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What You Need to Know About Forming a Company

There comes a time in the life of any business where a decision needs to be made whether continuing as a sole trader or as a partnership should give way to incorporation – that is, forming a company to continue the business.
Whilst operating as a sole trader or partnership brings with it freedom and flexibility, those business structures can also expose the owners to substantial personal risk. The losses of the business will be individual owner’s losses, potentially putting things such as the family home and car at risk.
Through incorporation, owners can separate the risks inherent in running a business from their personal assets. This is because companies are recognised as having a separate legal ‘personality’. A company can do such things as form contracts, buy, sell and lease property, and sue and be sued in its own right separately to the person or persons who founded the company or hold shares.
There are two main forms of companies in Australia:

private companies; and
public companies which are further categorised as:

companies “limited by guarantee” (often used by charities or enterprises operating for a public benefit); and
public companies listed on the Australian Stock Exchange.

The most common option for small to medium enterprises (SMEs) is to form a private, limited liability company. The term “proprietary” and the letters “Pty Ltd” following the company’s name are there to let people know that they are dealing with a private company.
A company is made up of members (the shareholders) who have been issued and paid for shares in the company. Shares are often issued for nominal value, hence the term “twodollar company”. Shareholders’ legal responsibility for any debts incurred by, or liabilities of, the company is limited only to the amount they paid for the shares. That is the basis for the term “limited” (or “Ltd”) in the company’s name.
A company structure not only separates shareholders’ personal risk from business risk, but also allows the business to take advantage of the corporate tax rate – (companies with less than $50 million a year in revenue are taxed at a rate of 27.5%, while those turning over $50 million or more pay 30%) – and to raise money for growing the business by issuing or transferring shares.
However, forming a company also brings with it significant legal compliance, regulatory and tax considerations. Australian companies are governed by the Corporations Act 2001. As is commonly the case, any decision to restructure a business comes with certain costs – there are capital gains tax and stamp duty implications for transferring assets from one business to another which are outlined below.
Other benefits and obligations of incorporation
Once a company is formed, it takes on a life of its own and, legally, stands on its own two feet. Goods and property are purchased and owned in the company’s name. Likewise, intangible assets such as intellectual property – logos or patents, for instance – can be owned by the company itself.
When assets change hands, taxes or fees relating to the change in ownership are borne by the individuals who make up a partnership or other unincorporated business. However, that is not the case when a company is “sold” because the assets owned by the company remain the property of the company even if the shares in the company have been transferred to a new owner.
Consider, as an example, the ownership of a courier or transport business. For a sole trader or partnership, any change in ownership which brings in a new partner (or sees one retire) will require a new ABN, transfer of vehicle registrations and assignments of leases and finance contracts. State stamp duty and Capital Gains Tax will also likely apply. On the other hand, a company operating a similar business can change the shareholdings of members or even hand effective control to a new shareholder without anyone in the “outside world” being aware of any change and for whom, as far as they are concerned, business with the courier company continues as usual.
Incorporation provides continuity of the business operation. If a senior executive or shareholder leaves the business, the company continues to trade uninterrupted because its equity (its shares) can be transferred easily to a new member. This ensures certainty for investors, creditors and customers.
Corporate Governance
The business or the company is managed and “directed” by the directors. These are often, but not necessarily, elected from the shareholders. The directors are the driving mind of the company and with that comes a burden of responsibility.
A common misconception is that the director who holds the most shares in the company gets the majority vote at, and can control, the board table. That is not the case and voting on a resolution of directors is one vote for each director. A majority shareholder can potentially control the company by controlling who is appointed as a director.
However, once a director is appointed, it is important that they understand that they have common law and statutory fiduciary duties which, if breached, can expose them to personal liability or prosecution.
The key duties of company directors and other office-holders are, in summary:

to always act in good faith in the best interests of the company;
to act for a proper purpose; and
to exercise reasonable care, skill and diligence in carrying out their role.

This includes:

making sure the company can pay its debts on time and that it does not trade while insolvent;
avoiding conflicts between personal and company interests; and
refraining from taking advantage of their position or information they have gained in the role for personal advantage.

Breaching these duties can result in directors being personally liable and subject to damages as well as other penalties.
What are the downsides of forming a company?
The costs of setting up a company are greater than starting a business as a sole trader or partnership.
Incorporation involves registering for an Australian Company Number (ACN) through the
Australian Securities and Investment Commission (ASIC), registering a business name, opening a separate company bank account, and possibly hiring an accountant or financial adviser to ensure compliance with tax and other statutory obligations. The company must also have a registered office and a principal place of business.
A company must lodge its own tax returns and keep financial records for a minimum of seven years under the Corporations Act 2001.
Key issues around taxation
Taxation is a complex area to consider in the process of incorporating and will be ongoing once incorporated. The services of a qualified adviser and/or solicitor should be sought to ensure compliance with the ATO requirements for corporate tax, GST, employees’ PAYG tax and superannuation.
Small businesses – those with less than $10 million aggregated turnover – may also be able to claim income tax, GST, pay-as-you-go (PAYG) and fringe benefits tax (FBT) tax concessions.
The process of restructuring a business into a company will often trigger a capital gains tax event. If certain conditions are satisfied, relief is available to rollover or disregard the capital gain or loss under the CGT rollover provisions in the Tax Acts.
Rollovers are available by election and allow, for example, eligible small businesses to defer any potential tax liability when transferring assets, trading stock, revenue assets and depreciating assets. The rules are complex and you should seek advice from your accountant and lawyers at an early stage.
Stamp duty is payable on the transfer of business assets and collected by the state in which the business operates. In Queensland, transfer duty concessions are available on the transfer or acquisition of primary production business property from a family member with the intention of running that business. These concessions are not available to companies and, whilst a decision to incorporate part of a business may make sense for asset protection or tax management, the stamp duty concession under part 10 of the Duties Act 2001 may well be lost. In a farming operation, that cost could be in the hundreds of thousands of dollars.
The importance of good advice
In any business decision, there is a lot to consider and even more so when restructuring into an incorporated entity. The advantages such as risk management, taxation and the flexibility to expand the operation must be weighed against the extra burdens of compliance, governance, start-up costs and other parts of the tax laws governing companies.
At South Geldard Lawyers we offer a highly personalised service that will provide practical advice and guidance on the implications of forming a company. If you have questions or concerns regarding incorporation, contact us (07) 4936 9100 or through our website to arrange an initial, fixed fee appointment.
It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.

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Who will Make Decisions for Me if I Lose Capacity?

In short, this will depend on whether you plan ahead. You can decide in advance who can make decisions for you by preparing a legal document known as an Enduring Power of Attorney (“EPA”). An EPA authorises another person/s to act on your behalf in managing your affairs should you lose the capacity to do so. Losing capacity does not just happen to seniors, it can happen at any time and this loss may be temporary or permanent such as an acquired brain injury. Your appointed attorney can make important decisions on your behalf about personal and health matters, as well as your financial matters, should you lose capacity.
What Happens When You have Not Made an Enduring Power of Attorney?
If a person loses capacity and they have not made an Enduring Power of Attorney then the only option is for a family member, close relative, close friend or even a trusted professional (such as a lawyer or financial advisor) to apply to the Queensland Civil and Administrative Tribunal (“QCAT”).  QCAT has exclusive jurisdiction for the appointment of guardians (that is to make health and personal decisions) and administrators (that is to make financial decisions) for adults with impaired capacity. Before QCAT can exercise its discretion, it needs to be satisfied that:

The adult has impaired decision making capacity;
There is a need for a decision;
A decision maker is needed to ensure that the adult’s needs are met, and their interests are protected.

