By Simon Black (Partner), Laura Sowden (Special Counsel) and Lucinda Touma of Barry.Nilsson.
A recent Federal Court of Australia (FCA) decision has revealed the pitfalls of a CEO commencing proceedings for wrongful termination. The CEO’s serious misconduct resulted in the employer being entitled to recover from him the settlement monies paid in relation to claims arising from his serious misconduct.
The background
In late 2017, two decisions were made by Parnell Corporate Services Pty Ltd (Parnell) to terminate CEO, Mr Robert Joseph’s employment.
Relevantly, on 18 December 2017, the second decision by Parnell to terminate his employment (and forming the crux of the FCA judgment) were influenced by Mr Joseph:
being involved in an incident in about December 2015 when he inserted a needle attached to a syringe into the leg of another employee, Ms Jennifer Lindsey (The Needle Incident)
making an offensive remark at a Gala Dinner in January 2016, resulting in the subsequent termination of employment of Ms Jennifer Tymeson who had (among other things) complained about Mr Joseph’s remark (Gala Dinner Incident)
grossly misleading conduct in relation to US Litigation and his Notice to Shareholders which disclosed confidential information of Parnell (Other Conduct)
In April 2018, Parnell paid Ms Lindsey US$295,00.00 in settlement of The Needle Incident. Similarly, in November 2018, Parnell paid Ms Tymeson US$180,000 in settlement of the Gala Dinner Incident.
In the FCA case Parnell, other corporate entities of Parnell and the Executive Chairman of one Parnell’s entities, filed a cross-claim against the CEO Mr Joseph seeking declaratory relief in addition to a claim for damages for the settlement of The Needle Incident and Gala Dinner Incident.
In Issue
The FCA was required to resolve a range of issues including whether:
the termination of Mr Joseph’s employment was lawful (Termination Issue)Mr Joseph’s conduct amounted to a breach of his employment contract (Breach Issue)monies paid in settlement of the Needle Incident and Gala Dinner Incident arising from Mr Joseph’s conduct were recoverable as damages in the present proceedings (Settlement Issue)

The decision at trial
In relation to the Termination Issue, Justice Flick rejected Mr Joseph’s claims of unlawful termination and concluded that the grounds for summary termination of his employment on 18 December 2017 had been made out. At the same time, it was observed by the Court that if any one or other of the three bases upon which Mr Joseph’s employment could be summarily terminated would have been sufficient to reject the claims made by him as taken together the decision becomes “unassailable”.
In relation to the Breach Issue, it was concluded that the conduct of Mr Joseph caused the proceedings in the US brought by Ms Lindsey and Ms Tymeson and that his conduct had constituted a breach of his contract of employment.
In relation to the Settlement Issue, Mr Joseph sought to rely on an indemnity clause in Parnell’s Constitution regarding indemnities in favour of directors, secretaries and executive officers. Justice Flick rejected this claim noting that on proper construction of the clause, it provided a right to be indemnified with respect to liabilities as against third parties, not a right to be indemnified in respect of monies that Mr Joseph may be obliged to pay Parnell.
Further, Mr Joseph sought to rely on section 3 of Employees Liability Act 1991 (NSW) (ELA) which provides that an employee is not liable where an employer is also liable. However, given that Mr Joseph’s conduct fell within the serious misconduct qualification in section 5 of the ELA, this claim was also rejected by the Court.
Thus, Mr Joseph was held liable to pay at least some of those settlement monies recoverable as damages in relation to the Settlement Issue.
Implications
This decision highlights that an employer may succeed in defending and subsequently recouping some of the losses it has sustained from a previous employee’s serious misconduct.
As such, employees wishing to entertain a wrongful termination claim in circumstances where serious misconduct is involved must be aware of the cross-claims that an employer may make against them.
Joseph v Parnell Corporate Services Pty Ltd [2020] FCA 426.
This article was originally published on the Barry.Nilsson. website and has been reproduced with permission.
The post CEO found personally liable for settlement payments made due to his serious misconduct appeared first on Wolters Kluwer | Central.

A comprehensive
guide to the new JobKeeper Payment Scheme has been prepared by barristers,
Ian Neil SC, David Chin SC and Christopher Parkin. The purpose of the guide is
to assist employment lawyers to understand and advise on the changes to the Fair
Work Act 2009 (Cth) consequent upon the creation of the scheme.
The guide identifies key risks and pitfalls
of which employers and employees should be aware, and answers key questions
that are likely to arise around the implementation of the scheme.
The guide is current as at 14 April 2020,
and its contents do not constitute legal advice, which should be sought to
address your own, or your clients’, individual circumstances. Liability for
reliance on the views expressed in the guide is excluded.
The guide is freely available on Ian Neil SC’s website and
the website of 5 Wentworth
Chambers.
The post Guide to the JobKeeper Scheme appeared first on Wolters Kluwer | Central.

On 24 March 2020, in response to the evolving COVID-19 pandemic,
the Government introduced and passed temporary legislation to provide companies
with some form of financial and regulatory relief whilst the crisis continues.
Amongst other changes, the Coronavirus Economic Response Package Omnibus Act 2020 (Cth) (COVID Act) amends the Corporations
Act 2001 (Cth), by inserting a new s 588GAAA to temporarily amend the safe
harbour provisions for company directors from their duty to prevent insolvent
trading. Under this new section, company directors are relieved of any personal
liability for insolvent trading if debts are incurred in the ordinary course of
business and prior to the appointment of an administrator or liquidator of the
company. This relief applies during the six-month period commencing on the day
which the section commences, or any longer period as prescribed by the
regulations. These provisions are contained in Part 2 of Schedule 12 of the COVID Act. They are in addition to, and do not effect, the
existing safe harbour regime.
What is the
safe harbour regime?
The safe harbour regime came into effect on 19 September
2017. The regime is aimed at promoting and encouraging entrepreneurship and
innovation by providing directors with some protection for handling the trading
of a company, whilst balancing the needs of creditors and shareholders.
Pursuant to s 588GA of the Corporations Act, a director
is not under a personal duty to prevent insolvent trading if, at the relevant
time, the director was engaged in a course of conduct which was reasonably
likely to lead to a better outcome for the company.
Gaining a better understanding of the safe harbour
provisions, and availing of the regime, could assist companies who are
experiencing financial distress, particularly in the current COVID-19 climate.
Entering
safe harbour
A director should look to have a company enter safe
harbour as soon as they suspect that the company may become insolvent. In the
current economic uncertainty surrounding COVID-19, directors are urged to err
on the side of caution when it comes to decisions on entering safe harbour.
An independent safe harbour committee should be
appointed, with the chair of that committee responsible for complying with the
necessary safe harbour provisions. This leaves the chair of the board free to
focus on commercial options and strategies for navigating safe harbour, based
on what the company and shareholders are seeking to achieve. It also ensures
that the process remains impartial, professional and less emotional.
Once in safe harbour, strategies to resolve the
situation and save the company need to be both pursued and abandoned quickly if
they are not a viable option.
The benefits
of safe harbour
The safe harbour regime provides legislative protection
which essentially “buys the company some time” to explore other options. Such
options may involve capital raising, a merger, acquisition or restructure to achieve
a more viable outcome and remove the risk of insolvent trading.
Unlike administration, receivership or liquidation,
safe harbour remains a private process, meaning that the company does not have
to advertise the fact that it is in safe harbour. This can assist with
maintaining the value of the company’s share price, as well as its general
reputation.
What the
COVID-19 changes mean for corporations
With regards to insolvent trading it is not clear which debts will be regarded as being incurred “in the ordinary course of business”,
particularly in the unusual circumstances surrounding COVID-19. Under the new s
588GAAA(2), the evidential burden will fall upon company directors to show that
the debt was so incurred.
Paragraph 12.18 of the
Explanatory Memorandum for the COVID Act states that a company
director “is taken to incur a debt in the
ordinary course of business if it is necessary to facilitate the continuation
of the business during the six month period … of the [temporary legislation]”.
This may include, for example, a company director taking out a loan in order to
move some business operations online. It may also include debts incurred by
continuing to pay employees during the COVID-19 pandemic.
The amendments appear to apply
not only to debts incurred as part of the ordinary day-to-day trading
operations of a business but possibly also to debts incurred in order to
restructure a business to enable trading through the current COVID-19 crisis. Examples
may include taking out a new working capital loan or the costs incurred in
transitioning to the online delivery of goods and services, etc.
What next?
The safe harbour regime provides a viable option for companies in financial distress and should be considered before the more extreme steps of administration or receivership. The protective regime may be especially pertinent for small businesses who may be struggling in the current COVID-19 economic downturn.
If a director is considering the option to enter safe
harbour, they should always seek appropriate and timely legal advice. This will
ensure that both the director, and the company, remain compliant with all
statutory and regulatory obligations.
Further
reading and sources
Coronavirus Economic
Response Package Omnibus Act 2020
Coronavirus
Economic Response Package Omnibus Act 2020 – Explanatory Memorandum
Safe
Harbour Regime – Q&A and a Case Study, Ash Street Legal, 14 April 2020
Please subscribe to our dedicated COVID-19 blog for all the latest updates on the COVID-19 pandemic. .
We are here to assist you and your company in navigating the ongoing
legislative and regulatory changes in response to COVID-19.
The post Company Law – Navigating to a safe harbour amid COVID-19 appeared first on Wolters Kluwer | Central.

