Whilst businesses always plan to succeed, statistics show that about 1 in 2 new businesses fail in the short to medium term. For this reason, it is always relevant when choosing a business structure to consider the personal liabilities for the business owners should things not go as planned.
Traditionally, trading through a structure like a company offered a significant degree of insulation from personal liabilities. With some fairly narrow exceptions, the worst-case result for the business owners was the loss of the money they put into the business. Business failure did not spill over to the separate assets of the business owners.
In more recent times, things have changed significantly. It is now much more difficult for business owners to avoid personal responsibility even when the business is run by a company.
An example of this is the recent Federal Circuit Court decision in FWO v Step Ahead.
In that case, the Fair Work Ombudsman successfully argued that particular sections of the Fair Work Act operated to make “accessories” such as company directors, personally liable to pay unpaid employee entitlements.
The case involved the failure of a private security business operating through a company structure with a Mr Jennings as it sole director, which had underpaid its staff in numerous respects.
Mr Jennings was found to be jointly and severally liable for wages and entitlements underpaid of some $23,000. On any view, Mr Jennings was not an innocent bystander:-
He was in sole control of the company,
two previous associated entities had failed, in one case leaving employee entitlements unpaid, and
a new company had been formed to take over the operations previously conducted by Step Ahead, cosmetically controlled by Mr Jennings’ son but with Mr Jennings in de-facto control.
The case is not however limited to the “rogue operator” situation. It has significant implications for all people involved in the management and ownership of businesses..
At Everingham Solomons, we have the experience and expertise to provide advice to businesses at all stages from formation to closure.
Often, after the separation of employment both employees and employers are concerned about whether or not restraints will apply to the former employee as part of their post-employment obligations to their former employer.
In New South Wales a restraint is valid to the extent to which it is not against public policy bearing in mind an employer is not entitled to be protected against mere competition but is protecting its legitimate interests by enforcing the restraints. Such interests may include employer’s trade secrets, confidential information, the employer’s goodwill, including its connections with its customers.
It is also worth noting that there are statutory obligations under the Corporations Act that an employee cannot use information obtained to gain advantage for themselves or for someone else which may cause detriment to a corporation.
A Court when determining a restraint period, gives considerable weight towards enforceability when the parties have entered into a restraint agreement. Such a restraint agreement can be properly documented in an employment contract.
There are also recognised obligations of loyalty that an employee owes to an employer that do not cease on the termination of employment.
Restraints are important to ensure that the interests of the employer are protected. A clearly defined restraint agreement sets out both the geographic area as well as the time that the parties agree is reasonable to protect the employer’s commercial interests.
The enforceability of the length and area of restraints are unique to a particular business and take into account the background of the separation of employment. For example, for a Court a relevant fact when considering a restraint would be if the employee was made redundant as it goes to the reasonableness of the restraints in the circumstances.
It is important for employers to protect their commercial interests including but not limited to, any intellectual property that is created by staff during their time of employment.
A clearly defined restraint provisions within an employment contract shows the intention of the parties and goes towards securing an employer’s position.
At Everingham Solomons Solicitors we have the expertise to provide advice in relation to drafting employment contracts focusing on restraints placed upon employees to protect the employer’s rights because Helping You is Our Business.
Undertaking work before being paid is a part of business. If you’ve been in business for a while you’ll know the difficulties that can arise in getting paid after the fact.
This is a situation where prevention is much better than cure. There are a number of steps that a business can take to greatly reduce the likelihood of payment problems arising.
Although it seems simple, the first is often overlooked. It is important to properly identify who your business is dealing with and to make an assessment of the creditworthiness of the entity you are contracting with. People and companies can enter into contracts, but nobody else. Identification troubles arise particularly when businesses purport to contract with business names, trusts and partnerships. The identity of companies and the people behind it can be verified by a search with ASIC.
