Religious discrimination Bill a potential minefield for sponsors like Qantas

INSTITUTE of Certified Management Accountants (ICMA) CEO Janek Ratnatunga is urging Australian finance professionals to pay close attention to the Australian Government’s draft Religious Discrimination Bill – and particular attention to what is being called the ‘Folau Clause’.

Professor Ratnatunga said the Folau Clause relates to the case of sacked top-level Australian rugby union player Israel Folau, whose comments on his private social media account, based on his religious beliefs, led to the termination of his contract with Rugby Australia.

Under the Folau Clause, additional requirements will be imposed upon businesses with annual revenue of at least $50 million when it comes to standards of dress, appearance or behaviour that limit religious expression. 

The Bill states that such restrictions must be shown to be necessary to “avoid unjustifiable financial hardship on the business”. The process of calculating potential financial hardship will fall on financial professionals, particularly management accountants.

Prof. Ratnatunga said, “The application of the ‘Folau Clause’ means organisations will have to prove that their social media rules relating to religious expression, and subsequent actions taken, are in place to protect their brand.

“However, as the impact of individual social media activity on brand reputation is impossible to quantify, the draft bill instead defines the impact on the brand in financial terms, i.e. as causing ‘unjustifiable financial hardship on the business’.”

In the case of Rugby Australia, Prof. Ratnatunga said, its primary revenue is derived from ticket sales, broadcast rights, government grants and sponsorships.

“The revenue source that has garnered the most attention for potentially unjustifiable financial impact is corporate sponsorship, which accounts for 22 percent of Rugby Australia’s total income,” Prof. Ratnatunga said. “Rugby Australia’s major sponsor, Qantas, clearly has to distance itself from the Folau case, as it may be considered an accessory to any breach and become a target for legal action if Rugby Australia is found guilty of wrongful dismissal.”

Prof. Ratnatunga believes this poses a conundrum for sponsors like Qantas.

“For example, if the Folau case arose after the Bill was passed in its current form, Rugby Australia would have to prove that Qantas was going to discontinue sponsorship, thereby demonstrating ‘financial hardship’. At the same time, Qantas would have to reject any such claim, or face the consequences of Mr Folau winning his case and citing them as an accessory to any breach.”

WARNINGS FOR SPORT, UNIVERSITIES

Prof. Ratnatunga warned, if the Bill passes, corporates will need to be extremely careful of sponsorship agreements. This would also be true of organisations such as universities, which have been the subject of much debate regarding external sponsors and their influence on free speech.

Prof. Ratnatunga provided a hypothetical example of a University of Melbourne academic posting a private social media comment that is “very supportive of the Dalai Lama returning to Tibet and rejuvenating Buddhism there”. If this led to the possibility of losing sponsorship from the Confucius Institute, would Melbourne University be justified in terminating that academic’s contract under the Folau Clause?

Prof. Ratnatunga said, “Again, what if an academic in a university that is sponsored by the Ramsay Centre for Western Civilisation posted the following comment on social media: ‘The only thing Western civilisation has done is spread Christianity with the gun.? Would the university be justified in terminating that academic’s contract under the Folau Clause?”

Prof. Ratnatunga posed a final question: “Should corporates offer their views on social issues unrelated to their core businesses?

“Corporates are justified in ending sponsorship deals with individuals and other organisations for bad behaviour, sexual discrimination and the like, both publicly and privately, but threatening to end sponsorship agreements as a result of religious comments posted on private social media accounts by employees or other contractors on religious issues that have little or no relation to their core business is another matter,” he said.

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THE Small Business Fair Dismissal Code "in its current form, is not working in the way it was originally intended,” according to Australian Small Business and Family Enterprise Ombudsman, Kate Carnell.

Ms Carnell, has handed down a comprehensive review of the Small Business Fair Dismissal Code, recommending a suite of changes to help small business employers meet their obligations.

"It is ambiguous and open to interpretation, particularly by lawyers, which means too many small businesses are being pulled into unfair dismissal hearings which are costly and impact productivity," Ms Carnell said. 

“The vast majority of small business operators are hard-working Australians with good intentions.

“The recommendations in this review aim to give small business operators clear guidelines to deliver certainty around complying with the code.

“Importantly – the recommended amendments and checklists are designed to guide a small business employer through a fair dismissal process, not to make the dismissal process easier," Ms Carnell said.

“We know that small businesses do not make the decision to end a worker’s employment lightly. Research by the Fair Work Commission found one of the key challenges for small business operators was attracting and retaining good staff and that good employees were highly valued.

“Small businesses can’t afford to engage in costly and stressful legal action. They don’t have the support of a HR department when faced with the difficult decision to end a staff member’s employment," Ms Carnell said.

“That’s why it’s critical for the code to drive fairness, and set out clear expectations for small business employers.

“According to figures released by the Fair Work Commission, during the first three months of this year it received 3,583 unfair dismissal applications.

“Most were settled during mediation, but for the 172 cases that were presented to the Commission, 111 (65%) were dismissed because they were without merit or deemed legally invalid, meaning they should not have gone to the Commission in the first place," she said.

