Legal

Outdated court system is failing small businesses: ASBFEO

BEFORE she left of office. former Australian Small Business and Family Enterprise Ombudsman,  Kate Carnell called for an overhaul of Australia's dispute resolution framework, saying the current court system "does not work for small businesses".

When she released the Access to Justice Report, Ms Carnell said small businesses urgently needed pathways to resolve their disputes quickly and cost-effectively.

“Trying to resolve a dispute through the courts is just not a viable option for most small businesses,” Ms Carnell said before leaving the role and handing over to Bruce Billson, a former Federal Government Minister whose portfolio represented the small business sector.

“It’s prohibitively expensive and time-consuming," Ms Carnell said at the time. "We know small businesses are more likely to abandon both the dispute and the commercial relationship, than suffer the cost and mental load of taking legal action. 

“Our report essentially provides a five point plan to ensure small businesses have access to tailored dispute resolution processes that are less formal, more timely and cost effective.”

The report includes a suite of recommendations as part of the five umbrella findings. These include:

-       Strengthening Unfair Contract Terms protections;

-       Promoting alternative dispute resolution;

-       Providing access to voluntary, binding arbitration;

-       Greater access to tribunal and court determinations for disputes;

-       Supporting the wellbeing of small business owners through permanent funding of the Beyond Blue NewAccess for Small Business program.

Ms Carnell said small businesses had been hit hard by the COVID crisis and in this time of unprecedented hardship, disputes inevitably arise.

“My office saw commercial lease disputes increase nine-fold during the peak of the pandemic, with more than 570 cases in the June quarter alone,” Ms Carnell said..

“We know that state-based small business commissioners’ offices were also inundated with these kinds of disputes.

“Commercial disputes are very common, but they can be devastating when not handled correctly.

“Clearly, alternative dispute resolution through mediation, conciliation and arbitration is the best way to preserve commercial relationships. Litigation, on the other hand, is a relationship killer," Ms Carnell said.

“When businesses can’t resolve a dispute with the help of experts, we need to have a system in place that allows for an external party to make a determination, without small businesses having to wait for lengthy periods or go bankrupt due to excessive legal fees.

“Our report recommends forming a small business jurisdiction as part of the Federal Circuit Court to hear matters which cannot be heard by current state or territory tribunals. Damages would be capped at $5 million, matters would be aimed to be resolved within 60 days and small businesses could apply for a no adverse costs order so they are not saddled with the other party’s costs.

“Current state tribunals have been found to be effective for small businesses but they are limited in dealing with cross-border and international disputes. For instance, a Queensland farmer who deals with a NSW processor would not be able to seek a resolution through either state tribunals.

“While the vast majority of disputes are resolved through mediation and conciliation, there also needs to be a cost-effective, timely and binding judicial process for those small businesses that need it.

“Given the enormous pressure small business owners are under as a result of the COVID crisis and the inevitable stress that comes with being involved in a dispute, it is important that our dispute resolution avenues are supportive of participants’ wellbeing.

“Our report recommends mental health measures be integrated into all dispute resolution processes and reviewed regularly to ensure they are meeting the needs of small business owners," Ms Carnell said.

“Ultimately the purpose of this report is to create a framework that supports small businesses and family enterprises in this critical recovery phase.” 

www.asbfeo.gov.au

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What do new laws for casual employees mean for employers?

By Riley Anastasio >>

Following the decision of Workpac Pty Ltd v Rossato (Rossato) in 2020, employers were left with uncertainty regarding their casual workforce, with concerns of misclassification and ‘double dipping’.

Thankfully for employers, on March 22, 2021, new legislation was passed that significantly amended the casual employment regime.

The legislation includes a definition of ‘casual employee’ and expands upon already existing casual conversion rights, including an obligation on employers to offer permanent employment in certain circumstances. 

What is a casual employee?

There is now a statutory definition of a casual employee. A casual employee is an employee who:

  • has been given an offer of employment on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work (CasualOffer);
  • accepts the offer on the above basis.

The legislation includes an exhaustive list of factors that must be considered when determining whether, at the time the Casual Offer is made, the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work. These include, but are not limited to whether:

  • the employer can elect to offer work and whether the person can elect to accept or reject work;
  • the person will work according to the needs of the employer;
  • the person will be entitled to a casual loading or specific rate of pay for casual employees.

Importantly, the question of whether a person is a casual employee is to be assessed on the basis of the offer of employment and acceptance of that offer, not on the basis of any subsequent conduct of either party.

This arguably reverses the approach taken in Rossato, which assessed casual employment based on the conduct of the parties during the employment.

Changes to casual conversion

The Bill also introduces an obligation to offer casual employees permanent employment when certain circumstances are met. This will apply unless the employer can show there are ‘reasonable grounds’ not to make the offer.

An employer (other than a small business employer) must offer a casual employee conversion to either part-time or full-time employment if:

  • the employee has been employed for a period of 12 months;
  • during at least the last six months, the employee has worked a regular pattern of hours on an ongoing basis that, without significant adjustment, the employee could continue to work as a full-time or part-time employee.

