Social media is fuelling a significant increase in defamation cases, according to Australia’s largest plaintiff law firm.

Slater and Gordon has seen a significant increase in defamation enquiries in the last financial year as a result of social media posts, with 43% of defamation enquiries relating to Facebook posts.

Posts made on Twitter, Instagram and online forums are also helping drive defamation enquiries at Australian law firms.

Last year a student was made to pay his former music teacher $105,000 after defaming her on Twitter and Facebook.

Jeremy Zimet, defamation lawyer at Slater and Gordon, told SmartCompany the increase in the number of defamation enquiries arising from social media is probably due to a number of reasons.

“It can be attributed perhaps to an increased use in social media for communication and also an increased understanding by people participating in that form of communication that these types of publications are indeed capable of being defamatory,” Zimet says.

“In order to bring a claim for defamation, a business must have 10 employees or less. For a business to be sued in defamation there is no limit to the number of employees that they must have.”

Zimet says it is crucial for small businesses to be aware of where they stand under the law as they can both sue for defamation and be sued under certain circumstances.

This also applies to scathing online reviews, which have long been a headache for small businesses in the hospitality and travel industries.

“Where there is a review that seeks to maliciously harm a business and that business has less than 10 employees, it would be possible for that business to claim defamation against the publisher,” Zimet says.

“If a rival business makes up a review of a company they compete with and negatively portrays the services they provide, then that may also open them up to a claim in defamation.”

However Zimet says if a review is “substantially true” or the honest opinion of the reviewer, then it will be more difficult for a small business to bring forward a claim for defamation.

A South Australian-based air conditioning firm has been taken to court by one of its high-profile customers, who claims the actions of one of the company’s employees “cooked” his expensive wine collection.

Watson Fitzgerald and Associates is being sued for negligence and a breach of contract and its statutory duty by Spero Raptis, a retired vascular surgeon.

Raptis lodged a claim against the company in the Supreme Court of South Australia in January, according to The Australian, with the case to return to court in October.

Raptis claims his 1253-bottle wine collection, which included 86 bottles of Penfolds Grange Hermitage and was previously valued at $430,000, has been reduced in value by at least $312,000 as the result of a “significant heat event”.

According to Raptis, the heat event was caused by an employee of Watson Fitzgerald who was called to his home to service an air-conditioning unit and humidifier in September 2014.

Raptis claims he contacted the company after the temperature in his wine cellar had been “slightly increasing”.

The claim filed by Raptis says a compressor on the air conditioning unit was found to be faulty and needed replacing. The worker allegedly turned off the power to isolate the faulty unit, which was dismantled and removed before a new unit could be installed the following day.

However, Raptis claims the humidifier on the unit continued to work despite the cellar fan not operating. He says this caused large amounts on condensation, which could be seen in the corridor outside the cellar the following morning, and raised the temperature in the cellar to the point Raptis was unable to enter the room.

The wine in the cellar was subjected to a “high temperature”, causing it damage and the collection has “dramatically lost value”, according to Raptis’s claim.

Raptis is seeking court orders for damages, the replacement of the damaged wine with “identical bottles”, costs and interest from Watson Fitzgerald.

However, Watson Fitzgerald has denied Raptis’ claims and in July filed a motion for the court to dismiss the claims.

The company said Raptis was advised the humidifier needed replacing and said the wine was not exposed to lengthy periods of high temperatures or adverse conditions.

“If the wine or any portion of it is damages (which is denied), such damage was caused by factors unrelated to matters alleged against (the company),” Watson Fitzgerald said.

Catherine Logan, principal at LegalVision, told SmartCompany as the recipient of services from Watson Fitzgerald, it is likely Raptis is covered under the consumer guarantees contained in the Australian Consumer Law.

“He is entitled under the consumer guarantees for compensation where there is major failure in the quality of the services that have been provided and the supplier of services could have reasonably foreseen the loss or damage that has occurred as a result of that failure,” she says.

However, Logan says it may be difficult to prove in this case that all the bottles of wine that were reportedly affected were in good condition before the alleged heat damage occurred.

“A key strategy in risk minimisation for small businesses in this area is to have good public liability insurance cover in place,” Logan adds.

SmartCompany contacted Watson Fitzgerald and Associates but did not receive a response prior to publication. SmartCompany was unable to contact Spero Raptis.

An Adelaide-based liquidator has had its registration cancelled by the corporate watchdog after concerns over its insolvency practice.

Daryl Charles Emmerson, principal of accounting firm the Chancellor Group, requested his registration be cancelled after the Australian Securities and Investment Commission raised concerns about his practice and his conduct of an external administration for a company formerly known as JB Electrical Contracting Pty Ltd.

As well as having his registration cancelled, Emmerson is also required to give one month's notice should he at any stage seek to re-register as a liquidator.

The questions over his handling of the external administration surround the adequacy of the remuneration disclosure, independence disclosure, documentation regarding investigations and securing assets in a timely manner and other documentation.

In a statement, ASIC Commissioner John Price said ASIC will continue to crack down on insolvency practitioners when it comes to compliance issues.

“Where we see instances of liquidators not having adequate systems and processes in place, not complying with disclosure obligations, and lacking documentation, ASIC will continue to act to ensure the standards of the industry are maintained,” Price said.

Jennifer Dickfos, lecturer in business and corporations law at Griffith University, told SmartCompany while her initial thoughts on seeing ASIC’s action were “not again, another liquidator registration being cancelled”, she thinks it is ultimately good news.

“I think it’s a good thing, basically it’ saying the system is working, that ASIC is investigating and… that there are repercussions,” Dickfos says.

“The person is being taken out of the industry for a number of years and can’t wreak further havoc.”

Dickfos says it is intriguing that Emmerson had requested the cancellation himself.

“I’d want to know what his motivation was in doing that, I’d say that’s unusual,” she says.

Dickfos believes Australia is starting to mirror a tendency towards the greater “cleaning up” of the insolvency industry that is occurring in the UK.

But she says while it is important to ferret out practitioners that are not meeting obligations, she believes there are a lot of good operators.

“The industry is not full of bad people,” she says.

“I meet various IPs [insolvency practitioners] in the work I do, they’re not all bad apples.”

Dickfos says many people blame ASIC but to some extent there needs to be more responsibility placed on creditors.

