Self Employed Australia

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“Everyone needs an Advocate”

Unfair contracts

Historic day for small business people – Real unfair contract protections

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unfair-contractToday is historic for small business people and the Australian economy.

Today (9 November 2023) is the start of the new ‘beefed up’ unfair contract laws. These new laws have real ‘teeth’:

  • Businesses that ignore or breach the laws can suffer fines of up to $50 million.
  • Loopholes have been closed to stop businesses getting around the laws by making minor changes to their contracts and so on. The courts have wide powers to close unforeseen ‘loopholes’.

Have no doubt that these laws are a game-changer for small business people. It’s much bigger than most people realise.

And big businesses are responding. If they don’t, they are in trouble. We’re aware of at least a dozen big-name companies who have just released ‘upgrades’ to their standard form contracts.

We’ve prepared a two-page summary of the laws. Read it. You need to be aware of your rights and these protections. We provide a link to the government regulators (ACCC and ASIC) who enforce the laws.

And we think that we are entitled to claim a big chunk of credit for these laws coming into being.

  • We started campaigning for the laws in 2009.
  • It was a long, lonely, persistent seven-year campaign.
  • We were strongly opposed by some of the most powerful Australian big business lobbyists.
  • Success came in 2016 with the first laws for small business people.
  • Now, ultimate success—the laws with ‘teeth’ start today.

Of course, no-one does anything on their own. There was political support from politicians on all sides of parliament. Our huge thanks to The Australian business journalist, Robert Gottliebsen. He’s a champion of small business. But we can say that, without our campaigning, these small business protections would not be in place today.

The full story is here, showing our campaign back to 2009.

This is what we at Self-Employed Australia do. We focus on the long-term and are damn persistent.

We are delighted with today’s historic event.

But now we are focusing on defending your right to be you own boss. It’s staggering that we have to do this. The Albanese government’s Loophole Bill is the greatest attack upon small business people that Australia has seen. Here’s our campaign page.

Tomorrow (10 November 2023) I’m giving evidence before the Senate Committee that is reviewing the Loophole Bill. We’re being quite specific about the sections of the Bill that must be defeated if small business people are to exist in Australia.

Our submission to the Senate Inquiry is here (number 160). It’s big! But the issues are massive.

More soon.

Independent Senators – Your small business future in their hands

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independent-senatorsHave no doubt that the future of your right to be your own boss, to be a small business person, is in the hands of the seven independent Senators in parliament.

On Monday and Tuesday this week I ‘walked the corridors’ of Parliament House, Canberra, meeting with Senator’s advisors and others on the government’s 284-page, highly complex Loophole (Industrial Relations) Bill. I’ll be returning to Canberra several times before Christmas.

We’ve provided you an overview of the Bill and a detailed analysis of how the Bill trashes contract law as defined by the High Court. We’ll be supplying more analysis progressively. But be very clear on the central thrust of this Albanese government Bill.

This is the greatest attack against Australian small business people ever seen. More details below.

What should be happening are proper protections for small business people. One of these is the unfair contract laws. Seriously stronger unfair contract law come into effect on 9 November and, across the board, companies are upgrading their contracts. But government departments are not subject to these laws. That is, government departments can have unfair contracts with small business people and get away with it.

On Monday morning (16 October), independents Senator David Pocock, Senator Jacqui Lambie and MP Allegra Spender co-sponsored a small business breakfast in Parliament. The large room was packed. I had a chance to push this issue.

I put it to the Senators that this must be fixed. A one-paragraph amendment to competition law would stop this double-standards shocker.

Here I am putting this proposition. Senator David Pocock is behind me on the left of the picture.

small-business

But back to the Bill. The consequence of this Bill is that:

  • 2 million self-employed people will be declared to be employees. This will kill incomes.
  • 970,000 people who use gig work for top-up income will have their incomes trashed.
  • 8 million casuals will be forced to be full/part time employees, losing 6 per cent of their income.