Jacky
Campbell
Partner
Forte
Family Lawyers
The COVID-19 pandemic and the consequent
restrictions imposed by Federal, State and Territory governments have meant
changes to the usual procedures of the Family Law Courts. These changes are
intended to be temporary and are not located in the Rules of either court. The
changed procedures cover witnessing of affidavits, filing of court documents,
listing arrangements of all types of hearings, courtroom procedures, child
dispute services and viewing subpoenas. The courts have also issued guidance
notes to parents about parenting orders and border restrictions.
The Family Law Courts issued “Joint Practice Direction 2 of 2020 – Special Measures in Response to COVID-19” on 31 March 2020. This replaced earlier COVID-19 Practice Directions issued by the two courts and ensures that the procedures in the courts are largely the same. To the extent practicable, the Joint Practice Direction applies to proceedings whether filed before or after 31 March 2020 and will remain in effect until and unless superseded or revoked. In addition, legal practitioners and parties need to follow the 25 March 2020 “Statement from the Hon Will Alstergren – Parenting Orders and COVID-19”, and various news items, Notices to the Profession and protocols on the websites of the Family Law Courts. This update is current as at 9 am on 14 April 2020, but it is expected that there will be further changes due to the evolving impact of the pandemic.
Witnessing of affidavits and other
documents
The Australian
social distancing requirements imposed by the Federal Government include that
people should stay at home, only
go out if it is absolutely essential and keep 1.5 metres away from others. Breaching
the guidelines is an offence under State and Territory laws, although each
State and Territory has interpreted and applied the Federal Government’s requirements
differently. The witnessing of affidavits by legal practitioners appears
to involve actions which breach the law and make the legal practitioner and
client liable to a penalty. Even if the execution of an affidavit is considered
to be “essential’ many legal practitioners and their clients would prefer not
to expose themselves to potentially catching the virus.
The
process for witnessing affidavits is a matter of State and Territory law. The
Law Institute of Victoria issued on 25 March 2020 “COVID-19 Guidance on
witnessing documents electronically” which explains why documents cannot be
witnessed through video-conferencing or other means which are not in person.
This applies to many documents including affidavits, financial statements, financial
agreements and parenting plans. When witnessing a signature on a document, the
witness:
            “(a)      certifies that they were present at the
time the document was signed;
            (b)        certifies that the document attested was
signed by the witness;
            (c)        certifies that the document was signed
voluntarily, so that it was the signatory’s own act; and
            (d)        represents that they attested at the
time they witnessed the signature by the signatory.”
The
objective of the above is directed at providing independent verification in the
event that a party seeks to deny their signature. The witness cannot fulfil
their duty if any part of the process is conducted in such a way that the
witness can later deny any of the matters in (a) to (c) above. The duty in (d)
protects the integrity of the certification process. 
Technology
may be able to address some of these requirements, but not all, particularly
ensuring that the same document is signed by both the signatory and the witness
and being certain that the witness signed voluntarily as there could be
somebody near the signatory who is placing the signatory under duress.
To
address the problem of how affidavits can be witnessed during the pandemic, the
Joint Practice Direction sensibly provides that:
Documents, including affidavits, financial statements and consent orders, required to be signed under the Family Law Rules 2004 or the Federal Circuit Court Rules 2001 may be signed electronically by the deponent and/or the lawyer on the record for that party, including by having the person signing the document type their name in the relevant space in the signature block in lieu of physically signing the document.The courts will accept affidavits (other than where part of a divorce application) and financial statements for filing even if the deponent’s signature has not been properly witnessed. If the judicial officer requires it, the deponent needs to be available by telephone, videoconference or in person, at a court event, to swear or affirm that the contents of the document are true and correct to the best of their knowledge, information and belief.
New South Wales is the first State or Territory to start addressing the problem. The COVID Legislation Amendment (Emergency Measures) Act (NSW) 2020 commenced on 25 March 2002. Section 17(1) gives special regulation-making power:
“The
regulations under any relevant Act may provide for the following matters for
the purposes of responding to the public health emergency caused by the
COVID-19 pandemic –
altered
arrangements for the signature of documents provided for by an Act or another
law, altered
arrangements for witnessing signatures, including requirements for
certification of certain matters by witnesses and verification of identity,
provided for by an Act or another law, altered
arrangements for the attestation of documents.”
Any regulation made under this section
will expire 6 months after the day on which the regulation commences or an
earlier day decided by resolution of either House of the Parliament of New
South Wales.
Similar legislative changes are likely to be proposed in other States and Territories but no legislative changes have yet occurred. Unless and until the necessary legislative and/or regulatory changes are made in the State or Territory in which the affidavit is sworn, an affidavit cannot be sworn electronically.
2. Filing of court documents
Since 24 March
2020, the registry services of the Family Law Courts have been provided
remotely, by telephone and through other online services. Members of the public
and legal practitioners who have an enquiry can contact the Family Law Courts
on: 1300 352 000.
To facilitate matters being dealt with
electronically, legal practitioners and lawyers must eFile or eLodge all
documents. If documents are unable to be eFiled or eLodged, then they should be
emailed to the registry for electronic filing. Court users without access to
the necessary electronic equipment, including self-represented litigants, can contact
the Registry by telephone for assistance. Hard copies of documents are not to
be posted or delivered to the registry. 
For affidavits filed in the Family Court of Australia, unless total annexures exceed more than two centimetres in width, the annexures should be attached to the affidavit when it is electronically filed or emailed to the registry. This temporarily over-rides r 15.08(2) of the Family Law Rules 2004.  The reference to 2 cm is not very helpful because most lawyers are working electronically and may not print out all of the annexures, and paper thickness varies. As a rough guide, 2 cm is about 200 sheets of paper. If the annexures to an affidavit exceed two centimetres thick, application can be made to the registry case co-ordinator who may liaise with the duty registrar or docket judge. If the application is granted, the affidavit should be emailed to the court or, if email or other electronic means is not possible, USB stick containing those documents can be delivered to the registry with the permission of the court.
For interim proceedings in the Federal Circuit Court, the pre
COVID-19 procedure continues to apply. Practice Direction No 2 of 2017 provides
that unless express leave is granted by the Judge into whose docket the matter
has been allocated, any affidavit in support of an interim application must not
exceed 10 pages in length or contain more than 5 annexures.
Registry staff may be unable to process fee payments where they are working from home and are unable to access an EFTPOS terminal, so a fee payment for a scanned form or document that has been emailed to the court may be “deferred”. Where registry staff are able to come into the physical court premises they will continue to process payments for forms that have been scanned and emailed to the court. The process for online payments, including when eFiling, remains unchanged
3. Listing arrangements
The situation with listing
arrangements has changed with the developing advice from the Commonwealth
Government Department of Health and as further restrictions are imposed by the
Commonwealth, State and Territory governments on social distancing. On 18 March
2020 in a Notice to the Profession, the Family Law Courts announced:
“1.        Due to the nature of family law work, including child related and family violence aspects, urgent and priority trials and contested hearings will remain listed and will be conducted in the safest manner possible.
2. Non-urgent property only trials may be adjourned, as well as non-urgent parenting trials at the discretion of the Judge.
3. If trials or hearings can appropriately be done by telephone, they will be done that way.
4. High volume lists that are required to be conducted in person will be staggered to reduce the number of people in attendance.
5. The number of people to attend a courtroom at any one time (other than the judge and their support staff) will be limited to 8 people (‘8 person in-court cap’). Additional people involved in matters must remain outside the courtroom.
6. The balance of the Sydney Federal Circuit Court callovers were vacated and adjourned to a date to be fixed. Callovers in the Federal Circuit Court in Brisbane, Parramatta and Adelaide were postponed until further notice.”
On 19 March
2020 and 9 April 2020 further Notices to the Profession set out more detailed
guidance. The main way in which work will be conducted in the courts in the near future will be
by telephone and, where possible, by videoconferencing. The courts are using
Microsoft Teams for video-conferencing, but it is not necessary for the legal
practitioners and their clients to have downloaded this software as the courts
provide a link. Only a small number of exceptional matters will be dealt with
by in-court face-to-face hearings, which will be conducted pursuant to
the face-to-face in-court protocol which is outlined below.
Now that Microsoft Teams has been rolled out across the courts, the court is trying to recommence the callovers of the Summer Campaign.
First Return Duty Lists, Abridgments, Mentions, Directions, and Interim Hearings
Appearances for these hearings will generally be by telephone using the following procedure:
Parties will be advised by the court that the matter will be heard by telephone;A party may approach the court seeking that (a) the matter not proceed by telephone hearing because it is not practicable to do so or (b) the matter is urgent and requires a face-to-face hearing in court.Requests for face-to-face hearings should be made to the chambers of the presiding Judge or the case-coordinator as appropriate by email. These requests should give a brief outline as to why the matter is urgent and should remain listed for a face-to-face hearing. If the Court directs the parties to proceed by face-to-face hearing, the face-to-face in-court protocol applies;If it is not practicable for the matter to proceed by telephone, and the matter is not urgent, the Judge may administratively adjourn the matter to a date to be advised and, if appropriate, send it to an ADR event;If the matter proceeds by telephone, parties will be requested by the court to provide their direct telephone contact details to the court by no later than 4:00pm two business days prior to the listing. Parties will be given an estimated time for their hearing to commence and must ensure they are available by telephone until they receive the court’s call.For Duty Lists, the courts require practitioners to consider:
“7.1. Are there serious risk factors in this
matter?
7.2 What are the major issues in dispute in
the case?
7.3 If related to parenting, are the parties
able to agree on an interim arrangement?
7.4 Would the parties benefit from a
conference with a Registrar, and if parenting, including a Family Consultant?
7.5 Can disclosure be limited to particular
topics?
7.6 Can it be heard on a preliminary point
which might then lead to the whole proceeding being settled?
7.7 Is the case appropriate to be sent to
mediation or another form of ADR?
7.8 If the matter is a property case, should
it be sent to arbitration?
7.9 What other orders could the court make by
consent to progress the matter?”
If any of the above are relevant, practitioners should raise these issues with the Duty Judge and seek orders, preferably by consent.
8. If parties agree as to the future conduct of the matter, proposed interim consent minutes may be submitted by email to the court for consideration.
9. Matters in a duty list where no Notice of Address for Service or Response has been filed will remain listed to be dealt with face-to-face in court, but with the Applicant to appear by telephone. The name of the Respondent will be called outside the courtroom in the usual way.
Final hearings
The Courts have rolled out Microsoft Teams and now have greater capacity for electronic hearings, and the courts will attempt to conduct as many hearings as possible. The courts will rely on the profession to assist by cooperating with the use of technology, adapt to new practice directions and be progressive. Any matter that is currently listed will proceed electronically where possible. Where a case has to be vacated or requires a face-to-face hearing (especially if it is not urgent and requires a face-to-face hearing of more than 1.5 hours), it will be placed in a national pool and be listed as soon as the operations of the courts allow.
For matters that either have a trial date or are seeking one, practitioners can approach the courts to seek orders that may help to facilitate an electronic hearing. They could include:
• written opening and closing submissions
• the provision of objections to evidence and a ruling before the hearing
• narrowing of issues
• a statement of agreed facts
• limiting time for cross examination
• the provision of an electronic court book and tender bundle, or
• a suggested trial timetable.
Practitioners should consider carefully whether there is any reason why trials of particular matters cannot properly be heard via Microsoft Teams. If there is a dispute about whether a trial should proceed via video, the docketed Judge will determine that dispute. Practitioners have been warned that they should not assume that resistance to a video trial will automatically be successful.
For final hearings, the following procedure will generally be followed:
The presiding Judge will conduct a telephone callover of all
matters listed in their docket for a defended hearing in the next 2 months.During the telephone callover, parties should inform the Judge
of the urgency and status of the case, whether it may be susceptible to hearing
by video or telephone either partly or fully, and whether it should be given
priority over other cases listed for trial in that period.Cases that are assessed to be of a lower priority may be sent to
an ADR event, either to a private mediation or a conference with a Registrar
and/or Family Consultant, and the matter will otherwise be adjourned for trial
on a date to be advised.Practitioners are encouraged to consider how they can effectively
facilitate ADR within the parameters of appropriate social distancing,
including using videoconferencing or shuttle mediations.Cases that are assessed to be of a high priority, and remain
listed for hearing, should follow the face-to-face in-court protocol, including
giving consideration to conducting parts of the hearing by telephone or written
submissions after the 1.5 hour time period has elapsed.Subject to any further developments or Government restrictions,
this process may then be repeated for matters listed for final hearing in 3 and
4 months’ time.
Appellate family law proceedings
The following arrangements apply
to the Appeal Division of the Family Court of Australia at least until the end
of May 2020: 
Appeals in Sydney will be conducted
for no longer than 1.5 hours face to face in court with a judge or judges
appearing by video or telephone where necessary.Appeals in Adelaide will be
conducted with the presiding judge in the courtroom for no more than 1.5 hours
face-to-face in court and the other two judges otherwise appearing by video (or
telephone if necessary).Appeals in Melbourne will be conducted in a courtroom with all
three judges appearing by video (or telephone if necessary).It may not be possible to list all appeals that are currently or
will shortly be ready for hearing, and priority will be given to matters that
are deemed urgent. Only one appeal will be listed each day.Counsel (and their instructing solicitors where necessary),
solicitor advocates, and self-represented litigants are expected to attend the
court where the appeal is being heard, but requests can be made to attend by
telephone depending on the circumstances and the nature of the appeal.It is not necessary for parties who are legally represented to
attend in person at the hearing, and through their legal representatives they can
request to listen in by telephone.All documents to be provided to the bench must be sent
electronically to the Appeal Registrar no later than 24 hours prior to the commencement
of the hearing. A chambers order to that effect will be made by each Appeal
Registrar in all appeals where a directions hearing has already been held. This
order will be a standard order made at each future directions hearing.All directions hearings before Appeal Registrars will be
conducted by telephone.Single judge appeals and Applications in an Appeal will be
conducted as directed by the judicial officer hearing them however, any hearing
will not exceed 1.5 hours face-to-face in court and may be continued by
telephone or by written submissions.For all Applications in an Appeal, all parties will be asked
whether the application can be determined on the papers.
Telephone hearings
Parties will be provided with a listing time
and operational instructions for the telephone hearing by the court. Only the
Judge and Chambers staff will be in the courtroom. Interpreters will also
appear by telephone if possible. If a telephone hearing is not practicable, and
the matter is not urgent,
then it may be adjourned to a date to be advised. If a telephone hearing is not
practicable and the matter is urgent,
it will remain listed for a face-to-face hearing at the discretion of the
Judge.
Reserved judgments will be
delivered in an empty courtroom, and reasons for judgment emailed to the
parties in the usual way, noting that no appearance is required.
Face-to-face hearings
Any urgent matter which requires a face-to-face hearing must adhere to the face-to-face in-court protocol which is explained below.
Hearings on the papers
Judges are encouraged to consider any matter on the papers where possible in accordance with the usual Rules of Court.
4. Face-to-face in court protocol
The Face-to-face in court protocol is designed to reduce the risk of infection for Judges, staff and court users when conducting face-to-face court hearings. The major features are changes to listing and courtroom procedures.
Listings
There will be far fewer hearings which involve the parties and their legal practitioners being in a courtroom. These are now called face-to-face hearings. Priority for face-to-face hearings will be given to urgent matters that the Judge considers cannot be dealt with over the telephone.
Listings will be staggered to
reduce the number of people waiting in the building. Short matters for mention
or directions hearings will be listed at 30 minute intervals. Longer contested
matters will not be listed for more than 1.5 hours, and with sufficient time in
between listings to allow cleaning to occur.
The length of face-to-face
hearings will be reduced, where possible, with written submissions and telephone
hearings.
Courtrooms and courtroom procedure
Courtroom procedure has changed
to adhere to social distancing restrictions. The following procedures apply:
No party is to enter the courtroom before their matter is
called.No more than 8 people (excluding the Judge and Associate) may be
in the courtroom at any one time. This restriction was calculated by Chief
Justice Will Alstergren who, according to the Australian Financial Review (“Why eight is enough for federal
courts”, Michael Pelly, 19 March 2020) took seven people with him to one of the
Melbourne courtrooms, directed people where to sit and took out a tape-measure
to do the measuring Counsel, solicitors and parties are to adhere to social
distancing by sitting in designated seats as indicated in the diagram on the
door of the courtroom and in the seats marked in each courtroom (i.e. at least
1.5 to 2 metres apart).Appearances will not be required until the hearing commences,
and they should be provided from the Bar table orally, not advised to the
Associate. Parties cannot approach the Associates’ desk.Hearings will be conducted for not more than 1.5 hours in the
same matter.Hard copy documents cannot be handed up, so they will need to be
provided to the other party and to the court by email.Parties must leave the courtroom immediately after their hearing
has concluded, and go promptly to the Registry exit.
Cleaning and Security
Additional cleaning of courtrooms
that are used for face-to-face hearings will occur as often as practicable
between hearings and when the court is adjourned during the day.
Security will ensure social distancing
is observed whilst court attendees are queuing for security.
Contactless thermometers may be
used to allow for non-invasive temperature measurements prior to parties and
legal practitioners entering the Registry buildings.
Court attendees displaying symptoms
In the event that any court attendees become ill or display any symptoms of COVID-19, they should immediately notify the court and leave the Registry. The court will be adjourned and appropriate steps taken, including any deep cleaning required.
5. Parenting orders
The purpose of the Statement from the Hon Will Alstergren – Parenting Orders and COVID-19 published on 26 March 2020 is to clarify that the Family Law Courts remain open to assist parties, and to provide parents with some general guidance, but with the understanding that every family’s circumstances are different. The Statement reminds parties that “the law requires separating families who have a dispute about children to make a genuine effort to try to sort it out through family dispute resolution (FDR) before filing an application for parenting orders in court.” Unless one of the few exceptions to this requirement applies, such as cases involving family violence, child abuse or urgency, parties seeking to have a parenting matter determined by a family law court will need to electronically file a certificate from an accredited FDR practitioner issued under s 60I of the Family Law Act 1975 (FLA). In addition, the radio interview by Chief Justice Will Alstergren with radio station Triple M on 27 March 2020 is on the Family Law Courts’ websites in which His Honour summarises actions taken to ensure the courts remain open and gives sensible advice to parents about parenting arrangements.
The following points are made in the Statement with respect to
parenting matters:
“1.        It is imperative that parents and carers act in the best interests of their children. This includes ensuring their children’s safety and wellbeing. Whilst the courts make orders that are determined to be in the best interests of a child, caring for and determining the practical day-to-day best interests of a child is primarily the responsibility of parents and carers.
2. Consistent with their responsibilities to act in the children’s best interests, parents and carers are expected to comply with court orders in relation to parenting arrangements. This includes facilitating time being spent by the children with each parent or carer pursuant to parenting orders.
3. In the highly unusual circumstances now faced by Australian parents and carers, there may be situations that arise that make strict compliance with current court orders very difficult, if not, impossible. This may be caused, for instance, where orders stipulate that contact with a parent occurs at a designated contact centre, which may not currently be operating. Or, the “pick up” arrangements of a child may nominate a particular school, and that school is now closed. Many state borders are also closed. In addition, there may be genuine safety issues that have arisen whereby one parent, or someone in close contact with that parent, has been exposed to COVID-19, and this may restrict the safe movement of a child from one house to another.
4. As a first step, and only if it is safe to do so, parties should communicate with each other about their ability to comply with current orders and they should attempt to find a practical solution to these difficulties. These should be considered sensibly and reasonably. Each parent should always consider the safety and best interests of the child, but also appreciate the concerns of the other parent when attempting to reach new or revised arrangements. This includes understanding that family members are important to children and the risk of infection to vulnerable members of the child’s family and household should also be considered.
5. If an agreement can be reached about new parenting arrangements, even if they are to be adjusted for a short period of time, this agreement should ideally be in writing, even if by way of email, text message or WhatsApp between each other. This will be particularly important if there are later family law hearings and will assist all concerned, including the court, to understand what agreement may have been reached.
6. If you feel that you need further guidance, the Family Relationships Advice Line can provide information, advice and telephone-based Family Dispute Resolution services to assist parents and carers to discuss any issues that arise and help them come to an agreement. The Family Relationships Advice Line can be contacted on 1800 050 321 or visit the website.
7. Parents and carers can also mediate their differences through lawyers. Electronic mediation services are available from the courts and through local Bar Associations and Law Societies during these restricted times. Visit their websites for more information.
8. If an agreement has been reached and consent orders have been developed to outline new or varied parenting orders, consent order applications can be filed electronically with the court. This process is quick and usually conducted without a hearing.
9. If the parties are unable to agree to vary the arrangement, or if it is unsafe to do so, and one or both parents continue to have real concerns, the parties are at liberty to approach the court electronically and seek a variation of the orders.
10. Where there is no agreement, parents should keep the children safe until the dispute can be resolved. Also during this period of dispute, parents should ensure that each parent or carer continues to have some contact with the children consistent with the parenting arrangements such as by videoconferencing, social media or, if that is not possible, by telephone.
11. At all times, parents or carers must act reasonably. To act reasonably, or to have a reasonable excuse for not complying with court orders, is a matter that is considered by the court (pursuant to s 70NAE FLA).
12. It is imperative that, even if the orders cannot be strictly adhered to and are varied by the parties, the parties ensure that the purpose or spirit of the orders are respected when considering altering arrangements, and that they act in the best interest of the children.
13. The courts appreciate that agreement by mutual consent may not be reached, particularly if one party has concern for their physical safety. Therefore, the courts advise that if you or your child is in immediate danger, please contact your local police and seek medical advice if required.”
6. Border restrictions and shared parenting orders
On 8 April 2020 the Family Law Courts
issued a statement about the restrictions imposed by some Australian States and
Territories on residents who are travelling across State and Territory borders
in response to the Government’s protocols for non-essential travel. Some of the
restrictions also involve strict quarantine requirements.
These border restrictions may affect
families with court orders for shared-parenting arrangements that require
children to move from one household to another across State borders. Border arrangements
are primarily a matter for each State or Territory government, and there is
currently no national approach to how parents should deal with this situation.
Families should seek advice from the relevant State and Territory authorities
about how the border restrictions and quarantine requirements may impact them
and their circumstances. For example, there may be exemptions that enable
families with court orders in place to travel across State or Territory
borders. Links to each State and Territory website have been provided in the “COVID-19: Border restrictions and shared parenting
orders” page on the websites of each of the courts.
When crossing State or Territory borders, parties may be required to provide the appropriate court order, as evidence of essential movement, to border control personnel, so they should ensure that they carry current photo identification. Ideally, they should also have a hardcopy of the appropriate court order, or at least an electronic copy or photo of the court orders.
7. Child dispute services
Child Inclusive Conferences under s 11F of the FLA will only be ordered where the Judge considers there is an urgent requirement for a family consultant to see the children. This will primarily relate to urgent matters in duty lists. Otherwise Child Dispute Conferences will be ordered. Child Dispute Conferences involve only the parties with the Family Consultant and not the children.
All Child Dispute Conferences will be conducted by
telephone. Parties will be sent dial-in details with AAPT numbers or,
alternatively, will be asked to provide their contact details. There will be no
requirement to attend court in-person.
Family report interviews scheduled will proceed as
arranged, unless the parties are advised otherwise by Child Dispute Services (CDS),
but will be conducted consistent with social distancing principles as far as
possible.
The “Child dispute services – interview protocol” is designed to reduce the risk of
being in close contact with a court user who may be infectious with COVID-19.
A close contact is typically someone
who has been face-to-face for at least 15 minutes, or been in the same closed
space for at least 2 hours, with a person that was infectious (World Health
Organisation definition). The protocol is to be used in addition to the usual
COVID-19 hygiene practices of regular washing of hands and not touching one’s
face.
Wherever possible, face-to-face interviews should not take place and should instead be conducted electronically in accordance with the CDS Guidelines for Conducting Assessments.
Interviews will be
arranged to minimise the number of people coming into the court at any one
time. Face-to-face interviews with children and parent/child observations must
be limited to a maximum of 1.5 hours with the same individual(s). Observations
will occur in a separate room to that used for the interviews with children. Interviews
with, and observations of, the children will be from one family per day.
As interviews will adhere
to the ‘4 square metres’ rule, CDS may need to make special arrangements to use
larger rooms where possible.
During interviews or
observations, taking into account the age of the child, Family Consultants are,
to the extent possible, to keep an appropriate distance (i.e. at least 1.5 to 2
metres apart) from parents and children.
Additional cleaning of interview rooms is being arranged and hand sanitiser is being sourced.
8. Viewing subpoenas
Subpoena viewing at all registries of the courts is
by appointment only. Requests for an appointment should be made by emailing the
relevant registry.
Access to subpoenaed material that has ‘photocopy access’ may be provided at the discretion of the registry. Registry staff will email approved documents. Photocopy access will not be made to documents including a child welfare record, criminal record, medical record or police record, in accordance with r 15.30(2) of the Family Law Rules 2004 and r 15A.13(2) of the Federal Circuit Court Rules 2001.
Legal practitioners and parties should only make appointments to view subpoenaed material if the matter is critically urgent. 
9. Mediations and Arbitrations
Now, more than ever alternative dispute
resolutionis being encouraged by
the courts.  In the 9 April 2020 Notice
to the Profession, parties and their lawyers are reminded that there is
software which allows electronic medications such as Microsoft Teams, Zoom and
Immediation. Registrars are also being trained to conduct conferences by
Microsoft Teams and Immediation.
The courts also expect that arbitration will become more popular and, to assist with this, a specialist national list Judge will be appointed in each Court to hear and manage applications and directions for cases that have been referred to arbitration.
10. Conclusion
There has been a flurry of Notices, Protocols and other material issued by the Family Law Courts. The social distancing requirements imposed by governments and the general impact of COVID-19 have meant that the Family Law Courts have had to change their procedures temporarily to ensure that they can still operate, albeit at a slower speed, and giving priority to urgent matters. More changes are expected as the courts address issues arising from the ongoing pandemic.
14
April 2020
The post COVID-19 Changes to procedures of the Family Law Courts appeared first on Wolters Kluwer | Central.

