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

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    Peter Strong 

    In 1977 one of the issues mentioned in the very first set of minutes of the newly founded Council of Small Business of Australia was a need for changes to contract laws and processes to stop some big businesses from abusing and misusing their power.

    Now the Turnbull government, through Minister for Small Business Kelly O’Dwyer, has confirmed it will bring in those changes.

    Since 1977 we have fought a long battle for fairness and some big businesses have fought a long battle to keep their ability to abuse the people who run small businesses.

    It was a long hard fight – certainly too long. But we have finally achieved significant outcomes for small business owners through hard-fought for reforms.

    Who are the big businesses who abused their power and caused untold damage to individuals, to the economy, to our culture? The biggest landlords, dominant retailers, some franchisors and suppliers to industries where there is little competition and only a few dominant players.

    What has been the impact of the behaviour of these big businesses? The impact on people’s lives has probably been the most profound. The unethical big businesses were responsible, through their behaviour, for the stress, bankruptcies, loss of livelihood, major health problems and indeed self-harm from people who found themselves the victim not of their own failings but of contracts that gave the biggest businesses the ability to change rules willy-nilly, to make sure court cases would go for ever and to abuse people’s trust.

    Another important impact is on productivity. The unprecedented dominance that big retailers have over the supply chain has placed unmanageable stress on our producers and manufacturers. As a result innovation has waned and productivity languishes.

    The other negative impact has been on retail diversity. As more and more mega shopping centres take over towns and communities we find the choice of shopping is limited to franchises as the quirky retailers and cafes are forced out of business.

    So these changes to contract protections are very necessary.

    Up until now the argument from the unethical businesses is that a business-to-business contract is the same no matter if, for example, it is Rio Tinto versus BHP or Rio Tinto versus an owner/driver. That is of course wrong. The owner/driver is a person, like any other person; no board of directors, no millions of dollars waiting to be spent on court cases, no experts advising on everything that is said and done. It is just them and perhaps a small number of paid advisers like an accountant and a lawyer.

    What that owner/driver does have is optimism and trust – no one goes into business if they are pessimistic and mistrusting of all and sundry. These changes remove the capacity of the likes of large corporates to use their expertise and resources to force a contractor into a position where they have no rights and no recourse. These changes do not impact on their dealings with other big businesses.

    The only businesses that need worry are the bad franchisors, the questionable landlords and any retailer who practices the dark arts of threats and innuendo instead of professionalism and transparency.

    Congratulations to the government for not blindly rejecting the amendments to its legislation on party grounds. Congratulations to the Greens for moving the important amendments and congratulations to Labor for not hindering the process.

    We know the pressure from big business lobbyists must have been huge. Have we reached a place in time when small business and big business lobbyists given equal time and equal measure? If so – excellent. But we must remain forever vigilant as some of the biggest businesses do have a history of deviousness, secret backroom deals and misuse of power.

     

    Background


    As background the federal government’s proposed changes to unfair contract terms recently passed the Senate, with amendments, and needed to return to the House of Representatives.

    The new laws will extend the unfair contract term protections available to consumers to cover small business contracts. The new protections will allow the courts to declare that any unfair contract terms are void.

    As a result the new protections as currently drafted will be available for businesses with less than 20 employees for transactions under $300,000, or for multi-year contracts totalling less than $1,000,000.

    These changes will prohibit (render void) any clauses in a standard form business-to-business contract that create a major imbalance between big and small businesses, and which cannot be shown to be really needed or commercially relevant.

    The Australian Competition and Consumer Commission, State and Territory Australian Consumer Law regulators and the Australian Securities and Investments Commission (for contracts relating to financial services and products) will be responsible for enforcing the law.

    The ACCC is intending to provide guidance on the new protections once these laws are passed. We understand the ACCC and ASIC will hold a joint webinar about the protections once the laws are enacted.

    Peter Strong is the chief executive of the Council of Small Business of Australia. 


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    The company behind Steggles and Lilydale chicken brands has agreed to pay back current and former workers that were underpaid by subcontractors to the tune of half a million dollars.

    Baiada Group’s Baiada Poultry Pty Ltd and Bartter Enterprises Pty Ltd, the country’s biggest producer in the Australian poultry market, has agreed to set aside the $500,000 figure for current and former workers found to have been underpaid from the start of the year.

    The Fair Work Ombudsman uncovered evidence of unlawful practices and exploitation in June, following complaints that workers, many of whom were on 417 working holiday visas, were being underpaid by subcontractors and forced to work long hours at several processing sites in New South Wales.

    The practices have also been the subject of investigative reports by ABC programs Four Corners and Lateline.

    Fair Work Ombudsman Natalie James said in a statement today she is pleased the Baiada Group has signed on to a three-year Proactive Compliance Deed, as well agreeing to back-pay the workers.

    In the deed, Baiada has acknowledged it has a ‘moral and ethical responsibility’ to address unlawful practices revealed as part of a recent investigation into the business’s treatment of the workers.

    “Over the life of the deed, Baiada has agreed to assume responsibility for the underpayment of workers engaged in its supply chain through contract labour arrangements, even though it is not their direct employer,” James said.

    Baiada managing director Simon Camilleri said in a statement the company is committed to implementing the compliance deed.

    “We will closely monitor the effectiveness of these measures and will act to terminate agreements with contractors who do not comply,” he said.

    Rachel Drew, partner at TressCox lawyers, told SmartCompany this morning the action of the Fair Work Ombudsman is connected to section 550 of the Fair Work Act, which states an employer can be held responsible for a contravention of the act by others in the supply chain, including sub-contractors.

    “In this case Baiada had a complex but lawful system for engaging labour,” she says.

    “The system involved various levels of subcontractors who engaged or provided labour on a labour-hire basis.”

    Drew says in this case, the breaches of the act relate to the underpayment of workers made by subcontractors of Baiada.

    “However, because of liability and the Fair Work Act, the Ombudsman has been able to require engagement of Baiada in their investigation and has been able to convince them that even though they were not employer of underpaid works, that they were at risk of being liable for those underpayments,” she says.

    “Baiada is not the first or only company to be drawn into underpayments by subcontractors. The arrangements it had were completely lawful, it was the subcontractors not paying correctly.”

    Drew says the Fair Work Ombudsman has very broad powers to investigate and prosecute under the circumstances involved in this case and, despite it being the subcontractors that underpaid workers, it is in the chicken producer’s best interests to take such steps.

    “Baiada’s actions in resolving this though the Proactive Compliance Deed with the Ombudsman are very sensible,” she says.

