportunities for franchisors to give franchisees a “big picture” overview of workplace obligations.

     “It appears to be sadly lacking in this case,” she says.

    “They didn’t even know about simple minimum wage rates.”

    SmartCompany contacted DM&G but a spokesperson for the company declined to comment.

     


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    A former BHP Billiton worker has been awarded more than $45,000 in compensation after winning his unfair dismissal case before the Fair Work Commission.

    Jason Schmidt, who worked at BHP Coal at the Saraji mine in Queensland for about 13 years, was fired for misconduct in May last year following a safety incident involving a leaking fuel tank on a mine truck.

    Fair Work ruled in May Schmidt was fired because he failed to report the incident properly after sending a text message to his supervisor’s old phone number, which was never received.

    BHP provided evidence to the commission to suggest Schmidt had received warnings about his conduct in the past and this was the final incident.

    However, Schmidt argued the earlier warnings were unjustified and not appropriate to justify terminating his employment. 

    Commissioner Susan Booth found BHP did have a valid reason for dismissing Schmidt, however, she ruled Schmidt’s dismissal was harsh because the employer failed to follow correct procedures.

    “While I have found there was a valid reason to dismiss Mr Schmidt, the other factors indicate the dismissal to be harsh, unjust or unreasonable in all the circumstances,” Booth said.

    In a ruling this month, Booth awarded Schmidt $45,705.36 in compensation, the equivalent of about 20 weeks’ pay minus an amount for misconduct. Booth had previously said reinstatement would be inappropriate.

    Will Snow, senior associate at Finlaysons, told SmartCompany this morning the case demonstrates the bar is pretty high for large corporates to demonstrate they’ve gone through fair termination process.

    “A smaller company… may have been looked at differently by the commission,” Snow says.

    Snow says while it did confirm a strengthening line of cases coming from Fair Work where misconduct or slips in performance when it came to safety risks did justify disciplinary action, the employer essentially “fell down” because of the process it took in dismissing the worker.

    Snow says the commission essentially found the leaking fuel tank and subsequent failings to notify the employer was a valid reason for termination.

    “(The commissioner) did find the fuel leak (was valid reason for termination) but didn’t find all the necessary steps were taken,” he says.

    Snow says he believes it is a good outcome for the business that the worker wasn’t reinstated.

    “If he had of been reinstated that might have undermined safety message,” he says.

    Snow says the amount of compensation awarded to Schmidt reflects the lengthy period of time he had worked for BHP.

    “It’s almost the highest amount he could have been awarded,” he says.

    “It’s a significant amount of money. They’re the sorts of decisions you see when you do have a long-service history.”

    Snow says the commission also considered how existing warnings about Schmidt’s performance were treated by BHP.

    “The case demonstrates you need to think about these issues very carefully when considering termination, extremely carefully,” he says.

    “Is it a similar issue? How recent was it?”

    “The employer here was criticised because the previous issue, while on face looked similar, was in fact different from the final issue which resulted in his termination.”

    “Employers need to be careful when relying on previous warning to terminate employment. Here, because it’s the employer it is [BHP], they almost needed to execute a completely perfect process.”

    Snow says the main lesson for other businesses is “the bigger you are the higher the bar is set for procedural fairness”.

    “Secondly, be careful when relying on older warnings because it needs to be similar sorts of issues and recent issues if you want to fairly dismiss them,” he says.

    Snow says safety related and performance issues need to be taken seriously by employers.

    “Here you’ve got a tank that’s leaking fuel, which creates lots of risks and issues,” he says.

    “The commissioner essentially found a valid reason to terminate employment but that company relied on old warnings.”

    SmartCompany contacted BHP Billiton but did not get a response prior to publication.

     


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    Two global milk producers are being forced to defend the packaging of their products, with US consumers attempting to sue because their brands of almond milk contain just 2% of actual almonds.

    Filed in New York in July, the lawsuit alleges Blue Diamond, maker of Almond Breeze, and WhiteWave, maker of the Silk and So Delicious brands of almond milk, have engaged in false advertising.

    The plaintiffs in the case, Tracy Albert and Dimitrious Malaxianis want the companies to disclose the low level of actual almonds used in the products on their packaging and websites, as well as refrain from making favourable health claims about the milks.