“When you look at these cases, there have been people complaining but complaints have gone unaddressed,” he says.

“For creditors as a whole, especially unsecured creditors, I think they have a responsibility to do something in some form.”

Dickfos also says there is a need for more education for those dealing with insolvency practitioners, including businesses and the general public.

“I think there’ s a real need in terms of educating the creditors and the general public, who might become creditors, about what an IP really does, the role of them,” she says.

“ASIC relies on them to investigate them, especially if directors are at fault.”

The owners of the convenience store chain 7-Eleven have blamed franchisees for underpaying workers as the company faces accusations of a systematic cover-up of the practice.

Meanwhile, some franchising experts say that underpaying workers is likely to be widespread across different brands in the convenience store sector.

The 7-Eleven franchise has been rocked by allegations that international students are being underpaid and forced to work excessive hours.

Head office has engaged in a “massive” cover-up of employee exploitation over the years, according to a joint investigation by Fairfax and the ABC.

In addition, almost 70% of 7-Eleven stores in Australia were found to have payroll compliance issues when an internal review was conducted in July this year.

The Fairfax and ABC investigation follows a recent case reported by SmartCompany where a former 7-Eleven franchisee was caught underpaying an employee more than $20,000 and fined $7000 for refusing to co-operate with the Fair Work Ombudsman.

The employer watchdog has had its eye on 7-Eleven for some time, conducting audits of Victorian stores as far back as 2009.

However, franchising experts say the popular convenience store is not alone in underpaying employees and the issue demands more attention from policymakers.

Jason Gehrke, director of the Franchise Advisory Centre, told SmartCompany issues around franchisees underpaying their employees is “not brand-specific”.

“We’ve got business owners coming from places in the world where employee wages are not government-mandated and effectively decided through staff negotiation,” Gehrke says.

“When they start businesses in Australia that will be a perspective they may bring to the operation of their business locally. It is an issue that is significantly a cultural issue and one that, quite frankly, any franchisor could potentially face or be required to deal with.”

Elizabeth Gore-Jones, principal of The Franchise & Business Lawyers, told SmartCompany that while the onus is on franchisees to comply with the law when it comes to running their business, 7-Eleven is clearly in a position where action needs to be taken.

“Sometimes common sense needs to prevail over the legal rights and obligations outlined in the franchise agreement and in this instance the franchisor has been given a pretty clear indication that something is awry in the franchise system and action is required,” Gore-Jones says.

“If the franchise model is not working and, the franchisees find themselves in a position where they feel they have no choice but to break the law to survive, that should be a red flag to the franchisor that the franchise model may need to be adjusted to help to ensure the survival, and preferably prosperity, of both the franchisees and the franchisor.”

7-Eleven released a statement on the weekend saying it does not condone the actions of any franchisee who does not meet his or her obligations as an employer.

“7-Eleven is extremely disappointed that a number of franchisees have chosen not to meet their obligations as employers,” the company said.

“We are deeply concerned about the personal impact on affected employees or former employees, and the damage such actions cause to franchisees who are trusted, reliable and responsible small business owners meeting their obligations as employers.

“We do not and will not hesitate to take any appropriate action, under law and within the franchise agreement, where a franchisee is found to be in contravention of the law.”

7-Eleven was contacted for further comment about what action the company is taking in the wake of the joint Fairfax and ABC investigation, but SmartCompany did not receive a response prior to publication.

Flight Centre says it is “surprised and disappointed” by the ACCC’s decision to launch a further appeal about price-fixing claims.

On Friday the ACCC indicated it will fight a decision which saw Flight Centre win an $11 million legal battle over price-fixing claims, with the government agency saying it is seeking special leave of the High Court to appeal the decision.

ACCC chairman Rod Sims said the consumer watchdog, which alleges the company tried to induce three international airlines into price-fixing arrangements, is concerned that, if successful, Flight Centre’s actions were “likely to have meant that consumers would not have seen the benefit of competition through lower ticket prices offered online by the airlines concerned”.

“This case also raises important issues for the application of competition laws in Australia in the future, as online offers are increasingly being made directly to consumers by both agents and their principals,” Sims said.

Flight Centre responded with a statement to its shareholders on the ASX, with managing director Graham Turner saying the decision in Flight Centre’s favour was “unanimous”.

“We are disappointed that the ACCC has chosen to continue this action and are surprised the ACCC has not accepted the clear and unanimous judgment of a Full Court,” the statement said.

“We will of course, oppose the action and continue to vigorously defend our position.

“We are not in the business of attempting to make airfares more expensive and we will continue to seek access to all fares to ensure the millions of customers that we serve are not forced to pay more for their flights.”

Santiago De Silva, managing partner at The Dream Lawyers, told SmartCompany this morning he believed the main issue is whether Flight Centre directly or by its conduct created price-fixing arrangements.

 “If there are any question whatsoever, it is a good thing for High Court to decide it,” he says.

“I don’t believe ACCC is in the habit of doing something for no reason, it is responsible for protecting rights of consumers and ensure pricing is competitive and no collusion going on.”

He says what happens next will be interesting, with special leave applications “difficult to say the least”.

“The important thing to look at if special leave is granted, there are serious, important questions which need to be addressed,” he says.

“If refused, the ACCC can’t do anything further.”

He says hypothetically, if it is proven Flight Centre has entered into such arrangements, it would have a big impact on the travel agency’s business.

The former chief executive of Nudie Juice, Andrew Binetter, is being sued by the Australian Taxation Office following allegations he oversaw a tax scam involving millions of dollars.

The case, which is due to be heard in the Federal Court before Justice Gleeson today in Sydney, follows investigations by the tax office as part of Operation Wickenby, which has now concluded.

According to reports in The Australian, the ATO claims Binetter, as well as other members of his family, brought in millions of dollars from their own accounts at Swiss and Israeli banks from 2006 to 2009 but disguised the money as loans.

The money was allegedly used to fund businesses, such as Nudie, while the family allegedly claimed tax deductions on the interest it paid on the loans.

The ATO’s move against Binetter personally follows its attempt to freeze $45 million in proceeds from the takeover of Nudie Juice by Philippines-based multinational food giant Monde Nissin earlier this year.