“By taking the ambiguous language out of the Code such as ‘reasonable grounds,’ ‘valid reason,’ and ‘reasonable chance’ and improving the checklist questions, small businesses will be in a much better position to comply.

“We want the Code to work, so that small businesses are doing the right thing and there’s less need to engage lawyers,” Ms Carnell said.

Ms Carnell said the review contains recommendations in three key areas:     

• Amendments to ensure the code meets its intended functions and objectives and provides certainty on what is required of small business employers to ensure a dismissal is fair.
• Improving small business education and awareness in relation to the Code and checklists to help them meet their obligations.
• Clarifying the unfair dismissal claims process for small business employers and employees.

The Small Business Fair Dismissal Code was formed as part of a report 'Forward with Fairness: Labor’s plan for fairer and more productive Australian workplaces' in recognition that small business owners do not have the time or expertise to navigate the complex unfair dismissal system. When the code came into effect in 2009 under the Labor Government, the interpretation of the code was challenged in the courts and, on occasion, by members of the Fair Work Commission.

Ms Carnell said that created uncertainty for small business employers, as following the code was no longer a reliable way of ensuring a dismissal was going to be deemed fair.

In April 2018, the Australian Small Business and Family Enterprise Ombudsman released its report 'Workplace Relations- Simplification for Small Business'.  That report recommended ASBFEO lead a review of the Small Business Fair Dismissal Code and checklist.

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THE INSTITUITE of Public Accountants (IPA) has expressed concerns about the upcoming repeal of the Competition and Consumer Act 2010 (CCA) Section 51(3) and its potential impact on small business.

The repeal of the section, to take effect on September 13, 2019, will mean that conduct involving intellectual property rights (IPR) will no longer be exempt from certain provisions in Part IV of the CCA, particularly in relation to granting a licence; making an assignment; or, 'entering into a contract, arrangement or understanding'.

"The IPA supports innovation as a means to boost small business productivity and intellectual property protection plays a major part in innovation and entrepreneurialism,” IPA chief executive officer, Andrew Conway said.

“Therefore, we remain cautious over the repeal and we encourage the ACCC to raise awareness amongst the small business community as to the consequences that may impact the sector. 

“While there are guidelines in relation to the repeal, these are for professional advisers, and not aimed at small business people.  We urge the ACCC to produce a simplified version accessible to small business operators.  It is essential that small businesses, that may be impacted by the repeal, clearly understand the implications and seek the appropriate legal advice as to their particular intellectual property needs.

“This repeal may have a direct impact on Section 45 of the CCA and as a result could stifle competition rather than encourage it,” Mr Conway said.

He said Section 45 of the CCA prohibits contracts, arrangements, understandings or concerted practices that have the purpose, effect or likely effect of substantially lessening competition in a market, even if that conduct does not meet the stricter definitions of other anti-competitive conduct such as cartels.

“Without the ability to control how intellectual property is to be used, a licensor may be reluctant to licence the intellectual property at all. This will be detrimental for downstream competition and may also deter innovation," Mr Conway said.

“Small businesses will not be in a position to determine whether such a condition is likely to substantially lessen competition in the relevant market, in order to have certainty about their legal position.

“To prevent small business taking an overly cautious approach, the ACCC could introduce a class exemption that would create some certainty in how to deal with licensing and transfers of IPR so as not to infringe the CCA.  The European Commission has a block exemption that applies to technology transfer agreements and a similar approach could be taken here in Australia.

“The IPA Deakin SME Research Centre will be monitoring the implications of the repeal and consider if such class exemptions are appropriate in this regard,” Mr Conway said.

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IT IS NOT UNCOMMON in the commercial world, when customers are unexpectedly inconvenienced, for compensation to be offered so it’s time for the Australian Taxation Office (ATO) to recognise the damage caused by technology outages, according to the Institute of Public Accountants (IPA).

“We recognise the fact that the ATO has worked hard to fix system faults that have been a blight on its operations in recent years,” IPA chief executive officer, Andrew Conway said. 

“System downtimes such as that experienced last week comes at a huge expense for many of our members and quite simply, a mere apology doesn’t go far enough.

“The Scheme for Detriment caused by Defective Administration (CDDA) is currently under review by the government," he said.

“The existing framework provides little scope for intermediaries such as tax agents to make a claim.  It is not fit for purpose, especially in light of accountants facing rising costs from increased regulation and compliance requirements. 

“Practitioners who lose productivity time need to be compensated.  It is real time and it’s real income that is lost.  Time is an accountant’s commodity.

“Tax practitioners have faced loss of income, lost productivity, psychological injury from stress and anxiety and reputational damage from system outages and where the digital journey has not gone smoothly; all matters outside of their control," Mr Conway said.

“Public accountants have to work double time to make up for the time lost caused by the ATO’s system failures, robbing them of family time on weekends and causing them significant stress.

“While we understand that outages are a fact of life, unless the provider is adversely impacted and share the pain, there will not be a change in their approach," he said.

"Consideration should also be given to blanket redress arrangements in the event of a future digital disruption. 

"We recognise that it can be difficult to quantify the non-economic losses and the fact that not all intermediaries are equally affected.  This should not be a reason for not providing redress,” Mr Conway said.

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