Is your employment documentation ready to go for 2017? – Keiran Breckenridge

KXBbwThe Australian Institute of Company Directors released its Director Sentiment Index for the second half of the year on 1 December 2016.  One of the headline findings is that, despite greater global uncertainty, 34% of directors expect their business to increase both levels of staffing and investment.  Business confidence among directors has increased by ten index points and is at its highest since 2013.

When a business increases its staffing levels, it also adjusts all manner of systems and processes. The risks to the business associated with its employees increase.  At Everingham Solomons, we hold a comprehensive database of employment documents that can be tailored to the needs of your business to assist you to manage risks around the employer/employee relationship.

For example, we can set your business up with template engagement letters for casual, part time, full time, Modern Award and non-Award staff. We have a comprehensive and robust employment contract for managerial and professional staff.  We can assist with agreements for your independent contractors as well.

You may be struggling for time to document your own policies and procedures for your business. We have over 50 template policy documents from which you can choose: Anti-Discrimination and EEO; Code of Conduct; First Aid; Internet Email and Computer Use; Personal Grievance; Work Health & Safety; Workplace Bullying, and so on.

When you need to write to your employees about various issues, you need to follow certain steps and use appropriate language. For example, in show cause or warning letters, letters for the recruitment process, letters regarding the taking of various forms of leave, and the like.  We can provide you with a set of correspondence documents covering these matters and others.

We invite you to make an appointment for January 2017 to see us about your employment document needs and start the year on the right track. Everingham Solomons can tailor a document package for the needs of your business because Helping You is Our Business.

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Blockchains and DAOs – a view of the future – Keiran Breckenridge

KXBbwDistributed ledger technologies utilising “blockchains” are set to change the legal industry and the industries in which our clients operate. The cryptocurrency Bitcoin is an early application of this technology.

Please go online and look for the TED talk by Don Tapscott: “How the blockchain is changing money and business“.

DAOs – Decentralised Autonomous Organisations – are a fascinating example, and just may be the way businesses are run in the future. DAOs are organisations run mainly through computer coding and smart contracts.  A DAO’s records and program rules are securely held on a blockchain for all stakeholders in the organisation to access, review and verify.

Take a General Manager of a DAO who is tasked by the Board with purchasing a new fleet of vehicles. She simply uploads her recommendation to purchase the vehicles to the DAO on her smartphone or tablet. The Board considers the recommendation and vote, again on their smartphones or tablets.  The coding and smart contracts of the DAO are triggered once a Board majority is reached.  The DAO automatically sends out the purchase order to the vehicle dealer, which then sends back its invoice.  That is recognised and confirmed by the DAO, which requests the deposit funds from its bank and those are paid to the dealer.  When the vehicles are ready for delivery, the dealer notifies the DAO and it directs its bank to pay the balance of the funds to the dealer, and confirms the delivery instructions.  The DAO adjusts the organisation’s accounting records and asset register.  The DAO minutes the Board’s resolution.  The DAO informs the General Manager and the Board that the transaction is complete.  The entire record of the transaction is recorded on the DAO’s blockchain.

These activities normally involve multiple levels of human interaction, reporting, cross-checking and paperwork. The DAO requires only minimal interaction at the outset by the General Manager and the Board. Imagine the efficiency and productivity gains that may be achieved.  It’s all a bit frightening as well on a number of levels, much like people must have felt 100 years ago with the invention of motor cars! The social, ethical, legal and regulatory consequences to this technology are still to be developed.

Everingham Solomons will be monitoring these exciting developments for our own business and also for our clients because Helping You is Our Business.

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More quality time with your banker (or your lawyer…)?

KXBbwIt is very common for the owners of a business operating through a company to have to provide a personal guarantee of the debt owed to the bank by the company. The Code of Banking Practice requires banks to give notice of particular features of guarantee and indemnity documents to business owners before such documents are executed.  Often, however, that process is rushed in order to get a particular transaction over the line.

In a recent case from Victoria, a senior business banking manager presented a sophisticated business owner with various finance documents, including a guarantee and indemnity. The banker spent 15 to 30 minutes discussing the documents with the business owner and then pointed him to where they were to be signed.  The business owner did not read the documents before signing.  He thought he was only guaranteeing a portion of the company’s loan, not the full $8 million.  The banker did not tell him he would be liable for the full amount if the company defaulted.

When the company later defaulted on the loan and the bank sued the business owner for the debt, he brought a counter-claim on the basis that the Code had been breached. The Court scrutinised the process the banker had followed and found that he did not comply with the Code.  The guarantee and indemnity was held to be void, and the business owner was able to avoid liability for the $8 million.

What does this mean for you, the everyday business owner? It probably means that bankers will go to extra lengths to provide you with finance documents earlier to read and they will likely double and triple check with you that you have read and understood them.  More likely, bankers will become more insistent that business owners obtain independent financial and legal advice on business banking documents before they are signed.

Our team at Everingham Solomons is well equipped to advise business owners on the legal aspects of financing your business because Helping You is Our Business.