    “It’s being marketed as a healthy premium product because it is made from almonds, when it barely contains any almonds,” said James C Kelly, the lawyer representing the pair, according to News.com.au.

    “The product is really developed from thickening agents to create a milk-like substitute that tastes very much like milk. The wrongdoing is really hitting home on a large scale.”

    But WhiteWave has hit back at the claims, saying consumers “know what they are getting when they buy almond milk.”

    “We believe our consumers understand that in order to make this a beverage, that there are other ingredients beyond just almonds,” the company said in a statement.

    “Like most food companies, we don’t share our exact product recipes, but we provide a full and accurate ingredient list and nutrition panel on all of our products.”

    Blue Diamond’s Almond Breeze product range is available from Australian supermarkets and a spokesperson for the company confirmed to SmartCompany this morning all of the varieties available in Australia contain 2% almonds.

    This information, along with all of the other ingredients used in the milks, is included on the packaging.

    In a statement also provided to SmartCompany, Blue Diamond said Almond Breeze is made from “an average of over 50 almonds per half gallon”.

    “The balance of our recipe is water and other quality ingredients … Water is the most common and highest volume ingredient in nearly all popular beverages including, coffee, tea, soda, juice, and sports drinks,” the company said.

    “Cow’s milk is 85% to 95% water and the same can be said for most soy and almond milks which is why our brand is not alone in responding to recent lawsuit claims.”

    It’s not clear if consumers would be able to pursue a similar legal claim in Australia to one filed in New York.

    Catherine Logan, principal at LegalVision, told SmartCompany this morning the claims are likely a “beat up” and even a “storm in a almond milk latte”.

    In Logan’s opinion, the term ‘milk’ is often used as a descriptor and can refer to the texture of a product, as opposed to its origin.

    “It is commonly used in pharmaceutical products to describe the creamy and light texture of a product,” Logan says.

    “I don’t think it is misleading at all.”

    “If consumers are buying manufactured products … they should read the label to see what the ingredients are and make up their own mind.”

    Melissa Monks, special counsel at King & Wood Mallesons, told SmartCompany any marketing or packaging claims in Australia must not be misleading or they could be found to be in breach of Australian Consumer Law and attract penalties of up to $1.1 million per offence.

    There are also strict requirements for food labels under the Food Standards Code about the types of health claims that producers can make, Monks says.

    “If an Australian court was considering this matter the issue would be whether a reasonable consumer would believe, when looking at this packaging – with the name ‘Almond Breeze’ emblazoned across the pack in large prominent text, images showing handfuls of almonds and multiple references to ‘almond’ – that it is predominately or at least a significant portion is made up of almonds,” she says.

    “If so and this is not true, then the packaging may be misleading under Australian law.”

    Monks says labelling can be “a tricky area” for food manufacturers in Australia.

    “There are no clear thresholds about how much of an ingredient or food you can show on pack of feature in a name before it is misleading, rather it is all about the overall impression and this is never black and white,” Monks says.

    “We’ve seen a few examples of the packaging of big brands being found to be misleading after action by the Australian Competition and Consumer Commission because of the images and names they use.”

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

     

     


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    A former employee at Corrective Services NSW has been awarded more than $170,000 in compensation after the Federal Circuit Court found she had been unlawfully discriminated against.

    The court ruled Corrective Services failed to make “reasonable adjustments” to Caryn Huntley’s work duties after she was diagnosed with Chrohn’s Disease, which is considered to be a disability under Australian law.

    The medical condition meant Huntley was unable to drive for long periods of time without scheduled breaks.

    While Corrective Services NSW put in place a “return to work plan” Huntley was advised about six months later that the informal arrangement could not continue due to the constraints it placed on workplace operations.

    In 2010 Huntley was asked if she would prefer to be redeployed or retired, to which she asked to be redeployed.

    A number of other positions were available, however Huntley declined, saying they did not suit her physical needs due to her medical condition.

    In the meantime she continued to work and meet with her supervisors to discuss her medical condition.

    Two years later Corrective Services NSW told Huntley it was not required to secure her an alternative position and would not provide any “adjustments” to her current job.

