Archive for 'legal'
Now that businesses must have a better idea of the working conditions they will be adopting in 2021, it’s ideal to consider how employer liability changes.
The health and safety of employees in the workplace is the responsibility of the employer. Employers must protect their employees’ well-being, by taking into consideration the risks involved on the premises where employees work.
If there are employees who will be consistently working from home, or who usually work remotely, then there are some things that employers can do:
- Ensure that the work expected of employees from home can be done so with safety
- Consider making changes to the task so that it can be done safely from home
- Employees are equipped with the tools and equipment necessary to complete the work safely (this could also include ergonomic computer equipment)
- Arrangements are made to instal heavy company equipment into the employee’s workspace safely rather than be left to the responsibility of the employee.
- Employees have been given the relevant information or been trained to operate all equipment provided to the employees with safety.
- Reasonable accommodations have been made for employees who might have disabilities in relation to the work employees are expected to perform.
- More steps are taken to ensure employees’ mental welfare
Employee welfare is particularly important when remote working is involved. This is because employees might have no contact with their co-workers and have limited scope. Try to find ways through which employees can interact with one another whilst working remotely. Further, ensure that employees can access mental health support easily if they need it.
Keeping these things in mind will not only protect employers from liability but ensure that employees are being productive.
Implementing these customer service strategies will help your business avoid liability lawsuits
Conduct follow-ups during the project
During a project, both you and the client can get busy with running the business and making sure everything goes to plan. This means that your client may not have the time to contact you when an issue arises. Setting time aside that is allocated to checking in with them and verify that things are running smoothly will be beneficial in the long run. It will let you address any problems earlier rather than later so that you can take the right steps to avoid a lawsuit down the line.
Keep clients updated about their project
Keeping your client in the loop helps build trust and means that you might have some leeway if something goes wrong. For example, consider a scenario where you have done all the work but one of your suppliers is late and prevents you from meeting a deadline. If your client has been kept up to date and knows that you have taken all the necessary steps, then not being able to meet a deadline is likely to be received better than abruptly telling them you’ll be late due to a third party (a lot less believable).
Collect and respond to feedback
At the end of a project, conduct formal or informal surveys to give your customers the opportunity to give you feedback. If you end up implementing feedback, let your customers know that you have done so!
Know when to invest time in hyper-personal contact
Not every customer that experiences an issue is going to bring a lawsuit against you. Some customers will need to be given more attention – follow them up, talk to them, carefully listen to their comments, etc.
Intellectual property (IP) is a valuable asset to any business. It can be anything from a manufacturing process to a trade secret – it is essentially intangible proprietary property. Protecting IP has become increasingly important and the following steps are the minimum precautions you should take to keep your IP safe.
- Know what intellectual property your business has: Understanding what needs to be protected will help you understand how you can protect it.
- Know where your intellectual property is: Various devices in the office and outside of the office could contain IP. This includes input/output devices such as printers, cloud-based applications, employees personal devices, third party systems shared with other businesses.
- Prioritise your IP: Some of your IP is more valuable than others. Assess the risks associated with losing different types of IP and take steps to protect the high-risk IP first.
- Label valuable IP: If for whatever reason your business ends up in court, you should be able to demonstrate that a particular piece of IP was protected. This is much easier to do so if it is labelled appropriately.
- Physical and digital protection: Use passwords and only distribute them to relevant employees for digital protection. Lock rooms where sensitive data is stored for physical protection.
- Educate employees about IP: Inform your employees about IP and what sort of practices they should adopt to prevent leaking IP.
Protecting your business from legal fallout isn’t at the forefront when you are focussing your efforts on growing your small business. However, it is necessary. You can take the following simple steps so that you are protected from potential legal issues:
- Use written agreements: Don’t rely on the aural agreements on their own, confirm what is said in writing. This applies to any new relationship you establish as a business. This also ensures that all terms are clearly understood as there is less scope for misunderstanding.
- Keep up-to-date paperwork: Having updated documentation and record-keeping whenever changes are made is integral. Maintaining paperwork is important for taxation and auditing purposes.
- Do your research: Having a basic grasp of legalities associated with your business will be beneficial. Although there may be other industry-specific ones, general areas to build some legal knowledge include intellectual property, finances, employment and labour, marketing and advertising.
- Register intellectual property: Protecting your intellectual property is vital. You need to protect your creative ideas and designs by registering trademarks and copyrights where possible.