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Bank fees class action fails – Keiran Breckenridge

KXBbwA class action bought by credit card, consumer and business deposit customers of a bank in relation to dishonour fees, late payment fees and the like has failed in the High Court.

We have all experienced these fees and felt annoyed at having to wear such a large amount for what seems to be a minor default on a credit card or bank account. The customers in this case argued that the fees they paid were not a reasonable estimate of the actual costs to the bank of their default.  They argued that the fees amounted to the imposition of a penalty by the bank and were unenforceable.  The customers demanded the bank repay those amounts to them and others in the class of customers.

Experts were called by both sides as to what actual costs were caused to the bank by events that triggered the fees. The customers argued that only a narrow range of costs were incurred by the bank.  The bank’s expert included a broader range of costs.

The customers succeeded initially, the Federal Court finding that the fees charged by the bank were a penalty. On appeal the Full Federal Court disagreed.  The High Court then settled matters by finding that the fees were not penalties; the bank was entitled to be compensated for a broad range of costs caused by the triggering events.

At Everingham Solomons, we have the experience and expertise to assist you with legal advice on your relationship with your bank, one of your key business partners because Helping You is Our Business.

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Can I cash out my employees’ annual leave? – Keiran Breckenridge

KXBbwOften 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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Am I my loved one’s carer or a manager of legal issues? – Keiran Breckenridge

KXBbwI was invited to meet with members of the New England Cancer Carers’ Group this week and present to them on some of the legal issues faced by those who find themselves caring for a loved one undergoing treatment for cancer or some other illness.

I was confronted during my research at how many legal issues carers face, mainly as volunteers as well. I felt it was important to reassure the carers that there are many good solicitors and accountants in our region who can assist to work through these issues.

The big ticket items are there – ensuring that their loved one has his or her affairs in order via a Will, an Enduring Power of Attorney, an Appointment of Enduring Guardian (with Advanced Care Directive) and through superannuation arrangements. But there is a fine line that carers must tread between assisting to put those arrangements in place and being perceived to be influencing the decisions being made. That perception may arise particularly where the carer has come along later in the ill person’s life and there are children from an earlier marriage. My advice to the carers was to make arrangements for a visit from the ill person’s solicitor but then step back from the process and allow the solicitor to manage the situation.

Farm and business succession struck me as a big issue too. Where a farm or business has been run by a person who suddenly becomes seriously ill, his or her carer may need to step into the breach and run the farm or business; and be the primary carer as well! Many farmers and business people work with their solicitors and accountants to prepare plans that deal with that eventuality but many do not as well. On top of everything else, it can be very stressful for the ill person, primary carer and the family to have to come together at that time to have the drawn out discussions required to put in place a viable farm or business succession plan.

We discussed a raft of other legal issues as well – the ill person and the carer needing flexible work arrangements from their employers; issues with claims against income protection, trauma, TPD and life insurance policies; workers compensation claims where the illness is work-related; privacy laws and access to medical records; medical negligence claims; issues with funeral arrangements; the executor’s role; and so on.

The solicitors at Everingham Solomons work with carers facing legal issues like those above to provide some peace of mind at a difficult time because Helping You is Our Business.

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When “kickbacks” can really kick back – Keiran Breckenridge

KXBbwNews reports occasionally contain stories about individuals with influence in tendering processes who receive “kickbacks” for giving favourable treatment to certain tenderers. This can sometimes take the form of a tendering party receiving an invoice for “consulting services” of some type from a company associated in some way with the individual with influence in the tendering process.  The invoice is paid and accounted for in the tenderer’s books, which then receives favourable treatment in the tender. The funds are then moved from the invoicing company in some way into the pocket of the individual with influence. On the surface, the payment can look legitimate but a bribe has been concealed.

In Australia, it often takes investigatory work of an anti-corruption watchdog to expose such activity. Political pressure then increases for prosecuting bodies to eradicate such practices and punish the offenders.

The Federal Parliament has recently made that task easier by enacting the Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Act 2016.  While mainly directed at the bribery of foreign public officials, the Act also has broad application domestically.  The Federal Criminal Code has been amended to prohibit a company or an individual making, altering, destroying or concealing an accounting document:

  • with the intention to facilitate, conceal or disguise the giving or receipt of a payment not legitimately due to a person; or
  • reckless to the fact that doing so will have that effect.

Intentional individual offenders face 10 years imprisonment and/or a fine of $1.8 million. Recklessness can lead to five years imprisonment and/or a $900,000 fine.  Intentional corporate offenders face fines the greater of $18 million, three times the value of the benefit gained or 10 percent of the corporation’s annual turnover if the value of the benefit cannot be determined.  The fines are half for reckless corporate offenders.

Companies (and their directors) that do not review systems and cultures in their organisations that could allow such behaviour to occur may find themselves investigated and prosecuted on the basis of recklessness alongside the actual perpetrators of the bribery.

At Everingham Solomons, we advise and assist businesses to comply with their ever-increasing legal obligations because Helping You is Our Business.