    Not taking such action could have led to further legal action on behalf of the Ombudsman, Drew says.

    “It is open to the Fair Work Ombudsman to commence court action against employers which were the subcontractor of Baiada and to commence court action against group itself,” she says.

    Drew says the public perception of the company is “very important “and there is a stigma attached to companies believed not to be complying with workplace responsibilities.

    “It is very important for Baiada, given not the employer and not underpaying, but extremely important for Baiada to be part of the solution here,” she says.

    “Cooperation with the Ombudsman is absolutely essential for their reputation.”

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

     

     


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    The Australian arm of international shopping community Lyoness says it feels “vindicated” after the Federal Court last week ruled its loyalty program is not a pyramid scheme and did not involve unlawful referral selling.

    In legal proceedings pursued by the Australian Competition and Consumer Commission against Lyoness Australia, the consumer watchdog had alleged the company was offering financial incentives to members to recruit new members who also make a down payment on the site for their future shopping.

    But the company argued members only received benefits when they shopped, regardless of whether they introduced other members or not.

    “Lyoness members may introduce members and receive benefits when the new member shops in the Lyoness community, but no benefits come from the introduction alone,” Lyoness said last year.

    The court accepted Lyoness’s arguments and found any entitlement for members to receive a benefit came about not by the introduction of the new members but when those new members shopped on the site.

    Justice Geoffrey Flick ruled the ACCC had also failed to establish that persons could become members only by making down payments.

    However, ACCC chairman Rod Sims said in a statement the court did echo some of the watchdog’s concerns and said the ACCC will carefully consider the judgment.

    “The ACCC will continue to investigate schemes that encourage consumers to recruit new members. We will take action where appropriate to ensure consumers are not drawn into schemes where the financial benefits held out to induce potential members to join up rely substantially on the recruitment of further new members into the scheme,” he said.

    In a statement, managing director of Lyoness Australia James O’Sullivan said Lyoness welcomes the judgment, having at all times denied the allegations and defended the court proceedings.

     

    “As a company Lyoness is committed to compliance with consumer laws in every country we operate in,” he said.

     

    “We look forward to continuing to provide a great shopping and loyalty experience for our members and merchants.”

     

    O’Sullivan told SmartCompany this morning the decision not only had significance for the Australian branch of Lyoness but its global operations as well.

    He says Lyoness began in 2003 internationally but only launched in Australia in 2012.

    “First of all we’d like to acknowledge and thank our members and existing members for their support during the proceedings,” he says.

    “We strenuously rejected the allegations, but also wanted to co-operate as fully as possible. We were vindicated.”

    O’Sullivan says Lyoness Australia has just launched a new cash-back solutions program and an initiative for some of SME merchants that use the platform.

    He says there are close to 50,000 SME merchants involved in Lyoness globally and about 1000 in Australia, with that figure expected to multiply quickly now off the back of the Federal Court decision.

    O’Sullivan believes some have been holding back from signing up with the platform while waiting for the Federal Court’s decision.

    “We’ve had some of them sign up on Friday and over the weekend,” he says.

    “We want to grow the business and provide value to our merchants and shoppers.”

     

     

     


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    An often underrated financial risk for small and medium business is when the marriage or de facto relationship of one of the business owners fails.

    Read more: How to minimise the impact of marriage breakdown on your busines

    The subsequent property settlement between an estranged couple can put the future of a business in jeopardy with possibly detrimental implications extending to third-party business partners.

    For instance, there is a real risk that a business partner may be forced to dispose of his or her share of the business in order to pay out an estranged spouse.

    And such a forced disposal of a major shareholding may lead to a successful business being broken up, potentially destroying much of its value.

    The reality is the financial fallout from a relationship breakdown can cause collateral damage to a business itself and all of the commercial partners involved.

     

    Do you need a pre-nup?

     

    Astute SME owners are increasingly entering binding financial agreements with their married or de-facto spouses with an express purpose of trying to quarantine business assets if their personal relationships fail.

    In short, a properly prepared binding financial agreement is a legally enforceable private contract that dictates how the assets of married and de facto couples – including their business assets – will be divided if their relationship breaks down.

    A term in the agreement can be, for instance, that the spouse who brought his or her ownership of the business into the relationship will keep that enterprise if the relationship ends. In other words, the ownership of the business is quarantined from any subsequent property settlement in the event of a separation.

    Alternatively if both spouses own the business together, their binding financial agreement can specify which spouse will retain the business if their relationship ends. Significantly, the agreement can cover the method of valuing the business so that the spouse leaving the business is adequately compensated.

    If you operate an SME either as a company, as a sole trader, through a partnership or though a trust, the assets of the business can be protected if a binding financial agreement is in place.

    The most widely recognised agreement is a pre-nuptial, which parties enter into before they marry.

    The other types of binding financial agreements are a mid-nuptial (entered into during a relationship in the event of a separation) and a post-nuptial, which parties enter into after they have separated (recording the terms of their negotiated property settlement).

    De facto partners can into similar agreements.

    What happens if you don’t have an agreement

    It is critical to understand the possible devastating consequences that a contested marital property settlement can have on your business:

     

    1. Having to produce sensitive business records

    Business owners can be forced to produce sensitive business records to the estranged spouse  – even if the spouse is not involved in the business. Such records can include financial statements, loan account ledgers, bank statements, future projected profit statements, contracts, wage records, BAS statements and accounting journals.

     

    2. Having the business valued by a so-called single expert

    An accountant will scrutinise the business to place a value on it. Inevitably, the other owners of your business, in addition to yourself, will be caught up in this valuation process.

     

    3. Placing employees of your business in stressful situations

    A disputed property settlement between business owners is likely to become a major distraction to the day-to-day running of the business.

     

    If all the owners of a business enter binding financial agreements with their married or de-facto spouses, all should gain a greater degree of comfort.

    Keep in mind that that Australian Bureau of Statistics divorce data suggests that more than 40% of marriages fail.

    In particular, the owners of growing and increasingly valuable business should each consider whether to enter a binding financial agreement if in a personal relationship.

    The agreements should be properly prepared with the assistance of independent legal advisers, who give advice independently to each of the parties about its effects, benefits and risks. Typically, your accountants will provide assistance when determining what should be included in the document.

    By ensuring the court-enforceable agreement is properly prepared, you can help secure your business’s future. 

    This can bring peace of mind to family business owners and help ensure the business is passed down intact to future generations and protected from claims by a non-business estranged spouse.

    Crucially, the Family Court cannot override binding financial agreements apart from in exceptional circumstances such as the involvement of fraud, duress or unconscionable conduct. The court can also set aside the agreements if there has been a “material change” in the circumstances of a child that would cause hardship to one of the parties to the agreement.

