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Downsizer superannuation contributions

*The contents of this article are general in nature – as always, you should seek financial planning advice before doing anything to alter your financial position.*

From 1 July 2018, the Australian Government will allow “downsizer contributions” into superannuation as part of a package of reforms aimed at reducing pressure on housing affordability in Australia.

This measure applies where the exchange of contracts for the sale of your home (which must be your principal place of residence) occurs on or after 1 July 2018.

If you are 65 or older, and you meet the eligibility requirements, you may be able to choose to make a “downsizer contribution” from the proceeds of selling your home into your superannuation account for an amount of potentially up to $300,000.

Importantly, your downsizer contribution is not a non-concessional contribution and will not count towards your contributions cap, nor do the normal contributions rules apply, such as the “works test”.

Downsizer contributions are not tax deductible and will be taken into account for determining your eligibility for the age pension.

If you do not meet the “downsizer contribution” requirements, then the contribution will be assessed under the normal contributions caps (and penalties may apply).

If considering a downsizer contribution, you should also look to ensure that your estate plan is appropriate and if not, put appropriate arrangements in place.

From 1 July 2018, the Australian Government will allow “downsizer superannuation contributions”

ELIGIBILITY

You will generally be eligible to make a downsizer contribution to super if you can answer “yes” to all of the following:

  • you are 65 years old or older at the time you make a downsizer contribution (there is no maximum age limit),
  • the amount you are contributing is from the proceeds of selling your home where the contract of sale was exchanged on or after 1 July 2018,
  • your home was owned by you (or your spouse) for at least 10 years prior to the sale,
  • your home is in Australia (and is not a caravan, houseboat or other mobile home),
  • the proceeds (capital gain or loss) from the sale of the home are either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption, or would be entitled to such an exemption if the home was a CGT, rather than a pre-CGT (acquired before 20 September 1985) asset,
  • you have provided your super fund with the downsizer contribution form, either before or at the time of making your downsizer contribution,
  • you make your downsizer contribution within 90 days of receiving the proceeds of sale, which is usually the date of settlement, and
  • you have not previously made a downsizer contribution to your super from the sale of another home.

HOW MUCH CAN YOU MAKE AS A DOWNSIZER CONTRIBUTION?

If you are eligible to make a downsizer contribution, there is a maximum amount of $300,000 that can be made.

The contribution amount can’t be greater than the total proceeds of the sale of your home.

It only applies to the sale of your main residence, and you can only use it for the sale of one home. You can’t access it again for the sale of a second home, but there is also no requirement to purchase another home.

TIMING

You must make your downsizer contribution within 90 days of receiving the proceeds of sale. This is usually at the date of settlement.

You may make multiple “downsizer contributions” from the proceeds of a single sale however:

  • they must be made within 90 days of the date you receive the sale proceeds (usually the settlement date of the sale), and
  • the total of all your contributions must not exceed $300,000 (or the total proceeds of the sale less any other downsizer contributions that have been made by your spouse).

If circumstances outside your control prevent payment within that time, you can seek an extension of time.

HOW TO MAKE A DOWNSIZER CONTRIBUTION

Before you decide to make a downsizer contribution, you should:

  • obtain financial planning advice in relation to the relevant requirements and any effect on your social security benefits or other entitlements (there may be other things to consider with any surplus sale proceeds such as acquiring a “granny flat right” and updating your estate planning documents),
  • check the eligibility requirements for making a downsizer contribution,
  • contact your super fund to check that it will accept downsizer contributions, and
  • complete a downsizer contribution form for each downsizer contribution and provide this to your super fund when making – or prior to making – each contribution

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to estate planning, business succession, superannuation or SMSFs, 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.

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in Asset Protection / Estate Planning / General / Property / Superannuation / Trusts  by 01 Jun 2018 0 comments

SMSF owns property. Member dies. Oh oh!

Do you, like many Australians, have a self managed superannuation fund (SMSF)?

If you want to own direct investments within your superannuation or have greater control of your superannuation portfolio, a SMSF can be a suitable alternative to retail superannuation funds.