The process through QCAT can take a number of months.
We can assist you to understand and prepare a carefully drafted Enduring Power of Attorney. We can also advise you in all matters in QCAT including seeking the appointment of administrators and/or guardians; removal for inappropriate action and preparing an Application to QCAT.
It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.

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Key Things to Consider When Forming a Business Partnership

Going into business with close friends or associates as partners is, for many people, an ideal way to realise their entrepreneurial dreams.
Like sole trading, a partnership business structure offers many advantages. The most significant of these is the comparatively simple operation and methods of setting up and ending the partnership. Compared with the extensive administration involved in forming a company, a partnership involves less regulatory compliance and less overall paperwork. A partnership can be established by registering an Australian Business Name (ABN) and Tax File Number (TFN) for tax purposes.
But unlike a company structure, a partnership does not offer the protection of creating a separate legal entity. Therefore, partners carry much of the risk if things don’t go to plan. This means a partner’s personal assets (for example, a partner’s house or car) could be used to pay debts of the partnership. Partners also share the accountability for each other’s mistakes in the partnership.
In Queensland,partnerships are subject to the legislative provisions of the Partnership Act 1891. Although at first glance this act may seem overwhelming, below are a few key considerations for anyone considering entering into a partnership.
What are the key features of partnerships?

A partnership is a business structure made up of two or more people who carry out business with the intention of making a profit.
A partner cannot transfer their interest in the business to someone outside the partnership unless the other partner(s) agree.
Each partner maintains a right to take part in the management of the business.
The essential nature of the business cannot be changed without the consent of all partners.
A partner is obliged to inform other partners of any material conflict of interest, such as doing business outside of the partnership which may be in competition with the partnership’s operation.
Unless otherwise stated, all partners are equally responsible for the business, meaning each carries unlimited liability for any debts incurred by the business. Partners are also “jointly and severally” liable in the partnership.

What is ‘joint and several’ liability?
‘Joint and several’ liability means that as well as their shared liability for all of the debts of the partnership, partners are also personally liable for all debts incurred by or in the name of the business. This includes debts incurred without the knowledge or authority of other partners, such as when one partner makes a deal with a third party to supply the business, for example.
Under the Partnership Act, a partner remains liable for debts incurred during the time that they were involved in the partnership even after they leave the business. New partners are not liable for debts or obligations incurred before their arrival into the partnership, unless they agree to be.
Venture capital businesses and other high-risk enterprises sometimes form a particular form of partnership known as an incorporated limited partnership which, unlike a general partnership, separates the business entity from its partners. In this form of partnership, at least one general partner (but not more than 20) will retain unlimited liability for debts incurred by the business. Under the Partnership Act this form of partnership but must have a written partnership agreement setting out the rights and responsibilities of each partner.
How is tax treated in a partnership structure?
Whilst a company pays tax because it is treated as having a separate legal “personality”, in a partnership each partner must individually pay tax based on their share of its income and assets. Therefore, income and losses are apportioned on the basis of each partner’s shareholding in the business.
Is a partnership agreement necessary?
It is recommended that any partnership entered into should be governed by a partnership agreement. Ideally this agreement is a clear, well-drafted document that sets out:

the share of the partnership held by each partner;
the partnership’s assets;
how profits are distributed;
how liability is dealt with between the partners; how the partnership is ended or terminated;
the procedures for resolving disputes between partners.

Along with a partnership agreement, proper records of meetings held by partners should be kept in order to document important business decisions. These are essential if there are subsequent disagreements about the direction or termination of the partnership business.
If you have questions about setting up a partnership, or need help in drafting a partnership agreement to deal with all the possibilities that could eventuate in the business, contact
South Geldard Lawyers of Rockhampton. We have the expertise to guide you on all business structures, including the benefits and drawbacks of partnerships. Contact us today on (07) 4936 9100 or through our website to arrange an initial, fixed fee consultation.
It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.

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Are You Separated or Thinking About Separating?

While separation may be a difficult and emotional time, which may create uncertainty for you, your children and your partner, some necessary practicalities are involved.
Firstly, while the act of separation may be rather obvious, one party must communicate the end of the relationship to the other party.
It is important to note the date of separation. Why?
A married couple need to be separated for 12 months prior to applying for a divorce. In a de facto relationship, a property settlement must be commenced within 2 years from the date of separation. The date will also be relevant for government agencies such as Centrelink and Child Support Agency.
Who is going to remain living in the home?
This may depend on who has the primary care of any children of the relationship, who has alternative accommodation (e.g. relatives) or the means to be pay rent, if you are comfortable or safe to stay in the house.
Other interim considerations:

Changing passwords on your computer, apps on your phone, or PIN numbers to bank accounts or credit cards
Redirect your mail
How are you going to pay the mortgage, support your children or the partner with little or no income? Establish a bank account in your sole name for any surplus income or benefits to be redirected to this account.
If it is possible, discuss with your partner what is to happen with any funds remaining in any joint accounts. It may be beneficial to attend at the bank and ensure both persons are required to sign to withdraw money or otherwise deal with the account or funds (provided this is
practical)
Discuss how joints credit cards are to be used or are they are to be paid out and closed.
Review your health insurance. You may wish to set up a new policy or discuss who will pay for and remain on the policy.

Disclosure
If you are involved in a property settlement in the future, you will have a duty to disclose. Gather copies of bank and credit card statements, tax returns, superannuation statements, car registration in your sole name, payslips from your employment and any other documents related to assets or liabilities you may have.
Child Support
If there are children of the relationship, arrangements must be made for their financial support. Centrelink or Department of Human Services (Child Support) may assist you in this regard.
Your Will and Enduring Power of Attorney
You may wish to change your Will or Power of Attorney if your partner was an executor/attorney or beneficiary or change your nominated beneficiaries on your superannuation or life insurance policies. Remember to consider whether your partner may need access to some funds to support your children if
you die. If your partner is irresponsible with money, who might be the appropriate person to be the Trustee for your children?
Our specialist family lawyers at South Geldard Lawyers in Rockhampton can help. Please contact us on (07) 4936 9100 or through the website to arrange a fixed fee appointment for advice on family law mattes such as:

Initial advice on separation
Property Settlement
Divorce
Parenting Matters
Child Support Agreements
Domestic Violence
Will or Enduring Power of Attorney

It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.

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COVID-19 Pandemic: What Are the Options for Employers?

