Small Business Minister Bruce Billson has released a discussion paper, outlining the proposed creation of a Small Business and Family Enterprise Ombudsman with real power to resolve disputes.

According to the discussion paper, the ombudsman’s new role will be to provide information and advice to small and family run businesses.

In addition, the ombudsman will likely have the power to investigate small business disputes, refer the dispute to other regulatory bodies and compel the parties to attend mediation.

In the discussion paper, Billson said small businesses are a vital part of the Australian economy and the establishment of a Small Business Ombudsman would help represent their interests.

“Providing a fair operating environment and conditions is one of the best ways to help this engine room of our economy prosper,” he said. “When small businesses and entrepreneurs prosper, so does the rest of our country.”

Business groups have welcomed the move, saying a small business ombudsman will minimise compliance burdens and help the more than two million small businesses in Australia thrive.

Council of Small Business of Australia executive director Peter Strong told SmartCompany he was happy with the announcement.

“Since 1977 when we were first formed one of the things we wanted to see was an ombudsman so we are pleased,” he said. “They are going to give the ombudsman good powers, although I suspect they won’t need to use them very often.”

Industry groups have long campaigned for a small business ombudsman with powers to resolve disputes between SMEs and Commonwealth agencies. While the states and territories have mechanisms to mediate these disputes, the Australian Small Business Commissioner and state small business commissioners have no formal powers to settle disputes.

ACCI chief operating officer John Osborn said in a statement small businesses would benefit from a “one-stop-shop” where they could access Commonwealth assistance.

“The absence of a small business ombudsman with teeth has been a frustration to small business people for a long time,” he said. “Small business is particularly happy to see the government’s plan to give the ombudsman stronger powers to help resolve disputes, and a capacity to shape policy at the Commonwealth level while fighting red-tape.”

The Australian Retailers Association also welcomed the recommendations in the discussion paper. ARA executive director Russell Zimmerman said in a statement smaller retailers are looking forward to an ombudsman who can best meet their needs.

“Small businesses have certainly faced a rough trading environment over the last few years,” he said. “The ARA is positive, however, that the Small Business and Family Enterprise Ombudsman is certainly a step in the right direction to getting the industry on the road to recovery.”

The Australian Competition and Consumer Commission has initiated proceedings in the Federal Court against a refrigerant gas business on the grounds of deceptive conduct.

The ACCC alleges Actrol Parts Pty Ltd made misleading representations about significant price increases effective from July 1, 2012, the date which the carbon tax scheme came into effect.

The competition watchdog also alleges Actrol contravened Australian Consumer Law by “amassing a stockpile” of refrigerant gas prior to the implementation of its price increases in order to increase its earnings.

In a statement, ACCC chairman Rod Sims said the commission takes these matters very seriously.

“This case is a further demonstration of the role of the ACCC in scrutinising claims made by all levels of business in relation to the introduction of the carbon tax, and taking enforcement action where appropriate,” he said. “The ACCC will be equally vigilant in monitoring the practices of businesses following the repeal of the carbon tax.”

Sally Scott, partner at Hall & Wilcox Lawyers, told SmartCompany the ACCC began focusing on misleading carbon tax claims when the price on carbon was introduced several years ago.

“The ACCC would expect that businesses ought to be on top of representation issues concerning the carbon tax by now, being several years after the introduction of the carbon tax,” she said.

“Businesses need to ensure that if they link a price rise to the carbon tax, they can substantiate the link. They should also retain evidence so that they are in a position to prove the link if necessary.”

The ACCC today released a carbon monitoring report for the March 2014 quarter. Treasurer Joe Hockey has directed the ACCC to monitor the prices, costs and profits across various sectors in order to assess the general effect of the carbon tax.

Sims said in a statement the watchdog will monitor prices closely when the government fulfils its election promise to remove the price on carbon.

“This information will permit the ACCC to understand how the carbon tax has affected price tags across the economy,” he said. “It provides a benchmark to allow the ACCC to compare prices charged to consumers both before and after the carbon tax is removed.”

Sims says the purpose of monitoring the effects of the carbon tax scheme is to ensure a reduction in costs is passed on to consumers if the government successfully repeals the carbon tax.

“The ACCC expects that after the repeal of the carbon tax businesses will remove any remaining carbon components in prices and that consumers will see the benefit of the repeal as quickly as possible.”

There is intense disagreement between politicians over whether or not the carbon tax affects small businesses. A survey of 400 Australian businesses conducted last year by Ai Group found 70% of them had not been able to pass on any energy cost increases to consumers –resulting in tighter profit margins.

Council of Small Businesses of Australia executive director Peter Strong previously told SmartCompanythere were more serious concerns for small businesses than the carbon tax.

“Every extra cost impacts small business,” he said. “But the bigger issues still remain red tape, contract laws, the duopoly of Coles and Woolworths, landlords and workplace relations and penalty rates.”

SmartCompany contacted Actrol for comment but did not receive a response prior to publication.

Supermarket giant Coles is today defending itself against allegations by the Australian Competition and Consumer Commission that it engaged in unconscionable conduct towards 200 of its smaller suppliers.

In the latest development in the competition watchdog’s investigation into claims the major supermarkets have used improper practices to force down prices paid to suppliers, the ACCC has initiated proceedings against Coles in the Federal Court and is seeking pecuniary penalties, declarations, injunctions and costs.

The allegations relate to the Coles Active Retail Collaboration program, developed by the retailer in 2011 in a bid to obtain better trading terms from its suppliers.

The ACCC alleges Coles used the program to attempt to improve its earnings by requiring suppliers to pay ongoing rebates based on purported benefits for the suppliers from changes Coles had made to its supply chain.

The ACCC will argue Coles breached Australian Consumer Law by providing misleading information to suppliers about the savings and value of the program; using undue influence and unfair tactics against suppliers to obtain the rebates, and in some cases threatening commercial consequences when rebates were not paid; taking advantage of its superior bargaining position; and requiring 200 of its smaller suppliers to agree to rebates without sufficient time to assess the value of the deal.

In a statement issued to SmartCompany, Coles said it will “vigorously defend the allegations made against it by the ACCC”.

