Labor promises fines for unfair contracts

Image: Getty

Big businesses will be hit with $10 million fines if they force smaller companies onto unfair contracts under a future Labor federal government.

The opposition’s updated small business policy was released on Friday and includes a promise to protect more small businesses from unfair contracts.

At present, it’s not illegal for contacts that allow companies to unilaterally vary all terms, or unreasonably cancel or end an agreement.

Larger companies can also use their market power to force small companies into giving them broad and unreasonable powers to protect themselves against loss or damage at the expense of smaller business.

Shadow assistant treasurer Andrew Leigh said there are “no repercussions” for businesses who insert unfair contract terms, even if the terms are legally unenforceable.

“We think they ought to be banned, and that’s certainly been the strong view of the competition watchdog,” Dr Leigh told AAP on Friday.

Labor is promising to expand the definition of small business from a 20-employee limit to also include businesses with a turnover of up to $10 million.

Labor is also warning companies could be hit with up to $10 million in fines if they breach the new laws. Currently, there are no fines in place for unfair contract terms.

Dr Leigh said the Australian Competition and Consumer Commission had done the background work on the planned regime ready and Labor would be ready to bring it in quickly if it wins the next election.

“We’d like to move speedily on it,” he said.

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