The urgent Federal Court application was made after lawyers for the liquidator of BCI Finances – the Binetter family’s funding vehicle for Nudie Juice – found out the family was about to sign off on the $80 million sale to Monde Nissin. The ATO, in turn, is a major creditor of BCI.

Mark Molesworth, tax partner at BDO Australia, told SmartCompany although Project Wickenby is over, the tax office will “always use information at its disposal in a way it sees fit”.

“Certainly if the tax office has information, even if it’s from a project which is no longer continuing, it’s not really a surprise,” he says.

He says the tax office regularly put out statistics about the success of such investigations.

Molesworth says without an outcome from this case, it is hard to draw any conclusions but generally speaking, people have to declare their income from offshore.

 “Australians have to pay tax on income in Australia no matter where they have earned it,” he says.

“If the allegations relate to interest or income derived offshore which has not been put in an Australian tax return, then that is an allegation the tax office may make,” he says.

“That would be the sort of allegation the tax office would pursue.”

SmartCompany contacted Andrew Binetter for comment but did not receive a response prior to deadline.  Nudie Juice declined to comment on the case.

The Fair Work Ombudsman has launched legal action against a 7-Eleven franchisee over claims two migrant workers have been underpaid almost $50,000.

The Ombudsman revealed this afternoon it has commenced proceedings in the Federal Circuit Court against Harmandeep Singh Sarkaria and his company, Armritsaria Four Pty Ltd, which owns and operates a 7-Eleven franchise in Blacktown.

The employment watchdog claims Sarkaria and his company underpaid two migrant workers a total of $49,426 between 2012 and 2014.

The legal action comes as the owners of the 7-Eleven chain have been forced to defend the company after a joint investigation by Fairfax and the ABC found the convenience store chain has allegedly engaged in a “massive” cover-up of employee exploitation over several years.

The investigation claims international students employed by 7-Eleven are being underpaid and forced to work excessive hours.

According to the investigation, almost 70% of 7-Eleven stores in Australia were found to have payroll compliance issues when an internal review was conducted in July.

This is also not the first time the Fair Work Ombudsman has intervened, with audits of 7-Eleven stores having occurred as far back as 2009.

More recently, a former 7-Eleven franchisee was caught underpaying an employee more than $20,000 and fined $7000 for refusing to co-operate with the Ombudsman’s office.

In the case of the Blacktown franchise, Fair Work alleges the two workers were often paid rates that were equivalent to just $10 an hour, despite the two workers being entitled to more than $22 an hour for normal work and up to $29.27 an hour for some overtime, weekend and public holiday work.

The Ombudsman will also argue in court the company created erroneous pay records to attempt to show the workers were being paid around $25 an hour and provided false time-and-wages sheets to Fair Work inspectors.

Fair Work Ombudsman Natalie James said the watchdog decided to commence legal action because of the seriousness of the claims and because the alleged breaches involve vulnerable migrant workers.

Fair Work said Sarkaria has been co-operating with the Ombudsman in relation to rectifying the underpayments, however, he faces maximum penalties of between $5100 and $10,200 per breach.

His company could be fined between $25,500 to $51,000 per breach.

Responding to the legal action, 7-Eleven head office said in a statement this afternoon it “fully supports” the Ombudsman’s actions.

“7-Eleven Australia provides its full support to the Fair Work Ombudsman to assist it in its work to ensure all franchisees’ employees receive the pay and conditions they are entitled to under law,” 7-Eleven chief executive Warren Wilmot said.

“We do not condone the action of any franchisee who does not meet his or her obligations, and we fully support and co-operate with any investigations or action undertaken by FWO in this regard.”

Wilmot said the underpayment of staff does not underpin the 7-Eleven business model.

“The viability of the 7-Eleven business model does not, has not, and never will, rely on the underpayment of staff,” he said.

“We trust this action by the FWO will reinforce the obligation every employer has to ensure proper pay and conditions are afforded to their employees.”

Rachel Drew, employment, industrial relations and workplace safety partner at TressCox Lawyers, told SmartCompany Fair Work takes any claims relating to falsifying records seriously.

“It is a very serious matter for the Fair Work Ombudsman if they believe the employer has falsified records,” Drew says.

“That shows first of all the employer has acted dishonestly and secondly, there was knowledge of the correct wages.”

Drew says if the Ombudsman does have evidence that false records were created, it would be very difficult for an employer to argue there was an “inadvertent” breach of the Fair Work Act.

Drew says the Ombudsman also prioritises investigations involving what it considers to be “vulnerable groups of workers”, including young people, migrant workers, and those who work for very low rates of pay.

“In 7-Elevens, there is a certain proportion of employees drawn from migrant and overseas students and that is one of the categories,” Drew says.

Drew believes there will be “some substantial investigations” of 7-Eleven in coming weeks and the outcome “will be watched very closely”.

It is something 7-Eleven Australia appears to be preparing for, announcing this afternoon it will establish an independent panel to investigate underpayment claims from employees, as well as franchise agreement terms.

The panel will be chaired by an as-yet-unnamed “eminent and qualified Australian” and 7-Eleven chief executive Warren Wilmot said in a statement the company has approached the Ombudsman’s office for help to establish the panel.

“The key factor here is that the panel will receive, review, and process any claim of underpayment, and authorise repayment where this is appropriate,” Wilmot said.

“This doesn’t let off the hook any franchisees doing the wrong thing, because we will pursue them to repay any money owed to former and present staff.”

SmartCompany contacted the 7-Eleven franchise in Blacktown by Sarkaria was not available for comment.

An employee at a Melbourne college who went on an email tirade insulting the organisation’s IT department has won his unfair dismissal case despite the Fair Work Commission ruling his “destructive” communication style was a valid reason for his dismissal.

Dr Ian Horgan was employed full-time as a course coordinator with Asia Pacific International College (APIC) between March and October last year, when he was sacked by email.

The Fair Work Commission heard there was extensive email correspondence between Horgan and the principal of APIC, Dr Ali Jaafari, during the seven months of his employment.

The commission heard that Horgan had been issued with a warning concerning his “insulting others and bad mouthing the college”.

One of Horgan’s emails sent to an IT employee said: “OK. I’ll tell the students that it was a dream. Everything is perfect and they shouldn’t be upset. .. Anybody want to volunteer to apologise to the affected students? I’m fed up of fielding IT related issues from students. You may tell me that it’s wonderful but I know different.”