     

    Glenda Laurence is head of family law with Argyle Lawyers. She was one of the first accredited family law specialists in New South Wales.

     

     

     

     

     

     

     


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    Western Australia-based car finance provider Get Approved Finance allegedly engaged in unfair conduct by approving approximately $1.38 million in car loans for consumers with poor credit histories, according to the corporate watchdog.

    Esanda, a subsidiary company of ANZ that financed the loans, will compensate 70 car loan borrowers after the Australian Securities and Investment Commission found 15 brokers at Get Approved Finance approved loans between 2011 and 2015 that did not meet Esanda’s lending criteria.

    ASIC alleges the brokers misled friends and family of initial loan applicants into thinking they were going guarantor for the loans, but were instead listed on signed documents as the nominated borrower.

    ASIC said in a statement some borrowers were also sold add-on products, such as insurance or warranties, at significant additional costs without their knowledge or consent.

    It also found Get Approved Finance benefited from commissions earned from Esanda and the providers of the add-on products.

    ASIC deputy chairman Peter Kell said in the statement the case shows how some brokers can be tempted to take “extreme steps to ensure that a loan is approved, to ensure they can earn commissions from the lender and from the sale of add-on products”.

    “Lenders must have effective systems in place to address this type or misconduct by brokers, or else they will run a substantial risk of having to compensate consumers when it occurs,” he said.

    Two Get Approved Finance brokers were permanently banned by ASIC in July this year for similar matters.

    ASIC is still investigating Get Approved Finance and Esanda over the matter, with Esanda agreeing to undertake new compliance measures with loan applications.

    Professor of commercial law at Melbourne University, Ian Ramsay, told SmartCompany this morning the case is significant as Esanda is a large finance company and connected to one of the big four banks.

    “I think it is significant in that Esanda here didn’t have in place proper systems or process to stop what looks to be fraud going on,” he says.

    Ramsay says the case highlighted a number of issues to do with lending systems.

    “One is that it shows some of the largest providers of finance continue to have problems with their compliance systems. The system has failed in quite a significant way,” he says.

    He says getting other people to sign on the loans and misleading them, while profiting from it, constitutes “appalling” circumstances.

    Given two Get Approved Finance brokers were previously banned by ASIC, Ramsay says one important question is whether or not ASIC’s permanent bans or long-term bans are sufficient.

    “Does it send a sufficient deterrent message out there into the industry?” he says.

     “Simply banning people when they’ve profited significantly from wrongdoing (might not be enough). All you are doing is banning them from financial service, they can move onto other things.”

    Ramsay also questions whether further penalties could be applied.

    “Whether or not you need criminal proceedings to be brought, it’s about which sends the strongest message,” he says.

    “The main question is whether following further investigations, ASIC believes there is any breach of the law that might lead to criminal prosecution.”

    A spokesperson for ANZ told SmartCompany this morning the bank has co-operated with ASIC from the start, having initially identified the loans in question.

    “ANZ identified around 70 Esanda loans introduced by Get Approved Finance that were based on misleading documents provided by Get Approved Finance,” the spokesperson says.

    “We have assisted ASIC with its review into Get Approved Finance and our immediate priority has been to apologise and compensate affected customers.

    “The impacted loans are excluded from the Esanda Dealer Finance portfolio which ANZ has agreed to sell to Macquarie Group Limited.”

    SmartCompany contacted Get Approved Finance and Esanda but did not receive a response prior to publication.

     


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    A businessman who previously failed to pay workers while paying himself and another director a combined total of about half a million dollars in wages has been fined again over employee underpayments in a different company.

    Both instances involve workers going door-to-door to offer households free power boards as part of the Victoria Energy Efficiency Target Scheme, according to the Fair Work Ombudsman.

    Claudio Locaso was fined in excess of $10,000 in July this year after the Federal Circuit Court found he and another director of his marketing and distribution business, Invivo Group, paid seven backpackers nothing while paying themselves at total of $500,000 between 2012 and 2013.

    The Federal Circuit Court fined Locaso again last month, this time for allegedly short-changing four employees doing similar work through another company, The Syndicate Group Pty Ltd.

    The underpayments in this case also stem back to 2013 and total $9622.

    The Ombudsman said two of the four employees were paid nothing for around two or three weeks work respectively.

    Locaso was fined $4845 while The Syndicate Group was fined $12,750 for the latest breaches.

    The Ombudsman was forced to take legal action after compliance notices requesting back payment of the amounts were ignored, Fair Work Ombudsman Natalie James said.

    “We are increasingly issuing compliance notices to try and resolve underpayment matters outside of the court – but we are prepared to commence legal action against employers which refuse to co-operate,” she said.

    Federal Court Judge Norah Hartnett described the breaches as appearing to be part of a “broader pattern of conduct by Mr Locaso”.

    Rachel Drew, partner at TressCox Lawyers, told SmartCompany this morning it is likely Locaso’s case took on more weight from the Ombudsman’s perspective given it is the second time it has had to investigate one of his companies.

    “I think the Fair Work Ombudsman will have approached this matter in a more serious way because Mr Locaso is a repeat offender,” she says.

    “It was probably more willing to commence prosecution because it knew in the past compliance notices were not followed.”

    Drew says from the Ombudsman’s perspective, Locaso is a person who knew about the existence of workplace law and also knew the consequences of ignoring them.

    “An employer ignores a FWO compliance notice at their own risk,” she says.

    “It is very important to be open and honest with the Fair Work Ombudsman and if the Ombudsman has taken the step of issuing a compliance notice, employers will be better served by complying.”

    Drew says the judge’s criticism of Locaso is also “quite serious”.

    “It suggests that Mr Locaso was adopting workplace practices which were completely non-compliant with the law,” he says.

    Drew says there are no excuses when it comes to non-payment of workers.

    “All employers should be aware if they going to engage workers, they need to pay them,” she says.

    “Refusal to pay them at all will be difficult to categorise as lack of awareness.”

    Drew says it did seem inappropriate the directors’ wages were previously so high and at the same time workers were not being paid or underpaid.

    “I think the primary lesson here is that first of all make an attempt to understand your workplace obligations,” she says.

    “Even if you are ignorant, if the Fair Work Ombudsman knocks on your door, use it as a learning opportunity and don’t ignore it.”

    SmartCompany contacted Locaso and The Syndicate Group but did not receive a response prior to publication.


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    Lorna Jane Clarkson has spoken about the bullying allegations dogging her fitness wear empire, saying in a television interview on Sunday night “the truth will come through”.

