1.              A National System

If your business name is currently registered in multiple States, it will now be registered nationally, and you will only need to pay one renewal fee. The new system will also only require you to register a new business name once to cover all States.

2.              ABN Compulsory

You will now need to have an Australian Business Number (ABN), or be in the process of applying for one, in order to apply for a business name.

3.              Distinguishing Names

If your business has an identical name as another business operating in another state or territory, ASIC will provide additional information on the public register to differentiate affected businesses. This may be the State or Territory your business name was first registered in. The identifier will not form part of your business name, but is used to allow people to distinguish between identical business names on the public register.

4.              Renewals

If you already have a business name registered, you will not see a significant change in the system (aside from the fact that your renewal letters will be on a new letterhead). ASIC will contact you when registration is due for renewal if the renewal date is after 28 May 2012. If the renewal falls due between now and 28 May 2012 you should contact your state authority to renew the name under the current system.

5.              Registration Fees

Registration fees will be significantly less under the new system: $30 for a one year registration and $70 for a three year registration (currently $133.60 and $255.60 respectively).

6.              Ease of Access

One of the significant benefits that businesses will see from the new system will be ease of access to all of their corporate documentation in the one place. For instance, if you have a company registration, business name, or multiple business names registered, you will be able to align the renewal dates for all of those registrations under the new system.

Trademarks

From my experience, clients often make the mistake of assuming a registered business name is enough to secure the ownership of the business’ intellectual property.

It is important to remember however that registration of a business, company or domain name does not give you any proprietary rights to ownership of that name. If you require exclusive use of your business name, you should register it as a trade mark.

A registered trade mark under the Trade Marks Act 1995 gives you the exclusive legal right to use, license and sell your intellectual asset in Australia. The owner of a trade mark can apply for its registration. The registration period initially lasts for 10 years and can be continued indefinitely providing that you pay renewal fees.

It is also important that you use your trade mark—other applicants can apply to have your trade mark deregistered if you haven’t used it for more than three years.

ASIC Roadshow

ASIC is hosting a national business names roadshow to help business name holders and industry professionals understand the new business names register.

The roadshow will visit all capital cities between 17 April and 16 May 2012.

If you have any questions about your business name or intellectual property, please contact me.

Thankfully, case law tells us that we shouldn’t be afraid to dismiss such employees provided we have a valid reason.

I recently read the case of Anderson v Crown Melbourne. Here, the employer discovered from other staff members that the employee was intending to fly interstate to attend a football game.

In the days leading up to the ‘sicky’ the employee was warned by his employer on several occasions that he should apply for annual leave because any misuse of sick leave could result in termination of employment. To this, the employee responded with words to the effect “I’ll have a doctor’s certificate covering me for that day”. Needless to say the employee called in sick and was dismissed summarily, even though he provided a medical certificate. The dismissal was considered valid.

Another example is the case of Ropafadzo Tokoda v Wespac Banking Corporation where an employee tried to explain her absence by providing a false medical certificate. During an investigation into the matter, the employee alleged that she couldn’t afford to go to the doctor; hence she had to provide the false certificate. Despite this, she was dismissed for dishonest and fraudulent misconduct. Fair Work Australia found in favor of the employer because the employee was afforded due process by way of an investigation, conducted prior to the dismissal. 

Keep in mind though; Fair Work Australia is not so understanding of employers who think they can dismiss ailing employees on baseless grounds. Or worse still, refuse to afford procedural fairness. There is nothing tribunal members hate more than the employer who is apparently unfamiliar with procedural fairness and what is so obviously the law.  

Take the case of Kavassilas v Migration Training Australia Pty Ltd (No.2). Here, an employer dismissed a manager while she was on two days sick leave, as permitted by her contract.  The manager notified her employer that she would provide a medical certificate but was dismissed prior to being able to provide one. The dismissed manager was awarded compensation of $33,706.21 plus interest and costs. Not only that, but the employer was also ordered to pay a penalty of $20,000.00 for showing a “conscious disregard” for legal provisions relating to sick leave.

So remember, if you have a valid reason to dismiss a ‘sick’ employee, make sure you conduct a proper investigation first. And, if you think you don’t want to bother, just bite the bullet and investigate - because failing to conduct a proper investigation could cost your business big bucks.

Please feel free to contact me if you have any questions relating to Employment Law. 

