Legal Blog

Legal Matters: Debt recovery for businesses

Thu, 20 May 2010 00:42:00 GMT

Written by: Chantal Kirkwood

from Mccolm Matsinger Lawyers

Maintaining an effective system for recovering debts is essential to all businesses. Allowing unpaid debts to accumulate affects cash flow and can seriously impact the profitability of a business.

The first step in controlling debts is ensuring that contracts and terms of service are clear and stipulate the procedure for payment of accounts. The phrase “prevention is better than cure” can apply to the account control practices implemented by businesses. Recovering debts via tribunals and courts can be a messy and expensive affair and therefore utilising an appropriate contract at the supply stage can significantly reduce the occurrence of bad debts.

A well-drafted contract for goods or services will minimise disputes by clearly identifying the rights and obligations of both the supplier and consumer.

Key terms that should be included in contracts for goods and services are:

Accurate definitions of the goods or services that are being supplied;
The accepted time for payment;
The consequences of failing to pay on time;
Circumstances that may result in the ability for the parties to terminate the contract; and
Processes for the resolution of disputes or dealing with faulty goods or services.

Unfortunately even the most comprehensive contract will not keep a business impervious to bad debtors. Where non-payment of a debt occurs it is imperative that businesses have a procedure in place to promptly initiate the debt recovery process. Lengthy delays make the recovery process more difficult as debtors may assume that a creditor is not serious about recovery, or even worse, the debtor may be unable to be located due to relocation or entering into administration/bankruptcy.

The Recovery Process

Generally the first step in recovery is to issue a letter of demand. A well-written letter of demand can have the effect of procuring payment of the debt, and if successful, saves a creditor from further expenditure on legal costs.

Whether a letter of demand should be issued by a creditor directly or should be referred to a lawyer will depend on several factors including the amount and nature of the debt, the previous history of the debtor and the circumstances surrounding any dispute the debtor has raised with respect to payment.

A letter of demand should always clearly identify the exact amount owed and provide a reasonable date by which the debt should be paid. A letter of demand should be firm but under no circumstances should abusive or threatening language be included in the demand.

If the letter of demand is ineffective the next step is to take legal action by making a claim for the debt. The venue of a claim for recovery and the processes involved will vary depending on the amount and type of the debt, as outlined in the following summary:-

Queensland Civil and Administrative Tribunal (QCAT)

Debt disputes and disputes between consumers and traders valued up to $25,000.
Is inexpensive and is more informal than a traditional court.
The process for making a claim is simplified and does not require professional legal drafting.
Lawyers are unable to attend the tribunal hearings and a creditor must appear on their own behalf.

Magistrates Court

For disputes where the debt is up to $50,000.
A claim in the Magistrates Court must be drafted according to the Uniform Civil Procedure Rules 1999 and it is advisable that legal advice be obtained.

District Court

For disputes that involve amounts more than $50,000 and less than $250,000.

Once a claim is filed in any of the above jurisdictions a debtor will have 28 days to file a defence, if the debt is disputed. If no defence is filed the creditor may apply to the Court/Tribunal for a Default Judgment. A judgment is a formal order by the Court/Tribunal that acknowledges that the debt is payable by the debtor to the creditor and can be enforced against the debtor by:

The registering of a writ or enforcement warrant against any property owned by the debtor; or
The seizure and sale of property owned by the debtor; or
The deduction of money from the wages of the debtor; or
Forcing the debtor to attend at an “enforcement hearing” to answer questions and provide information about the personal financial situation of the debtor.

Debts are an unfortunate reality that all businesses must deal with at some time, however the adoption of efficient practices and prompt action when accounts remain unpaid can reduce disputes and maximise prospects of recovery.

Industrial Law Developments 2010

Wed, 14 Apr 2010 06:18:00 GMT

January 1, 2010, was a critical date for the Federal Government’s Industrial Relations Reforms with the commencement of the National Employment Standards (NES), Federal Modern Awards and the referral of “State Employees” into the Federal Industrial System.

National Employment Standards and the Modern Award

The NES are enshrined in the Fair Work Act 2009. They regulate:

hours of work;
parental leave;
flexible work for parents;
annual leave, personal/carers leave, compassionate leave, community service leave;
public holidays;
notice of termination and redundancy; and
the obligation to publish a Fair Work Information Statement to new employees.