SOME ADVANTAGES OF SMSFs

SMSFs have:

  • direct investment choice
  • access to wholesale managed funds
  • the benefit of being able to combine the superannuation balances of up to 6* people
  • the advantage of 15% taxation on investment earnings (as opposed to marginal or company tax rates) and potentially reduced capital gains tax
  • the ability to assist with estate planning and possibly for non-lapsing binding death benefit nominations

DIRECT PROPERTY

Often seen as a key advantage is the ability of an SMSF to invest in direct property, such as owning office or factory space from which a business operates from (assuming your SMSF’s Investment Strategy allows for direct property).

Where member balances are insufficient to buy a property outright, SMSFs can also borrow but only using a limited recourse borrowing arrangement (LRBA) using a bare trustee that holds the property on behalf of the SMSF for the duration of the loan and once the debt is paid, the legal ownership of the property passes to the SMSF.

Property values hopefully go up over the next 20 or so years and the members benefit from and can live happily off the benefits during retirement …

… well that’s the plan anyway. So, what happens if a member dies or gets really sick a few years into the plan? (hint – it can ruin everything, for the other members).

CONSEQUENCES OF DEATH OR TPD

On the death of a member, that member’s superannuation balance is to be paid out (to the member’s estate of their nominated beneficiary/ies) as soon as is practicable.

On the total and permanent disablement (TPD) of a member, the member may be able to exit from the SMSF and call for their member balance to be paid out.

… but if the SMSF’s cash is all tied up in the property and the property is still subject to the LRBA, where does the money come from to pay out the member balance?

The property may have to be sold to fund this! That is, unless there is a SMSF Member Death & TPD Exit Deed in place.

SMSF MEMBER DEATH & TPD EXIT DEED

A SMSF Member Death & TPD Exit Deed can help in reducing the financial effects arising from the unexpected death or TPD of a member by for example:

  • requiring the SMSF members to effect a life insurance policy over the lives of the other members and where there is a death and a payout under the policy, the policy owners contribute funds to the SMSF with the intention of paying out the deceased member’s superannuation balance (and using any remainder to reduce or pay out any debt on the property under the LRBA); and
  • requiring the SMSF members to either put in place appropriate TPD cover or to agree that on the occurrence of a TPD event of a member, that member may remain a passive investor in the SMSF but cannot immediately call for payment of their member balance, even if they would otherwise be entitled to under the superannuation legislation, but rather, if they want the payment, their member balance is to be paid out over several years (ie, from the SMSF’s cashflow).

Unless there are appropriate insurances in place or an agreement for members to only get paid out benefits over time in the event of a TPD event, then the likely outcome of the death or TPD of one member is the sale of the SMSF’s property.

This can be a particularly bad problem if the SMSF has only recently acquired the property and had therefore incurred all of the legal, financial planning and accounting costs as well as stamp duty, but had no time for the asset to generate income or appreciate in value. The death or TPD of the one member therefore affects up to 3 other members who may not even be related to the affected member!

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to estate planning, business succession, superannuation or SMSFs, 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.

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*amendment 01 July 2021 – only 4 members were allowed prior to 1 July 2021.

SMSF owns property. Member dies. Oh oh!

in Business / Commercial Law / Dispute Resolution / Estate Planning / Probate / Risk management / Superannuation / Tax Planning / Trusts  by 07 May 2018 0 comments

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 $100,000*;
  2. the goods or services cost more than $100,000*, 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.

*at the time of this article’s creation, this amount was $40,000 but increased 150% to $100,000 on 01 July 2021.

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.

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in Business / Commercial Law / Dispute Resolution / Employment / General / Online Issues / Risk management  by 02 Apr 2018 0 comments

Claim a CTP Green Slip refund

The NSW Government has reformed the compulsory third party (CTP) insurance scheme to reduce the costs of CTP Green Slips for vehicle owners and better support people injured on NSW roads.

If you were the registered owner of a private vehicle as at midnight 30 November 2017, you may be able to claim a CTP Green Slip refund for CTP insurance policies bought or renewed before 1 December 2017.

Over 4 million NSW vehicle owners will be eligible for a refund as a result of these reforms.

Claims must be submitted by 30 September 2018.

To see if you are eligible to claim a CTP Green Slip refund and to make a claim for your refund, log in to Service NSW

in General  by 20 Mar 2018 0 comments

Do you own land in NSW through a family trust structure?

