Articles on this Page
- 11/19/15--05:28: _Aldi ordered to pay...
- 11/22/15--03:17: _Jetstar and Virgin ...
- 11/22/15--05:00: _Pizza Hut hit with ...
- 11/22/15--05:22: _Make It Mine hit wi...
- 11/22/15--05:37: _Arnott’s pays $51,0...
- 11/24/15--05:16: _Epharmacy Group hit...
- 11/25/15--04:26: _Uncle Tobys oats ma...
- 11/29/15--04:34: _Blueberry farm to b...
- 11/30/15--04:36: _Meriton Group dismi...
- 11/30/15--05:15: _ACCC to push for gr...
- 11/30/15--05:29: _Day spa chain close...
- 11/30/15--09:41: _The Community Netwo...
- 12/02/15--03:58: _Four things your bu...
- 12/02/15--04:50: _Restaurant caught u...
- 12/03/15--03:33: _Competition issues ...
- 12/03/15--05:17: _High Court rules fo...
- 12/07/15--10:25: _Members-only deals ...
- 12/08/15--10:05: _Simpler retail and ...
- 12/09/15--10:06: _ACCC takes Woolwort...
- 12/10/15--04:20: _Woolworths defends ...
- 11/22/15--03:17: Jetstar and Virgin caught out for overlooking mobile commerce
- 12/03/15--03:33: Competition issues loom large for digital disruptors
- Review your structure – does it facilitate price-fixing between competitors?
- Are you engaging in third line forcing?
- Does your website boast complete transparency for consumers?
- Is the total price of goods and services obvious or obfuscated?
- Is there a risk that some of the images you display are too good to be true, leaving you open to accusations of misleading conduct?
- Are your online terms and conditions clear and fair?
A former Aldi manager has been awarded more than $37,000 by the Fair Work Commission after she was unfairly dismissed in June over alleged conduct towards fellow employees.
Therese Schieh started working for Aldi in 2006 and was made a manager of the supermarket’s Chadstone store in November 2013.
In January this year, Fair Work heard Schieh received a performance review that noted she was a “great trainer and leader”.
However five months later, Aldi terminated her employment over issues associated with her conduct.
After the former manager lodged an application for unfair dismissal, the Fair Work Commission was told by Aldi that Schieh belittled and bullied “certain employees” and used CCTV footage to “surveil staff members”.
Aldi argued that because of these reasons, the dismissal was justified, citing the need to protect the welfare of other employees and a high staff turnover rate.
The commission heard allegations that Schieh left staff members demoralised and, at times, in tears.
But Schieh rejected these claims, telling the commission she was a firm manager but not a harsh or unreasonable boss.
In her ruling, deputy president Anne Gooley said she was unable to find evidence that Schieh bullied or belittled employees.
In regards to the clams of monitoring staff using Aldi’s CCTV footgae, Gooley ruled the policies submitted by Aldi were “not clear” and therefore she could not determine if the former manager had breached company policies.
The commission subsequently ruled there was not a valid reason for the termination of Schieh’s employment because while she was given an opportunity to respond to the allegations against her, she was not provided with an opportunity to respond to the reasons for the dismissal.
“What occurred was inconsistent with Aldi’s own policy,” Gooley said in her judgment.
“The termination of her employment was a disproportionate response to that conduct.”
As a result, Aldi was ordered to pay Schieh $37,450, minus tax, along with $3557.75 to her superannuation fund.
A spokesperson for Aldi told SmartCompany the supermarket has accepted the commission’s ruling.
“Aldi Australia will abide by the decision of the Fair Work Commission and will not be commenting further,” the spokesperson said.
SmartCompany was unable to contact Schieh for comment.
The Federal Court found both airlines had contravened sections 18 and 29 of Australian Consumer Law by drip pricing, and while the airlines now avoided the practice on their websites, their mobile sites failed to keep up.
Drip pricing is the practice of disclosing only incrementally the various fees and charges consumers must pay.
Typically these take the form of booking fees, or fees for using credit cards, that are revealed only when the consumer has reached the end of their online purchase. Especially when associated with a seductively attractive headline price, this practice misleads consumers about the true cost of the transaction.
It also distorts the competitive process by disadvantaging those firms that do not mislead consumers in this manner.
Although sometimes the additional costs involve seem minor when compared with the total cost of the transaction, this is not always the case.
For example, using Jetstar’s website before May 2013, a listed fare of A$49 would have cost a consumer booking the fare using a non-Jetstar branded credit card a total of A$66.
This represents almost 35% more than the headline price - something to which consumers were not alerted until they had reached the payment stage of the booking process.
The present case concerned the websites, mobile sites and email communications of both Jetstar and Virgin. In the case of Jetstar, the Court found that its website in May 2013 contravened the misleading or deceptive conduct and false representation provisions of the ACL.
Both Jetstar and Virgin’s mobile sites were also found to contravene the ACL.
However, the Court found that neither Jetstar’s nor Virgin’s current websites did so because early in the booking process they now include (no doubt influenced by the ACCC’s vigilance) an “explicit disclosure of the existence of the booking and service fee and of its quantum”.
The effect of these disclosures is to prevent those sites from misleading consumers or making false representations.
On the other hand, their mobile sites were found to have contravened the law because they did not do this.
Rather, the consumer needed to undertake what (when referring to Virgin’s site) the judge described as “a series of relatively annoying steps … to ascertain the existence of the booking and service fee” and when it would be charged.
The morale of this case for online sellers is clear: if they wish to charge consumers more than their headline price they must make this very clear to them and do so very early in the purchasing process, both on their websites and mobile sites.
If they do not, they are likely to contravene sections 18 and 29 of consumer law.
However, taking this step will give sellers protection only in relation to those provisions.
If the total price that a consumer must pay for a product or service is divided into components, such as a fare + a booking fee, then they need to also be alert to the operation of section 48 of the law.
This prohibits what is often referred to as “component pricing” - effectively disguising the actual cost by dividing it into a number of components.
Importantly, the Act requires the supplier to prominently specify what the consumer is required to pay as a single amount.
