Happy New Laws – the new regulations SMEs need to understand in 2011

Entrepreneurs returning to work today must work quickly to ensure they and their staff are fully across the three major regulatory changes that came into force on January 1, or risk falling foul of new laws covering consumer rights, pay rates and parental leave.

As has become seemingly traditional at the start of each financial and calendar year (on July 1 and January 1 respectively) the New Year heralded a raft of minor and major legislative changes, covering everything from agriculture through to recreation (including new regulations about the standard length of a bowling green).

But there are three mains areas that SME business owners need to particularly focus on:

1. Consumer laws

The number of new regulations under the second tranche of the Labor Government’s consumer laws regime came into effect on January 1, with retailers among the sectors most affected.

While the first tranche of the laws (introduced on July 1) covered unfair contracts (particularly so-called standard contracts) the second tranche is focused on protection of consumer rights and includes new rules about warranties, direct selling and so-called consumer guarantees.

The nine consumer guarantees relating to goods are:

  • Suppliers and manufacturers guarantee that goods are of acceptable quality when sold to a consumer.
  • A suppler guarantees that goods will be reasonably fit for any purpose the consumer or supplier specified.
  • Suppliers and manufacturers guarantee that their description of goods (for example, in marketing materials) is accurate.
  • A supplier guarantees that goods will match any sample or demonstration model and any description provided.
  • Suppliers and manufacturers guarantee that the goods will satisfy any extra promises made about them in express warranties.
  • A supplier guarantees they have the right to sell the goods with clear title unless they alerted the consumer before the sale that they had limited title.
  • A supplier guarantees that no one will try to repossess or take back the goods, or prevent the consumer from using the goods, except in certain circumstances.
  • A supplier guarantees that goods are free of any hidden securities or charges and will remain so, except in certain circumstances.
  • Manufacturers or importers guarantee they will take reasonable steps to provide spare parts and repair facilities for a reasonable time after purchase.

Service providers must also guarantee to provide services:

  • With due care and skill.
  • Which are fit for specified purpose.
  • Within a reasonable time frame (where no time is set).

What will companies need to do in practice to meet their obligations under the new regime? The key will be to ensure warranties and other documentation reflect the new laws, and to ensure that customer-facing staff understand how the new laws could affect their dealing with customers.

For example, it will now be unlawful for a store to have a policy and documentation stating it does not offer refunds or does not offer refunds on sale items. Under the consumer guarantees, any faulty or unfit goods must be able to be exchanged – regardless of price.

The new consumer laws also cover what is known as unsolicited selling, such as door-to-door sales or telephone sales. The new laws establish a cooling off period during which the seller is not allowed to accept payment or supply the goods for 10 days. While these laws will not officially come into effect until the start of 2012, the industry – which is very unhappy – must start transitioning now.

2. Paid parental leave

The new government-funded paid parental leave scheme is now in force, offering eligible workers 18 weeks pay at the minimum wage (currently $569.90). Currently about 6,500 workers and about 1,000 businesses have registered the scheme.

While the urgency with which you need to understand paid parental leave will depend on whether or not you have staff who are looking to access the benefit, it is important to understand the employers rights and obligations. The main ones are:

  • The employer will act as paymaster in the scheme, receiving cash from the Government and passing this to the worker.
  • If you have an existing paid parental leave scheme in place, it must stay in place.
  • Employees can now take up to two years of parental leave, although it is unpaid after the first 18 weeks.

3. Modern awards

The process of transitioning the Australian economy to the Labor Government’s Modern Awards system has been a long one, and it is still continuing. On January 1 a new phase started, with a number of industries – including the hospitality and child care sectors, and a range of workers on state awards – moving to the new, federal awards system.

Obviously, whether your business is affected by these changes will depend on your industry. But if you are impacted, and you are not across the new pay rates and obligations, you had better act very fast.


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