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.
On 1 July 2016, certain Stamp Duties are to be abolished in New South Wales.
Firstly, mortgages executed on or after 1 July 2016 will not be liable to payment of Stamp Duty.
Further, any advances made on a pre-existing agreement after 1 July 2016 will not be subject to the imposition of Stamp Duty.
Secondly, Stamp Duty on a large number of business assets will also be abolished. Whilst this abolition has been promised for many years, it looks like this is the year where it will be removed.
The types of business assets which will cease to be subject to Stamp Duty include the goodwill of a business, a business’s intellectual property, statutory licences or permissions (for example, a taxi licence) and duty on gaming machine entitlements.
Stock in trade is already exempt from Stamp Duty.
There are some anti-avoidance measures. If an agreement was entered into prior to the 1 July which is subsequently replaced with an agreement after 1 July, then the transaction is still subject to payment of Stamp Duty.
Further, if a transaction has been entered into after 1 July 2016 as a result of an Option Agreement entered into prior to that date, then the Stamp Duty is still payable.
But wait there is more. As and from 1 July 2016 the government will also cease charging Stamp Duty on the Transfer of Shares in a New South Wales Company and on units in a Unit Trust Scheme registered in New South Wales.
Stamp Duty is best known as a tax which is paid by them when they purchase land and improvements.
Unfortunately, there appears to be no plans to abolish or reduce the rate of Stamp Duty payable on land transactions in New South Wales.
If you are planning to do a transaction involving a mortgage or purchase of a business or the transfer of shares or units in a trust, it may be advantageous to wait until after 1 July 2016.
If you have questions regarding Stamp Duty, we can at Everingham Solomons, provide the answers, because Helping You is Our Business.
Legislators are hoping that property buyers in New South Wales will face less frustration with the new agents underquoting laws which came into effect on the 1 January 2016.
Under changes to the legislation, real estate agents must quote price ranges within 10% of the lowest estimated price (i.e. $500,000.00 – $550,000.00).
The new laws mean real estate agents who underquote, potentially face losing their commission and fines up to $22,000.00.
For Buyers it means a more accurate price estimate so that buyers will not be misled into believing that they can afford a property, spending money on building and pest reports and other costs when they are not in that price bracket. This is more of a big city issue.
The biggest change will, however, be with respect to making the sales process for sellers much more transparent. Agents must note the likely selling price in the Sales Agreement given to a seller. The estimated price must be backed up with researched based evidence such as comparable sales, location and market demand. That should mean more accurate price estimates and prevent agents from over estimating to win the listing.
Vendors will need to have a frank discussion with their selling agent so as they really know where their property sits in the market place from a price perspective so that the seller is not misled into expecting the market to pay a huge price when the property is not really worth that amount of money.
To promote the transparency in the industry, New South Wales agents will no longer be able to use terms such as – “offers above” and “offers over” and using symbols like “the plus sign” when quoting a property’s price range.
The legislation is aimed at ensuring that both buyers and sellers receive an accurate sales price estimate that is as realistic as possible.
It is hoped that the underquoting reforms will increase certainty around price expectations and that hopefully is good news for buyers and sellers.
At Everingham Solomons, we have the expertise to help you in all of your property related transactions because Helping You is Our Business.
It is not uncommon for parties to a contract such as the sale and purchase of a business or a landlord and tenant of commercial premises to enter into Heads of Agreement prior to any contract being entered into.
If the Heads of Agreement are signed both parties, are the parties bound?
This has resulted in many disputes being submitted to the Courts for determination.
Normally Heads of Agreement are entered into as a gesture of good faith and a promise to proceed with the transaction. Usually Heads of Agreement are not meant to bind the parties to the terms of the agreement.
If you are entering into a Heads of Agreement you need to be explicit as to whether or not that document is intended to bind the parties. Normally Heads of Agreement will specifically state that the parties are not bound and will only be bound when contracts prepared by the respective parties’ solicitors have been approved and the parties sign them.
Heads of Agreement are usually symbolic of the mutual intention to proceed as usually the parties have not considered or documented the finer details of the agreement and are indicating their intention to proceed subject to accountancy and legal advice, whilst allowing them the opportunity to make necessary enquiries, conduct due diligence and allowing the solicitors from each party to negotiate and draft the precise terms and conditions of the substantive contract.
When parties enter Heads of Agreement it is usually a sign of commitment to enter into further legally prepared documentation at a later time. Whilst most of the time these agreements are not binding on the parties, they can be in certain circumstances.
If you are unsure as to the binding nature of Heads of Agreement you should obtain legal advice. At Everingham Solomons we have the expertise to assist you with all of your business and legal matters because Helping You is Our Business.
There are criminal penalties and civil remedies for defamation and the laws apply to all forms of communication, including social media.