- Obtain legal advice: Legalities can be complicated and it is important to seek advice to clear any doubts you may have. You could opt for a one-time consultation or continued representation – depending on what your business needs.
A partnership agreement formalises the business relationship between two partners. It can cover everything from low-level processes, up to how dispute resolution will take place in the business.
Business partners are personally liable for the business in a partnership, therefore, determining the finer details is extremely important and can prevent complications down the line. The agreement will help allocate the responsibilities and obligations of each partner. It will also help establish the rights of each partner and how profits and losses will be distributed amongst partners.
An agreement should take the following into consideration for it to be an effective piece of documentation:
- Percentage of ownership: How much will each partner contribute to the business? This contribution could be in the form of capital or equipment and service – regardless, this will determine how much ownership of the business the partner has.
- Division of profit and loss: Allocation of profits and losses might simply follow the ownership percentages or simply be equal between partners. Regardless of how the division will be allocated, it is important to clearly identify this in the agreement.
- Length of partnership: The agreement could be for an unspecified amount of time, or the design of the business could lend itself to be dissolved after a given period of time. This should be in the agreement – including if the time frame is unspecified.
- Decision making and dispute resolution: Outlining a decision-making process and instructions on how disputes between partners should be resolved is extremely important. A meditation clause will help with resolution without the interference of the court.
- Authority: A ‘binding power’ should be included in the agreement which allocates partner authority. If a business is bound to a debt or other contractual agreement, this can expose the company to unmanageable risks. Including terms that state which partners hold the authority to bind the company and what would need to be done in those situations will assist with reducing or avoiding these risks.
- Withdrawal or death: The procedures for handling the departure or death of a partner should be stated in the agreement. This could involve how the valuation process will take place and might need each partner to maintain a life insurance policy as well as a designated beneficiary.
Employment contracts contain terms and conditions which both the employee and employer agree upon. Ideally, this contract should be written rather than confirmed verbally to avoid miscommunications or misunderstandings. Contracts may also contain implied terms i.e. not misusing confidential information.
Employment contracts are also governed by legislation which provide further information about the minimum terms required, remedies that can be utilised, and basic regulatory frameworks. The industry you are in may also have additional industry-specific requirements which are legally reinforced.
Breach of employment occurs when employers or employees fail to comply with terms of the contract. The innocent party may be entitled to sue for the damages that have occurred as a result of the breach – so that they can be restored. A substantial breach may also allow an immediate termination of the contract and additionally allow individuals to sue for any loss incurred.
In the case that an employer or employee has breached a contract, it may be easier to navigate the difficult processes that need to be completed with the help of a legal advisor. This is because breach of contract can be fairly nuanced and information provided on websites may not be sufficient enough to lead the process without help from a legal professional.
The government may be able to provide free or concessional legal advice which should be utilised as legal proceedings can often be costly.
Reading any contract before you sign it is essential, but there are some things you should keep a special eye out for when signing an employment contract.
You should always check that the salary you have agreed upon with your employer is on par with the award rates and no less. Double check what rates are associated with your position and clarify any concerns with your employer.
Restraint of trade
An employer may add a ‘restraint of trade’ clause to your contract. This may impact whether you can work in the same industry later on, so make sure that the employer hasn’t done this without first discussing the details with them first.
Changing terms of contract
Your employer may have added a clause which gives them the sole right to make any changes to the contract (such as duties, pay, seniority or location of work). Although employers should not be changing any terms and conditions in the contract without first notifying you, having this clause in the contract will make it more difficult for you to argue any changes. Check to make sure the employer doesn’t have sole ability.
Carefully read all aspects of the contract to make sure that they reflect national standards and any specific agreements you had made with your employer.
Private companies may be incentivised to make loans to a shareholder or their associate during the income year in an effort to save on income tax. In order to remedy any inequities as a result of making shareholder loan agreements, the Government enforces compliance through a set number of rules. Loans which follow such rules under the Income Assessment Act 1936 will also be exempted from being a dividend.
Minimum interest rate
Loans must have an interest rate greater than or equal to the benchmark interest rate outlined in Division 7A of the Income Tax Assessment Act 1936, published by the ATO annually. The benchmark interest rate for 2020 is 5.35% (under bank variable housing loans interest rates) and is 4.52% for 2021. This interest rate needs to be applied for each year after the year in which the loan was made.