It is imperative that employers secure a sound understanding of the NES and ensure compliance. This is particularly the case with the elements of the NES that are new, including obligations in respect of parental leave, flexible work for parents, notice of termination, redundancy and the publication of the Fair Work Information Statement to new employees. The operation of the NES is not without its complexity. There are some transitional rules regulating the operation of the NES and each employee’s entitlement need to be considered carefully.

The other significant development in the Federal Industrial system on January 1, 2010, was the commencement of the federal Modern Awards. Modern Awards will apply to a National System Employee and National System Employer if the Award covers the employee and the employee is otherwise not exempt. (e.g. a high income earner, which is currently fixed at $108,300 per annum). The operation of the Modern Awards is a result of a two-year exercise by the Australian Industrial Relations Commission resulting in some 122 Modern Awards replacing an estimated 1,560 State and Federal Awards.

The first and important step for employers already in the Federal System is to identify which Modern Award applies to their business. The identification of the correct Award will be critical in calculating phasing in of wage rates, allowances and penalties contained in the Award.

On average and in comparison to federal pay scales, the Modern Awards provide for higher rates of pay, penalties and allowances. Accordingly, most Modern Awards contain phasing in provisions in order to minimise the potential for an overnight financial burden on a business from 8.30am January 1, 2010. The model phasing in provisions allows for annual incremental adjustments (i.e. of 20 percent) over the next five years of the Transitional Amounts (being the difference between minimum entitlements under a NAPSA and the Modern Award.) The first adjustment is to be made on the first pay period after July 1, 2010. The mathematics associated with the phasing in of the Transitional Amounts is complex. I struggle to comprehend how most small businesses will calculate their minimum obligations from July 1, 2010. In some instances an employer will be faced with the need to phase in increases and decreases in wage rates, penalties and allowances. Take for example, a business transitioning from the Retail Takeaway Food Award Qld to the Federal Fast Food Award 2010. It will have to phase in an increase in minimum wage rates, a decrease in a penalty rate for Saturday work and, a new loading for late work after 6pm. Expect applications for annual leave from payroll staff to peak in July 2010. Of some comfort to business is that increases in the minimum entitlements under the Federal Awards (as phased in) are capable of being absorbed by over award payments currently being made.

The importance of getting the minimum award entitlements correct cannot be underestimated as of course an employer can be prosecuted for getting it wrong. In a recent example, an employer in a fast food/take away industry failed to pay a district allowance under an award through ignorance of the obligation was ordered to back pay the allowance totalling approximately $25,500 and was then prosecuted for the offence and was ordered to pay a penalty exceeding $22,000.

State Employees

From January 1, 2010, those employers whom have avoided the industrial rollercoaster from Work Choices to Fair Work (being Sole Traders, Partnerships and other unincorporated entities) are also now covered by the Federal Industrial System in consequence of legislation passed by the State and Federal Government in late 2009.

State Awards (now called a division 2B State Award) which regulated the party’s entitlements and obligations as at December 31, 2009, will continue to operate until December 31, 2010. During this period (and, of course, with some exceptions) a Federal Modern Award will not have application. There are interaction rules between the division 2B State Award and the NES. For example, the obligation under the NES to give notice of termination and the provision of a Fair Work information statement will operate effective January 1, 2010.

Conclusion

Those employers (Constitutional Corporations) who have “enjoyed” the rollercoaster which has been Work Choices to Fair Work again face a complicated process of transitioning onto a Modern Award. In the very short-term those employers must:
1. identify the Modern Award applicable to their business; and
2. set about calculating their wage obligations as from July 1, 2010.

If there is a light at the end of the tunnel, it is that after the expiration of the various transitional timeframes all Queensland businesses in the private sector will enjoy the benefit of a National Employment Scheme removing the uncertainty for some employers as to which industrial scheme it is required to comply. This national industrial euphoria is, however, subject always to a change of government which may, of course, result in further industrial chaos.

Mitchell Devine
Solicitor
McColm Matsinger Lawyers

Do Not Call!

Thu, 22 Apr 2010 06:04:00 GMT

The national Do Not Call Register was launched in 2007, and allowed people to sign up so that they could not be contacted by the rising number of telemarketers. It enabled Australians to choose not to receive unsolicited commercial marketing calls by registering their fixed line and mobile telephone numbers that were used for private and domestic purposes.