    Huntley then lodged a complaint with the Australian Human Rights Commission and subsequently took Corrective Services to court.

    As a result, judge Nick Nicholls found Huntley was entitled to compensation for pain and suffering, along with a breach of contract.

    Warwick Ryan, workplace relations expert and partner at Swaab Attorneys, told SmartCompany it is important for employers to understand they have an obligation to help an employee fulfil their duties.

    This could involve installing a lift for an employee who has to use a wheelchair or installing a specific type of software for the visually impaired.

    “The obligation is to provide some sort of aid or support that enables them to carry out their job,” Ryan says.

    “But at the end of the process of the adjustments, they have to be able to do their job. The limitation on that is it shouldn’t impose an unjustifiable hardship on the business.

    “So it might be, for example, a small business that happens to be in a two-storey building. I doubt the court would say you have to move your whole business down the road to another building.”

    Ryan says apart from these obligations on behalf of the employer, workers do not have a right to not do their job.

    “The basic principle is that employees have to be able to carry out the inherent requirements of the job,” he says.

    “That has been upheld in a variety of decisions such as a case involving Boag’s Brewery. The individual concerned in that case had a condition that didn’t allow him to carry out his job fully – his mates helped him. But the court said that wasn’t enough.”

    Ryan also points out the courts place a much greater obligation on the public service employers than on the private sector, as the public sector is seen to have “deep pockets”.

    “It is very common when I read a case involving the public service that I come away thinking the courts have been particularly hard on the public service and have an expectation on them that is bordering on the unreasonable,” Ryan says.

    “You’ve got to then ask the question of how that effects the productivity of the public service.”

    SmartCompany contacted Corrective Services NSW but did not receive a response prior to publication.

     


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    A smallgoods business in South Australia has been fined more than $10,000 for potentially misleading consumers about about the origin of a batch of its bacon.

    Conroy’s Smallgoods, a family-owned Australian manufacturer of premium quality hams, bacon and smallgoods, paid a $10,200 penalty after receiving an infringement notice from the Australian Competition and Consumer Commission about an alleged breach of Australian Consumer Law.

    The ACCC alleges Conroy’s Smallgoods made misleading representations about the place of origin of the company’s Breakfast Bacon, when it sold a batch of imported bacon with a label attached saying ‘Product of Australia’.

    According to the ACCC, the imported bacon product was supplied in a one-off, 1020kg shipment to a Western Australian wholesaler in February this year.

    In addition to the penalty, Conroy’s has agreed to publish a correction on its website, establish a competition and consumer compliance program and enter a court enforceable undertaking to ensure it does not misrepresent any of its products in the future.

    ACCC chairman Rod Sims said it is “crucial” that businesses provided accurate information about the place of origin of the goods it supplies.

    “False claims of this kind not only mislead consumers but can also disadvantage competing suppliers, particularly those who source local ingredients for their products,” he says.

    Conroy’s Smallgoods joint managing director Andrew Conroy told SmartCompany this morning the imported pork, which originated in Denmark, was not meant to have the “Product of Australia” label.

    “It was a one-off mistake, the wrong label was put on the product,” he says.

    Damin Murdock, principal lawyer at MurdockChen Legal Practice, told SmartCompany the ACCC is alleging the company was in breach of particular parts of Australian Consumer Law which deal with misleading and deceptive conduct.

    But Murdock says the $10,000 fine, while significant, is not as high as it potentially could have.

    “This penalty applies to a one-off event, which would suggest there wasn’t any evidence they had done it previously,” he says.

    “That is perhaps why the penalty in the scheme of things is not as high as other cases in the past; a $10,000 penalty is not as high as you would see in past cases.”

    Murdock cited a widely known case involving a company who promoted their ‘ugg boots’ as Australian made and was ultimately ordered to pay more than $330,000 for a similar breach of the Australian Consumer Law.

    Murdock thinks paying the $10,000 fine, while a significant amount of cash, would make sense for Conroy’s as a small business rather than contesting the penalty.

    “When you’re looking at a fine around $10,000 and then the legal fees of taking it to court, it’s not worth defending,” he says.

    “It would make most sense for company to pay the penalty.