Do you own land in NSW through a family trust structure? If so, then take note…

Revenue NSW (previously the NSW Office of State Revenue) automatically applies the Land Tax Surcharge on land tax assessments for properties owned through a family trust. The surcharge, which was introduced as part of the 2016 NSW budget, is currently at 2%, and can be significant.  There is a similar application to stamp duty also.

This surcharge does not apply where Revenue NSW has been advised of the fact that the trust deed specifically (and irrevocably and permanently) excludes foreign persons or entities as potential beneficiaries.

On 24 June 2020, the State Revenue Legislation Further Amendment Act 2020 (NSW) received Royal Assent. It clarifies that a trustee of a discretionary trust owning residential property in NSW is taken to be a foreign person for foreign surcharges purposes, if the trust does not irrevocably prevent a foreign person from being a beneficiary of the trust.

The transitional provisions give trustees of discretionary trusts an exemption and refund for foreign surcharges where the trust deed, made on or before 24 June 2020, contains a provision to prevent a foreign person from benefiting.

Until 31 December 2020, trustees of discretionary trusts have an opportunity to amend their trust deeds to include the provision and the provision must be irrevocable for the past and future surcharges not to apply.

From 1 January 2021, trustees of all discretionary trusts (including testamentary trusts) will be subject to surcharges unless the trust deed contains an irrevocable provision.

We have assisted several clients to update their trust deeds at the time of initial registration for land tax (to exclude foreign persons or entities as potential beneficiaries) however, where there is an existing trust with an existing landholding, this may be something that needs to be monitored and updated, so check your assessments.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to land tax, trust deed amendments or any other 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 needs.

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in General / Property / Tax Planning / Trusts  by 01 Mar 2018 0 comments

Bringing on business partners?

For businesses that are growing and putting on other shareholders and directors, a Shareholders Agreement is a must have. If your business is not a company but it a partnership or a unit trust structure, the document would be a Partnership Deed or Unitholders Agreement.

Don’t leave some of the most important and fundamental issues for your business to chance. Consider a company with 2 or 3 shareholders – a typical small to medium sized business scenario…

COMMON PROBLEMS FOR SHAREHOLDERS

Issues that commonly that can affect shareholders include:

  • A shareholder sells their shares, leaving you with an unintended business partner;
  • A shareholder dies and you inherit an unintended business partner or you have to buy the shares from their estate for more than you ought to;
  • As a shareholder, you want out but cannot find a suitable purchaser but the other shareholders won’t buy you out;
  • The shareholders don’t have available funds to pay out an exiting shareholder;
  • The majority shareholder wishes to run the business one way, but is restricted by a minority shareholder;
  • You, as a minority shareholder, are being treated poorly by other shareholders who are running the business with little regard to your interests;
  • You wish to sell the company’s business as there is an excellent offer on the table, but another shareholder will not and is jeopardizing the sale;
  • You wish to receive dividends from the business, but others want to reinvest the profits.

The aim of a Shareholder Agreement is to bring some certainty to the business relationship so there is confidence in how the business will operate

TAILORED SOLUTIONS

A Shareholder Agreement tailors the rights and obligations of the shareholders to fit the particular purposes of the company, the nature of its business and the aims and wishes of its shareholders – to help avoid some of the potential problems identified above.

Some factors that should be considered in a Shareholders Agreement include:

  • The company’s activities/type of business – its purpose;
  • The roles and obligations of the shareholders;
  • Who are the directors and how the shareholders can change them;
  • Director remuneration;
  • Who will manage and control the business day to day, such as a managing director;
  • Meetings – how they are called, how they are run, counting of votes;
  • How decisions are made by shareholders or the board of directors;
  • What types of decisions require a simple majority, special resolution or a unanimous vote;
  • Payment of dividends;
  • Funding/borrowing;
  • Restrictions on the issue/transfer of shares and calculating the share price;
  • How shareholders can exit from the company and on what terms;
  • Funding of exits (including death) – buy/sell obligations and personal insurances;
  • Restraints on existing shareholders as to company customers etc;
  • Insurances to be taken out; and
  • How any disputes are to be resolved.