Fast track a couple of years on, and a proposal to include all Australian business phone numbers and fax numbers, including those used by small businesses has just been passed by the Senate Environment, Communications, Information Technology and the Arts Committee, under the Do Not Call Register Legislation Amendment Bill 2009. Does this mean the end of annoying telemarketing calls once and for all? Worse - Recent research revealed 78% of small businesses do not have the resources to manage the new changes to the Do Not Call Register.

Late last year, a study commissioned by business search directory, TrueLocal.com.au in partnership with the Council of Small Business of Australia (COSBOA) was conducted to find out the views of business owners and operators towards the proposed legislation.

The research found that significant financial strain would be placed on the majority of Australia’s small businesses. Should it be passed, small businesses will not be able to call a business to promote, advertise or propose to supply goods, services, land, business opportunities or investment opportunities if the number is on the Do Not Call Register.

Any business that failed to comply with the legislation and calls a business listed on the Do Not Call Register could face a fine of up to $1.1 million for each breach of the legislation. Property, business services, communication, marketing and media industries all will be heavily impacted by the proposed legislative change.

TrueLocal.com.au chief executive, John Allan said as an organisation with many small to medium sized business clients, he was concerned about the implications of the extension on this sector.
“We oppose it as we believe it is anti-competitive for Australia’s new and emerging businesses, as they will be unable to contact an estimated 30% of prospective customers to establish a new relationship.”

“Additionally, the majority of small businesses have said they simply do not have the resources to easily check their contact information against the Government’s Do Not Call list and the legislation would increase the operating cost for nearly 50% of small businesses.”

COSBOA chief executive Jaye Radisich said “we need to reduce red tape for small businesses, not increase new compliance costs by the proposed extension to the Do Not Call Register.”

“Phone calls are the most popular source of new business for many industries, especially in the services industries - so we’re concerned that these small businesses will be hampered by the new legislation,” he said.

On passing the legislation, the Committee said “on balance, the committee does not believe that the costs of complying with the bill will be excessive or prohibitive.”

Recently, the federal opposition has said they would vote down government legislation which seeks to extend the Do Not Call Register to businesses.

More information about the Government’s plans to expand the Register is available at the Department of Broadband, Communications and the Digital Economy’s website: www.dbcde.gov.au.

The Do Not Call Register Legislation Amendment Bill 2009 will:

Allow the registration of all telephone and fax numbers, including numbers used by businesses and government departments.
Prohibit the sending of unsolicited marketing faxes to numbers on the Register.
Allow new registrants the ability to choose whether they wish to either expressly consent to receiving phone calls or faxes from particular industry classifications or instead to opt out of receiving any marketing calls or faxes.

22% of small businesses said they gained new business through phone calls indicating an estimated 440,000 small businesses will be adversely affected by the legislation.

The SPA Treatment

Fri, 16 Apr 2010 03:14:00 GMT

The SPA Treatment

The Sustainable Planning Act (SPA) has already been described as the biggest progression in Queensland’s planning, development and building system, over the last ten years. SPA is the legislation that has recently been introduced by the Queensland Government to replace the Integrated Planning Act 1997. For planning industry fans, a complete guide to the SPA is available at http://www.dip.qld.gov.au/spa in a detailed, 745-page document. For the rest of us, a summary highlighting some of the key changes are available below.
The Sustainable Planning Bill 2009 was introduced on 19 June last year, which was passed by the Queensland Parliament on 16 September, 2009. As a result, brand new planning and development laws came into effect on 18 December, at which point the Sustainable Planning Act 2009 replaced the Integrated Planning Act (IPA) 1997 to become the State’s core planning legislation.

According to the Department of Infrastructure and Planning (DIP), the new legislation is set to achieve sustainable planning outcomes through managing the process by which development takes place; managing the effects of development on the environment; and continuing the coordination and integration of local, regional and state planning.
While the Act has retained many of the core features of the IPA, there are claims that it will simplify and streamline the planning and development assessment process across Queensland with changes to the way planning schemes are prepared, development assessment and approvals, and the Court’s role in solving lapsed development applications.

The faster and simpler SPA system will:

Shift the focus from planning process to delivering sustainable outcomes
Reduce complexity through standardisation
Adopt a risk management approach to development assessment
Introduce a broader range of opportunities for people to reach agreement and resolve disputes
Provide improved opportunities for the community to understand and participate in the planning system

(Source: Department of Infrastructure and Planning, 2010)

While most Australian businesses can play a part in future sustainability, whether the SPA will affect your business directly will depend on your business activities.