With Government shutdowns of business likely, employers now face difficult decisions regarding their employees to ensure the survival of their businesses.
The options available to an employer depend on the employer’s particular circumstances; and range from agreed outcomes with employees to stand downs (without pay) and redundancies.
STANDING DOWN WITHOUT PAY
In the current circumstances, employers need to consider whether they can stand down employees without being required to pay them.  The relevant stand down provision in the Fair Work Act is section 524(1)(c).
The section provides that an employer may stand down an employee if “the employee cannot usefully be employed” and standing them down is “because of … a stoppage of work for any cause for which the employer cannot reasonably be held responsible”.  In these circumstances, an employee may be stood down without pay, however the employee remains in the employ of the employer and continues to accrue sick leave, annual leave and long service leave.
To be able to stand down an employee, an employer must be able to demonstrate:

That there has been an actual stoppage of work and not merely a downturn. Examples of a stoppage of work include:

If there is enforceable government direction requiring the business to close and there is no work at all for the employees (even from home);
If a large proportion of the workforce is required to self-quarantine with the result that the remaining workforce cannot be usefully employed; and
If there is a stoppage of work due to a lack of supply.

There must be no opportunity for the employee to be usefully employed in the business. Employers need to exhaust all other options such as working in some other way (for example, in an alternative role) before they seek to stand down an employee.

That the cause of the stoppage is one for which the employer cannot reasonably be held responsible.

Where there has been only a downturn of work for a business, but it is possible for an employer to demonstrate that there has been a stoppage of work for a department/team or a particular employee, it may be possible for the employer to stand down the employee/s for whom work has stopped (provided the employee/s cannot be employed elsewhere in the business).
Care must be taken before standing down an employee. If an employer unlawfully stands down an employee, the employer may face a claim from the employee in the Fair Work Commission for unpaid wages. Legal advice should be obtained regarding an employer’s particular circumstances before an employer stands-down an employee. 
An employee who has been stood down without pay is able to access income support from the Government through its Jobseeker Payment scheme.
Agreed Outcomes 
An employer may look to reach agreement with an employee for alternative work arrangements such as:

the employee taking paid annual or long service leave;
the employee taking unpaid leave;
the employee working reduced hours;
a combination of the above.

To achieve such agreement usually requires open and honest communication by the employer regarding its financial situation and the challenges it is facing.
Redundancy 
If standing down an employee is not an option and a mutually suitable agreement for alternative working arrangement cannot be reached with an employee, the employer may wish to consider making the employee redundant.
For a redundancy to be an option, the role of the employee must be obsolete and there must be no other position of employment in the business available to the employee.
If an employee is made redundant, the employee’s employment is terminated. Upon termination the employer must pay the employee its accrued entitlements (annual leave and long service leave) and a redundancy payment which will vary depending on the employee’s length of service (the minimum redundancy payment is 4 weeks’ base pay for an employee of one year’s employment and the maximum redundancy payment is 12 weeks’ base pay).
In making an employee redundant there is the risk that the employee makes a claim against the employer for unfair or unlawful dismissal. It is therefore important the employer obtain legal advice before making any decisions in this regard.

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Family Law Alert – COVID-19

We are certainly in extraordinary times, however South Geldard Lawyers aims to provide legal services to our valued clients to the extent that we are able.
Our office remains open for business. We kindly ask that:

You do not attend our office if you are unwell;
Have been diagnosed with COVID-19;
Have had any contact with diagnosed cases of COVID-19 or persons who have returned from overseas in the last 14 days; or
You have travelled from overseas within the last 14 days.

The health and safety of our clients and staff during this pandemic is a priority.
We are endeavoring to minimise face to face appointments and will offer both telephone and video conferencing appointments if you are unable or do not wish to attend our office in person.
Family Law
Each of our family lawyers, Vicki Jackson, Accredited Specialist, Clare Farmer and Luke Collins are available to take electronic appointments.
The courts have advised that we are still able to file new applications so that at least your matter can be initiated in the system so that when the court is conducting trials you will be ahead of those who wait until after this crisis has passed to file their applications.
In the unfortunate event of a forced lockdown, our lawyers will continue to be available by telephone and video conferencing facilities. We will have arrangements in place for you to call our usual office number 07 4936 9100 to contact us. Our email system will remain operational and will be checked on a daily basis.
TIME LIMITS – you need to be aware that if you need assistance with a division of property after your divorce or after you and your de facto partner separate, there are time limits.
You must file an application for a property settlement within 12 months of your divorce order being finalised. Failure to do so means that you must seek the leave (permission) of the court. Leave is not guaranteed and will involve you in additional expense.
If you and your partner have resided in a de facto relationship, you must similarly make an application for orders dividing your property within two years from when you separate. It is always important to understand that you or your partner may have different views about when you actually separated.
Claims on Deceased Estates
If you have any concerns about not benefiting under a Will there are also time limits within which you must give notice to the executor and within which to file an application for provision out of the estate. If you have any concerns about these time limits or whether you might be entitled to make such a claim, do not hesitate to contact us to arrange to discuss these issues.

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COVID-19 & SOUTH GELDARD LAWYERS

South Geldard Lawyers is continually monitoring the situation regarding COVID-19. We take the health and wellbeing of our colleagues and clients seriously and have implemented measures to minimise and prevent the spread of the virus in accordance with the Government and the Health Department.
We have in place a number of additional measures to ensure that, as best we can, we shall continue to provide an uninterrupted service to our clients. We are able to offer telephone appointments to any clients who do not wish to come into the office and will post or email any paperwork that requires to be signed if necessary.
Our aim is to continue to service all of our clients’ needs and minimise inconvenience. As this is an unprecedented set of circumstances, we will continue to monitor the situation. We will update our website and social media or contact our clients directly should we require to make changes to our service. Please do not hesitate to get in touch should you have any concerns.
Meantime we thank you for your co-operation and hope that you and your families remain healthy.

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$17.6bn ECONOMIC STIMULUS PACKAGE

The Prime Minister announced the details of a $17.6 billion stimulus package to support businesses being disrupted by COVID-19.
The stimulus covers five main categories:

Increased small business write off
Cash flow assistance for wages
Additional apprentice wages support
Government support families
Grant for tourism, agriculture and education

Increased Small Business Write-Off
The Government is increasing the instant asset write-off (IAWO) threshold from $30,000 to $150,000 and expanding access to include all businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.
The IAWO is due to revert to $1,000 for small businesses (turnover less than $10 million) from 1 July 2020.
Apprentice Wages Support
If your business employs apprentices, a wage subsidy of 50% maybe available for up to nine months. The period being from 1 January 2020 to 30 September 2020. This will be capped at $21,000 per apprentice and split over three quarters.
Government Support Families
From 31 March, one-off payments of $750 to people on social security, veteran and other income support recipients and eligible concession card holders. The payment will be tax-free and will not count as income for social security, farm household allowance and veteran payments.
Grants for Tourism, Agriculture and Education
Targeted support for the tourism, agriculture and education sectors at this stage. Tourism will be target at domestic.
This support will include waiving fees and charges for business operating in the Great Barrier Reef Marine Park, and in other national parks, plus assistance in identifying new export markets and supply chains.
Useful Resources

Cash flow assistance for businesses
Delivering support for business investment
Assistance for severely affected regions
Stimulus payments to households to support growth

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Can Businesses Protect their Online Reputation from Anonymous Defamatory Reviews?