“The ACCC legal action concerns a detailed supply chain program implemented by Coles over two years ago as a part of its strategy to develop a more efficient and internationally competitive supply chain,” said the company.

“The project involved improvements to both supply chain collaboration and efficiencies in logistics [and] it was designed to deliver benefits to Coles, suppliers and customers through lowering costs and improving availability of stock in our stores.”

“Coles is totally committed to negotiating fairly and working collaboratively with its suppliers, providing opportunities for suppliers to grow; this has been integral to Coles’ turnaround strategy from the start,” said the company.

The ACCC said the legal proceedings are the result of its continuing investigation into long-standing claims Australia’s major supermarket chains have used their market power to bully food producers over prices and supply.

The ACCC began investigating the claims in November 2011, calling for confidential information from grocery suppliers in February 2012 and undertaking a detailed investigation between June 2012 and December 2013.

“The conduct of Coles alleged by the ACCC in these proceedings was capable of causing significant detriment to small suppliers’ businesses,” said ACCC chairman Rod Sims in a statement.

“This could have resulted in these businesses becoming less able to plan and less able to innovate in the market, with resulting reduced economic efficiency and consumer detriment.”

“The ACCC alleges that Coles used undue pressure and unfair tactics in negotiating with suppliers, provided misleading information and took advantage of its superior bargaining position, so that its overall conduct was in all the circumstances unconscionable,” said Sims.

“If this conduct is established in court, the ACCC expects that the community will share the ACCC’s view that business should not be conducted in this way in Australia,” he said.

The Federal Court has awarded a photographer $174,000 in compensation after finding she was subject to pregnancy discrimination by her employer Piccoli Photography.

The court found Samantha Sagona was forced to resign from her job as a result of Piccoli Photography’s response to her pregnancy. 

Sagona was employed for 12 years by Piccoli Photography, a Melbourne photography business operated by Robert Piccoli and Christine Piccoli.

But Sagona told the court while the initial reaction to the news of her pregnancy was positive and included flowers and a card, she was later told that she would need to take long service. 

Sagona claims she was told that she could continue her normal role until the end of the year but would then need to take her long service leave after the summer holidays and before she had the baby.

The court heard Sagona was told if she insisted on returning to work after the summer holidays she could only do so in a “behind the scenes capacity”.

She could not continue to undertake photo shoots, have sales appointments with customers or be seen by customers because it “was not a good look” for customers to see a pregnant woman working in the business and this would make the Piccolis look like they were “slave drivers”.

Sagona was also told she would look “desperate” if she worked while she was noticeably pregnant.

Piccoli Photography also told Sagona if she did return to work after the summer holidays, her pay would need to be cut because she would not be generating any income for the business due to the fact that she would not be working as a photographer.

Judge Whelan found Sagona had no choice but to resign.

“The capacity for women to continue in employment during their pregnancy and to be able to continue with their career after having a child are matters which as a society we consider should be protected,” Judge Whelan said.

“I consider that there is a need for general deterrence with respect to both of these matters and, in particular, with respect to employees employed in small businesses.”

Christine Piccoli told SmartCompany the Piccolis are considering appealing the case.

“Our business was disrupted for about two years, we tried to settle as well on occasions which did not happen, we did everything we possibly could,” she says. 

“It’s pretty tough. We were naive and inexperienced, you definitely have to get advice from the beginning.”

But Giri Sivaraman, principal in the employment practices group at law firm Maurice Blackburn, says Piccoli Photography had made it very difficult and very uncomfortable for the employee just because she was pregnant.

“They immediately assumed she would have difficulty performing the role without inquiring how pregnancy would affect her doing her job,” Sivaraman says.

He says Piccoli Photography decided it didn’t want Sagona back after the pregnancy and manufactured reasons to put pressure on her to leave.

“It’s sad and highly regrettable that an employer would take such an antiquated and terrible view towards an employee because she is pregnant,” Sivaraman says.

“You can’t simply assume because your employee is pregnant that she is going to be unable to do her job or that she is some sort of hindrance that needs to be moved aside.”

Sivaraman says if a business has a genuine concern about an employee’s ability to perform the job then as a minimum it should speak to the employee about these concerns.

Sivaraman recommends having a genuine and thoughtful discussion, not simply making assumptions and acting on those assumptions.

“You should absolutely not contrive performance reasons to maneuver an employee out of the workplace. It’s unlawful and unethical and it’s incredibly demeaning to that employee,” he says. 

The corporate regulator’s ongoing battle with the major supermarket chains took an interesting twist on Monday when it alleged that Coles had engaged in unconscionable conduct against various small suppliers.

The case relates to Coles’ efforts to improve its efficiency via a major revamp of its supply chain. This led to the Active Retail Collaboration program, which – according to Coles – delivered benefits for large and small suppliers. There’s no such thing as a free lunch though: Coles wanted its suppliers to pay rebates in return for these benefits.

The Australian Competition and Consumer Commission’s (ACCC) case relates to the manner in which Coles sought the suppliers’ agreement to pay the rebates. It is based upon the evidence of 200 small suppliers who were allegedly given “a matter of days” to examine the proposals put forward by Coles. Refusals to pay the rebate were apparently “escalated” to senior Coles staff who threatened “commercial consequences” if the supplier didn’t comply.

On the face of the ACCC’s media statement, the facts upon which the case is based could have been framed as a misuse of market power. The ACCC, however, has made a strategic decision to pursue the claim as unconscionability.

A recent broadening of the law

There are several reasons why it may have done so. First, the ACCC had a significant victory last year when the Full Court found that Lux had engaged in unconscionable conduct when selling vacuum cleaners door-to-door. The unconscionable conduct provisions have been a moving feast ever since their introduction into what is now known as the Competition and Consumer Act. When first inserted, Parliament clearly indicated that the statutory prohibition was not the same as the equitable concept of unconscionability, which is extremely hard to prove.

But many early court decisions seemed to view the statutory prohibition within the framework of the old fashioned equitable approach. In response, Parliament kept amending the legislation, leading to several iterations of the prohibition. But this itself resulted in greater uncertainty about the interpretation of the law. With the Lux case, however, we have superior court interpretation of a provision that has not been amended for more than two years (in the life of statutory unconscionability, that’s practically a record).