    “So although possible there was a defence available to Conroy’s from commercial reality, they probably made the best commercial decision to resolve it amicably."


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    An online retailer specialising in kitchen appliances has been slapped with a $17,500 fine for engaging in resale price maintenance.

    The Australian Competition and Consumer Commission initiated legal proceedings against OmniBlend Australia last year, after the watchdog suspected the retailer of telling one of its competitors it could not sell its blenders below a certain price.

    In a judgment handed down by the Federal Court this week, Omniblend was fined for aiding, abetting, counselling and procuring overseas suppler Taiwan Star International, to engage in resale price maintenance.

    OmniBlend’s director Neal Bowhay has promised to undergo compliance training to ensure the business does not engage in anti-competitive behaviour in the future.

    OmniBlend Australia will also contribute to the ACCC’s legal costs.

    Craig Subocz, senior associate at Russell Kennedy, told SmartCompany the competition regulator takes resale price maintenance very seriously.

    “It’s a practice or an arrangement where the seller of products tells the purchaser they can only sell those products at a certain price,” Subocz says.

    “If I sell you products and I say to you, you can’t discount them below a certain price, that would be resale price maintenance. It’s discouraging competition.

    “The whole Competition and Consumer Act is to encourage competition between vendors, products and services – so if there’s any mechanism through which competition is discouraged the courts will look at that very harshly.”

    Subocz says small businesses who suspect their suppliers are engaging in resale price maintenance should contact the competition watchdog.

    “If there’s any readers that see that practice used against them where suppliers are saying you can’t retail below a certain price, the first port of call is to get in touch with the ACCC,” he says.

    “As we can see from this case the ACC takes these sorts of cases very seriously.”

    ACCC commissioner Sarah Court said there is no place for resale price maintenance in the Australian economy.

    “The prohibition of resale price maintenance is an important one, as this conduct can affect consumers by increasing prices, reducing consumer choice and distorting the competitive process,” Court said.

    “The ACCC took this action because it was concerned that this conduct may have caused harm to OmniBlend’s competitor, consumers and the market generally. The freedom to set prices, including offering discounts, allows businesses to compete for customers and is at the heart of a functioning market economy.”

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


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    Aldi has been accused of potentially misleading customers and undercutting other beef producers because of the food labelling on its prize-winning ‘grass-fed’ beef cuts.

    A Fairfax investigation into the discount supermarket’s Highland Park-branded beef found its beef cuts come from cattle that are sometimes fed grains but are being packaged as premium “grass-fed” beef cuts.

    Some genuine grass-fed beef producers, which require a Pasture-fed Cattle Assurance System certificate, say they are being significantly undercut on price by the cuts sold by Aldi, while others say the products are being passed off as genuine “grass-fed” cuts at prestigious food shows.

    Aldi has downplayed the concerns by explaining the cattle it sources for the beef product are given supplementary feed with grain in bad weather conditions and cited animal welfare concerns.

    In a statement provided to SmartCompany this morning, an Aldi spokesperson says the supermarket chain is “fully compliant” with all current legal requirements for food labelling.

    “This includes the labelling of Aldi’s Highland Park Grass Fed Beef,” the spokesperson said.

    “Highland Park cattle feed on grass, however supplementary feeding occurs when bad weather conditions necessitate it, such as droughts.

    “This is essential for the cattle’s welfare and does not compromise the quality of the products.”

    Aldi says its entry of the Highland Park products into major food shows around the country is “fully compliant” with the competition criteria set by shows but confirmed the grass-fed range was not certified pasture fed and does not carry the certified pasture fed trademark.

    Alistair Little, partner at TressCox Lawyers, told SmartCompany this morning this is not the first time Aldi has run into problems with food labelling issues.

    Little says back in 2011, Aldi entered into an arrangement with the Australian Competition and Consumer Commission, including an enforceable undertaking, after it was found to be marketing a honey product as being a honey sourced from Kangaroo Island.

    Little believes it is likely there is “some element of sensitivity” in terms of the latest claims.

    “It’s likely Aldi will be fairly careful about the matter,” Little says.

    “The complexity here is Aldi say… they are compliant with requirements with regards to labelling products as grass-fed beef.”