By Michael Tooma, Managing Partner, Clyde & Co Australia
The COVID-19 pandemic has already claimed over 45,000 lives worldwide with almost one million confirmed cases as at 3 April 2020. In Australia, there are over 5,000 confirmed cases with over 24 fatalities. The public health response to this, very sensibly, has been to require social distancing and isolation and quarantine for those with the virus or at high risk of having acquired the virus because of overseas travel, for example.
Australian businesses have shown great leadership throughout this crisis. Most businesses were early adopters of the social isolation policy, long before any government restrictions required them to do so. For the most part, businesses that could operate remotely did so at the beginning of the crisis, in part as a response to their civic duty to promote public health and in part as part of discharging their duty of care to their workers. That approach is commendable, appropriate and indeed legally mandated on any reading of the duty of care. It also comes with hidden risks that must be appropriately managed through other controls. Chief amongst these is the mental health risk to workers as they work in isolation.
Even before this pandemic, Australia was experiencing a mental health crisis. According to an Australian Bureau of Statistics study, 45% of Australians between the ages of 16-85 will experience a mental health condition in their lifetime.[1] One in five Australians (21%) have taken time off work in the past 12 months because they felt stressed, anxious, depressed or mentally unhealthy.[2] The uncertainty surrounding the pandemic is likely to accentuate what was already a major health and safety issue facing workplaces.
Social isolation can make the problem even more difficult to manage. We humans are social creatures. We crave social interaction. Social isolation is bad for our mental health at the best of times. At times of uncertainty it is far worse. If our baseline of mental health is low to start with going into this crisis, the impact may be catastrophic for many. This is an entirely foreseeable risk. It is a risk that falls squarely within the duty of care of persons conducting a business or undertaking.
The usual strategy for managing mental health risks hinges on increased social interaction, on being on the look-out for signs of mental health concerns, and on intervening to offer assistance and support. This is more difficult, but not impossible, in a remote or virtual workplace setting.
It is crucial at this time that persons conducting a business or undertaking implement targeted strategies to address mental health in their workplace in the COVID-19 disrupted world. At a minimum, this should include regularly checking-in on their workers to make sure they are okay. There has never been a greater need to promote awareness of mental health in the workplace and to encourage people to reach out and seek assistance if they are not feeling okay. More broadly, businesses need to promote strategies and programmes in this disrupted world that build personal mental health resilience. That includes meditation, sleep, exercise, nutrition, recognising and unlocking the power of positive rituals to cue mindset change, and changing the mindset to stress from a threat mindset to a challenge mindset.
Mental health of workers is a key part of the duty of care of persons conducting a business or undertaking. As we collectively respond to this crisis, it is crucial that we build in controls to minimise the unintended mental health impact of broader health risk controls.
Visit our CCH Learning website, to view further information on our upcoming complimentary webinar on The hidden risk of COVID-19: mental health.
Michael is also the author of Michael Tooma on Mental Health, a book recently published by Wolters Kluwer. The book outlines a step-by-step framework for holistically and systematically managing mental health risks and promoting positive mental health outcomes in workplaces. Find out more >

[1] TNS,
(2014), State of Workplace Mental Health in Australia, Beyond Blue, p 1.
[2] Ibid.
The post The hidden COVID-19 liability risk – mental health appeared first on Wolters Kluwer | Central.

