Some franchise agreements might promise guaranteed incomes for franchisees. This might be a promise regarding: 
the minimum revenue of the franchised business; or a salary that you pay to the franchisee. 
You should carefully consider the commercial and financial implications of agreeing to guarantee payment to your franchisees. You should be aware of the legal implications of:
making representations to the franchisee regarding a guaranteed minimum income; andfailing to make payments that they have agreed to make in the franchise agreement.
This article explains what a guaranteed income is and the risks associated with providing guaranteed incomes to franchisees, including a case study on the Megasave Courier franchise.
What is a Guaranteed Income?
An income guarantee provision is a term setting out the minimum income that a franchise business will earn for a specified period. The determined period is often within the first year of trading. 
The guarantee is essentially a promise that you will pay a certain level of income to prospective or existing franchisees. This means that you may need to top up your franchisees’ earnings if they have not generated sufficient revenue, which can be a big financial risk for your business.
New franchisees are often first time business owners and more familiar with earning a set salary. Providing an income guarantee is therefore particularly enticing for franchisees, as it allows them to easily forecast their income and manage their expenses. The predictability afforded by a guarantee gives prospective franchisees an added incentive to purchase the franchise.  
Risks of Providing Guarantees 
Advertising or including an income guarantee provision presents an array of risks to your franchise. The Australian Consumer Law (ACL) is a federal law aimed at protecting Australian consumers, including prospective franchisees. The ACL governs the way that a franchisor: 
conducts its business; advertises the franchise network; and manages its franchisees. 
The ACL includes a general obligation on all those involved in trade and commerce to not engage in misleading or deceptive conduct.

This means that any information that you provide to your franchisee network must be truthful and accurate, including financial figures.

Therefore, you should avoid providing new or existing franchisees with projected earnings or predictive financials, so as to not mislead or deceive prospective franchisees.
Buying a franchise is a big decision and requires significant financial investment. Prospective franchisees must be able to rely on the information that they are provided with by the franchisor. This means you must be careful about what promises you make in:
promotional statements;franchise brochures;website information;operations manuals;franchise documents; and any other communication across the franchise.
How Does This Apply to Franchisors?
You should take care when making any claims concerning the income or likelihood of success of a franchised business. Income guarantee clauses are risky in that they may mislead franchisees as to the true cash flow needs of the business. Even providing financial information, operating expenses and profit might infer an income guarantee. This may expose you to a legal claim from a franchisee if the information that you provided is inaccurate or misleading.
A number of cases have been brought to the attention of the Australian Competition and Consumer Commission (‘ACCC’) in recent years by franchisees in distress. This occurs when franchisors assure prospective franchisees that they will earn a certain amount of money to entice them to purchase the franchise. Then, after the franchisee signs the franchise agreement and begins operating the franchised business, they learn that they are unlikely to earn the amounts projected by the franchisor.  
Projected revenues and income guarantees published in marketing collateral provided by franchisors to franchisees are often viewed by the ACCC or the courts as a lure used to attract prospective franchisees to an otherwise less than appealing franchise network. Any franchisor that fails to make payments according to a minimum income guarantee will be held accountable.
Case Study: Megasave Courier Franchise
A recent case investigated by the ACCC in respect of guaranteed incomes for franchisees is the Megasave Courier franchise.
Background
In April 2019, Megasave and its sole director, Gary Bourne, began advertising Megasave franchises for sale. Franchisees bought specific territories within which they would deliver parcels as part of the Megasave network.
Megasave indicated to their franchisees that they would be paid a guaranteed minimum weekly amount for an initial period after purchasing the franchise. In most cases, the weekly earnings were $2,000 per week for the first six months. Megasave also promised a specific yearly income. The average guaranteed income promised to over 50 franchisees was $91,000 per annum.
Megasave published those representations on: 
their website;the Seek Business website;a ‘franchise earnings’ document supplied to prospective franchisees;in conversation; and via text message to potential franchisees. 
Megasave allegedly stopped paying the guaranteed weekly income while continuing to advertise the guarantee to new franchisees. Meanwhile, many did not earn enough to make the guaranteed annual income. In December 2019, Gary Bourne announced in a video distributed amongst the franchise network that most payments to franchisees would be suspended.
The ACCC alleges Megasave then directed franchisees to submit weekly sales leads to the franchisor in order to receive their minimum weekly payments. This condition was new and not disclosed to franchisees prior to their franchise purchase. 
Over 30 franchisees complained to the ACCC, some of whom have been advised by LegalVision.
Harm Caused
Franchisees were robbed of their guaranteed minimum weekly payments and guaranteed annual income. Franchisees lost their fee paid to join the Megasave network, usually in the amount of $27,500. 
 Often franchisees also: 
purchased a vehicle; took out or are liable to service loans; or left other employment to start their Megasave franchise business. 

ACCC Deputy Chair, Mick Keogh, said: ‘This caused significant financial hardship and stress to franchisees who were expecting to receive the guaranteed minimum weekly payments and annual income after signing up. In a number of cases, these franchisees had taken out loans or used life savings to purchase the Megasave franchise.’

Legal Implications
By guaranteeing a minimum weekly payment and predicting an annual income, Megasave engaged in: 
misleading or deceptive conduct; or conduct which was likely to mislead or deceive in contravention of the ACL.  
This is because they made false or misleading statements about the:
benefits of its franchises;potential earnings and profitability; andrisk associated with being a franchisee.
These statements were made to motivate the interest, performance of work and investment of money by prospective franchisees, thereby violating the ACL.
The ACCC instituted proceedings against Megasave seeking: 
pecuniary penalties;injunctions;disqualification orders against Gary Bourne; and an order as to the findings of fact.  
Ideally, the ACCC will regain costs and necessary compensation for franchisees who have incurred financial hardship and stress as a result of the actions of Megasave and Gary Bourne.
On 19 June 2020, the ACCC secured a freezing order from the Federal Court against the assets of Megasave, Gary Bourne and related entities. This order has since been overruled by a separate order with Gary Bourne, promising the court not to touch his valuables.
I Am a Franchisee. Should I Be Wary of Guarantees?
While franchise businesses face the same difficulties as other small businesses, they often benefit from being part of an established brand that has tried-and-tested business processes. However, you should not assume success or profit is guaranteed. 
Even in a franchised business, there is a direct correlation between how hard you work and the sales or profit returned. The franchisor will provide training and support, but the success of the business will often depend on the work that you put in as the franchisee.
The key benefit of an income guarantee clause is the offer of financial stability in the early stages of building your franchised business. Income guarantees can be useful when comparing different franchise opportunities, to decide which business you want to pursue. 
It is important that if an income guarantee is provided by the franchisor, you carefully consider the terms and conditions that you must achieve in order for the franchisor to comply with the guarantee. There will often be certain criteria that you must satisfy, so you must ensure this is realistic and achievable.
Key Takeaways
The ACCC routinely assesses complaints made by franchisees in relation to franchisors misrepresenting costs, profits and expected income. Therefore, you should ensure that you do not make any misleading or inaccurate statements in your franchisee advertising material. You should refrain from offering guaranteed incomes for franchisees as a recruitment strategy, as it may open you up to significant financial and legal risk. Similarly, if you are looking to buy a franchise, be careful of guaranteed incomes for franchisees. Prospective franchisees should get legal advice from a franchise lawyer and speak with an accountant before committing to the business. If you are concerned about an income guarantee in your franchise agreement, contact LegalVision’s franchise lawyers on 1300 544 755 or fill out the form on this page.

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A document retention policy is a plan outlining how you expect your employees to manage, retain and dispose of company documents and records. Over the lifetime of your business, your company will inevitably collect thousands of documents and records. You might store these documents in overflowing filing cabinets or they might merely take up storage space digitally. Given that businesses must comply with a range of legal requirements that dictate how long they must keep long documents, it is important to have strategies in place for how you will manage your documents. A document retention policy is a good way to keep track of the various minimum requirements for retaining documents. This article explains:

why you need a document retention policy; and
how to create a policy that best protects your business. 

Why Do I Need a Document Retention Policy?
A document retention policy is a good way for your business to plan how it intends to deal with its documents and records. This is important because you need to balance the competing priorities of: 

retaining documents for legal requirements; and 
not holding onto documents for too long because it can be expensive and pose a security risk. 

For example, you may not want to hold onto someone’s personal information for too long. This is because you will incur the legal responsibility for sharing confidential information if that personal data is taken or accidentally disclosed. 

When thinking about your business’ document retention obligations, you will need to consider whether:

certain documents hold particular significance for your business;
there is a legal requirement in any legislation that you hold a particular document for a certain amount of time;
you will require any documents in any current or potential future legal dispute (for example, in a court proceeding);
the destruction of certain documents could cause a court to infer that you acted in bad faith (for example, that you destroyed documents to remove evidence);
the information came from a source with certain retention requirements; and
the purpose for which the information was collected is still relevant.

How Do I Create a Document Retention Policy?
Document retention policies will not be the same for every business. This is because each business: 

conducts different activities with different levels of risk (for example, the tobacco industry);
is controlled by different regulatory requirements;
holds different types of documents; and 
has unique financial and space constraints. 

For this reason, it is important that you take the time to consider your own business’ situation. This will help you to put systems and strategies in place that are appropriate for your business. Taking a systematic approach to document retention, as opposed to an ad hoc one, will help your business: 

be more efficient; and 
reduce the risk of a court inferring that your business destroyed documents on purpose to cover something up.

When thinking about your business’ approach to document retention, you consider the steps below.
1. Evaluate the Types of Documents that You Work With
Start by conducting an audit of your business, to find out what types of documents you hold and where you store them. 
Once you have a list of the sorts of documents your business works with, you should assess whether there are any legal requirements for how long you must keep the documents. Keep in mind that these are only a minimum period. To err on the side of caution, many businesses will add a period of time on top of the minimum period in case an unexpected event arises. 

For example, planning to hold your records for slightly longer than the legal requirements can be helpful if minimum retention periods are extended.

You should also account for: 

any other reasons your business may need to keep documents longer than those mandatory periods; and 
how long you will keep documents that do not have any legal requirements. 

For example, it is a higher risk to run a car manufacturing business than it is to operate a t-shirt shop. Therefore, you may want to hold onto some documents for longer because you know there is a risk of someone making a claim against you.

2. Plan to Store Your Documents
You need to work out how you are going to capture and store your documents. This may involve: 

categorising documents; 
arranging them in a logical manner so that you can find them easily; and 
implementing a system of registration to record the existence of documents that you have.

You should also consider whether to restrict access to some documents to certain people within your organisation.
3. Decide How You Will Dispose of Documents
It is important to establish: 

a process for how to dispose of documents; and 
whether these sorts of decisions are to be made by senior members of your business. 

Any sensitive commercial information should be confidentially destroyed, for instance, by shredding the documents. If stored electronically, you should subject the sensitive information to secure electronic deletion.
4. Appoint a Document Retention Officer
Consider whether you will appoint someone as a document retention officer. This makes one of your employees responsible for maintaining and implementing your document retention systems. They will also become the first port of call for other employees that have questions. 
5. Draft Your Document Retention Policy
After considering the various points outlined above, it is time to draft your document retention policy. This should capture your new system and guidelines for employees in writing.
What Documents Should be Covered?
Your document retention policy should cover both physical and electronic records generated in the course of your business’ operations. This may include:

paper documents – both originals and copies;
digital documents and records such as emails, videos, audio and photographs;
contracts, invoices, orders and insurance policies;
corporate documents such as your shareholders agreements and company minutes and resolutions; 
financial and tax documents;
employee records; and
data generated by your systems.

Tips to Ensure Your Policy is Effective
To ensure that your document retention policy is successful, you should:

communicate the policy to all levels of your business; 
train employees on how the policy works;
appoint responsibility to different individuals to help implement and manage the policy;
build automated processes to help with the retention and disposal of documents;
ensure your business follows the processes it has decided on; and
regularly review your policy in light of any changes in the law or your business.

Key Takeaways
A document retention policy is a good way for businesses to document their intentions with regards to document retention and disposal. It should: 

outline your business’ internal systems for retaining and disposing of documents; and 
provide guidelines on how long different documents should be retained.