What does it all mean for you and your business? The SPA will see:

Building developments will get off the ground within weeks rather than months
The creation and sustaining of construction industry jobs
Reductions in red tape and unnecessary delays
Reduced costs, streamlining plan-making and improvements in assessment times
Faster, on-the-ground delivery of appropriate developments
Councils have enhanced powers to stop work on a development
Investment on major issues such as sustainability, housing affordability, climate change and population growth

Please visit the Department of Infrastructure and Planning at http://www.dip.qld.gov.au/spa for more information.

Are you too scared to die?

Wed, 21 Oct 2009 01:02:00 GMT

Written by Malcolm McColm, McColm Matsinger Lawyers.

Many years ago my father, the centre of my then universe died suddenly at age 51. He left three teenage children, all of whom he loved dearly. He had no Will. In his time he was not an exception. Decades later he is still not an exception. Why is it a vast number of people do no estate planning during their lifetime for the family they love? I have been involved in estate planning for clients for more than thirty decades and this question continues to visit me.

Weekly I speak with clients whose lack of planning in one of the most important aspects of their lives astounds me. Singles and couples in their thirties, forties and fifties who have never had a Will. Clients who “are sure they have a Will” but have no idea where that document may be. Individuals who have not considered the affect their divorce, marriage, remarriage, separation etc may have upon their Will and “Will Kit” documents that are worse than having no Will at all. The list goes on...

Why are we so negligent towards our families?

One obvious answer is that we are just scared to die. In Australian society we do not do death well. This is unfortunate because it is one of the more difficult things to avoid. However, from observing the behaviour of clients over many years, I believe that facing our own mortality is a significant cause of us failing to have a Will when we die.

When we hear news of people we know being involved in some life threatening diagnosis, accident or experience there is often schadenfreude – some small relief that it did not happen to us. Are we concerned therefore that by engaging in some acknowledgement of our own mortality – such as estate planning – we shall somehow commence a process leading to our ultimate demise? Will those pagan gods that we do not acknowledge, bring their wrath upon us by our mere acknowledgment of their existence? Will our existence be prolonged by ignoring its end?

Can people be persuaded to overcome these fears by invoking the corollary:-

“You would die if you knew the consequences of not having a Will!”

Whilst I have created some effective devices to assist clients overcoming their fears once they are in my office, I have not yet discovered the shtick (if that is what it shall take) to motivate people with these issues to commence the legal preparation for their death.

No doubt there are other reasons that cause people to fail to estate plan. I doubt that this was the chief cause for my father – a decorated WWWII pilot, shot down over Europe, who faced death on many occasions – to not prepare a Will.

Perhaps hedonism, our culture of instant gratification and an unerring belief in “tomorrow” might paradoxically be a disincentive, particularly to the young and fit, to deal with issues that are perceived as related to elder life, frailty and future medical diagnosis.

The Swiss factors – time and money - are of course other disincentives.

The cost of time – time off work for appointments with your lawyer, time to see your medical practitioner to complete an Advance Health Directive – is a negative.

And of course the monetary cost. Good estate planning does not come free.

By law your Will can be prepared by only two persons – yourself or a qualified legal practitioner.

The Courts have placed clear and onerous obligations on legal practitioners preparing Wills and in order to meet the standards required by the Courts, a legal practitioner is unable to finalise your estate planning for even a simple Will without spending a minimum of 2 ½ - 3 hours. Depending upon your personal circumstance, structures and assets many times this amount of work may be required.

For those persons who do not have, or do not wish to allocate, financial resources for their estate planning there are other options available. The Public Trustee and charitable organisations (Cancer Council Queensland, Red Cross, and Salvation Army etc) offer estate planning options. However, these alternatives will bear an ultimate cost to your estate greater than your own lawyer’s estate planning bill and you should make careful enquiry of the true cost at the outset.

For those vast number of people who shall continue to die without preparation of their affairs there is however some good news. The intestacy laws under the Succession Act will distribute the estate of such people amongst their nearest surviving next of kin. The bad news is that some family member will need to apply for an order from the Supreme Court to administer the estate or in cases such as my father’s estate – leave it to the Public Trustee to administer. Neither of these alternatives is, in my experience, the most desirable.

Ensuring that you have a valid Will and Enduring Power of Attorney in place is an obligation that you owe, not to yourself, but to your loved ones. It is time and money well spent.

