Contributors:
Mark Fowler
Chris Mills
4 November 2016
In this update:
- Consumer Protection Law Extended to Small Businesses from 12 November 2016
- Can Employees Refuse to Perform Higher Duties?
- Are you Consumer Law ready?
Who Does the New Law Cover?
Unfair Contract terms legislation will be expanded to cover the operations of small businesses from 12 November 2016. This includes the operations of small businesses that are lenders, borrowers, franchisees and franchisors, purchasers and sellers. It includes not for profits and charities that are small businesses. It is also relevant to those persons and businesses who are contracting with small businesses, who will also have to consider the application of the law to their engagements with these small businesses.
What is the Practical Effect?
Under the legislation, unfair terms within ‘standard form contracts’ may be declared void (non-binding).
This may occur where:
– the contract is a standard form small business contract for the supply of goods and services (including financial services) or the sale or grant of an interest in land; and
– the upfront price is less than $300,000 (including GST) or $1,000,000 if the term of the contract is for more than 12 months.
Where a business uses the same template version of contract for multiple parties a declaration that a contract term is void may then affect all other contracts you have entered.
What is an Unfair Contract Term?
Amongst other factors, an unfair contract term exists if:
-It would cause a significant imbalance in the parties’ rights and obligations;
-It is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and
-It would cause detriment (financial or otherwise) to a party.
What is a Small Business?
A small business is a business with less than 20 people when the relevant contract is entered into. This includes casual employees engaged on a “regular and systematic” basis.
Do you Need to Do Anything?
If you operate a small business, or if you contract with small businesses, we recommend that you consider the application of the new law to your existing contract suite. This may include developing a means to identify whether the businesses you are proposing to engage with are small businesses and covered by the law.
We can offer a ‘Consumer Law Ready Review’ of your existing standard business contracts and practice to assist with your compliance.
- Can Employees Refuse to Perform Higher Duties?
A company was recently sued for firing an employee who refused to perform higher duties when directed. At first instance the court decided the employee had a right to refuse to perform higher duties, and that the company had taken adverse action against the employee in breach of the General Protections provisions in the Fair Work Act 2009 (Cth). The primary judge accepted that the company did not intend to take adverse action because it was genuinely mistaken as to the law, but decided its lack of knowledge was no defence to the claim. The company appealed the decision to the Full Court of the Federal Court of Australia.
The Full Court was asked to decide, among other things, whether the primary judge erred in finding that the employee had a right to refuse to perform higher duties. After reviewing the relevant terms of the company’s enterprise agreement and the evidence concerning the employee’s knowledge and experience in the role, the Full Court decided the employee did not have a right to refuse to perform the higher duties and overturned the original decision.
Our full discussion of the Full Court’s decision and its consequences are available on our website.