Under s529(3) of the Crimes Act 1900, it is an offence to publish, without lawful excuse, a matter defamatory to another person knowing the matter to be false, and with intent to cause serious harm, or being reckless as to whether such harm has been caused.
The offence of defamation carries a maximum penalty of 3 years imprisonment.
In accordance with the Defamation Act 2005 defamation is a tort for which damages can be recovered. As indicated in the case of Mickle v Farley in which the NSW District Court awarded damages in the sum of $105,000 for defamatory comments posted on a social medial site, you must think before you post.
Contrary to popular belief freedom of speech and freedom of expression does not give you immunity to make unfounded or baseless accusations or allegations.
For example;
you cannot vindicate someone’s reputation
ridicule
or accuse someone of committing a crime.
The things you post on social media must either be true, or a comment based on fact.
If you need advice in relation to a defamation matter, the experienced solicitors at Everingham Solomons can assist you because Helping You is Our Business.
The requirement that before a property can be sold or leased, the owner or landlord must have an up-to-date swimming pool certificate of compliance, has been postponed until April 2016.
Whilst that date may seem a little way off, if you are intending to sell your property or you have a rental property that has a swimming pool, you ought to think seriously about obtaining a swimming pool inspection to ascertain whether or not your property complies and if not taking the necessary corrective action to obtain a certificate.
Undoubtedly there will be a rush in the early part of 2016 to obtain such certificates and it appears likely that there will be insufficient inspectors and insufficient trades’ persons in the short term to manage the anticipated influx of applications and repair work that will be required.
Anecdotally it is reported that 80% of swimming pools will not comply with the Act.
A swimming pool is defined as an excavation, structure or vessel capable of being filled to a depth of greater than 300 mm and which is used or designed to be used for the purpose of swimming, paddling or human aquatic activity. It includes a spa pool, does not include a spa bath or anything situated within a bath room. It applies to both private and commercial properties.
It will apply to strata, community and neighbourhood developments and accordingly owners corporations will need to ensure that pools comply with the Act so as proprietors of lots are able to lease their property andor sell their property when needed.
There are many different rules and it does depend on when a swimming pool has been constructed as to what rules apply. For example, a swimming pool which was installed before 1 July 2010 and is situated on premises having an area of 2 ha or more is not required to be surrounded by a child resistant barrier provided access is restricted from the home in accordance with regulations. These rules are different if the same pool was constructed on the same property today.
All pool owners are required to have registered their pool on a central registry. Non-registration can result in a penalty, however to date, it does not appear that any prosecutions have been issued.
Swimming pools can be inspected by local council inspectors or private accredited certifiers.
If you own a swimming pool or spa, it is best to be prepared well in advance. If you are a landlord or if you are intending to sell, then you should act sooner rather than later to ensure that your pool or spa complies.
At Everingham Solomons, we have the expertise to assist you with all of your legal matters because Helping You is Our Business.
Generally if you wish to change your business structure, say from a partnership to a company or trust, you must consider whether such restructure or transfer will involve a payment of capital gains tax, stamp duty and/or GST.
As a result of those taxes, many restructures do not take place and businesses operate with structures which are less than ideal for their circumstances.
A welcome Budget announcement is the proposed relief for small businesses who wish to restructure from the payment of capital gains tax.
The concession recognises that in the initial stages of a business, business owners often do not know whether their business will be successful and do not have the resources to spend on obtaining expert advice as to how their business ought to be best structured now and in the future.
You should be aware however that whilst the Budget proposal permits small businesses to restructure without incurring the cost of capital gains tax, the effects other taxes such as stamp duty and GST still need to be considered.
As always, with Budget announcements, the detail remains to be seen.
In a similar vein, the Budget also contained an announcement that small businesses that do seek professional advice when establishing their small business, will be entitled to claim an immediate deduction for professional expenses such as for legal and accounting advice.
At Everingham Solomons we have the expertise to assist you with all of your business needs including structuring and restructuring of your business because Helping You is Our Business.
Section 67A allows a Self-Managed Super Fund (“SMSF”) to borrow to acquire an asset subject to strict conditions such as holding the asset in a separate Holding Trust, using a nonrecourse loan and the SMSF must only purchase a single acquirable asset.
It has long been known and the ATO has confirmed that a related party to a member of a SMSF is entitled to lend to that person’s own super fund. For example you can personally or an associated entity can lend to your own SMSF to acquire an asset.
In 2010 the ATO issued an interpretative decision indicating that a related party could charge less than a market rate of interest on a loan to their SMSF, but could not charge more than a market rate.
For many years super fund advisors have operated on the premise that it is okay to allow related party loans to a SMSF to operate on more favourable terms than might, otherwise, be able to be obtained from a commercial lender. Such things as lower or no interest rate, no repayment requirements and no security.
In December 2014, however, the ATO issued a further interpretative decision indicating that a related party must lend to an SMSF on full commercial terms and they must not be more favourable to the SMSF than would be available in the open market.