The aim of a Shareholders Agreement is to bring some certainty to the business relationship so that shareholders can have some confidence as to how the company will be run and, if there is a falling out, to provide a mechanism for that falling out to be dealt with, as painlessly as possible.

Ideally, the Shareholders Agreement would be in place from the outset whilst all parties are in agreement in relation to all issues however, they can be documented at any time (provided all parties agree).

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to starting or buying a business, drafting business documents or any other 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 business needs.

Stay up to date – LinkedIn | Facebook | Twitter

in Business / Commercial Law / Dispute Resolution / General / Risk management / Trusts  by 12 Feb 2018 0 comments

Creditor’s Statutory Demand

If you or your business are owed a debt by an Australian company that is not disputed, then there can be a relatively simple, yet effective way of obtaining payment in as little as 3 weeks.

The Corporations Act 2001 (Cth) provides for the issue of a document called a “creditor’s statutory demand” to any Australian company that owes a debt greater than the prescribed amount (which from 01 July 2021 is $4,000*).  *Note that this threshold increased from the original $2,000 (at the time this article was original published) to $20,000 as a result of the Coronavirus legislation, but dropped back to the current threshold.

The process is basically that the demand is served and then you wait.

Statutory demands must be in the prescribed form, detail the debt due, be signed by or on behalf of the creditor and be properly served on the company. Where the debt is not a judgment debt, an affidavit is also required to be signed, certifying that the debt is due and payable.

The Act provides where the demand is served and not complied with within 21 days*, the company is presumed to be insolvent and is liable to be wound up. Compliance with the statutory demand is achieved by either paying the debt due or coming to an arrangement satisfactory to the creditor in relation to payment of the debt within that 21 day period. (*During the COVID-19 pandemic period, this increased to 6 months but has reverted back to 21 days from 01 January 2021).

The presumption of insolvency lasts for 3 months after the 21 day period expires. Any proceedings to wind up the company on the basis that it is insolvent must be commenced within that period.

Creditor’s statutory demands may only be set aside by the Court on certain grounds and applications to do so must be both filed with the Court and served on the creditor that issued the demand within that 21 day period. Grounds for setting aside the demands are limited and include where there is a defect in the demand, where the amount owed is less than the prescribed amount or where there is a genuine dispute as to the existence and/or amount of the debt claimed. None of these grounds may be relied on to oppose a demand after the 21 day period.

Where the debt is disputed, the service of a creditor’s statutory demand is not the appropriate way to obtain payment however, there are other methods available.

FURTHER INFORMATION

For further information in relation to debt recovery, company issues or any commercial law matter, contact McKillop Legal on (02) 9521 2455 or email help@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

in Business / Commercial Law / Debt Recovery / Dispute Resolution / General / Insolvency & Bankruptcy / Litigation  by 29 Jan 2018 0 comments

What is AUSTRAC and what does it do?

So, what is AUSTRAC and what does it do?

The Australian Transaction Reports and Analysis Centre (AUSTRAC) is tasked with enforcing compliance with the Financial Transaction Reports Act 1998 (FTR Act) and the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).

One of the purposes of the FTR Act and AML/CTF Act is to seek to ensure that instances of tax evasion, money laundering and the potential financing of terrorists are reported to the appropriate authorities.

The AML/CTF Act

The AML/CTF Act imposes obligations on entities that provide ‘designated services’ (such as account/deposit-taking services, cash carrying/payroll services, currency exchange services, life insurance services and lending).

Entities that provide one or more designated services under the AML/CTF Act are ‘reporting entities’.

Threshold transactions

Reporting entities must submit a Threshold Transaction Report (TTR) to AUSTRAC within 10 business days after the entity provides a customer with a designated service involving a ‘threshold transaction’.

Threshold transactions involve the transfer of physical currency or e-currency of AUD$10,000 or more (or foreign currency equivalent).

International funds transfers

The ‘sender’ of an International Funds Transfer Instruction (IFTI) transmitted out of Australia, or the ‘recipient’ of an IFTI transmitted into Australia, must report the instruction to AUSTRAC within 10 business days after the day the instruction was sent or received.

