Midas fracas caught in contracts act… Red tape let loose… SMEs work long hours… IR ads get backing

New right for disgruntled Midas franchisees

Disgruntled franchisees could have a new avenue to pursue franchisors if three of the Midas car care franchisees are successful in their court battle against Midas Australia under the new Independent Contractors Act.

Two former franchisees and one current franchisee in the Midas chain are alleging, among other things, in the Federal Court that their contract with their franchisor Midas Australia is unfair under the act, which came into force on 1 March.

On 9 July, the Federal Court will hear an application by Midas Australia to knock out all three unfair contract claims on the basis that franchises should not be covered by the Independent Contractors Act. If the Midas Australia application fails and the franchisees succeed, franchisees will have a new right to pursue – a right to a fair contract.

Bryan Belling, a partner at law firm HWL, is acting for the franchisees and says that franchisees in New South Wales have previously had a remedy under state industrial relations laws to vary unfair contracts. This could be the first time franchisees in other states have had a similar right.

Belling says if successful under the new act, his clients could be allowed to void the contract in whole or in part, vary the contract, in whole or in part, and the Court could order damages to address the unfairness.

But Belling says the remedies and the rights under the act are narrower than the rights under New South Wales industrial laws, which have been criticised by franchisors and employers for over-compensating employees and franchisees. The act only entitles the courts to look at circumstances of the two parties to the contract at the time of the formation of contract. He says in 90% of his cases, contracts become unfair over time when circumstances change.

Independent contractors are a hot election issue. Opposition independent contractor spokesman Craig Emerson claimed yesterday that no cases of unfair contracts had been brought since the regime was introduced two months ago, reports The Australian newspaper.

Emerson is complaining that the Independent Contractors Act is ineffective because it is too expensive to make a claim. There are 1.9 million independent contractors in Australia, according to the Australian Bureau of Statistics, so expect to hear much more about this act and its consequences in the lead up to the election.

Meanwhile the trouble at Midas Australia continues and disgruntled franchisees wait anxiously to hear whether the proposed sale to Tyrecorp will go through.

– Jacqui Walker

Council program to reduce red tape gets federal chop

Local councils have long been the bane of home-based businesses. Horror stories abound of local councils hitting Australia’s one-million-plus home-based businesses with regulations, forms and fees while providing nothing in return.

Now a $50 million Regulation Reduction Incentive Fund (RRIF), which was set up to reduce red tape and regulation in the 700-plus local councils, has been given the chop.

The Federal Government has decided not to extend funding for the program. This means that many local councils will have no incentive to change.

The $50 million was being used to provide competitive grants to councils to help them reduce red tape, encourage best practice and promote the technology to SMEs. The councils were expected to eliminate processes, harmonise others and introduce standardised forms so that businesses did not have to fill in different forms in different areas.

Councils who received grants were also expected to come up with services that would assist people in their area (see below).

Fran Bailey, Minister for Small Business and Tourism, who encouraged small businesses to dob in a local council with a bad red tape record, confirmed that the final funding would expire in 2007/08.

She says it delivered more than $450 million of savings for small businesses. “RRIF is a superb program that will continue to deliver great benefits for small business long after the program wraps up,” she says. As for further initiatives to cut red tape, watch this space.

Types of services local councils should be offering

• A single point of entry website to local businesses and community services.
• Ensuring land developers provide telecommunications for home-based businesses.
• Requiring land developers to offer time-share office space in main streets.
• Providing local businesses with information and networking functions.
• Business development officer.
• A user-friendly working from home booklet.

What do you think?

Is your local council offering any of these services? Do you have any horror local council stories? Is your local council doing a great job? Send replies to feedback@smartcompany.com.au

– Amanda Gome

Australian SME owners put in the long hours

Australian SME owners work longer hours than business owners in just about every other country in the world, a new international survey by accounting firm Grant Thornton has revealed.

The survey reveals Australian SME owners work an average of 56 hours per week. Of the 7200 SME owners in 32 countries surveyed, only business owners in India and Argentina, who put in an average 57 hours per week, work harder. Tellingly, even those business owners putting in the shortest average hours still work hard. Italian entrepreneurs are at the bottom of the table, but they still work a hefty 47 hours a week.