I urge everyone who reads this article to review their personal family’s estate planning needs and ensure that you have a current valid Will and Enduring Power of Attorney that meets your desires. If in doubt, see your lawyer to have them prepared. If you do not have one then visit a good lawyer who can.

Buying a franchise? Do your research

Tue, 01 Sep 2009 00:40:00 GMT

By Christine Matsinger, McColm Matsinger Lawyers

The acquisition of a franchise is a complex process, proving there is a lot to be said on the subject. I have already written an article on the issue several editions ago. If you missed it, go online to the legal blogs section of www.businessmattersonline.com.au.

Some attention should be devoted to the steps that need to be taken by a prospective franchisee when considering the acquisition of a franchise business.

There are well over a thousand franchise systems in Australia. But what best suits you? The benefits of carrying out some in depth research into the types and availability of franchise businesses cannot be underestimated.

A prospective franchisee needs to consider several important factors such as:
•   whether they possess the necessary skills to operate a particular type of business;
•   the sort of work to be carried out;
•   the hours required to be put in;
•   the capital requirements to get the business up and running;
•   what the future is for the industry in which you are looking to operate the franchise business.

Going into business will always involve risks. Acquiring a franchise business does not alleviate that risk, however having the benefit of a proven system with an established reputation and brand and the support of a good franchisor will help to minimise that risk.

Whilst poring over paperwork does not appeal to many people, a potential franchisee is doing themselves and their family a disservice if they do not carry out a thorough due diligence process on their proposed choice of franchise business.

By that I mean gathering together all the relevant information regarding the franchise business and analysing it carefully so you know what you are getting yourself into.

The due diligence process should include:
•   carefully reviewing the disclosure document and the draft franchise agreement relating to the franchised business. You are entering into a binding contract, which many franchisees do not appear to understand;
•   doing your homework on the franchisor, including its/their history, business experience and reputation;
•   speaking with existing franchisees (whose details and contact numbers are in the disclosure document) to ascertain their level of satisfaction with the franchisor, the system, training provided, franchisor support, etc. This cannot be underestimated as a great source of up-to-date information about the health of the system generally;
•   if there is a retail or other site applicable, a history and demographic analysis of the site, traffic, future for the site, etc and an assessment of any leasing requirements;
•   an assessment of the strength of the brand (is it relatively new or does it have brand recognition already) and confirming that the franchisor has its intellectual property properly protected (by way of trade mark) to ensure the maintenance of the value and reputation of the brand;
•   an assessment of the competition in the industry and in the proposed franchise territory and surrounds;
•   details of the territory (if applicable), its size, demographics, potential for growth and any exclusivity granted;
•   how the franchise business operates on a day-to-day basis and what it is going to take to make the business work – does this suit the lifestyle you envisage for yourself and your family?

The key is to consider all the information available, get good accounting and business advice. Obtain legal advice from a lawyer experienced in franchising and make an informed decision based on the information you have gathered and assessed rather than a decision based on emotion. This is easier said than done.

Once you have taken the leap and made your decision to acquire the franchise business, be prepared to devote yourself to the training and also ensure you:
•   listen to your franchisor. They know their business and the system – utilise their system and expertise – don’t think you can do it better your way;
•   have enough capital in reserve as times are likely to be tough in the first several months or more;
•   prepare and implement a detailed business plan;
•   ask your franchisor for help if you need it – you are not alone;
•   ensure you stay on top of your reporting requirements so you know exactly where you are at in your business.   This will enable your franchisor to assist in pinpointing any problem areas and provide further training and help as required;
•   take advantage of all that the franchise system has to offer, liaise with other franchisees, join any franchise advisory group and regularly attend the franchise meetings.

Visit the “Education Section” and the “About Franchising” section of the Franchise Council of Australia website at www.franchise.org.au for some valuable resources and some free seminars on franchising which are held in Brisbane from time to time.

This Article was written by Christine Matsinger of McColm Matsinger Lawyers. You can contact Christine by telephone on 07 5443 1800 or via email cmatsinger@mmlaw.com.au.

Commercial and retail shop leasing

Wed, 15 Jul 2009 05:17:00 GMT

Written by Chantal Kirkwood, McColm Matsinger Lawyers.

The majority of businesses on the Sunshine Coast operate from leased premises. After wages, the costs associated with leasing are the most significant costs incurred by a business owner, however it is not uncommon for business tenants, and landlords alike, to have some misconceptions about the rights and obligations that leasing creates.

