Employment

Minimum wage increase

The Fair Work Commission has, by the National Minimum Wage Order 2018, increased minimum wages by 3.5% from the first pay period starting on or after 1 July 2018.

This minimum wage increase applies to all employees paid the national minimum wage – employees will be entitled to a minimum take-home weekly pay of $719.20, or $18.93/hour.

Employers should review the pay rates of all employees to ensure that they are being paid at or above the appropriate pay rate.

A review should also be undertaken to ensure those employees on “annualized salaries” remain appropriately remunerated.

Further information

If you would like any more information in relation to employment law, disputes or business issues generally, please contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your legal concerns or objectives.

Stay up to date - LinkedIn Facebook Twitter | McKillop Legal Blog

The Australian Consumer Law (ACL)

Since 2011, businesses that provide goods (whether by selling or leasing them) or services to consumers in Australia must comply with certain consumer guarantees (as do manufactures and importers) imposed by the Australian Consumer Law (ACL).

Businesses must provide these ACL guarantees automatically, regardless of any other warranties they give to you or sell you.

Who is a consumer?

A person – including a business – will be considered a “consumer” if:

  1. they purchase goods or services that cost less than $40,000;
  2. the goods or services cost more than $40,000, but they are of a kind ordinarily acquired for domestic, household or personal use or consumption; or
  3. the goods are a commercial road vehicle or trailer used primarily to transport goods on public roads.

CONSUMER GUARANTEES – GOODS

Businesses that sell goods guarantee that those goods:

  • are of acceptable quality – safe, lasting, have no faults, look acceptable and do all the things someone would normally expect them to do;
  • are fit for any purpose that the consumer made known to the business before buying (either expressly or by implication), or the purpose for which the business said it would be fit for;
  • have been accurately described;
  • match any sample or demonstration model;
  • satisfy any express warranty (ie, anything promised by the business about the goods);
  • have a clear title, unless you otherwise advise the consumer before the sale;
  • come with undisturbed possession, so no one has the right to take the goods away from or to prevent the consumer from using them;
  • are free from any hidden securities or charges; and
  • have spare parts and repair facilities reasonably available for a reasonable period of time, unless the consumer is advised otherwise.

Manufacturers and importers guarantee that their goods:

  • are of acceptable quality;
  • have been accurately described;
  • satisfy any manufacturer’s express warranty; and
  • have spare parts and repair facilities reasonably available for a reasonable period of time, unless the consumer is advised otherwise.

What happens if these guarantees regarding goods aren’t met?

If a business sells a good to a customer that fails to meet one or more of the above consumer guarantees, they are entitled to a remedy – either a repair, replacement or refund and compensation for any consequential loss – depending on the circumstances.

Minor problems

Generally, if the problem is minor, the business can choose whether to remedy the problem with a replacement, repair or refund. If business chooses to repair and it takes too long, the consumer can get someone else to fix the problem and ask the business to pay reasonable costs, or reject the good and get a full refund or replacement.

Major problems

If the problem is major or can’t be fixed, the consumer can choose to:

  • reject the goods and obtain a full refund or replacement, or
  • keep the goods and seek compensation for the reduction in value of the goods.

What is “minor” and what is “major” when considering goods?

A purchased item has a major problem when it:

  • has a problem that would have stopped someone from buying the good if they had known about it;
  • is unsafe;
  • is significantly different from the sample or description;
  • doesn’t do what the business said it would, or what the consumer asked for and can’t easily be fixed.

Gift recipients are entitled to the same rights as consumers who bought the goods directly.

A business can’t refuse to provide a remedy if the good is not returned in its original packaging.

The buyer also must not refuse to deal with a customer about the returned good and tell them to deal with the manufacturer instead (however a manufacturer can be approached directly by the consumer).

CONSUMER GUARANTEES – SERVICES

Businesses that supply services to consumers guarantee that those services will be:

  • provided with due care and skill;
  • fit for any specified purpose (express or implied); and
  • provided within a reasonable time (when no time is set).

What happens if these guarantees regarding services aren’t met?

If a business sells a customer a service that fails to meet one or more of the consumer guarantees, the consumer is entitled to a remedy – for example, a refund, a further service to rectify the problem and in some circumstances compensation for consequential loss. The service provider must then provide the appropriate remedy.

Minor problems

If the problem is minor and can be fixed, the business can choose how to fix the problem.

The consumer cannot cancel and demand a refund immediately. The business must have an opportunity to fix the problem. If the repairs take too long, the consumer can get someone else to fix the problem and ask the business to pay reasonable costs, or cancel the service and get a refund.