Importantly, the policy is only a statement of intent. You also need to make sure that all of your employees follow the document retention processes that you have decided to implement. If you need assistance with preparing a document retention policy, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

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A service agreement is a contract that outlines the relationship between you and a customer to whom you will provide services. However, one day in the future, you may wish to transfer a service agreement that you signed with a customer to another business. This could come about for several reasons. To properly transfer a service agreement, you need to understand the legal options open to you and ensure that you take the right actions accordingly. This article considers: 

the situations in which you may wish to transfer a service agreement; and 
some options for how you can do this.

Why Would I Transfer a Service Agreement?
There are many situations which may call for the transfer of your service agreement to someone else. 

For example, if you want to:

sell your business;
set up a new company; or
sell the contract to someone else because you do not have time to do the work yourself.

Your reason for transferring the service agreement will impact the best method for the transfer.
How Can I Transfer a Service Agreement?
There are three key options for transferring your service agreement. These are: 

assignment;
novation; and 
subcontracting. 

1. Assignment
Assignment is a process that allows you to transfer your existing rights and benefits under the agreement to someone else. However, you cannot transfer your obligations or liabilities under the agreement. Accordingly, assignment does not change the service agreement and it is not necessary to sign a new agreement.
When you assign a right or benefit, you will be the “assignor” and the person or business you assign it to will be the “assignee”. The assignee will not become a party to the service agreement. They will only have the right to receive the benefit or enforce their right to receive this benefit. 

For example, you may assign the right to be paid the fee for the services performed under the service agreement. In this situation, you will still need to perform the services. The assignee will only be entitled to receive the fee or take action to recover the fee if the customer fails to pay as required by the agreement.

Often a service agreement will include a clause setting out whether an assignment requires consent from the customer.
2. Novation
Novation involves a full transfer of the service agreement from you to someone else. The other person or business takes on your role but under a new agreement. Typically, this means from the date of novation, the incoming person or business will assume both your:

rights and benefits; and
obligation and liabilities.

Therefore, you should only novate the contract to a person or business with the capability to perform the services in the agreement.
To novate a contract, all parties to the original contract and the new contract must consent. You can typically achieve this by signing a deed of novation. A deed of novation should set out whether: 

past rights and obligations will stay with you after the date of novation; or
the person or business you transfer the agreement to will take on your past rights and liabilities.

For example, if you sell your business, novating the whole service agreement to the new business owner will be the best option. This is because they will now be providing the services to the customer instead of you. Hence, they must receive the relevant payment for these services. This means they will be taking on your future rights and obligations. 

Generally, it is in your best interests for the new business owner to also take ownership of your past rights and responsibilities. This way, if a customer wants to make a legal claim against you for a past breach of your service agreement, this claim will be against the new business owner rather than against you.
3. Subcontracting
Another method of transferring your obligations under a service agreement is to engage someone else to perform some of the services for you. This is known as subcontracting the work. 
To do this, you must first make sure the service agreement allows you to use a subcontractor. Sometimes you may need to ask the customer for their permission before you engage a subcontractor, which will be set out in your agreement.
When you engage a subcontractor, they do not become a party to the service agreement with the customer. You will retain all of your: 

rights;
benefits; 
obligations; and 
liabilities.

This means you will also need to sign a separate contract with the subcontractor. In the subcontractor agreement, they will agree to carry out certain parts of the work for you in return for payment.

For example, if you are performing IT services and your customer asks you to develop a mobile app but you do not have the time or skills to do so, you can check the service agreement to see if you are allowed to subcontract. If you are, you can engage a separate mobile app developer to create the app. The customer will pay you and you will engage the subcontractor and pay the subcontractor.

It is very important to make sure that you pass through any responsibilities you have to the customer to the subcontractor, in your subcontractor agreement. Otherwise, you may not be able to hold the subcontractor responsible if something goes wrong and you are required to pay the customer. 

For example, your services agreement might require you to finish the work by a certain date. If you do not include this date in your subcontractor agreement, you will be solely responsible for any delays. This means you may need to pay compensation to the customer without any right to claim from the subcontractor, meaning you will be out of pocket.

Key Takeaways
You may want to transfer your service agreement to someone else because you are selling your business or you do not have time to complete the work yourself. In these circumstances, there are three main options to pass on the agreement, including:

assignment, which only transfers the specified rights under the agreement (like the right to payment);
novation, which transfers the whole agreement to someone else; and
subcontracting, which allows you to delegate some of the work to someone else but you will remain responsible to the customer. 

The best option for you will depend on your situation. If you need help transferring your service agreement, drafting a deed of novation or creating a subcontractor agreement, contact LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.

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If your business has an annual turnover of $50 million or more, you will need to comply with the New South Wales (NSW) modern slavery laws. Unfortunately, there are an estimated 46 million people around the world who are victims of slavery. You may think that this is not relevant in Australia, but over 4000 workers in the country are thought to be exploited and essentially working as slaves. The government has recognised the need to address this issue, not only to combat slavery domestically but also play a part in reducing slavery on a global scale.
NSW introduced new modern slavery reporting requirements in 2018. This intends to encourage corporations to influence real change both in Australia and internationally, given their global supply chains. This article outlines the key features of the NSW modern slavery laws and offers some tips to help your business comply with the reporting requirements.
Overview of the 2018 Laws 
The objectives of the NSW modern slavery laws include:

combating modern slavery;
aiding the detection and exposure of modern slavery; and 
providing for an Anti-Slavery Commissioner. 

Modern slavery includes conduct that uses any form of slavery, servitude or forced labour to exploit children or other people. This accounts for actions both within your business and your supply chains, including government and non-government organisations.
You will be required to submit an annual modern slavery statement if you: 

have employees in NSW;
have an annual turnover of $50 million or more; and 
supply goods and services for profit.

Failure to comply with these requirements will incur a penalty of up to $1.1 million. 

Reporting Obligations 
If your organisation is captured by the NSW modern slavery laws, you will need to publicly release a modern slavery statement each financial year. This statement must contain certain information prescribed by the regulations, including: 

details of your entity, including its structure, the nature of its business and its supply chains; 
the risks of modern slavery practice taking place in your business or supply chains; 
the due diligence processes and actions your entity has taken to address and combat modern slavery in its business and supply chains. 
how you assess the effectiveness of any actions taken to mitigate slavery risks;
a description of your consultations with any entities that you own or control, concerning their business and supply chains;
how you have trained your employees to recognise and address modern slavery. 

Your business must: 

prepare and make this statement publicly available by lodging it with the Modern Slavery Commissioner within six months after the end of your financial year; 
ensure that any information provided in the statement is not false or misleading; and 
ensure the statement is approved by the principal governing body of your organisation

Tips on How to Assess Modern Slavery 
These requirements are a step in the right direction to tackling the global problem of modern slavery. If you are an entity that is required to comply with these reporting obligations, you must have a plan in place as to how you will go about preparing a modern slavery statement.
1. Know Your Business and Supply Chains
This may seem like an obvious point, but it is crucial that the person in your organisation responsible for preparing this statement has access to all internal information relating to your business and supply chains. You can do this by ensuring that all the managers and employees in each relevant stream of the business can prepare reports specific to their own departments.
You can then collate this information to prepare the final report. It is not practical for one person in a large organisation to have the necessary knowledge about all of your suppliers. Therefore, it is a good idea to make each sector of the business responsible for providing the necessary information. 
2. Due Diligence 
Once you have the information, it is also important to do due diligence to ensure the accuracy of this information. This is particularly important with respect to overseas suppliers. You need to understand: 

their business; and 
where and how they source the products and materials that they supply to you. 

This will help you identify where the risks are in your supply chains and put in place procedures to address those risks, including changing suppliers where you cannot adequately assess the risk. 
3. Subcontractors
You may not readily have access to all the necessary information about your suppliers’ and subcontractors’ internal practices. Therefore, it may be a good idea to start including provisions in your supply contracts and subcontracts that require the supplier or subcontractor to provide you with information about its business and supply chains. This will ensure that you have access to the information that you need to comply with your reporting obligations. 
Commonwealth 
The Commonwealth government has also introduced modern slavery laws which mirror the rules in NSW. However, federal laws apply to entities with an annual turnover of $100 million or more. 
You will only need to comply with one of the legislative frameworks. Therefore, if your turnover is between $50 million and $100 million, you will need to comply with the laws in NSW. If your turnover is $100 million or more, you will need to comply with the Commonwealth legislation. 
Key Takeaways
If your business has a turnover of between $50 million and $100 million, you will need to comply with the NSW modern slavery reporting requirements. This should include key information about your operations and supply chain, as well as measures you are taking to prevent the risk of slavery. Failing to comply with modern slavery laws could subject you to a financial penalty of up to $1.1 million. It could also damage the reputation of your business. If you have any questions regarding your reporting obligations under modern slavery laws, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

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You may have started your business with a partner with a fixed term in mind or with a hope to work together on an ongoing basis. However, partnerships may come to an end for several reasons. In these circumstances, you will need to consider a number of legal implications to dissolve your partnership. This article sets out: 

the different reasons for ending a partnership;
how to dissolve a partnership; and 
why it is best to document the dissolution of the partnership in a formal agreement.

What is a Partnership?
A partnership is a type of business structure where two or more people operate a business together as partners. These often take the form of general partnerships, where the partners: 

share equal rights and responsibilities of the business operations and management; and 
are all jointly responsible for the actions and debts of the other partners and the business as a whole.

Reasons for Ending a Partnership
There are a number of reasons why you may choose to end a partnership. Or perhaps you are required to dissolve the partnership under law. Some reasons that you may end your partnership include that:

you entered into the partnership for a fixed term and that term has expired;
the partnership was for a particular business venture, that venture has come to an end and there is no further need for the partnership;
a partner wishes to leave;
the business becomes insolvent and must cease;
an event makes the partnership illegal;
a partner becomes bankrupt or dies; or
a court dissolves the partnership due to incapacity or unsoundness of mind.

What to Consider When Before You Dissolve a Partnership
When dissolving a partnership, you should primarily consider: 

what will happen to the business after you dissolve the partnership; and 
what each partner’s plans are following the dissolution.

Will the business still operate? Will one partner want to continue operating the existing business? If so, how much will the continuing partner pay to purchase the departing partner’s interest? 

It’s also important to consider whether it’s appropriate to put in place non-compete clauses which apply to the partner who is no longer going to be involved in the business.
You will also need to deal with the administrative factors involved in dissolving a partnership. The dissolution of a partnership will effectively mean that the legal structure of the partnership no longer exists. This is true even if the underlying business will continue to be operated by someone else going forward. Therefore, you will need to finalise and wind up any remaining tasks or structures, such as:

completing and filing all of your tax returns and business activities statements; 
closing any bank accounts;
fully repaying any outstanding loans and liabilities; and 
transferring ongoing contracts and insurance policies to the new owner of the business.

How to Dissolve a Partnership
Many partnerships will have a partnership agreement that outlines the mutual obligations and rights of the partners. If you would like to dissolve a partnership, the first place you should look to is your partnership agreement. 
The partnership agreement should set out: 

when you can dissolve the partnership; and 
the process to do this. 

If your partnership is not governed by a partnership agreement, you will still be subject to state or territory based legislation. 

For example, the Partnership Act 1892 (NSW) governs all partnerships in NSW.

Generally speaking, partnerships can be dissolved when:

all partners agree to dissolve the partnership;
where there are only two partners, one partner wishing to leave gives written notice to the other partner of their intention; or
it is required under the partnership agreement or by law that you dissolve the partnership.

Deed of Dissolution of Partnership
It is best to document the dissolution of a partnership in a written deed of dissolution. This ensures that each partner clearly understands the:

the terms of the separation;
what happens to the business; and 
how the partners may deal with each other and the business going forward. 