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Pizza Hut is the latest brand to be hit with allegations of sham contracts, with reports some of the pizza chain’s franchisees could be paying delivery drivers as little as $12 an hour.
Under a Pizza Hut contract obtained by Fairfax, a driver can earn $6 for a delivery and complete no more than two deliveries per trip.
This is despite the Pizza Hut enterprise bargaining agreement stipulating that full-time delivery drivers are to be paid just over $20 an hour, while casual employees are to be paid around $25 per hour.
The allegations come as Pizza Hut franchisees fight their parent company Yum! Restaurants in the Federal Court.
Several franchisees have launched a class action lawsuit and are seeking damages for lost profits due to Pizza Hut’s discount pricing strategy, which was introduced in July last year.
The pizza chain is the latest in a string of Australian businesses to come under fire recently over the terms of their employment practices, including 7-Eleven.
Just last week a security company was fined $20,400 by the Federal Circuit Court for knowingly allowing one of its contractors to underpay a guard $11,189.
In the same week, the Fair Work Ombudsman announced four cleaners who worked at Myer’s Melbourne CBD and Doncaster stores would be reimbursed almost $12,000 after the cleaning company they worked for paid them a flat rate of $20 an hour.
The employer watchdog has vowed to keep all cleaning contractors under scrutiny through ongoing and unannounced spot checks.
Shane Wescott, solicitor at Patron Legal, told SmartCompany he believes regulators will be keeping a close eye on contract terms in the wake of these cases, as well as the allegations against Pizza Hut.
“I think we will see the Fair Work Ombudsman crack down [on this issue],” Wescott says.
“They’ve indicated this is an area that they are going to focus on. I also think that, generally, companies are always increasingly looking to outsource their employment law obligations – be that through contracts directly or through labour hire agencies.”
Wescott says the spate of recent cases involving contractors also highlights the complexity surrounding who is an independent contractor and who is an employee.
“With the state of the law in terms of what is an independent contractor and what is an employee, it is currently unclear – which could lead to more cases like this,” he says.
A spokesperson for the Fair Work Ombudsman told SmartCompany the watchdog is aware of the allegations against Pizza Hut and is “currently making inquiries”.
“As a regulatory agency, we treat allegations of sham contracting seriously,” the spokesperson said in a statement.
“Last financial year, the Fair Work Ombudsman initiated six legal matters involving involving sham contracting - approximately 12% of our litigations for 2014-15.”
Pizza Hut's general manager Graeme Houston told SmartCompany in a statement the business is investigating claims that some franchisees are not acting in accordance with the existing enterprise agreement with the Shop, Distributive and Allied Employees Association.
“We have not seen the contract referred to in media coverage and therefore cannot make specific comments at this stage,” Houston said.
“We take these claims very seriously and will ensure our investigation is a priority for the business.”
*This article was updated at 12.03pm to include a statement from Pizza Hut
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Appliance rental company Make It Mine has been hit with $1.25 million in penalties for breaching consumer credit laws, including its responsible lending obligations.
The Federal Court handed down the penalty last week following a decision in April that found the business had failed to disclose important information to customers.
Make It Mine supplies computers and household whitegoods to people on instalment plan contracts.
The court found Make It Mine failed to inform customers of the cash price of the goods they were purchasing via instalments, as well as the total amount of interest to be paid for contracts entered into between 2010 and 2013.
In addition, Make It Mine was found to have failed to make enquiries into the financial position of more than 20,000 customers.
While handing down the penalty, Justice Jonathan Beach said the consumer leasing industry is growing and is capable of “serious adverse impacts on the most vulnerable members of the Australian community”.
“Commercial behaviour leveraged off the vulnerability of others will be closely scrutinised and disciplined,” Beach said.
Make It Mine has promised to work with an external compliance consultant and report back to the corporate watchdog to ensure future compliance with Australia’s consumer credit laws.
ASIC deputy chair Peter Kell said in a statement he hopes the penalty will serve as a warning to those in the consumer lending industry.
“It is imperative that consumer lease providers disclose all information necessary to enable consumers to make an informed decision, and comply fully with their responsible lending obligations – including making proper enquiries about the consumer’s income and living expenses,” Kell said.
“Relying on consumers being able to make payments as long as they are in receipt of government benefits is not a substitute to making these enquiries.”
The maximum penalty for a company breaching responsible lending laws is $1.7 million for each contravention.
Make It Mine founder and chief executive Andre Lang said in a statement he acknowledges the mistakes the company made and takes full responsibility for them.
“When the business first commenced I was 21, inexperienced and we lacked internal expertise,” Lang said.
“We didn’t seek the best available industry advice in relation to our compliance requirements, we made some mistakes, and as a result we are now dealing with the consequences. What I can assure our customers is that these breaches were unintentional and that we take our compliance responsibilities very seriously.”
Lang said Make It Mine is investing “significant resources” into proper systems and procedures, as well as staff training, to ensure the concerns raised by the court are not repeated.
Ursula Hogben, principal and general counsel at LegalVision, told SmartCompany credit licensees have to comply with the National Consumer Credit Protection Act, which is only six years old.
“It’s obviously an increasing area of regulatory focus as they’ve recently amended the Act,” Hogben says.
“Under it, you’re required to do three things. You’re required to make reasonable enquiries about a customer’s financial situation, then verify that, and then make an assessment whether the credit is suitable.”
“The requirement for Centrelink payments means people might need financial assistance, so it’s hard to reconcile on one hand that you’re required to be comfortable about a consumer’s financial situation and they’re suitable – while on the other hand you know their main source of income might be from the government.”
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Biscuit maker Arnott’s has paid $51,000 in penalties to the Australian Competition and Consumer Commission in relation to the consumer watchdog’s concerns it was misleading shoppers about how much fat is in Shapes.
The hefty penalties were contained in five infringement notices issued by the ACCC, which said in a statement this morning it had reasonable grounds to believe Arnott’s had made a false and misleading representation in breach of Australian Consumer Law.
The ACCC said the representations in question were made on four varieties multipacks of Shapes Light & Crispy biscuits between October 2014 and July 2015.
The packaging said the product contained “75% less saturated fat”, which was a comparison to potato chips that are cooked in 100% palm oil.