Major problems

If the problem is major or can’t be fixed, the consumer can choose to:

  • terminate the contract for services and obtain a full refund; or
  • seek compensation for the difference between the value of the services provided compared to the price paid.

What is a “major” problem when looking at services?

A purchased service has a major problem when it:

  • has a problem that would have stopped someone from purchasing the service if they had known about it;
  • is substantially unfit for its common purpose, and can’t easily be fixed within a reasonable time;
  • does not meet the specific purpose the consumer asked for and can’t easily be fixed within a reasonable time; or
  • creates an unsafe situation.

EXCEPTIONS

A business may not be required to provide a remedy if a consumer:

  • simply changes their mind, decides they do not like the purchase or has no use for it;
  • discovers they can buy the goods or services more cheaply elsewhere; or
  • has misused the goods in a way that caused the issue or damaged the goods by using them in a way that was unreasonable.
  • knew of or was made aware of the fault before they bought the good;
  • asked for a service to be done in a certain way against the advice of the business.

HOW CAN BUSINESSES HELP THEMSELVES?

Although the consumer guarantees cannot be contracted out of, businesses can take steps to limit its effect, such as:

  • Putting in place appropriate Terms of Trade that confirm the understanding of the parties as to things that can often cause issues like time for delivery (as opposed to the unclear “reasonable” time), imposing obligations on the consumers as to how to properly use the goods/services and so on;
  • Putting in place appropriate workplace policies and employment contracts that limit the “promises” that sales staff may make about goods or services being sold;
  • Considering marketing and product/service detailed material so as to ensure the descriptions and promises about the goods and services are clear and correct and not misleading or likely to cause complaints.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to consumer rights, business or commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

Stay up to date - LinkedIn | Facebook | Twitter

The importance of workplace policies

All employers need to maintain, develop and implement appropriate workplace policies in their business.

The need for these policies is not only compliance with relevant legislation, but also to protect the businesses against claims which might arise from inappropriate conduct of employees. Creating and enforcing workplace policies is one way in which employers may be able to effectively prevent or manage such claims.

Putting in place suitable policies can be a time-consuming task and one that is potentially dangerous for those who are not familiar with the legislative and contractual requirements involved.

The purpose of workplace policies is to place both the employer and employees (or prospective employees) on notice of certain things such as prohibited conduct. They often prevent any serious problems arising but if problems do arise, the employer is usually able to prove they upheld their legal duty by showing compliance with an established written policy.

We can tailor policies to meet the requirements of your particular business.

The following is a non-exhaustive list of topics that employers may wish to cover with appropriate policies:

  • Equal employment opportunity
  • Discrimination, harassment, bullying and violence
  • Work health and safety
  • Appropriate email and internet use
  • Workplace surveillance
  • Drug and alcohol use
  • Mobile telephone use
  • Dress codes
  • Annual leave and sick leave
  • Dispute resolution
  • Counselling and disciplinary procedures
  • Privacy
  • Redundancy

The workplace policies should be drafted so that they compliment the employment contracts in place.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to workplace policies, business law or employment related matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your legal concerns or objectives.

Stay up to date - LinkedIn Facebook Twitter

 

How does jury service work?

Jury service plays an important role in our justice system. Juries are used to ensure that legal verdicts are impartial and in line with community standards of behaviour.


The jury system in New South Wales is administered by the Jury Services Branch of the Office of the Sheriff of New South Wales, operating in accordance with the Jury Act 1977 and the Jury Amendment Act 2010.

WHAT DOES A JURY DO?

Juries are used in the District and Supreme Courts of New South Wales to:
  • hear and determine more serious criminal matters
  • hear and determine civil matters involving large monetary claims
  • participate in coronial inquests in the New South Wales Coroner’s Court.

In criminal trials, a jury hears evidence, applies the law as directed by the judge, and decides if a person is guilty or not guilty of a crime, based on the facts. A jury does not participate in the sentencing process.


In most criminal trials, 12 people are selected to be on the jury. Up to 15 jurors can be empanelled if a trial is expected to last longer than 3 months. To be ‘empanelled’ means to be chosen for a specific trial.

Civil trials which require juries are usually defamation proceedings. The trial judge will outline the issues the jury needs to consider to decide who is at fault. A civil trial jury is typically comprised of 4 jurors however, in the Supreme Court, 12 jurors may be ordered.

HOW IS A JURY SELECTED?

There are 3 steps to jury selection:
  1. Inclusion on the jury roll
  2. Receiving a jury summons
  3. Jury selection and empanelling

People who sit as jurors in a particular trial have gone through all 3 steps.