While that decision is very fact specific, it clearly broadened the scope of the statutory prohibition, such that the ACCC may feel greater confidence in categorising Coles’ alleged conduct as unconscionability rather than as a misuse of market power.

Time and complexity

Market power cases are notoriously difficult to prosecute: they are long-running, expensive and extremely complex. The ACCC doesn’t have the best track record in relation to such cases and even success can turn out to be a Pyrrhic victory. One of the ACCC’s best misuse of market power success stories is the 2006 Safeway case, in which Safeway (now Woolworths) was fined $8.9 million for unfair conduct towards bread suppliers. That case took nine years from the time of filing to the handing down of final penalties: any benefit for Safeway’s victims had clearly dissipated in the meantime.

Unconscionable conduct cases are much more fact specific and do not involve the complexities of expert economic evidence. Lux for example took around 18 months from filing until the Full Court’s decision.

While the current case is much more complex than Lux (the sheer volume of witnesses will make a significant difference), a first instance decision could be expected by the end of next year. The first directions hearing (on June 6) will be before Justice Michelle Gordon; she runs a fearsomely efficient court room, so an earlier result (if the case stays on her docket) is quite likely.

What would success mean for the ACCC and suppliers?

By framing Coles’ conduct as unconscionable, the ACCC will lose out a little in relation to possible penalties. Maximum fines for misuse of market power are substantially higher – $10 million or more – as opposed to $1.1 million for unconscionability.

But this factor is unlikely to have weighed heavily on the ACCC. First, any such consideration is premised on victory and, as already discussed, unconscionable conduct looks easier to prove right now. In addition, penalties can be imposed per contravention – it’s unclear, at this stage, how many contraventions the ACCC is alleging and how they might be categorised. But it’s unlikely that there would be a maximum penalty of just $1.1 million available to the judge if the ACCC is successful.

In any case, the key outcomes will be damage to Coles’ reputation (which may well result even if the ACCC doesn’t win) and the closer scrutiny of its ongoing conduct. Suppliers, in particular, are likely to be more vocal in complaining about the conduct of Coles and Woolworths if they can see that the ACCC is able to take timely and effective action on their behalf.

To this end, it seems unlikely that Coles will punish the 200 or so suppliers who are caught up in the ACCC’s action. The ACCC has made very clear that much of its evidence was obtained by the use of compulsory powers: as such, it’s hard to tell whether a supplier is a “collaborator” or an unwilling participant.

In any case, Coles would be extremely foolish if it tried to punish suppliers for co-operating with the ACCC while under such a public spotlight. That would look a whole lot like unconscionable conduct.

Alexandra Merrett is a competition lawyer and senior fellow at University of Melbourne.

This piece originally appeared at The Conversation.

The NSW Industrial Relations Commission has reinstated a public servant who was fired after groping five women at his work Christmas party.

The commission found Andrew McCaskill, a project officer with the Department of Justice, was treated more harshly than a senior manager who was only demoted.

McCaskill admitted to touching the breasts of five female co-workers at the Christmas party held at a hotel near his work.

He also disclosed confidential information to one of his colleagues, telling her she had not been successful in her application for a position.

McCaskill apologised to the women and said “he had not intended to offend either of the women and that what he did, as a gay male, was in good humour.”

He said his behavior was uncharacteristic and he was “appalled and ashamed”, placing the blame on missing lunch and drinking too much alcohol.

McCaskill argued the decision to fire him was made without consideration of mitigating factors and past good conduct.

He also raised a lesser penalty applied to another manager at the party who also behaved inappropriately.

Commissioner Tabbaa found McCaskill’s unsolicited conduct was “deplorable… and had the potential to undermine the integrity and reputation of the department”.

But she found the penalty of dismissal was harsh when assessed against the penalty meted out to the other senior manager. 

Commissioner Tabbaa dismissed an argument that McCaskill’s conduct should be distinguished from that of the senior manager because it involved more women.

“Quantity is not the issue – it is one woman too many”, she said. 

“In this day and age it goes without saying that one does not invade the space of another person or touch another person without permission. In any event, even if permission was given, it should not occur in the workplace or any function associated with the workplace.”

Commissioner Tabbaa found reinstatement of McCaskill was not impracticable because he had continued in his role after the incident and maintained a “cordial” relationship with three of the five women. 

She ordered McCaskill to be reinstated to his previous position on the same terms and conditions on which he was previously employed with full continuity of service with a number of conditions.

Commissioner Tabbaa ordered a reduction in McCaskill’s rate of pay to the base increment of a clerk 7/8, placement of a final warning letter on his personnel file, a written apology to the five women and participation in equal opportunity and sexual harassment training. 

“I have no doubt that the applicant has been humiliated and embarrassed by his actions at that function and will live with the consequences for a long time to come,” Commissioner Tabbaa said.

Employment lawyer Peter Vitale told SmartCompany the critical thing that undid the employer in this case was the inconsistency of treating two different employees engaging in the same conduct.   

“There’s a hard lesson here because one can argue the employer acted completely appropriately in terms of terminating the [McCaskill’s] employment.”

“It’s a case which has small employers trying to comply with the law pulling their hair out,” he says. 

Vitale says businesses need to demonstrate they are serious about implementation of policies such as equal opportunity policies and sexual harassment policies.

“One of the ways you do that is by applying them equally to different employees,” he says.

Litigation has increasingly become a tool of last resort. It is expensive, distracting and can seriously reduce the productivity of the people involved in running a case.

But it is naive to think that a business can avoid conflict altogether and never become embroiled in an argument.

Avoiding litigation doesn’t need to involve simply walking away from disputes or paying exorbitant settlement sums. Instead, the trick is to have strategies to stop conflicts escalating into serious disputes. Writs and judges will then become a thing of the past.

Every business has the ability to facilitate good relationships with clients and to resolve disputes efficiently – they just need to know the right tactics.

Here are nine steps that you can implement in your business to keep things on track - even when your latest employee responds to an email from Nigeria.

1. Know the legal environment in which you operate

Before considering a new relationship with another party, make sure that you understand the underlying legal obligations. Whether it is an employee, client or a takeover target, Australia has a web of interacting regulations that have a profound impact on how the relationship must operate.