Employers will be obliged to make a casual conversion offer, in the form prescribed, unless ‘reasonable grounds’ exist for not making the offer, based on facts that are known, or reasonably foreseeable. Reasonable grounds for deciding not to make an offer include, but are not limited to:

  • in the period of 12 months after the time of deciding not to make the offer:
  • the employee’s position will cease to exist;
  • the hours of work that the employee is required to perform will be significantly reduced;
  • there will be a significant change in:
  • the days on which the employee’s hours of work are required to be performed
  • the times at which the employee’s hours of work are required to be performed
  • and this cannot be accommodated due to the employee’s availability
  • making the offer would not comply with a recruitment or selection process required by or under law of the Commonwealth or a state or territory.

The Bill also gives casual employees a residual right to request conversion to permanent employment in circumstances where they have been employed for at least 12 months and have worked a regular patter of hours on an ongoing basis in the last six months that, without significant adjustment, they could continue to work as a full time or part-time employee.

Employers can only refuse a request for casual conversion made by an employee where ‘reasonable grounds’ for the refusal exist. The factors relevant to whether reasonable grounds exist are the same as the ones used to determine whether an employer must make an offer to casual employees to convert.

If an offer is accepted by an employee or granted by an employer, the employer must, within 21 days, notify the employee of:

  • whether they are converting to full-time or part-time employment;
  • their hours of work after the conversion;
  • the day the conversion will take effect.

Disputes

There is a new dispute resolution mechanism for disputes regarding an employer’s obligation to offer casual conversion or an employee’s right to request casual conversion. The dispute resolution mechanism may be contained in:

  • a fair work instrument that applies to the employee (e.g. an enterprise agreement);
  • the employee’s contract of employment;
  • another written agreement between the employer and employee.

If none of these mechanisms apply to the parties and the dispute could not be resolved at a workplace level, they may refer their dispute to the Fair Work Commission.

Casual employment information statement

Employers must give each casual employee a Casual Employment Information Statement before, or as soon as practicable after, the employee starts employment as a casual employee.

The Fair Work Ombudsman has been tasked with preparing a ‘Casual Employment Information Statement’, containing information about casual employment and offers and requests for casual conversion.

Casual loadings

In lieu of accruing permanent entitlements (e.g. annual leave and personal leave), casual employees are paid a separately identifiable amount, called a ‘casual loading’.

Labelled as potential ‘double dipping’, courts in recent cases have, when finding an employee is not a casual employee at law, not allowed employers to ‘set off’ the casual loading paid to the employee during their employment against the amount owed to them for permanent entitlements.

In response, the legislation requires a court, when making any order in relation to a claim by a casual employee for permanent entitlements, to reduce any amount payable for permanent entitlements by an amount equal to the casual loading paid during the period for which permanent entitlements are claimed.

Courts may, where an employer pays an employee a loading in satisfaction of a number of entitlements and only a portion of the loading is paid in lieu of permanent entitlements, reduce the amount the employer is required to pay by the proportion attributable to permanent entitlements.

The new legislation has given employers and their casual employees more certainty. It will be extremely important that employers are familiar with the new requirements and that they comply with them.

It will also be important that employers update their casual employment contracts for all employees, whether covered by a Modern Award or not, so that they trigger the protections in the new laws.

For more information, contact the Cooper Grace Ward Lawyers workplace relations and safety team.

Partners  Belinda Winter and Annie Smeaton will be hosting a complementary webinar on this topic on April 30, 2021. To register, see the listing on the Business Acumen Events Calendar.

www.cgw.com.au

*Author Riley Anastasio is a graduate team member at Cooper Grace Ward, Brisbane.

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'Norms’ of acceptable commercial conduct now test for unconscionable conduct

THE Australian Small Business and Family Enterprise Ombudsman, Bruce Billson has welcomed the landmark decision of the Full Federal Court to make ‘a sufficient departure from the norms of acceptable commercial behaviour’ a test of whether conduct is ‘unconscionable’ under the Australian law.

“This is a great day for Australian small businesses seeking protection from unconscionable conduct that can harm enterprises and livelihoods,’ Mr Billson said.

“The decision ensures egregious commercial conduct can be captured by the unconscionable conduct provisions under the Australian Consumer Law without having to prove that the harmed small business or consumer has a special disadvantage or vulnerability that was exploited.

“I welcome the Full Court confirmation that conduct may be found to be unconscionable as a result of deviations from the norms of acceptable commercial behaviour, even where there has not been a special disadvantage or vulnerability that was exploited. 

“This should reassure smaller businesses that remedies are available for the harm caused by the unconscionable conduct of a counterparty are available and that fair and reasonable commercial dealings support Australian commerce, even where a larger, more powerful corporation is involved."

Mr Billson congratulated the ACCC and its chair, Rod Sims, for appealing an earlier Federal Court decision that required that a business could only be found to have acted ‘unconscionably’ under the Australian Consumer Law and other similar laws, if it had exploited some disadvantage or vulnerability on the part of the consumers or small businesses affected.