It is vital for any person considering entering into a commercial or retail shop lease, as either a landlord or a tenant, to obtain specialist advice prior to signing a lease document.

The following is a brief overview of some of the issues to be considered by both landlords and tenants when entering into a leasing relationship.

What is a lease?

A lease is a contractual agreement between the owner of the premises (the landlord) and a person or entity who occupies the premises for a period of time (the tenant). The lease document sets out the important elements of the leasing arrangement and specifies the rights and obligations of the respective parties.

What is the difference between a Commercial Lease and a Retail Shop Lease?

Queensland, and most other States, has passed legislation that deals specifically with issues relating to the lease of retail shop premises. The purpose of the Retail Shop Leases Act is to define particular rights and obligations owing by landlords and tenants, and in particular to ensure greater protection for tenants in large retail shopping centres by requiring mandatory minimum standards for leases.

A retail shop lease arises where the premises is located within a complex including a certain number of other retail shops, or when the use of the leased premises is one that is specifically listed by the legislation.

A commercial lease is a lease for business purposes that does not fall under the Retail Shop Leases Act and which is not subject to the mandatory minimum standards.

To determine whether a lease fall within the scope of the Retail Shop Leases Act, you should seek legal advice.

Important elements of a lease

The following are some of the important issues that should be contained within a lease and which the prospective parties should be aware of prior to committing to a lease:-

The start and duration of the lease;
Whether there are any options to renew or extend the lease;
The permitted use of the premises under the lease and whether this is adequate to cover the intended business and any future expansion;
The rent and outgoings payable under the lease;
How the rent will be reviewed during the lease and any options;
The insurance required under the lease and the party responsible for the costs of insuring;
Whether a bond or bank guarantee is required to be provided;
If the tenant under the lease is a company, whether directors guarantees will be required;
The costs of preparing the lease and who will be paying these;
Registration of the lease;
The items or services that are included in the lease, for example, air conditioning,
Obligations at the end of the lease including repair and redecoration of the premises;
The consequences of not complying with the lease or failing to pay rent or other payments.

Protection for landlords

When entering into a lease as a landlord, it is crucial to ensure that the lease document provides adequate protection measures and caters for the potential default of the tenant.

If a tenant fails to pay rent or outgoings under the lease, a landlord may suffer significant financial loss. Additionally loss can be suffered if a tenant damages premises or vacates without returning the premises to its original condition.

An effective method of security for a landlord is the requirement that a tenant provide a bank guarantee at the commencement of the lease. Bank guarantees are payable on demand by the issuing financial institution to the person named in the guarantee and are therefore an invaluable security in the event of a defaulting tenant.

A landlord should also ensure that adequate provision is made for the “making good” of the premises at the termination of the lease by requiring the tenant to remove all fixtures and fittings and return the premises to their original condition. A well-drafted “make good” clause in the lease assists in the smooth transition from one tenant to a new tenant and helps to ensure that the premises remain tenanted.

Protection for tenants

As a tenant it is important to ensure that a prospective lease is affordable and is appropriate for the type of business to be carried on. It is crucial to consider the length of the term and any options to extend the term in conjunction with a tenant’s business plan.

The rent and outgoings must be affordable and the tenant should take into account the provisions detailing rent increases throughout the term.

If, as a tenant, your business will be expanding or evolving, it is important to consider the permitted use of the premises and whether this will cater for these business changes.

Obtaining legal advice

The above checklist and essential terms are not by any means an exhaustive list of issues that need to be addressed in a commercial or retail shop lease. It is imperative that any person considering entering into a lease obtain expert legal advice to ensure that the lease meets their individual needs.

Flexible working arrangement under the national employment standards

Tue, 07 Jul 2009 23:30:00 GMT

Written by Mitchell Devine, McColm Matsinger Lawyers.

On April 8, 2009 the Labour Government’s Fair Work Bill received royal assent birthing the Federal Labour Government’s Industrial Relations blue print for the future and at the same time killing off the remnants of Work Choices.

Whilst some provisions of the Fair Work Act are expected to come into operation on 1 July 2009, the majority of the legislation will take effect on 1 January 2010. This date will coincide with the commencement of Federal Modern Awards and the operation of the National Employment Standards.