    Clarkson, who founded the Lorna Jane brand 25 years ago, also showed some of the emotional toll these types of allegations can take on business owners.

    “I should be tougher than that but this is who I am. I’m human,” Clarkson said in an interview on Channel Nine’s 60 Minutes.

    In September, the popular brand was accused of bullying and harassment by a former store manager Amy Robinson, who alleges Lorna Jane management attempted to cover up the bullying she endured about her weight while working for the company.

    The company denies the allegations but a decision to create a hashtag for its defence on Facebook also attracted criticism.

    The accusations also followed a backlash against Lorna Jane over a job ad for a receptionist and “fit model” in July.

    The ad, which one employment law specialist described as having “sailed a bit close to the wind”, specified the applicant “must” have a specific body size to undertake the duties of a “fit model”, including a bust of 87-90 centimetres, a waist of 70-73 centimetres, a hip measurement of between 97-100 centimetres and height of at least 165 centimetres.

    Here are four takeaways from Clarkson’s emotional interview.

     

    1.    On that job ad

    “Well, in hindsight would I wish we’d written it differently? Absolutely. I just think it was … we’re an activewear company. They misconstrued the word ‘fit’ for being physically fit and not actually a ‘fitting’ model. And fit doesn’t mean skinny.”

     

    2.    On the allegations of bullying and harassment

    “It’s not true. And the truth will come through. And, you know, if there was (harassment) I would put a stop to it. I would do the right things.”

     

    3.    On facing criticism as a business owner

    “When you build a brand that is so much about you and who you are as a person, it hurts.”

    “I hope I’ll get a thicker skin because of it, but right now, no, it doesn’t feel like that at all. I feel vulnerable, I guess.”

    “Bill [Clarkson] will kill me for getting upset because I’m not normally like this, you know. I’m so positive and I think that… This is not me, but right now with the things the press are saying about me and my brand, this is how I feel.”

     

    4.    On ambition

    “My grandmother said to me, when I was … about four something like that, she said, ‘Lorna, Lorna Jane, what do you want to do when you grow up?’ And I said, ‘I want to be rich and famous’.”

     


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    A Perth accountant lost his defamation claim against a woman who posted negative comments about him on a Facebook page for British expats living in Western Australia.

    Barry McEloney, a chartered accountant with his own practice in Perth, argued he was entitled to more than $120,000 in damages because the comments were “defamatory statements for an improper purpose”.

    The District Court of Western Australia heard the women described McEloney as a “clown” and “rude and obnoxious” in a series of comments posted on the “Poms in Perth” Facebook page last year.

    McEloney argued before the court that the Facebook comments were defamatory and implied he was unprofessional, rude to clients, overcharged for his services and did not provide a good service.

    The defendant, Stephanie Massey, meanwhile argued her statements were the expression of an honest opinion made in the public interest.

    In her ruling, Judge Annette Schoombee said an “ordinary and reasonable reader” of the Facebook page would be under the impression it was a space where people were offering their opinions about various goods and services around Perth.

    “Ms Massey employed colourful language using words such as ‘clown’ and ‘shark’ which were perhaps over the top and exaggerated, but an ordinary reasonable reader of the Facebook page Poms in Perth would have understood that she was expressing her opinion about her specific dealings with Mr McEloney,” Schoombee said.

    “Accordingly, I find that the defence of honest opinion is made out in respect of all the statements made and conclusions offered by Ms Massey on the Facebook page of Poms in Perth.”

    As a result, McEloney was not successful in his claim for damages and the case was dismissed.

    David Rolf, associate professor at the University of Sydney’s Faculty of Law, told SmartCompany the accountant lost this case due to a number of factors.

    “The problem for the plaintiff was that several of the imputations were found by the judge to be true,” Rolf says.

    “If someone publishes something about you that is true, truth is a defence to defamation.”

    Rolf says Massey also successfully argued the Facebook posts were “fair comment”.

    “The other thing I thought was interesting about this case was the judge went on to find the imputations on the Facebook page were defensible as either fair comment or honest opinion,” he says.

    “The defence of fair comment is meant to be a very important for the freedom of expression… but it is highly technical and very rarely succeeds in practice. This is a rare example of a defence of fair comment succeeding.”

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

    SmartCompany was unable to contact Stephanie Massey for comment.


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    A former employee at NBN Co has had his unfair dismissal bid thrown out after he lost his job for refusing to enter into a payment plan to repay thousands of dollars in personal calls made from his work phone.

    The unnamed applicant applied to the Fair Work Commission after he was found to have incurred around $7500 in international call costs in August last year on his company-issued mobile phone.

    The applicant was notified about the phone bill and apologised to his manager, saying the calls were to family members in India.

    Further investigations by NBN Co found a further $3200 worth of international calls between August 24 and September 11, 2014.

     When investigations were extended, NBN Co uncovered a total of $22,630 in international calls incurred by the applicant from May to September 2014.

    The Fair Work Commission heard the applicant advised NBN Co he could not afford to pay back the phone bills as a lump sum, although he did pay $7500 in November last year.

    In February this year, NBN Co issued the applicant with a warning letter regarding the misuse of his mobile phone and directed him to repay the outstanding amount under a repayment plan.

    During negotiations over a repayment plan, NBN Co suggested a repayment plan that would see the outstanding money repaid by February 2016.

    However, the applicant argued NBN’s policies relating to mobile phone use were not accessible and, the next month, said he was withdrawing his offer to repay the money until he received a more agreeable repayment plan.

    After a number of meetings, NBN Co made a final offer for the repayment plan to the applicant but, when this was not accepted, he was advised his employment was terminated.

    In her ruling, Fair Work Commission’s deputy president Anne Gooley said it was unreasonable for the former employee not to enter into a repayment plan.

    “I do not consider that the mere existence of a debt provides an employer with a valid reason to terminate the employment of an employee,” Gooley said in her judgement.

    “However, I find in this case that there was no reasonable basis for the applicant to dispute the debt. As such, it was unreasonable of him not to enter into an agreement to repay the monies.”

    As a result, the former NBN employee’s case was dismissed.

    Sarah Lock, principal lawyer at Workplace Law Group, told SmartCompany workplace disputes involving company-issued mobile phones are very common.

    “Sometimes mobile phones are given to staff for personal use,” Lock says.

    “I’ve seen situations where that occurs.”

    Lock says the lesson in this case for small businesses is to have clear policies in place that outline what is expected of employees when it comes to company property.

    “In particular, is the phone just for work purposes or can it be used for personal use?” she says.

