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Discriminatory lease lands business in hot water

Adam Zuchetti
Adam Zuchetti
21 February 2018 2 minute readShare
business in hot water

A Queensland business has hit the headlines for denying its services to a woman because of her gender, attributed to a discriminatory non-compete clause in its lease agreement.

The ABC reported the case of Brisbane woman Vivien Houston who was denied service at Jimmy Rod’s Barber Shop at The Gap Village Shopping Centre.

Staff at the barber shop – one of a chain of 14 outlets, mostly in Queensland – reportedly told her they could not serve a woman because of an non-compete clause in their lease agreement designed to prevent the business competing directly with other hair salons in the centre.

On Friday, 16 February 2018, Vivien attended our Jimmy Rod’s store at The Gap. Jimmy Rod’s Barbershop has been a tenant at the Gap Village Shopping Centre for 10 years and recently renewed its lease. The terms of the new lease included provisions from the previous Jimmy Rod’s leases, including the premises be used as a barbershop catering for men’s and children’s hair only,” the company's managing director, James O'Brien, said in a statement.

Acting according to the terms of the lease, Vivien was advised by the store manager that staff were unable to cut her hair. Jimmy Rod’s received an email from Vivien on Monday, 19 February, at 7.58am, advising her concerns and intention to lodge a complaint with the Anti-Discrimination Commission Queensland. Jimmy Rod’s responded to Vivien email shortly after 12pm on Monday to address the matter privately with Vivien.

Jimmy Rod’s does not discriminate against female customers. We have 13 other stores that all perform haircuts for women.

Geoff Baldwin of Stacks Champion told My Business that “it’s not an easy case”, but that when it comes to anti-discrimination law, the circumstance is what ultimately determines whether discrimination is illegal.

According to Mr Baldwin, it is not against the law, for example, for a Chinese restaurant to advertise for Chinese wait staff, a film crew to seek out an Aboriginal actor for a specific role or guards of a particular gender to be hired where strip searches or pat downs may be needed.

As such, he said that if the barber shop specifically advertised itself as a specialist men’s hair care provider, it would not be in breach of discrimination law.

However, under the given circumstances, Mr Baldwin noted that the business is caught in “a collision … between two legal duties”, namely anti-discrimination provisions and its contractual lease conditions.

Generally speaking, though, legislative rules will trounce lease conditions, he said. As such, obeying the law in defiance of a lease agreement would be both tenable and defensible.

However, a business in such a situation, Mr Baldwin said, could face financial ruin in a fight with the shopping centre owner, and the question of whether the non-compete clause was a fundamental condition of the lease would become a central point of contention.

Jimmy Rod’s confirmed to My Business that it has successfully negotiated a new agreement with the shopping centre that will remove the problematic clause, and that it has communicated this to Ms Houston. But it remains to be seen whether Ms Houston will progress with a formal complaint of discrimination against the store and/or the centre.

This case isn’t the first time landlords have come under fire for complicating the activities and restricting the profitability of SMEs.

A My Business reader last year accused commercial landlords of hampering the national economy by price gouging on rents.

Meanwhile Mark Gardiner of Teddington Legal previously told My Business that unchecked lease agreements can and do send businesses bust.

He urged anyone looking at taking on or renewing a lease to have it checked over by a qualified lawyer.

“It’s not like a residential lease where if you want to get out of it, you can just notify the landlord and you’re out of it easily,” Mr Gardiner noted.

Discriminatory lease lands business in hot water
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

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