Each year, the names of around 200,000 potential jurors are randomly selected from the New South Wales Electoral Roll (the list of registered voters) and included on a jury roll. Notices of Inclusion are sent out to tell people they are on the jury roll. This is a list of people who could be selected for jury service in the next 12 months.

Approximately 150,000 people on the roll are sent a jury summons notice at some point in the year. This notice requires them to come to court, where they may be selected as a juror for a specific trial.

Out of these, only about 9,000 people a year are selected to serve on jury panels for specific trials. They are then empanelled as jurors.

You can ask to be excused from jury service for various reasons, including the kind of work you do, personal circumstances or because you are away from the state.

There are several categories of people that are excluded from being on a jury (such as lawyers, judges, members of parliament, policemen etc) and others who may be exempted from being on a jury (such as doctors, firemen, members of the clergy, the ill and those who have been on a jury in the last 3 years etc).

DO YOU GET PAID?

If you are selected as a juror, you will get paid an allowance for attending (only if for more than half a day) plus a travel allowance. This is intended to reduce any financial hardship you may incur by serving as a juror, but is not intended to be equal to your normal wage or salary payment – it is effectively a public service obligation on all citizens of New South Wales.

The amount you are paid depends on the length of the trial and whether you are currently employed or not employed. People who are not employed include carers, stay at home parents, retirees and unemployed people.

The present entitlement are:

The travel allowance is calculated on the distance from your postcode to the courthouse and is presently paid at the rate of 30.7c/Km.

Allowances are paid weekly by electronic funds transfers to your nominated bank account. You will be given details to log onto juror.nsw.gov.au and enter your bank account details prior to your court attendance.

WHAT ABOUT EMPLOYERS?

The allowance paid to jurors is not intended to be a substitute for a salary or wage.

Under the Fair Work Act 2009, an employer is required to pay full-time or part-time staff for the first 10 days of jury service.

Employers cannot:
  • force employees to take own leave, such as recreation or sick leave, while doing jury service;
  • dismiss, injure or alter their employees position for doing jury service;
  • ask employees to work on any day that they are serving as jurors; or
  • ask employees to do additional hours or work to make up for time that they missed as a result of jury service.

 

FURTHER INFORMATION
Craig Pryor  is principal solicitor at McKillop Legal. For further information in relation to jury duty or any court/litigation related matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.

Selling your business?

So you have an offer to buy your business. How exciting!

Although there may be agreement on the price being paid and the amount of deposit, what else needs to be considered?

  • How is the price apportioned between goodwill and equipment?
  • Have you considered the costs associated with the sale – you may have an agreement with a business broker, but there are lawyers, accountants, financial advisers also.
  • What about tax, capital gains tax (CGT) in particular, and is GST payable?

Who does what?

You need good advice. You are great at what you do, but you cant do everything. You need a great team of advisers – this is their thing.

Your lawyer will be required to prepare the legal documents that give effect to the sale (such as Business Sale Contract, Share Sale Agreement, Deed of Restraint, Deed of Consent to Assignment of Lease, Employment Contracts, Deed of Novation, Consultancy Agreements etc… yes, there may be others).

Your accountant can advise on the price apportionment and taxation implications, whether GST is payable or not, and how to make the most of any CGT concessions, exemptions and rollover relief such as those relating to small business and retirement.

Your financial adviser can give you advice on what to do with your cash to make the most of it now or in retirement.

What are you actually selling?

It would seem obvious, but have you considered what you are actually selling? Are you selling your business or, in the case of a company or unit trust, the entity that owns it?

There is a big difference, particularly given that entitlements to income and liability for expenses incurred prior to completion of the sale will remain with the vendor under a business sale whereas in the case of a share sale, the whole lot will be under the control of the purchaser from completion.

This will also affect how much due diligence a purchaser may undertake – as any prudent purchaser would have concerns about potential claims, tax debts etc

The usual things

Assuming a sale of business, not a share sale, some of the other things to consider is what is included in the sale?

  • Business name
  • Plant and equipment used by the business
  • Stock
  • Customer lists
  • Agreements with suppliers, referrers… to the extent they can be transferred
  • Phone/fax numbers, logos, domain names, email addresses social media etc
  • Intellectual property – do you have any trademarks?
  • Licenses/permits to operate the business
  • Are staff being terminated or transferring to the purchaser? What are employee entitlements are due?
  • Are the business premises leased? Is the agreement subject a an assignment of the existing lease or the granting of a new lease?
  • Personal Property Securities Register issues – for example, is the telephone system under a hire purchase agreement? Is the photocopier leased?
  • Do you need the consent of anyone to the sale proceeding? Eg, a franchisor, a mortgagor, someone you have given a first option to purchase to for example?
  • Are there to be restraints of trade/non-competition provisions that affect you? What about for key staff?