Negative reviews from disgruntled customers are a reality that most businesses will have to face from time to time. But once those negative reviews are anonymously published online, business owners are often powerless to control their digital reputation. That may be about to change with the 2020 Federal Court decision of Kabbabe v Google LLC holding cyber-giant, Google, responsible to a Melbourne business owner for a detrimental one-star rating published on their reviewing service.
What are the Facts of Kabbabe v Google LLC?
Dr Matthew Kabbabe (the applicant in this case) is a dental surgeon and the owner of a teeth whitening clinic in Melbourne. Dr Kabbabe, like many business owners, relies on the digital “word of mouth” Google facilitates with its review forum to promote his business to the public.
Before a review from an anonymous user under the pseudonym “CBsm 23” gave Dr Kabbabe’s business a one-star rating, the business held a perfect track record with an average of five stars.
This review not only affected the average rating attached to Dr Kabbabe’s business when searched on Google, but was accompanied by an extensive condemnation of the business and a warning to all potential customers to “STAY AWAY!”. Dr Kabbabe claims this review alone has had a profound impact on his business.
On 27 March 2020, the Federal Court of Australia decided that Dr Kabbabe should be allowed to serve Google headquarters in the United States with an application to force Google to reveal any information related to de-identifying “CBsm 23”. If successful, Dr Kabbabe could then bring defamation proceedings against the author of the negative review.
Why is this Case so Ground-breaking?
Kabbabe v Google LLC has provided a clear pathway to navigate the often difficult task of serving an international party in a court proceeding.
In summary, the court must be satisfied of the following:

The application is accompanied by an affidavit outlining various matters, including the country in which the person to be served resides – in this case, Google LLC in the United States;
The court has jurisdiction to hear the matter – which it did as a proceeding under the Federal Court Rules 2011 for an order to reveal information about a potential respondent (the identity of “CBsm 23” in a defamation action);
The matter involves a cause of action arising in Australia – which, naturally, it did;
The person applying has, on the face of it, a case against the respondent – which according to the court, Dr Kabbabe did have against Google to have information relating to the identity of “CBsm 23” revealed.

What does All of this Mean for Business Owners?
The fourth point above is the most significant takeaway for business owners.
Through this decision, the Federal Court has signalled to other business owners who may be facing financial hardship from a negative Google review, that obtaining information about anonymous “keyboard warriors” is not impossible. This is evident by other business owners already taking advantage of this decision, with a further application of this nature being heard relating to a Melbourne solicitor, and a class action against Google in the works.
Despite this issue still being in the “watch this space” stage, business owners can take comfort that Kabbabe v Google LLC, and the widespread attention it has drawn, has prompted “CBsm 23” to withdraw their negative review, and remains as a warning that online reviewers are not safe behind anonymity.
Business owners should keep in mind that there are legal avenues available to them if someone is defaming their business online, whether anonymously or not. Ultimately, a demand to remove the defaming review, and if necessary, an action in defamation are viable options and is something South Geldard Lawyers can assist you with.
Do you feel someone has posted a defamatory review of your business online? Contact our team at South Geldard Lawyers.
It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.

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$17.6bn Economic Stimulus PackageIn Article, Business and Commercial17 March 2020
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Does Equal Shared Parental Responsibility Mean Equal Time?

Whether you were married, in a de facto relationship, or were never together, if you have a child with someone and then separate from the other parent, in the eyes of the law you continue to have shared responsibility to raise that child until they are 18 years of age.
The Family Law Act 1975 (‘the Act’) gives children the right to enjoy a “meaningful relationship” with each of their parents. This concern, as well as protecting a child from physical or psychological harm, informs a court’s consideration of the “best interests of the child”, the guiding principle of the Act.
Shared parental responsibility means both parents making the important decisions in the best interests of their child, from where they go to school, how they manage their health, sporting activities, extended family interaction, religious observance and much more.
One common misconception about shared parental responsibility, however, is that equal responsibility means equal time with each parent. There is no law or rule that determines that must be the case.
How is time with each parent decided?
The best-case scenario is that after separation, both parents can come to their own, mutually satisfactory agreement about how they share the responsibility of raising their children. This arrangement might take account of the fact one parent works full-time while the other doesn’t, or that one lives close to the children’s school, while the other lives further away.
The individual needs of the children should dictate how much time they spend with each parent, and this may not always be a 50:50 split.
Such an agreement might be reached on an informal basis, or through agreement reached at a mediation between the parents. Mediation will ideally be conducted by a specialist family law mediator, which your legal representative can organise.
Either way avoids the need to go to court, which costs more money, takes more time, and creates more stress for both parents and children alike. If you can reach an agreement without the need to go to court, it can be formalised by making a parenting plan you both agree to abide by, or obtaining Consent Orders from the court which makes the agreement legally binding on both parties.
When parents can’t agree
If separated parents can’t formulate their own agreement, a judge in a family law court will likely be called on to make a decision about how much time the children spend with each parent. Again, this decision will be based on the best interests of the child in accordance with the Family Law Act.
A judge will consider a number of factors among which are the relationship of a child to each parent, as well as their relationship with extended family members (grandparents, etc); the extent to which each parent has fulfilled their parental obligations to date; the capacity of each parent to care and provide for the child; the likely effect of separation on the child; and the child’s own wishes, depending on their age and maturity.
Child support
As with living arrangements, both parents can agree on their own arrangement about financial support given both have a duty to financially provide for their child after separation, regardless of with whom the child lives. This, of course, may depend on the employment status of one or both parents.
If parents can’t agree on the financial support arrangement, they can apply to the Department of Human Services for a child support assessment. A fairly complex formula is used to determine this amount and it’s best to consult your legal representative or visit the child support section of the department’s website for further guidance.
Helpful legal advice
Whether you need help reaching agreement with your ex-partner on shared parenting responsibilities, representation in court, or guidance on your rights and responsibilities, our specialist family lawyers at South Geldard Lawyers in Rockhampton can help. We have the experience to provide easy-to-comprehend, practical and understanding advice tailored to your particular circumstance. Contact us on (07) 4936 9100 or through our website to arrange a fixed fee first appointment.
It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.

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Can I Make Recordings that May Help My Family Law Matter?

All’s fair in love and war. Or is it? If you are embroiled in a family law matter such as separation or divorce, you may be tempted to do whatever it takes to get your share of the assets, and for the kids to live with you.
Maybe you’re trapped in an abusive situation and want to get proof of your partner’s behaviour so you can get a protection order. In either case, you may be tempted to make audio or video recordings to bolster your case. The question is, can you do so? Here’s what you need to know about this issue in the context of family law.
Legal considerations
These days, you don’t need fancy equipment or high-tech gear to make a good audio or video recording. All you really need is a mobile phone.
But think carefully before using your smartphone, micro-cassette recorder or any other device to record private conversations. There is no guarantee the court will accept the recordings as evidence, even if making them is legal.
In other words, it could do more harm than good.
The law in Queensland
In Queensland, you can record a conversation without someone’s knowledge. However, this is only allowed in certain circumstances. Specifically, you can only record a conversation that you are having with someone else. So if you are actually speaking with ‘Person A’ and ‘Person B’, you can record the conversation without their knowledge but you cannot record a private conversation between the two of them if you were not participating in the conversation.
Exclusion of material that is wrongfully obtained
Section 138 of the Evidence Act 1995 (Cth) permits the court to use its discretion regarding the exclusion of any evidence that was wrongfully obtained. Section 138 renders evidence obtained in contravention of an Australia law as not admissible unless the desirability of admitting the evidence outweighs the undesirability of admitting evidence obtained improperly or illegally. For example, the court could deny the admission of any evidence that you broke the law to obtain.
To reach a decision on the admission or exclusion of any such evidence, the court takes the following into account:

The usefulness of the evidence to prove a particular point or points in question;
the importance of the evidence in the proceedings;
the type of evidence;
the seriousness of the illegal conduct used to obtain the evidence, and whether it was deliberate or reckless. (Section 138(3) of the Evidence Act 1995 (Cth)).