The National Employment Standards are 10 Legislative minimum entitlements which will apply to all National System Employees and will replace the Australian Fair Pay and Condition Standards. They include the following:

1. Hours of Work

2. Parental leave

3. Flexible Work for Parents

4. Annual Leave

5. Personal/carer’s and compassionate leave

6. Community Service Leave

7. Public Holidays

8. Notice of Termination and Redundancy

9. Long Service Leave

10. The Fair Work Information Statement

The purpose of this article is to address the National Employment Standard relating to the entitlement for Flexible Working Arrangements for Parents.

Under the National Employment Standard, a parent who has the responsibility to care for a child can make a request of their employer to change working arrangements to assist the employee to care for a child which is of school age (being a child who is under 16 years of age and is required to be enrolled in school) or a child who is under 18 years of age and has a disability.

A parent is unable to make a request for a change of working arrangements unless they have completed a period of 12 months continuous service with the employer immediately before making a request (the entitlement accordingly extends to long-term casual employees).

The request must be in writing and set out the details of the changes sought and the reasons for the change.

Upon receiving a request an employer must (within 21 days) provide the eligible employee with a written response stating whether the employer grants or refuses the request. An employer may only refuse a request on ‘reasonable business grounds’ and the refusal must spell out those reasons.

The Legislation does not define what may or may not comprise of ‘reasonable business grounds’ for the refusal of a request. The explanatory memorandum to the legislation suggests that the following may be reasonable business grounds.

The effect on the workplace and the employer’s business of approving the request, including the financial impact of doing so and the impact on efficiency, productivity and customer service
The inability to organise work among existing staff
The inability to recruitment a replacement employee or a practicality or otherwise of the arrangements that may need to be put in place to accommodate the employees request.’

A contravention of the National Employment Standards can give rise to civil remedy at the instigation of the employee, an employee organisation. Fortunately, an employer whom refuses a request from an eligible national system employee to alter their terms and conditions of employment to care for a child on ill-founded reasonable business grounds will not be subject to a prosecution. The parties may agree via a contract of employment or other document for the new statutory body, Fair Work Australia (which shall replace the Workplace Authority and the Workplace Ombudsman), to deal with a dispute as to whether the business grounds were reasonable.

The National Employment Standards addressing flexible working arrangements will not operate so as to exclude other State laws which may be applicable to an employees circumstances including the Anti Discrimination Act 1991 (Qld).

At McColm Matsinger Lawyers, we can assist you with understanding your obligations and responsibilities under the new Labour Industrial Relations System.

Warning: The content of this article is in the form of an academic paper and the opinions expressed herein are generalised. The application of the legal principles referred to can alter from case to case. No reliance should therefore be placed on the opinions expressed in this paper and specific legal advice should be sought for your specific circumstances.

Do you really have insurance to cover flood damage?

Thu, 11 Jun 2009 01:22:00 GMT

Written by Carmel Davies, McColm Matsinger Lawyers.

Most of us will agree that having insurance cover for flood damage is quite important. One never really knows when a heavy downpour will cause flooding or whether a home is vulnerable to flooding even from a high tide.

However exactly what is contained in our insurance policy to protect us from the sometimes disastrous effects of flood damage?

Firstly, let us start with the relevant wording in the insurance policy document. It is an interesting exercise to compare the wording of different insurance policies which may be thought to cover flood damage. The crucial question is do they actually cover such damage.

It is not uncommon for an insurance company to renege on an apparent commitment to pay out a claim, by relying on the particular wording of a clause or a definition in the insurance policy.

Upon examining definitions for “flood” in different policies, one will find there is no standard insurance industry definition at all. It is unwise to assume there is flood cover unless the wording in the policy document is unmistakeably clear. It is unwise to assume that insurance cover for water damage for example from rain and run-off means the same as flood cover.

In one fairly recent case* the insurance policy actually excluded cover for what most of us would consider a “flood”. The word “flood” in that policy, was expressed to mean, “inundation following an escape of water from the normal confines from any lake, reservoir, dam, river, creek or navigable canal, as a result of a natural phenomenon which has some element of violence, suddenness or largeness about it but does not mean inundation by water from fixed apparatus, fixed tanks, fixed pipes or run off of surface water from surrounding areas.

Despite the claimants attempting to obtain payment from the insurer for damage on the basis that they alleged that it was water from “rain and run-off” that caused the largest amount of damage to their property, this explanation was simply not accepted by the Court. We need to clearly understand that “flood damage” does not equate to “weather damage”.