2. Train staff about relevant risk issues

Employees are the frontline of the business. Not only are they the ones facing the customers, they are also a common source of problems. You must ensure that staff are trained to be aware of the likely events that may give rise to problems so they come to you before matters escalate.

By keeping staff educated about legal obligations and the risks to the business, you will minimise your chance of disputes with both the employees and the people they are dealing with.

3. Put it in writing

The very first stage of any business relationship is aligning what the parties expect of each other. It seems that the new catchcry of business in Australia is “manage expectations.” The best way to do this is to put it in writing.

A well-drafted contract, combined with procedures and policies, makes the rights and obligations of the parties explicit. This should give everyone a road map towards a smooth business partnership.

4. Good communication and relationships

Management should keep business relationships strong enough to withstand the stress of conflict. This involves a high level of mutual trust and respect.

Studies have shown that people are far less likely to get into disputes with people or entities that they like and empathise with, so get to know your clients and suppliers. And if someone stuffs up (and let’s face it, we all do from time to time) deal with it immediately.

5. Be organised and prepared

Having properly organised systems and filing makes it much easier to deal with problems when they arise. If you can quickly assemble a complete set of documents that explain your negotiation position, you can assess your exposure with all of the relevant facts.

This is the time to get an external opinion from someone who can give you objective advice on the risks that you face. This is a best possible launching pad for a frank and positive negotiation.

6. Manage conflicts before they become disputes

Business life is based around conflict. Everyone wants a little bit more of the pie: consumers want cheaper prices, and suppliers want to expand their margins. You just need to stop conflict from escalating into a formal dispute.

If conflicts arise, use early intervention. If things have the potential to escalate, obtain expert assistance to provide you with advice on how to proceed.

7. Pick your battles

Some fights just aren’t worth having. Make sure you look at the big picture when deciding when to take a stand. You need to consider the effect on those involved in the business as well as the cost of litigation. If you can’t justify the dispute financially and morally, it isn’t a fight worth having.

8. Get help early

Even if you are experienced in a particular area, it may be worth getting a second opinion. An independent bystander may be able to see things from a different perspective.

9. Negotiate smart

Modern psychology has transformed negotiating tactics. Avoid positional bargaining and instead try to work together with the other party to achieve a mutually acceptable result. The use of interest-based bargaining and early intervention will deliver you some surprising results.

Ben Patrick is a senior associate at law firm Holding Redlich.

The government says it is committed to establishing a Small Business and Family Enterprise Ombudsman “with real power”.

It has now released a discussion paper on establishing such an ombudsman. The Minister for Small Business, Bruce Billson, said the idea is to establish a single entry-point for small businesses, providing an easy way to find out about services and programs.

The government is looking for input on the scope of the ombudsman’s key responsibilities and how to best provide the role with appropriate powers to deliver benefits to small businesses.

The paper concentrates on the four main functions of the new ombudsman. As part of its key responsibilities, the ombudsman will be a:

• concierge for dispute resolution. The paper says there are four types of disputes the ombudsman’s own mediation service could focus on. These include small business disputes with: (i) Australian government agencies; (ii) international businesses; (iii) interstate businesses; and also (iv) disputes under Commonwealth industry codes of conduct;
• Commonwealth-wide advocate for small businesses and family enterprises. This could include concerns from smaller enterprises about their dealings with Australian government agencies (such as the ATO and others) or other businesses;
• contributor to the development of small business-friendly Commonwealth laws and regulations. The government intends that the new Ombudsman would help ensure that Commonwealth legislation and regulations are small business-friendly, and assist the Australian government in achieving its broader deregulation agenda; and
• single entry point agency through which Commonwealth assistance and information regarding small business can be accessed. The single entry-point will also provide information to help small businesses manage and avoid disputes.

The discussion paper includes options for the scope of the ombudsman's functions and powers, and seeks to identify possible areas of duplication, gaps or alignment with services and functions that are delivered through other governments, industry bodies or private providers. 

The government says the Small Business and Family Enterprise Ombudsman will extend the activities of the existing Australian Small Business Commissioner to create a more purposeful, empowered and effective role. Providing statutory backing for the ombudsman is designed to help cement the ombudsman’s impartiality and equip it with the tools to effectively receive and deal with small business concerns and disputes.

Some examples of what the new ombudsman may deal with include:

- If a business is unable to resolve a disagreement or is concerned about actions of another business or government agency, there are various informal and formal pathways available if it wants to pursue the matter further. When considering a small business complaint, the ombudsman would need to consider the merit of the matter and the appropriate course of action.

- Where a complaint raises concerns about maladministration by a government body, the Ombudsman would then refer businesses to existing complaint handling bodies such as the Commonwealth Ombudsman or the relevant state-based ombudsman.

- Where a business is seeking to resolve a disagreement with another business or government agency, the ombudsman may undertake preliminary enquiries into the matter before considering an appropriate method to resolve the dispute. The ombudsman may refer the business to existing dispute resolution services, such as those offered by the state small business commissioners.

The government says it is committed that the ombudsman will be supported by legislated powers. Small businesses can be destroyed by disputes, and the intervention by an ombudsman may be one method to prevent this. The ombudsman could be conferred powers to:

• make administrative decisions;
• investigate small business disputes, including obtaining information from parties; and
• compel parties to attend mediation before approaching a tribunal or court.

The single entry-point aspect is expected to provide advice and educational resources to small business. This could include material developed specifically for the single entry-point, but also direct small businesses to information readily available through other government websites and hotlines (like digitalbusiness.gov.au and the Australian Competition and Consumer Commission’s Scamwatch).

Cooperation with non-government organisations, such as industry associations, under agreed publishing guidelines, would allow the rapid development of industry-specific information and educational resources that respond to emerging priorities and issues.

The government is seeking views from all interested parties, including of course SMEs. Comments on the paper are due by May 23, 2014 and details are on the treasury website. This is an excellent opportunity for SMEs to make their views known.

The Australian Competition and Consumer Commission has instituted proceedings against Origin Energy in the Federal Court of Australia, alleging the energy provider made false or misleading representations and engaged in deceptive conduct.

