The start of the calendar year is a great time for businesses to take stock of their current practices, policies and documentation in order to identify potential risks and opportunities for improvement. We have compiled a brief checklist of critical (but often overlooked) items, to assist in your reflection on your business’ current practices.
If any of the following strike a chord with you, it may be time to consult with your legal advisor to address any barriers to the continued growth and success of your business in 2018.
- Review your current employment contracts
The National Employment Standards apply to all employment contracts and many employees will also be covered by a relevant Modern Award. Employers need to be aware of the minimum employee entitlements contained within these instruments, and all standard employment contracts should be regularly reviewed to ensure that they are compliant.
Some businesses may also wish to include more complex terms in contracts with their senior employees, such as non-solicitation or restraint of trade clauses and ‘garden leave’ provisions. It is imperative that these provisions are drafted by lawyers with experience in employment law, as inexpertly drafted restraint clauses have often been held to be invalid by the Courts.
- Review any contractor arrangements
The office of the Fair Work Ombudsman has indicated that it will maintain a heightened focus on sham contracting arrangements in 2018. Businesses must accurately classify employees and contractors, and be aware of the key differences between them. Pointon Partners have previously prepared an employee/contractor checklist to assist in this classification.
Your business may also benefit from legal advice concerning the obligation (in certain circumstances) to pay superannuation and/or payroll tax in relation to independent contractors and whether any exceptions may apply.
- Implement or update your business’ policies
Employee policies are an important resource for both employees and management, as they describe how all team members are expected to conduct themselves. Some policies which your business may require are those concerning:
- Social media
- Drug and alcohol use
- Sexual harassment and discrimination
- Update your trading terms and conditions
If your business has trading terms and conditions, they should be periodically reviewed by legal advisors to consider the impact of legislative changes. For example, all standard form agreements should have been examined after 12 November 2016, when the unfair contract terms protections contained in the Australian Consumer Law were extended to small business contracts.
The Australian Competition and Consumer Commission (ACCC) has already successfully enforced the new regime against JJ Richards & Sons Pty Ltd, in a high-profile case concerning what the ACCC considered to be unfair terms.
- Reassess any material arrangements between the business and any directors or associates
Where there are arrangements in place between your business and any associate, such as the provision of loans or services, the terms of such arrangements should be reduced to writing. If there are loans from the business to any shareholders or their associates, there may also be implications arising in relation to Division 7A of the Income Tax Assessments Act 1936 (Cth) which will need to be considered.
- Consider asset protection for directors and key personnel
Directors and key individuals within a business should be made aware of their potential personal liability as a result of the business’ activities. By way of example, directors can be made liable under the insolvent trading provisions of the Corporations Act 2001, whilst human resources managers and payroll officers have recently come under fire through the accessorial liability provisions of the Fair Work Act 2009 for underpayments by employers.
Particularly where directors and/or key individuals own significant assets in their own names, they may wish to discuss restructuring their personal affairs with a legal advisor.
Pointon Partners have significant experience in advising small to medium businesses. If you wish to discuss any of the above issues, or your business activities generally, please contact Michael Bishop or Ben Drysdale on (03) 9614 7707.