Unsurprisingly, the survey also reveals rapidly rising stress levels among SME owners. Australian SME owners reported a big 41% increase in stress levels in 2007 compared to 2006, but that pales in comparison to struggling Chinese entrepreneurs, who reported stress levels 84% higher than in 2006.

RMIT management professor Kosmas Smyrnios says research consistently shows that SME owners put in extremely long work hours. “With many business owners you’re really looking at 60 to 70 hours a week each week, especially in family businesses. There are a smaller number who regularly put in considerably more than 70 hours each week,” Smyrnios says.

He says technological developments that have made it easier for business owners to take work home and the increasingly common need to be responsive to clients in different timezones around the world, are key drivers behind longer working hours.

“For small business owners it’s not uncommon to go from the boardroom to the bedroom in one fell swoop, it can be all consuming,” Smyrnios says.

Kate James, the director of work/life balance consultancy Total Balance Group, says longer hours does not necessarily mean more stress where business owners enjoy their work and are strongly motivated to put in the hours. But, she says, the pressure of being responsible for a business may mean SME owners do not always feel like they have control over their hours.

“Owning your own business can be a double edged sword – you have autonomy, but at the same time the buck stops with you and it can be hard to take time off if you are sick or stressed,” James says.

Organisation health consultant Dr Jon Russell says it is not uncommon to find that business owners are at more of a risk of injury or stress related health problems than their employees. “Chronic exposure to a stressful environment leads to anxiety and depression, the risk is that you can just hit a wall and burnout,” he says.

(See also today’s Work/Life Balance blog for tips to deal with winter blues)

– Mike Preston

Business groups keen on IR ads

Business groups are planning to go ahead with an advertising campaign to argue their case on industrial relations, The Australian reports today.

The Government has put pressure on business groups, who have received millions of dollars in government funding to provide education and advice on WorkChoices, to fund an advertising campaign to argue the business case on industrial relations.

The Government blames the ad campaign by the Australian Council of Trade Unions for whipping up a “scare campaign” against WorkChoices. The ads are widely considered to have played a role in maintaining a negative view of WorkChoices in the community.

Meanwhile, Council of Small Businesses Organisations of Australia chief executive Tony Stevens says small business is worried about Labor’s IR policy.

“If legislation is drafted based on Labor policy for unions to force a relationship in the workplace with a minority of votes, that is untenable,” he told The Australian.

– Mike Preston

DIY super on the grow

The number of people opting to manage their own super continues to grow apace, with new self-managed funds increasing by 9% in the March 2007 quarter, The Australian Financial Review reports.

Tax office figures show that 6283 new DIY super funds were created in the first quarter of 2007. The number of people paying super into a DIY fund increased by 13,022 to 652,677 during that time.

– Mike Preston

Australia will have to go it alone on carbon trading

Tomorrow’s report by the Prime Minister’s task force on carbon trading is expected to recommend that Australia sets up its own comprehensive scheme, even if major greenhouse gas emitters won’t get on board.

The report is likely to support a broad-based carbon trading scheme with no exemptions for big power users and generators, the businesses that will be hardest hit by a price on carbon.

Prime Minister John Howard has previously said that Australia should not join a carbon trading scheme unless big greenhouse gas producing countries such as the US, China and India are included.

– Mike Preston

Economy round-up

Seasonally adjusted retail sales growth of 0.1% in April 2007 is below economists’ expectations. The modest figures released by the Australian Bureau of Statistics today suggest consolidation following bumper retail growth in March of 1%.

Food retailing continues to be the major contributor to retail growth in Australia, followed by clothing, soft goods retailing and hospitality and services. Department stores and recreational goods retailers suffered a decline in April.

All states and territories except New South Wales (-0.1%), South Australia (-0.7%) and the Australian Capital Territory (-0.9%) had increases in the seasonally adjusted estimate. The largest increase occurred in Tasmania (+1.2%).

Meanwhile 1^st quarter 2007 construction activity exceeded expectations, growing 2.7% in seasonally adjusted terms to $27,233.6 million. Residential and engineering building rose 3.4% and 5.4% respectively, while non-residential building fell 3.1.

At 12.40pm the S&P/ASX 200 was down 0.7% to 6273.4 and the Australian dollar was trading at US81.90c, up on yesterday’s US81.77c close.

– Mike Preston