APIC alleged Horgan’s other communications via email with staff and students were also inappropriate and disrespectful.

Fair Work Commissioner Julius Roe agreed, saying Horgan had been warned and counselled about the matter and he was satisfied the behaviour was not acceptable.

“The behaviour was repeated. I am therefore satisfied that this constituted misconduct and that it is a valid reason for termination,” Roe said.

However, Roe ruled the dismissal was unfair because Horgan was not given a chance to respond to the allegations.

“Although the valid reason for the termination is a strong factor in the circumstances of this case and the dismissal was not unreasonable it does not outweigh all the other factors,” Roe said.

“The dismissal was unjust because Dr Horgan was not advised of the reasons and given an opportunity to respond to them.”

Dr Horgan was awarded a total of four weeks’ pay in compensation for the dismissal.

Will Snow, senior associate at Finlaysons, told SmartCompany this morning the case appears to be an example of a relationship breaking down in an inappropriate forum.

“If relationships are breaking down, nothing is better than to have a discussion about it,” Snow says.

“Reading between the lines, the relationship was indeed breaking down.”

“With emails, you can never put the right tone on it, people can easily misconceive things and otherwise get upset.”

Snow says the employer’s “failure of the last procedural step” is the only reason Horgan was awarded compensation by Fair Work.

“There is a good reason to terminate, however if you’re going to terminate, you need to put it to him for his response,” he says.

“It really goes to show you need to ensure that while you might have had a gutful, you at least deal with the issue in a satisfactory procedural way.”

Snow says the lesson for other businesses in situations where the behaviour of an employee is clearly unacceptable is to ensure fair process is always followed.

“You can be totally justifiable in terminating someone’s employment, but you need to ensure a fair process is followed and that always involves putting allegation or issue to the employee for their response,” he says.

“In this matter, that would have been a relatively easy thing to comply with.”

Snow also recommends having face-to-face discussions with employees, even if an inappropriate email has already been received.

 “Increasingly, you do have organisations where people working part-time or casually, in this case students did work online or via correspondence,” he says.

“It’s all great when everyone is getting along, but when the relationship breaks down written communication a terrible way to resolve conflict.”

SmartCompany contacted APIC and Horgan but did not receive a response prior to deadline.

7-Eleven Australia has offered to refund franchising fees and help facilitate store sales for any franchisee that wishes to leave the chain.

The offer comes as the convenience store chain has been left reeling by a joint investigation by Fairfax and the ABC that has exposed widespread underpayment of 7-Eleven workers, many of whom are international students.

According to the investigation, which was detailed in an episode of Four Corners on Monday night and reported on by Fairfax, there is evidence that some 7-Eleven franchises have deliberately falsified payslips to hide the underpayments.

The report also aired allegations that 7-Eleven franchisees have an incentive to underpay workers as the company’s head office takes the majority (57%) of the franchisees’ gross profit.

As a consequence, work is reportedly underway on a class action against 7-Eleven and has been so far be joined by several former 7-Eleven franchisees.

7-Eleven made the offer to dissatisfied franchisees on Monday afternoon, alongside an announcement it will seek to appoint an independent panel to investigate underpayment claims from employees, as well as franchise agreement terms.

The panel will be chaired by an as-yet-unnamed “eminent and qualified Australian” and 7-Eleven chief executive Warren Wilmot said in a statement the company has approached the Fair Work Ombudsman for help to establish the panel.

In the same statement, Wilmot said 7-Eleven will work with existing franchisees who no longer want to be part of the chain.

“While we dispute there is insufficient financial viability in a system that delivers on average net profit of $165,000 per store, and year-on-year growth of more than 9%, the company has committed that any existing franchisee, who no longer wants to participate in the system, 7-Eleven Stores Pty Ltd will refund the franchisee fee paid, and help to sell any store where a goodwill payment has been made,” Wilmot said.

“What has happened, has happened on our watch, and we are a company with a proud heritage and a strong reputation, we cannot allow the few to taint the achievements of many.”

Jason Gehrke, director of the Franchise Advisory Centre, told SmartCompany this morning the offer from 7-Eleven is not a “buyback” of 7-Eleven stores by head office, but rather an offer to help sell franchisees sell their stores.

“In the resale of existing franchises, the franchisee fee component is usually a relatively small amount of the total purchase price,” Gehrke says.

Gehrke says he doesn’t believe there is a precedent for an Australian franchisor establishing an independent panel to review its operations.

Coinciding with the Fairfax and ABC investigation, the Fair Work Ombudsman yesterday revealed it has launched legal action against one 7-Eleven franchisee in Sydney over allegations two migrant workers have been underpaid almost $50,000.

The Ombudsman said today another 7-Eleven franchisee, this time in Melbourne, has admitted to deliberately underpaying workers and altering employment records in a bid to cut costs.

The franchisee, Kumar Sandarakumar, and his company, PSP International Trading, have entered into an enforceable undertaking with the Ombudsman to avoid litigation and have agreed to repay 12 of the store’s 15 employees more than $30,000.

The franchisee has also agreed to establish processes and systems to ensure future compliance with workplace laws.

Speaking more generally about compliance with workplace laws by franchise systems, Gehrke told SmartCompany “the risk of franchisees and independent small business operators incorrectly paying international students is significantly greater where the franchisees themselves are from a business migrant background”.

“There is a cultural issue as the frames of reference from home cultures in terms of staff pay are not relevant frames in a regulated Australian context,” Gehrke says.

Gehrke says the support offered to business migrants is an issue all franchise systems must address.

“As business migrants are becoming more common in franchising, it is an issue that franchisors won’t be able to ignore and will ultimately have to address through better screening at the recruitment phase, better training at the induction phase and better ongoing monitoring during the operational stage,” he says.

SmartCompany contacted 7-Eleven but did not receive a response prior to publication.

A plastics manufacturer in Sydney is being taken to court by the Fair Work Ombudsman over allegations it underpaid two workers by paying a flat rate of $8 an hour and failing to pay penalty rates over a multi-year period.

Delahill Pty Ltd, which trades as ABCO Plastics in Guildford, as well as its director, Guilherme Roque Rebello, will face Federal Court over allegations it breached workplace law by failed to comply with the Ombudsman’s requests to pay the couple back more than $86,000 in wages.