    “If you do not have a policy in place or it is not regularly reviewed and employees are not aware of this, then it is extremely hard for an employer to use the policy as a defence against this type of phone usage. It may even be useful for employers to consider pre-paid phone cards as a way of managing the employee’s usage.”

    A spokesperson for NBN Co told SmartCompany the government-owned company was pleased with the decision.

    “We are pleased that NBN was found to have handled the dismissal process appropriately,” the NBN spokesperson said.

    “As is always the case, we are reviewing the way we can further enhance the communication of our policies to our employees.”

    The former NBN Co employee could not be contacted for comment.


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    A company that provides technology and engineering services to blue chip clients in the coal industry, including many coal-fired power stations, has gone into voluntary administration.

    HRL is a public unlisted Australian-owned company that specialises in energy, technology, technical services and project development. The company operates from 12 sites and employs around 500 staff across the country.

    HRL Limited’s business operations include new technology development such as “coal gasification and waste to energy plants” and its subsidiary Driffield Energy has mining licences for reserves with an estimated 330 million tonnes of brown coal in Victoria’s Latrobe Valley.

    Ian Carson, Craig Crosbie and Stephen Longley of PPB Advisory were appointed as administrators of the company and its associated entities on October 27.

    The first meeting of creditors will be held in Melbourne on November 9.

    Urgent expressions of interest are now being sought to acquire the business and assets of HRL Technology, the technology arm of the company, according to an advertisement in the Australian Financial Review today.

    The ad describes HRL Technology as one of “Australia’s leading providers of engineering, consulting and testing services to the power, coal, energy, resources and manufacturing industries”.

    HRL Technology employs specialist engineers and scientists at the company’s laboratories and testing facilities in Mulgrave, Morwell and Brisbane.

    The subsidiary served a “strong client base of largely blue chip corporates including the majority of coal fired power stations”, according to the notice and recorded revenue for the 2014-15 financial year of $17 million.

    In a statement provided to SmartCompany, PPB Advisory said a large portion of the entire HRL Limited workforce will continue on as per normal while the administrators undertake an urgent assessment of the business.

    PPB Advisory partner Stephen Longley said the administrators will continue to liaise with parties that express an interest in the purchase of the business and assets.

    “In our role as administrators of HRL Limited, we will be capitalising on the work already underway, including the potential sale of existing parts of the group as a going concern,” he said.

    “I’d like to recognise the efforts of the directors and management team of HRL who have made every effort to restructure the group and undertake a sales process.

    “We intend to build on this to achieve a positive outcome for stakeholders.”

     


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    Glass manufacturer ACI Operations has been ordered to pay a former employee $20,400 after falling short of the appropriate notice of termination period by just two days.

    Anthony Cerin had been employed by ACI Operations since March 1996 but sustained a workplace injury in April 2009, which qualified him for workers’ compensation.

    The Federal Circuit Court in Adelaide heard in October 2012, ACI Operations advised Cerin his employment would be terminated the following month.

    While the notice of termination complied with workers’ compensation legislation, the court ruled the termination did not comply with the Fair Work Act because Cerin was entitled to a further two days’ notice.

    The Federal Circuit Court in Adelaide heard Cerin suffered a loss of $181.66 due to the two days’ notice he was entitled to.

    Federal Magistrate Denys Simpson described the lack of proper notice or pay in lieu as “somewhat bizarre”.

    “No satisfactory excuse for not complying has been provided,” Simpson said in his judgment.

    “From the court’s point of view, it would seem to be a storm in a teacup that should have been resolved at a very early stage.”

    As a result, ACI Operations has been ordered to pay Cerin $20,400.

    In addition, the company’s HR manager was fined $1020 for her role in not providing enough notice to the former employee, despite the court finding she was not being “heavily involved in the contravention”.

    Warwick Ryan, partner at Swaab Attorneys, told SmartCompany the lesson for business owners in this case is to get good legal advice from the outset.

    “A lot of managers expect HR to understand the law of employment,” Ryan says.

    “A lot of HR manager think they understand the law of employment. But when it comes down to technical questions, particularly where there are contracts involved, both parties’ beliefs are generally misplaced.”

    Ryan says businesses need to understand that employment law is a very complex part of Australia’s legal system.

    “Not because it is intellectually difficult, but because there are about two or three different sources of it – or more – often conflicting,” Ryan says.

    “If you have someone who’s under workers’ compensation, and you’re terminating them, then there are three or four different pieces of legislation which will have something to say about that and often the opposite to one another. And then you have the contract as well.”

    SmartCompany contacted ACI Operations for comment, but did not receive a response prior to publication. SmartCompany was unable to contact Anthony Cerin prior to publication. 


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    The Victorian government will back pay about 40,000 teachers and principals millions of dollars after the Federal Court ruled last week that the Victorian Department of Education and Early Childhood Development had unlawfully deducted about $20 million from teacher salaries for “contributions” to the cost of work laptops.

    The court ruled in favour of the Australian Education Union (AEU) Victoria’s argument that the “contributions” deductions from salaries constituted a breach of the Fair Work Act, which dictates that an employer can only make deductions from an employee’s salary in limited circumstances.

    The court heard the department had deducted fortnightly amounts of between $4 and $17 between 2009 and 2013 from the salaries of teachers and principals in Victoria who had signed up to take part in a scheme that provided them with a laptop.

    The laptops were primarily for professional use but the scheme permitted personal use as well.

    In a statement about the “landmark” case on Friday, AEU Victoria president Meredith Peace said laptops are “essential” for teachers and principals.

    “It is unreasonable to expect teachers and principals to pay for accessing their work computers,” she said.

    A department spokeswoman told SmartCompany this morning the department “will closely consider the court’s decision”.

    Will Snow, senior associate at Finlaysons, told SmartCompany it is a “complicated case”, but there had been an assumption made by the employer that employees were getting personal access to laptops.

    “The court made very clear distinction to say these laptops are required to do work with,” he says.

    “Because they are required to do work, the employer couldn’t deduct or require contributions to access the laptop.”

    Snow says deductions can be “tricky” for employers because the Fair Work Act states an employer can only deduct an amount from an employee if authorised in writing and if the deduction is principally something of benefit to an employee.

    Snow says common deductions include deductions for someone’s union membership or a social club.

    “Here, we’re not talking about salary sacrifice arrangements, we’re talking about deductions,” he says.

    “Employers have to be really careful in simply deducting amounts, for example if there’s been an overpayment one fortnight to think it is OK to deduct the amount the next fortnight.

    “Without employee agreement, that it would be unlawful.”

    Snow says when it came to deductions, employers need employee agreement and to have a discussion about an underpayment as quickly as you can.