Issue
You are the accountant of a small business operation out of the northern suburbs of Sydney, named GE Landscape Architecture Consulting (GELAC). The business revolves around its two principals, Genevieve and Emma. They are both landscape architects with Genevieve specialising in projects and urban development work, and Emma being an expert in sustainability management and public park management.
GELAC’s ownership structure is a unit trust, with 100 units held by Genevieve’s private company and 100 units held by Emma’s family discretionary trust. They both take a principal’s salary and have company cars, with the balance of income distributed to the unit holders each year. Generally, this additional income is mainly reinvested into the business for working capital. Occasionally, they have decided to make a “pay-out” (ie. distribution) to the respective ownership entities of additional profits.
Before COVID-19, GELAC earned revenue through both one-off project work and long-term contracts on retainer. However, once the COVID-19 pandemic started to take hold, a large amount of the anticipated project work dried up. Most of the work that was on retainer was maintained, however this was less than half of forecast income.
You have requested that GELAC update their revenue projection from the 12-month forecast completed at the start of the 2020 calendar year. The changes to revenue projection are as follows:
Contract income12 mth projectionPre-COVID6 mth projectionduring COVIDUrban development consulting125,00015,000Local government councils225,00056,250Private land – projects280,00020,000Private land – consulting105,00052,500Park management75,00037,500Sustainability consulting140,00035,000Total projected income950,000216,250
Based on these numbers, GELAC is expecting to receive less than half of its anticipated income. And that revenue is reliant on income from retainers which is not guaranteed to be paid immediately after invoicing. Although, the principals are positive about receiving the income which they have contracted.
Along with the earlier forecast completed, the business has budgeted to have a cash outflow of $895,600 for the year, leaving a forecast cash surplus for the 12 months of $54,400. These outflows include the payment of 8 staff members, including the principals. Before COVID-19, the projected annual payments for staff were as follows:
Staff memberYearly salaryPrincipals ($120,000 each)240,000Office manager72,000Senior planner92,000Senior consultant90,000Assistant landscape designer66,000Assistant junior architect62,000Assistant junior project planner58,000Annual salary680,000
Superannuation of 9.5% is expected to be $64,600.
With anticipated income expected to drop from $475,000 to $216,250 over the next 6 months, GELAC is in a dilemma. The new forecast for the 6 months, due to COVID-19, is as follows:
Pre-COVIDCOVIDRevenue475,000216,250Costs(447,800)(447,800)Net cash increase/(decrease) (6 months)27,200(231,550)
As the majority of GELAC’s expenses relate to staff, in order to ride out the downturn from COVID and have any chance of long-term survival, Genevieve and Emma must take action. It is clear that they are unable to sustain losses at this level.
It is 27 March and they have come to you, their accountant, for advice. Under the current environment, they have decided that the only action they can take in order to save the business long term is to make the following decisions:
Each principal will take a 50% pay cut for the next 6 months and will use personal money to make repayments on company cars. No money will be spent on fixed assets for the next 6 months, at least. They will close the office, and significantly reduce their variable overheads. It is expected, due to the reduced income and less travel to sites, they budget $900 per month going forward. They will have to make their 3 junior staff redundant. For the time being, it is more important to keep their senior staff, asking them to take up more of the junior work. In order to retain the seniors, they will ensure they do not take a pay cut.
Based on the 4 decisions, as well as the reduction in anticipated income, you are asked to complete a new forecast for COVID-19, being 6 months at this stage. This includes providing advice on government stimulus packages.
Solution
Cash flow relief for small and medium businesses
As announced on 12 March 2020, and subsequently made into law on 24 March 2020, cash flow relief is available for small and medium businesses. The assistance is available in the form of a credit to PAYG tax withheld of employees. Therefore, the assistance is only available when GELAC lodge its Activity Statements.
The credit is applied automatically to the business’s Running Balance Account with the Australian Taxation Office (ATO), meaning that no payment of tax withheld is required. GELAC is able to utilise this assistance as their annual business turnover in the previous income year was under $50m. Also, as noted above, they are an employer of staff, and are lodging activity statements during the period of 1 January 2020 to 30 June 2020.
The credit to be applied is equal to 100% of the PAYG tax withheld for each quarter. Any business who employs staff is able to receive a minimum credit of $10,000 per quarter, with a maximum of $50,000 per quarter.
As GELAC lodges monthly activity statements for wages (annual tax withheld is over $25,000), the March monthly lodgement will have a credit applied equal to 300% of the PAYG tax withheld. This covers the 3 months of payments where other withholders are lodging quarterly statements for March 2020.
As the junior staff have been made redundant in March, the amounts withheld from their termination pay will count against this credit balance. This is because the credit applies to any amount withheld under TAA 1953 Subdiv 12-B, 12-C or 12-D, as enacted by parliament. The three juniors received a redundancy payment of about 5 weeks wages, plus any annual leave and long service leave entitlements owed. The redundancy pay-outs, for all 3 staff, were as follows:
AmountRedundancy payment27,500Taxable components (LSL/AL only)7,750PAYG tax withheld (32%)(2,480)Net payment to staff25,020
Based on the yearly staff salaries listed above, per month the regular payments for all 8 staff totalled $56,667 gross, with $14,165 tax withheld. However, with the reduced staff numbers as well as the principal’s pay cuts, the monthly amounts for April through June 2020 will be $31,167 gross and $7,250 tax withheld. That equates to a grand total of $71,685 in PAYG tax withheld credits to apply against GELAC’s Running Balance Account. The following table shows the workings:
YearlyMonthlyWithheldJun qtrWithheldPrincipal120,00010,0002,8605,0001,023Principal120,00010,0002,8605,0001,023Office manager72,0006,0001,3696,0001,369Senior planner92,0007,6671,9507,6671,950Senior consultant90,0007,5001,8857,5001,885Ass’t l’scape design66,0005,5001,196––Ass’t architect62,0005,1671,079––Ass’t project off.58,0004,833966––Salary costs680,00056,66714,16531,1677,250Redundancies – March 202027,5002,480––Total PAYG tax withheld16,6457,250Credit benefit for March (300%)49,935
The credit for March is $49,935 which is under the $50,000 limit. Based on income levels stated above, it is anticipated that GELAC will receive a cash refund from their Running Balance Account of about $45,000 in April 2020. The May, June and July instalments of $7,250 will also be credited against their account, removing the future liability.
Overall, the cash flow relief has improved the business’s cash position over the next 6 months by $49,935 + ($7,250 × 3) = $71,685.
JobKeeper payment
The following week after the meeting, you become aware that the government announced the JobKeeper payment scheme to subside wage payments to employees. The JobKeeper payment of $1,500 per fortnight per employee will be paid to the business, on the proviso that they pay staff. The payment is also subject to eligibility requirements, which are, at the time of writing, as follows:
Business must have had a 30% reduction in turnover compared to a year ago. This moves to a 50% reduction for businesses with a global turnover greater than $1b. The business must have an employment relationship with eligible employees as at 1 March 2020 (ie. does not extend to contractors). Employers must confirm that each eligible employee is currently engaged to work, which will be verified by Single Touch Payroll. The business cannot be subject to the Major Bank Levy.
The easiest way to show the ATO that there is a reduction in turnover is through the Business Activity Statements as it is a regular statement made on turnover. However, for most businesses, the reduction in turnover may only be felt after a shutdown, which occurred in mid to late March, or into April etc.
In order to qualify, it may be necessary for GELAC to show their anticipated revenue for the next 6 months, as well as the usual amounts received from one-off contracts that will no continue. This may be difficult in the immediate time frame. At the time of writing, it is likely that a declaration with the ATO is sufficient to qualify, and would be made on a monthly basis in accordance with receiving the payment.
To register the business to be part of the JobKeeper payment scheme, the application is made via the ATO with a form on their website. Proceed to https://www.ato.gov.au/Job-keeper-payment/
GELAC registers on the understanding that there will be 5 staff members who are retained. Even though an option exists to “re-hire” the junior staff that they have made redundant, they have already paid them out. To be eligible for the payment, the business must continue paying staff. This leaves the principals in an awkward position about whether to re-hire or not. However, in the immediate term, they choose not to do so.
Once the application is approved, the payments begin in the first week of May. The amounts are paid monthly in advance, as follows:
MonthDate receivedNo. of fortnightsJobKeeper paymentApril8/5/20202$15,000May5/6/2020215,000June3/7/2020215,000July7/8/2020322,500August4/9/2020215,000September2/10/2020215,000Total$97,500
The JobKeeper payments are made by the Commissioner of Taxation to the business via their Income Tax Account on the business portal. Therefore, it is advisable that the accountant reviews the income tax account financial institution details to confirm their accuracy.
In GELAC’s case, they probably do not have an Income Tax Account with the ATO as they are legally a unit trust. Therefore, the ATO is able to send the refunds via the Running Balance Account.
Update of cash flow forecast
In order to finalise the request of the principals, the accountant updates the 6-month projection of the business with the anticipated revenue figures. This includes the updated advice regarding changes to planned expenditure.
The updated cash flow forecast is as follows:
AccountOriginalprojectionUpdatedprojectionContract revenue$475,000$216,250Less:Salaries($340,000)($187,000)Superannuation($32,300)($17,765)Redundancies–($27,500)Rent($37,500)($37,500)Fixed asset expenditure($12,500)–Fixed overhead costs($7,500)($7,500)Variable overhead costs($18,000)($5,400)Total cash outlays($447,800)($282,665)Net cash increase/(decrease)$27,200($66,415)Cash flow benefit – PAYG tax withheld–$71,685JobKeeper payment–$97,500Overall cash balance$27,200$102,770
Despite the projected overall cash position being much better than anticipated, it is made up from two clear factors:
The principals still must decide whether they are able/willing to take a 50% pay cut for their business for half the year.The business still needs to receive that revenue listed at the top of the forecast.
It is not necessarily clear whether the organisations who contract to GELAC for services will be in a position to pay their invoices or retainers over the next 6 months due to COVID-19.
In order to show the overall cash balance in another way, the accountant decides to show the break-even point from the numbers above. Total cash outlays ($282,665) less the projected increase in cash balance ($102,770) provides a break-even point of $113,480.
The break-even point is the minimum amount of revenue that the business needs to receive in payment to pay for the expenses. The amount of $113,480 represents 24% of the income expected to be received before COVID-19.
The break-even point excluding all payments to the principals (ie. they receive nothing for 6 months, including superannuation) and keeping the 3 senior staff only is $47,780 for the 6 months.
Other options available
Based on the risk profile of the principals, as well as the probability that the outstanding retainer income will be received over the next 6 months, options are available to the principals.
Options include:
The principals taking a “leaner” pay cut (ie. 25% or 0% instead of 50%). This would allow greater benefit from PAYG tax withheld for the months of April to June to be received, but increases the break-even point.The principals staying with the 50% pay cut but re-employing the junior staff (or rescinding their termination). This would bring more allowances from the government in the form of PAYG tax withheld benefit and JobKeeper, but again increases the break-even point.
With both of these other options, there remains a situation that the business may run a loss from a tax perspective for the 2019/20 income year. This would mean that the principals are effectively paying tax on income that they have not yet earned.
The other options are made available to the principals, so that they can make the decision that is best for their business.
OptionNet cashpositionBreak-evenpointPrincipals 50% pay cut; reduce staff$102,770$113,480Principals 25% pay cut; reduce staff$75,092$141,158Principals No pay cut; reduce staff$48,092$168,158Principals 50% pay cut; keep all staff$89,218$127,032
The decision is up to the principals. However, they should understand and acknowledge that the government assistance, at this stage, will only be available for 6 months.
The post Worked example: Cash flow analysis for keeping staff amid COVID-19 appeared first on Wolters Kluwer | Central.

The OECD has published a global reference on the actions that each country is taking to support its taxpayers. These actions include measures to address cash flow concerns, difficulties in meeting reporting and payment deadlines and communication initiatives.
The intention of this document, which will be updated on a regular basis, is to assist administrations in the consideration and development of their domestic measures.
Measures for individual taxpayers generally focus on preventing hardship and reducing burdens given the restrictions in place in a number of countries. Measures for businesses, both legal entities and the self-employed, generally focus on helping to alleviate cash-flow problems to help avoid escalating problems such as the laying off workers, temporary inability to pay suppliers and, in the worst cases, closure or bankruptcy.
While some of the measures described in the document are within the general powers given to tax administrations, including powers which require special circumstances to be triggered, other measures may require legislative changes.
A database of the tax policy measures taken by governments around the world has also been compiled and can be downloaded from here.
Actions undertaken by different jurisdictions are grouped as follows.

The post OECD publishes countries’ COVID-19 response appeared first on Wolters Kluwer | Central.

By Andrew
Fricot, Founder and Director, Payroll Tax Solutions Ltd.
Various Australian
state and territory governments have announced several measures to ease the
financial tax burdens they impose on many businesses that operate in their
jurisdictions amidst the COVID-19 outbreak. Some of the relief measures have
been changing from week to week in this volatile climate. Below is a summary of
various measures that states and territories have introduced as at 3 April
2020 to assist payroll tax paying businesses:
NSW
Businesses with total grouped
Australian wages for the 2019-20 financial year that are no more than $10
million will have their annual tax liability reduced by 25% when they lodge
their annual reconciliation, which is due on 28 July 2020.For those businesses who lodge
and pay monthly, no payment for the months of March, April or May 2020 will be
required. When lodging the Annual Reconciliation,
businesses will still need to provide wage details paid in these months and
will receive the benefit of a 25% reduction in the amount of tax they have to
pay for 2019-20.Businesses with total grouped
Australian wages for the 2019-20 financial year that are more than $10
million will have the option to defer their payment of payroll tax for up
to six months. The deferral will commence with their payment for the March
period which would ordinarily be due by 7 April. More information is still to
come.The $1 million scheduled
tax-free threshold increase has been brought forward from 1 July 2021 to 1 July
2020. 
More
information and updates
Victoria
Small to medium-sized businesses
with wages up to $3 million will have their 2019-20 payroll tax paid to
date refunded. The eligible businesses must continue to lodge returns, but will
not be required to make any further payments for the rest of the financial
year.The same eligible businesses
will also be able to defer any payroll tax payments for the first three months
of the 2020/21 financial year until 1 January 2021.
More information and updates
Queensland
Businesses whose total grouped
Australian wages is $6.5 million or less may be eligible for a refund of
payroll tax for 2 months (November and December 2019) and pay no payroll tax
for 3 months (January to March 2020). Additionally, the eligible businesses may
apply for a deferral of payroll tax for the 2020 calendar year. (Previous
applicants need not reapply – it will be extended.)For businesses whose total
grouped Australian wages is greater than $6.5 million that have been
negatively affected by the coronavirus, they can apply for a deferral of tax
for the 2020 calendar year. (Previous applicants need not reapply- it will be
extended.) Additionally, they can apply for a refund of their January and
February 2020 payroll tax.All
businesses are still required to lodge their returns on time despite approval
for the deferral of payments.
More
information and updates
Western Australia
One-off
grant of $17 500 for employers (or grouped employers) with total annual
Australian taxable wages more than $1 million and up to
$4 million. For a group of employers, a single grant will be payable to the
designated group employer. Grants will be automatically paid by cheque from 1
July 2020.Payroll
tax will be waived from March to June 2020 for businesses with Australian wages
that are less than $7.5 million (grouped on non-grouped) as at 30 June
2020. If a business is part of a group, it is the Designated Group Employer
(DGE) who is responsible for determining the group’s Australian wages and
notifying their other group members if they should apply the waiver. Non-DGE
group members must keep evidence of their correspondence with the DGE. Businesses with total
Australian wages less than $5 million as at 29 February 2020 they will not
need to apply for the waiver as its automatically applied. All other payments
up to and including the February lodgement and payment are required to be
up-to-date. For businesses with total
Australian wages of $5 million or more, but less than $7.5 million as at
29 February 2020, or new employers from 1 March can apply to defer lodging and
paying returns for the remainder of the 2020 financial year. If total wages
exceed $7.5 million by the end of the financial year deferred payments will
become payable by 21 July as part of completing their Annual Reconciliation. If
total wages are less than $7.5 million at the end of the financial year payroll
tax for March to June 2020 will be waived as part of the Annual Reconciliation
process.  The payroll tax threshold will
be increased to $1 million on 1 July 2020. This brings the increase forward
from the planned date of 1 January 2021.
More
information and updates
Tasmania
Small to medium businesses with
annual total Australian wages up to $5 million annually who can
demonstrate that their operations have been affected by COVID-19 will be able
to apply to have their 2019-20 payroll tax waived. The Annual Reconciliation
will still need to be lodged by 21 July 2020 without payment.Payroll tax will be waived for
the entire 2020 financial year for the hospitality, tourism, and seafood sectors.
There are no wage caps applicable to this waiver. The Annual Reconciliation
will still need to be lodged by 21 July 2020 without payment.A one-year rebate for employers
who pay payroll tax and employ new youth employees aged 24 years and under will
take effect from 1 April 2020 to 31 December 2020.
More information and
updates