Secondly, a business needs to have enforceable written contracts. Often these contracts can be generic documents suitable for adaptation to many different jobs, but, it is important that they clearly state the scope of the work and the payment terms. For the supply of goods, they may include retention of title clauses which provide the supplier with a form of security. The use and effect of such clauses is controlled by the Personal Property Securities Act.
When dealing with smaller companies particularly, the lines can be blurred as to whether the company owns any assets capable of satisfying its financial obligations or whether the assets are really owned by the people behind the company. In these situations it is always prudent to have the people behind the company guarantee the company’s performance of the contract. That is, if the company doesn’t pay, the people that stand behind it must.
In some cases, it may also be appropriate for a business to consider taking some form of security for the money they are to be paid. The mortgage is a form of security that most people are familiar with – if you don’t pay the bank as you promised, they take your house – but there are a great many other forms of security available to businesses. It’s possible to take security over assets other than land or to have a third party offer some form of security on behalf of the contracting party.
If you want to improve your business’s financial security, contact Everingham Solomons because Helping You is Our Business.
Earlier this year Judge Mahoney of the District Court reduced an award of damages of $1.57m by 25% because the injured passenger was not wearing a seat belt and got into a car with a person he knew or ought to have known was under the influence of alcohol.
The case of Vance v Chambers [2016] NSW DC 79 involved two friends who, after fishing and consuming alcohol together drove along a beach at Sandon River, just south of Yamba. The vehicle hit a ‘washout‘ on the beach and as a result the car being driven by the defendant rolled. The plaintiff was ejected from the car as he was not wearing a seat belt and suffered a number of injuries that included severe chest injuries, rib fractures, fractured skull, liver laceration and vertebral fracture.
The plaintiff was thrown from the car and knocked unconscious, only to be woken by a wave washing over him.
Such was the seriousness of the injuries that he was in hospital for 31 days.
The judge assessed the plaintiff’s loss and damages at $1,577,670. This was made up of general damages, past and future economic loss, domestic assistance as well as medical expenses.
The award however was reduced by 25% because of contributory negligence which meant that the award was reduced from $1,577,670 to $1,183,250. This was as a result of the plaintiff getting into a vehicle that he knew or ought to have known was being driven by an intoxicated driver and he was not wearing a seat belt.
If you require any assistance in respect to these or other matters, please do not hesitate to contact us at Everingham Solomons because Helping You is Our Business.
An enduring Power of Attorney is a legal document that permits a person (‘the Principal’) to appoint a trusted friend or family member, or more than one (‘the attorney’) to step into the Principal’s shoes and manage their legal and financial affairs if for some reason the Principal’s decision making ability is lost. This type of Power of Attorney is aptly named an enduring Power of Attorney because the attorney’s power to make decisions for the Principal endures or continues if the Principal loses their mental capacity to manage their own affairs.
Any person who acts as an attorney pursuant to an enduring Power of Attorney document has a number of duties. Those duties are now spelt out in writing within the prescribed form of enduring Power of Attorney document.
Those duties include:-
Acting in the best interests of their Principal;
Not conferring benefits on themselves or on anyone else unless they are expressly authorised to do so;
Keeping adequate accounts and records of any dealings with the Principal’s assets, as the attorney may be held accountable for how money or other assets of the Principal are dealt with; and
Ensuring they always act honestly in all matters concerning the Principal’s legal and financial affairs.
If a person acts as an attorney pursuant to an enduring Power of Attorney document it is incumbent upon the attorney to discharge their duties to the Principal faithfully or they can be held accountable for their actions as the following case demonstrates.
In the case of Moylan v Rickard, the children sold their mother’s home pursuant to an enduring Power of Attorney, invested part of the proceeds to cover nursing home fees for their mother and paid the balance to themselves as gifts. The children argued that the gifts were in the Principal’s interest because they preserved the Principals’ pension and associated medical entitlements. The argument was not successful. The Court found the distributions made by the attorneys to themselves “were made in disregard of the interests of their mother [the Principal] and accordingly were not an honest exercise of the power conferred on them” by the enduring Power of Attorney instrument. The Court ordered the attorneys repay the gifts.