    Little says because there are no requirements set out in Australian Consumer Law with regard to labelling of grass-fed beef, it means businesses have to go back to general law to see if something is deceptive.

    “The general legal position is if a statement made on a product would mislead consumers or is likely to mislead consumers, it could be in breach of Australian Consumer Law,” he says.

    “The question is if consumers would believe if grass-fed beef is entirely grass-fed.”

    Little says that is a question which would potentially need to be determined by a judge in a court of law, and says he “wouldn’t be at all surprised” if other producers who think they are being undercut on price went down that path.

    “I’d say there’s a very real prospect those who feel they are being undercut will take it to the ACCC,” he says.

    “Bearing in mind the ACCC has previously stepped in with regards to food labelling with Aldi and they may well do so again.”

    Little says product labelling is a “hot issue” at the moment, with calls for clearer regulation with regards to not just country of origin product labelling but organic food and other kinds of labelling as well.

    “Consumers are becoming more demanding about where their products come from and what kind of farm they come from, whether they’re free range eggs or battery eggs, organic produce or farm produce,” Little says.

    “I see this as being the latest in what I think is going to be a series of battles about the way in which food products are labelled, whether its free range, organic or grass-fed.”


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    A vacuum cleaner distributor has been ordered to pay $370,000 in penalties after one of its sales representatives was found to have acted unconscionably when selling vacuum cleaners to three elderly women.

    The full bench of the Federal Court had found Lux Distributors engaged in the unconscionable conduct by in a ruling made in August 2013, however, a decision on penalties was only made on August 21.  

    At the time, the court found the Lux Distributors sales rep entered the women’s homes under the premise of offering a free maintenance check on their vacuum cleaners but intended to sell them a vacuum cleaner.

    The court found the women were subjected to unfair sales tactics and were pressured into making a purchase for a price of up to $2280.

    In addition to the hefty fine, the Federal Court has also imposed injunctions on Lux Distributors to prevent it from engaging in similar conduct in the future. The company will also be required to establish a compliance and education program for all of its employees and agents.

    The penalties imposed on Lux Distributors come at the end of a legal case that has been pursued by the Australian Competition and Consumer Commission for more than three years.

    The ACCC first initiated proceedings against Lux Distributors in May 2012, alleging that the company engaged in unconscionable conduct in instances where vacuum cleaners were sold to five elderly consumers. The ACCC argued the company breached both Australian Consumer Law and the Trade Practices Act.

    The consumer watchdog’s application was dismissed in February 2013 but on appeal in August 2013, the full bench of the court ruled Lux Distributors had acted unconscionably towards three of the five consumers.

    In a statement issued today, ACCC commissioner Sarah Court said the significant penalties imposed by the court reflect the nature of the conduct, “which involved taking advantage of a ‘deliberate ruse’ to gain access to consumers’ homes and then engaging in pressure sales tactics so that these vulnerable consumers agreed to make a purchase”.

    “The Full Court noted in its judgment in 2013 that consumer protection laws reinforce societal values and expectations that consumers will be dealt with honestly and fairly, and without deception,” Court said.

    “As the national consumer protection regulator, consumer protection issues that affect vulnerable members of the community and unconscionable conduct are priority areas for the ACCC.”

    However, in a statement provided to SmartCompany this afternoon, Lux Distributors said it believed the initial claim against the company was made by “a customer with connections to an ex-employee at the ACCC”.

    “ACCC started investigations and managed to get four other customers on board who did not complain to the ACCC,” the company says.

    Lux Distributors says the full bench found the company had engaged in unconscionable conduct based on the initial phone call to customers, which was “considered deceptive as it didn’t mention the person visiting could offer to sell a product”.

    However, Lux Distributors says it has since changed this sales procedure.

    “The company conducted a risk assessment in 2013 and implemented a procedure where the distributors can only quote for a product if the customer is interested,” Lux Distributors says.

    “Customers will have time to consider and if interested can purchase the product by phoning the company later.”


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    The former director of collapsed whitegoods distribution company Kleenmaid has pleaded guilty to three charges relating to company’s collapse.