Although an exciting time, there are many issues that need to be considered when you are selling your business. The abovementioned items are certainly not an exhaustive list of things to consider and every business is different, but hopefully it gets you thinking about what you may need to consider when selling your business.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to buying/selling businesses, intellectual property or any commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your legal concerns or objectives.

Stay up to date - LinkedIn | Facebook | Twitter | McKillop Legal Blog

Minimizing risk in your business

Running a business is risky and small businesses can be especially so. Minimizing risk in your business is crucial.

Often, SME owners put their own personal assets on the line, whether to borrow funds from a lender to start up or buy stock or equipment or by signing a guarantee in relation to suppliers and others for the debts of the business.

There are several methods of protecting personal assets from creditors, but it is a process that many don’t follow. Some are quite simple and easy to put in place. They include…

Placing assets in a spouses’ name or in a family trust

In most circumstances, creditors will not be able to make a claim upon assets owned by your spouse or held by a discretionary trust, provided that you are not the trustee. If your spouse is the trustee, then he or she is the person who will usually decide how to divide up the income or capital of a trust (or not to).

Of course, stamp duty and capital gains tax issues must also be considered before acquiring or transferring assets as well as the potential operation of claw back provisions. The loss of the principal place of residence CGT exemption or the land tax issues may be a factor weighing against doing this.

In the end, it is weighing up risk vs benefits and making an informed decision regarding any asset protection measures.

Encumbering assets if you cannot transfer them

An asset that is mortgaged to its value is not attractive to a creditor. The mortgagee in such a case is the only entity that will benefit from the subsequent sale of the asset.

A guarantee form a person without assets is effectively valueless. Often businesses don’t check to see what a guarantor actually owns.

If you seek a guarantee from a director of another business, you could make some inquiries about their credit/financial position before creating an account,

Correctly structuring your business

Sometimes it is not feasible to establish an asset-holding entity and a trading entity (as many small business start-ups are strapped for cash) but it can be a great way to protect the business assets from day to day trading risks. Even getting the type of business structure right from the beginning (sole trader, partnership, company, trust or combination etc) can have a massive impact on your business.

It is possible to establish a company with a single director and/or single shareholder. The company dealing with third parties, supplies, customers and the like is the entity that may be liable to them, not the shareholders.

The shareholders are only liable to the company for the unpaid amounts (if any) on any issued share capital. This liability is usually a nominal amount such as a dollar. Shareholders have no liability to third parties unless they agree to it, such as by giving a guarantee.

Company directors may have some liability but only in limited circumstances can the corporate veil be lifted. Courts may be prepared to lift the veil in limited circumstances, such as in the case of insolvent trading, fraud or misrepresentation, inappropriate transactions or where public policy requires it.

Charging assets (and properly recording the charge)

Before lending money to your business, a charge should be created in the correct form and that form recorded as against assets such as real property (by way of mortgage recorded at Land and Property Information or another State’s land titles registry) or against non-real estate assets (by way of a Specific or General Security Deed and making a registration on the Personal Property Securities Register (PPSR)) to secure repayment of that money in preference to other creditors should the business fail.

Having proper terms of trade

Most businesses, if they have them at all, have terribly inadequate terms and conditions of trade. Often they are just copied and pasted from other documents and not tailored, leaving businesses thinking they are adequately protected when they really are not covered at all.

T&Cs should be built to protect your particular business and should be a work in progress, tweaked to solve or prevent problems that have arisen in your business from occurring again,

Avoiding personal guarantees altogether

A guarantee is a contract by which a guarantor promises that another person or entity will comply with his, her or its obligations to a third party and if they don’t, the guarantor will. The most common example involves bank loans where a guarantor such as a parent promises to repay the loan of their child if the child defaults.

Becoming a guarantor can be extremely risky, particularly when large liabilities are involved. Under most guarantees, the guarantor becomes immediately and primarily liable to repay the debt (and the lender does not have to wait for attempt to recover from the borrower before calling on the guarantee).

As a practical matter, many businesses cannot obtain finance unless a personal guarantee is provided. If this is the case however, whenever the loan is actually repaid or if the business can prove it is financial stable and secure, the guarantee should be discharged so that the guarantor cannot continue to rely on it at a later date concerning subsequent transactions.