A deed of dissolution will commonly address:

how the interests in the partnership and the assets of the business will be divided;
if one partner is purchasing the other partner’s interest in the partnership (including all the assets and goodwill which comprise the business), what the terms and price of this purchase is;
the requirement that you pay out all liabilities related to the partnership;
what happens to the existing contracts and customers of the business;
what happens to the business names and intellectual property of the business; 
the requirement that certain partners must return property and records of the business;
restraint and non-compete clauses; and
non-disparagement and confidentiality clauses.

Key Takeaways
If you want to end a partnership or you are required to do so by law, you must ensure to:

meet your obligations under your partnership agreement; and
the law.

The idea of dissolving a partnership can seem overwhelming. However, it is important to ensure that you document the dissolution appropriately so that all parties can have peace of mind moving forward. If you’d like assistance with dissolving your partnership or preparing a deed of dissolution, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

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downturn. Register for free now.

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If you run a gym, you should be aware of the inherent risks to your customers. No gym owner wants someone to hurt themselves at their gym. This is especially if you or your staff cause the injury. If someone hurts themselves, you might be legally responsible to them under the Australian Consumer Law (ACL). As such, you should ensure you understand the guarantees you make to customers.
Importantly, by preparing a compliant waiver, you can limit or exclude some of your liability, unless an injury is caused by your reckless conduct. This article will outline the legal risks which you may face as a gym owner, and what your disclaimer should include.
Consumer Guarantees Under the ACL
By providing services to consumers, you automatically make guarantees about the services you provide under the ACL. Generally, you cannot contract out of these guarantees, even if your customer agrees.
Who is a Consumer?
Under the ACL, a person acquires services as a consumer if the price of the product is under $40,000 or, if the price is over $40,000, the services acquired are those normally acquired for personal household use or consumption. A gym is likely to sell its services to customers for less than $40,000, so the gym members will be considered consumers under the ACL.
What Are the ACL Consumer Guarantees?
You must provide the services with due care and skill. This means that you must:
have an acceptable level of skill or technical knowledge in the area of activity covered by the service. For example, your staff includes qualified personal trainers;exercise due care and skill in supplying the services; andtake all necessary care to avoid loss or damage when providing the services.
You must also ensure that the services are fit for purpose. Here, you may guarantee that the services are fit for purpose by implication or you may expressly guarantee that the services are fit for purpose. 

For example, if a customer joins the gym on the basis that staff expressly told them they would lose five kilograms in the next three months, then you made the guarantee that this goal will be met.

You must provide the services within a reasonable time.

For example, a customer must be able to access the gym within a reasonable time after signing up – unless you specify otherwise at the time of sign up.

If a gym sells products, you must also meet guarantees about the goods you provide.
What Happens if I Fail to Meet These Guarantees?
If the failure is minor, you can choose between fixing the problem or offering a refund. If the breach is major, the customer can cancel the services and receive a refund for the membership services they did not use. Alternatively, they can choose to keep the membership and receive compensation for the difference in the value of the services.
A failure is major if a reasonable consumer would not have paid for the membership had they known the extent of the defaults. Importantly, a customer may also sue you to recover damages for any loss you foresaw. As a general rule, the ACL does not permit service providers to contractually exclude these guarantees.
The Exception: Recreational Services
As a starting point, a gym may be liable for a customer who suffers personal injury, including for breach of consumer guarantees. 

For example, if a customer hurts their back during a yoga class and the instructor is not skilled or qualified to teach, you may be liable for personal injury, including for a breach of consumer guarantees.

However, the ACL makes an exception to this general rule if you provide recreational services. Here, you may exclude or at least limit your liability for death or personal injury, including illness (mental or physical). This is unless your reckless conduct caused this. Each state sets out when and how providers can exclude or limit consumer guarantees for recreational services.
Recreational services consist of participation in:
a sporting activity;a similar leisure pursuit; oranother activity that involves a significant degree of physical exertion or physical risk, and is undertaken for recreation, enjoyment or leisure. 
Most services provided by a gym fall within this definition.
When a customer signs up to your gym, they will generally sign an agreement with you, generally referred to as terms and conditions. Here, customers should also agree to sign a waiver.
What Should I Include in My Waiver?
You should include a risk warning that is clear, unambiguous and that specifies how the personal injury may come about. 

For example, this may be a customer’s physical fitness level or pre-existing health conditions. 

You should also include a risk warning at your gym’s premises.
The waiver should include language to the effect that by participating in the recreational services, the customer releases the gym from liability for death or personal injury. The specific language that you require will vary depending on the state in which your gym is located. Some state legislation and regulations require that you include specific language. Further, minors can agree to waive their rights in some states, but not in others.
You may also wish to include warranties from the customers that they:
agree to applicable rules that you communicate to them; will collaborate and follow your reasonable instructions; andwill not engage your services if they are suffering from a condition that could be a risk to their health and safety.
How Should I Display My Waiver?
Most state legislation and regulations require that you make the waiver as obvious as possible to your customers. For example:
your terms and conditions should start with the warning and a clear statement that the terms and conditions include a waiver;if customers sign up online, there should be two separate tick boxes to accept – one for the terms and conditions and one the waiver;if customers sign up in person, your staff should verbally draw your customers attention to the waiver; andnote that some states require a hard copy signature for the waiver to apply.
Key Takeaways
If you run a gym, you should consider how consumer guarantees apply to you, including whether the services you provide are recreational services. All recreational service providers should consider a waiver to exclude their liability for personal injury or death. There are specific rules around how to draft and how to draw customers’ attention to the waiver which may impact on their enforceability. If you need assistance with drafting your waiver, call LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.

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Market reviews are a common type of rent review method in a retail lease and are most often implemented at the start of an option term. While common, the procedure of a market review may be confusing to tenants. Importantly, if you have a commercial lease, rather than a retail lease, you may not be protected by market review legislation. This article will outline what retail tenants need to know about market reviews. This includes any potential issues which you may find in your lease.
What is a Market Review?
The purpose of a rent review is to adjust the rent, usually using a particular method. During a market review, the landlord will assess the rent payable in line with the rental market. Retail lease legislation in each state or territory governs market rent reviews and any dispute resolution procedures surrounding them.
However, tenants should be aware that while legislation governs procedure and dispute resolution for market rent, in practice, often a landlord and tenant will simply agree on a suitable rent amount at the time of the market review.
Market Review Procedures
State-based legislation will govern how a market rent review takes place. Some legislation may also specify what a market review should consider. 

For example, states including VIC and NSW require the market rent determination to take into account:

lease terms;
the rent that would reasonably be expected to pay for the premises if it were unoccupied and offered for rent for the same or similar use;
the gross rent (less any outgoings); and
rent concessions and other benefits.

If the tenant and landlord cannot agree on the market rent, then each state or territory’s legislation will set out a dispute resolution procedure. For most states, the matter will go to an independent or specialist valuer. This is with the exception of the ACT, where the dispute must first go to the Magistrates Court. The valuer will determine the market rent based on the grounds specified in the relevant legislation.
The procedure for market review and any dispute resolution differs widely across the states and territories. You should double-check how it works in your state or territory so that you are aware of your rights and what to do if a dispute arises.
What to Look Out For
Retail leases commonly include two key issues related to market rent reviews.
Ratchet Clauses
Leases sometimes specify that a market rent review cannot result in a rent amount which is lower than the rent prior to the market review. This is a rent reduction or “ratchet” clause. 
Generally, a common ratchet clause example may state the following: 

‘Notwithstanding any determination of the current market rent, the rent payable from the market rent review date must not be less than the rent payable for the year prior to the rent review date.’

In practice, if a market review results in a lower rent, even when determined by an independent valuer, then the rent that is payable from that rent review date will still be the same as the year before. In other words, the rent will not decrease, even if the market has fallen.
Most retail lease legislation (with the exception of the Australian Capital Territory) expressly make any ratchet clauses void. The logic behind this is that for a fair market review to occur, the rent must be determined in accordance with what the market situation is like at the time of review. This means that theoretically, the rent could decrease, and any clause prohibiting this decrease is unfair to the tenant. It is worth checking your lease before entering it to ensure that you are adequately protected against ratchet clauses.
Early Determination of Market Review
Market reviews in a lease will typically take place on the date of the rent review. If your market review is for the start of your option, this usually means it will take place on the first day of your option term. Given the undecided nature of market rent, this may be problematic. This is because you will not know what rent you must pay during your option term before you exercise your option. Option terms usually must be exercised at least three months in advance.
Some retail lease legislation, such as in New South Wales, Queensland and South Australia, will protect the tenant in the above scenario. Here, the tenant has the right to early market rent determination. This is usually specific to market rent reviews for an option term only. It typically also implements a new deadline to exercise your option.

For example, in New South Wales, you may request an early determination of market rent between three to six months before the last day on which you must exercise your option. If you choose to do so, the last day on which you must exercise your option is automatically adjusted to be 21 days after the market rent is determined.

Not all retail lease legislation provides the tenant with the right to early market determination. If knowing your market rent before exercising your option is important to you, you should check your relevant legislation to see if you are protected.
Non-Retail Leases
If you have a non-retail lease, you are not protected by any of the rights under retail lease legislation. Market rent procedures for non-retail leases may differ significantly from a retail market rent procedure. 
For a non-retail lease, the market rent procedure will be as negotiated between the parties prior to entering the lease. As you are not protected by legislation, this means any concerns around ratchet clauses and early rent determination must be negotiated and settled prior to signing the lease.
Key Takeaways
Market rent reviews are common rent review procedures in a retail lease and are regulated by the relevant retail lease legislation in your state or territory. However, the procedures are different for each state and territory. As such, your rights may differ depending on where your premises is located. If you have any questions surrounding market rent reviews, contact LegalVision’s leasing lawyers on 1300 544 755 or fill out the form on this page.

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As an employer, you need to consider many different workplace laws, regulations and updates to ensure that your business is meeting workplace standards. While mistakes happen, by understanding the common compliance errors businesses make, you can take steps to avoid these yourself. This article will discuss the top compliance errors businesses make and provide tips to ensure your business remains legally compliant.
Compliance Framework
There are key areas where employers must ensure they are compliant. These include under:
Fair Work Act 2009 (Cth) (Fair Work Act);National Employment Standards (NES);Fair Work Regulations 2009 (Cth) (Regulations);modern awards; andenterprise agreements.
Non-compliance with the above areas can result not only in penalties, but also in reputational damage. This is seen regularly in recent high-profile underpayment scandals. As such, every business needs to be serious about complying with workplace laws.
Misclassification
A common compliance error is misclassifying an employee’s level under the applicable modern award. Each modern award contains a section regarding classification and wage rates.

For example, the General Retail Industry Award 2010 (GRIA), contains eight different classification levels, in addition to age-based junior levels and apprenticeship levels. The many levels of potential classification can be difficult to work through and ultimately may lead to classification errors.

To determine the correct classification level for employees, employers need to look at elements such as:
duties employees perform;indicative job titles;job-related qualifications;apprenticeship milestones;experience; andmanagement of other employees.
Once you accurately gauge the appropriate classification for each of your employees, you will need to ensure that you keep this updated. If there are any changes to your employees’ employment status, you need to reflect this in their classification. 
To overcome misclassification compliance issues, you should keep up to date job descriptions for each role within your business. This will assist you in cross-checking duties against those contained in each award to ensure that you are appropriately classifying your employees. Each time an employee is promoted, or changes duties, completing a review of their classification will also assist in minimising the chances of non-compliance.
Misinterpretation
Another common compliance error is the misinterpretation of the correct modern award. Often, misinterpretation of a modern award occurs within industries where one general award would otherwise apply.

For example, in the automotive industry, the Vehicle Manufacturing, Repair, Services and Retail Award 2010 applies.

Businesses may use a blanket application of their industry award without specifically analysing whether all roles within the business accurately fall within the particular award.

For example, there are many awards which contain a reference to duties, including administrative tasks. However, in some circumstances, a more appropriate classification for administrative employees is the Clerks – Private Sector Award 2010. Here, the predominant purpose of their role is to perform clerical work of an administrative nature. 