The ACCC alleges Origin Energy made misleading representations to South Australian consumers in early to mid-2013 in regard to the level of discounts that could be obtained through the company’s ‘DailySaver’ plan. The competition regulator says Origin Energy made these representations on its website and in information packs sent to consumers. 

ACCC chairman Rod Sims said in a statement energy bills are one of the most significant ongoing costs for households.

“As a result, representations by energy retailers about savings that can be achieved through discounted charges are likely to induce consumers to agree to commence an energy plan because of the opportunity to lower their power bills,” he said.

“This is the second proceeding commenced by the ACCC against an energy retailer in which it is alleged that the retailer has misled consumers about the level of discounts under energy plans featuring discounts.”

The ACCC alleges Origin told consumers they would receive a discount of up to 16% off electricity usage charges with their ‘DailySaver’ plan, when the rates charged to consumers were around 4% higher than Origin’s standard retail contract. Similarly, the regulator alleges Origin told consumers they would receive a discount of up to 12% off natural gas charges when the rate was around 1% higher.

Sims said the proceedings against Origin Energy should serve as a warning to businesses engaging in deceptive conduct over energy prices.

“Energy retailers should be in no doubt that the ACCC will take appropriate enforcement action when it forms the view that a retailer has misled consumers about the savings they can obtain under energy plans.”

Melissa Monks, special counsel at law firm King & Wood Mallesons, previously told SmartCompany the energy sector was one of the ACCC’s key priorities for 2014. 

“We will definitely see litigation in relation to the savings ‘discounts off what?’ concerns, likely in the energy sector given the ACCC has been investigating this concern since at least June last year,” she said.

In its Compliance and Enforcement Priorities for 2014, the ACCC announced “drip pricing” was a particular area the regulator wished to tackle. “Drip pricing” is a strategy used by some online retailers to lure customers by promoting competitive prices, but then adding additional charges when they begin processing payments.

Origin Energy was contacted for comment but did not respond prior to publication.

Australian publishers could soon be prevented from using the word “glossy” to describe their publications if an attempt to trademark the term by Bauer Media is successful.

Mumbrella reports the German publishing giant, which publishes Australian women’s magazines Cosmopolitan, Australian Women’s Weekly and Elle, has applied for a trademark in Australia for the term “glossy” in two classifications which cover print and online publishing.

Classification 16 includes magazine and periodical publishing, while classification 41 covers publishing, competitions, entertainment and cultural services, production of television and radio shows, interactive games services and “publication of information on global computer networks including the internet”.

According to the Trade Mark Watch blog, the application was lodged on May 1 and is subject to approval.

SmartCompany contacted Bauer Media for comment but did not receive a response prior to publication.

This is not the first time the publisher has applied for the “glossy” trademark, following several applications by ACP magazines, which was acquired by Bauer in 2012, between 2007 and 2009.

ACP magazines registered the “glossy” trademark under the same classifications in 2012, but it was not added to the trademark register and subsequently lapsed.

K&L Gates partner Jane Owen told SmartCompany she expects the application will “fall down at the first hurdle” in relation to printed materials as the word “glossy” is “inherently descriptive”.

“It’s one step removed from trying to register the word ‘magazine’” Owen says, pointing out IP Australia will not give a business a monopoly over a trademark in a situation where “other traders ought to be able to use the word in the normal course of trade”.

Owen says businesses and individuals in Australia can apply for trademarks and the applications are reviewed by IP Australia, which compares the application with the trademarks already registered in Australia for similar goods and services to see if the trademark is distinctive.

Failing these tests, Owen says the applicant must show substantial evidence that it is already using the term.

Finlaysons intellectual property, media and technology partner John MacPhail agreed, telling SmartCompany he would be “extremely surprised” if the application was successful.

“The test is quite plain and simple,” MacPhail says. “Would people when they see the word glossy make the unique connection with Bauer? The answer is no.”

The Fair Work Commission has found a manager who was made redundant was not treated unfairly by receiving one day's notice.

Paul Murray, a technical project manager with software development company Ventyx, was made redundant after 16 months of employment. 

He made an unfair dismissal claim but the full bench of the Fair Work Commission found various factors may affect the timing of discussions with employees.

"Employers may face various exigencies which will affect the practicability of the timing of the commencement of discussions with employees,” the full bench of the commission found.

In this case there were circumstances where confidentiality of client data was important. 

Murray was made redundant after Ventyx undertook a review of its global business which had not been performing to expectations.

It made 100 employees globally redundant, with nine positions in Australia going including Murray. 

Ventyx claimed it did not inform employees of the redundancies until July 1, 2013, because of security concerns for its own systems and those of its clients. 

Murray’s work was project based and the commission found Murray was unfortunately between projects or "on the bench" at the relevant time and there was no work in the pipeline for him.

“It is in the public interest that the full bench should assist in developing clear lines of authorities in such areas as redundancy decisions of the Commission, which have a high degree of prevalence in a cross section of industries in the economy,” the commission found. 

Employment law expert Peter Vitale told SmartCompany the message for employers is really that the commission will adopt a flexible and common sense approach to considering the circumstances which are unique to that particular business.  

"It does not mean that in all cases it is necessarily appropriate to give employees very short notice that they are about to be made redundant," he says.

"In this case an important consideration for the commission was that the company had contractual obligations to its clients to ensure confidentiality and security of information that it held. It was also found that the company had not strictly complied with its obligations to consult under the award, but balancing all the other factors in the case the termination was not harsh, unjust or unreasonable."   

Bearing distributor NSK Australia was yesterday slapped with a $3 million penalty, after the Federal Court found Japanese executives had conspired to fix prices in Australia.

The court found several senior NSK executives living in Australia and those of two other bearings companies, Nachi Australia and Koyo Australia, had met over dinner as a group they called the ‘Southern Cross Association’ to share pricing plans.

This is not the first time a Japanese-based company has been fined for participating in "cartel conduct" in Australia, last April cable supplier Viscas was hit with a $1.3 million fine after it was found guilty of bid rigging and price fixing by the Federal Court in Adelaide.

The court found at two separate ‘Southern Cross Association’ meetings, which had taken place at Japanese restaurants in Sydney and Melbourne, an arrangement had been made between NSK, Nachi and Koyo to control the price of bearings to their aftermarket customers.  

