ACCC looking out for small businesses

The ACCC will continue to educate businesses and take enforcement action to ensure that small businesses receive the protections of the new unfair contract terms laws.

Since November last year, when the laws were extended to small business contracts, the ACCC says it has taken successful court action against a major waste management company, JJ Richards & Sons for unfair contract terms including an automatic five-year rollover clause, a unilateral price variation term and a broad indemnity provision.

The ACCC has also commenced proceedings against serviced office space provider, Servcorp Ltd, alleging that 19 terms in its Service Agreement used with small business clients are unfair. The matter is currently before the court.

There are more than 500 franchise stores in the print industry, most with between two and in some cases, up to 30 staff in them, together representing around a quarter of the entire print industry workforce, and print is the biggest manufacturing industry left in Australia. Franchise groups include Kwik Kopy, Snap, Worldwide, MBE, Minuteman, Signwave and Signarama.

[Related: PIAA: FWC a danger zone]

The PIAA have been campaigning hard against the 7-Eleven bill saying it will penalise businesses, CEO Andrew Macaulay says, “On its face, the Bill makes franchisors and holding companies responsible for underpayments by franchisees or subsidiaries where they knew or ought to have reasonably known of contraventions of workplace relations laws, and failed to take reasonable steps to prevent them.

“But the Bill makes the mistake of assuming that every franchisor has control, influence and a direct line of sight over the workplace relations practices of each of its franchisees, when they do not.  Whilst this was the case in the well-publicised 7-Eleven cases, for a range of practical and commercial reasons it’s rarely the case in the franchising sector; nor should it be required to be so."

Dr Michael Schaper, Deputy Chair at the ACCC says,  “These cases show the ACCC is serious about enforcing the new laws, and we will continue to take action where appropriate to ensure that small businesses are protected.

“ACCC engagement has seen tens of thousands of new or existing contracts improved, but this is the tip of the iceberg as Australia’s two million small businesses sign an average of eight standard form contracts a year.”

Earlier this year, a number of major traders such as Uber, Fairfax Media, Jetts Fitness, Lendlease Property Management and Sensis amended their standard small business contracts in response to unfair contract terms concerns raised by the ACCC. These changes have an effect upon thousands of small business contracts across Australia.

More recently, Australia Post proposed some amendments to its Licensed Post Office Agreement to address certain unfair contract terms concerns raised by the ACCC, and now plans to consult with its licensees on the proposed changes.

[Related: 7-eleven bill will penalise businesses]

Schaper says, “We are pleased with the level of engagement and cooperation we have seen from some traders over the past year, but we are also continuing to receive a steady flow of complaints from small businesses indicating there’s still a good deal of work left to do.

“Where small businesses think they are being asked to sign a contract that puts them in a greatly disadvantaged position to the company offering the contract, they should ask that the contract be changed. If the company won’t change the contract terms, they should make a report to the ACCC.”

The ACCC says small businesses should look out for common types of terms which may be unfair including Automatic renewal terms binding customers to subsequent contracts unless they cancel the contract within a certain timeframe; Terms allowing a trader to unilaterally increase its prices or alter the terms and conditions of the contract; Terms that broadly limit a trader’s liability towards a small business, or which require a small business to indemnify a trader in an unreasonably broad range of circumstances; and terms that allow traders to cancel or terminate an agreement without cause.

The ACCC says if small business thinks a contract term is unfair, it should ask the provider to amend or remove the unfair term. If this is unsuccessful, a small business should contact the ACC or seek assistance of the state’s small business commissioner. 

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