Checking for Unfair Terms in Standard Form Small Business Contracts.

With less than eight weeks to go before the unfair terms in standard form small business contracts changes to the Australian Consumer Law take effect, the Recruiters Casebook outlines steps that recruitment, contracting and on-hire agencies might take to avoid being caught out after the commencement date on 12 November 2016.

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Unfair terms in standard form small business contracts in the independent contracting sector – First questions.

With only eight weeks to go until the unfair terms in standard form small business contracts reforms take effect on 12 November 2016, and with the ACCC having indicated that the independent contracting sector is clearly in its sights[1], I am hoping that someone is looking at how this is going to play out for independent contractors and their principals in the recruitment, on-hire, and contracting industries. 

I might be about to ask more questions than I can answer; but let me ask them anyway and see if they bring a few issues into sharper focus.

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10 things you should probably know about the interaction between candidate replacement guarantees and Australian statutory consumer guarantees

guaranteed-434x640Talking about Candidate Replacement Guarantees

In Brisbane recently, I had an opportunity to speak with recruiters about their terms of business. We got to talking about candidate replacement guarantees and some of the challenges that they present.

Often recruitment agencies put forward their candidate guarantees as a competitive point of difference; but after a while they begin to look pretty much the same.

One thing intrigued me. It was the idea that a competitive point of difference could be based upon what, from a client’s perspective at least, might be viewed as a service failure.

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Recruitment, Contracting and On-Hire Agencies: Still time to weed out suspect unfair terms!

justiceTaking stock

From 12 November, 2016 the Australian Consumer Law will provide that a term of a small business contract is void if:

  • the term is unfair; and
  • the contract is a standard form contract.

The Recruiters Casebook has been exploring each of these key expressions as we prepare for the 12 November reform commencement date.

So far, we’ve looked at the definition of small business contract. A contract is a small business contract if it meets both a headcount requirement and an upfront price requirement.

We have already considered the headcount requirement (fewer than 20 employee) and the upfront price requirement (not more than $300,000 or $1 million if the duration of the contract is more than 12 months).

In our last article, we identified some recruitment, on-hire and contracting agency contracts that you might regularly use, which might be standard form contracts and took a closer look at how a court would decide if they actually are standard form contracts.

Standard form contracts that are often used by recruitment, on-hire and contacting agencies could be:

  • terms of business under which you supply services to clients;
  • terms of business under which you acquire goods, services or property interests (e.g. a commercial lease) from third parties;
  • terms of business with your independent contractors – because they’re contracts for services;
  • candidate or work seeker registration agreements – because you are supplying agency or representation services – even though the candidates or work seekers might not actually be engaged or might be between assignments.

In this article you will learn how to recognise terms of standard form contracts that might be unfair and how a court would decide if they actually were unfair. Continue reading

Recruitment, Contracting & On-Hire Agencies: Get ready. Your “standard form contracts” are whatever another person says they are!

 

From 12 November, 2016 the Australian Consumer Law will provide that a term of a small business contract is void if:

  • the term is unfair; and
  • the contract is a standard form contract.

We are exploring each of these key expressions as we prepare for the 12 November reform commencement date. So far, we have looked at the definition of small business contract. A contract is a small business contract if it meets both a headcount requirement and an upfront price requirement. We have already considered the headcount requirement and the upfront price requirement.

Let’s see if we can identify some contracts that you might regularly use, which might be standard form contracts. Then we’ll take a closer look at how a court would decide if they actually are standard form contracts.

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Recruitment, On-Hire & Contracting Agencies: A closer look at the upfront price provisions of the unfair terms in standard form small business contracts reforms.

Teacher 3From 12 November, 2016 the Australian Consumer Law will provide that a term of a small business contract is void if:

  • the term is unfair; and
  • the contract is a standard form contract.

We are exploring each of these key expressions as we prepare for the 12 November reform commencement date. So far, we have been looking at the definition of small business contract. A contract is a small business contract if it meets both a headcount requirement[1] and an upfront price requirement.  We have already considered the headcount requirement; let’s now examine the upfront price requirement.

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7 Market-Driven Features of the Fels Wage Fairness Panel Inquiry into the 7-Eleven Franchise

For anyone who might be looking for evidence of the effectiveness of market-driven initiatives in tackling labour exploitation, seven features of the Fels’ Panel inquiry into wage fairness within the Australian 7-Eleven franchise are worth noting. Continue reading

Tackling Labour Market Exploitation: Are industry and regulatory codes of conduct sufficient?

Of course not! It would be naive as to suggest that they are. Nevertheless, they are vital to the success of a comprehensive strategy in tackling labour market exploitation. Three characteristics of labour market exploitation suggest reasons why that is so. Continue reading

Standing Offer or Overarching Agreement? Is it time to review your terms of business?

How long has it been since you last had your terms of business reviewed? If it’s been a while, it might be worth taking note of some recent developments in the Australian Consumer Law and having them looked again. That’s because they might be structured in a way that is more likely to attract existing statutory guarantees under the ACL and the unfair terms in small business standard form contracts provisions that come into effect on 12 November 2016).

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Tougher penalties and crackdowns – superficial, short term “solutions” to labour market exploitation.

When things go wrong within a high consequence[1] industry such as the employment services industry, a sort of “moral panic” can sometimes set in that sees interest groups demanding tougher penalties and crackdowns. Whilst penalty increases and crackdowns meet a political need to “get tough” on offenders, if one scratches beneath the surface, there is often little substance to them.

Penalties and sentencing measures serve several functions including:

  • retribution – assuaging public outrage and demands for “justice”;
  • general deterrence – deterring others from committing similar offences;
  • rehabilitation – correcting and improving the offender’s conduct [2]

At best, tougher penalties and crackdowns merely serve a short term interest in retribution – and then only if they are sufficiently well-directed to catch the principal offenders and those who benefit from the offence.

It is widely accepted (and you can understand it from a risk management perspective) that the effectiveness of general deterrence depends upon the likelihood of being caught and the consequences of being caught.  Tougher penalties only address the consequences of being caught. Unless there is a commensurate likelihood of being caught, brought about by focussed intent and increased resources in support of enforcement policy, sustained over time, the effectiveness of penalties and crackdowns is rarely as great as one might hope or predict.

Penalties and crackdowns also fail to address rehabilitation, which in the context of employment services industry regulation, can be understood in terms of improvement and correction of business practice concerning the supply and use of labour and employment services.

So whilst there may be many interests clamouring at the moment for tougher penalties and crackdowns, what is really needed is change and industry improvement at a more profound level – and to be effective, it will have to be industry led rather than imposed by courts and tribunals in the form of penalties and sentencing measures.

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[1] “High consequence” in terms of the adverse human rights impacts that employment services agencies’ operations may have on work seekers – masking and sometimes legitimising exploitation.
[2] Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65 (14 May 2007) at [93] cited in Fair Work Ombudsman v Quincolli Pty Ltd & Anor (No.2) [2013] FMCA 17 (18 February 2013) at [60].