NSK Australia then proceeded to implement increases to their customers as discussed at these meetings.

Dr Julie Clarke, Associate Professor at Deakin University’s School of Law, said these sorts of ‘cartel’ judgements tended to be based on agreed facts and admission of liability, meaning the court actually heard little detail about whether a contravention had indeed taken place and what it was.

“They’ve gotten together, they’ve talked about prices and exchanged price lists, and they have admitted it was an arrangement to fix control on prices,” said Clarke.

“The result is over-priced goods so that the consumer is paying more.

“The theory behind cartel conduct is that competitive market prices are more likely to be fixed at an optimal competitive level, but if people are getting together to agree on prices, they are almost certainly going to agree on what will be a higher price for consumers.

“The consumer is going to lose what would have been the difference between the price in a competitive market and what the parties agreed on.

Clarke said because the meetings took place before 2009, when new cartel laws were introduced to Australia, the judgement appeared to have been based on those older laws, and potentially meant NSK was not open to criminal charges or higher fines brought in by the new laws.

The court made orders restraining NSK from engaging in similar cartel conduct for a period of three years, requiring it to implement a competition and consumer law compliance training program.

They received a significant discount in penalty for co-operating with the ACCC during the investigation, which Clarke said was typical in these cases.

She said $3 million was a comparatively modest fine compared to other cases of cartel conduct, especially cases in Europe which saw guilty companies forking out billions in penalties.

Clarke said there was a feeling that if higher penalties weren’t brought in to Australia, there may not be a strong enough deterrent for business.

“Cartel conduct happens covertly, it’s very difficult to detect, if the fines are too low people just think they can factor it into risk assessment of doing business, so it needs to be much higher to provide a deterrent.”

She said Australian studies have estimated only 10% of cartel conduct in Australia is detected.

SmartCompany has contacted NSK Australia for comment but none had been received at the time of publication.

Women’s clothing retailer Sussan has been ordered to pay $237,000 by the Supreme Court of Queensland after the retailer failed to follow its own bullying policy. 

Gabrielle Keegan, a former assistant manager at Sussan, claimed $1.2 million in damages after she alleged that she suffered a major psychiatric injury over 11 days due to bullying and harassment by her new manager.

Keegan claimed when she returned from a period of parental leave her manager, Diana Clarke, left her out of business management matters, spoke aggressively to her, including during a confrontation about a mop, and gave unwarranted criticism about various matters including the state of the store. 

Keegan phoned Sussan’s Queensland business manager, Jayne Makarein, in tears but after listening to her complaint Keegan claimed Makarein told her to “put some lippy on and go home to [her] bub”.

Makarein told Clarke about the allegations and told her to be “more mindful” about how she dealt with Keegan in the future.

She also told Keegan she had to “work it out for herself”. 

Makarein did not follow Sussan's bullying and harassment policy, which required that complaints be taken seriously, treated confidentially and investigated.

Sussan denied liability for Keegan's psychiatric injury and argued that her injury was extraordinary and unforeseeable given Clarke's "essentially unremarkable behaviour".

But the court found Makarein's "patronising advice" and method of dealing with the issue clearly indicated that she did not take the bullying complaint seriously.

It found Sussan was responsible for Makarein and Clarke's actions and awarded Keegan $237,000. 

SmartCompany spoke to legal experts Hedy Cray, a partner at law firm Clayton Utz, and Ross Lee, principal of the law firm Lee Lawyers, who both say having a bullying policy is not enough. 

“No matter how trivial it may appear, you must take bullying complaints seriously,” Cray says.

She says the case reinforces the importance of supporting mangers and support can come in different ways.

“Firstly, regarding the managers own conduct and behavior,” Cray says.

“Second is how to respond and investigate complaints. A response extends not only to the outcome to a finding of unreasonable or unacceptable behavior but the empathy and support that is given to a complainant without predetermination of an outcome.”

WorkCover figures indicate success rates for these types of bullying claims are very low, but Lee says “when they succeed they succeed in a big way”.

“If they do succeed and the person does in fact show a persistent trait of not being able to go back to work and not being able to heal themselves for six or 12 months, ongoing, the claim can be very sizeable,” he says. 

Lee says SMEs need to have systems in place to care for and protect employees and this includes a bullying policy.    

“Like any system, it’s all very well to have the manual on the shelf gathering dust, but it’s really not going to impress the judge,” he says.

“I think this case is a good reminder for people to check they have appropriate workers’ compensation insurance and, secondly, that they have good policies and, thirdly, that they carry them out.”

SmartCompany contacted Sussan for comment but did not receive a response prior to publication.

Esra Ogru, the former chief executive of Melbourne based biotech company Phosphagenics, is facing criminal charges over an alleged $6 million fraud.

The Australian reports Ogru has been charged with nine offences over the misappropriation of funds from Phosphagenics, including four charges of dishonestly obtaining money, three charges of conspiracy to dishonestly obtain money and two charges of using her position as a company director to dishonestly obtain money. 

The penalties for each charge range from a fine to a custodial sentence. 

Phosphagenics shares were placed in a trading halt and Ogru was dismissed by the board after Phosphogenics uncovered "irregular transactions" in relation to its invoicing and accounting records in July last year.

"The company believes that the amount involved may be material. The company has retained independent legal and accounting professionals to undertake a thorough and extensive investigation," Phosphagenics said in a statement to the ASX at the time.

Phosphagenics claims $6.33 million was misappropriated by Ogru over eight years in a scheme which involved issuing false invoices and overstating research and development expenses.

David Segal, head of investor relations at Phosphagenics, told SmartCompany the company has recouped $1 million from its former chief executive.

A further $1.3 million is expected to be repaid following the sale of Ogru’s family home.

“We’ve already told the market it has been business as usual since and we had some exciting clinical results late last year and our programs are moving forward this year,” Segal says.

“It has been great credit to the staff that they haven’t been distracted from getting on with the business of proving our technology, which has made some significant breakthroughs in the last 12 months.”

Segal says Phosphagenics is trying to put the alleged fraud behind it and is focused on moving forward.

“It’s not one of the normal things you’d anticipate you have to deal with, from a shareholder and investor relations point of view it’s been a challenge,” he says.