But the ACCC said this qualification was printed on the bottom of the pack in fine print and it is likely that consumers could have been mislead into believing the comparison was to Arnott’s original Shapes biscuits.
The ACCC also said that given around 20% of potato chips in Australia are cooked in palm oil, the representation could be misleading.
“Consumers should be able to trust the claims that businesses made to see their products,” said ACCC chairman Rod Sims in the statement.
“Small print disclaimers cannot correct false or misleading representations, which are made in a prominent way in advertising or on packaging.
“Businesses must ensure that any comparison claims they make are accurate and based on meaningful comparisons for consumers. This is particularly the case regarding claims that involve healthier eating.”
Arnott’s has also entered into a court enforceable undertaking with the ACCC that it will not engage in similar conduct for the next three years and will publish a corrective notice on its website and in national publication, Foodmagazine.
However, the payment of an infringement notice is not an admission that a company has contravened Australian Consumer Law.
In a statement provided to SmartCompany this morning, Arnott’s said it acknowledges “it was not made sufficiently clear to consumers that Shapes Light & Crispy was intended to be compared to potato chips, rather than the original Shapes savoury biscuits”.
“Shapes Light & Crispy actually contain on average 60% less saturated fat than original Shapes,” the company said.
"Arnott's further acknowledges the ACCC's concerns about the appropriateness of this comparison where approximately 80% of potato chips in Australia are not cooked in palmolein oil.
"Arnott's believed that consumers were familiar with this claim due to its long term use on some potato chips. Unlike the original Shapes range, the Light & Crispy range contains potato flakes and has a taste, texture and appearance similar to potato chips."
The company said the packages that contained the claim have been phased out, however, the product recipe and ingredients remain the same.
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The company behind the Chemist Warehouse and My Chemist websites has been hit with $32,400 in penalties by the Australian Competition and Consumer Commission for allegedly making false and misleading representations.
The competition watchdog claims Epharmacy Group potentially mislead consumers into believing they would save money off the recommended retail price for certain products, when in fact the products in question had never been offered at the RRP.
Several Healthy Care products were listed on the Chemist Warehouse, My Chemist and Epharmacy websites along with the words “don’t pay RRP $39.99” and “save $18”.
Epharmacy Group removed the alleged misrepresentations after becoming aware of the competition watchdog’s concerns.
However the ACCC still issued three infringement notices, costing Epharmacy Group a total of $32,400.
ACCC commissioner Sarah Court said she hopes the penalties send a “strong message” to retailers who claim consumers are saving money on recommended retail prices.
“Businesses using statements such as ‘savings’ or ‘discounts’ when comparing a sale price to the RRP of goods and services suggest to potential customers that they are getting a good deal because the sale price is less than the RRP,” Court said.
“But if the product has never been previously sold at the RRP, or the RRP does not reflect a current market price, then this type of comparison misrepresents the savings that may be achieved.”
Court said customers rely on comparative pricing to find the best deals.
“If in fact there are no genuine savings, businesses are misleading consumers and risk enforcement action by the ACCC,” Court said.
Rohan Harris, principal at law firm Russell Kennedy, told SmartCompany this case contains a number of lessons for business owners.
“As always, any business has got to be careful it’s not misleading the public, particularly around issues of price representations,” Harris says.
“It’s also a potential issue for publishers, too, because this website seems to be operated by a related but different party to the retailers. So if you’re publishing advertising on behalf of other parties, you’ve got to make sure you’ve got appropriate protections for them as well.”
Harris also points out this case is an example of how the ACCC has the power to issue infringement notices – which are still a “relatively new type of enforcement mechanism”.
“This is an administrative procedure that can be implemented without any finding of liability,” Harris says.
“It’s another way the ACCC can achieve its objectives of compliance with Australian consumer law and educate the public and other retailers about their responsibilities.”
SmartCompany contacted Epharmacy Group but the business declined to comment.
*This article was updated at 12.10pm to include Epharmacy Group's decision not to comment
The manufacturer of Uncle Tobys oats has been hit with more than $30,000 in penalties for allegedly misleading consumers about the amount of protein in its “quick sachets” oats.
Cereal Partners Australia has paid fines worth $32,400 after the Australian Competition and Consumer Commission found the company potentially contravened competition law.
Uncle Tobys “quick sachets” oats contained the statement “natural source of protein” while its “traditional oats” product contained the statement “naturally rich in protein”.
However the packaging on both products contained the disclaimer “when prepared with ½ or 2/3 cup of skim milk” in fine print.
These representations were also made in television commercials for Uncle Tobys oats.
The ACCC claims that by presenting the word “protein” and “superfood” prominently on the packaging, Cereal Partners Australia was suggesting Uncle Tobys oats contained a significant amount of protein when this is not the case.
ACCC chairman Rod Sims said in a statement truth in advertising is a “priority enforcement area” for the competition watchdog.
“Consumers should be able to purchase food products based on accurate health and composition claims,” Sims said.
“While the ACCC acknowledges that oats have many health benefits, on their own they are not high in protein, contrary to the representations made about Uncle Tobys products. “Businesses should be aware that a fine print disclaimer is insufficient to correct or qualify a prominent representation on packaging or in advertising that is false or misleading.”
Earlier this week, biscuit maker Arnott’s was hit with $51,000 in penalties for making claims about the amount of fat in a variety of its Shapes biscuits.
Yesterday, the company behind the Chemist Warehouse and My Chemist websites was stung with $32,400 in penalties for making claims that consumers were saving money on a product’s recommended retail price when the product was never offered at the RRP.
Rohan Harris, principal at law firm Russell Kennedy, previously told SmartCompany the ACCC is eager to educate retailers about their responsibilities.
“As always, any business has got to be careful it’s not misleading the public, particularly around the issues of price representations,” Harris said.
Cereal Partners Australia is a joint venture between Nestle and General Mills.
SmartCompany contacted Nestle but did not receive a response prior to publication.
The operators of several blueberry farms in New South Wales have been forced to back-pay almost 140 seasonal workers more than $46,000 after an investigation by the Fair Work Ombudsman.
The underpayments occurred between July 2014 and January this year, with the largest underpayment sitting at around $960.