To avoid a compliance error due to misinterpretation, businesses should look at each role within their business individually. Each role should be evaluated against the most relevant modern award, not simply the industry award. The Fair Work Ombudsman website includes helpful tools to assist you in determining the correct award that applies to each role.
Legal Instruments
Enterprise Agreements
Legal instruments govern your employees, including:
modern awards;enterprise agreements; or individual flexibility agreements.
Compliance errors can occur when, for example, a business has an existing enterprise agreement, and the base rates of pay are lower than employees would otherwise be entitled to under the underlying modern award.
Generally, enterprise agreements have been approved by the Fair Work Commission (FWC), which confirms that employees are ‘better off overall’ than they would otherwise be under the modern award. 
Each year, the FWC completes a review of the rates of pay contained within each modern award. Often, these rates are increased at the commencement of each financial year. If an enterprise agreement’s base rates of pay fall below the base rates of pay in the underpinning modern award, businesses may be non-compliant and underpaying employees. It is vital to check that the rates of pay you are applying under an enterprise agreement do not fall below the base rates in the relevant modern award.
Award-Free Employees
Non-compliance can also occur when your business does not appropriately differentiate between award-free employees (who do not fall under any modern award) and employees who should be covered by an award. Businesses should be cautious about classifying employees as ‘award-free’ without appropriate advice, as simply not applying an appropriate award can lead to significant non-compliance and risks of underpayment. 
Your legal team can assist you in determining the most appropriate classification for your employees. They can also confirm whether or not your employees are actually “award-free”.
Record Keeping
The Fair Work Act and Regulations outline clear record-keeping obligations for businesses to adhere to. Common record-keeping non-compliance can arise from things such as a failure to:
provide payslips;comply with content requirements on payslips;keep appropriate leave records; ensure records are not false or misleading;keep superannuation records; orkeep records for the specified time.
This is by no means an exhaustive list. However, it does highlight the many areas businesses need to ensure they are compliant with in regards to record-keeping obligations.
These obligations are set out in the Fair Work Act and Regulations. Your business should be aware of all record-keeping obligations and set up clear procedures which reflect your obligations. Keeping or maintaining manual records can lead to potential non-compliance. As such, you should maintain computer-based records, with appropriate backups as required.
Key Takeaways
There are many ways that compliance errors can occur. Most often, compliance errors are unintentional. However, regardless of the reasoning for such an error, your business must take steps to rectify any non-compliance. Common compliance errors include:
misclassification under a modern award;misinterpretation of modern awards;non-compliance with legal instruments; and a failure to comply with record-keeping requirements. 
Navigating your compliance with workplace laws can seem daunting, however, engaging an experienced employment law team can guide you to ensure you remain compliant. If you have any questions about ensuring your business is compliant, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

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As an employer, it is important to be aware that all employees are entitled to minimum entitlements as set out in the National Employment Standards (NES). Additionally, a modern award may apply to your employees and set out the minimum terms and conditions of employment. There are also enterprise agreements made between employers and employees about the terms and conditions of employment.
The NES, modern awards and enterprise agreements are a form of base entitlements. There are many different entitlements, all of which are important for you to understand. This article provides an overview of the industrial system in Australia, so you can understand which employee entitlements relate to your business.
National Employment Standards
The NES consists of 10 minimum entitlements which must be provided to all employees. 

Entitlement

Details

1. Maximum Weekly Hours

The maximum weekly hours of work are:

 38 hours for a full-time employee; and
 less than 38 hours for a part-time employee.

This is unless the additional hours worked are reasonable.

2. Requests for Flexible Working Arrangements

Some employees who have worked for the same employer for at least 12 months can request flexible working arrangements. This includes changes to hours, patterns of work or locations of work.

3. Parental Leave

Employees can get parental leave when a child is born or adopted. Employees are entitled to 12 months of unpaid parental leave. They can also request an additional 12 months of unpaid leave.

4. Annual Leave

Full-time employees are entitled to four weeks of annual leave per year. 
Part-time employees are entitled to four weeks of annual leave per year on a pro rata basis, according to the number of hours they work.
Shift Workers may get up to five weeks annual leave per year.

5. Personal Leave
Permanent employees are entitled to 10 days of sick and carer’s leave for each year of employment. All employees, including casual employees, are entitled to two days of unpaid carer’s leave. Employees are also entitled to two days of compassionate leave each time an immediate family or household member dies or suffers a life-threatening illness or injury. All employees are entitled to five days of unpaid family, and domestic violence leave each year.
6. Community Service Leave

Employees, including casual employees, can take community service leave for certain activities such as:

voluntary emergency management activities; and
jury duty (including attendance for jury selection).

There is no limit on the amount of community service leave an employee can take.

7. Long Service Leave

An employee obtains long service leave after a long period of working for the same employer. 
Most employees’ entitlement to long service leave comes from specific laws in each state or territory.

8. Public Holidays

It is important to know when public holidays are because employees can get different entitlements on these days.

9. Notice of Termination and Redundancy Pay

A notice period is the length of time that an employee or employer has to provide to end employment. To end an employee’s employment (also known as firing or terminating employment), an employer has to give them written notice of their last day of employment.
There are specific requirements around redundancy. The employee’s dismissal must be a genuine redundancy, so the employee is not able to make an unfair dismissal claim.

10. Fair Work Information Statement

Every worker in Australia needs to be provided with a copy of the Fair Work Information Statement when they start a new job.

Modern Awards
Moderns awards came into effect on 1 January 2010 and provide entitlements such as:
minimum rates of pay;hours of work;rosters;breaks; allowances;penalty rates; andovertime rates.
There are currently 122 modern awards. The entitlements in each modern award vary, so you should not expect the entitlements to be uniform across all awards.
Who is Covered?
Modern awards apply to all employees covered by the national workplace relations system. They are industry or occupation-based and apply to employers and employees who perform work covered by the award. Employees will fall under a modern award if they: 
work in an industry or occupation that has an applicable award; orare performing duties covered within the relevant modern award’s classifications.
Managers or higher-income employees may not be covered by a modern award, even if one applies to the industry in which they work. You can use the Fair Work’s find my award tool to locate the applicable award for your employees. You can also use Fair Work’s Pay and Conditions Tool (PACT) to calculate:
pay;leave;notice; and redundancy.
When Modern Awards Do Not Apply
If a registered agreement covers the business, the conditions of a modern award are usually no longer relevant. 

For example, this may be if an enterprise agreement is in place.

However, if the base rates of pay in an agreement are lower than those in the relevant modern award, the base rates of pay in the modern award will apply.
An award or a registered agreement will not cover some employers and employees. When an award or agreement does not cover an employee, they are considered to be award and agreement free. In these situations, the NES will form the minimum terms and conditions of employment.
Award Classification
There is a set of award classifications for each modern award. These are a set of criteria that determine which employees each respective award covers. These include the employees:
duties;responsibilities;qualifications; andexperience.
Furthermore, each award could contain several levels of classification. This means the minimum wages payable to your employees may vary depending on their classification level. This can be quite complicated for employers to navigate, especially when you have employees spread across different classification levels.
Enterprise Agreements
Enterprise agreements are specific to each business and can be tailored to meet the needs of the business.
Some occupations may require certain arrangements, like different work hours or weekend work, that the relevant modern award does not provide for. Enterprise agreements allow employers to vary entitlements like:
work hours;overtime; andpenalty rates.
This is as long as it leaves an employee ‘better off overall‘ in comparison to the relevant award’ entitlements. This means the employee’s rights must be greater under the agreement than the applicable award. 

For example, your business does not want to provide penalty rates or overtime as per the relevant award. As such, you will need to provide another entitlement to compensate for this. This ensures the employee is better off overall. You could compensate the employee by increasing the hourly rate for ordinary hours worked by the employee.

It is important to remember that pay rates in awards are reviewed each year. You should check to see if there has been an increase on 1 July, then review your enterprise agreement to ensure your rates remain above the award and that the employee is better off overall. If the increase in rates in the award go above the rates in your enterprise agreement, the relevant award will then apply.
Contracts of Employment
Employment contracts can add additional entitlements on top of the employees base entitlements. They cannot make employees worse off than their minimum entitlements, whether that is under:
the NES;the relevant award; oran enterprise agreement. 
Employment contracts typically contain provisions outlining:
hours of work;the probation period;leave entitlements;restraint of trade or non-compete;notice of termination; andrules on confidentiality and intellectual property.
Key Takeaways
As employees can be entitled to a range of differing entitlements, it can be quite complicated to navigate the system to ensure your employees are receiving all their entitlements. You must understand the entitlements of each employee so that you do not face any penalties from the FairWork Ombudsman. If you have any questions about understanding employee entitlements for your business, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

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keep an eye on during COVID-19, how to manage your cash flow and strategies to access cash during an economic
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Employee underpayments often occur simply due to mistakes. Your business must have processes in place to identify and rectify mistakes if they do happen. As many recent large-scale wage scandals have shown, underpayment can affect any business. This article will discuss how your business can take steps to identify if you may be underpaying your employees. It will also discuss what you can do to ensure that you maintain your legal compliance moving forward.
Auditing
If your business is investigating whether employees may have been underpaid, the first step is to review your records.
This review should identify all employees in your business and includes looking at:

the legal instrument that applies (modern award or enterprise agreement);
the employee’s classification;
current rates of pay (including superannuation and allowances);
employment status (full time, part-time, casual);
the employee’s duties; and
hours of work (rostering, shift work).

Identifying the above details will assist your business to accurately classify employees under the applicable industrial instrument. It will also help you confirm whether you are paying your employees in line with their classification.
If your employees are covered by a modern award, as many employees in Australia are, each modern award contains clear guidance on how employees are classified, relative to their:

duties;
experience; and 
qualifications.

For example, a junior administrative employee who does not hold any qualifications, and has only been employed for a short time, would be classified at a lower level under the relevant modern award than a more experienced administrative employee with relevant qualifications. These classifications are important to get right as they will determine the relevant employee’s rate of pay. Misclassifying may lead to underpaying employees.

Some of the most common reasons for underpaying employees (and what your business needs to monitor) are:

payroll errors (human or computer errors, miscalculated pay rates);
changes in classification (duty changes, qualification completion, apprenticeship movements);
missed increases to modern award minimum wages; and
penalty rates are not applied (weekend rates, overtime rates, allowances, loadings)

Record Keeping
Accurate and clear record-keeping is not only important in the event you need to commence audits of your business, but it is also a requirement under the Fair Work Act 2009 (Cth) (Act) and the Fair Work Regulations 2009 (Cth) (Regulations). Both the Act and Regulations require businesses to keep accurate and full employment records for seven years.
Once you have reviewed your records and confirmed the correct classification of your employees, you can commence either internal or external audits of your payroll and records.
Internal Audit
Internal audits are a more cost-effective approach to identifying potential underpayments. This process will involve a review of things like your:

payroll;
employee classifications; and 
records, including rosters and timesheets.

Internal audits should look at both current and historical records. It is important to identify historical compliance with workplace laws, as well as current compliance. You also need to include a review of records for both current and former employees.
Auditing will need to include comparisons between when those hours were worked and payroll, payslips and timesheets. Often, underpaying employees will come from the underpayment or non-payment of overtime or penalty rates. This can occur if your business has not kept accurate records or does not have suitable record-keeping practices.
External Audit
External audits are more comprehensive investigations into potential employee underpayments. There are options available for specialised audits performed by accountants or specialised legal teams. External audits are likely to be more expensive than internal audits and will involve providing auditors with access to many of your historical and current records.
The benefits of external audits are that these audits are unbiased and reliable examinations into potential non-compliance. External auditing also provides your business with a tangible output, including:

the extent of any underpayment identified; and
calculations to provide back payments to affected employees.

Regardless of how you audit your business, identifying underpayments is only one step in the process. You will also need to develop action plans for managing non-compliance and put processes in place to ensure your business is compliant moving forward.
Planning
If your audits reveal non-compliance and employee underpayment, your business should develop an action plan to manage this.
The first step in the action plan is to set out how your business will deal with the underpayments. It would be advisable to approach the affected employees and let them know that you have identified a potential issue and that you are working to rectify any underpayments which may owe them. 

The business should also decide whether you will provide any interest or additional apology payments to affected employees.