    “Likewise if an employee damages a car or property, you can’t simply deduct value of that damage from their pay,” he says.

    “Many people do, but it creates legal risk. It can be useful having a clause about a deduction in a contract or enterprise agreement as well, which can assist to recover overpaid amounts.”

    Snow says a good starting point is for employers to think about what property is being used for work purposes.

    “For example, some workplace might have bring-your-own-device policy, where the employer reimburses for work-related use of phone,” he says.

    “Another issue which can occur is when an employer holds back annual leave on term of employment in order to satisfy an outstanding debt, and there are only very limited circumstances in which you can do that.

     “You want to be clear about how that’s being paid for, a straight deduction from pay has risks.”


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    A former employee at a global logistics business has been awarded $21,000 by the Fair Work Commission after she was sacked for allegedly telling a co-worker to “go and punch Stacey in the face”.

    Melanie Davidson began working for Visa Global Logistics in 2007, however was fired in May this year following an alleged telephone conversation that took place the week before.

    In a letter sent to Davidson the day after the incident, her employer also referred to an incident back in February where she had allegedly raised her voice and swore at another staff member.

    The matter was taken to the Fair Work Commission and, under cross examination, Davidson admitted to calling the employee a “fucking cunt” during the argument in February.

    However, the former employee said the comments she made during the telephone conversation, which happened shortly before she was dismissed, were meant as a joke and taken out of context.

    The commission heard the company made a “without prejudice offer” of $10,000 to Davidson shortly before she was dismissed, however, this was rejected.

    As a result, the former employee was paid four weeks of pay in lieu of notice.

    Visa Global Logistics told the Fair Work Commission it provided procedural fairness to Davidson by warning her “numerous times, formally and informally” about her conduct.

    During the hearing, Commissioner Jeff Lawrence said he accepted the comment about punching Stacey in the face was meant as a joke and, while it could have been misunderstood, it was not spoken directly to the employee concerned.

    “It is clear that there was no threat of violence or act of intimidating behaviour to the employer or another employee,” Lawrence said in his judgment.

    “The applicant had never met Stacey … In summary, I find that there was not a valid reason for dismissal.”

    As a result, Lawrence ordered Visa Global Logistics to pay Davidson $21,000.

     

    What are the lessons for small business owners?

    Employment lawyer Peter Vitale told SmartCompany this case shows how an employer’s decision to terminate an employee needs to be made on a “sound and reasonable conclusion” of serious misconduct.

    “The employer must also implement disciplinary measures consistently among its workforce,” Vitale says.

    While the employee in this case was found to have used inappropriate language, Vitale says the behaviour fell short of misconduct because it did not constitute “an actual threat of violence”.

    “The employer also relied on a previous warning given to the employee for using offensive language, but the commission found that warning was not appropriate,” he says.

    “In this case, as far as the law is concerned, the employer simply got it wrong.”

    SmartCompany contacted Visa Global Logistics but did not receive a response prior to publication.

    SmartCompany was unable to contact Melanie Davidson for comment. 


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    The former owners of Darwin cafe have been ordered to pay a fine worth more than 10 times the amount owed to two former underpaid workers, following a ruling by the Federal Court.

    The Federal Court imposed a $73,000 fine on Moya and Peter Buckley, as former owner-operators of the Java Spice Cafe in Darwin, after investigations by the Fair Work Ombudsman found two former Taiwanese backpackers had been underpaid approximately $7000.

    In imposing the penalty, Federal Court Judge Stewart Brown came down hard on the former business owners, likening them to “unscrupulous operators”.

    “In my view, backpackers and the like are particularly susceptible to being exploited by the unscrupulous operators in the hospitality industry,” Brown said, according to a statement from the Fair Work Ombudsman.

    Brown found the conduct of the business had been “exacerbated by its lack of co-operation” and “disregard” for the Fair Work Ombudsman.

    The Buckleys have also been ordered to back pay amounts of $5805 and $1605 to the two former workers, respectively.

    Rachel Drew, partner at TressCox Lawyers, told SmartCompany this morning the penalty is “unusually high” for an underpayment case.

    “The penalty reflects that the individual who owned and operated the cafe both failed to co-operate in a meaningful way with the Ombudsman and then ignored orders from the court,” she says.

    “It’s a combination of lack of co-operation and lack of acknowledging the significance of ombudsman’s and court’s request.”

    Drew says she thinks the business owners are likely to be “very surprised” to learn the amount of the penalty.

    “The directors or owners may also be very surprised to know they are personally liable for whole of that penalty and Fair Work Ombudsman is entitled to recover the penalty from personal assets,” she says.

    Drew says it is always a risky decision for employees to ignore the Ombudsman and the court.

    “They’ve run the risk of ignoring the Ombudsman and the court, and they’ve not done well,” she says.

    “It’s important to know that even though backpackers or 417 visa holders are only in Australia for limited period, that their rights will be enforced by the courts,” she says.

    Will Snow, senior associate at Finlaysons, also thinks this is an important decision and a significant penalty on behalf of the Ombudsman.

    “It’s effectively a penalty of 10 times what they were found to have owed,” Snow told SmartCompany.

    Snow says the “hidden story” in this case is the inherent risk of engaging in such behaviour, especially given the informal networks that may exist between backpackers.  

    “You can just imagine word of this issue spreading through networks of discussions within itinerant travelling community,” he says.

    Snow says it is in the best interests of small business owners to co-operate with the Ombudsman.

    “You can’t chose to not get involved, always explain your personal circumstances,” he says.

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


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    Energy retailer Simply Energy has been hit with $80,000 in penalties from the Australian Energy Regulator (AER) over claims it signed customers up to gas and electricity contracts without their consent.

    Simply Energy has paid four infringement notices issued by the national regulator in relation to four instances in New South Wales and South Australia in which the AER believes the company did not have explicit, informed consent from customers that were entered into contracts.

    The AER said in a statement the alleged incidents occurred in 2013 and 2014 when Simply Engery sales consultants made unsolicited phone calls to consumers to convince them to switch to Simply Energy from their current supplier.

    The regulator says in each instance, the consumer on the end of the line was “vulnerable” and did not fully understand the purpose of the call.

    One customer was an 88-year-old with hearing difficulties, while another was a 14-year-old.

    “Retailers must ensure that consumers fully understand the energy offer being made to them and that they are able to give informed consent to enter into that contract,” said AER chair Paula Conboy in the same statement.

    “The requirement to obtain explicit informed consent from customers is an important protection under the National Energy Retail Law.”