Section 135 of the Evidence Act 1995 (Cth) also gives the court broad discretion regarding the exclusion of evidence if its usefulness is outweighed by the potential for unfair bias or confusion.
A case in point
To understand how all of this legal theory can play out in real life, let’s consider the widely cited case, Coulter & Coulter. In this particular matter, the parties were engaged in parenting proceedings regarding their two children. Because the father engaged in abusive behaviour, the mother also requested a protection order from the court.
Before the father turned up to collect the children from their mother’s house, the mother put a video recording device in the hallway, facing the front door. The device captured the discussion that occurred between the parents at changeover, without the father’s knowledge.
In this case, the court ruled that the video was not illegal because the mother made the recording in an effort to protect herself from further harm. Specifically, the court found that as a victim of family violence, she was attempting to gather proof of the father’s behaviour so she could get a protection order.
On the other hand, the court ruled that recordings of private telephone discussions between the father and the children made by the mother were illegal.
Even though the mother made the recordings based on the belief that the father used the telephone conversations to alienate one of the children, it was not enough to convince the court that the action had merit. In fact, the court ruled, the telephone recordings constituted a breach of the father’s privacy and that they adversely affected the children’s “right to a meaningful relationship with their father”.
In conclusion
The moral of the story is that – even when undertaken with the best of intentions – drastic actions can have drastic consequences. The stakes are especially high in family law matters, where emotions are heated and children are involved.
For example, in the case detailed above, the presiding justice noted that recording private conversations between the children and their dad could have lasting implications. In particular, the justice indicated that the mother’s actions in this context interfered with the children’s ability to “speak freely and trust their parents”. Reading between the lines, it is clear that this would have not only emotional implications for the children, but also logistical implications for the parents.
Because all cases are different, the admissibility of audio and video recordings depends on your situation, and whether the recordings were made lawfully. Therefore, it is crucial to seek legal advice before taking matters into your own hands.  Our family lawyers at South Geldard Lawyers in Rockhampton have the experience to provide easy to understand practical advice tailored to your particular circumstances. If you have questions or concerns regarding this issue, simply contact us (07) 4936 9100 or through our website to arrange a fixed fee first appointment with a member of our legal team.
It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.

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Conducting a Procedurally Fair Workplace Investigation and Disciplinary Action

If you employ a workforce, chances are you will at some stage be called upon to investigate and adjudicate allegations of employee misconduct.
The process can be complex.
On one hand, investigations in the workplace should be structured and carried out in accordance with a proper procedure.
On the other, you may be required to act promptly and decisively to minimise disruption to your business, or in circumstances where employees’ health and safety may be at risk.
Striking the right balance can be difficult and investigating allegations of misconduct in the workplace may involve:

carefully considering the nature of any allegations to determine a proper process;
taking complaints;
interviewing witnesses;
taking statements from employees and others;
setting out allegations in writing,
standing down employees;
providing employees the opportunity to respond to allegations against them;
deciding on any appropriate disciplinary action.

The consequences for taking disciplinary or other adverse action against an employee without just cause, or without following a proper process, can be severe.
Similarly if misconduct has occurred, any disciplinary action must be proportionate to the extent of any misconduct – the punishment needs to fit the crime.
If you would like more information on conducting a workplace investigation, implementing disciplinary action up to and including dismissal or implementing a performance management plan for an employee, please contact us on 4936 9100 or [email protected]
It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.

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Characteristics of a Thorough Succession Plan

A good succession plan has the following characteristics:
It must be tailored
Each person and every family is different. A succession plan must be tailored to your specific circumstances.
A review of your unique circumstances will identify succession planning issues that need to be addressed. These issues may include:

Personal items (such as family heirlooms, antiques or collectables) that need to be specifically dealt with
Family members who require special treatment because of a disability, addiction or other health concerns
Business interests
Family circumstances, such as a second marriage or children from different relationships
Potential challenges to your Will
The existence of a self-managed superannuation fund or other trust structure

Your succession plan must be flexible
Your succession plan must be flexible enough to deal with a change of your circumstances and to the circumstances of your beneficiaries.
Where possible, you should avoid locking future generations into arrangements that may become restrictive and unworkable.
The succession plan must be understood by you
It is important that you understand your succession plan, and that it can be understood by others, including your executor and family members who survive you.
If you do not understand it, there is a very good chance that others will also have difficulty.
Unnecessary complexity and ambiguity may serve to defeat your intentions.
Remember, when your Will is administered, you will not be present to explain what you intended: your intentions must be clear from the terms of the Will example.
Succession planning must be reviewed regularly
Succession planning is not a discipline that relies on the “set and forget” principle. A five-yearly review at a minimum is recommended, however there may be circumstances that justify more regular reviews.
Factors that would justify a succession planning review and/or a meeting with your legal adviser to determine whether your succession plan requires amendment include:

Marriage, separation or divorce
Entering or ending a de facto relationship
Having children (including adopted or fostered children)
The death of a proposed beneficiary
Other major events occurring in your family
Major events affecting your assets, including the disposal of an asset that is referred to in your Will
A change in the need to ensure a gift for spendthrift, intellectually disabled or bankrupt beneficiaries is protected under the Will
A proposed beneficiary qualifying for a means tested social security pension
A change to the extent of which your beneficiaries will benefit from other sources, such as jointly held assets, superannuation and life insurance proceeds, and family trust distributions
Changes to the taxation laws
The death, aging or ill-health of your proposed executor
The establishment of a family trust or a new business venture
The transfer of assets to a business or family trust
The existence of trust income allocated to a beneficiary that has not been paid to or applied for the benefit of the beneficiary that may require adjustment
The desire to implement a plan for business accession

Succession planning requires collaboration between professionals and advisers
A good succession plan is the result of teamwork between each of your advisers, your lawyer, accountant and financial planner.
You as the client understand your personal circumstances, beliefs, values and long-term goals and objectives.
Your financial planner has the financial and investment expertise and understands your investment portfolio and risk profile.
Your accountant possesses knowledge of your business structures, such as trust companies and self-managed superannuation fund.
Your legal adviser understands the documentation and legal requirements to give effect to the succession plan and has expertise in drafting legal documents.
Your succession plan relies on thorough data collection
Your adviser must understand your personal, investment and business circumstances. Your adviser should be made aware of the following information:

Financial circumstances including a summary of your assets and liabilities
The circumstances of your children and other potential beneficiaries, including marital status, occupation, business interests, disabilities or other factors that might affect their ability to manage money
The existence of family trusts and companies and business interests
The nature, extent and ownership of superannuation and life insurance cover
The identity of people who are financially dependent on you

Before you meet your legal adviser, you should prepare a personal profile document containing information such as:

Your personal details
Your marital status, including previous marriages (if applicable)
The names, ages and correspondence details of all your children and their proposed guardians (if applicable)
Any special needs your beneficiaries may have that will affect their ability to manage an inheritance
The executors you wish to nominate
The existence of an enduring power of attorney
Your business structure, including details of your superannuation and life insurance

The provision of the above information will ensure that your legal adviser is fully informed about your circumstances and will make the process more cost effective.
You should also give your legal adviser permission to discuss your financial and business affairs with your other advisers.
If you require any advice regarding your succession plans please do not hesitate to contact us on 4936 9100 or [email protected].
It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.