According to the Ombudsman, the business underpaid a Sri Lankan couple in their 50s who were in Australia on bridging visas and spoke limited English at the time of their employment.

The Ombudsman claims the underpayments resulted from the employees allegedly being paid flat hourly rates of $8 an hour for a probation period.

While the couple’s hourly rate later rose to $13 or $14 an hour, under the relevant award the couple is entitled to rates of more than $17 an hour and $32 an hour for overtime.

The couple tipped off the FWO to the underpayments, which led to the company and director Rebello being issued compliance notices to back pay the amounts.

Fair Work Ombudsman Natalie James said the agency made extensive efforts to resolve the matter before launching legal action.

“We prefer to assist employers to rectify inadvertent non-compliance issues but we are prepared to take legal action against employers which refuse to co-operate,” James said.

The Ombudsman is seeking a court order for Delahill to back pay the employees in full, while the company also faces a maximum penalty of $25,000.

Rebello faces a maximum penalty of $5100.

Will Snow, senior associate at Finlaysons, told SmartCompany the case is another example of the Fair Work Ombudsman doing its job.

“It really highlights the excellent and important work the Ombudsman undertakes,” Snow says.

“This couple appear really vulnerable, on tenuous visa arrangements, with limited English and possibly limited understanding of what their rights are.”

Snow says the $8 an hour flat rate represents a “massive underpayment”.

“It is a significant reduced rate,” he says.

“Also you have the employer failing to apply correct penalty rates for overtime.”

Snow says it never pays to ignore compliance notices from the Ombudsman.

“I don’t know why it (the business) wouldn’t have complied with the compliance notice,” he says.

“Ignoring notices does not make the issue go away.”

Snow says it is possible, especially in light of the investigations into underpayment claims at 7-Eleven, that the employees in this case may have even worked more hours than is reflected on their timesheets.

He says the onus is on employers to examine what it paid employees.

“You can get into the situation where an ombudsman can look back and go through this,” he says.

 “Businesses need to examine current payroll and assess if compliance with the applicable award.”

“If they’re not, there could be a large and ever-growing shortfall.”

SmartCompany contacted Delahill’s director Guilherme Roque Rebello but did not receive a response prior to publication.
 

A former Melbourne hotel manager is facing time behind bars over allegations he stole $681,000 from his workplace in order to pay for interstate holidays, lavish parties and sex workers.

Gary Johnson is accused of siphoning hundreds of thousands of dollars of his employer’s money into his own and other people’s accounts over a seven year period, between 2007 and mid-last year.

Johnson was employed as the financial controller at the Radisson hotel on Flagstaff Gardens at the time of the alleged fraud, according to Fairfax.

Police allege Johnson used the funds to make a number of trips to Sydney and Hamilton Island, as well as pay for sex workers and a personal trainer.

The behaviour was only discovered after an audit of the hotel found the business had not been meeting its financial targets.

Johnson has since pleaded guilty to eight counts of theft and remains in police custody.

Steve Finlayson, general manager of Radisson on Flagstaff Gardens, declined to comment when contacted by SmartCompany as the case is still before the courts.

Sylvain Mansotte, co-founder and chief executive of Fraudsec, told SmartCompany it is crucial for businesses to have what he calls a “three-way match” system to avoid fraudulent financial transactions.

This means the ability to raise an order, approve a purchase and receive payments should be delegated to different people if possible.

“Only enable access to the system, or permissions as we call them, to certain tasks so someone can’t do it all,” Mansotte says.

“The issue in some organisations is some people move from one role to another and they get more permissions and we forget to remove the old ones. It’s really important companies pay attention to that.”

Mansotte also points out that companies should have a system in place where employees are able to report suspicious behaviour anonymously.

“It may be their boss and they fear if they say something they are going to be vilified,” he says.

“This is the dilemma of the whistle-blower. Give them the opportunity to do it anonymously – it’s really hard to come forward and tell someone what you’ve seen. When people know there is a system taking place, they tend to do the right thing.”

Johnson is due to be sentenced in the Melbourne County Court tomorrow.

A television marketing company has been rebuked by the competition watchdog after claiming that wearing one of its products for one minute, even while relaxing, was the equivalent of doing 400 sit-ups.

Danoz Direct, the company behind the Abtronic X2 device, claimed in television commercials its product would result in weight loss and flattened and toned abs without any exercise or dietary modifications.

The Abtronic X2 is a belt-like device that produces an electric current and is worn around the waist.

Danoz Direct has agreed to sign an enforceable undertaking and amend its advertising practices following an investigation by the Australian Competition and Consumer Commission.

The offending television commercials ran between August 2013 and September last year, according to the ACCC, and stated the Abtronic provided an “intense workout” even while a user was sitting down or watching television.

The Abtronic X2 belt sells for $179.85, according to the Danoz Direct website, plus an additional fee for postage.

ACCC Commissioner Sarah Court said companies need to follow the law when promoting their products on television commercials.

“Businesses must be able to substantiate all claims that they make when promoting or advertising their products, or they risk breaching the Australian Consumer Law,” Court said.

Alistair Little, partner at TressCox lawyers, told SmartCompany the competition watchdog is keeping a close eye on businesses that claim their products have particular health benefits.

“The important thing here is for business that are making any kind of representations as to the benefits of a particularly product actually have proof – preferably independent proof – that what they say will happen will actually happen,” Little says.

“The ACCC is certainly doing this to get the message out there that people who claim false health benefits of a particular product are on notice and that they will be watched carefully as to the representations that are made. This is part of a long history.”

Little says Danoz will need written advice from a qualified expert if it makes similar claims about its Abtronic product in the future.

Otherwise, it could risk further action from the competition watchdog.

“What the ACCC has required Danoz to do is say they won’t make any representations of the sort they’ve made in the absence of actually having appropriate medical opinion,” Little says.

In a statement published on its website, Danoz Direct acknowledged it did not have reasonable grounds to say that wearing the Abtronic X2 for one minute had the same effect as doing 400 sit-ups.

“When contacted by the ACCC, Danoz Direct agreed to co-operate and took steps to address the ACCC’s concerns,” the company said.

“Danoz Direct has undertaken that it will not make any representations of the kind referred to above unless it has substantiation that supports those claims.