    Simply Energy reported the incidents to the AER as a result of its reporting obligations under the Retail Law and National Energy Retail Rules.

    However, the payment of an infringement notice is not considered to be an admission that the rules have been breached.

    A spokesperson told SmartCompany the company alerted the AER to the issue as soon as it became aware and has co-operated fully with the regulator’s investigation.

    “We have taken all appropriate steps to ensure affected people have not been disadvantaged,” the spokesperson says.

    “Simply Energy has enhanced relevant processes to reduce the likelihood of these issues reoccurring.”

    Other energy suppliers have also paid penalties this year for not obtaining explicit informed consent from customers to enter contracts.

    In March, EnergyAustralia was penalised $500,000 by the Federal Court for not obtaining the necessary consent before transferring 27 consumers in South Australia and the Australian Capital Territory to new energy plans.

    Rohan Harris, principal at law firm Russell Kennedy, previously told SmartCompany regulators, including the Australian Competition and Consumer Commission, were paying close attention to the actions of energy providers.

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

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

    Harris said any business that may be dealing with vulnerable consumers must also be careful.

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

    Lauren Moroney, senior lawyer at LegalVision, agrees, telling SmartCompany today this case represents an important lesson for all businesses, especially those that deal with consumers. 

    "You need to ensure you provide your customers with sufficient opportunity to review your contract and have their informed consent, preferably in writing, before entering into any given contract for the sale of goods or services," Moroney says. 

    "Obtaining a copy of their driver licence or another form of identification is also strongly recommended."

    Moroney says businesses that sell goods and services to consumers must ensure they comply with the Australian Consumer Law (ACL). 

    "Failure to comply with the ACL can result in significant penalties and enforcement action against a business so it is really important for a business to fully understand its legal obligations," she says. 

    Moroney also recommends businesses have in place well-drafted terms of trade and to complete the necessary due diligence with customers to ensure all contracts are properly entered into.


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    Christmas hamper provider Chrisco acted unfairly under Australian Consumer Law with its “headstart plan”, according to a Federal Court ruling.

    The plan required customers to allow Chrisco to continue withdrawing funds from the customer’s account even after the customer had paid for the goods in full.

    The “headstart” term would apply unless the customer opted out, with the money withdrawn from the customer’s bank account set aside for future orders.

    If the customer requested a refund for any additional money paid to Chrisco, the business would refund the amount without any interest.

    Chrisco argued because of the demographic of its customers, the “headstart” term in its contracts benefited consumers because it allowed them to potentially pay for future orders in smaller instalments.

    However, the Federal Court ruled on Tuesday the benefit to customers was “not substantial”.

    “I consider that in all of the circumstance of the Headstart term and Chrisco’s contract, the term was unfair,” Justice James Edelman said in his ruling.

    The Australian Competition and Consumer Commissioner Sarah Court said she hopes the judgment will be a warning to businesses thinking of doing the wrong thing.

    “The court’s findings send a strong message to traders that they must comply with all of their obligations under the Australian Consumer Law,” Court said.

    “Purchasing goods by way of a lay-by agreement is a convenient way to shop for many Australian consumers, particularly in the lead-up to Christmas. Businesses that use lay-by as a method of sale need to ensure that they are meeting their ACL obligations to their customers.”

    Rohan Harris, partner at Russell Kennedy, told SmartCompany businesses must ensure they are treating consumers fairly and acting in accordance with their obligations under Australian Consumer Law.

    “This is a perfect example, particularly with unfair contract term laws and the specific requirements around lay-by agreements,” Harris says.

    “Those laws are there for this very scenario where it appears consumers may have been treated unfairly.”

    Harris says businesses need to understand the competition watchdog likes consumers to get what they pay for, and will take action if it suspects that isn’t happening.

    “I’m not surprised the ACCC pursued it,” he says.

    “Again, you’ve got to look at what’s fair and what’s not fair.”

    In a statement, Chrisco said customers can opt out of the "headstart" term. 

    "The headstart term in Chrisco's 2015-16 agreements has been substantially reworded to make it clearer for customers," Christco said. 

    "We are proud of the role that we play in helping our customers remove the stress and worry of big bills and debt so they can enjoy a magical Christmas." 


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    Small businesses across Australia are being warned to be careful when signing new contracts within the next 12 months as businesses of all sizes prepare for the introduction of laws to protect smaller firms from unfair contract provisions.

    Amended legislation to extend unfair contract term protections to small businesses was passed by the parliament in October and the legislation received Royal Assent yesterday.

    This means the protections will come into effect in 12 months time from the date of Royal Assent, on November 12, 2016.

    The legislation, which was an election commitment of the Abbott government, applies to small businesses that employ less than 20 people.

    Amendments put forward by the Greens in the Senate mean that small businesses negotiating a contract that does not exceed $300,000 in value – or $1 million for contracts longer than 12 months will be covered by the legislation.

    The bill will render unfair terms in standard form contracts with small business void and are intended to create a more level playing field between smaller and larger operators.

    However, Peter Strong, executive director of the Council of Small Business of Australia, told SmartCompany this morning there are concerns that some larger firms will attempt to sign off on contracts with small firms before the legislation is introduced to avoid the new provisions.

    Strong says this would be particularly worrying if the contracts that are signed cover multiple years.

    “Don’t let them force you into a long-term contract,” Strong says to small business owners.

    Strong says the Australian Competition and Consumer Commission will be monitoring the implementation of the new protections.

    “If you feel you are being unfairly coerced, contact the ACCC,” he says. 


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    A vast number of laws and regulations govern employment relationships in Australia. Despite the best intentions, your business may be in breach of few of them. Each contravention of Australia’s key employment legislation, the Fair Work Act 2009, exposes your business to penalties of up to $54,000 and up to $10,800 for individuals.

    Below are six problems that we come across most often. How does your business stack up?

     

    1. Using unpaid ‘interns’ to do productive work

    Unpaid ‘internships’ are an increasingly attractive option for Australian students and jobseekers to get a ‘foot in the door’ of certain businesses and industries and to gain experience. They are attractive to some businesses as well, particularly startups.

    Beware though, if an ‘intern’ is not participating in a recognised school program or tertiary degree requirement and is performing productive work for your business, you may unwittingly create an employment relationship. If this is the case, unless your business is paying and otherwise treating the intern like an employee, you are at risk of breaching the National Employment Standards in the Fair Work Act in addition to minimum award conditions. If you are not sure about the status of an intern in your business, seek advice.

     

    2. Failure to consult with employees about a proposed workplace change

    Around 60% of Australian workers have their minimum employment conditions underpinned by a modern award. Each award contains a term requiring employers to consult with employees where there has been a “definite decision” to introduce major changes that are likely to impact employees.

