Outdated ‘set-off’ clause from its industry standard Herd Owning Sharemilking Agreement to be removed

Content supplied by Federated Farmers

Federated Farmers is to delete the outdated ‘set-off’ clause from its industry standard Herd Owning Sharemilking Agreement.  This move will be welcomed by Sharemilkers and Sharemilker Employers alike.

“The set-off clause is outdated, against common law and is downright draconian,” says Tony Wilding, Chairperson of Federated Farmers Sharemilker Employers section  

“The set-off clause gave farm owners the ‘right’ to instruct their dairy company to withhold up to 75 percent of the milk payment due to a sharemilker during a dispute.  These funds are instead transferred into the farm owner’s solicitor’s Trust Account. 

“I know the set-off clause is only supposed to be used after conciliation of the dispute has failed and the dispute is in arbitration, but too often, I have heard it being misused and this is causing sheer misery. 

“Sharemilkers end up with little money to feed their family, let alone their cows, when the correct dispute resolution process hasn’t been adhered to.

“It’s a blight on our industry and I welcome Federated Farmers distancing itself from this practice by deleting this outdated clause,” continued Mr Wilding.

The decision has been described by Neil Filer, Federated Farmers Sharemilkers’ Section Chairperson, “as a great relief to all sharemilkers”.

“We really appreciate the soul searching by our colleagues in Federated Farmers Sharemilker Employers’ Section, which represents the interests of farmers who engage sharemilkers,” Neil Filer added.

“Together with other members of the Sharemilking Section, we sat down with the Sharemilker Employers’ Section along with experienced arbitrators and mediators involved in the industry. 

“We talked about what this clause means for sharemilkers and farm owners.  None of us have heard that it’s a great clause and, in fact, it is the clause we hear the most negative things about.

“While we have taken out this clause, we have tightened up the timeframes and requirements when resolving disputes.  This is to ensure sufficient protection and incentives for breaches and disputes to be settled under conciliation and arbitration, without us going back to something that is correctly seen as extremely harsh and contentious.

“While we cannot stop a farm owner from instructing the dairy company to withhold payments from the sharemilker, we do not think Federated Farmers should continue to have such a harsh provision which is inconsistent with common law, in a modern day agreement. 

“Those who do withhold payments under the new Agreement will be in breach of their contractual obligations.

“We collectively believe this clause should no longer be in the Federated Farmers Herd Owning Agreement and we are moving to delete this from the Federated Farmers Variable Order Sharemilking Agreement as well,” concluded Mr Filer

Those reviewing the Agreement include sharemilkers, farm owners and experienced arbitrators and mediators involved in the industry.  The new Herd Owning Agreement will be available for the 2015/16 season at the latest.