“Danoz Direct has implemented a Compliance Program to ensure this conduct does not occur again and to ensure future compliance with provisions of the Australian Consumer Law.”

SmartCompany contacted Danoz Direct for further comment but the company did not respond prior to publication.

Three businesses in the pork industry have drawn the ire of the Australian Competition and Consumer Commission for making potentially misleading claims about “free range” products.

The watchdog believes Primo Smallgoods, KR Castlemaine and Otway Pork may have breached Australian Consumer Law with claims on their products.

The ACCC has been investigating the pork industry, with an emphasis on products labelled as “free range”, “bred free range” and “bred indoors”.

Primo Smallgoods is in the firing line for its use of the words “free range” on its products, while KR Castlemaine and Otway Pork have attracted the regulator’s attention for their “bred free range” claims.

The pork companies are the latest to fall foul of the consumer watchdog when it comes to its ongoing crackdown on companies making misleading claims about ‘free range’ products.

In a statement today, the ACCC said it had accepted enforceable undertakings from the three companies responsible for the brands, which will involve each company issuing corrections and implementing consumer law compliance programs.

The producer-owned organisation which promotes the pork industry, Australian Pork Limited, has also agreed to change the title and logo of one of its pork production standards from “outdoor bred” to “Outdoor Bred. Raised indoors on straw” after the ACCC considered the wording made it clearer to consumers the pigs were born outdoors but raised indoors from weaning until slaughter.

ACCC chairman Rod Sims said the investigation highlights the importance of meat producers getting their marketing right.

“It is important that the description on product packaging and in promotional material accurately reflects the living conditions of the animals raised for the production of meat products,” Sims said.

“Marketing material must use words that consumers can understand, irrespective of whether the words have some special industry meaning.”

Alistair Little, partner at TressCox Lawyers, told SmartCompany this afternoon he understands the enforceable undertakings will require the companies to refrain from making similar representations in future and to issue “corrective advertising”.

This could possibly require the companies to place corrections with the retailers where the produce has been sold, Little says.

“It might be a notice which states the products were not free range and indicates the companies had to give an undertaking not to use the language again,” Little says.

Little says backing down publicly from previous claims could result in some negative brand damage for the companies involved.

 “It has the potential to be embarrassing for the companies,” he says.

“The fact of the matter is if the notice is prominently displayed, there is always the potential for reputational damage.”

Little says the ACCC is likely concerned that genuine free range producers are being disadvantaged or undercut on price by any producers that make false claims.

 “That’s one of the real competition issues here, that the ACC keen to sort out, if people are claiming products are free range or organic, that those claims are true,” he says.

“The ACCC is going to really crack down hard on people making false or misleading claims with regards to source of their products.”

SmartCompany contacted Primo Smallgoods, George Weston Foods and Otway Pork and Australian Pork Limited but did not receive a response prior to publication.

The Fair Work Commission has ruled in Qantas’s favour after the airline sacked an employee for giving discounted international airfares to numerous friends.

Maria Panera commenced working with Qantas in 1986 but was dismissed in June last year after she booked cheap flights to New York, Venice and Athens for family friends and associates, which Qantas argued breached company policy.

In several instances, Panera, whose normal duties involved day travel changes, was found to have given her acquaintances the cheapest possible tickets for future bookings.

In one incident, the commission heard Panera overruled the computer system in order to access a cheaper fare for a friend, and in another booking Qantas said she did not enter the age of a friend’s child in order for that friend to not have to pay an adult fair.

Panera lodged an unfair dismissal application with the commission and argued she was not aware that her actions breached company policies.

In assessing her claim, the Fair Work Commission heard Panera has been made aware of the relevant company policies and was provided with a letter outlining the allegations against her.

The commission also found Panera was given a reasonable opportunity to respond to the allegations the month before her dismissal.

As a result, senior deputy president Lea Drake ruled the dismissal was not harsh and dismissed Panera’s application.

“Ms Panera had an otherwise good employment record and the outcome of termination of employment was, both socially and financially, devastating,” Drake said.

“Termination of employment might not necessarily be the fair outcome in such circumstances. However, I consider that Qantas was entitled to expect a senior employee in Ms Panera’s role to both understand and apply its policies and to act honestly, and I am satisfied that in neither circumstance was termination of employment with notice an outcome that was harsh, unjust or unreasonable.”

Swaab Attorneys partner and workplace relations expert Warwick Ryan told SmartCompany Qantas is known for following established procedures very well and it is unsurprising the company was successful in this case.

“If there is serious misconduct then there are grounds to terminate forthwith,” Ryan says.

“But it doesn’t mean that you are relieved of the obligation to investigate the incident, which includes giving the alleged perpetrator or wrongdoer the opportunity to put forth his or her side of the story.”

Ryan says in these sorts of cases, the commission’s decision will generally hinge on whether it can be proved that the employee accused of wrongdoing was the person behind the till or computer terminal.

“That is why in hotels they’ve gone to great lengths to give people identifiers, so if they look up a till they can identify the individual behind it,” he says.

Ryan says another lesson to be learnt from this case is employees should be instructed about company policies not just at the beginning of their employment, but periodically.

“That way an employee can’t say, oh, I had no idea,” he says.

“This happens all the time – whether it’s drugs and alcohol, accessing porn or even granting cheap flights to relatives.”

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

A small catering business in South Australia has been hit with more than $10,000 in penalties for taking money from a couple and then not showing up on their wedding day.

Consumer and Business Services South Australia took action against Ian Vetter, trading as The Right Chef, after Vetter accepted almost $2000 from the couple to cater for their wedding in 2013.

The couple, based in Woodcroft, told The Advertiser Vetter had assured them on the day he was on his way to the venue but he never turned up.

Friends and family of the bride and groom rallied together to purchase party pies and other finger foods from a local supermarket to feed the wedding guests, with bride Kim Bloom saying family members missed out on most of the wedding ceremony as they were preparing the food.

“It was more 30th birthday party food and not as gourmet as we had expected,” Bloom said.

“The most disappointing thing was that he lied to us and that our family missed out on our special day.”

Vetter face the Adelaide Magistrate’s Court in August and was convicted of breaching Australian Consumer Law by accepting payment and not providing the agreed services within the specified timeframe.

The court fined Vetter $8000 and ordered him to compensate the couple. The court penalties and compensation totalled $10,168.80.