Managing staff

One of the biggest risks to your business is that of staff leaving, and worse still, taking valuable information and assets with them.

Having appropriately drafted Employment Contracts with restraints of trade in them is a must.

Superannuation contributions

In many circumstances, superannuation entitlements can be protected from bankruptcy trustees. There may be no protection for example where the payments are made for the primary purpose of defeating creditors.

Making contributions to super is getting harder and harder with the Federal Government’s recent changes to the superannuation laws however, this can be an effective long term tool for wealth creation and asset protection. This will also usually involve the assistance of your financial planner.

Business succession planning

If you are in business with another person, what happens to your business if you or your business partner gets seriously injured or dies?

Do you have an appropriate and valid Will, Enduring Power of Attorney and Appointment of Enduring Guardians in place?

Usually having these estate planning documents is not enough. Presumably your business partner would give all of his or her assets to their spouse on their death through their Will. What if you don’t want to me in business with your business partner’s partner?

You should have in place business succession documents to deal with this such as a Buy/Sell Deed with appropriate insurances, a Shareholders Agreement (for companies), Unitholders Agreement (for unit trusts) or a Partnership Agreement (for businesses operating through a partnership structure).

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to starting a new business, commercial law, business disputes or estate planning/business succession issues generally, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

Stay up to date - LinkedIn Facebook Twitter | McKillop Legal Blog

What is a restraint of trade?

Post engagement restrictions

Often, employment contracts and contractor agreements contain restrictive covenants or ‘restraints of trade’ to protect businesses when an employee or service provider / contractor leaves.

So, what is a restraint of trade? A restraint of trade is effectively a restriction on the employee or contractor as to where they may work and who they may work for during, and for an agreed period after the termination of, their engagement. Restraints often restrict an employee’s ability to work for competing businesses and within a certain geographical area for a specified period of time.

How far can they go?

A valid restraint should only restrict activities reasonably necessary to protect the legitimate interests of the business that has the benefit of it. Those legitimate interests may include clients, referral relationships, trade secrets, confidential information and the like.

A restraint clause that is too wide, and therefore too restrictive, is generally unenforceable. A restraint should be tailored to accurately reflect the nature of the business activities being protected and only go so far as to protect them, when looked at reasonably. Where restraints seek to protect more than is reasonably necessary to protect the business, they can be struck down. There are public policy considerations in not preventing competition. Restraints are read strictly against the business that seeks to impose it.

Where there are no restraints in the employment or services agreement, there is no restraint and the business will only be able to rely upon their common law rights, which are often inadequate.

How are they enforced?

To enforce a restraint, the court requires that the party seeking to enforce it show that the restraint is reasonable – this will depend on the nature of the business, the restraint period, the restraint area and the nature of the work undertaken by the person or entity affected by it.

Often, enforcement takes the form of an injunction, seeking damages or an accounting for profits.

Further information

If you would like any more information in relation to employment law, disputes or business issues generally, please contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au

Weekend and public holiday penalty rates

There has been a lot of news coverage recently in relation to the  Fair Work Commissions decision which effectively cuts Sunday and public holiday penalty rates for workers in the retail, fast food, hospitality and pharmacy industries. We explain how and why this occurred below.

Section 156 of the Fair Work Act 2009 (Cth)provides that the Fair Work Commission must conduct a 4 yearly review of Modern Awards.

The Commission’s task in the Review is to decide whether a particular Modern Award achieves the Modern Awards’ objective. If it doesn’t, then it is to be varied such that it only includes terms that are ‘necessary to achieve the Modern Awards’ objective’ (s.138).

As part of the Review, various employer bodies made applications to vary the penalty rates provisions in a number of Modern Awards in the Hospitality and Retail sectors. These applications have been heard together.

On 23 February 2017, a Full Bench of the Commission made a determination in relation to weekend and public holiday penalty rates and some related matters, in Hospitality and Retail awards.

The Modern Awards which are dealt with in this decision are:

  • Fast Food Industry Award 2010 (Fast Food Award)
  • General Retail Industry Award 2010 (Retail Award)
  • Hospitality Industry (General) Award 2010 (Hospitality Award)
  • Pharmacy Industry Award 2010 (Pharmacy Award)
  • Registered and Licensed Clubs Award 2010 (Clubs Award)
  • Restaurant Industry Award 2010 (Restaurant Award

A summary of sum of the changes are set out below.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to any business or employment related issue, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.

Fair Work Commission penalty rates

Fair Work Commission public holiday rates

Access the summary of the decision here