    Gary Collyer Armstrong appeared before Brisbane District Court yesterday on one charge of dishonestly gaining a Westpac loan of $13 million in 2007 and two counts of insolvent trading relating to debts of $3.5 million dating back to 2008.

    Kleenmaid had about 200 staff and 15 retail franchises before it collapsed in 2009, when liquidators reported consolidated debts of about $100 million.

    The company’s collapse affected an estimated 6000 customers around the country who paid money for appliances they never received, while its retail and service franchisees lost their investments.

    The Australian Securities and Investment Commission has been pursuing the matter since 2012, with the latest development set to see Armstrong sentenced in October.

    Two of the other former Kleenmaid directors, Andrew Eric Young and Bradley Wendell Young, who are also facing charges, will appear back in court in October.

    The court will decide on further directions about the charges the brothers face, after the original trial date of August 17 was vacated.

    Matt Davis, a solicitor at Breene and Breene Solicitors who specialises in insolvency and criminal law, told SmartCompany this morning the important thing for SME business owners to understand is such cases are not just a “big end of town issue”.

     “The laws apply to all companies regardless of size,” Davis says.

    “It’s as much of a problem for big companies or Kleenmaid as it is for one or two directors or mum or dad style companies.”

    Davis says in his experience ASIC and the Australian Tax Office are taking a “much harder line” now than they have for some time.

    “ASIC are much more proactive in prosecuting offences under the Corporations Act,” he says.

    “ATO has seriously ramped up investigations into delinquent directors… the ATO is jumping on them much quicker than in past.”

    Davis says members of the public are also a bit more “savvy” in their understanding of general criminal law as it applied to company directors.

    Davis says the liquidators in the Kleenmaid case would have already taken steps to try and recover money owed.

    “Liquidators can sue for insolvent trading, if directors cause a company to incur debt,” he says.

    Davis says the Corporations Act clearly spells out prosecution will follow insolvent transactions.

    “It’s not irregular for directors to be prosecuted by ASIC, this just happens to be a high profile case,” he says.

     “It affects everyone, criminal law is for everyone not just big end of town affected by it.”


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    High-profile chef and businessman Gary Mehigan will fight claims he and his business partners have left a Melbourne builder hundreds of thousands of dollars out of pocket.

    Builder Robert Pavlovic is suing the Masterchef judge and his business partners Steve Bogdani and Paul Romanella for $167,000, which he claims is owed over construction work he completed in June to August last year.

    In a writ filed in the Victorian Supreme Court on Monday, Pavlovic claimed the trio stopped paying bills for the construction of a new warehouse, 64 Sutton, for their catering company Big Kitchen Events in August 2014, according to Fairfax.

    Pavlovic is claiming he is owed $155,942 in unpaid invoices, as well as $12,031 in interest. He is also seeking an additional $5389 in costs.

    He claims he entered into a verbal agreement with Mehigan, Bogdani and Romanella to undertake the work in April 2014.

    However, a spokesperson for Mehigan has told Fairfax the high-profile chef will contest the claims, which he says are based on amounts that were not approved or justified.

    Big Kitchen Events has 42 days from the issuing of the writ to respond and put in a defence.

    “There is no issue over the fact that there was an outstanding account,” the spokesperson told Fairfax.

    “The problem was the amount outstanding and that that wasn’t approved or justified in any way, shape or form.

    “Like anyone, you don’t pay a bill unless there is justification – especially if it was way over the original quote.”

    The spokesperson says Pavlovic also failed to provide receipts from suppliers and contractors.

    Big Kitchen Events director Brett May confirmed to SmartCompany this morning the company is in a dispute with Pavlovic but said the matter “is in the hands of our lawyers and it will be resolved in due course”.

    However, May said no court proceedings have commenced against Big Kitchen Events.

    “Our focus remains on continuing to provide excellent service to our customers,” May says.

    Ursula Hogben, principal and general counsel at LegalVision, told SmartCompany work contracts that are based on verbal agreements between two parties can be problematic.

    “This is not recommended due to the potential for lack of certainty on the parameters of the contract, and the processes involved,” Hogben says.

    Hogben says if the case does proceed, Big Kitchen Events will need to provide evidence of what the verbal contract covered and how extra work for the project was to be dealt with.