Most of the employees were overseas backpackers who were in Australia on 417 working holiday visas.
K S Benning & Sons was audited in March this year by the employment watchdog, which found the business’s owners were failing to pay the correct wages and entitlements under the Horticulture Award.
The Fair Work Ombudsman alleges the business did not pay correct penalty rates and casual loadings and failed to keep appropriate employment records.
The owners of K S Benning & Sons have apologised and agreed to repay all outstanding wages and entitlements.
In addition, the employers have signed an enforceable undertaking with the Fair Work Ombudsman, agreeing to hire an external account to audit their books and make a $5000 donation to charity.
Fair Work Ombudsman Natalie James said in a statement an enforceable undertaking was used in this instance because enforceable undertakings have been effective in the past and avoid the need for costly court proceedings.
“They are used where we have formed a view that a breach of the law has occurred, but where the employer has acknowledged this and accepted responsibility and agreed to co-operate and fix the problem,” James said.
James says if businesses have any doubts about their workplace practices they should contact the Fair Work Ombudsman in order to ensure they are complying with the law.
Peta Tumpey, partner at TressCox Lawyers, told SmartCompany this case demonstrates the importance of businesses familiarising themselves with the relevant industry awards.
“Failure to comply or be familiar to the awards that apply to your industry are far more onerous than simply familiarising yourself with the award and complying with it,” Tumpey says.
“They can be long documents… they have many subsets of types of employees and types of employees in those industries, but at the end of the day we have the benefit of the award system that helps us to decide what to pay.
“A bit of time taken to do that is far better than having these sorts of audits and the bad publicity hurts the employer in the future.”
Tumpey also points out the donation, which is part of the blueberry farm’s enforceable undertaking, is “unusual”.
“I’ve never seen that before,” she says.
“My take is it was initiated by the employer. Because they’re an industry that has a lot of backpackers and is a large employer in the community, it was probably an effort to say not only will we pay what these people are due … but we will also make this donation to the community as we’re serious about our business and moving forward.”
SmartCompany contacted K S Benning & Sons but the company declined to comment.
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Australia’s largest apartment developer has dismissed an employee after an investigation found he had used inappropriate language on Facebook.
Michael Nolan, who worked as a supervisor at Meriton Apartments, has left the company after calling columnist Clementine Ford a “slut” in a comment on her public Facebook page on November 25.
Ford subsequently published a screenshot of the comment along with a screenshot of the man’s Facebook profile two days later.
“I wonder if the folks over at Meriton Apartments are aware that a man listing himself as a supervisor for their business likes to leave comments on women’s Facebook pages calling them sluts,” Ford wrote.
Meriton Group has since written to Ford to inform her Nolan no longer works for the business.
“Meriton Group have now investigated the matter relating to the complaint made about Michael Nolan using inappropriate language on Facebook,” the company said in a statement to Ford.
“Meriton Group does not condone this type of behaviour. Michael Nolan was removed from the Meriton site on Saturday 28 November pending an investigation and as of 2.30pm today, 30 November 2015, he no longer works for Meriton Group.”
On her public Facebook page, Ford wrote that perhaps men will now think twice about calling women sluts online.
“These men have rarely ever faced consequences for their actions, but that’s starting to change,” Ford said.
“To anyone who suggests I have caused a man to lose his job, I’d like to say this: no. He is responsible for his actions. He is responsible for the things he writes and the attitudes he holds.
“It is not my responsibility to hold his hand and coddle him when he behaves in an abusive manner just because it might have consequences for him.”
Ford says it is unfair that women are often told to remain silent in case a man ruins his career.
“If you enjoy exercising misogyny online, you only have yourself to blame,” she wrote.
“I’d also like to personally say a big well done to Meriton Apartments for taking this so seriously. It’s very reassuring to see a business adopt this policy towards their staff and I appreciate their handling of the matter.”
What are the legal implications for dismissing an employee for inappropriate conduct on Facebook?
Andrew Douglas, workplace relations specialist and principal at M+K Lawyers, told SmartCompany there are several things employers must keep in mind when it comes to disciplinary action as a result of Facebook use.
“Firstly, if something is published on the public domain, then it is a matter which can be properly taken into consideration for employment,” Douglas says.
“Second, Facebook records the actions of a person during their employment and therefore the actions can be considered as part of the behaviours expected while employed.
“The third thing is that an investigation was undertaken which provided procedural fairness to the person [in this case]. So long as that procedural fairness was appropriate, there is no doubt the dismissal was a fair dismissal.”
Douglas says an employee calling any potential client of a business a “slut” on any basis is serious misconduct.
“A hotel provides people with a level of support and comfort and treats them with integrity, so any behaviour which is offensive must by its very nature be a breach of the contract of employment,” he says.
SmartCompany contacted Meriton Group but a spokesperson referred to the statement sent to Ford and declined to comment further.
SmartCompany was unable to contact Michael Nolan prior to publication.
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Australian businesses that are found to have breached the Australian Consumer Law (ACL) could face harsher penalties in the future, following a review of the legislation next year.
Australian Competition and Consumer Commission chairman Rod Sims today questioned whether the current penalty regime is strong enough and provides enough deterrence.
Corporations currently face a maximum penalty of $1.1 million per contravention of the ACL, while individuals can be fined up to $220,000 per contravention.
Delivering a keynote address at the Consumer Law Roundtable in Canberra today, Sims said since the regime was introduced, courts have ordered penalties of more than $44 million, with 18 cases attracting penalties of $1 million or more.
“But are our penalties strong enough and are they keeping pace with deterrence?” Sims said.
“That has been the burning question since the Coles judgment in December 2014.”
Sims was referring to an agreement from Coles to pay a penalty of $10 million in relation to claims it engaged in unconscionable conduct towards suppliers.
Melissa Monks, special counsel at King & Wood Mallesons, told SmartCompany this morning the ACCC has over the past 18 months “questioned the adequacy” of the current penalty regime for corporations.
“Its key concern has been whether such penalties can offer a sufficient deterrent to large corporates with large turnovers who can easily manage such a fine,” Monks says.
“However, the ACCC has not yet revealed just what level of penalty it considers would be appropriate.”
