The Federal Government has introduced legislation in Parliament that will outlaw unfair contract terms for small businesses. Small Business Minister Julie Collins and the Assistant Minister for Competition, Charities and Treasury Andrew Leigh have announced that the government would be introducing civil penalty provisions “outlawing the use of, and reliance on, unfair terms in standard form contracts”.
The Australian Small Business and Family Enterprise Ombudsman Bruce Billson has welcomed the development, which is the fulfilment of an election promise by the Albanese government.
Billson has previously met with different small businesses who have highlighted the unfair contracts problem.
“We see in many contracts we review, examples of unfair terms. This is an area ripe for change,” Billson said. “Power imbalances between small business and large enterprises are exacerbated by unfair business practices and unfair contract terms.”
Billson said that addressing those issues through the proposed legislation will aid in rebalancing the small business-large enterprise relationships and promote economic growth.
“I encourage large enterprises doing business with smaller firms to be a kindly customer – patient and understanding, with good and generous intent, especially around contract terms,” the Ombudsman said. “Small businesses are run by real people who deserve our respect and empathy everyday.”
Billson has also welcomed the government’s move to update the definition of a small business in the proposed legislation to increase the eligibility threshold from fewer than 20 employees to fewer than 100 employees and introduces an annual turnover threshold of less than $10 million as an alternative threshold for determining eligibility.