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Planning Your Industrial Arrangements

A cooperative and productive workplace is one of the most crucial aspects of any successful business. Engaging a workforce and properly planning industrial arrangements can however be a challenging and complex endeavour.
Employment relationships in Australia are governed by a broad array of legislation, industrial instruments and case law that regulate all stages of the process, from hiring, through to finalising employment, and beyond.
Most Australian employers are subject to the provisions of the Fair Work Act 2009 (Cth).
The Act has the stated aim of providing a balanced framework for cooperative and productive workplace relations by providing laws that are fair to working Australians and are flexible for businesses.
Part of the bargain for all national system employers is a requirement to comply with ten minimum employment standards (the National Employment Standards) which regulate:

maximum weekly working hours;
requests for flexible working arrangements;
parental leave and related entitlements;
annual leave;
personal carers leave and compassionate leave;
community service leave;
long service leave;
public holidays;
notice of termination and redundancy pay;
provision of a Fair Work information statement.

Modern Awards and other industrial instruments may set out other minimum standards of employment, some of which may be flexible, but many of which are mandatory.
Failure to comply can result in penalties of up to $10,800.00 for individuals and $54,000.00 for corporations.
Getting it right requires employers to properly understand their obligations and to carefully consider their industrial requirements. Well drafted employment agreements and workplace policies are a significant step towards ensuring that you and your workforce understand the workplace bargain.
If you would like more information, please contact us on 4936 9100 or email [email protected].
It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.

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Responding to Workplace Claims

Responding to an employment claim involving former or existing employees can be costly, extremely disruptive and, sometimes, inevitable.
Disputes in the workplace frequently arise over:

a failure to meet workplace rights and obligations;
inconsistent treatment of employees;
inadequate policies and procedures;
inadequate dispute resolutions procedures;
cultural differences;
changing workplace practices without proper consultation.

Common types of workplace litigation include:

applications for unfair dismissal;
applications dealing with general protections and disputes over entitlements;
applications for orders to stop workplace bullying;
contractual disputes.

Engaging with any employment related claims early and responding thoroughly is the first step in maximising the prospects of a good outcome and minimising the possibility of ongoing disruption to your business.
While the litigation process varies depending on the type of claim, most involve the option (or requirement) for the parties to participate in some form of alternative dispute resolution.
Getting proper advice at an early stage is crucial to determining how you wish to conduct any employment related litigation and what your strategy will be.
If you would like more information on conducting any employment related litigation, please contact us on 4936 9100 or [email protected]
It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.

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Certificate of Title’s – A Thing of the Past

Paper certificates of title are no longer evidence of legal ownership because of recent changes to the Land Title Act 1994 (Qld) which have transitioned from the land titles system in Queensland from a paper based to an electronic system.
Soon, all conveyances of property in Queensland will be settled electronically. Abolishing paper certificates of title is a significant step towards this goal.
The electronic Land Title Registry is now the record of ownership of property in Queensland.
If you are in possession of a paper certificate of title you are not required to hand it in to the Land Title Registry for destruction.  You can use it for ornamental purposes.
At South Geldard Lawyers we are an early adopter of the technology required to transfer property electronically. In doing so we are providing our clients with greater security and ensuring their conveyance is handled efficiently.
For more information do not hesitate to contact us on 4936 9100 or email [email protected].

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Property Settlement After Separation or Divorce

Deadlines
One of the first and most important things to keep in mind if you are getting separated or divorced is that you can- and should- resolve your property and financial matters as soon as possible.
Australian law allows you to settle a division of property after you separate rather than waiting until you are divorced. In rare and in special circumstances of a particular case you may be able to divide property even if you are not separated.
If you wait until you are divorced, there are time limits for the bringing of court proceedings if you and your spouse are unable to agree. You have within 12 months after your divorce order is finalised to file an application in the court for a division of property. Your divorce order takes effect (or is finalised) at the expiration of one month from the date of your divorce order.
If you are not married but have been living in a de facto relationship, you must initiate your court proceedings within 2 years from when you separate.
If you fail to initiate proceedings within the time limitations, then you can still ask the court to determine a division of property which is referred to as “obtaining the leave of the court”. However, this process involves you in additional legal fees and there is no guarantee that the court will grant leave.
It is very important therefore, to get proper advice early from a qualified lawyer about the property settlement process. Even if you and your former partner have reached an agreement, you should consult a lawyer to review it and advise you how to ensure it is legally binding and enforceable. If you do not finalise your agreement by way of a consent order or financial agreement, you risk your former partner still seeking further property from you. It is important to understand that the property available for division between each of you is not the property which you owned at separation (although still relevant) but is the property owned by each of you or any entity which either one of you control and their respective values at the time you do the settlement. The values are not back dated to the date of separation.
The Initial Meeting and Assessment
In any case, this is what to expect during your first meeting with your lawyer. He or she will ask several questions to become familiar with your past and current circumstances. Do not be surprised if he or she asks detailed questions not only about you, but also about your former spouse and your respective finances prior to and throughout your relationship. Specifically your lawyers needs to know about:-

All assets and liabilities in which each of you have an interest or own as well as any entity (such as company or trust) which you control or in which you are a beneficiary or potential beneficiary.
Any superannuation entitlements
Your employment and income
Your bank accounts including credit card accounts identifying the balances or how much is owed.
Any loans whether money owed by you or to you
Whether you are expecting an inheritance or a damages claim.
A list of assets, superannuation interests or debts which you had when you and your partner commenced to live together and an estimate of the values.
Whether you are your partner received any gifts or inheritances, damages claims or any windfalls during the period that you lived together or after separation.

With this information, your lawyer can conduct a compressive assessment of a range of entitlement you might expect by way of a division of property and give you proper advice.
Your lawyer will also make sure you are fully informed about the assistance available to explore reconciliation or if there is no hope of reconciliation, the processes which are available for negotiation and mediation. The commencement of court proceedings is usually a last resort.
You need to be aware that you and your former partner must disclose to each other all relevant financial information to assist in negotiating an agreement. Failure to make a full and frank disclosure is against the law and risks any agreement being set aside by the court at a later date.
Methods of Resolution
If separated partners are unable to communicate to reach a mutually acceptable agreement between themselves, the lawyer can assist in reaching an agreement, as we have briefly mentioned upon earlier.
Ways in which agreement can be negotiated include: –

Correspondence between your respective lawyers.
A round table conference between each of you and your respective lawyers; or
A mediation where each of you and your respective lawyers attend with a mediator who is an independent third party who assists you to broker an agreement.