The maximum term for a complying loan agreement is seven years. In the case that the loan is secured by a registered mortgage over real property, the maximum term is 25 years. For a maximum term of 25 years, the market value of the property (not including any other liabilities for securing the property prior to the loan) must also be at least 110% of the amount of the loan.
In addition to meeting the minimum interest rate and maximum term criteria, complying loan agreements need to be made under a written agreement before the private company’s lodgement date. Loan agreements that meet such requirements will not be treated as a dividend in the income year the loan is made.
There is no prescribed form for the written agreement. However, as a minimum, the agreement should:
- identify the parties,
- set out the essential terms of the loans (for example, the amount and term of the loan, the requirement to repay and the interest rate payable under the loan), and
- be signed and dated by all parties involved.
Businesses moving towards online operations (temporarily or permanently) need to be aware of the Government’s modified provisions concerning virtual meetings and the electronic signing of company documents. These modified provisions in the Corporations Act 2001 (Cth) became active on 5 May 2020 and will automatically be repealed on 5 September 2020.
The new temporary provisions outline how a virtual company meeting should be held and procedures they must follow. Under the Determination, meetings may be held using one or more technologies so that members do not have to be at the same physical location to satisfy business requirements such as a quorum.
Additionally, members must be able to speak at the virtual meeting and voting must be done through an online poll rather than a usual show of hands. Proxies may participate in a meeting in the event that businesses are unsure of the necessary virtual procedures.
Notice of meetings
Notices for meetings, along with any material related to the meeting, must be issued to participating members before a virtual meeting is held. Such notices can be sent digitally through email, or posted on an online location where the notice and other material may be viewed by participating members. Under the new provisions, the notice must also include how involved members can speak and vote on polls during the meeting.
Electronic signing of company documents
It is understandably difficult to sign and execute documents online. However, the new provisions allow for electronic signing in place of signing a physical copy if necessary, as long as the electronic signature reliably identifies the person and indicates the person’s intention about the contents of the document. Physical signings with electronic communication (such as fax) are also permitted.
Although there are many virtual meeting and electronic signing technologies available to businesses, not all are easy to operate and free. Consider investing into a paid service if you are considering moving more of your business operations online and test a number of platforms first before committing to one in particular.
When entering a supply contract, it is extremely important to work out all the nuisances before signing to prevent complications down the road and make sure conditions are favourable for you. Here are a few key pointers to look out for in your supply contract.
Warranties are promises within contracts to both parties that certain matters are correct and that certain criteria must be met for the supply of goods and services. Warranties can be expressly stated in a contract, whereby the virtues of particular products from a supplier are restated as warranties in a contract, and warranties are ensured by suppliers to be limited to those specifically stated in the contract.
A guarantee involves a third party, where they must honour the obligations of one of the involved parties in the event that they breach the contract. This offers protection for both contracted parties, almost like insurance in the case that something goes wrong. In some instances, personal guarantees involving personal assets may also be involved.
Risk and title
“Risk” refers to the responsibility for security and safety of goods that is passed onto the customer on delivery, while “title” refers to the legal ownership of goods which is not passed onto customers until a full payment is confirmed. You need to be aware of the differences between these two types of clauses so that the type and frequency of transactions between customers and suppliers can be determined.
Indemnity is a promise made from one party to protect the other from specified loss or damage. For customers, this means protection from damage arising from a breach of contract or the negligence of a supplier and vice versa for suppliers. Suppliers should also an insurance broker review their contract to ensure that there is adequate coverage for suppliers against claims under the indemnity clause from customers.
Defects liability period
The defects liability period is the period of time in which a customer can oblige suppliers to rectify any defects from goods or services performed. Customers need to ensure this period is long enough for any defects to be discovered or consider including a retention amount or some form of guarantee until the end of the period to act as a safeguard. On the other hand, suppliers need to agree on the period, reinstate the definition of “defect” and iron out any exceptions that may come as a result of customer misusage or negligence.
Limitation of liability
It is standard practice for both parties involved in a supply contract to limit their exposure liability and risk wherever possible. Suppliers in particular need to ensure that their contract excludes all implied warranties (where legally possible), reduces liabilities if a customer contributes to a failure to meet warranty and if a warranty is breached, removes liability for indirect loss of profits and limits aggregate liability to a numerical figure (e.g. a percentage).
Boiler plate causes
These are standard administrative clauses at the end of a contract which outline legal terms such as:
- Forced Majeure ability to delay without penalty,
- Jurisdiction and laws that govern the contract,
- Transferrence of rights.