If we want insurance cover for water damage which may arise from various sources, then we should ensure that the insurance policy that we take out, clearly outlines the range of events which we envisage need to be covered to give adequate protection. Such events may include storms and flash flooding, rain water run-off, rising rivers canals creeks and dams, tsunamis, flood damage to gates and fences, gutters overflowing, or even flooding from dishwashers, hot water systems and burst pipes.

We may also need to check other aspects of the insurance policy we take out. For example, can we expect new for old replacement on both home and contents regardless of age? Does the policy clearly state this?

An insurer does have responsibilities to inform the insured of what a particular insurance policy covers and what is excluded in the insurance contract before contract is entered into. It is important to really understand what the policy covers and what is actually excluded.

The time to ask questions of the insurer is prior to the contract being entered into.

If disputes arise at the time you make a claim, then litigation is an expensive way of resolving issues.

So you want to franchise your business?

Tue, 11 Aug 2009 06:50:00 GMT

Written by Christine Matsinger, McColm Matsinger Lawyers.

As a business owner perhaps you have asked yourself the question, do I want to Franchise my business?

Franchising can be a very effective means of expanding an existing business. The nature of a franchise can be described as:-

“A franchisor, holding property rights over a marketing system, business service or product (identified by a brand name or trade mark) enters a contract or agreement with the franchisee and grants, under certain conditions, the right to use a business brand name or trade mark and the right to produce or distribute the franchisor’s product or service. ”

There are a diverse range of Franchise systems in Australia encompassing many different industries and businesses of all sizes, and there is undoubtedly still much growth to come in the Franchising sector.

If you are considering franchising you need to ask yourself several questions.

Do you have a business that:-

•   Operates successfully, i.e. has a proven positive cash flow. You need to be franchising a proven system not simply a great idea or concept which hasn’t been proven.

•   Is able to be systemised and replicated. Franchisees need to be taught how to use your system or method of doing business. It is essential that your system and business methods can be replicated. Your business requires development of a detailed Operations Manual which documents your business system in its entirety. This Manual is used as a training tool and as a reference point for Franchisees.

•   Has an identifying name or trademark. Your concept needs to be unique and provide Franchisees with a competitive edge by use of a distinctive brand and image.

•   Has a proven track record and is sustainable. Your system needs to have staying power and be more than a passing fad with a limited lifespan.

•   Is capable of generating sufficient income for you as the Franchisor and to sustain the Franchise network.

•   Is capable of generating sufficient income for your Franchisees. The business has to be financially viable after payment of ongoing royalties and marketing fund contributions.

Do you have what it takes to Franchise?

•   Do you have a very strong desire to grow? This desire is best based on your confidence in your business and a vision for growth which need to be matched by your commitment to make it happen.

•   Are you prepared to accept the responsibility for other people’s capital and assets. Franchising can reduce the risks of entering into business but it certainly does not eliminate them.

•   Do you have sufficient time and capital to invest in developing your franchise strategy. The best foundation that you can lay is developing a sound franchise system. To achieve quality and a business that is sustainable for both parties, i.e. the Franchisor and the Franchisee, you need to be focussed and prepared to invest a significant amount of time in establishing your franchise system i.e. at least four to six months. You also must be prepared to invest enough capital to ensure that all facets of your business are properly developed and systemised, and ready to be franchised.    These steps will include:-

o   the development of Operating Manuals;
o   implementation of a comprehensive training program;
o   ensuring any computer based programs that are part of your system are up to date and problem free;
o   ensuring your Intellectual Property is protected, i.e. registering your trade mark;
o   choosing and setting up an appropriate legal structure to franchise your business; and
o   preparation of the documentation required to comply with the mandatory Franchising Code of Conduct, including a Disclosure Document and your Franchise Agreement.

•   Key decisions need to be made early in the development of your Franchise strategy, and you will need to source expert advice from industry consultants experienced in Franchising including Business Advisors, Accountants and Lawyers.

•   You need to consider your ability to recruit, train and motivate your Franchisees. Careful selection of Franchisees is imperative if the network is to grow and prosper. You need to be able to communicate effectively and develop relationships with all different sorts of personality types.

When developing your Franchise system, there is a wealth of sources of information available. You cannot read too many books on Franchising and business, or talk to too many existing Franchisors and Franchisees about their experiences. Visit the Franchise Council of Australia website at www.franchise.org.au and the publications section for some valuable resources on franchising your business.

The keys are “to make haste slowly” and “if it’s worth doing, its worth doing properly”.