Depending on the extent of the underpayment and breaches of laws, your business may decide to self-report to the Fair Work Ombudsman (FWO). There is no requirement for your business to self-report. However, self-reporting can be an important step to rectify non-compliance and advise the FWO that although you have breached laws, you are taking steps to correct your mistakes.
You will also need to make all the appropriate back payments to affected employees. This can be in the normal pay cycle, or an out of cycle payment. Keep in mind that all records of underpayments and back payments need to be maintained in line with the Act and Regulations. It is also vital that all back payments are made, taking into account the relevant PAYG taxes and superannuation entitlements.
Ongoing Compliance
Once you have identified and rectified the underpayments, your business needs to ensure that it is compliant with workplace laws moving forward. Your business needs to stay updated for all wage changes that will affect your employees. The FWO website provides a subscription for email updates. However, your payroll team should be regularly checking for these updates.
You need to maintain accurate employment records to ensure that as employees change duties, or celebrate a birthday, their classifications are appropriately updated. Simple tools such as calendar reminders in your payroll system will assist you with updating classifications.

If your business relies on a pre-populated software program, you need to actively self-review this software to ensure it is accurate. Sometimes software can make mistakes, whether due to:

human error in programming; or 
insufficient updates.

 This creates the necessity that you regularly review the output.

Compliance is everyone’s responsibility. Making your management team accountable may assist your business in developing better compliance strategies and guidelines. Putting processes in place to catch potential underpayments before they arise is best practice. You should also have checks in place for payroll teams to self-identify errors, especially if using software, and tools in place to rectify errors.
Key Takeaways
You should take proactive steps to audit your employment records to ensure ongoing compliance with workplace laws. Underpaying employees can be unintentional, and ongoing checks are important for all businesses, regardless of their size. Discovering non-compliance can have far more wide-reaching effects than simply a financial liability, as the reputational damage can be sometimes more severe. If you have any questions about auditing your business’ records to ensure you are complying with employment laws, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

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Every business with employees must take all necessary steps to ensure they are compliant with Australia’s workplace laws. Navigating workplace laws and the many moving parts that make up the workplace compliance landscape can seem like a difficult task. As a business owner, it is important to know what you must comply with and how to be sure your business is complying. Businesses who are non-compliant can face both monetary penalties and reputational damage. This article will outline:
how businesses need to be compliant with workplace laws;that compliance does not just involve the standard rates of pay; andhow to maintain your business can maintain its compliance.
Compliance
Compliance with Australian workplace laws is multifaceted. Employers under the national system of workplace laws must comply with the key legislation:
Fair Work Act 2009 (Cth); andFair Work Regulations 2009 (Cth)
They must also comply with:
the national employment standards (NES);modern awards; andenterprise agreements.
Within these regulations, there are specific elements of employment that employers must comply with. A failure to comply with legislation, NES or an award can result in your business facing penalties. As an employer, you need to familiarise yourself with the above mechanisms to ensure you are compliant with all aspects, not just rates of pay.
Rates of Pay
Compliance with the rates of pay owed to employees contains a number of elements. Under each modern award or agreement, there are additional considerations businesses need to make when processing payroll. These include:
the base rate of pay;casual loadings;weeknight, weekend or public holiday penalties;overtime rates;allowances (e.g. uniform, meals, car, equipment); andany additional rates specific to an award or agreement.
As there are many considerations, you should calculate each employee’s additional rates and ensure they are included in each payroll run.

For example, an error could occur when an employee is rostered to work 11:00 am – 6:30 pm on a Monday. The modern award that applies to this employee sets a base rate of pay and then a higher rate of pay for hours worked between 6:00 pm and 11:00 pm. As such, this employee should be paid the base rate for the first seven hours of work and the additional 30 minutes of work at the relevant higher rate.

Small errors in calculating rates of pay can lead to significant underpayments and non-compliance. It is important to set up your payroll in such a way that all automatic inputs are double-checked. The system should also have clear processes to catch non-compliance issues before they arise.
Record Keeping
Compliance with the Fair Work Act and Regulations also includes compliance with your record-keeping obligations. Generally, you must maintain accurate records for seven years. 
The records you must keep include:
a variety of time and wage records (e.g. rosters, timesheets, overtime);payslips;accurate leave records; andrecords relating to the starting or ending of employment.
The Fair Work Act and Regulations set out clear record-keeping obligations. As an employer, you should familiarise yourself with these obligations.
Setting up processes to record and save the kind of information you are required to keep assists in maintaining your compliance. However, it is important to continue to check the accuracy of the information that your computer systems compile. Computer system errors are not sufficient excuses for non-compliance.
Superannuation
The vast majority of Australian employees receive superannuation contributions. You must keep accurate and up to date records of all superannuation contributions owed to your employees. You must also keep records of your payment of these contributions into defined benefit funds.

Additionally, non-payment of accrued superannuation contributions may be investigated by the Australian Taxation Office (ATO).

Some awards or other agreements include additional terms relating to superannuation. As such, you must be familiar with your superannuation obligations under the relevant modern awards or agreements which apply to your employees.
Maintaining Compliance
Maintaining compliance involves setting your business up with the right tools to succeed. Often, implementing ongoing systems to identify compliance issues is one practical method businesses can use.

For example, accurate record keeping will assist your business in maintaining compliance. If you keep accurate records, you can audit your own records to self-check your compliance.

Maintaining compliance also means investing in appropriate resourcing. Although businesses of any size can face non-compliance, in circumstances where information is not thoroughly reviewed, this can result in errors.
A qualified legal team can also support your efforts to maintain compliance with workplace laws. You should be able to rely on your legal team to provide you with accurate, up to date advice which is commercially sound for your specific business. 
Risks of Non-Compliance
If you are non-compliant with your obligations as an employer and are investigated by the Fair Work Ombudsman, you can receive infringement notices containing fines. However, if your breaches of Australian workplace laws are more substantial, the Fair Work Ombudsman may choose to take the matter to court. If your business is taken to court, you may face substantial penalties. Employees can also claim back pay of underpaid wages up to six years after the amounts became due and payable.

Current or former employees may also make a complaint to the Fair Work Ombudsman if they believe that you are not compliant. This can lead to an investigation.

The Australian public does not look favourably upon businesses which are non-compliant with their employment obligations. As such, the reputational damage that your business may face if you are non-compliant may be significant.
Ignorance of your obligations as an employer is not a valid excuse for non-compliance. There are many resources available through both the Fair Work Ombudsman and Fair Work Commission, in addition to seeking out your own independent legal advice. 
Key Takeaways
Your business could face serious consequences if your business is non-compliant with workplace laws. You must ensure that you are meeting your requirements in relation to:
rates of pay;record-keeping; andsuperannuation.
You also must ensure that you continue to maintain this compliance, even when changes to your business or relevant laws occur. If you have any questions about your workplace legal compliance, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

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A landmark High Court decision has finally brought certainty to employers on how personal leave entitlements are calculated. The decision overturns a Federal Court ruling from a year ago that, left as is, would have significantly increased costs for businesses. 
The High Court decision confirms that personal and carers leave for part-time employees is calculated on the basis of ordinary hours worked, proportionate to that of a full time employee. This article explains the reasons for the High Court’s decision and the implications on your business’ obligation to pay personal leave.
What Was the Issue?
The FW Act establishes that for each year of service your employees dedicate to your business, they are entitled to 10 days of paid personal leave. It is typically understood that part-time employees accrue their entitlement on a pro-rated basis against full-time hours. 
However, this concept was challenged when two Cadbury workers questioned the adequacy of their leave entitlements in 2017. These employees worked an average of three 12-hour shifts every week, accruing 96 hours of personal leave per year under their enterprise agreement (EA).
The workers disputed whether these entitlements met the minimum ‘10 day’ requirement under the FW Act, as it only equated to leave for eight 12-hour shifts. They argued that they were entitled to 10 working days of leave, reflecting the number of hours they worked within a 24-hour period.
Mondelez International, the owners of Cadbury, argued that their employees were only entitled to 10 nominal days of leave. A ‘nominal day’ refers to the average hours worked per day.
As a result, Mondelez commenced proceedings in the Federal Court seeking to clarify the personal leave entitlements of its employees. 
The Federal Court’s Decision
The Federal Court agreed with the Cadbury workers that personal leave should be calculated on the basis of working days. A ‘working day’ for the purposes of the FW Act means the relevant portion of a 24 hour period that an employee is performing their job.

For example, in this case, the Cadbury employees worked three 12-hour shifts per week. This meant that their ‘working day’ was 12 hours. Consequently, their right to 10 days of personal leave per year under the FW required Mondelez to pay 120 hours of leave.

However, this decision received significant attention from employer groups and the media, because it was considered unfair to employers. 

For instance, under the Federal Court’s interpretation, a part-time employee who worked one day per week is entitled to the same amount of personal leave per year as an employee who works five days per week. This results in a large increase in costs to employers.

This disagreement led Mondelez and the Federal Government to appeal the Federal Court’s contentious decision to the High Court. 
The High Court’s Decision
The High Court overturned the Federal Court’s definition of a ‘working day’ and confirmed that employees are entitled to 10 ‘notional days’ of personal leave a year, based on their ordinary working hours. Therefore, the key outcome of this decision is that an employee’s 10 days of personal leave under the FW Act will accrue for every year of service, equivalent to an employee’s ordinary hours of work in a week over a two-week period. 
Part-time employees are still entitled to 10 days’ personal leave. However, these are ‘notional days’. This means that leave must be calculated on a pro-rata basis, depending on how many hours the part-time employee works in a fortnight.
The High Court held that the definition of a ‘working day’, as adopted by the Federal Court, was:
inconsistent with the stated objectives of the FW Act, being ‘fairness, flexibility, certainty and stability’; andthat it would create unfairness and uncertainty giving rise to absurd results, contrary to the purposes of the FW Act. 
How Does this Apply to Your Business in Practice?
The High Court’s decision provides clarity as to how you must calculate your employees’ personal leave entitlements.
The result is that your part-time employees will accrue personal leave on a pro rata basis against the full-time 10 days; under the FW Act, those 10 days are considered to be two standard five-day working weeks. 
On that basis, a full-time employee working five days a week accrues 76 hours of personal leave a year (10 x 7.6 hour days). So, a part-time employee working, for example, two days a week will accrue 30.4 hours of personal leave a year (4 x 7.6 hour days). This is because the part-time employee’s entitlement to “10 days” is calculated as 1/26th of their ordinary working hours in a year (15.2 hours per week x 52 weeks equals the ordinary working hours in the year, being 790.4 hours. If you then divide this by 26, it equals 30.4 hours of personal leave).
Key Takeaways
This decision is a welcomed outcome for many employers who would otherwise be required to recalculate personal leave accruals and usage for at least the past six years. In short:
a full-time employee is entitled to 10 days leave per year; andleave for your part-time employees will be pro-rated based on the hours worked. 
Thankfully, most payroll systems utilised in Australia already accrue and deduct leave according to the approach identified in the High Court decision. If you already changed your payroll and leave calculator systems to align with the Federal Court’s decision, you will now need to recalculate leave balances following the High Court decision. If you have any questions about the implications of this decision, contact LegalVisions’s employment lawyers on 1300 544 755 or fill out the form on this page.

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Leading a team can bring a lot of joy to managers. Seeing your team members grow in their roles, achieve goals and work collaboratively is both rewarding and motivating. However, from time to time, team members might show signs of underperformance. As a manager, it is important to intervene quickly to get your direct report back on track with performance management.
This article sets out the four key steps for performance management, including how to:
identify signs of underperformance;put a plan in place to improve performance; and take reasonable disciplinary action should your team member fail to turn things around.
1. Identify Signs of Underperformance
Identify the Performance Issue
The first step of managing underperformance is to identify the actual issue. Whether it is:
making mistakes;missing deadlines; or arriving late to work;
underperformance can take many forms. You might see the issue first hand, or someone else may bring it to your attention. Take some time to understand more about the issue before discussing it with your direct report. 

For example, if another manager tells you that your direct report produced a poorly written report for them, ask to see the report and have the other manager talk you through the issues. Determine how complex the task was, and how the final product differed to what you expected.