If any of these methods are successful, your lawyer will prepare a written document to ensure that your agreement is legally binding and enforceable. The written document can either be terms of settlement which are filed in the court with an application for a consent order. If the court considers that your agreement is fair and equitable it will make the order. Alternatively, you can finalise your agreement by way of a financial agreement.
Going to Court
When all else fails and you have not been able to reach an agreement, the only option is to seek court intervention. To do so, your lawyer will file an application in the Family Law Court Registry.
Your lawyer will prepare an application, a financial statement and an affidavit.
Your application sets out what you seek by way of a division of property. Your financial statement must truthfully reflect your income, expenses, assets, superannuation, liabilities and any other interests such as an interest in a trust or an expectation to receive some money such as a damages claim or inheritance.
Your affidavit sets out relevant evidence to prove your contributions and other relevant factors in support of the orders which you are asking the court to make.
The court will provide a date upon which the application will be listed usually for a directions hearing. You will need to attend court with your lawyer. Usually your lawyer and the lawyer representing your partner are able to agree on the directions to be made for the further conduct of your case.
The fact that you have needed to file an application to bring the matter to a head does not necessarily mean that you will find yourself in court giving evidence before a Judge who will make a determination about a division of your property. In most cases, once the application is filed, with the assistance of your respective lawyers and either a Registrar of the court or a mediator, an agreement can be reached and finalised by way of a Court Order with your consent. Overall, there are very few matters which require a judge’s determination.
If your case does need to go to a final hearing, the Judge will read the evidence contained not only your initial affidavit but any subsequent affidavits which are filed to update the evidence before it gets to trial which can be up to 12 months or more after you file your application depending upon the number of cases to be heard in the particular court. The Judge will also hear you being asked questions by your partner’s lawyer about the evidence you have set out in your affidavit. This is called cross examination.
After the evidence is finalised by way of affidavits and cross examination, your respective lawyers will make submissions to the Judge to persuade the Judge that the evidence supports the orders which you are seeking. The Judge will then give his or her judgment. Usually the judgment is not given on the spot but rather the Judge will take time to further read the affidavits and a transcript of the oral evidence and consider the matter carefully before giving a judgment.
Divorce and separation are never easy. Given the emotions involved, reaching agreements about financial matters and the allocation of property is not necessarily easy either. To learn more about how we can help you reach an amicable property settlement, please contact us today.
It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.

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Have you received a letter from the ATO about your SMSF?

A number of our clients have recently received a letter from the ATO asking them about the soundness of their investment strategy.
The ATO is concerned that some funds aren’t sufficiently diversified and are carrying too much risk. The letter reminds Trustees of the operating standard relating to “diversification” and goes on to say that they will be writing directly to the fund’s Auditor to advise them of their concerns. If the Auditor identifies that Trustees have failed to rectify any non-compliance, penalties may be imposed.
The Superannuation Industry (Supervision) Act and Regulations say that an SMSF must formulate an investment strategy and “give effect to” it (i.e. manage the fund in accordance with that strategy).
In formulating the strategy, Trustees are required to consider:

The risks associated with the Fund’s investments;
The likely return from investments, taking into account the Fund’s objectives and cash flow requirements;
Investment diversity and the Fund’s exposure to risk due to inadequate diversification;
The liquidity of the Fund’s investments having regard to the Fund’s expected cash flow requirements in discharging its existing and prospective liabilities (including benefit payments); and
Whether the Trustees of the Fund should hold insurance cover for one or more members

So, what is your investment objective and how will it support your retirement plans?
Start by answering some key questions, such as:

How old are the SMSF’s members? Are they in accumulation or pension phase?
What assets do the Fund’s members have both inside and outside the Fund?
How much income will you need in retirement?
What level of investment risk are the members prepared to accept?

You will need to decide where to invest your assets in the same way professional fund managers carefully determine how to allocate funds across the various asset classes. The investment strategy should clearly state the types of asset classes you want to invest in – like equities, cash, fixed interest and property – as well as the percentage weightings (that is, the percentage of the fund that will be invested in that asset) and benchmarks for each asset class.
Next is to detail other investment rules or restrictions you wish to impose on the Fund. These rules can be used to specify diversification, manage risk, maintain adequate liquidity, or strengthen the probability of delivering strong after-tax returns
Investing in ‘in-house assets’ (as defined by the Act) should be specifically referenced.
If you propose to invest in a material asset such as a business property or in “exotic” assets such as artworks or collectibles, a written strategy will assist in demonstrating that the relevant issues have been considered and that the investment is not ad hoc or reckless. Minutes should be kept, documenting the decision reached.
An SMSF is required to consider whether the Fund should take out insurance cover for one or more members. Insurance could be life cover, TPD (temporary or permanent disability) or income protection.
This requirement doesn’t mean that your Fund needs to take our insurance – it just means that you need to consider whether to do so or not. You should record this decision in a Trustee minute every year at the same time for minute reviewing the adequacy of your investment strategy.
If you have any queries with your SMSF, we can assist you to answer these.
It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.

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How Can My Business Defend Itself From an Adverse Action Claim?

In a recent post, we shared the basics about adverse action claims. Specifically, we discussed what they are, when an employee can make one and how to make one. We also considered a 2018 case in which the judge upheld an adverse action claim. Today we’ll talk about how your business can defend itself from an adverse action claim.
What is an adverse action?
First of all, let’s review the definition of an adverse action. As you may recall, this is most simply defined as any negative action that an employer takes against an employee. As such, it violates the Fair Work Act if it is done without proper cause. In this context, it is usually (but not always) carried out after an employee exercises his or her workplace right to make relevant complaints or raise concerns. It also involves some type of discipline. Some examples include:

termination;
pay cuts;
deliberately creating job redundancy (thereby eliminating the need for continuation of employment);
refusing to grant an overseas work assignment (when requested);
written warnings;
suspension;
demotion;
discrimination.

General protection provisions
It is also important to understand the general protections afforded to employees under the Fair Work Act.
Basically, these are legal provisions that prevent employers from taking adverse actions against their employees in certain circumstances. Specifically, they protect an employee from such actions when he or she had a workplace right, or was exercising (or was not exercising) a workplace right. Put another way, an employer is prohibited from taking adverse action against an employee when he or she has:

the right to a benefit under a modern award or business agreement;
the right to a benefit in accordance with a law that regulates the employment relationship (such as family leave);
a role or duty assigned under a workplace law or business agreement;
union member/officer status (or does not have such status).

An employer is also prohibited from taking any such action when an employee exercises his or her workplace rights by:

Asking for flexible working arrangements;
making a work-related complaint or inquiry;
organising, promoting, encouraging or participating in lawful union activity.