Monks says corporations that are found to have breached the ACL current face “a far lower penalty” than those that are found to have breached the competition provisions contained in the Competition and Consumer Act 2010.
Contravening the latter attracts a penalty of whichever is greater; up to $10 million, three times the benefit gained as a result of the breach or 10% of the corporation’s annual turnover in Australia.
“So it will be interesting to see the position that the ACCC takes,” Monks says.
However, Monks says it is concerning that the ACCC has flagged potentially subjecting the general misleading conduct provision of the act to penalties.
“Conduct that may breach that section is generally not black and white and therefore whether it breaches the law and the appropriate penalty that should apply are questions best assessed by an independent judiciary rather than a regulator such as the ACCC,” she says.
“It is certainly something that was considered and ultimately rejected in the original review leading to the current ACL.”
A review of the ACL will be undertaken by Consumer Affairs Australia and New Zealand in 2016.
Sims also flagged several other possible areas for review, including how the ACL applies to businesses in the sharing economy and phoenix companies.
A phoenix company is one that has previously traded as another entity and declared insolvency to avoid debts or tax payments but then re-emerged to do business again.
“We need to consider whether the ACL can adequately address any consumer protection issues that may arise within these transactions,” Sims said in relation to the sharing economy.
“Finally, we strongly believe there is scope to look at the extent to which the CL facilitates consumers, including business consumers, obtaining redress for contraventions of the ACL when companies phoenix.”
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A chain of four day spas in Melbourne has closed just weeks before Christmas, amid claims from angry customers who have been left with gift vouchers that can’t be redeemed.
Groom Spa’s four outlets in Melbourne shopping centres at Chadstone, Southland, Doncaster and Fountain Gate all closed this week, with customers revealing on Facebook they received text messages on Sunday evening cancelling their appointments.
The phone numbers listed for the beauty salons are answered by a voice recording that says “due to unforseen circumstances, this spa has been closed” and callers are directed to email the company’s client services department.
However, SmartCompany did not receive a response from the department this morning.
The Groom Spa website has been taken offline, as has its Facebook page.
However, customers have taken to a Facebook location page for the Fountain Gate salon to voice their concerns.
“I would just like to thank Groom Spa in Fountain Gate that sent me a message at 6.00pm on Sunday night to tell me they can’t keep my appointment on Friday because they are closing down,” said one customer on Sunday.
“Now not only is this a sad and shitty thing to happen to me as it was a significant gift voucher given to me by decent people but also to all the people they were still selling gift vouchers to knowing they were going to cease trading today.”
Other commenters said they now have no way to redeem gift vouchers worth as much as $300 dollars, while another person said they have been attempting to obtain a refund for gift vouchers since July.
While the Facebook page is not managed by Groom Spa, a former employee of the Fountain Gate salon responded to some of the complaints by saying the sudden closure “has come as a great disappointment to all of our staff and customers”.
“We have had to deal with the shock of this sudden closure as much as you have, and feel terrible for those clients who feel short-changed by the decision to close,” they wrote.
“We intend to try and reach out to as many of our loyal customers as possible to contact you directly.”
“Please understand that we are all devastated by the news, particularly being so close to Christmas and we are now in a position where we all need to look for new jobs. We never wished or wanted this for our clients as we have respect and loyalty towards you all.”
SmartCompany understand Consumer Affairs Victoria has received multiple complaints about the closure of Groom Spa.
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A business that sells digital advertising services to small businesses will be forced to defend itself in court after the Australian Competition and Consumer Commission initiated legal proceedings alleging the company engaged in unconscionable conduct.
The ACCC has commenced proceedings in the Federal Court against Multimedia International Services, which trades as The Community Network.
The Community Network sells advertising space to small businesses, which appears on branded LCD screens in locations such as fitness centres, newsagencies and shopping centres.
The consumer watchdog said in a statement today it will argue before the court that The Community Network acted unconscionably in relation to two small businesses, which it allegedly refused to release from contracts, despite not providing the services promised.
The ACCC alleges The Community Network then pursued the two unnamed businesses for non-payment, threatened legal action and in one case, called in debt collectors.
The Community Network is also accused of making false and misleading statements to small businesses, both expressly or implicitly.
The ACCC says potentially false and misleading representations included that the key contract terms were disclosed on the front of the contract; that the contract was for a fixed period of two years unless the businesses gave 12 months written notice to end the contract by registered post, when this was not the case.
The consumer watchdog also alleges that the location for the advertising was set out on the front of the contract but fine print on the document’s reverse side allowed for this to be changed.
The Community Network is also accused of misleading three small businesses about where their ads would be shown and the conditions under which this could be changed.
The company is also accused of wrongly taking payments from these three unnamed businesses when it knew it would not be able to provide the services at the specified location within a reasonable time.
The ACCC will seek pecuniary penalties, declarations, injunctions and costs from The Community Network.
ACCC deputy chair Michael Shaper said in the statement unconscionable conduct towards small businesses is a current priority for the regulator.
“In any contract with small businesses, the terms and conditions much be fully disclosed, particularly those which are onerous, such as terms restricting the small business from terminating the contract or automatically rolling over the contract for a substantial period,” Shaper said.
“Businesses should also be aware that they must not accept payment for goods and services from other businesses if they are aware or ought to be aware that there are reasonable grounds for believing that they will not be able to supply them in a timely manner, or at all.
“This is a breach of the Australian Consumer Law and may attract substantial penalties.”
Catherine Logan, principal at LegalVision, told SmartCompany the action by the ACCC is based on a combination of alleged misleading and deceptive conduct and unconscionable conduct in business transactions.
Logan says small businesses will soon be given more tools to prevent this type of thing being done to them when the federal government’s unfair contract protections come into effect in November 2016.
The changes will offer protections to small businesses with fewer than 20 employees, provided the value of the contract does not exceed $300,000 in 12 months or $1 million for multi-year contracts.
“Standard form contracts like this should be reviewed by providers during the grace period over the next 12 months to make sure one-sided unilateral terms like the ones referred to in the ACCC media release in this case are redrafted to reflect a fairer deal, because after that, they simply will not stand up,” Logan says.