Provide Feedback
Once you have the information you need, arrange a time to speak with your direct report about the issue. When sharing your feedback:
start with the facts;explain the impact of their actions or behaviour; then articulate the way forward. 

Back to the example of the poorly written report, you should inform your direct report that their work was not up to scratch as it included a lot of spelling and grammatical errors. Then explain that the other manager had to spend two hours editing the report before it was able to be sent to the client. Finally, let your direct report know that they need to improve their attention to detail moving forward.

2. Implement a Performance Improvement Plan
Often providing effective feedback to your direct reports will get them back on track, but that is not always the case. Ongoing underperformance needs to be addressed, and quickly. This is where proper performance management can aid your efforts.
Informal Performance Improvement Plan
If your direct report continues to show signs of underperformance, you should consider implementing an informal performance improvement plan. This involves meeting with your direct report again to share your concerns, and explaining that you are going to put a plan in place to help them improve their performance. 
The plan should clearly outline in writing:
what the issues are;the actions that they need to take to improve their performance; and the timeframe for improvement. 
Involve your direct report in creating the plan, as this will make them feel more involved and supported in the process. You need to inform your direct report that if their performance does not improve within the required timeframe, you may have to move to a formal performance management process.
Formal Performance Improvement Plan
If your direct report does not improve their performance by the conclusion of their informal performance improvement plan, you will need to implement a formal performance improvement plan. The main difference between an informal and formal performance improvement plan is the consequences: 
informal performance improvement plans do not lead to disciplinary action if the employee does not improve their performance to the required level; while formal performance improvement plans may result in disciplinary action, such as an extension of the plan, issuing formal warnings, or ultimately, termination of employment.
Commencing a formal performance improvement plan requires a formal meeting. Forewarn your direct report about the meeting and what you intend to discuss. This will allow your direct report to come prepared, and allows them to identify a support person, should they wish to bring one.

If you have a Human Resources team in your business, it is a good idea to involve them in this meeting as a witness and notetaker.

In the meeting:
clearly state the issues, and provide examples;offer your direct report the opportunity to respond before launching into next steps;explain that you will be introducing a formal performance improvement plan to assist your direct report to meet the expectations of their role; and make clear that if their performance does not improve to the required level by the end of the allocated timeframe, you may take disciplinary action.
Like with the informal plan, work with your direct report to create their formal performance improvement plan. Their ‘buy in’ is important, and will increase the chances of them taking the plan seriously. Agree on how often you will meet to review their progress, and diarise the meetings accordingly. The more regular the meetings, the better.
3. Monitor Performance
Formal performance improvement plans are not ‘set and forget’ processes. It is important that you are:
diligent about providing regular feedback to your direct report; and ensure your review meetings take place as originally planned. 
As a manager, it is critical that you have evidence, such as calendar invites, meeting notes and the performance improvement plan itself. These show that you provided feedback and support to your direct report and gave them ample opportunity to improve their performance and meet the role’s expectations.
At the end of the performance improvement plan timeframe, arrange a formal meeting to review your direct report’s overall performance. If you have provided regular feedback to your direct report throughout the plan timeframe, there should be no surprises in this meeting.
Your direct report might improved their performance to the required level. In this case, this achievement and congratulate them on turning things around. If your direct report is showing signs of improvement, but there are still issues, or if they have shown little to no improvement, then disciplinary action may be appropriate.
4. Disciplinary Action
Disciplinary action should be commensurate with the level of underperformance your direct report is exhibiting. 

For example, if your direct report has shown signs of improvement, but is not quite at the level you need them to be, it could be deemed unreasonable to terminate their employment without giving them another opportunity to improve. 

In such circumstances, a fairer and less risky course of action would be to issue a written warning to your employee, and extend their performance improvement plan for a further period. On the other hand, if your direct report has had ample opportunity to improve through formal performance improvement plans and they are simply not making progress, terminating their employment on the basis of underperformance could be considered fair and reasonable.
Deciding to terminate a person’s employment should not be taken lightly. There is a lot of risk and employers can get themselves into trouble if you do not take the right steps to ensure a fair, just and reasonable process. 
It is worth seeking legal advice when considering terminating an employee to ensure:
you have covered all your bases; and are clear on what entitlements will be owed to your direct report if you dismiss them.
Key Takeaways
If an employee is underperforming, it is in everybody’s interest to see this turnaround. This can be achieved with diligent performance management. Start by identifying the performance issues and communicating these, along with examples, to the employee. Then put in place a performance improvement plan and monitor the direct report’s progress. If ultimately performance does not improve, you will need to consider terminating your direct report’s employment. It is worth seeking legal advice before doing so. If you need assistance with employment-related issues, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

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In-house counsel Amy Spira does not believe in getting too comfortable in a job. In fact, she firmly believes that stepping outside your comfort zone makes work life far more rewarding, and opens the door to new opportunities. 
Spira is part of the Domain in-house legal team. She joined the company a year after it was listed, bringing a desire to become integral to the business and a willingness to become uncomfortable while doing so. Eighteen months later, her efforts were recognised when she was awarded Corporate Lawyer of the Year by the Association of Corporate Counsel Australia. 
Here, Spira provides insights into her award-winning projects, the five ways she believes that in-house counsel can add value to their business, and her lessons learned.

Exploring New Legal Horizons
Prior to the COVID pandemic, Spira was set up to work from home but opted to be present in the office during business hours. She was keen to build a relationship with the business, especially while the legal team was establishing itself. 
The Domain team was champing at the metaphorical bit to explore new ways of leveraging its technology and data and needed legal input to guide their projects. 

“It was a really exciting time,” Spira said. “It was a gratifying experience for in-house counsel to be a sounding board, especially in the technology space, where ideas are coming to the surface for the first time, not only in the business but in the industry. 
“You’ve got privacy and data questions bubbling to the surface with no established answers. So you’re going back to first principles as a lawyer and finding ways the business can achieve what it’s looking for in a framework that is evolving quickly,” she explained.
Early Legal Input Means Faster to Market
Wanting to help the business launch products to market more quickly, Spira and her team introduced a legal drop-in clinic for Hack Teams during Domain Innovation Days (technology hackathons). This way, she and her colleagues could address such issues as privacy and intellectual property constraints and business structuring and monetisation strategies. In turn, this resulted in more viable pitches to management, proving the benefit of involving legal counsel early in product ideation.
The in-house team soon found themselves flooded with requests for help. Spira recognised the need for process improvement, to free up the legal team to focus on high-risk, high-value work. 
“There are varying tasks that hit an in-house counsel’s desk,” Spira said. “Some are complex questions, requiring bespoke solutions. Others are run of the mill questions requiring a one-size-fits-all solution.” 
Spira’s team identified tasks that could be simplified by:
training the business;making a resource available; orproviding a checklist to the business so the matter can evolve further before coming to the legal team.
Spira then worked with her team and the business to develop a series of checklists, cheat sheets, precedents and practice notes for the business. The team also uses a centralised legal email inbox. 
“Simple and incredibly cost-effective solutions like these make a big difference to how we funnel the instructions into our team and then respond to those questions in a timely fashion,” Spira said. “We could feel the impact on our team’s productivity and client satisfaction.”
Embracing the Discomfort of New Experiences
In addition to product development, Domain has a healthy acquisition and disposal program designed to support the business’ strategic objectives. As the legal team’s M&A specialist, Spira had a busy 12 months completing seven acquisitions and disposals, including acquiring commercialview.com.au and the Real Time Agent product suite. 
She felt fortunate to be working with the executive and strategy teams to support the business in this way and regarded it as a period of personal growth. 
“It cemented for me something intuitive: that the feeling of discomfort and disorientation you experience when you take on something new, different and hard is a preamble to growth and great achievement,” Spira said. 
“I learnt to adopt a ‘say yes’ policy to things that would stretch me and to embrace the discomfort that comes from not knowing exactly how you’re going to solve the problem.” 
Spira believes this will serve her well in her career moving forward, because the more she challenges herself, the more she feels fulfilled.
5 Ways to Add Value as In-House Counsel
Spira believes the best way in-house counsel can add value to their business is by:
being deeply aligned with what the business is trying to achieve; and finding creative solutions to impediments to those goals. 
“We bring our knowledge of the business along with our knowledge and understanding of the law,” she said.
Spira identifies five ways that in-house counsel can add value:
Seek to understand the rationale behind any instruction. Spira believes it is not enough to ‘just’ address liability and risk allocation; she encourages in-house counsel to understand why the business is seeking to enter into the arrangement and how it meets the business’ strategic objectives. Adopt a solutions focus. Don’t just focus on providing the right legal advice; find ways to help the business achieve its end goal. This includes finding creative alternatives when you run into a legal impediment. While in-house counsel cannot always say ‘yes’ to what the business wants, Spira believes a good legal counsel will find alternative options and present them to the business for consideration.Learn to speak the business’ language. It pays to learn the terminology the business and finance teams are using and to know your way around a balance sheet and P&L. This way when you give advice, you are more mindful of the context in which it will be received.Identify ways to extract additional value from an opportunity. In addition to your legal expertise, bring your ideas to the table for the business to consider. The business can workshop them and decide if there is something worth pursuing there, and will appreciate your added value.Anticipate the business’s future needs. This comes once you’re well embedded into the business. “You can see into the future and predict what’s coming next and explore how it will look in a legal framework,” Spira said. 
Amy Spira’s 3 Lessons Learned
With her ‘can do’ attitude and positive spirit, Spira’s career is on a positive trajectory. Having worked in private practice and in-house legal roles across a couple of industries, she is well placed to share the lessons she has learned to date. Here are her top three:
Being passionate about your job is a choice that you make. You can approach standard tasks (such as contract review) from the perspective of drudgery and boredom, or you can look at it from the perspective of deep interest and curiosity. Find out the business’ strategic reasoning behind each task and be motivated by your role in pursuing the business’ objectives.Invest in relationships. Develop mutual respect for your colleagues’ expertise. This way, if you encounter friction between what the business is seeking to achieve and what you believe is the appropriate legal outcome, you can leverage the relationship to work together to find an effective solution. Seek out opportunities to move outside your comfort zone and expand your horizons. “Feeling discomfort is a prelude to bigger and better things,” Spira said. “Embracing that feeling makes work and life so much more valuable and rewarding.”

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If you are a homeowner who has recently engaged, or is looking to engage, a builder or design consultant, you may benefit from new protective laws in New South Wales (NSW). The law was in response to recent spikes in residential building defects. These include the Mascot Towers and Sydney Olympic Park Opal Tower developments, where construction issues required the evacuation of residents. This article explains a new statutory duty of care that applies to the building industry, and how it will benefit homeowners.
What is a Duty of Care?
A duty of care, at its simplest, is an obligation to take reasonable care towards others. A statutory duty of care is one that arises at law (from legislation passed by the NSW Parliament).
What is the New Duty of Care?
On 11 June 2020, the new statutory duty of care came into effect. The duty of care belongs to the person who carries out “construction work”. 
The new duty of care requires a person who carries out construction work to exercise reasonable care to avoid economic loss caused by defects:

in or related to a building for which the work is done; and
arising from the construction work.

Who Benefits From the Duty of Care?
The duty of care benefits owners of properties (and importantly, subsequent owners of properties). This means that if you have purchased a new or newly renovated house or apartment, you may be able to rely on the duty of care. This is significant because if you are a subsequent owner, you would not usually have a contract with the original building practitioner that you could rely on.
If you are an apartment owner, the owners corporation for your apartment building will also benefit from the duty of care. This is important because, in apartment complexes, there may be defects in:

apartments owned by individual homeowners; and 
defects in common property. 

For example, if there are waterproofing issues in a building, they may affect individual apartment balconies, and also shared spaces like a parking garage.

Who Owes the Duty of Care? 
The duty of care is relatively expansive in terms of who owes the duty. 