For just the casual workers, people on:

  • minimum pay will lose up to $3,062 a year;
  • average pay will lose up to $5,354 a year.

That is, the Albanese government is engaged in a massive attack against people’s incomes.

This is no exaggeration. These conclusions are based on hard analysis of the words in the legislation with clear documentation on what this means. But be alert. The Albanese government is conducting a scandalous misinformation and disinformation campaign to push this Bill through.

We have more detailed explanation papers that we’ll release shortly. You can judge for yourself. We’ve already supplied these to the independent Senators and MPs and they are listening.

Make the gander do what the goose must do

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gander-gooseThe Federal Small Business Ombudsman is conducting a review into how the Commonwealth government behaves when it buys goods and services from small businesses. We’ve made a submission. Our submission is titled ‘The gander should be required to do what the goose is required to do’.

Specifically, we think it’s crazy that it’s not illegal for government departments to have unfair contracts with small business people. But it is illegal for private businesses to have unfair contracts with small businesses. Talk about double standards!

We’re asking the Federal Small Business Ombudsman to recommend that this be fixed. And we’ve suggested the exact amendment to the competition laws that would do this. The amendment would read:

Application of Act to Commonwealth and Commonwealth authorities

(1) Subject to this section and sections 44AC, 44E and 95D, this Act binds the Crown in right of the Commonwealth in relation to the unfair contract provisions of the Act in so far as the Crown in right of the Commonwealth engages in trade or commerce, either directly or by an authority of the Commonwealth with a small business.

This is similar to what we’re asking of Senators in our campaign requesting the defeat of the ‘employee-like’ provisions of the government’s new ‘spaghetti bowl’ industrial relations laws. We want more protections for self-employed small business people. And having government departments required to comply with unfair contract laws is one of those much-needed protections.

These unfair contract laws will have real ‘teeth’ when the ‘beefed up’ legislation takes effect in November this year. Our submission has a summary of what ‘unfair’ means and what the new ‘teeth’ are.

Frankly, government needs to stop treating the rest of us in the community as a gaggle of geese!

Right to Be Your Own Boss – Sign the Petition

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petitionYour Right to Be Your Own Boss is under attack.

We are endorsing a campaign started by others to defend that right. Check out the Defend Your Rights website here.

We encourage you to sign the petition. (Scroll down on the right-hand side of the website.)

This is important. Please take five minutes to sign it and encourage others to do so.

An update on our campaigning (see our website page)

It appears that the legislation intended to deny you your right to Be Your Own Boss is likely to be presented to Parliament in the next two-week sitting (starting on 4 September).

We’ll be in Parliament House on 4 September, ‘walking the halls’ and knocking on Senators’ doors with updated information on our objections to these planned ‘rights’ denial laws.

A key part of our campaign is to seek to extend and strengthen self-employed, independent contractors’ existing rights and protections under commercial and competition law. A key part of this is the application of Unfair Contract law protections. These laws are receiving a major upgrade in November this year, with serious sanctions for breaches.

Here’s our briefing paper on the ‘beefed up’ unfair contract law protections.

What we think is (frankly) scandalous is that this law does not apply to government departments. That is, government departments can quite lawfully impose unfair contracts on small business people whereas the private sector cannot do this. Talk about a recipe to repeat Robodebt anytime a government department goes rogue!!!

But we have a simple fix involving a straightforward amendment to the Competition laws that would read as follows:

Application of Act to Commonwealth and Commonwealth authorities
(1) Subject to this section and sections 44AC, 44E and 95D, this Act binds the Crown in right of the Commonwealth in relation to the unfair contract provisions of the Act in so far as the Crown in right of the Commonwealth engages in trade or commerce, either directly or by an authority of the Commonwealth with a small business.

Our briefing note explains the background.

This one-paragraph amendment to the Competition law would require government departments to comply with the Unfair Contract laws.

We’re starting our campaign promoting this legislative amendment to the independent Senators first.

There’s a simple principle here: Where government imposes obligations and responsibilities on the private sector, the same obligations and responsibilities should apply to the public sector.