    You may be aware of the need to consult award-covered employees regarding redundancies. However, it is also the case that employers of award-based employees are required to consult regarding changes relating to job structure, work availability, hours of work, promotions, training and relocations.

    Consultation is not just a box to be ticked after a decision has been made. Rather, courts and the Fair Work Commission have said that consultation is about providing the individual with a real opportunity to influence the decision maker and should be taken seriously. Failure to consult, or consult adequately, may be a breach of the relevant award. In turn, a proven breach of an award condition will be a contravention of the Fair Work Act.

     

    3. Failure to provide for allowances owing under an award

    In addition to minimum wages, penalties and overtime, many awards entitle employees to allowances. For example, the Clerks (Private Sector) Award 2010 requires employers to provide employees with a meal or pay them $14.65 if they are required to work more than one-and-a-half hours of overtime without 24 hours notice.

    Many employers pay over (sometimes well over) the minimum award rate of pay and seek to rely on the higher payment to cover for wages, allowances, penalties and overtime. However, the Fair Work Commission and courts have confirmed that unless a written employment agreement specifies an over-award payment is intended to cover those specific minimum entitlements, award entitlements will be actually payable on top of the higher rate of pay the employee is already receiving.

     

    4. Failure to pay leave loading on termination payments

    Most employers understand they are required to pay employees their accrued unused annual leave upon termination. However, as recently confirmed by the full court of the Federal Court of Australia, accrued annual leave balances at termination must be paid at a rate that includes any applicable leave loading - typically an extra 17.5 per cent on top of the employee’s hourly rate of pay. Failure to pay leave loading on termination will be an underpayment under and breach of the relevant award or enterprise agreement, and a contravention of the Fair Work Act.

     

    5. Not keeping adequate employee records

    The Fair Work Act requires employers to maintain employee records for seven years from the date the record is made. The records must be kept even after employment ceases. The kinds of records employers are required to keep are those concerning pay, overtime, averaging arrangements, leave, superannuation contributions, individual flexibility arrangements, guarantee of annual earnings, termination of employment and transfer of business matters. The records need to be accurate and legible. They must also be provided to an employee upon request.

     

    6. Not providing each employee a Fair Work Information Statement upon commencement of employment.

    The Fair Work Act requires employers to ensure all employees receive a copy of the ‘Fair Work Information Statement’ before, or as soon as practicable after, the employee commences employment. This commonly breached requirement is easily fixed. Visit the Fair Work Ombudsman’s website, download the Fair Work Information Statement and make it part of your standard operating procedure to include it with each employee’s written employment agreement or in their induction pack.

    So, how do your business’s employment practices stack up against these six common issues? Undertaking a review now may save you and your business much effort and expense in the future.

     

    Evan Willis is a solicitor in the workplace relations and safety practice group at Holding Redlich in Melbourne. 


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    The vast majority of small businesses don’t have adequate workplace policies in place, according to research published today by legal startup LawPath.

    A survey of more than 500 Australian small businesses found 77% of businesses do not have established workplace policies for issues ranging from drug and alcohol use to social media.

    In addition, around 40% of the businesses LawPath surveyed do not have employment contracts for part-time, full-time or casual employees.

    The biggest offenders were businesses operating as a partnership, with 91% of businesses operating under this structure reporting they do not have employment contracts.

    Read more: Six employment laws your business may be breaking

    While 61% of the SMEs surveyed have hired contractors, 17% did not have contract agreements.

    Also 63% of respondents conducted business online but just over 20% did not have website terms and conditions.  

    Damien Andreasen, chief executive of LawPath, told SmartCompany the number of small business owners operating without adequate workplace policies came “as a bit of a shock”.

    “What this tells me is it’s difficult to understand all the obligations you have as a small-to-medium-sized business owner,” Andreasen says.

    “Especially around employment contracts, you think that is something that would be fairly well known that you need some sort of agreement in place outlining how that engagement works. Similarly, with workplace policies – these are the standards a business sets.”

    Andreasen says he expects the cost of drawing up professional contracts often deters small business owners from having the correct documents and policies.

    “The traditional legal model has always been complex, time-consuming and very expensive for small-to-medium businesses,” he says.

    “There’s always been a bit of a fear factor and them putting their head in the sand. It’s a huge cost for an early-stage company.”

    However Andreasen says it is critical for SMEs to have employment contracts and workplace policies in place in case someone injures themselves at work or there is a dispute over intellectual property.

    The lead-up to Christmas is also an important time to review workplace policies, according to Andreasen.

    “If you don’t have your drug and alcohol policy in place, those elements could get you in trouble,” he says.  


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    An international financial services company has been rebuked by the Australian corporate watchdog after publishing a media release that said it was “normal practice” for a business’s financial services licence to be cancelled while undergoing a restructure.

    Formax recently claimed in a media release that the licence suspension of its wholly-owned subsidiary, Australian Capital Markets Advisory Services, would be lifted once the company’s restructure had been finalised.

    The media release also claimed this sort of suspension is normal practice, according to the Australian Securities and Investments Commission.

    However this is untrue, with ASIC suspending the licence of ACMAS back in August because it had ceased to provide the over-the-counter financial services outlined in its licence.

    ASIC commissioner Cathie Armour said in a statement Formax’s media release was inaccurate and had the potential to mislead investors.

    “ASIC undertakes all action for good reason,” Armour said.

    “It is important that industry and investors understand those reasons. In this case, we were concerned to discover an overseas parent commenting in a way that misrepresented the action ASIC had taken and was likely to mislead investors.”

    While the original suspension was due to be lifted last month, ASIC has decided to extend the suspension of ACMAS’s financial services licence until November 27.

    ACMAS’s parent company has offices in Shanghai, Hong Kong, Vietnam, India, Thailand, New Zealand and the UK.

    In a statement published on Formax’s website last month, the company said it took the suspension of its subsidiary “very seriously” and is taking steps to put in place proper compliance processes.

     

    Issuing inaccurate media releases can land businesses “in hot water”

    Nicole Reaney, director of InsideOut Public Relations, told SmartCompany this situation shows how inaccurate or false statements “just ask for trouble”.

    “It’s only a matter of time before that gets you into hot water,” Reaney says.

    “Whenever you issue a company statement, having the right checks and balances from various perspectives is essential, from legal to marketing to product to communications. Media statements will always be reviewed by relevant regulators.

    “Sometimes, it’s in an organisation’s best interests to avoid issuing a release in the first instance.”

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


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