For example, the definition of “construction work” is broad and extends to:

residential building work (for example, a new house or apartment, or renovations or alterations to a house or apartment); 
design preparation (for example, designs prepared by an architect or interior designer); 
the manufacture or supply of a building product used for building work (for example, a supplier of bricks or Colorbond roofing used to build a home); and
supervising, coordinating, project managing or otherwise having substantial control over any of the above categories (for example, a project manager).

The duty of care will apply even where there is no contract for the relevant construction work. 
Please note also, NSW has specific requirements for residential building contracts, including for them to be:

in writing;
signed by both parties; and 
to include various mandatory clauses (including a warning about how the contract sum can increase). 

What Does This Mean For Me?
The new duty of care is an additional check and balance on the works performed by builders and consultants you may engage in building or renovating your home. 
If you engage a builder or design consultant who breaches this duty of care, you may be able to claim damages against them. This usually involves commencing Court proceedings. However, if you try to resolve a dispute before going to Court (for example, through mediation), it may still be useful to know the potential for you to claim damages.
The duty of care applies retrospectively, which means you may be able to rely on it if you have had building works carried out within the 10 years before 11 June 2020.
Key Takeaways

Anyone who carries out residential construction work needs to take reasonable care to avoid economic loss caused by defects.
If there is a breach of this duty of care, you as a homeowner may be able to claim damages.
The duty of care could apply to construction work carried out in the 10 years prior to 11 June 2020.

If you would like any assistance in understanding the duty of care, or if you need help reviewing a residential building contract, contact LegalVision’s construction lawyers on 1300 544 755 or fill out the form on this page.

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This article is intended to be read alongside LegalVision’s Hourly Rate Calculator, which you can download here for free.
Every business owner asks themselves this question at some point: “Is this worth my time?”
To answer that question, you need to ask this one first: “How much is my time worth?”
For consultants – accountants, lawyers, advisors and coaches – this question might be central to your pricing strategy. Or, put another way: “How much should I charge for my time?”
To help answer this question, we have created an Hourly Rate Calculator. 
But it’s not enough to have the numbers. You need the tips, tricks and principles to help you implement your hourly rate pricing strategy.
Price-taker or Price-maker?
You need to decide if a business like yours (in your industry, at your stage of growth) is a price-taker or a price-maker.
A price-taker charges roughly the same price as their competitors. This is common for new businesses; it’s hard to command a higher price until you’ve built the reputation to justify it. 
For price-takers, your hourly rate is about the same as your competitors’ rates. As a result, in order to earn an attractive gross profit margin (the ratio of your hourly rate to the average cost of providing an hour of work), you need to keep your costs low. 
Typically, price-takers should accept lower gross profit margins in the short term, rather than cutting costs or increasing rates. As your service improves and your reputation builds, you can increase your prices and your margins.
A price-maker, on the other hand, can charge a price that is significantly different to their competitors. Price-makers provide a highly differentiated service, or have an exceptional reputation, that allows them to charge more than their peers.
Price-makers are in a position to determine their own hourly rate, while price-takers must align with their competitors’ rates.
This article concerns price-makers – businesses that have a differentiated service and can vary their pricing.
Here are three tips you should follow when putting a price on your time.
1. Leave Your Ego At The Door
Pricing your time is a psychological minefield. Questions like: “How much is my time worth?” can be misconstrued to mean: “How much am I worth as a person / business owner / advisor?”
An emotional approach to pricing can lead to overcharging or undercharging your clients. 
Try to leave your ego out of the equation. Pricing is a delicate art, even without the intrusion of feelings of self worth. That’s why our Hourly Rate Calculator uses a ‘cost plus margin’ methodology to calculate your hourly rate. You sum the costs of providing an hour of work, enter a target gross profit margin and this determines your rate.
A mathematical approach removes the temptation to charge what you feel justifies your pedigree and guarantees a gross profit for each hour of advice you provide.
2. Stand By Your Rate
When a potential client balks at your rate (and one or two inevitably will), it’s tempting to offer a discount.
However, once you’ve calculated your hourly rate, you should avoid discounting your time.
The cost to provide one hour of advice is always the same – it’s one hour of your time. So if you discount your hourly rate, you’re directly eating into your gross profit margin.
Discounting also sends a signal that the service you’re providing is not worth as much as you initially advertised. 
One exception is for introductory offers or bulk discounts. Personal trainers will often provide the first session for free. This is a recognised and potentially valuable sales tactic. Trainers will also sell bundles of sessions – say, 10x one-hour sessions – and offer a bulk discount. This allows trainers to increase their utilisation (another important metric for service-based businesses). These tactics do not devalue the service, in fact, they promote its use.
3. Make Sure You Get Paid
Businesses that charge clients by the hour typically get paid in arrears.
It’s important to have a robust debt collection process, so you are actually paid for your services, on time.
Getting paid late increases your working capital requirement – the amount of money you need to cover your expenses (like salaries) while you’re waiting to get paid by your clients. Working capital is usually borrowed from a bank at the cost of interest payments.
Check out LegalVision’s guide to getting paid here. 
An airtight Client Agreement will also help you define the scope of your services and get paid fairly. 
Key Takeaways
Businesses that provide differentiated services have some power to determine the price they charge for their time. Choosing an hourly rate that reflects your input costs and target gross profit margin is a good place to start. Try not to discount your services; but revisit your pricing from time to time. Finally, take the time to ensure you receive payment for your hard work.
If you need advice on how to set up your services business, our commercial lawyers can help. Call 1300 544 755 or complete the form on this page.

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If you are involved in a commercial dispute, it is important to explore every option to resolve it before going to court. Negotiating a settlement agreement will save you time, stress and avoid the often excessive legal costs involved in going to court. Whether you negotiate with the other party yourself, use a lawyer or arrange settlement during mediation, reaching a commercial settlement is the quickest and most effective way to resolve a dispute. It is important to keep an open mind and be prepared to compromise to obtain a result that will allow you to put the dispute aside and get back to running your business. This article will outline the key steps involved in settlement negotiations.
What is a Commercial Settlement?
A commercial settlement is an agreement that parties reach which puts an end to a commercial dispute. It may involve one party paying the other an agreed sum of money, or doing certain things to resolve the dispute. You can reach a settlement after negotiations that may take place:
in person; over the phone; or through written correspondence.
Once reaching an agreement, you should formalise the terms of that agreement in a deed of settlement. This deed is binding on both parties. This deed usually includes an agreement that the parties will take no further legal action in relation to the matter.
While it is best to start settlement negotiations before court proceedings, they can take place at any time, including:
after filing court documents; orany time before the start of a trial.
What Are the Benefits of a Settlement?
The main benefit of negotiating a commercial settlement is that it resolves the dispute without having to go to court. Court proceedings are expensive and time-consuming, taking up to a year or more to reach a final trial. 
If you are not successful at the hearing, the court may order you to pay the other side’s legal costs. A settlement will bring a quick and final end to the legal dispute and allow you to get back to your business. While you may have to compromise on a result, such as accepting less money than you believe you are owed, you will save thousands of dollars on legal costs and the stress and uncertainty of legal proceedings.
What Does ‘Without Prejudice’ Mean?
Lawyers and parties involved in negotiating a dispute will often add ‘Without Prejudice’ to the top of a letter or email. Similarly, a mediator running a mediation, or lawyers having discussions with the other party, may advise that all discussions relating to the dispute are on a ‘without prejudice’ basis. But what does that really mean?
Communications or discussions marked ‘without prejudice’ are for the purposes of settlement only. Neither party can use them in later legal proceedings if the matter ends up in court. This allows parties to speak freely and explore a wide range of settlement options, without fear that a settlement offer will be used against them in court.

For example, you might make a settlement offer to accept half the amount of a debt you claim is owed. If the offer is marked ‘without prejudice’, the other side can not later use this as evidence in court that you were prepared to accept the lesser amount.

Tips to Settle Your Dispute
Know Your Legal Position
You should have a clear idea on your legal position in the dispute before starting settlement negotiations. Seek legal advice if you need further understanding of your legal rights. This will affect your ability to negotiate effectively and know when to use any leverage you have over the other side, such as where the other party clearly owes you money.
Remove Emotion
A commercial settlement is not about winning or losing. Rather, it is about compromising and reaching an agreement. This is easier to do when you remove the emotion and personal feelings you may have towards the other party. Focus on the best commercial outcome for your business.
Use an Expert
It can help to use a third party in settlement negotiations. A lawyer can advise on your legal position and use negotiating strategies that help obtain a resolution faster. Using a lawyer to communicate with the other side can help separate you from the emotion or any personal issues with the other party.
An independent mediator can also help parties focus on the real issues in dispute. Mediators will have the skills and experience to explore a range of solutions you may not have considered.
Be Aware of the Bottom Line
Keep an eye on the commercial value of settling a dispute quickly and saving the high costs of lengthy court proceedings. What you may lose in a less-than-perfect settlement should be balanced against the:
stress;uncertainty; andhigh costs of litigation.
What is a Deed of Settlement?
If you reach an agreement that both parties are happy with, it is important to formally document the terms of that agreement. This is called a deed of settlement or deed of settlement and release.
The deed will set out the obligations each party has to perform in the agreement, such as: 
payment of money; orreturn of goods.
The deed is also binding on the parties, which means that if they ‘default’ or fail to perform their obligations, the other party can take legal action against them. A deed will also usually include ‘releases’ that mean each party agrees they will not take any legal action against the other party in relation to the dispute. A deed of settlement, therefore, provides you with the security that you have resolved the matter. It also provides further security that you can rely on the deed if the other party does not meet its obligations.
Key Terms in a Deed of Settlement
A deed of settlement should include the following essential terms:
date – you must clearly date the deed when all parties have signed it;parties – the correct legal entities should be included, whether individuals, companies or other associations. You can also add extra parties if appropriate, such as individual guarantors;key obligations – the deed should clearly spell out what each party has to do to comply with the deed, such as paying a sum of money by a certain date;default terms – this will set out what happens if one party defaults on their obligations. For example, the deed can include that if a party fails to pay a required sum of money to the other party, then the original debt claimed is payable and the deed can be relied on in further legal proceedings; andmutual releases – here, both parties release each other from any other legal claims relating to the dispute.
Key Takeaways
If you are involved in a commercial dispute, undertaking settlement negotiations may be the most efficient way to resolve the dispute. When undertaking these negotiations, make sure to have a clear understanding of your legal position, and use third-party experts when necessary. Further, once you come to an agreement with the other party, make sure to sign a properly drafted deed of settlement. If you have any questions about dealing with your commercial dispute, contact LegalVision’s dispute resolution lawyers on 1300 544 755 or fill out the form on this page. 

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Not all courts are the same. There is a wide variety of courts and tribunals in Australia, and your experience of ‘going to court’ will depend on which court or tribunal you are in. If you are involved in a commercial dispute that is likely to end up in court, you must understand the difference between each court and which court should hear your dispute. This article will explain the structure of the court system in Australia and how to work out which court is appropriate for your commercial dispute.
Which Court Should I Use?
Australia’s court system is divided between state and federal courts. All courts and tribunals have the power to hear only certain types of cases. 
In most cases, the type of dispute and the amount of any money claimed will determine which court will hear the dispute. If your commercial dispute involves a breach of certain legislation, that legislation will often dictate which court can hear the dispute. 

For example, in NSW, retail leasing disputes are heard by the NSW Civil and Administrative Tribunal (NCAT), while breaches of the Competition and Consumer Act 2010 are generally heard in the Federal Court.

In some disputes, you may have a choice between courts to hear your commercial dispute. 

For example, in NSW, the District Court has jurisdiction to hear claims valued between $100,000 and $750,000. In comparison, the Supreme Court has unlimited jurisdiction in the value of claims.