Labor to deny self-employed access to protections

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protections-deniedThe Albanese government’s determination to legislate an ‘employee-like’ definition will introduce radical law that will deny protections to Australia’s self-employed people.

The government says that it doesn’t want to create any ‘unintended consequences.’ Whether the consequences of its actions are intended or unintended is irrelevant. Denial of protections is what will occur.

Self-employed people currently enjoy protections from:

Further, Australia has built a system of cheap, quick dispute resolution through the network of state and federal small business commissioners and ombudsmen.

This entire protection system will be thrown into chaos and confusion with the creation of an ‘employee-like’ definition.

This is because self-employed people are regulated and protected through commercial law which is entirely different to how employees are dealt with under employment law.

The government’s agenda will defy decisions of the global protector of workers’ rights, the International Labour Organisation. In 2006 the ILO declared principles which stated that it was necessary to:

  • protect the freedom of independent contractors to enter into services contracts;
  • recognise independent contracting as a legitimate form of work arrangement that is primarily commercial; and
  • prevent interference with the terms of genuine independent services contracts.

These principles are embedded in the Australian Independent Contractors Act.

And more.

On certainty

In February 2022, The Australian High Court made the most important decision on the definition of self-employment in more than 50 years. In its decision the Court stated that:

“…It is the task of the courts to promote certainty with respect to a relationship of such fundamental importance.” (at par 58)

The government’s ‘employee-like’ agenda will create uncertainty, the very opposite of what the High Court says needs to be achieved.

Legal relationship is not social/psychological

The High Court also said:

“The employment relationship with which the common law is concerned must be a legal relationship. It is not a social or psychological concept like friendship.”

The government wants to turn a social or psychological concept (‘employee-like’) into a legal form through legislation. This defies and erodes the common-law distinction between employment and self-employment which the High Court says must remain distinct.

Bad consultation

The government’s recently announced ‘consultation’ on the issue does not raise or seek to discuss any of these vital issues. This is not ‘consultation’. It is a process of seeking to ram through an agenda that is bad for self-employed, small business people.

We’d appreciate any support you can afford in our campaign to defend the right to be self-employed. It’s important.

There’s a small business reform ‘steam train’ happening with the federal government

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There’s considerable reform occurring at the federal level affecting self-employed, small business people. This is all positive ‘stuff’.

Paying Small Business on time
From 1 January 2021, businesses with more than $100 million in turnover must report to a central government database their small business supplier payment terms and practices. We understand that the information will be publicly available. Next year we expect to see legislation where if a large business does not pay small business on time, the large business will lose access to government contracts. The reporting scheme is important for this. These are major moves to stop large businesses using small businesses as ‘banks’.

Beefing up unfair contract laws
In 2016 large businesses were required to have ‘fair’ contracts with small businesses. What is ‘unfair’ under the law is common sense. See here. But the laws were weak on enforcement and now the federal government has achieved agreement from all the state and territory governments to ‘beef up’ the laws. This is a significant development.

  • Currently, unfair terms are ‘null and void’. Now unfair terms will be ‘unlawful’.
  • Financial penalties will now apply.
  • The definition of small business is expanded.
  • Clarifying what is a standard form contract.
  • Currently, the law only applies to contract up to $300,000. Now there will be no limit.

Big businesses have bought these tougher laws on themselves. Too many large businesses have ignored the laws. Now the laws will have real teeth.

Small business insolvency
Following the Covid disaster, many small businesses will collapse or have collapsed. The federal government is changing insolvency laws for small business. This will give small business people a better chance to turn their businesses around or to retain some control of the situation during the insolvency process. For too long some insolvency practitioners have simply ripped out the value of a failed business to fund the insolvency practitioner’s business. The new laws are broadly designed around the US ‘Chapter 11’ insolvency laws.

These individual reforms are important but as a package are hugely important. If small businesses and self-employed people are to rebuild after the Covid-induced huge downturn, these reforms are doubly important. We congratulate the government on these moves.