    She says it is likely the company’s stance will be it is only liable for the work that was requested and the builder agreed to, for an agreed price.

    However, Pavlovic will likely contest that the work was approved and he was given the ability to complete additional work as needed, Hogben says.

    When negotiating contracts, Hogben recommends business owners always put pen to paper.

    “There should be a written contract that sets our the work to be done, the time-frame and the payment process, for example, fortnightly progress payments,” she says.

    “The contract should address how additional work or variations will be dealt with.”

    In the construction industry, Hogben says provisions for additional work should cover how the extra work is scooped, if the client needs to approve the work in advance, if the party carring out of the work needs to provide a fixed pricing schedule and if the builder is able to exceed the quote in order to complete the work. 

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


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    A Western Australian electrical contractor that has been operating for more than 30 years and supplied machinery for mining in the Pilbara region has collapsed into voluntary administration.

    Cape Range Electrical Contractors is a Newman-based electrical contractor business specialising in the supply, installation and maintenance for individual and commercial clients.       

    The family-owned business has been operating since 1973 and mainly services the Newman and Pilbara region.

    A tagline on the company’s website states “no job is too small or too big for us to handle”, the site also claims Cape Range Electrical Contractors is “powering up the Pilbara”.

    The business also leases vehicles and other earthmoving machinery for mining and major contractor projects.

    Administrators Rob Kirman and Keith Crawford of McGrathNicol were appointed to manage the voluntary administration of the company on August 18.

    Kirman told SmartCompany this morning discussions with key stakeholders, including the company’s approximately 30 employees, after the collapse have so far had been positive.

    “Since the administration appointment it has been business as usual,” Kirman says.

    “The key strategy is to maintain that and explore expression of interests (for the purchase of the business and assets).”

    The administrators are seeking urgent expressions of interest for the purchase of the business and its assets, with an advertisement appearing last week in The Australian.

    The ad lists assets including a “modern, well-equipped available-for-hire fleet, including mine specification light vehicles, excavators, truck, trailers, tippers, skid steer and directional drill rigs”.

    It also references a “skilled workforce providing a comprehensive range of electrical services, including industrial installation, communication cabling, maintenance and labour hire”.

    The first meeting of the company’s creditors will take place in Perth on August 28, a day after expressions of interest close.

    SmartCompany contacted Cape Range Electrical Contractors but did not receive a response prior to deadline.


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    A former employee at software company Hewlett-Packard has been sentenced to almost two years in prison after using company credit cards to buy luxury clothing, Apple products and even a trip to Europe.

    Holli Coulman, 45, worked as an executive assistant at Hewlett-Packard in San Diego, California from 2008 to 2012, and used her position to intercept her boss’s emails and dispose of any that questioned her expenditure.

    During her time at the company, Coulman spent nearly $1 million on flights, spa treatments and clothes, according to the San Diego Union-Tribune.

    The former executive assistant pleaded guilty to wire fraud last year and was yesterday sentenced to 21 months in prison.

    Coulman was also ordered to pay back the $954,000 she spent on company credit cards.

    Andrew Morgan, forensic services partner at BDO Australia, told SmartCompany these sorts of cases are very common.

    “This is something that comes up a lot, where you have a very trusted person in an organisation who uses that level of trust because of their position,” Morgan says.

    “In traditional fraud you talk about the person who has the keys to the lolly shop, but the other very trusted person is the executive assistant to someone high up in the organisation. In a lot of organisations the executive assistant has access to the executive’s credit card details so they can make purchases on their account and they are in a position to intercept emails and that sort of thing.”

    Morgan says businesses need to have proper processes in place in order to catch fraudulent behaviour and minimise the impact of it when it does occur.

    “We’re not saying don’t let your EA do the job you’ve hired them to do, but you do need to put in a process that gives the organisation as a whole comfort they’re going to pick up on these sorts of things,” he says.

    “This means your finance office or HR or another senior executive should be given the task of periodically oversighting other people’s expenses just to make sure there’s another pair of eyes. It’s a pretty simple thing to put in place and if a senior executive has a PA they’ve probably got enough people floating around to put something like that in place.”

    Hewlett-Packard was contacted for comment but did not respond prior to publication.


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