“Mr Vetter not only took money for catering services that he never provided, but also caused an enormous amount of stress to the bride on her wedding day – a day that she can never get back,” Consumer Affairs Commissioner Dini Soulio said.

“This case is a timely reminder for consumers to do thorough research before deciding to engage in a contract with a trader.”

Soulio says despite The Right Chef having an Australian Business Number, business cards and a website, there are other ways to check a reputation of a business.

“Consumers are encouraged to have a good look online for reviews or check social media to see if the business has an active account and to see what other people are saying about the business and how they operate,” Soulio said.

Ursula Hogben, principal and general counsel at LegalVision, told SmartCompany both consumer law and contract law applies in cases such as this.

Hogben says consumers such as the Bloom have specified rights under Australian Consumer Law to receive goods and services they have paid for, as well as a potential refund or resupply if there is a fault with the goods or services.

She says wedding vendors will also typically enter into written contracts with customers and therefore if the service is not provided, the customer may additional rights under that contract.

Hogben says if small business owners find themselves in a situation where they cannot provided goods or services that have agreed, there are two things they should do to “mitigate the damage” and reduce both financial and reputational risk.

In the first instance, businesses should attempt to provide the customer with an alternative, such as supplying different foods, or making an effort to source a different supplier for the customer.

Alternatively, if a way to supply the goods or services cannot be found, Hogben says businesses must give consumers as much notice as possible.

“They must do everything they can to reduce the problem for the other side,” she says.

“It might sound like common sense but under the law it is called mitigating the damage and that makes a difference both under contract law and consumer law.”

SmartCompany contacted The Right Chef but did not receive a response prior to publication.

Visa Worldwide must pay up $18 million for anti-competitive conduct in a penalty imposed by the Federal Court on Friday.

Justice Michael Wigney of the Federal Court said the penalty should send a “clarion call” to multinationals operating in Australia that it would not tolerate conduct that contravened competition laws and was likely to have the effect of substantially lessening competition in Australian markets, even if the decision to do so was made globally.

The proceedings, brought by the Australian Competition and Consumer Commission, found Visa Worldwide, a subsidiary of Visa Inc, prevented the expansion of competitors in the market for international visitors to Australia using Visa cards at retailers, hotels and restaurants.

The consumer watchdog alleged Visa earned less revenue when a cardholder selected the "dynamic currency conversion [DCC] services" option than when a cardholder used Visa's own currency conversion system.

The Federal Court found in a five month period in 2010 Visa implemented and maintained a moratorium by making changes to the Visa rules that prohibited the further expansion of the supply of DCC services on point-of-sale transactions on the Visa network by its rival suppliers of currency conversion services in many parts of the world, including in Australia.

This prohibition meant retailers, hotels and restaurants that were not already offering DCC to their customers as at 30 April 2010 could not choose to offer DCC.

The court found this effectively froze the pool of merchants that could offer DCC during the period of the prohibition, which in turn prevented the further expansion of DCC during that period.

ACCC chairman Rod Sims said the ACCC was concerned Visa’s conduct was likely to stop the growth of currency conversion services that competed with its own and, as a result, limit the choices available to consumers.

“The substantial penalty imposed against Visa Worldwide reflects the serious nature of the conduct, which hindered the competitive process and restricted an emerging technology and service from developing under otherwise competitive market conditions,” Sims said in a statement.

The Federal Court also ordered Visa pay the ACCC $2 million in legal costs. 

A spokesperson for Visa said the credit card company is pleased to have resolved the litigation.

“Although Visa has made an admission in relation to one aspect of the claim, our court submissions demonstrate that Visa’s conduct was, in part, the result of seeking to protect the experience of Visa cardholders at the point of sale,” the spokesperson said in a statement.

Russell Zimmerman, executive director of the Australian Retailers Association, told SmartCompany retailers should look at the cost of payments and check the maths themselves when using currency conversion services.

“We would always want to ensure firstly that good competition is available to retailers in what ever services they are using, and secondly we would not want people to be caught up in something that would cost them more money,” Zimmerman says.

“We understand why Visa did it, but it’s fair to say it was seen to be uncompetitive and we would advise retailers who are going to use the DCC system that they ensure the costs don’t exceed the standard retail system.”  

Melissa Monks, special counsel at law firm King & Wood Mallesons, told SmartCompany it was interesting that the ACCC did not pursue its original claim of misuse of market power. 

“The ACCC is likely to use the Visa case as another weapon in its arsenal of arguments as to why an effects test should be introduced into section 46 [of the Competition and Consumer Act],” Monks says.   

“However the case does demonstrate that the ACCC still has options available to it to address anti-competitive conduct of concern, such as exclusive dealing (which includes an effects test), if it opts not to run a misuse of power allegation.”

Monks says the case demonstrates the willingness of the ACCC to pursue conduct of concern to it in concentrated markets in line with its 2015 enforcement priorities, and to run test cases.

“This [case] is the first action of its kind against Visa around the world and could very well prompt action by global regulators and possible class actions for civil damages,” she says.

A former Hewlett-Packard employee’s claim for workplace compensation has been rejected by the Workers Compensation Commission of New South Wales, which ruled her bipolar disorder predated her employment.

Rukiye Sirikci was employed at Hewlett-Packard Australia for four years but was made redundant in 2010 due to a company restructure.

She returned to the company two years later as a sales analyst after a brief stint at Westpac, where she resigned due to stress.

A month after Sirikci started her new role at Hewlett-Packard, she complained of workplace abuse to her GP and then resigned from her job due to what she described as “constant abuse” from her immediate supervisor.

Sirikci’s claim for worker’s compensation was denied after she refused to participate in an independent medical examination.

Sirikci lost her case before a Workers Compensation Commission arbitrator but tried to appeal the decision.

However, the Workers Compensation Commission dismissed the appeal in August on the grounds that Sirikci’s employment was not the main factor contributing to the aggravation of her pre-existing medical condition.

Andrew Douglas, employment lawyer and principal at M+K Lawyers, told SmartCompany when it comes to workplace cases involving psychological injuries, there are three tests to determine whether a claim will be compensable or not.

“There first is, is there an injury?” Douglas says.

“In this case, it’s pretty clear on the evidence there is some sort of psychological injury. The next one is, did it arise out of reasonable management action? That issue is not agitated in this case. The third one is, is work a substantial contributor? Nothing that occurred – in relation to the directions that were given – were a contributing factor.”