There is more reform in the pipeline and we’ll talk about it in the coming weeks.

Labor takes bold move on unfair contracts

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Tuesday, January 29, 2019

Bill Shorten’s Labor has announced that it will make unfair contract terms illegal and impose major fines for breaches. This is a position that we totally endorse.

Unfair contract laws protecting small business people were created in November 2015. Big businesses had 12 months to fix their contracts before the laws took effect. But big businesses did nothing. The ACCC has worked hard to enforce the laws but the task is huge when large businesses won’t voluntarily comply. (Idiots! Big business, that is!)

The government is conducting a review. Here’s the Treasury discussion paper.  In our submission we support

  • Making non-compliance illegal.
  • The imposition of fines.
  • No limit on the value of a contract that can be declared unfair.

***Further, we ask that government be subject to the unfair contract laws which, surprisingly, is not currently the case. It’s absurd that government makes one rule for the community but won’t apply the same rule to itself. Talk about double standards!

It’s excellent that Labor has declared its position supporting making non-compliance illegal. Labor’s policy is comprehensive. This includes increasing the number of small businesses and contracts that will have unfair contract protections. That is:

  • Businesses with a turnover of up to $10 milllion will be eligible.
  • The contract threshold will increase to $1 million (up from $300,000).

We’re particularly happy with this.

We ask that Labor also supports applying the laws to government.

We hope that the Morrision government finishes its review quickly, decides to beef up the laws and makes the needed changes quickly.

We don’t usually praise a bank. But—well done NAB!

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Sunday, October 15, 2017

First we said that NAB had ‘trashed its own small business brand’. We said this in March this year because of NAB’s lie that it had made its small business finance contracts comply with the unfair contract laws.

Last week we expressed tentative praise for NAB after it had ditched its bad contracts and come up with new ones. NAB’s self-congratulatory PR seemed to indicate a major step forward. But we said we’d check its standard form contract first.

Well, we’ve obtained its new standard form small business contract and it looks pretty good. You’ll find here:

If you bank with NAB or expect to, we’d anticipate this would be the contract you would receive if obtaining small business finance from them.

What we like about the contract is the following.

a) It’s in ordinary person’s language. It’s pretty much removed the legal mumbo-jumbo that’s designed to confuse people and force you to get a lawyer to understand the contract. Tick!
b) It uses personal pronouns ‘you, we, us’ etc. That is, the contract says “we will do this”… “you will need to do that”. This wording makes for greater understanding and clarity. Tick!
c) It’s relatively short and to the point. Only 21 pages. Tick!
d) Nothing sneaky. We’ve looked hard but we can’t see any clauses that might suggest a meaning different to that which appears. Tick!
e) Obligations clarity. It states fairly clearly your obligations to the bank and its obligations to you. Tick!
f) No unfair clauses. Again, we’ve looked closely and we can’t find any clauses that might breach the new unfair contract laws. Tick!

Again, we’re delighted that our nearly 10-year campaign to achieve the unfair contract laws is having serious impact. But congrats to NAB! It has taken on board not just the specifics but also the spirit of the new laws and produced a sensible contract that people can understand.

We’ve said it before. What’s important is that as contracts are progressively cleaned up, the Australian economy will undergo major change. Small business people will have a fairer environment in which to operate. This will improve competition, entrepreneurship and make Australia a stronger, fairer society. NAB has taken an important lead in this.

Bank lawyer: “We’ll do what we’re made to do”. Now they’re doing it!

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Sunday, October 08, 2017

More good news on the unfair contract front! But first some background.

Back around 2009, when we were talking to big businesses about having fair contracts, the chief legal counsel for one of the big banks said to us, “We’ll do what we’re made to do.” We realized then how difficult our campaign would be. But we succeeded. The new small business unfair contract laws we pushed for started at the end of 2016.

Well, now the banks are are doing what they’ve been made to do but, ‘butt’ has had to be kicked to achieve this. Look at NAB.