Suspicious matter reports

A reporting entity must submit an Suspicious Matter Report (SMR) to AUSTRAC within 24 hours after forming the relevant suspicion if the suspicion relates to terrorism financing (or otherwise within 3 business days) if it is suspected on reasonable grounds that:

  • a person (or their agent) is not the person they claim to be, or
  • information the reporting entity has may be: relevant to investigate or prosecute a person for; an evasion (or attempted evasion) of a tax law, or § an offence against a Commonwealth, state or territory law; or of assistance in enforcing: the Proceeds of Crime Act 2002 (or regulations under that Act); or a State or Territory law that corresponds to that Act or its regulations
  • providing a designated service may be: preparatory to committing an offence related to money laundering or terrorism financing; or relevant to the investigation or prosecution of a person for an offence related to money laundering or terrorism financing.

The FTR Act

Where an entity is covered by the AML/CTF Act (which was enacted years after the FTR Act), they are generally not covered by the FTR Act.

The FTR Act covers cash dealers include financial institutions, corporations that provide financial or insurance services, trustees and managers of unit trusts and a person who carries on a business of operating a gambling house or casino. The obligations of solicitors are also prescribed by the Act.

Where a significant cash transaction takes place (a cash transaction involving AUD$10,000 or more (or foreign currency equivalent including transactions which, when aggregated, exceed that amount), a Significant Cash Transaction Report (SCTR) is to be lodged with AUSTRAC.

Cash dealers who are a party to a ‘suspect’ transaction must report that transaction to AUSTRAC. The cash dealer must submit a suspect transaction report (SUSTR) to AUSTRAC as soon as practicable after forming the suspicion.

The objective of the FTR Act is that by preparing the reports to AUSTRAC, businesses can more easily identify their customers and are therefore more likely to reduce the incidence of fraud.

in Business / Commercial Law / General / Online Issues / Risk management  by 01 Dec 2017 0 comments

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

 

in Business / Commercial Law / Dispute Resolution / Employment / General / Risk management  by 01 Nov 2017 0 comments

What is an indemnity clause?

WHAT IS AN INDEMNITY CLAUSE?

An indemnity clause is a common clause in contracts, whether for the supply of goods, terms and conditions of the provision of services, leasing of assets or the sale of property.

The indemnity is intended to assign responsibility for risks in performing the contract to a particular party – it either confirms or alters the position at common law which would otherwise apply to determine responsibility for such events.

COMMON EXAMPLES

When drafting an indemnity, the nature and types of losses that may arise need to be considered.

Common areas that you may want an indemnity clause or limitation of liability cause to cover may include: negligence; injury to or the death of any person; loss of or damage to property; infringement of third party rights, such as intellectual property rights; duties and taxes; and legal costs and disbursements.

REMOTENESS & REASONABLE FORSEEABILITY

The common law (extending back to the 1854 case of Hadley v Baxendale) basically provides that if a head of damage wasn’t contemplated by the parties at the time of contracting (wasn’t reasonably foreseeable) or didn’t arise naturally arises from the breach according the usual course of thing (is too remote) – it may not be a recoverable loss.

Accordingly, if the damages that you may want the other party to wish the other party to bear on the occurrence of a certain event are considered remote, then they would probably not be recoverable at common law and therefore, you may wish to specifically provide for them in the clause.

The other party may not agree, so the negotiation would then begin and the parties will ultimately have to agree on what is a reasonable compromise in the circumstances.

DRAFTING THE INDEMNITY

Commonly, indemnity clauses are drafted such that where a right to indemnity arises, the liability reduced to the extent that the party benefited by the clause caused or contributed to the loss, that is reduced proportionally.

The extreme in indemnity clauses is where the liable party is liable absolutely (ie, there is no carve out to reduce the liability proportionally). This type of clause, given its strict nature, is usually only agreed to where the event is wholly within the control of the indemnifying party.

INSURANCE COVERAGE

Just as the strength of a personal guarantee is in the financial standing of the guarantor, you also need to be satisfied that the party providing the indemnity has the means to meet any claim if called upon. Often, a party is required to have insurance to support any indemnity but they fail to investigate the extent of their cover and are often not insured at all.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to any contract negotiation, agreement drafting issue commercial dispute, 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.

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in Business / Commercial Law / Dispute Resolution / General / Litigation / Risk management  by 01 Oct 2017 0 comments