Hodgson had been employed by Amcor Ltd for 38 years and was made redundant by the company at age 61. His annual remuneration package was as follows:

• Base salary;
• Superannuation;
• Housing allowance;
• Motor vehicle allowance;
• Total remuneration sum of $750,000.00.

No period of notice in the event of redundancy was specified in Hodgson’s employment contract; however, Amcor Ltd had a company Redundancy Policy which applied to all employees.

Amcor’s Redundancy Policy:

The Redundancy policy expressly applied to senior management and all staff members.

It stated that all redundant employees were entitled to be paid three weeks base salary for each completed year of continuous service. The maximum under the redundancy policy was 52 weeks pay. 

The Supreme Court held that this policy formed part of Hodgson’s employment contract.

Outcome:

The Supreme Court of Victoria ruled that Hodgson had not been made genuinely redundant because the restructure of the company did not cause his role to be modified sufficiently enough to fundamentally change the nature of his position. Further, there was an insufficient redistribution of Hodgson’s job functions. 

Accordingly, Amcor was order to pay a total of $917,695.00 to Hodgson which included payment in lieu of notice, accrued annual leave and long service leave. The order also included a bonus payment of $160,000.00 which Hodgson would have receive had his employment not been terminated.

Key Findings:

The Supreme Court of Victoria drew some key findings about redundancy in this case which should be kept in mind:  

1. A job becomes redundant only when the employer no longer requires to have the job performed by anyone; (or)
2. For all practical purposes the duties of the job have changed so in effect the original role no longer exists; (or)
3. The Employer is required to redistribute the duties of the job among other employees which means that in effect the original role ceases to exist.  

It is very important when considering terminating an employee, that you carefully consider your legal position. It is usually important to consider these issues when preparing employee agreements.

Please contact me if you have any questions in regards to redundancy and employment agreements.

As a company grows, staff may be offered incentives such as shares in a company as well as profit sharing.  Payments of shares and profits may be made directly to an employee or into a Trust set up specifically for that purpose.

When entering into these arrangements, employers may or may not enter into written agreements with their staff as to how the shares and profits in a company will be distributed to the employee.

A distribution of company shares or profits in this way is likely to be viewed by the Australian Taxation Office as an employee share scheme, depending on the nature of the agreement.  The Australian Taxation Office has specific requirements for this.

For employees, some of the consequences of this arrangement may include the following:

• The employee may be taxed when they receive the shares or profits in the company, when they leave the company, or when various triggering events occur. 
• The tax payments could be significant and occur at a time which is not suitable for the employee.
• The scheme may still be viewed as an employee share scheme even if the shares are held by a Trust.
• Payments of income out of the trust to various beneficiaries may have further consequences for the employee in relation to their individual tax payments.
• There will be compliance and administration costs associated with the running of the Trust.
• The agreements may or may not cover who pays the tax and when it is to be paid.
• Tax implications when the shares in the company are subsequently sold by the employee.

Employers wishing to enter into such transactions would need to be mindful of the following consequences:

• Fringe Benefits Tax implications.
• Issues surrounding how the company is to be valued, the proportion of profits to be paid and when they are to be paid.
• The employees may have voting or other rights in the company which the employer may not have intended.

With the numerous tax and other consequences of providing employees with a share of the company and company profits, employers and employees need to very carefully consider their agreement and the consequences that follow.  Alternate, simple arrangements may also need to be considered.  Expert legal and accounting advice should also obtained.

If you have any questions regarding the above, or questions generally regarding employment agreements and taxation, please do not hesitate to contact me.

My client is now a 50% owner in the business but because of the terms of the agreement that was signed, my client has no say at all in the management and operation of the business.  This news was distressing for my client, especially given the business relationship is deteriorating.

This type of situation could easily have been avoided by the parties seeking advice and properly documenting an agreement that actually reflected the arrangement between the parties.  A properly drafted agreement can serve to avoid unnecessary disputes arising throughout the term of a business relationship.

A shareholder or partnership agreement should address a number of issues, including:

• The correct legal entity of each owner;

• The principal of each owner, if the owner is a company or a trust;

• The percentage of the business owned by each owner;

• Whether any other agreements are contingent on the shareholder/partnership agreement (such as buy/sell agreements, employment agreements, loan agreements);

• The capital to be injected by each owner into the business;

• What happens if further capital is required;

• The ownership of key assets in the business such as intellectual property etc;

• Any prerequisites for being an owner of the business (such as a professional qualification);

• If the business is a company, the minimum and maximum number of directors;

• Representation on the board;

• The percentage of ownership required for certain resolutions to be passed;

• The role that each principal plays in the business;

• Any restraint on the owner upon leaving the business;

• Profit distribution policy;

• How a party can exit the ownership of the business (i.e. do they have to first offer their share in the business to the other owners);

• What happens upon the death, total and permanent disability or trauma of a principal;

• Can an owner be expelled from the business;

• How is the business valued upon the exit of an owner;

• What happens if a dispute arises.