Douglas says psychological injuries are a major issue for businesses small and large, but particularly so at the smaller end of town due to a lack of time and resources.

“[Small business owners] need to be mindful of the nature of hazards that exist in their workforce, including psychological hazards,” Douglas says.

“They need to stay close to their employees and notice when there is impact and adjust that impact to make sure it isn’t an injury that is compensable, that person isn’t harmed, and their productivity remains intact.”

SmartCompany contacted Hewlett-Packard for comment but did not receive a response prior to publication.

Beauty giant L’Oreal has launched legal proceedings in the Federal Court against Australian business BrandPoint on the basis of misleading and deceptive conduct involving L’Oreal’s flagship Clarisonic product.

The legal stoush centres on the Clarisonic facial cleansing brush which was launched in the US in 2004 by Pacific Bioscience Laboratories and has since taken the beauty industry by storm with over 10 million of the devices sold worldwide.

Queensland business BrandPoint acted as the distributor for Clarisonic in Australia from 2010 until 2012 when its distribution agreement expired and L’Oreal acquired Clarisonic.

Soon after BrandPoint launched a similar product, the PuraSonic facial cleansing brush.  

BrandPoint claims the PuraSonic product is similar to the Clarisonic but sold at a lower price.

Each product has similar degrees of movement, similar sizes, similar rounded shapes, brush heads that oscillate at more than 300 movements per second, one-minute pulsating timers and magnetic inductive chargers.

BrandPoint was founded in 2008 by Patrick McCarthy and has a turnover of $11 million a year and around 20 full-time employees.

In a preliminary hearing last week in the Federal Court, Justice Beach heard claims that BrandPoint “may have dollied up its promises for the PuraSonic product” and “made misleading, deceptive or false claims as to the performance of the PuraSonic product” in a promotional email sent to retailers and on the product’s website.

In particular the promotional email made claims about the performance of the PuraSonic in comparison to the Clarisonic on the basis of “efficacy research”.

But Justice Jonathan Beach heard there was no appropriate trials, testing or analysis of the product at the time of BrandPoint’s email representations.

“The retailers who received the BrandPoint email and attachment were likely to have been influenced thereby in a manner disadvantageous to L’Oréal Australia’s commercial interests,” Beach found.

“More generally, inaccurate or misleading representations about the performance of BrandPoint’s product would have been likely to have had a potential impact on the market for sonic facial cleansing brushes generally and therefore L’Oréal Australia’s commercial interests.”

Beach ordered discovery of relevant documents by BrandPoint by 26 September 26 and ordered that both BrandPoint and L’Oreal bear their own costs.

McCarthy told SmartCompany BrandPoint had an "exhaustive" list of demands for information by L’Oréal significantly narrowed by Justice Beach so that there remained a matter of only one controversial email which McCarthy describes as "a draft which BrandPoint acknowledged was sent in error". 

"BrandPoint notes aspects of the judgment in which the court found that the case on website representations was 'entirely speculative', and there was a finding by the judge that L’Oréal had 'over-reached' in its demands for documents," he says.   

"BrandPoint is committed to successfully defending any litigation by L’Oréal."

A spokesperson for L’Oreal Australia told SmartCompany she was unable to comment because the legal proceedings are ongoing.

“We are happy with the outcome so far,” she says.

A former close friend of Clive Palmer is suing the mining magnate turned politician in the Brisbane Supreme Court for $4.6 million over an employment contract he says was a “sham”.

William Schoch, who also previously stood as a candidate for the Palmer United Party in 2013, lodged a claim against Palmer and his companies Mineralogy and Queensland Nickel in April, with the trial beginning yesterday.

Palmer hired William Schoch as the chief financial officer for Palmer’s China First coal project in 2011, and later as the manager of Palmer’s Coolum Resort on the Sunshine Coast, via a verbal contract that Schoch alleges was to be worth $5 million, or $1 million a year over a five-year period.

However, Schoch told the Brisbane Supreme Court this week his annual salary was initially $100,000, later rising to $150,000 in 2012.

Schoch had signed the written employment contract but he told the court he believed the “deal” he had with Palmer was still valid and he would receive the additional money at a later date as a bonus, reports Nine News.

“He said that I’d be on a starting salary to start with and the rest of the money would come in later,” Schoch told the court yesterday.

But when Schoch queried his salary in December 2013, he said Palmer fired him over the phone, allegedly saying “you don’t have a contract for $5 million. You have a contract for f---ing $150,000. Leave by Tuesday. Sue me.”

Schoch is alleging he was duped into signing a “sham” employment contract and is seeking $4.6 million in damages.

Palmer and his companies have disputed the claim and the trial has been listed to run for four days.

Workplace lawyer Peter Vitale told SmartCompany the outcome of the case will likely be determined by questions about if the phone conversation that Schoch alleges took place “truly reflected the intent of the two parties”.

“And if it did, why it wasn’t specifically referred to in the written contract,” Vitale says.

“There will be a significant question of the court trying to determine what it believes is the common intent of the parties.”

Vitale says it is also possible that Schoch has made allegations of deceptive and misleading conduct under Australian Consumer Law and if this is the case, the court will also likely assess if there was any degree of exaggeration in the commercial negotiations for the job.

“It will focus very carefully on precisely what Mr Palmer said,” Vitale says.

Vitale says all employers “need to be careful about what sort of promises you make” when negotiating contracts with employees and “whether you intend them to be some form of encouragement or inducement”.

“It can be a fine line between something that is just commercial banter and something that becomes, in effect, a legally enforceable promise,” he says. 

This is not the first time Palmer has been the subject of legal action over a workplace dispute.

In September last year, another former employee of the Coolum resort filed an unfair dismissal claim against Palmer before the Fair Work Commission, alleging Palmer called him a “fat c---“ before dismissing him.

Peter Yates, who worked as an assistant food and beverage manager at the resort between 1998 and 2014, claimed he was never given a letter of termination and was not paid out his annual leave, long service leave and other entitlements.

The dispute was resolved when the parties reached a confidential settlement over the claims in September 2014.

SmartCompany contacted Clive Palmer but did not receive a response prior to publication. SmartCompany was unable to contact William Schoch.