SmartCompany contacted The Community Network but did not receive a response prior to publication.
We’ve all read about the 7-Eleven wage scandal that involved workers at Australia’s biggest convenience chain allegedly being paid as little as $10 an hour before tax in what has become known as the ‘half-pay’ scam.
Staff at 7-Eleven franchises were allegedly being underpaid half the award rate and some foreign workers claimed they were threatened with deportation if they spoke up.
Indeed, according to a joint investigation by the ABC and Fairfax, internal documents reveal that between July and August this year, 7-Eleven head office reviewed the payroll compliance at 225 stores and found that 69 stores had ongoing payroll issues.
Of course 7-Eleven is not the only company in Australia accused of flouting the law and underpaying staff. Myer and two contractors were recently hit with claims that cleaners working in the retailer’s stores have been underpaid and incorrectly treated as contractors instead of employees, while the Fair Work Ombudsman continues to take action against businesses that do not pay workers correct wages and entitlements.
So as business owners and senior managers, what can you do to avoid the same fate?
1. Compliance is everyone's responsibility
Whether it's staff in your business, a sub-contractor or franchisee, it's easy to turn a blind eye to a few bad actors and say ‘it's their problem, my house is in order’. Regardless of who's legally responsible, businesses brands are at risk when any related party has a public compliance breach. Having visibility of your entire workforce chain and doing so in a way that's largely automated to remove huge administration overheads is critical.
2. Track labour like you track inventory
Imagine running a retail chain with zero inventory management systems - crazy, right? Labour is the largest or second largest cost to businesses, but only a few forward-thinking companies are using software to manage their workforce against benchmarks within their businesses and in their sector. A franchisee whose inventory slippage is 5% higher than the average would be picked up immediately and the same rigor should be applied to labour.
If you’re running a business in the retail or hospitality industry, be careful when hiring casual workers or contractors. Consideration should be given to the reason for the arrangement, the length of time of the arrangement, the individual’s significance to the business, what the individual is doing; and who is getting the benefit from the arrangement.
3. Don’t bury your head in the sand
Just like the bookkeeping that hasn't been done in years, or the warehouse that hasn't been audited since last Christmas, tackling a workforce compliance or optimisation project can be the elephant in the room.
The government will eventually catch up and start penalising bad actors. Now is the time to get ahead of the regulation wave and be proactive about removing any potential risks so your business can focus on growth. Looking over your shoulder and waiting for a call from the Ombudsman is no way to run a business.
4. Compliance doesn't have to be a burden
Compliance for compliance sake is great, but not at the cost of your employees’ engagement. Many growing businesses are already using software that's engaging at all levels of the business - ensuring head office can tick all the boxes, while providing their employees with an experience that doesn't remind them of tax time.
In the past year alone, we’ve seen hundreds of thousands of dollars in penalties handed down by the Federal Court. 7-Eleven alone could face a $300 million compensation wages bill after the Allan
Fels-chaired panel released the first tranche of payments to underpaid workers a few weeks ago. These cases emphasise the willingness to use harsh penalties to act as a deterrent to others.
So, before you get that call or visit from the Fair Work Ombudsman, consider the points above and invest in systems that enable you to see exactly what your obligations are with regards to your workforce. Check your sub-contractor agreements and review all terms and conditions that apply to an employee under legislation. Today, it’s not good enough to just have a plan for when the Fair Work Ombudsman knocks on your door. By the time that happens you face the real probability of expensive fines and large litigation costs. And it’s just not worth the risk.
Chris Power is head of workforce management at Ento.com.
A former employee at a Queensland restaurant has been back-paid $45,000 after the Fair Work Ombudsman discovered he was regularly working seven days a week, sometimes for as little as $617.
The Ni Hao Chinese Restaurant in Toowoomba sponsored the 25-year-old worker’s visa, promising he would be employed as a restaurant manager.
However, when the Malaysian national arrived in Australia, he was given a job as a cook.
Under this different role, the employee should have been paid according to the Restaurant Industry Award.
The Ombudsman found the Malaysian national should have been paid a total of $98,482 between November 2013 and January 2015, instead of the $52,678 he was actually paid.
The bulk of the underpayments were for unpaid overtime but the Ombudsman also found the worker was short-changed when it came to the correct hourly rate, penalty rates and annual leave entitlements.
The restaurant has since reimbursed the former employee and provided a written apology for its actions.
The business has also signed an enforceable undertaking and promised to engage an external accounting professional to audit its records in the future.
Fair Work Ombudsman Natalie James said in a statement the exploitation of vulnerable overseas workers is a particular area of focus for the employer watchdog.
“Employers simply cannot undercut the minimum lawful entitlements of their employees based on what they think the job may be worth or what the employee is happy to accept,” James said.
“We know workplace laws can be complicated for the uninitiated, but we ask businesses to use the tools and resources that we provide for them.
“We are committed to helping employers understand and comply with workplace laws, but operators need to make an effort to get the basics right in the first place.”
This case is just the “tip of the iceberg”
Andrew Jewell, senior associate at employment law firm McDonald Murholme, told SmartCompany he is seeing a rise in the number of cases where international workers have been exploited.
“That doesn’t mean it wasn’t happening before, I just think now the ombudsman is more aware of it and getting involved,” Jewell says.
“It is happening a lot and, unfortunately, this is the tip of the iceberg. This one employer has been reasonably punished, but I don’t know if it is enough to stop others from doing what they are doing.”
Jewell says overseas workers are particularly vulnerable to exploitation because they may not be aware of their rights.
“For overseas workers, they’re not as aware of their ability to rely on a government organisation and they just don’t have the resources to enforce their private rights,” Jewell says.
“Then you’ve got this additional issue of a visa hanging over their head… so even if they know there’s an issue, they’ll often accept the situation because it means they will get closer to getting their visa.”
SmartCompany contacted the Ni Hao Chinese Restaurant in Toowoomba but did not receive a response prior to publication.
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The Australian Competition and Consumer Commission’s recent decision to block the iHail taxi app should send a signal to even the smallest businesses that the competition watchdog understands the competitive impact of digital disruption.