I also have found from experience that addressing these issues at the commencement a business relationship allows the parties to address some difficult topics before they commence the business relationship.  I have had occasions where clients have decided not to go into business with another person as a result of negotiations for the shareholder agreement.

If you have any questions in relation to this important document please do not hesitate to contact me.

Any successful business should have documented terms of trade with all external parties that they deal with.  The agreements could include:

• Supply agreements;
• Licensing agreements;
• Distribution agreements;
• Purchase agreements.

The terms of trade should be specific for each individual business, however there are a number of important matters that should be considered in any terms of trade.  These include:

1. The legal entity of the party that you are dealing with;
2. If the legal entity is a company or trust, whether you will be obtaining personal guarantees;
3. Carefully outline each party’s obligations under the agreement;
4. Detail the way in which payment is to be made;
5. Ensure that any retention of title issues are properly addressed;
6. Deal with any intellectual property issue;
7. Carefully outline the guarantor’s obligations;
8. Address all legislative requirements in relation to the agreement.  This will be specific for each agreement;
9. Deal with any warranties or defect liability issues;
10. Detail any variations to the agreement;
11. Detail how the agreement can be terminated by either party;
12. Detail any indemnity and liability issues;
13. If there is to be any charge over property to secure payment under the agreement, ensure that this is carefully worded to comply with appropriate legislation;
14. Have a dispute resolution clause;
15. Detail the jurisdiction in which any disputes will be resolved and the law that applies to the agreement.

If you have any questions in relation to the preparation of these important documents please do not hesitate to contact me.

One of the topics that I discussed was the amendments to the Australian Consumer Law.

From 1 January 2012 if you are in business and choose is to provide a warranty against defects to consumers, then the document that you provide must comply with the specific requirements of the Australian Consumer Law.

What is a Warranty against Defects?

A warranty against defects is a representation given by you to a consumer, that as a business you will repair or replace goods (or part of them), resupply or fix a problem with services (or part of them) and provide compensation to the consumer if the goods or services (or part of them) are defective.

Who must adhere to the requirements?

If you provide goods or services to consumers with a document evidencing a warranty against defect, you must adhere to the requirements of the Australian Consumer Law;

Who is a consumer?

A consumer is a person or a business if they purchase goods or services at costs less than $40,000.00, or goods or services that do cost more than $40,000.00 that are of a kind ordinarily acquired for domestic, household or personal use or consumption, or a vehicle.

What is a “document” evidencing a warranty against defects?

A document includes any material where there is writing or printing, such as a label, sale docket or formal warranty.

What information must be included in documents which evidence a warranty against defects?

This is very important.  The document must state:

1. What you as the business giving the warranty must do if goods are faulty or defective;
2. What the consumer must do to claim under the warranty;
3. The name, business address, telephone number and email address of your business;
4. The warranty period;
5. What a consumer must do to claim under the warranty;
6. Whether you or the consumer are responsible for expenses incurred with a warranty claim and how the consumer can claim back any expenses incurred;
7. The benefits provided to the consumer by the warranty are addition to any other rights and remedies available to the consumer under law;
8. Mandatory text as required by the legislation;
9. Limiting liability.

It is very important that you take care to ensure that any information or words in the warranty do not limit or negate the mandatory requirements and text.

Consumer Guarantees

Warranties against defects are provided in addition to consumer guarantees required under the Australian Consumer Law.

The requirements of the Australian Consumer Law are very important, and place a significant obligation on businesses.  It is very important to ensure that your systems, procedures and documentation (including your warranties) are reviewed very carefully ensure complaints with the Australian Consumer Law.  Please do not hesitate to contact me should you require any assistance with this.

What is Business Succession Planning?

In simple terms, Business Succession Planning is developing a strategy to transfer the ownership, management and financial responsibility of a business.

Who should be involved in the Business Succession Planning?

There are a number disciplines and professionals that should be engaged to ensure that the Business Succession Plan achieves all of your objectives.  Often I will meet with Accountants, insurance brokers, financiers and sometimes management consultants to ensure that all areas of expertise are involved.