The problem is that income earned from an SMSF from a property acquired with borrowed funds from a related party at zero interest or other favourable conditions, could be considered “non-arm’s length” income and consequently subject to tax at the maximum tax rate (47%).
It is therefore suggested that a related party who lends to their SMSF, must charge a commercial interest rate, the loan to valuation ratio must be no less than what a bank would permit, there must be adequate security such as a mortgage and there must be regular repayments and perhaps even personal guarantees.
If you are considering lending to your SMSF or you have already done so, then you need to carefully check your documentation to ensure that they are on commercial terms so that income or gains are not potentially deemed to be non-arm’s length and therefore subject to maximum tax rather than the concessionary rate charged normally on a super fund.
At Everingham Solomons, we have the expertise to assist you in these complex issues because Helping You is Our Business.
With the temperatures rising, and Christmas just around the corner, the annual office Christmas parties are now in full swing.
For both employers and employees this presents a welcome relief from their yearly work commitments and a time in which an employer can show appreciation for the year’s hard work to their employees.
What should be remembered, however, is, put simply, the Christmas party is a ‘workplace’, regardless of when and where it is held.
Employers can be liable for the actions of their employees at work-related events, such as seminars, conferences, work functions and Christmas parties.
In the spirit of the season, Everingham Solomons now presents a ‘do’s and don’ts’ for both employees and employers for office Christmas parties.
Do’s
Turn up! It is a great opportunity to interact away from the office environment, it builds morale and strengthens relationships.
For employers, leading up to the Christmas party, remind your staff that it is a workplace event and that you expect their behavior to reflect this. Remind staff of any existing office policies and procedures, particularly in relation to sexual harassment and bullying.
As alcohol will normally be served at office events, employers should organize travel arrangements, such as a taxi or courtesy bus to ensure their employees get home safely.
Choose your karaoke song wisely.
Dust off your worst Christmas themed tie and wear with pride
Enjoy yourself and get to know your work colleagues in a more relaxed environment.
Don’ts
Employees and employers should refrain from posting photos of the Christmas party on social media to avoid embarrassing pictures of themselves or colleagues entering the Twitter-sphere!
Avoid religion and politics. These are hard topics to approach sober, but with a drink or two can lead to an inflamed situation.
Do not do something that you know you would not be allowed to do in the office. Remember the policies of bullying and harassment apply!
Do not harass your boss for a pay rise! The Christmas party, and a few drinks in, is not the time to campaign!
Know your limits. Alcohol will be served and you do not want to be “that guy” or “that girl”, your hard earned respect from colleagues can be eroded quickly.
For Employers do not dismiss a post-Christmas party complaint, take it seriously and investigate as you would an office incident.
Merry Christmas
Everingham Solomons wishes everyone a safe and merry Christmas and please don’t drink and drive.
Remember, an incident or dispute arising at or after a Christmas party where alcohol was served is not a valid defence or excuse.
From Terry Robinson and the Directors of Everingham Solomons
Most franchise agreements contain terms to the effect that the franchisee is entitled to an “exclusive territory” where the franchisor will not compete for business or allow another franchisee to operate in that area.
Several recent court decisions have reviewed the obligation of franchisors to ensure the franchisee’s territory is not encroached upon by the actions of the franchisor itself or other franchisees.
A case involving a video hire store concerned whether the franchisor’s online sales breached the exclusive territory of the franchisee. The franchisor argued that as it had not opened a “bricks and mortar” store in the franchisee’s territory, it had not breached its obligation of non-competition. The Court held that there is no distinction between online and shopfront trading, and found that not only had the franchisor breached the exclusive territory, but had also failed to act in good faith.
A separate case was brought by a building contractor company against its franchisor, after making various complaints to head office over a 2 year period that it believed a neighbouring franchisee was poaching jobs in its territory. The franchisor had told the franchisee that it did not tolerate such behavior by other franchisees, and would take the necessary action to prevent the breach continuing. When nothing happened, the franchisee was forced to take the matter to court.
The Court discovered that the franchisor had in fact entered into an agreement with the neighbouring franchisee, allowing it to take on certain jobs in the area. Similar to the earlier case, the franchisor argued that there was no breach of the exclusive territory as the neighbouring franchisee had not opened a showroom in the territory. The Court held that the franchisee’s exclusive territory had been breached by the selling activities of the neighbouring franchisee, and the franchisor had breached its obligations in permitting this to occur. The franchisor was ordered to pay damages for lost profit and sales to the franchisee.
These recent decisions bode well for franchisees that are suffering as a result of franchisors’ lack of concern for their territorial rights – franchisors should now be aware that they may be liable for lost profits if they do not preserve their franchisee’s exclusive territories.
If you are a franchisee and believe that your exclusive territory has been breached, contact the team at Everingham Solomons where Helping You is Our Business.
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.