On the face of it, iHail's original proposal would have allowed established cab companies to compete more effectively with ridesharing platform Uber but according to the ACCC it could have also reduced overall competition in the taxi industry with little benefit to the public.
It’s not just the taxi industry facing scrutiny. The ACCC is also reportedly examining the recent trend that has seen traditional banks close the accounts of bitcoin companies in order to determine whether that’s just a rearguard action to stall digital disruption.
The ACCC will also be keen-eyed about startups to ensure that they don’t harness modern technology to underpin price-fixing; there still needs to be the opportunity to compete in terms of price, quality or service, even if a common online platform is used.
Emerging companies also need to understand how the competition rules work in order to be able to fend off anti-competitive counter attacks from entrenched traditional players.
The ACCC for example would likely take a dim view of any evidence of a group of entrenched competitors which appears to be acting in concert to stall or block newcomers.
It’s fair to say Australia’s corporate landscape features considerably more sectoral concentration than many other international consumer markets. There is a relatively concentrated handful of companies that dominate the sectors in which they operate.
It’s a mixed blessing for disruptors.
The concentration admittedly can make it harder for startups to access customers or suppliers that are locked in for long periods of time because of existing exclusive supply arrangements. Identifying that as an issue is one thing, resolving it another as even after a direct appeal to the ACCC, resolution could prove a protracted process.
The flipside of market concentration however is the complacency that can creep into a market; where competition is concentrated and static there can be less impetus to innovate, generating opportunity for nimble startups which are not tied to legacy approaches or relationships.
Entrenched competitors accustomed to only price related challenges can be blindsided by a disruptor that, for example, radically changes the service proposition or offers a more sustainable offering, which might be attractive to environmentally conscious consumers.
As technology continues to disrupt traditional business models it’s quite likely that there will be a raft more competition related challenges that startups will need to consider, particularly companies establishing online platforms that allow a series of product or service providers to come together to reach consumers.
It’s important that all companies understand their obligations with regard to competition compliance so that they meet those requirements and are also transparent with regard to pricing and truthful in their advertising.
Platform providers need to ensure that they aren’t engaged in any form of third line forcing, where a consumer is obliged to use a specific third party service in order to use the online service.
All startups and disruptors would benefit from taking the time to review their emerging business models through a competition lens to avoid breaching the law and generating adverse publicity. Issues to consider include:
When you’re starting up a business competition issues probably aren’t at the top of your to-do list. But as we’ve seen with the recent ACCC decision, the competition and consumer rules apply to every business in Australia.
It’s easier and cheaper to create a business that’s compliant with competition rules from day one, than to pivot your entire model and try to shoehorn it into some sort of compliance at a later date.
Cicely Sylow is a senior associate in the competition practice group in the Sydney office of law firm Bird & Bird.
The High Court has found a former accommodation provider in Western Australia breached sham contracting laws by trying to classify two employees as independent contractors.
The Fair Work Ombudsman took Quest South Perth Holdings to the Federal Court back in 2011 over allegations it was mischaracterising the employment of two housekeepers, Margaret Best and Carol Roden.
The Federal Court, along with the Full Court of the Federal Court, dismissed these claims.
However the employment watchdog appealed to the High Court, which this week ruled in its favour.
The High Court found Quest South Perth Holdings engaged in a “triangular contracting” arrangement.
This involved a separate labour hire business engaging the two housekeepers on behalf of Quest South Perth Holdings, despite the fact the two employees had worked for the accommodation provider for some time.
“Ms Best and Ms Roden continued to perform precisely the same work for Quest in precisely the same manner as they had always done,” the High Court ruled.
“In law, they never became independent contractors. At the time Quest represented that they were performing work for Quest as independent contractors of Contracting Solutions, they remained employees of Quest under implied contracts of employment.”
This is not the first time the courts have ruled against sham contracts
Andrew Douglas, principal at Macpherson Kelley, told SmartCompany this case is an important decision for businesses to familiarise themselves with.
Douglas says this is not the first time the courts have ruled against so-called sham contracts.
“The High Court has said ‘no’ to employers using employment devices to disguise a true underlying employment relationship to obtain financial and operational flexibility for the business,” Douglas says.
“This is the second decision in a matter of months where Australian courts have vigorously defended employee entitlements and penalised employers who seek to deploy methods of people engagement subterfuge to reduce employee entitlements.”
Quest South Perth Holdings no longer operates the Quest serviced apartments in Arlington.
Quest South Perth Holdings could not be contacted for comment.
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The competition watchdog is taking a members-only online shopping website to court for allegedly selling children’s nightwear that did not comply with mandatory safety standards.
The Australian Competition and Consumer Commission alleges Ozsale sold children’s nightwear garments between July 2014 and October this year without the appropriate fire hazard warnings.
Ozsale is a members-only shopping club that sources excess inventory from suppliers.
The ACCC claims Ozsale sold five children’s nightwear garments that had insufficient fire hazard warnings or had no warning labels at all.
In addition, the watchdog alleges one garment’s design did not comply with Australian standards as the cotton material it was composed of was too dense and, because of this, it was highly flammable.
Ozsale has since recalled the products in question and is offering customers a full refund.
The competition watchdog has launched proceedings in the Federal Court and is seeking penalties, injunctions, costs and the implementation of a safety compliance program. The case is due to be heard in Sydney in February next year.
ACCC deputy chair Delia Rickard said in a statement businesses must ensure all products sold in Australia comply with the relevant safety standards.
“Australian consumers are entitled to expect that children’s nightwear purchased in Australia is safe, fit-for-purpose and compliant with the mandatory Australian standard,” Rickard said.
“This requirement extends to all children’s nightwear, irrespective of the retailer’s business model. Businesses such as Ozsale which purchase goods not originally intended for sale in Australian markets from overseas suppliers must have adequate procedures in place to ensure that those goods comply with applicable mandatory Australian standards before they are offered for sale to Australian consumers.”
Ursula Hogben, principal and general counsel at LegalVision, told SmartCompany if the ACCC's litigation is successful, Ozsale could face penalties of up to $1.1 million for the company or up to $220,000 for an individual.