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Credit Card Surcharges and Booking Fees Under the Microscope

KXBbwBusinesses that charge excessive payment surcharges are now on notice from the Federal Government to clean up their act or face hefty penalties.

The Competition and Consumer Amendment (Payment Surcharges) Act 2016 has passed Parliament and now “a corporation must not, in trade or commerce, charge a payment surcharge that is excessive”.  A “payment surcharge” is an additional amount charged for processing payment for goods or services or for using one payment method over another.  A payment surcharge will be “excessive” if it breaches standards to be set by the Reserve Bank of Australia (RBA), which has indicated that surcharges must not be greater than the actual costs of accepting payment by those methods.

Credit card surcharges in retail shops, cafes and restaurants, for example, will have to be reconsidered. The consumer group Choice has its sights set on booking, transaction and service fees, particularly in the airline, ticketing and taxi industries.  A Choice investigation recently indicated that the major airlines credit card booking fees are 348.72%, 633.33%, 1,187.88% and 1,048.65% more than the actual cost to the airlines in processing those payments.  Consumers may see those types of fees come down in coming months in anticipation of the publication of the RBA’s standards on excessive payment surcharges.

The Australian Competition & Consumer Commission (ACCC) can issue an infringement notice to a listed corporation (such as the major airlines) with a penalty of $108,000 or $10,800 for an unlisted corporation. An infringement notice can be withdrawn if the corporation satisfies the ACCC that its payment surcharge is not excessive.

Businesses should keep an eye out for information from the providers of their merchant facilities on the average cost of processing payments. The banks will be expected to provide such information. That average cost may then be passed on as a surcharge. Booking fees that apply to one payment method over another should be reconsidered and the fees cannot exceed the cost of processing payment by that method.

At Everingham Solomons we’re happy to advise and assist businesses with all their day-to-day compliance obligations because Helping You is Our Business.

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Don’t Let Your House Become Bleak

KXBbwBefore Charles Dickens was a successful writer he worked in a legal office as a clerk so it’s not surprising that Lawyers have prominent roles in many of his books.

One of his most famous books is “Bleak House”. A major plot point in the book is a legal case that went for so long that all the money in dispute was spent in legal fees. Dickens usually did not portray lawyers in a favourable light. In this book he described the lawyer character as “always looking at the client, as if making a lingering meal of him with his eyes”.

Dickens’ fictional court case was inspired by a real case that had been going on for about 55 years at the time the book was first published.

The real case arose out of the death of William Jennens in 1798. Mr Jennens had various nicknames but “William the Rich” fitted him very well. When he died at the age of 97 he was regarded as “the richest common in England” leaving an estate of about $750 million in present terms.

Despite his enormous wealth and business acumen, he died without leaving a Will. He was also a bachelor and apparently did not have any children so relatives from near and far made claims upon his estate.

The various court cases associated with his estate went on for 117 years and ultimately only concluded when all the money had been spent on legal fees.

The moral of the tale is that failure to take a prudent legal step – in that case to make a Will – can have enormous ramifications future for you and your family.

Everyone needs a properly drawn Will. Every business owner, and in our area this applies particularly to farmers, needs a properly prepared business succession plan. Failure to plan ahead almost always leads to very significant financial and personal costs in the longer term.

At Everingham Solomons we have the expertise to help you with all your personal and business planning needs because Helping You is Our Business.

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A Tool For a Building Subcontractors Tool Kit

KXBbwThe Building and Construction Industry Security of Payment Act 1999 (NSW) (“Act”) can be a powerful tool for subcontractors to use when seeking payment for work performed and materials supplied from non-paying or late paying builders.

When work has been performed or materials supplied entitling a subcontractor to make a claim for a progress payment under a subcontract, the subcontractor can serve a “payment claim” (a complying invoice) on the builder. Under the Act, the builder then has 10 business days to issue a “payment schedule” to the subcontractor setting out the amount of the payment claim it intends to pay.  The builder has to set out also the items it does not propose to pay and its reasons for non-payment.  The items in dispute can then be referred for adjudication.

If the builder fails to issue a payment schedule in time it becomes liable to the subcontractor for the full amount of the payment claim. That is the case even if the builder has contacted the subcontractor by telephone or email to raise issues about the work or materials within that period.  If the subcontractor is not then paid the amount of the payment claim, he or she can sue the builder for the amount as a debt due to the subcontractor.

Significantly, the Act prevents the builder from cross claiming against the subcontractor in those proceedings or putting up a defence about matters arising under the subcontract. The builder’s hands are tied.  It will likely have to pay up the subcontractor in full plus any interest and legal costs, and then sue the subcontractor separately for any counter claim.  That is expensive and time consuming and a distraction from the builder’s business.

Of course, a subcontractor has to think very carefully before taking such steps because of the risk of causing long term damage to the relationship with the builder.

For subcontractors, clearly itemised invoices that inform builders that there are payment claims under the Act are important. For builders, efficient contract management processes are vital.

At Everingham Solomons, we have the knowledge and experience to advise builders and subcontractors on these and other aspects of the Act because  Helping You is Our Business.

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