Making an enduring Power of Attorney is an important strategy which can help prepare you and your family for a sudden change in your circumstances. At Everingham Solomons, we have the expertise to advise you in relation to all of your estate planning needs including enduring Powers of Attorney, because Helping You is Our Business.
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When parents separate, often one parent will wish to move away with their children. This can be for a range of reasons including obtaining new employment, to seek support of their family or to live with a new partner.
Relocation matters are becoming increasingly common in the family law courts, however they do not form a discrete subset of cases but rather are determined in accordance with the guiding principle of the law, namely whether it is in the best interests of the children to relocate, which forms the framework of the Family Law Act 1975.
The best interests of children are met by:
Ensuring that children have the benefit of both of their parents having a meaningful involvement in their lives; and
Protecting children from physical or psychological harm, from being subjected to or exposed to abuse, neglect or family violence;
Ensuring that children receive adequate and proper parenting to help them achieve their full potential;
Ensuring that parents fulfil their duties, and meet their responsibilities concerning the care, welfare and development of their children.
Whilst a meaningful relationship may not equate with equal time or even be considered an optimal relationship, clearly relocating children away from the other parent, may impact on being able to have a meaningful relationship.
Unless parents have parenting orders in place to the contrary, parents are presumed to have equal shared parental responsibility of their children. This means both parents are required to make decisions affecting their children jointly, such as whom they are to live with, what school they may attend and what religion they might follow. Both parents must agree in respect of children relocating as this inevitably affects where they will live and what school they will attend.
Equal shared parental responsibility also means that children should spend either equal time or substantial and significant time with each parent. In this respect, relocating away from one parent may make it impractical for a parent to be able to spend time with their children due to excessive travel, costs and work commitments for instance.
Every parenting case is different and will be determined on its own special facts and circumstances taking into consideration the paramount principle that all decisions made in respect of parenting arrangements are to be made in their best interests.
At Everingham Solomons we have the expertise and experience to assist you with relocation and parenting matters because Helping You is Our Business.
Often a business will have staff who hoard their annual leave, whether it is to insulate themselves for a rainy day, to seek longer periods of leave in the future, or perhaps they just prefer to work rather than holiday.
For a business, this hoarding can create issues. Greater financial provision has to be made for annual leave entitlements. Uncertainty can exist as to whether those staff members may seek long periods of leave at a time not suitable to the business. Employee errors or even fraud can remain undetected if an employee never takes annual leave.
The ability for an employer and an employee to agree to cash out some of an employee’s annual leave has not featured in most Modern Awards. That is about to change. The Fair Work Commission has recently determined that model rules for the cashing out of annual leave are to be inserted in 112 Modern Awards.
What will the requirements be?
A signed agreement between employer and employee on each occasion (signed by a parent or guardian if the employee is under 18)
The agreement must state the amount of leave to be cashed out, the payment to be made, and when it will be made
The payment must be based on wage rates that apply at the time of the cashing out not an earlier time
A four week accrued entitlement to paid annual leave must be retained by the employee
In any period of 12 months, only 2 weeks accrued annual leave can be cashed out
The employer must keep a copy of the agreement as an employee record
But remember, an employer is not allowed to exert undue influence or pressure on an employee to make, or not make, such an agreement. Further, an employer is not to knowingly or recklessly make false or misleading representations about an employee’s workplace rights. So, care needs to be taken in seeking to implement the cashing out of annual leave in your business.
At Everingham Solomons, we have a range of resources available to assist employers meet their human resources obligations because Helping You is Our Business.
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In NSW there are certain formal requirements required by law in order to make a valid Will. Whilst “compliance with formal requirements for the making of a Will…may involve unwanted expense and inconvenience for a prospective Will-maker” during their lifetime, a failure to observe these formalities in life can lead to large unintended expenses after death when the intended beneficiaries, and potential claimants on an estate are forced to ask a Court to determine the deceased’s wishes.