Phosphagenics annual report showed sales revenue last year fell 19% to $2.2 million recording a loss of $12.7 million.

Australian Mutual Holdings has paid more than $20,000 in penalties after the Australian Securities and Investments Commission issued two infringement notices for alleged misleading statements in product disclosure statements.

According to ASIC, Trident Global Growth Fund and Trident Income Plus Fund—both entities of Australian Mutual Holdings—mislead consumers in their product disclosure statements (PDSs) up until October 2013.

While the statements claimed the majority of the funds’ assets were held by the funds’ custodian, ASIC says the majority of assets were held in an Australian Mutual Holdings trading account.

ASIC Commissioner Greg Tanzer said in a statement the financial services industry should take particular care not to mislead consumers.

“PDSs are key documents which investors use to make important financial decisions,” he said. “They must be accurate.”

The infringement notices imposed on Australian Mutual Holdings were worth $10,200 each.

Speaking to SmartCompany previously, Melissa Monks, special counsel at law firm King & Wood Mallesons, said ASIC is sending a strong message to the business community.

“This is a good reminder to ensure that the terms and conditions of the claims you make in a particular campaign are accurate because the fallouts can be quite significant,” she said. “These things come very easily to a regulator’s attention when they are so obviously wrong.”

While the payment of infringement notices is not an admission of a contravention of the Australian Securities and Investment Commission Act 2001, Monks said businesses need to be careful because infringement notices are a quick and easy enforcement mechanism for the corporate regulator.

“It is still not an ideal outcome and many consumers see it as some sort of admission,” she said. “Increasingly regulators are using these and particularly ASIC. This is a good warning to the financial services industry that they really need to get their messaging right because the regulator is very willing to act.”

Monks also stressed the significance of non-financial repercussions can have on a business.

“The brand damage that flows from something like this is significant,” she said. “And the lack of confidence customers will have in the company going forward.”

ASIC has taken action against several companies this year for misleading claims, with a total of $140,000 in penalties. In April, Virgin Money, a popular insurance and home loan provider, paid more than $30,000 for misleading customers through online and television advertising.

Australian Mutual Holdings were contacted for comment but did not respond prior to publication.

Coles has been hit with a $31,500 fine for displaying deli meats past their use-by date.

The Adelaide Magistrates Court found the supermarket giant breached the food code at its McLaren Vale store in South Australia in April last year, when local council inspectors found out-of-date items including salami and shaved ham.

Coles faced more legal drama yesterday, when lawyers for the company pleaded guilty to seven counts of breaching food safety regulations and prosecutors dropped another 15 counts.

Magistrate David Whittle also ordered Coles to pay $10,000 in legal costs for Onkaparinga Council.

Coles yesterday released a statement saying the company took food safety seriously and the South Australian stores had an outstanding record in that area.

“We set high standards and when we do not meet them, we take accountability and fix the problem,” said the retailer.

The laws relating to date markings are consistent across all Australian states and territories and are based on two different kinds of date marks, use-by dates and best before dates.

Spokesperson for Food Standards Australia, Lorraine Belanger, told SmartCompany best before dates were used on products with no health safety risks, such as muesli bars, and related to the quality of the product. These items can be sold after their marked date.

However, products with use-by dates, such as deli meats or fish, are at high risk of growing bacteria under the right conditions and must be removed from the shelf before their marked date.

“It is very important to keep on top of use-by dates, especially for vulnerable sector of the community, such as pregnant, sick or people with an immune deficiency,” says Belanger.

She says the easiest way for businesses to avoid breaching the law was to keep across the code and any changes made to it on Food Standards Australia’s website and publications.

Representative Advocate of the National Association of Retail Grocers Australia, Selwyn Johnston, told SmartCompany the major supermarkets have sold expired food for decades and the fine is just “a slap on the wrist”.

Johnston says smaller food retailers bust their necks to follow the codes, because if they were caught, the ramifications could put them out of business.

“Word of mouth is death by a thousand lashes to small businesses,” he says.

“The reason why smaller grocers follow the code by the letter is because they want to provide a real alternative to the major supermarkets.”

“The majors have got away with it and will continue to get away with it. The fine is pittance to a major supermarket chain,” says Johnston, who says $30,000 is close to the yearly turnover of some independent supermarkets.

Johnston said small food retailers should maintain vigilance in checking their stock and remove its products two to three days before the expiry date.

“A precedent has been set now and a $30,000 fine would put a small grocer out of business,” he says.

The Federal Court has ordered Taxsmart Group to pay $260,400 in franchise fees to five former Taxsmart franchisees.

In a judgment handed down on Friday, the court found the accounting and taxation firm with 45 franchises across Australia engaged in misleading and deceptive conduct. 

The orders were made by consent in the proceedings brought by the Australian Competition and Consumer Commission.

The watchdog alleged Taxsmart Group, its director Scott Andrews, and its business development manager Janine Andrews made false promises in job advertisements for graduate accountant positions.

The court found Taxsmart collected sums of between $45,000 and $80,000 from a number of recently graduated accountants who paid to start a franchise business with Taxsmart.

The money was paid on the proviso that at the end of a 12-month supervision program the graduates would be qualified as registered tax agents and could consequently run their Taxsmart franchises.

A number of the employees, many of whom came from non-English speaking backgrounds, allegedly had their employment terminated within the first 12 months of working for Taxsmart, meaning their supervision period was not completed and they were not qualified to operate their business.

The court found Taxsmart had not made proper enquiries or adequately considered whether the graduate program would enable graduates, with no prior experience in tax accounting, to satisfy the legal requirements for registration as a tax agent.

It also found Taxsmart’s graduate program was not capable of enabling graduates with no previous work experience in tax accounting to satisfy the legal requirements for tax agent registration.

ACCC commissioner Sarah Court said the judgment should remind all businesses of their obligation to ensure that they have reasonable grounds for making any representations about future matters.

“A tax agent licence is lucrative to accountants as it allows them to complete tax returns for a fee without relying on a supervising agent to authorise the return,” she said in a statement. 

“These graduates paid significant franchise fees, relying on the representation made by Taxsmart that they would satisfy the requirements for registration as a tax agent, when in fact they would not meet those requirements through the graduate program.”