Meeting the burden of proof
Whenever an employee brings an adverse action claim, the employer must prove that it had a valid reason for taking the action in question.
Among other things, this means that everyone involved in the decision to take such an action should be prepared to testify. Any such testimony should include a denial that the adverse action was wrongfully administered. The decision-makers should also be able to provide credible proof that there was a legitimate cause for the administration of any such action.
As long as the employee can’t prove otherwise (by presenting his/her own witnesses, or providing documentation) the adverse action will be upheld.
Failure to meet the burden of proof
There are also several circumstances in which a court will find that an employer has not met the burden of proof. Many of these were established in CFMEU v Bengalla Mining Company Pty Ltd. In this case, the Federal Circuit Court determined that an employer does not meet the burden of proof in an adverse action claim when:

The managers’ evidence is successfully discredited in cross-examination;
the managers’ evidence is inherently unbelievable;
objective facts contradict the managers’ evidence;
the managers’ evidence is not supported by concomitant documents;
other evidence is presented indicating the managers had a problem with the employee and administered the adverse action accordingly.

Minimising the risk for adverse action claims
So, how do you lessen the chances that your business will face an adverse action claim? One of the single most effective strategies is open and honest communication. If you’ve got to take an adverse action against an employee for a bona fide reason, it would be prudent to let them know exactly why you are doing so.
Another effective strategy is to ensure that all supervisory personnel and everyone in your Human Resources department are properly trained on workplace rights and adverse action. This includes ongoing training to ensure everyone is familiar with the latest developments in the law. After all, ignorance of the law is not an acceptable defence.
Of course, the implementation of these strategies does not guarantee that an employee won’t bring an adverse action claim. As an employer, you should be prepared to defend one by ensuring that you have done the following whenever you take an adverse action against an employee:

complied with applicable business policies, procedures and practices;
removed the person that administered the adverse action against the  employee from the dispute resolution process, ensuring procedural fairness;
verified the reasons for the adverse action and communicated them to the employee;
gathered accurate documentation of all decisions related to the employee;
ensured that the decision-maker has a suitable explanation for taking the adverse action.

The bottom line
In summary, you as an employer have the right to take an adverse action against any employee as long as it is administered for valid reasons. If the employee brings an adverse action claim against you, you must be able to prove that the manager(s) did not take the adverse action for the reason alleged. Because there are several circumstances in which a court will rule that you haven’t met the burden of proof, it is essential that you take certain precautions whenever an adverse action is taken.
At South Geldard Lawyers we have diverse experience and expertise in modern employment law. To learn more about how we can help if an employee has made an adverse action claim against your business, contact us today on (07) 4936 9100.
It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.

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What is an Adverse Action Claim?

When we think of an “adverse action” claim, most people think of a disciplinary or termination of employment situation. However, legal issues can also arise when engaging a prospective employee and during the course of their employment.
Under the Fair Work Act (“the Act”) Australian employees have certain protected rights which are broadly:

workplace rights;
the right to engaging in industrial activities (such as belonging to a union or not);
freedom from, for example, discrimination and coercion and dismissal for a temporary absence due to illness (including a mental health condition);
protection from sham arrangements (such as calling an employee a “contractor”).

An example of these “General Protections” is the right of employees to question or challenge their employers about any relevant work-related issue without fear of retaliation. The Act also prohibits an employer from punishing an employee who exercises this, or another, workplace right. Specifically, its General Protections prohibit employers from taking certain “adverse actions” against their employees. Keep reading to learn more about these actions and what sort of things you need to keep in mind when dealing with your employees to ensure you don’t expose yourself to an adverse action claim.
Classification of adverse actions
To begin with it is important to understand the definition of an adverse action. Put in its simplest terms, this can be any action that has a negative effect on the employee. In this context, it is may take the form of some disciplinary action such as a verbal or written warning, suspension or termination. Additional examples include:

any action that damages an employee’s reputation in the workplace or his or her ability to do his or her job;
demoting the employee;
deliberately treating an employee differently to his or her peers.

It is important to note that, under the Act, there is a presumption that any such action has been taken for an improper reason or reasons, unless the employer can demonstrate otherwise. In other words, the employer must prove that they had a valid reason to discipline the employee and acted appropriately.
You should also be aware that employees aren’t the only ones subjected to adverse actions; adverse actions can be apply to contractors and prospective contractors as well.
How an adverse action claim is made
Because the General Protections are so broad, almost anyone who thinks an employer has changed a workplace right or disciplined them without cause can make an adverse action claim. However, this type of claim is usually made when someone believes they’ve been wrongfully disciplined after exercising their workplace right, for instance, to question or challenge their employer.
What constitutes a complaint or enquiry in relation to employment has been construed narrowly and broadly by different courts at various times.  However, the broad approach is increasingly applied with the requirement only that the criticism or concern is work-related.
In cases of dismissal, the deadline for initiating an adverse action claim is the same as for unfair dismissal, that is, 21 days after the termination took effect. The Fair Work Commission will only make exceptions in extraordinary circumstances.
Advice for employers
The way in which the employer responds to an employee’s criticism and concerns is also critical if the matter ends up in court.
Employers should have meaningful complaint and grievance resolution processes. Any such processes should be fairly applied to any relevant issues.
Employers should also exercise caution when initiating or continuing disciplinary or performance management processes. This is especially important when dealing with employees who raise employment-related issues or concerns.
Given the reverse onus of proof under the Act, the employer must be able to justify its decision-making process (e.g. leading to dismissal or disciplinary action) and keep proper records of steps taken. This way it can prove it based any action against an employee only on legitimate reasons.
A case in point
To see how all of this may play out, let’s consider the 2018 decision of the Federal Circuit Court of Australia in Fatourous v Broadreach Services Pty Ltd.
In this particular case, the employee was a senior manager responsible for overseeing the proper management of a number of projects. One particular project fell behind schedule and, in this context, he raised concerns in writing critical of the circumstances (and the CEO, in particular) that led to a sub-contractor leaving the work site.
He was subsequently terminated, and the letter of dismissal specifically referenced his complaint (amongst other alleged performance issues).
The employee initiated an adverse action claim in which he stated that he was protected from termination for the reasons alleged by his employer because his written complaints were work-related.
In its defence, his employer argued that the subject matter of those complaints did not directly relate to matters concerning his employment entitlements. Instead, it said the complaints pertained to business decisions made by the owners and therefore did not fall within the definition of “in relation to [his] employment“.
The trial judge agreed with the employee and upheld the adverse action claim based on a broad interpretation of the question at hand. The employee ultimately received a civil penalty of $12,500.00 from his employer. He was also awarded compensation for eight months’ loss of salary and retirement benefits, along with interest on those amounts, for a total of $144,570.48.
The bottom line
At South Geldard Lawyers we have considerable expertise in modern employment law. To learn more about how we can help in regards to an adverse action claim, contact us today on (07) 4936 9100.
It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.

RELATED NEWS
Expert Legal Help with Local Knowledge & Insight.
Keep up-to-date with our legal news.

What is an Adverse Action Claim?In Article, Employment24 September 2019
What is Restraint of Trade Clause?In Employment, Podcast19 June 2019
What Do the Changes to Queensland Labour Hire Laws Mean for You?In Article, Employment28 August 2018

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The post What is an Adverse Action Claim? appeared first on South Geldard Lawyers.