South
Australia
Businesses with total group
Australian wages of up to $4 million will receive a six-month waiver of
payroll tax for the months of March 2020 through to August 2020. No application
is required and eligible businesses will be contacted via RevenueSA online.
Monthly returns are still required to be submitted, with no payments to be
made.Businesses with total group
Australian wages of above $4 million can apply for a six-month payroll
tax deferral if they can demonstrate they have been significantly impacted by
COVID-19. An online application will be developed in due course. Monthly
returns are still required to be submitted, with no payments to be made until
the Annual Reconciliation is processed.
More
information and updates
  ACT
Industries affected by COVID-19
will have a six-month waiver of payroll tax from April to September 2020.
Affected industries include employers that have been announced as prohibited
business activities in the ACT.  
More
information and updates
Businesses with total group
Australian wages of up to $10 million can defer their 2020-21 payroll
tax, interest free until 1 July 2022. Businesses will need to confirm their
eligibility by applying online for the deferral. Monthly returns and the Annual
Reconciliation will still need to be lodged as normal without the associated
payments.
More
information and updates
 Northern Territory
The
payroll tax exemption for hiring Territory employees has been extended to 30
June 2021. Under this exemption eligible employers may be exempt for up to two
years in relation to wages paid to Territory residents that increase the number
of workers for that business.
More
information and updates
This information
is a current reflection of the measures taken by various state and territory governments
in response to the COVID-19 outbreak. It is important to note that these payroll
tax relief measures may change as governments further adjust their policies, so
check for further updates. For more information or for a wide range of payroll
tax services please feel free to contact Payroll Tax Solutions Pty Ltd on 0412
626 578 or email us on [email protected]

Visit our CCH Learning website, to view upcoming Payroll-related webinars.

About Andrew:
Andrew Fricot is the founder and director of Payroll Tax Solutions Pty Ltd. He has over 15 years professional experience working as a key spokesperson, advisor and educator in the field of payroll tax, grants and rebates.

The post Update: Payroll tax relief measures in response to COVID-19 appeared first on Wolters Kluwer | Central.

By Dr Phoebe Wynn-Pope (Head of Business and Human Rights), Heidi Roberts (Partner) and Natasha Hart (Lawyer) of Corrs Chambers Westgarth.
The New South Wales Modern Slavery Act 2018 (NSW Act) was the first to be passed in Australia. With a threshold comparable to the UK Modern Slavery Act, significant penalties for failing to report and a focus on victim support, it was considered one of the most progressive pieces of anti-slavery legislation in the world. 
But just six months later, the passing of the Commonwealth Modern Slavery Act 2018 (Commonwealth Act) threw the progressive NSW Act into doubt. There was widespread concern regarding inconsistencies between the two pieces of legislation, particularly in respect of the supply chain transparency obligations and, consequently, the NSW Act was returned to the NSW Legislative Council’s Standing Committee on Social Issues’ (Committee) for review. 
Last week, the Committee released its report with strong support for some of the key elements of the NSW Act. Provided the NSW Government accepts the recommendations in the report, certain entities with a consolidated revenue of more than $50 million and with at least one employee in NSW will be required to report under the NSW Act and there will be penalties of up to A$1.1 million if they fail to do so.
Review of the NSW Act
On 25 March 2020, the Committee tabled its anticipated Report 56 with the Clerk of the Parliaments (Report), following its inquiry into the NSW Act. 
The Report follows a lengthy public consultation process in which the Committee considered the operability and effect of the NSW Act, a proposed amendment Bill and Regulations designed to address concerns in the Act, particularly harmonisation of the reporting requirements with the Commonwealth Act. You can read more about this process and the NSW Act here. 
Committee findings
The Committee found that the NSW Act had significant stakeholder engagement with over 100 submissions and 27 pieces of evidence provided in person. Its robust features such as a strong supply chain transparency scheme for business and government, an Anti-Slavery Commissioner, the creation of new modern slavery offences, support for victims and the establishment of a parliamentary committee to provide oversight, were particularly supported. 
However, the Committee also recognised that there was room for improvement, particularly with the advent of the Commonwealth Act. So, while remaining true to the spirit of the NSW Act, they recommended some key changes aimed to:
harmonise the NSW anti-modern slavery scheme with the Commonwealth scheme;propose alignment with the Commonwealth Act statutory review to discuss harmonisation of the reporting threshold, while retaining the $50 million reporting threshold in NSW; iron out some mechanics regarding the application and prosecution of penalties; and enhance victim support, remove so-called ‘modern slavery risk orders’ and clarify the scope of the NSW Acts application to certain entities. 
We explain these recommendations in more detail below, but the key takeaway of the Committee’s review, found in the first of 17 recommendations, is that despite concerns to the contrary (and provided the Committee’s recommendations are accepted) the NSW Act is here to stay. 
Harmonisation between the NSW and Commonwealth reporting schemes 
A key theme of the stakeholder submissions was that having both state and federal modern slavery legislation with different supply chain transparency schemes may impose a large administrative burden on business.
In an attempt to overcome these concerns, the Committee: 
recommended the introduction of a statutory review of the NSW Act, to be conducted in conjunction with the Commonwealth Act, where issues such as reporting thresholds and exemptions for charities and not-for-profits will be considered (on the current timetable, this review will occur any time after 1 January 2022);recommended that the Anti-Slavery Commissioner continue to work with business to ensure that reporting requirements and guidance are simple and clear;commented that it supported the ongoing work of the Anti-Slavery Commissioner to ensure that the mandatory minimum contents of statements, timing and method of publication of statements was consistent with the Commonwealth; andnoted that the ability for an entity to voluntarily report under the Commonwealth Act and meet its obligations under the NSW Act would ‘go a long way’ to address businesses concerns about administrative burdens. 
The $50 million threshold is holding fast (for now)
The Committee recommended that the NSW Government retain the $50 million reporting threshold under the NSW Act. Many submissions from business saw the reporting threshold as unfair, as it is lower than the Commonwealth’s $100 million threshold. However, the Committee saw merit in NSW maintaining the $50 million threshold in order to use it as leverage in threshold harmonisation discussions during the statutory review proposed for 2022, and to encourage the Commonwealth to lower its threshold at that time. 
Notably, the lower threshold would bring the Commonwealth in line with the recommendations of the Joint Standing Committee on Foreign Affairs Defence and Trade – Inquiry into establishing a Modern Slavery Act, which originally proposed a reporting threshold of $50 million. 
The Committee also recommended that the NSW Government amend the NSW Act to replace the term ‘turnover’ with ‘consolidated revenue’ to bring it in line with the Commonwealth. 
Penalties 
Entities who are covered by the NSW Act are subject to penalties of up to $1.1 million if they fail to prepare or publish a statement or provide false or misleading information in a statement. However, entities with a turnover of $100 million or more falling under the Commonwealth Act are not subject to penalties. 
The penalties in the NSW Act are considered one of the robust features characteristics of the NSW Act and were strongly supported by modern slavery advocates in the Committee’s review. 
While the Committee acknowledged that the disparity in penalties is not ideal, it determined to retain penalties in order to be in a position to encourage the Commonwealth to strengthen its Act by adopting penalties at the 2022 Statutory Review. 
Significantly, rather than stepping back from the idea of penalties, the Committee recommended that the NSW Government specify a relevant authority responsible for commencing prosecutions against businesses for breaches of section 24 of the Act (transparency of supply chains). 
Other recommendations 
The Committee also made a number of other recommendations including to:
remove Modern Slavery Risk Orders (following submissions regarding their problematic application within the NWS criminal justice system from the NSW Government, DPP and the Law Society);increase victim support by allowing victims of modern slavery to access recognition payments;create of a working group comprising Government and key stakeholders to consider further amendments to protect potential victims of forced marriage;clarify that local councils and not-for-profit registered clubs who meet the reporting thresholds must report under the NSW Act and encourage the NSW Government to finalise the development of a voluntary reporting mechanism for businesses falling below the $50 million threshold; andin relation to the extraterritorial scope of ‘modern slavery offence’, the Committee supported the proposed Amendment Bill’s clarification that extraterritorial conduct, which would constitute an offence if it occurred in New South Wales, is included under the NSW Act.
Looking ahead
The Committee’s Report provides a lifeline to the NSW Modern Slavery Act which many thought may fade into obscurity in the face of the Commonwealth Act. However its proclamation is not yet assured. 
The Committee has recommended commencement of the NSW Act by 1 January 2021. In the meantime, we await the Government’s response to the report. If positive, the NSW Act must then return to the Legislative Council which must in turn accept and adopt the recommended changes. 
The COVID-19 pandemic may have an impact on the legislative timetable in NSW and so the future and timing of the Act will remain unclear until we have an indication of the Government’s intent.
However, if everything goes to plan, if an entity that is not a charity, not-for-profit organisation or small business has a consolidated revenue of $50 million and at least one employee in NSW, it will have to report on the risks of modern slavery in its supply chain and describe what it is doing to address those risks, with significant penalties for failing to do so. 
Corrs Chambers Westgarth disclaimer: The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.
This article was originally published on the Corrs Chambers Westgarth website and has been reproduced with permission.
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Issue
Before COVID-19, Karen was a graphic designer who worked for small marketing company. Her partner David worked as a sole trader in the tiling industry. They have 2 kids, aged 6 and 9, who are enrolled in primary school.
David’s work primarily is in the household repairs area, and he uses a sub-contractor for some assistance with his jobs. He typically pays the sub-contractor $30 per hour on jobs that require a second person. Before COVID-19, this occurred generally about 32 hours per week (ie. 4 days). The offsider had their own ABN, and David paid them directly without withholding tax. He had three sub-contractors that he would call, based on the work to be done and their availability. Another two days a week, on average, David was able to complete the work personally.
Based on interim figures for 31 December 2019, David was due to earn approximately $90-95,000 for the year. This was based on generally working about 45 hours per week.
As a result of COVID-19, a lot of David’s work has dried up. Instead of 45 hours per week, he is down to 24 hours on average (3 days). This work is with ongoing contracts, as opposed to one-off jobs. None of the sub-contractors are “available for work” anymore.
Karen was working as a mid-level employee on a full-time basis prior to COVID-19. Her gross weekly salary was $1,355, equating to $70,460 per annum. Her superannuation was paid on top of this, at 9.5%. Due to COVID-19, Karen’s company significantly reduced non-senior staff, and she was made redundant on 25 March 2020. Her payout was to be 4 weeks, plus accrued leave of 1 week, which was received on 3 April 2020. Despite the JobKeeper payment being created by the federal government, Karen’s employer is standing by their decision to make her redundant, leaving Karen unemployed.
David and Karen have gone to their accountant to discuss what measures are available to them, as a result of the downturn from COVID-19.
Solution
David
David’s earnings after expenses and before tax have reduced from usually about $3,960 per fortnight to $2,160 per fortnight as a result of the reduced level of contracts.
As he is self-employed, and his work has reduced by more than 30%, he is eligible to apply for the JobKeeper payment with the ATO. As David is eligible for JobKeeper, he will receive $1,500 before tax each fortnight.
During COVID-19, David will earn gross income of $3,660 ($2,160 + $1,500) per fortnight. He is also eligible to defer any income tax payments for 6 months with the ATO.
Karen
As Karen’s income has reduced to nil, she will be eligible to apply for the JobSeeker payment which includes a Coronavirus supplement payment. She does not need to serve a waiting period, and no assets or liquid assets tests apply.
However, Karen would be ineligible to receive any JobSeeker and Coronavirus supplement payment due to the income test. The income test, which determines eligibility, takes into consideration David’s income. David’s income will include the JobKeeper payment, as it is taxable in his hands. As David’s gross income is greater than $3,068 per fortnight, this is above the upper limit for the assistance.
Family tax benefit
With the reduction in income, the family may be entitled to receive Family Tax Benefit (FTB). However, FTB is calculated on full financial year, and must be estimated for both 2019/20 and 2020/21 income years.
As Karen’s income will be the lower income for the 2019/20 income year, we will look at her income first to determine eligibility for FTB Part B. Firstly, David’s income is expected to be less than $100,000 for the income year. However, as the FTB Part B cut-off amount is $21,973 per income year for parents of a child between 5 and 18 years of age, Karen will be above that amount based on her income for the first 9 months of the year.
Eligibility for FTB Part A is based on total family income for the full 2019/20 income year. The limit at which no amount is available to be paid is $109,379 per income year for the family. As at 1 April 2020, the estimated yearly family income (David $93,000 and Karen $60,000) is well above the FTB Part A limit for the entire year. The family will not receive any amount for Family Tax Benefit Parts A or B in the 2019/20 income year.
In relation to the 2020/21 income year, Karen will be eligible to apply for Family Tax Benefit. However, it should be noted that a claim should be considered carefully, based on the understanding that full year incomes are taken into consideration. It is possible that a debt may be applied later. Based on David earning an estimated amount of $93,000, the family would be eligible for the base rate of FTB Part A, which is $119.56 per fortnight. Also, FTB Part B of $110.60 per fortnight would be available.
Conclusion
In conclusion, Karen and David’s income after taking into consideration taxation payments in the table below. Please note: These amounts are on a fortnightly basis.
It shows that,
basically:
A drop
in business income for David, plusKaren
becoming out of work on 25 March 2020, andThe
receipt of some government assistance (for David)
results in the family receiving about 60% of net income during the COVID-19 pandemic.
AmountsPre COVID-19Apr. – June 2020July – Sept. 2020David – Business income after expenses$3,960$2,160$2,160David – Income tax (Quarterly PAYG)($952)($431)($505)David – JobKeeper (gross)–$1,500$1,500David – JobKeeper (no tax-free threshold)–($454)($454)Karen – Gross salary$2,710$1,042–Karen – PAYG tax withheld($612)($63)–Family Tax Benefit (Parts A & B)––$230Net income after taxes$5,106$3,754$2,931
Notes:
1. Generally, the PAYG instalment amounts for David are a straight-line “savings”, put away in order to pay the quarterly instalment when due. We would be looking to amend David’s PAYG instalment for June, based on the reduced income and tax withheld on JobKeeper payments.
2. Karen’s gross salary and withheld amounts for the June quarter are the 5 weeks of redundancy payment, including tax withheld on leave payments. This is a total gross payment of $6,775, with tax withheld $410. She receives the payment on 3 April 2020, and the amount in the table is averaged out over 13 weeks on a fortnight basis.
3. Karen would only make a claim for Family Tax Benefit after 1 July 2020 if she felt it was unlikely she would return to work for the majority of the 2020/21 income year. If she was to return to work, there may be a situation where FTB would need to be repaid on lodgement of 2020/21 income tax returns.
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By Peter Shaw, Director, Corporate and M&A, Ash St. Legal & Advisory
The foreign investment approval process in Australia has been materially changed. This affects the monetary thresholds for transactions which require review and the timeframe for the review process.
The following seeks to provide you with a high level summary of this temporary measure, based on available information today as well as our preliminary thoughts.
This information is relevant should you be embarking upon or in the midst of any transaction involving a foreign person.
What has changed?
The Federal Treasurer has announced that as a temporary measure, the threshold amounts which apply in determining whether particular foreign investments made on or after 10:30 pm (AEST) Sunday, 29 March 2020 are subject to Australia’s foreign investment framework are now $0.
Who is affected?
All foreign investors from all countries are affected by this decision irrespective of existing trade treaties or whether sovereign owned, listed on a stock exchange or privately held.
What transactions does this change affect?
All proposed acquisitions of, or substantive investments in, Australian businesses, Australian companies and land in Australia, are impacted as are reconstructions of existing businesses which are already foreign owned. Some secured debt investments will also be affected.
Importantly, this can and will also include indirect acquisitions where, for example, a foreign company owns 20% or more of the acquiring vehicle (or foreign interests hold 40% or more in aggregate) making the acquirer a ‘foreign person’.
What do I have to do?
All potential purchasers involved in foreign investments must make an application via the Foreign Investment Review Board (FIRB) process for approval or a letter of non-objection (FIRB Approval). Material application fees must be paid and these fees are refundable only on a discretionary basis where an application which has yet to be determined is withdrawn.
How long might the approval process take?
The statutory timeframe has been extended from 30 days to 6 months. Given FIRB must liaise with relevant government departments on each application, including the ATO, Treasury, the relevant State Departments etc., before a recommendation is made by FIRB to the Treasurer or minister assisting the Treasurer, and given the current COVID-19 pandemic crisis, potential investors should assume this process will not be quick.
Our thoughts
Whilst the change to the FIRB thresholds is stated to be a temporary change, it will for the foreseeable future have a significant impact on new acquisitions and investments as well as further financing or refinancing of companies and businesses, including restructures and bail outs, where foreign investors are involved. Not every situation will be caught by the new thresholds and there may well be ways of ensuring the entity in need of a cash injection can still receive investment without requiring FIRB approval, or of structuring a transaction to factor in the likely timeframe now required to obtain FIRB Approval.