If your dispute involves a claim of $500,000, you can choose between the District or Supreme courts to issue proceedings. If you do have a choice of courts or tribunals, you should obtain legal advice on the pros and cons of all options for your particular dispute. In general, the higher courts hear more complex, higher-value claims, but usually have more filing fees and formal procedures, which can add to legal costs.
Some courts are ‘no cost’ jurisdictions, which mean they cannot order one party to pay the other party’s costs at the end of proceedings. Other courts, such as some local courts, have ‘cost caps’ which limit the amount of costs that the court can order.
Types of Courts and Tribunals 
All courts are independent of the other arms of government, in accordance with the Australian Constitution. The High Court is the only court created by the Constitution. Various federal or state parliaments created the other courts.
The High Court
As its name suggests, the High Court is the highest court in Australia. It can deal with: 
all matters to do with the Constitution; cases involving international law; and all appeals which come from the lower courts.
The High Court can only hear appeals where the matters involve sufficient public interest or where the lower courts have interpreted the law differently. The High Court has a chief justice and six justices. It sits mostly in Canberra, with regular sittings in other states. 
Until 1986, Australians could appeal beyond the High Court, to the United Kingdom’s Privy Council. However, the Australia Acts 1986 (Cth) ended that option.
The Federal Courts
Along with the High Court, there are three other Federal courts in Australia. A chief justice heads all the courts. These include the:
Federal Court of Australia: It hears all civil matters arising under federal laws and some criminal cases. The civil matters include bankruptcy, corporations, industrial relations, native title, taxation and consumer law, and appeals from the Federal Circuit Court (except for family law matters);Family Court of Australia: This specialist court in family law deals with family disputes and hears appeals from family law matters of the Federal Circuit Court; andFederal Circuit Court of Australia: Formerly the Federal Magistrates Court, this court hears less complex disputes in matters including family law, child support, administrative law, admiralty law, bankruptcy, copyright, human rights, industrial law, migration, privacy and consumer law.
The State Courts
The hierarchy of courts in each state and territory varies, but all have a generally similar structure. Here, there is a higher court headed by a chief justice and intermediate and lower courts below that. 

For example, In New South Wales, there is:

the Local Court;
then the District Court; and
then the Supreme Court of NSW, as the superior court.

Each court hears both civil and criminal matters. 

On the other hand, the ACT has no intermediate court. The supreme courts in each state and territory will conduct jury trials for serious major offences such as murder, and also hear appeals from lower courts. Most states and territories also have a: 
Coroner’s Court, dealing with unexplained deaths and fires; and Children’s Court, for matters involving defendants aged under 18 at the time of offending.
Tribunals and Commissions
There are also tribunals and commissions with lower-level decision-making bodies set up through State and Commonwealth legislation. Tribunals have the power to make decisions that are binding. This means the successful party can enforce them. 
Tribunals are less formal than most courts and have more streamlined procedures, with fewer requirements for evidence and shorter time-frames between issuing proceedings and final hearing. They, therefore, offer a cheaper and quicker way to resolve a dispute than other courts. 
Some tribunals are ‘no-cost’ jurisdictions, meaning no costs orders can be awarded. Further, many discourage or limit the use of legal representatives and are designed for parties to represent themselves.
Key Takeaways
If you need to resolve your commercial dispute through a court or tribunal, it is important to understand:
how the Australian court system works;how the different levels of courts operate and intersect; and what types of matters are heard by each court.
If you need advice on resolving a commercial dispute, contact LegalVision’s dispute resolution lawyers on 1300 544 755 or fill out the form on this page.

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Going to court is expensive. Along with paying your own lawyer, if you are involved in court proceedings, you will also likely need to pay a number of other costs. If you lose at the hearing, you might be ordered to pay the other side’s legal costs as well as your own. It is important to understand what going to court will really cost so you can decide whether it is worth pursuing your matter or whether an out-of-court settlement would be a better option. This article will explain:
the many types of costs involved in litigation;what costs orders the court can make; andhow you can recover all costs owed to you.
What Do Your Legal Costs Cover?
Your legal costs include a range of fees and costs involved in going to court, including fees to:
your solicitor;expert witnesses;your barrister (also called counsel);the court including filing fees and hearing fees; andextra costs, such as transcript fees or document management software.
Generally, you will engage your lawyer, or firm of lawyers, to act on your behalf. Your lawyer will then incur the other costs involved in your legal matter, also called disbursements, and will charge you for these costs.

For example, your lawyer will engage the barrister or an expert to act for you and will be responsible for their costs. Your lawyer will add those costs to the invoices they send to you. 

When the court hearing ends, the judge will make orders regarding costs. Usually, the unsuccessful party will be ordered to pay the other party’s costs, but this is not always the case. The judge may find both parties should share the costs in some way, depending on the result of the hearing.
You should also remember that if you lose a court hearing, you will most likely have to pay part of the other party’s costs, as well as your own legal costs. 
How Lawyers Charge
The most common way that lawyers and law firms charge, especially for work that involves court proceedings, is by time-based billing. That is, you will pay your lawyer for all of the time they spend on your matter, based on their hourly rate. Depending on the firm’s size and the work involved in your case, you may be working with just one lawyer or a team of lawyers. This includes:
senior lawyers; junior lawyers;administrative staff; andparalegals. 
Lawyers will often ask you to pay money upfront into the firm’s trust account. This will cover the cost of the legal proceedings. They will often then ask you to pay top-ups to that amount as the court proceedings continue. Most law firms will bill you each month, and they should provide you with a detailed breakdown of every cost charged in the bill.
Lawyers must follow strict rules about the information they provide clients when they start acting for them. They must disclose their rates and terms of payment and must provide clients with an estimate of what they believe the court proceeding or legal work will cost. If the lawyer becomes aware that the forecast needs to increase, they must let you know as soon as possible. They must also provide you with a revised estimate for the cost of the proceedings.
Costs Orders by the Court
It is a common mistaken belief that parties will have all of their legal costs paid by the other side if they are successful at a hearing. This is not correct, and a court will never order the other side to pay 100% of a party’s costs. In some courts, there is a limit or cap on the costs that a court can order to pay.

For example, some lower courts do not allow costs orders for small claims matters involving amounts less than $20,000. Other courts or tribunals are ‘no cost’ jurisdictions, meaning no costs will be ordered regardless of who wins.

Courts can make several types of costs orders and when determining costs will consider actions either party took before the court proceedings began, such as whether a party made reasonable settlement offers. You should also be aware that costs orders made by the court only cover the costs that arise after you or the other party first file the court application and begin court proceedings. Any legal costs incurred before this date are not included in a court’s cost order. This means that you may not be able to recover costs for: 
initial legal correspondence; ormeetings with the other party in a dispute.
There are two main types of cost orders.
1. Party Costs
Party costs are the most common type of cost ordered by a court at the end of a court hearing. Usually, the unsuccessful party will be ordered to pay the other party’s costs ‘as agreed or assessed’. This means the parties can either:
reach an agreement on the amount to be paid; oruse an independent assessment process to work out what each party’s ‘reasonable’ costs should be.
Typically, this works out to be about 60-80% of a party’s actual legal costs. 
2. Indemnity Costs
A court may award costs on an ‘indemnity’ basis, which includes almost all of a party’s legal costs. The court will only award costs on an indemnity basis if there is a reason to do so.

For example, the successful party may argue that they should receive indemnity costs because the other party:

had no chance of winning and should never have brought the case;
displayed unreasonable behaviour; or
refused to accept a reasonable settlement offer before the hearing started. 

What is Cost Assessment?
If a party does not agree that the other party’s legal costs are reasonable, they can apply to have those costs assessed by an independent assessor.

For example, if the court orders the other side to pay your costs, the other side may request that your costs are ‘assessed’ to confirm the total is reasonable. The cost assessor will consider a range of factors, such as whether the:

work was carried out in a reasonable manner; and
lawyer met all disclosure and other professional requirements.

Key Takeaways
The cost of litigation is complex and varied, and there are no guarantees that you will get your costs back if you are successful at a hearing. There is always the risk that you may need to pay the other side’s costs as well as your own. It is essential to understand the types of legal costs you will incur in going to court and how courts make orders about what costs a party should pay after a hearing, so you can make the right decisions at every stage of your commercial dispute. If you have any questions about court costs or need assistance with a dispute, contact LegalVision’s litigation lawyers on 1300 544 755 or fill out the form on this page.

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As a small business owner, building a team is an exciting and challenging time. However, it is important to be aware of employment laws to ensure you provide your workers with the entitlements they are afforded under the law. This article outlines some important employment law considerations to help build your team and, ultimately, your business.
Employees vs Contractors
It is crucial to appropriately classify your workers as either employees or contractors to ensure you afford your workers the rights they are entitled to. An incorrect classification may subject you to an order from the Fair Work Commission or Federal Court. Here, you may have to pay fines, superannuation and other entitlements on top of what you may have already paid to your workers.
There are a number of factors to consider when determining what category your workers fall under, and some of these factors include:

control over work;
hours of work;
the expectation of ongoing work;
equipment;
remuneration;
superannuation;
leave;
income tax.

If you are unsure whether your workers should be employees or contractors, a lawyer can provide you with definitive results and advise you on your workers’ entitlements.
Contractor and Employment Agreements
Whether you are engaging workers as employees or independent contractors, you should have an appropriate agreement in place. Agreements between you and your workers not only define your relationship with them, but shape how your workers fit within your business. Having written agreements in place legally protects you as an employer as it provides you with a safety net if:

you need to discuss rights, duties, promises and agreements with your workers; or
a dispute arises with your worker.

Contractor Agreement
A contractor agreement outlines how you will engage a contractor and the key terms of your arrangement with them. Some key factors that the agreement should include:

details of the services of the contractor. For example, such details should include timeframes, deliverables and how you will pay the contractor;
the period of engagement. For example, you should consider whether you will engage the contractor on a project basis or ongoing basis; and
obligations of the contractors. For example, you may require your contractor to have a specific licence or qualification.

Employment Agreement
An employment agreement clearly sets out the relationship and rights between your business and your workers as your employees. Having a written agreement in place shows your commitment to your workers while also minimising the risk of a future dispute. It is important to outline the key factors of the engagement within the employment agreement such as:

payment terms;
working hours;
leave entitlements; and
termination.

National Employment Standards 
The National Employment Standards (NES) are 10 minimum employment entitlements that you must provide to all of your employees, although some standards differ slightly for casual employees. The NES addresses the following entitlements:

maximum weekly hours that you can require your workers to work. For example, the maximum number of hours for full-time workers is 38 hours;
requests for flexible working arrangements. Certain employees have a right to request changes to their working arrangement. For example, this may include a request to work from home;
parental leave and related entitlements. If your employees have completed at least 12 months of continuous service with you, they may take up to 12 months unpaid parental leave and can ask for an additional 12 months;
annual leave. Your employees are entitled to accrue a set number of weeks of leave per year. For example, full-time employees accrue four weeks per year of annual leave;
personal carer’s leave and compassionate leave. Employees are entitled to 10 days per year of personal leave;
community service leave. Your employees have a right to take leave for community-related work such as volunteer fire-fighting or jury duty;
long service leave. Employees who have been with you for a long period of time accrue long service leave;
public holidays. This addresses employees’ rights in relation to taking a paid day off on public holidays;
notice of termination and redundancy pay. When making employees redundant, you must provide them with up to five weeks notice and up to 16 weeks redundancy pay, based on their length of service; and
Fair Work Information Statement. As an employer, you must provide all new employees with this statement which contains information about employee entitlements.

Employee Handbook and Workplace Policies
An employee handbook plays a huge part in ensuring your business has the right framework in place to support your workers and business in succeeding. An employee handbook sets out the policies and procedures of your business, culture and expectations of your workers’ behaviour and work. While an employment agreement and contractor agreement governs the legal relationship with your workers, the handbook applies to all employees and contractors to an extent. Your employee handbook may include the following policies:

workplace health and safety;
IT;
anti-discrimination, harassment and bullying;
code of conduct and general office;
pay and leave;
grievances; and
disciplinary.

Key Takeaways
When building your team and engaging workers, it is crucial to be aware of and to adhere to the relevant employment laws. To ensure the success of your business and adhere to employment laws, it is crucial to:

appropriately classify your workers as either employees or contractors;
formalise your arrangement with your workers in a contractor or employment agreement;
provide your employees with the required entitlements under the NES; and
have set policies and procedures in place.

If you are looking at engaging workers and need employment law assistance, fill out the form on this page or get in touch with LegalVision’s employment lawyers on 1300 544 755.

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