The court also declared that Andrews aided and abetted Taxsmart in engaging in the misleading and deceptive conduct and is jointly liable for the repayment of the franchise fees.

The court accepted undertakings from Taxsmart and Andrews that they would not, for a period of three years, make the same or similar representation or make offers of employment contingent on the payment of a fee.

The court also ordered that Taxsmart and Andrews pay a contribution to the ACCC’s costs in the amount of $10,000.

Andrews told SmartCompany the outcome of the case was “very different” to what the ACCC originally envisaged, with the two parties negotiating some middle ground in the case.

“We acknowledge that the graduate program we put together included a significant amount of training, we felt that was necessary and still maintain we think it is appropriate for graduates with no experience to participate in some pretty heavy training,” he says.

“In the end we acknowledge that by implementing a heavy training program like that it cut into the practical experience that they would obtain.”

Andrews says Taxsmart hasn’t offered jobs as part of its franchise since 2007. “So from our perspective we don’t think it impacts our business too much,” he says.

“At the end of the day it probably means we are unlikely to employ graduates going forward with no experience.”

Melissa Monks, special counsel at law firm King & Wood Mallesons says any business making a representation about future matters, which is commonly earning potential and profitability, must ensure there is a reasonable basis for doing so or they may be exposed for misleading conduct.

“It's a significant decision because the ACCC has relied on its power to seek compensatory relief, rather than leaving it to individuals who have suffered loss or damage to pursue costly legal action themselves,” Monks says.

This is the first order of its kind under the Australian Consumer Law. 

Monks says under the legislation a court need only be satisfied that a person is likely to suffer loss or damage, so the ACCC doesn't even have to prove actual loss or damage, making it a powerful tool for the regulator. 

“However, as we've seen so far, the ACCC is only likely to rely on the power in limited circumstances as it not often that there are large classes of persons suffering the same or very similar loss from the same conduct,” she says.

An east coast landscaping business and two of its employees have been fined for threatening to sack a worker who asked for a car allowance owed to him.

After a legal battle which has lasted more than two years, the Federal Circuit Court in Brisbane has ordered Tuscan Landscape Company to pay $9000 for applying coercion to the worker and breaching the Fair Work Act by telling him he “should not expect a good outcome” and “may be fired for causing trouble”.

Tuscan Landscape Company, which supplies landscaping products in Victoria, NSW and Queensland, was also ordered to pay the worker $3381 in compensation for the employee’s non-economic loss, including stress, anxiety, hurt, humiliation and inconvenience, while two regional managers were each fined around $550 for their part in the incident.

The employee lodged a complaint with the Fair Work Ombudsman after he was not paid an allowance for using his own car to drive to and from work, despite being entitled to an allowance of 74 cents per kilometre.

The worker raised the issue with his supervisors on more than one occasion and after lodging a complaint with the ombudsman was told if he “kicked up a fuss the big bosses probably would not be happy and would say just sack the guy”.

While Tuscan Landscape Company and the employee eventually agreed to settle the dispute, and the amount of the car allowance was repaid after the ombudsman opened its investigation, he was told during the negotiations that if he was not satisfied, he and the company should “go their separate ways”.

Throughout the negotiations, Tuscan Landscape Company also stopped offering casual work to the worker, who was told his hours would return to normal once the claim was resolved.

Employment lawyer Peter Vitale told SmartCompany “it seems the court is sending a pretty clear message that you can’t try to intimidate an employee from claiming their entitlements”.

“If you explore the cases historically, you’ll find instances of similar behaviour. But it’s never been acceptable and it’s not acceptable now,” he says.

Vitale says the size of the underpayment to the employee is just one of the factors taken into account in these cases.

“The interesting aspect of this case seems to be the awarding of compensation for stress, anxiety, hurt and humiliation,” says Vitale. “This would be relatively unusual in this type of case.”

Vitale says the legislation governing both unfair dismissal and fair work cases involving bullying prohibit awarding compensation for non-economic loss, but in this case there has been a separate order to compensate the employee for this type of loss.

“I think we’re likely to see more adverse action claims for that type of loss and I would expect that the Fair Work Ombudsman might, depending on the circumstances, include a claim like that more often,” says Vitale.

SmartCompany attempted to contact Tuscan Landscape Designs but did not receive a response prior to publication.

In one of the first decisions made by the Fair Work Commission under its new jurisdiction the commission has dismissed a bullying claim.

The Fair Work Commission received an application for a stop bullying order from a team manager, known only as “SB” alleging unreasonable behaviour by her team, particularly one employee known as “CC”.

The manager claimed CC deliberately made false allegations against her, spread malicious rumours about her, and harassed and badgered her on a daily basis.

The manager claimed she received a lack of management support and there was an ongoing risk to her health and safety because her employer failed to take adequate action to prevent the bullying.

The employer opposed the application on the basis there was an absence of repeated unreasonable conduct by CC and others in the team.

The Fair Work Commission dismissed the claim, finding while some of the behaviour alleged was "bordering upon unreasonable", it was outside the scope of bullying behaviour as defined by the Fair Work Act. 

“I am not satisfied that the alleged behaviour occurred and/or was unreasonable in the context that it occurred,” Commissioner Hampton said.

“Some of the behaviour … was bordering upon unreasonable but not such as to fall within the scope of bullying behaviour as defined by the Act. In particular, I cannot be satisfied, based upon the evidence … that the limited degree of unreasonable behaviour by the individuals concerned was such that it created a risk to health and safety.”

Employment law expert Peter Vitale told SmartCompany it was clear the Fair Work Commission doesn’t want to provoke a “flood of bullying claims”.   

“It is a very careful and considered decision,” he says.

Vitale says the Commissioner’s comments make it clear there were some cultural and personality issues in that particular workplace.

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

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

Vitale says it was good to see management carried out an investigation into the alleged bullying conduct and took it very seriously, “as they should”.

Josh Bornstein, head of employment and industrial law at Maurice Blackburn says it is interesting to see the Commission referred to a workplace investigation commissioned by the employer.

"It shows the Commission will be very cautious of affording such workplace investigations much weight in these cases. It will reach it’s own views," he says.   

"It may be different if an independent and rigorous investigation takes place and there is disclosure and transparency about that."