Important to Note
The information set out above is general guidance only and is not intended to be relied on as a substitute for legal advice. Liability limited by a scheme approved under Professional Standards Legislation.
The information in this note is valid as at 3pm on 30 March 2020. FIRB has not yet updated the policy documents and guidance notes available on its website to reflect these changes. We will update this note once these are published.
This article was first published on the Ash St website and has been reproduced with permission.
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An advisory group has been established by the Government to
guide development and implementation of a response plan focusing on the unique
health needs of people with disability during the coronavirus pandemic.
The advisory group is chaired by a senior official from the
Department of Health and includes experts from the disability sector, academia,
clinical practice, nursing, Australian government officials, and state and
territory government representatives.
The advisory group, endorsed by the Australian Health Protection Principal
Committee [WJ1] (AHPPC),
will develop and implement the Management and Operational Plan for People with
Disability.  The advisory group aims to
deliver the Plan to the AHPCC on Thursday 9 April, for immediate action.
The Plan will form part of the Australian Health Sector
Emergency Response Plan for COVID-19 and will ensure the health care needs of
people with disability, their families and carers can be met during the
pandemic, including access to coronavirus screening, prevention and health
care.
The Plan will give priority to individuals whose disability
and current health status places them at the greatest risk from coronavirus.
This includes people with intellectual disability and people who have complex
support needs— behavioural, social, or physical—to undertake the activities of
daily living.
 Source: Joint media
release The Hon. Greg Hunt MP Minister for Health Minister Assisting the Prime
Minister for the Public Service and Cabinet; The Hon. Anne Ruston MP Minister
for Families and Social Services; The Hon. Stuart Robert MP Minister for the
National Disability Insurance Scheme 
Minister for Government Services dated 3 April 2020.