What matters should be addressed in Business Succession Planning?

It is difficult to outline all matters that should be outlined because each business is different.  Depending on the business the following matters should be factored into the Business Succession Plan:

• Retirement plan for key stakeholders in the business;
• Management succession plan which deals with the timing of the handover of the management of the business;
• Equity succession which deals with the actual transfer of ownership, and payment for this.
• Once the succession plan has been finalised it will need to be incorporated into the estate plans of the current owners.

Process for Planning

It is very important a structured process to approach the Business Succession Plan.  The process will involve consultation with appropriate professionals and deal with all of the elements that need to be considered.  Part of the process also involves conducting a review and due diligence of the business.

This approach will include considering the following questions:

1. Who could and would run the business for you if something was to happen;
2. How do you propose to continue your income after your exit from the business;
3. How did the other important stakeholders in the business view this;
4. What is the business worth;
5. What insurances do you have in place, both for the business and personally;
6. Do you have legal documents such as Shareholder Agreements, Will, Power of Attorney, Buyer Solicitor, Business Will;
7. Do you have a strategic plan for your business;
8. Who are the key stakeholders in your business that will continue to be involved in the business after you exit;
9. When would you like to exit the business.

It is very important that details consideration is given to any business succession plan, and professional advice sought from a number of disciplines.  Please do not hesitate to contact me if you would like to discuss this very important strategy for your business.

This section outlines the minimum notice periods which an employer is required to give an employee upon termination:

Not more than 1 year: 1 week

More than 1 year but less than 3: 2 weeks

More than 3 but less than 5: 3 weeks

More than 5 years: 4 weeks

It's important to note that employees who are over 45 years of age and have contributed at least 2 years service to the employer are entitled to an additional notice period of one week.  

However, it’s not always as simple as following section 117 of the Fair Work Act 2009 (Cth), especially when a disgruntled ex-employee decides to commence legal proceedings against you. The Courts focus more on what’s reasonable under the circumstances rather than just what is set out in the legislation.

Macauslane v Fisher & Paykel Finance Pty Ltd [2003] 1 Qd R 503:

By way of background, Mr Macauslane was a financial controller with Fisher & Paykel , on a salary which started at $90,000 and increased to $100,000 per annum.  He held a Bachelor and Masters degree and moved his family to Brisbane to take up the position. Mr Macauslane was made redundant at the age of 36 and given one months notice. 

In deciding what a reasonable notice period was, the court considered:

• the length of employment;
• the nature of employment,
• seniority and salary of the employee;
• the employee’s age, qualifications and experience.

It was ultimately held that Mr Macauslane was entitled to a 9 month period of notice prior to the termination of his employment.

Therefore, when terminating employment, don’t just consider the employment contract and section 117 of the Fair Work Act 2009 (Cth). Consider what is reasonable in all the circumstances. 

If you have any further questions, please do not hesitate to contact me.

When drafting employment agreements, I often get asked how to avoid a breakdown in employment relationships between the employer and employee. I usually suggest that employment relationships fail for three reasons:   

1.  The employee should never have been hired;

2.  There are no proper steps in place for resolving workplace issues;

3.  There is no proper plan in place for a smooth termination of employment.

To avoid mistake number one, make sure that as an employer you undertake a vigorous selection process when hiring staff. For example, research the candidates past employment history, or even have a look on Google. Facebook and Twitter is great for getting a feel for who the candidate is.

Obviously, it's important to be mindful of equal opportunity laws and privacy legislation. Equally as important, is making sure you do your homework to increase the likelihood of hiring the best possible candidate.

Resolving Issues and Terminating Employment  

Once an employee is hired, it is critical to put steps in place for resolving workplace issues. Here are a few practical suggestions:

• Set the standards that both the employee and employer will be bound by.
• Clearly outline the position description.
• Have clear policies for handling under-performance, workplace bullying,     workplace health and safety.
• Put everything in writing.

To achieve the above, I recommend you have a document which clearly sets out the expectations on both employer and employee. When conflicts arise, and they inevitably will, having a clearly thought out and mutually understood policy to follow is invaluable.

Further, all employment contracts should have a clearly drafted Termination Clause.  There are a number of circumstances which warrant immediate dismissal. Be aware of the relevant applicable Modern Award and the National Employment Standards which apply under the circumstances and particularly the notice periods required by the Fair Work Act 2009 (Cth).

If you have any further questions on Employment Relationships, please do not hesitate to contact me.