Where a person leaves a document that does not comply with the formal requirements for the making of a Will, the matter normally has to be determined by a Court. The Court in turn places a premium on “substance over form in ascertaining the testamentary intentions of a deceased person, and in seeing that his or her beneficiaries get what is due to them”.
In 2012 an 85 year old Will maker died leaving a formal Will and a short video Will. “She expressed a strong desire to speak to her children in making her intentions known to them after her death. She could have done that in a video not intended to have legal consequences” but instead she made a video Will seeking to make additional gifts of money to her children over and above any provision she had made for them in her formal Will of two days earlier.
Whilst this case was a novel one in that a video Will was approved by the Court it was not without its associated difficulties not the least of which being additional delay and expense incurred by the estate in seeking to have the Court determine the deceased’s wishes. The Court was at pains to stress that for the person making the Will and his or her beneficiaries their interests “are best served by compliance with the formalities prescribed by law for the making of a valid Will. They are not intended to be onerous or to do otherwise than to facilitate the orderly administration” of estates according to law.
At Everingham Solomons we have the expertise and experience to assist you in making a Will that is in conformity with current law and deals with your particular circumstances because Helping You is Our Business.
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As a general rule, a small business employer is not required to pay redundancy pay; however, there are some circumstances where an employer may be legally required to make redundancy payments.
The National Employment Standards confirms that a small business employer is not required to pay redundancy where an employee’s position becomes redundant. Notwithstanding these National Employment Standards, an employer may be obliged to pay redundancy because of the terms of a “modern award” or an “enterprise agreement”.
Who is a “small business employer”?
An employer who employs fewer than 15 employees at that time is deemed a small business employer. The employee being dismissed must be counted; however, casual employees are not to be counted unless they are employed on a regular and systematic basis.
A number of modern awards prescribed redundancy pay for small business employers and the amount of redundancy pay depends on the terms of the award and the number of years’ service the employee has given to the employer.
Examples of modern awards which prescribe redundancy pay for small business are the Joinery and Building Trades Award, the Manufacturing and Associated Industries and Occupations Award.
There are also some employees who are not entitled to redundancy pay, for example where the employee has less than 12 months continuous service, the employee is a casual employee, the employee is terminated because of serious misconduct, the employee is employed for a specific task or an agreed period of time, there is a training agreement in place or the employee is an apprentice.
Whilst the majority of small businesses are exempt from paying redundancy pay under the National Employment Standards, there are certain modern awards which require some business employers to pay an employee redundancy pay.
At Everingham Solomons we have the expertise to assist you with all of your legal needs because Helping You is Our Business.
All too often we hear of people agreeing to be an Executor for a family member or friend without knowing what they have agreed to, what their duties and obligations are, or what they are expected to do.
An Executor is the person/s you appoint in your Will to administer and distribute your estate upon your death. Your Executor does not have to have any legal knowledge or experience, but they must be someone you trust implicitly to act in the best interests of your Estate.
The primary functions of the Executor are to:
Obtain Grant of Probate, if required. Whether or not Probate is required will depend upon the nature and value of the deceased’s assets.
Call in the assets by arranging for them to be transferred or otherwise finalised.
Arrange for debts to be paid. The funeral, testamentary and administrative expenses and all outstanding liabilities are paid from the Estate. The Executor is not personally liable for the deceased’s debts.
Distribute the Estate to the beneficiaries named in the deceased’s Will.
If you are an Executor with questions regarding your role, or a testator who wants to review your Will, the friendly and experienced Solicitors at Everingham Solomons can assist you because Helping You is Our Business.
Whilst businesses always plan to succeed, statistics show that about 1 in 2 new businesses fail in the short to medium term. For this reason, it is always relevant when choosing a business structure to consider the personal liabilities for the business owners should things not go as planned.
Undertaking work before being paid is a part of business. If you’ve been in business for a while you’ll know the difficulties that can arise in getting paid after the fact.