"Children's nightwear that does not comply with Australian safety standards poses a genuine risk to safety and even to children's lives," Hogben says.
"There would have been considerable negative consequences if any children had been burned while wearing the nightwear, plus of course, significant negative publicity for Ozsale."
Hogben says the same safety standards apply to online retail businesses as to bricks-and-mortar stores.
She recommends all retailers consider the safety standards for all imported products, complete a cost-benefit analysis on importing products and factor in the cost of good advice and a product safety compliance program.
"Product Safety Australia helps businesses understand the mandatory safety standards that apply to products," she says.
"Businesses need to review the standards and have procedures in place to assess products to make sure they are compliant. This will prevent business owners from breaching the standards and will help protect them from penalties imposed by the ACCC."
SmartCompany contacted Ozsale for comment but did not receive a response prior to publication.
Businesses in the retail and hospitality sectors could see simpler awards in the next few years, according to Justice Iain Ross from the Fair Work Commission.
The Fair Work Commission is currently redrafting the national pharmacy award with the aim of using plainer language for small business owners.
Depending on the reaction from business groups and unions, the commission will then use the same approach to update awards for the retail and hospitality industries.
Speaking at COSBOA’s Microeconomic Challenge in Sydney, Ross said he is of the belief that an award should be able to be read without the need to hire a lawyer.
“We want clear, plain English materials and we want simpler awards,” Ross says.
“We’ve done a number of things to address that. We’re currently working on a plain English kit on how to make a workplace agreement under the Fair Work Act. We’re close to finalising that project, but we’re a little trapped by the legislation and how it tells us it has to be done.”
Ross says the commission is also doing a range of other things to help small business, including educating small business owners about how Fair Work Commission hearings operate.
Parties to Fair Work Commission cases will also soon be able to lodge their documents online, rather than send them to the commission in the post.
Ross says appearing before the Fair Work Commission can be a “traumatic experience”, which is why the commission now provides a checklist for employers who are representing themselves at an unfair dismissal hearing.
“There is room to transform the system into a more useable framework,” Ross says.
“If you’re a large business like Coles, they’re constantly in and have people who have expertise in the area and have people familiar with the environment.
“But how do we deal with small businesses or individual employers who are likely to only have one engagement with us?”
The Australian competition watchdog is taking supermarket giant Woolworths to court for allegedly engaging in unconscionable conduct in its dealings with a large number of its supermarket suppliers.
The Australian Competition and Consumer Commission alleges that in December last year Woolworths sought to obtain payments from 821 "tier B" suppliers.
The suppliers were allegedly asked for payments ranging between $4291 to $1.4 million in order to support the supermarket.
Woolworths did not have a pre-existing contractual entitlement to seek these payments and leveraged its bargaining position while seeking the payments, according to the competition watchdog.
ACCC chairman Rod Sims said in a statement Woolworths' 'Mind the Gap' strategy was "unconscionable in all circumstances".
It is difficult for suppliers to plan and budget for the operation of their businesses if they are subject to such ad hoc requests," Sims said.
"The alleged conduct by Woolworths came to the ACCC’s attention around the time when there was considerable publicity about the impending resolution of the ACCC’s Federal Court proceedings against Coles Supermarkets for engaging in unconscionable conduct against its suppliers. Of course, the allegations against Woolworths are separate and distinct from the Coles case.”
The ACCC is seeking injunctions and an order requiring full refunds for suppliers that contributed to the 'Mind the Gap' scheme.
A directions hearing is due to occur in the Federal Court in Sydney early next year.
SmartCompany has contacted Woolworths for comment.
The allegations against Woolworths show why Australia needs an effects test, according to Jos de Bruin
Jos de Bruin, chief executive of Master Grocers Australia, told SmartCompany the allegations against Woolworths show why Australia needs an effects test, as recommended in the Harper Review.
"All this does is confirm to us that the likes of Woolworths and Coles misuse their market power and we shouldn't be lead to believe that because they're big they do everything correctly and properly," de Bruin says.
"It just reinforces why competition laws need to be strengthened, particularly section 46 which is about the misuse of market power."
Woolworths has defended its actions in the wake of allegations from the competition watchdog that it sought payments from suppliers in order to improve its bottom line.
Yesterday the Australian Competition and Consumer Commission announced it is dragging Woolies to court on charges of unconscionable conduct, after the supermarket giant allegedly asked its suppliers to support it with payments ranging between $4291 and $1.4 million.
Failure to make the payments would have been seen as not supporting Woolworths, according to the ACCC.
Woolworths said yesterday it believes it has done nothing wrong and its actions are consistent with industry standards.
“We are reviewing the ACCC claims,” the supermarket giant said in a statement.
“Woolworths has been fully co-operating with the ACCC during the course of the investigation over the last year.
“We believe our conduct was consistent with Australian and international industry practice to engage regularly with suppliers over product and category performance.”
Woolworths also said it is working co-operatively with suppliers as a whole, as shown by its willingness to sign up to the Food and Grocery Code of Conduct.
“Woolworths was the first major supermarket to agree to sign the Grocery Code of Conduct and is currently implementing the code across its business,” the company said.
A directions hearing for the ACCC’s claims against Woolworths has been scheduled for February next year, with ACCC chairman Rod Sims saying in a statement yesterday the alleged payments were “unconscionable in all circumstances”.
Woolworths is not the first big supermarket to be taken to court by the competition watchdog.
Last year, Coles was accused of threatening suppliers and forcing them to make payments in order to bridge the gap between the amount of profit Coles wanted to make on certain goods and the profit it actually achieved.
Coles originally denied any wrongdoing but later admitted it had “crossed the line” and agreed to pay a $10 million penalty to the ACCC.
Treatment of supermarket suppliers holding Australia back, says COSBOA
Peter Strong, executive director of the Council of Small Business of Australia, told SmartCompany the allegations against Woolworths show why Australia needs an effects test.
“This follows on the Coles case and it shows we must not listen to dominant businesses, who have vested interests,” Strong says.
“We’ve got to focus on productivity and innovation. Once again, what’s holding Australia back is a very poor Section 46 [in] competition policy.”
“This should be a concern to everybody involved in trying to get innovation happening.”
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