 [WJ1]Hyperlink
https://www.directory.gov.au/portfolios/health/department-health/australian-health-protection-principal-committee
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By Michaela Moloney (Partner), Nick Ruskin (Partner), John Monroe (Senior Associate), Paul Hardman (Partner) and John Rodney (Special Counsel) of K&L Gates.
*This
information is accurate as at 2 April 2020 and is subject to change as this
situation evolves.
Over the past two weeks we have
assisted many of our clients deal with the heartbreaking reality of shutting
down their businesses. What we have seen to date is employers which have taken
whatever steps they could to try and mitigate the effects on their employees,
and employees who have accepted these life changing events with understanding
and dignity. Even two weeks ago, the thought of an employer standing down their
workforce was unimaginable. Now, it is a daily reality for many of our clients.
Stand down is an alternative to redundancy, it is saying to your employees
“We are shutting down now because we have to, but we will be back and we
want you to be around when we re-open”. It’s an important message to be
sending to your employees at the moment.
We set out below some of the key
questions we are getting from employers. We are focusing on stand down because
that’s what many of our clients are facing.
Can I Stand Down My Employees?
If your business has been required to close because of the
current government requirements and there is no useful work for your employees
to do, you are able to stand down your employees. You should check your employees’
contract of employment and any applicable award or enterprise agreement to see
if there are any special rules you have to follow.
What if there has Just Been a Downturn in Work Because there are Less
People Around?
For the statutory stand down provisions to be triggered there
must be a “stoppage of work” for which the employer cannot be
reasonably held responsible. Ordinarily a downturn is not a stoppage. However,
it is likely that as further shutdown restrictions come into place, many employees
will satisfy the requirements for a stoppage. If you are uncertain please call
us and we are happy to talk through your specific circumstances.
What is the Effect of a Stand Down?
Standing your employees down means employees won’t need to
come to work and perform their duties and employers won’t need to pay their
employees. However, the employees will remain employed for the period of the
stand down and this period will count as service for the purpose of accruing
entitlements such as annual leave.
What is the Benefit of Stand Down?
The stand down provisions are actually there to protect
employees. Without the stand down provisions many employers would be making
employees redundant right now.
In the current unprecedented circumstances the stand down
provisions allow employers to effectively preserve an employee’s role. Yes it’s
true that for, what is likely to be the next few months, employees who are
stood down won’t be entitled to their full salary. But when the government
requirements are lifted and there is no longer a “stoppage of work”
employees will be able to return to their previous role without any
interruption in service.
The other benefit of stand down is that while employees are
stood down they will be able to access government entitlements. On 30 March
2020, the Federal Government announced the introduction of the JobKeeper
Payment which businesses impacted by the Coronavirus by 30% (or 50% if their
turnover is A$1 billion or more) will be able to access for the next six months
to continue paying their employees. Affected employers will be able to claim
$1,500 per fortnight per eligible employee. The objective of the payment is to
keep employees and employers connected and able to re-start when the crisis is
over. 
Do I Have to Give Notice of Stand Down?
There is no official requirement to give notice of a stand
down. You may have formal consultation requirements in any applicable award or
enterprise agreement. Many of our clients are, where possible, discussing these
matters with their employees prior to standing them down. In most cases there’s
not much either party can do to avoid a stand down but these discussions are a
useful way to check in on your employees, assure them that this situation is
temporary and you want them back and talk to them about whether they would like
to access their accrued leave.
What if My Employee Wants to Access Their Paid Leave Entitlements?
It is perfectly fine for employees to ask to access their
accrued entitlements at this time. If an employee makes such a request and your
business can afford to make those payments, we think it is a practical way to
assist employees during this difficult time. Technically while an employee is
on leave they are not on stand down. The easiest way of dealing with this is
generally to allow employees to use up their accrued leave as a starting point
and if the closure of your business continues, then employees can apply for
government benefits.
However, an employer is not required to agree to a request to
take accrued leave where they have reasonable grounds to do so. Where cash flow
is an issue and employers cannot afford to pay staff to be on accrued leave
while there is a stoppage of work, an employer may decline a request to take
annual leave or consider reaching agreement with employees to take leave at
half pay.
Can I Require My Employees to Take Leave?
In certain limited circumstances, employers can require
employees to take accrued leave. Whether or not you can do this will depend on
the specific terms of the applicable award, enterprise agreement the employee’s
employment contract and your leave policies. Ultimately based on what we have
seen over the past two weeks, we think the preferred approach is to first try
and agree a position with your employees that will work for both of you. This
agreement should be recorded in writing. The outcome is probably going to be
the same but in this time of extreme uncertainty for employees, having some
control over how and when they take their leave can go a long way.
What if I Still Have Some Work for My Employees to do but it is Much Fewer
Hours Than Before?
If you have work for your employee, ie they can be usefully
employed, this will not be treated as stand down. We know plenty of retail
clients for example who have had to close their doors but have offered
employees some admin work to complete at head office. Even if this is a
temporary solution to help mitigate against the effects of a business closure,
it provides some short term assistance. Of course, this may not be an option
for many employers particular as government mandated restrictions continue to
increase. Providing some temporary alternative work or reduced hours for a
short period does not prevent an employer standing down that employee if that
work no longer continues to be available. Whether an employee is stood down or
working, they can still qualify for the JobKeeper Payment provided they meet
the eligibility criteria.
Where Does Redundancy Fit Into All of This?
Redundancy is
different to stand down. Stand down is temporary and employees remain employed.
Redundancy is a decision that the employee’s position is no longer required, it
will result in the termination of the employee’s employment. Some employers may
be making changes to their business as a result of the current pandemic that
will be ongoing, for example, permanently shutting down retail operations and
opening an online business. In those circumstances the position of the
permanent employees working in the bricks and mortar store would be redundant.
Compare that to restaurants where for most they are shutting their doors
temporarily and we hope will be back in operation in a few months. In those
circumstances, stand down is probably the more appropriate option.
This situation is evolving every day and we will continue to keep you informed.
K&L Gates disclaimer: This publication is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer.
This article was originally published on the K&L Gates website on 25 March 2020 and this updated version has been reproduced with permission.
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By Peter Shaw, Director, Corporate and M&A, Ash St. Legal & Advisory
How to ensure decision making is not disrupted by incapacity of officers or key employees
Whilst everyone hopes their business and their people will not be directly impacted by COVID-19 infection, the reality is that some of the people in our businesses will likely be infected, some seriously. As part of Business Continuity Planning, we have some thoughts about how to ensure that the business can still make decisions in case an officer of a company is materially incapacitated – impacting on the ability of the company to make key decisions or sign important documents.
Pass a board resolution now to authorize a range of activities – the directors might consider passing a board resolution now which authorises certain named people to make certain decisions / sign certain types of documents / or otherwise have the authority to bind the company.
Tips and suggestions: make the resolution as general as you need but try to be specific about key aspects such as:
set limits or caps on decision making powers delegated in this way, e.g.- person A can enter into contracts for the company to the value of a maximum amount of $Z per contract or $X in total in a given period;limit the resolution to apply for a particular period of time only;perhaps only make the resolution applicable to particular types of contracts or specific decisions;consider naming a specific group of authorised people but require that two of them must sign any document, to provide a check and balance and limit the risk of any maverick or aberrant behaviour.
Grant a power of attorney – similar to the idea of the board resolution, but a more formal and importantly something which can be executed by the company in a manner contemplated by the Corporations Act. A power of attorney granted by a company naming one or more attorneys will almost certainly be required where a company needs to execute a document as a deed. This level of formality may be relevant for some counter-parties such as lessors and banks. The board can resolve to grant a generic power of attorney to a specified person or group of people for a limited period of time (say, 3 – 6 months) to execute documents on behalf of the company. Again the balance is in getting it right for what your particular business needs.
Tips and suggestions: See the suggestions set out for a general board resolution. In particular the board should give some thought to the limits of that power of attorney and in particular whether it includes ability to amend documents, ability to carry out the transactions contemplated in the documents which the attorney is authorised to execute and whether the appointed attorney has a power to appoint a sub attorney.
Appoint alternate directors – We suggest given the current circumstances a prudent step for any private company might be to require each director to appoint an alternate director for a period of at least the next 3 months. This will enable to board to continue to meet and make decisions and for the company to sign documents even if one director is suddenly materially incapacitated and unable to participate in a board meeting.
Tips and suggestions: It is important to check the governance documents for the company first and to understand the Corporations Act formalities:
Sometimes a company’s Constitution (or shareholders agreement, if there is one) will limit who is eligible to be an alternate director (e.g. only another director, or only person acceptable to the other directors). An alternate director must consent in writing to act as a director and their appointment must be notified to ASIC.Alternate directors have the same duties (and protections) under the Corporations Act as the directors so issues such as indemnification of directors and whether your D&O cover extends to alternate directors should also be considered.
Appoint additional directors – to give the company additional “redundancy” protection , if you have a director who is incapacitated, oftentimes directors can still meet so long as there is a quorum, and will often have a power to appoint additional directors. If not, the company’s members can meet or sign a circular resolution and appoint additional directors.
Appoint an additional company secretary – as documents can be signed under the Corporations Act by either two directors or by one director and one company secretary, it may be wise to consider appointing a company secretary if you don’t already have one (or appointing an additional company secretary if you do) for the next few months so that you have more options to get documents signed if one or more of your officeholders become less available due to enforced self-isolation, illness or inability to travel.
Important to note: The information set out above is general guidance only and is not intended to be relied on as a substitute for legal advice. Liability limited by a scheme approved under Professional Standards Legislation.
Each company’s circumstances will be different. Before making any changes you should check your company’s governance documents (including any Constitution and/or shareholders agreement) for any delegation restrictions that apply.
This note assumes most businesses run through companies. Powers of attorney and general authorisations (as opposed to board delegations) can also be useful to sole traders and partnerships.
This article was first published on the Ash St website and has been reproduced with permission.
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Contributed by Amrit MacIntyre Partner, Baker McKenzie
The severe disruption caused by the COVID-19 pandemic has impacted many areas of economic life, not the least of which is the impact on the value of assets for taxation and other purposes. This disruption raises a considerable degree of uncertainty and creates new challenges to the task of valuation in accordance with the established principles. While it may be too early to make any meaningful predictions as to the trends, some preliminary comments may not be out of order.
First of all, while there has been considerable volatility in the stock market, the erratic movements in the value of securities in listed entities may to some extent, exaggerate the extent of the changes at hand. It is generally well accepted that privately held assets may better reflect true value as the value of privately held assets tends to move in a more steady way compared to the day-to-day changes in the value of securities that are traded on stock exchanges. This pattern, which is usual in times of uncertainty, appears also to be borne out in the current circumstances.
General uncertainty nevertheless remains. That uncertainty may remain until there is greater clarity as to what is happening in a number of areas, importantly including government policy and how that policy will impact on economic activity. Particularly relevant may be the extent to which government subvention of businesses activity occurs. That is, once a level of stability is brought to bear by the Government in terms of its policy settings, that certainty may assist in stabilising values of businesses and business assets. Indeed, one of the most remarkable and perhaps unexpected consequences of the present crisis is the return of big government both in Australia and overseas in a way not seen for decades (“Leviathan Rising”, Economist, March 2020, p 52).
As some sectors of the economy are adversely affected sometimes in extreme ways, for example tourism, hospitality and education, others may find that their revenue increases at least in the short term from responses to the pandemic, for example consumer staples, freight and logistics. The application of traditional methodologies for valuation will be difficult in such a context even if a degree of certainty can be brought to bear to the situation by rapid government action.
Traditionally, a preferred methodology for valuation has relied on comparable sales, where the true value of an asset is derived from the value of sales of similar assets in comparable circumstances (eg New South Wales Cremation Company Pty Limited v Valuer General [2016] NSWLEC 135). This type of methodology is usually preferred where there is a market for sale of the particular asset to allow derivation of enough data to make a meaningful comparison. However, challenges may arise in applying a comparable sales methodology given that the relevant data may derive from the activity in the preceding period, for example the preceding 12 months when conditions were significantly different to current conditions.
Another method of valuation that is commonly used is that of a value based on discounted cash flows (DCF) derived from the expected revenues from use of the relevant asset (eg Regis Aged Care Pty Ltd v Commissioner of State Revenue 2015 ATC ¶20-511; [2015] VSC 279). This methodology too requires reference to data from the recent past as well as predicted earnings from the period following the sale. A DCF methodology may also prove problematic where there is insufficient certainty to apply data from the recent past or to make the required predictions as to future cash flows in radically different economic circumstances.
It is well accepted that abnormalities in market conditions should not affect the task of a valuer in that what is required is a hypothetical sale between willing but not anxious vendors and purchasers (Brisbane Water County Council v Commissioner of Stamp Duties (NSW) 80 ATC 4051; 9 ATR 576). Whether the current situation can be regarded as abnormal remains to be seen, particularly if uncertain conditions remain for the foreseeable future. It is clear enough that the Courts will accept that unusual circumstances that persist for a time, such as in wartime conditions, may disrupt normal activity for a period and affect valuation (Elder’s Trustee & Executor Co Ltd v Higgins [1963] HCA 48; (1963) 113 CLR 426). Nevertheless, that is an assessment that valuers will need to make as a question of fact, that is, while abnormalities will need to be disregarded, valuations will need to be made having regard to the circumstances as foreseen during the period of the life of an asset.
Alternative methods of valuation that are usually less favoured than the preferred methodologies may become more useful in the current circumstances, for example methodologies based on cost (eg see Collins v Livingstone Shire Council [1972] HCA 35; (1972) 127 CLR 477) although the choice of methodology remains the prerogative of the valuer.
These are challenges that valuers and the legal and tax advisors instructing them will need to pay careful consideration to in the current circumstances. While the basic principles for valuation are well understood and contain considerable guidance as to the task of the valuer even in these difficult times, these principles will need to be applied in circumstances that are very different to those of the recent past and remain subject to considerable uncertainty. This may require consideration of methodologies that in normal circumstances may not find favour.
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By Christy Miller, Partner and Jessica Tinsley, Senior Associate of Clayton Utz, 31 March 2020.
While the new wage subsidy plan announced by the Federal Government on Monday will provide a much needed lifeline to Australian businesses and workers, employers should resist pressure to hastily change existing COVID-19 staffing arrangements until the plan’s fine print is confirmed by Parliament.
The wage subsidy plan provides eligible employers a flat rate subsidy of $1,500 per fortnight for existing, stood down and re-hired employees for the next 6 months.
Employers should expect to start fielding inquiries from many stood down and retrenched employees eager to extract the benefit of the subsidy (known as the “JobKeeper Payment“), which exceeds the maximum amount they are entitled to under the Job Seeker allowance. In fact, the PM Scott Morrison has urged people to do just this, stressing that Australians are unable to benefit from both the wage subsidy plan and the Job Seeker allowance.
Before acting too quickly to change existing staffing arrangements employers should remember that:
the wage subsidy plan will not be legislated for at least another couple of weeks, meaning that employers risk implementing changes, or agreeing to implement changes, before legislative conditions and restrictions are confirmed; andthe usual laws of employment apply, despite the unprecedented nature of this package.
What we know about the proposed JobKeeper Payment
Treasury has released a useful fact sheet setting out the basics of the JobKeeper Payment. From this, we know that:
businesses must demonstrate a prescribed reduction in turnover relative to a comparable period a year ago and must not be subject to the Major Bank Levy; the employer must have been in an employment relationship with eligible employees as at 1 March 2020 and confirm that each eligible employee is currently engaged in order to receive JobKeeper Payments; the employer has discretion to nominate eligible employees; eligible employees can include those who have been “stood down” or recently “re-hired” (i.e. after being retrenched since 1 March 2020) and can include full time, part time or long term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020);Not-for-profits entities (including charities) and self- employed individuals may also be eligible; the $1,500 (before tax) per fortnight is a flat rate – employers must pass on the full subsidy to the employee even if it is higher than their ordinary wages; while current employees (those who continue to perform duties) must have the difference between the subsidy and their ordinary wage ‘topped up’ by the employer, employees who have been stood down receive only receive $1,500 per fortnight, even if their original salary was higher; andemployers are not required to pay the superannuation guarantee on the $1,500 subsidy.
Potential traps for employers
From what we already know about the JobKeeper Payment, employers may be tempted, or pressured, to to shortly:
stand down additional employees in light of the increased safety net that the JobKeeper Payment provides;reduce the working hours and pay of employees who ordinarily receive more than $1,500 a fortnight to avoid paying any additional salary;nominate all long-term casuals to receive the JobKeeper Payment without clarifying the casual nature of the employment relationship; andre-hire retrenched employees so that they can receive the JobKeeper Payment.
Employers must be aware of the potential traps arising from these steps and should seek legal advice before introducing these changes, or giving (potentially binding) assurances to employees that these changes will be implemented from the first week of May (when these payments will start).
Standing down employees
Employers who may be more likely to stand down employees in light of the generous safety net afforded by the new wage subsidy plan must not stand down employees unless they have a basis to do so under either:
the Fair Work Act (FW Act); orprovisions in any applicable Enterprise Agreement or employment contract.
Importantly, employers must only stand down employees, under the FW Act, during a period in which the employee cannot be “usefully employed” because of a stoppage of work for any cause for which the employer cannot reasonably be held responsible. Stand down must remain a measure of last resort.
The use of stand down provisions by employers in circumstances similar to the COVID-19 outbreak is untested by the Courts and open to challenge by employees. In particular, employees with an ordinary salary higher than $1,500 a fortnight may still challenge the decision to stand them down to recover the difference between the $1,500 and their ordinary salary.
Additionally, as the JobKeeper Payment is a flat rate, some employees who stand to receive the same or more salary under this new wage subsidy scheme (whether they continue to perform their ordinary duties or not), may refuse to perform their usual duties, even when there is work for them to do, potentially, for example, citing health concerns.
An employee who can be “usefully employed” must not be stood down. Any unreasonable refusal to perform ordinary duties by an employee may give rise to a breach of contract, which may give the employer the right to withhold wages. Therefore, employers must make it clear to employees that if there is work for them to do it must be done, unless they have a reasonable excuse (such as needing to take personal or carers’ leave).
Finally, there are currently no restrictions on employers’ right to unilaterally decide which eligible employees will be nominated to receive the JobKeeper Payment (although this may change when the legislation is finalised). In theory, an employer can freely decide which employees should be re-hired or even to refuse to nominate an eligible employee who would receive more from the JobKeeper Payment at no additional cost to the employer.
Employers must keep in mind the usual laws affecting employment when selecting employees, or groups of employees, including by ensuring that selection of eligible employees:
is not based on a protected attribute (ie. race, sex, family commitments, disability or age), which could give rise to a breach of discrimination laws; andcould not give rise to complaints of adverse action if an employer decides not to nominate the employee to receive the JobKeeper Payment.
Changing terms and conditions of employment in light of the JobKeeper Payment
Employers who cannot afford to pay the difference between the JobKeeper Payment and ordinary hours may wish to reduce the employee’s ordinary hours and wages so that they only receive the JobKeeper Payment.
Unions and other employee groups have expressed concern about this, and it is possible that these groups may lobby, and the Labor opposition may push for in Parliament, special provisions in the final JobKeeper Payment legislation that stop employers from doing this.
In any case, again, the usual laws affecting employment will apply in this case, including that:
any reduction of working hours and pay may be subject to terms set out in a Modern Award, Enterprise Agreement or employment contract;at least in the first instance, employer’s should seek agreement from the employee before making this change; andemployers should exercise caution in unilaterally changing an employee’s terms and conditions, as a substantial change may be construed by a Court as a redundancy situation, where the employee will be entitled to a redundancy payment.
Nominating casual employees
Employers should seek legal advice before nominating eligible casual employees to receive the JobKeeper Payment.
There is a risk that nominating ‘long term’ casuals for the JobKeeper Payment may be later construed as evidence of a permanent relationship, which could expose the employer to potential misclassification claims which may result in liability for back-payments for unpaid employee entitlements.
While employers should not be discouraged from nominating ‘long term’ casuals for the JobKeeper Payment, misclassification risk may be managed by clarifying the nature of the relationship when first communicating the decision to nominate the casual employee for the wage subsidy.
Re-hiring employees
While the Federal Government has specifically stated that employees who were retrenched after 1 March 2020 and who have been re-hired may be eligible to receive the JobKeeper Payment, the Prime Minister has said that it will be left to the employer and employee to determine how any termination payments will be dealt with once an employee has been re-hired. However we would expect the final legislation to provide more guidance on this issue.
In particular, it is not yet clear whether:
employers will have a right to claw back termination, or redundancy, payments previously paid to the employee by keeping a portion of the JobKeeper Payment;the employee has to be employed on the same terms and conditions of employment as they were on before their previous employment was terminated for the employer to receive the JobKeeper Payment; andthe termination and re-hire will break continuous service (although some Modern Awards or Enterprise Agreements may already allow for unbroken continuous service if the employee is re-hired within a certain period).
Employers must also be mindful that any steps taken to-hire an employee may expose it to liability, including in relation to:
unfair dismissal: when making an employee’s position redundant it is important that the employer can prove, if challenged that the redundancy was “genuine”. If an employee is re-hired shortly after being made redundant, they may have a strong case that the initial redundancy was not “genuine” as the re-hire would demonstrate that the position does still exist; and tax treatment: the Australian Taxation Office (ATO) will only provide a tax concession for a ‘redundancy payment’ that arises as a result of a “genuine redundancy”. One factor that the ATO will consider when determining whether the redundancy is “genuine”, is whether there was a previous agreement to re-hire the employee. By re-hiring a redundant employee because of the wage subsidy announcement, may evidence that there was an agreement between the parties to re-hire the employee once the employer’s financial position strengthened.
Some employers may wish to re-hire former employees and immediately stand them down so that they can receive the JobKeeper Payment. While the details are yet to be realised, the Federal Government has made clear that this payment is not another form of welfare and that employees must remain employed or, in the case of a stand down, connected with the employer to receive the JobKeeper Payment.
It is currently unclear how employers will need to evidence the employment relationship and what the consequences will be for employers if payments are claimed incorrectly, including whether the ATO (who will administer this scheme) will have the right to claw back JobKeeper Payments from employers.
Employers should therefore refrain from re-hiring employees until after the wage subsidy plan has been legislated and receive legal advice before re-hiring any employees who have been made redundant.
Clayton Utz disclaimer: Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.
This article was originally published on the Clayton Utz website and has been reproduced with permission.
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By Melinda Bell (Special Counsel), Karl Rozenbergs (Partner) and Gemma Hallett (Lawyer) of Hall & Wilcox.
From 4 February 2020, 30 modern awards have been updated following the Fair Work Commission’s (FWC) four-yearly review of all modern awards. This includes the Banking, Finance and Insurance Award 2010, the Car Parking Award 2010 and the State Government Agencies Award 2010. If you employ award-covered employees, you must take action to find out if these updates affect you.
The updates are designed to improve readability, with plain language amendments and reordered clauses. Other important changes include the insertion of a clause on casual conversion in certain awards. You’ll also notice that your award’s title now ends with ‘2020’.
To demonstrate what has been updated, the FWC has published ‘tracked changes’ versions of the updated awards. To access these, click here and type ‘tracked’ into the Document Title search field.
Employers should refer directly to the updated modern awards and ensure that all employment documentation that refers to the award is amended. Failure to do so may present unexpected risks.
More awards will be updated on 13 April and 4 May 2020, and new annualised salary clauses in some awards will commence from 1 March 2020. It’s important to stay up to date with the changes, and seek legal advice if you’re unsure of the implications for your business. You can subscribe to award-specific updates here.
Hall & Wilcox disclaimer: This is not advice. Readers should not act solely on the basis of the material contained in this newsletter. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We, therefore, recommend that our formal advice is sought before acting in any of the areas covered in any newsletter.
This article was originally published on the Hall & Wilcox website and has been reproduced with permission.
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The coronavirus (COVID-19) crisis is an unprecedented social, political and economic environment. It is also a completely new environment for workplace relations practitioners. Our systems and many key principles must now be challenged. There are new opportunities to work in different and more co-operative ways and new demands on organisations.
To help businesses navigate this new environment, Matthew O’Callaghan (Workplace Relations Consultant and former Senior Deputy President of the Fair Work Commission) has written a detailed guide to the key workplace relations issues arising during this time.
Access the Guide to Workplace Relations Issues during the COVID-19 Outbreak on the CCH Pinpoint Employment, Work Health and Safety or Compliance and Business Law practice areas. The Guide is freely available, and access does not require a CCH Pinpoint subscription.
The guide covers:

the “legal basics” – what laws apply?
management and communication strategies
employee safety issues and risk management
changing work arrangements, including working from home, reducing employee hours or relocating employees
the impact on enterprise agreements
the impact on casual employees
leave policies, including personal/carer’s leave, annual leave and long service leave
the JobKeeper Payment scheme
termination of employment and stand down
workers’ compensation issues, and
business reactivation planning.

The issues addressed in the guide are continually evolving and developing. While all possible care has been taken in the preparation of suggested approaches that may be considered, these should not be taken as prescriptive or applicable in all circumstances. Matthew O’Callaghan’s observations are based on over 40 years of workplace relations experience and his current involvement in assisting businesses in the retail, manufacturing, transport, health and entertainment industries in dealing with the crisis. He is also actively involved in helping some public sector entities respond to COVID-19. These emerging experiences of different industries highlight the unique issues that are continually appearing. While there is no one right answer, Matthew O”Callaghan has identified important issues for consideration.
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On 24 March 2020, in response to the evolving COVID-19 medical
emergency, the Government introduced and passed temporary legislation with unprecedented
expediency. The purpose of this suite of temporary legislative measures is to
provide companies with some form of financial
relief whilst the crisis continues.
With a myriad of information evolving on a daily basis,
it is easy for companies to become overwhelmed as to what legislative changes
are important when it comes to operating their business.
The purpose of this article is to summarise the key
temporary legislative measures which company directors need to be aware of to
ensure that their business:
Remains
compliant with their statutory obligations,Is
cognisant of the changes surrounding proceedings such as bankruptcy &
insolvency, andAvails of
any temporary relief measures available in order to cope with the crisis.
The key temporary legislative measures are summarised
below.
Coronavirus
Economic Response Package Omnibus Act 2020
Amendments
to legislation
The Coronavirus Economic Response Package Omnibus Act 2020 (Cth) (COVID Act) amends the Corporations Act 2001 (Cth), by:
Inserting a
new Part 9.11. This new part provides certain flexibility from the provisions
of the Corporations Act by permitting the Minister to exempt certain persons
from the strict provisions of the Corporations Act or to modify a provision, or
provisions, to exempt certain persons or class of persons from their
obligations under the Corporations Act. ASIC may apply to the Court for an
order that the person, or persons, comply with any conditions associated with
these exemptions. These temporary measures are in place for a period 6 months, unless
the Minister notifies otherwise. Extending
the time by which a company may be required to pay a debt under a statutory
demand, pursuant to s 459E of the Corporations Act.Increasing
the time by which a company may respond to a statutory demand or apply to set
aside a statutory demand, from 21 days to 6 months, pursuant to s 459G of the
Corporations Act.Inserting a
new s 588GAAA to provide a safe harbour for company directors from their duty
to prevent insolvent trading. Under this new section, company directors are
relieved of personal liability for insolvent trading if debts are incurred in
the ordinary course of business and prior to the appointment of an
administrator or liquidator of the company. This relief applies during the
six-month period commencing on the day which the section commences, or any
longer period prescribed by the regulations.
The provisions concerning the Minister’s powers to exempt certain persons from their obligations or to modify their obligations under the Corporations Act are contained in Schedule 8 of the COVID Act. The remaining provisions, to extend the time to comply with a debt, respond to a statutory demand for payment of a debt or provide a safe harbour for corporate insolvent trading, are contained in Part 2 of Schedule 12 of the COVID Act.
The COVID Act also amends the Bankruptcy Act 1996 (Cth), by:
Extending the time required for a debtor to comply with a bankruptcy
notice under Part IV of the Bankruptcy Act, from 21 days to 6 months, andAmending the statutory minimum for which a creditor may institute
involuntary bankruptcy proceedings from $5,000 to $20,000, for a bankruptcy
notice pursuant to ss 41, 44 and 244 of the Bankruptcy Act.
The amendments to s 244 provide some relief in the
administration of estates upon petition by a creditor.
These provisions are contained in Part 1 of Schedule 12 of the COVID Act.
Amendments to
regulations
Corresponding amendments have also been made to both the:
Corporations Regulations 2001 (Cth) in Part 2 of Schedule 12 of the COVID Act, andBankruptcy Regulations 1996 (Cth), in Part 1 of Schedule 12 of the COVID Act.
These amendments insert new regulations to temporarily amend
the definitions of statutory minimum
and statutory period for the
purposes of bankruptcy notices and bankruptcy proceedings.
What this
means for corporations
With regards to insolvent trading it is not clear which debts will be regarded as being incurred “in the ordinary course of business”, particularly in the unusual circumstances surrounding COVID-19. The evidential burden will fall upon company directors to show that the debt was so incurred, s 588GAAA(2).
Paragraph 12.18 of the Explanatory Memorandum for the COVID Act states that a company director “is taken to incur a debt in the ordinary course of business if it is necessary to facilitate the continuation of the business during the six month period … of the [temporary legislation]”. This may include, for example, a company director taking out a loan in order to move some business operations online. It may also include debts incurred by continuing to pay employees during the COVID-19 pandemic.
The amendments appear to apply
not only to debts incurred as part of the ordinary day-to-day trading
operations of a business but possibly also to debts incurred in order to
restructure a business to enable trading through the current COVID-19 crisis. Examples
may include taking out a new working capital loan or the costs incurred in
transitioning to the online delivery of goods and services, etc.
Australian
Business Growth Fund (Coronavirus Economic Response Package) Act 2020
The Australian Business Growth Fund (Coronavirus Economic Response Package) Act 2020 (Cth) (Growth Fund Act) permits the Commonwealth to invest in a Corporations Act company for the purposes of providing small and medium Australian enterprises with access to capital.
Pursuant to s 5 of the Growth Fund Act, a Corporations Act company is defined as “a body corporate that is incorporated, or taken to be incorporated, under the Corporations Act 2001.”
What this means for corporations
The Commonwealth investing in a Corporations Act company may involve the Minister acquiring shares or debentures in a company, or becoming a member of the company, pursuant to s 10 of the Growth Fund Act.
Further
reading and sources
Coronavirus Economic Response Package Omnibus Act 2020
Australian Business Growth Fund (Coronavirus Economic Response Package) Act 2020
Please subscribe to our dedicated COVID-19 blog for all the latest updates on the COVID-19 pandemic. We are here to assist you and your company in navigating the ongoing legislative and regulatory changes in response to COVID-19.
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The Federal government has announced
that it will provide eligible employers who have taken a significant financial
hit as a result of the COVID-19 outbreak with the funds to pay their full-time,
part-time and long-term casual employees $1,500 per fortnight.
The JobKeeper Payment will be paid to
employers, for up to 6 months, for each eligible employee who was on their
books on 1 March 2020 and is retained or continues to be engaged by that employer
(including those who have been stood down).
When will payments be made?
The program will commence on 30 March 2020,
with the first payments to be received in the first week of May from the
Australian Taxation Office.
Eligible employers
Eligible employers will be those with:
an annual turnover of less than
$1b who self-assess as having a reduction in revenue of 30% or more since 1
March 2020, andan annual turnover of $1b or
more who demonstrate a reduction in revenue of 50% or more.
Eligible employers include businesses
structured through companies, partnerships, trusts and sole traders. Not for
profit entities, including charities, will also be eligible.
Businesses subject to the Major Bank Levy
will not be eligible.
Eligible employees
Full-time and part-time employees,
including stood down employees, would be eligible to receive the JobKeeper
payment. Where a casual employee has been with their employer for at least the
previous 12 months they will also be eligible for the payment. An employee will
only be eligible to receive this payment from one employer.
Eligible employees include Australian
residents, New Zealand citizens in Australia who hold a subclass 444 special
category visa, and migrants who are eligible for JobSeeker Payment or Youth
Allowance (Other).
Self-employed individuals are also eligible
to receive the JobKeeper Payment.
Applying for the payment
Eligible businesses can apply for the
payment online and are able to register their interest via https://www.ato.gov.au/general/gen/JobKeeper-payment/
. Participating employers will be required to ensure eligible employees will
receive, at a minimum, $1,500 per fortnight, before tax. Employers can choose
if they want to pay superannuation on any additional wage paid because of the
JobKeeper Payment.
For more information, see the Prime
Minister’s media
release and the Treasury factsheet.
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