In March this year we exposed NAB lying (yes, lying) when it claimed that it had fixed its small business contracts to comply with the unfair contract laws. We said that the NAB had trashed its small business reputation. And the exposure of the NAB lie resulted in the banks being pushed into compliance by the regulators. In August the big four banks agreed to new, ‘fair’ small business contracts.

NAB has now taken an additional step. It has just announced simpler, shorter and plain English, ‘fair,’ standard form, small business contracts. Here’s its public relations blurb. The new contracts start on 16 October and don’t yet appear to be available. We’ve learnt to be careful and won’t comment until we study the new contracts. But if the contracts reflect NAB’s self-praising PR, they could deserve positive comment. We’ll let you know.

Do you rent a serviced office space?
Huge numbers of self-employed people rent serviced office space. One of the big players in the field is Servcorp. The ACCC is now taking Servcorp to Court over alleged unfair contract clauses. This will directly affect you if you use Servcorp’s services.

The ACCC alleges that clauses allowed Servcorp to, amongst other things:

  • automatically renew a contract, and increase the price, without prior notice to the customer;
  • unilaterally terminate a contract and impose penalty-type consequences on the customer;
  • unreasonably limit Servcorp’s liability or impose unreasonable liability on the customer;
  • unilaterally determine whether the contract had been breached; and
  • acquire the customer’s property without any notice.

Good on you ACCC! This is in addition to the litigation against the waste disposal company JJ Richards.

What’s important is that as contracts are progressively cleaned up (it’s going to take a long time), the Australian economy will undergo major change. Small business people will have a fairer environment in which to operate. This will improve competition, entrepreneurship and make Australia a stronger, fairer society.

Banks forced to change small business contracts. A huge win for fairness!

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Thursday, August 24, 2017

We’re mighty proud of the work we did, over close to a decade, to achieve the 2015 unfair contract laws protecting small business people. Here’s the tracking of our campaign from 2009. And it’s pretty fair to say that, without us, the laws would not have come into existence.

In that long struggle the banks consistently opposed the unfair contract laws. During that campaign one bank, NAB, was found by the courts to have engaged in ‘misleading and deceptive conduct’ in relation to a business mortgage. In our view NAB’s bank officers arguably behaved as they did because NAB’s small business finance contracts seemingly gave them unfair power.

Continuing with this deceptive theme, in December 2016 NAB issued a letter to its small business customers claiming it had changed their small business contracts to comply with the new unfair contract laws. Here’s NAB’s letter. But when we had the contracts studied, it was found that the contracts were worse, not better! Talk about NAB destroying its own brand!

Our exposure of NAB’s misleading conduct along with important work by The Australian journalist Robert Gottliebsen resulted in a chain reaction. The bank regulator, ASIC, and the Federal Small Business Ombudsman conducted a wide-ranging investigation into whether the banks’ small business contracts complied with the unfair contract laws.

After some nine months of haggling, the big four banks have agreed to change their small business contracts, removing unfair contract terms in loan facilities up to $3 million. According to a report in The Age yesterday, some of the changes include:

  • the banks will not be able to require customers to cover losses due to fraud by the bank; and
  • the banks’ ability to vary contracts will be limited.

It’s staggering that these sorts of clauses were ever in contracts. We’d wager that banks would not agree if such clauses were imposed on them in a contract.

Also making common sense, small business customers will be able to exit a contract if the banks change a contract. Isn’t that what a ‘contract’ should allow? Robert Gottliebsen gives a fuller explanation today in The Australian.

The fact that the banks had to be dragged to agree to such changes is also staggering. Frankly, they would have faced legal action if they hadn’t agreed.

The banks like to portray themselves as ethical. But with this sort of behaviour it’s easy to understand why the banks’ reputations are in the gutter.

There’s a lot more work to be done on this issue. The ‘big end of town’ are avoiding fixing their unfair contracts. Our message to them is: ‘we’re watching’. And we’ll act and expose unfair contracts wherever we find them!