“While the exploitation of a disadvantage or vulnerability is an important criteria for establishing if a business has acted ‘unconscionably’, egregious conduct that causes harm to another business cannot be acceptable purely by the absence of this specific form of exploitation,” Mr Billson said.

“We look forward to seeing further protections for small businesses through changes to the unfair contract terms legislation in the near future.”

www.asbfeo.gov.au

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Maurice Blackburn chief calls for all Hayne Royal Commission recommendations

MAURICE BLACKBURN Lawyers principal Kim Shaw is calling for urgent action on outstanding banking Royal Commission recommendations, with February 1 marking two years since the final report into the financial services industry was handed down by Commissioner Kenneth Hayne.

Ms Shaw said crucial recommendations made by the Royal Commission to protect consumers had stalled, with many requiring urgent implementation in 2021.

“Commissioner Hayne’s final report provided a roadmap for changes that were needed right across the financial services industry to protect consumers from poor behaviour, much of which was well-documented throughout the banking Royal Commission,” Ms Shaw said.

“Yet as recent reports have noted, it is now two years since that time and more than half of Commissioner Hayne’s recommendations are still yet to be acted on in full or have been abandoned altogether. 

“The Federal Government has pointed to COVID-19 as the reason for delay on a number of recommendations, but the fact remains that many of these recommendations are now more important than ever in ensuring consumers are properly compensated for harm caused and protected from poor behaviour," Ms Shaw said.

“It abandoned key recommendations from Commissioner Hayne to protect consumers against unfair or irresponsible lending and to ban commissions for mortgage brokers – both of which were crucial measures that have become even more important in the wake of COVID-19.

“As the Royal Commission demonstrated, banks’ relaxed lending standards and brokers’ involvement in loan sales resulted in widespread debt over-commitment, and our firm has represented hundreds of consumers who have fallen victim to these issues through irresponsible lending.

“Yet rather than act on the recommendations from Commissioner Hayne to address these issues, the Federal Government continues to try and make it easier for banks to lend money and provide credit without further necessary protections – measures that risk causing considerable problems for consumers when they can least afford it," Ms Shaw said.

“The delay in implementing a Compensation Scheme of Last Resort (CSLR) is another key recommendation that must be acted on – Commissioner Hayne’s report makes clear such a scheme is badly needed to compensate victims of negligent financial advisors who have gone bust, yet the Federal Government is still to introduce legislation to Parliament for this.

“There remains no good reason not to act on this recommendation, and we again call on the Federal Government to ensure that a CSLR is implemented this year as a priority.

“On today’s two-year anniversary we urge Government to urgently act on the remaining Hayne recommendations to ensure people don’t continue to find themselves worse off in the long run,” she said.

www.mauriceblackburn.com.au

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Everyday Justice charity to provide free legal advice for 'vulnerable Australians'

AN INNOVATIVE new charity, Everyday Justice, is aiming to improve access to legal advice, particularly for regional and mobility-impaired Australians, and provide relief for overstretched community legal services.

Everyday Justice is an initiative of national law firm Mills Oakley. Commenting on the new charity, Mills Oakley CEO John Nerurker said the need for pro bono legal advice has never been greater.

“This has been a tough period for many people, and a particularly difficult time for people who can’t afford to pay for a lawyer to help them with issues like unpaid wages, mounting debts and possible eviction from rental accommodation,” Mr Nerurker said. 

“The team at Mills Oakley felt that it was time to step up and take a unique approach to addressing the unmet legal needs of so many Australians. The Missing Middle Everyday Justice will provide free legal advice for the 'missing middle'.”  

He said the term 'missing middle' describes the growing number of low to moderate income earners in Australia who are ineligible for means-tested Legal Aid services but are unable to afford a private lawyer. 

To access the legal system, the missing middle often must make a difficult choice between incurring substantial financial hardship, self representing or abstaining from pursuing their legitimate legal claims altogether. Everyday Justice hopes to alleviate some of this undue hardship, he said.

ACCESSIBLE JUSTICE

Mr Nerurker said Everyday Justice would emphasise accessibility for clients, delivering services online and via telephone, as well as in person. Innovative legal technology solutions will ensure that vulnerable people, including those with disabilities, the elderly and those in rural, remote and regional communities have ample access to free legal assistance without the need to travel great distances to obtain it.

“During the COVID lockdowns, Mills Oakley honed the skill of providing seamless client service remotely,” Mr Nerurker said. “We are well placed to apply those lessons with Everyday Justice.”

He said Everyday Justice would provide advice on employment law, tenancy, credit and debt, bankruptcy, financial abuse, fines and infringements, human rights, environmental and other areas of public interest. Many of these practice areas have experienced a strong increase in demand since last summer’s bushfires and the ongoing coronavirus related lockdowns.

Everyday Justice will also provide a pathway for aspiring lawyers to gain the practical legal experience required for admission, offering internships to law graduates and newly qualified lawyers interested in pursuing careers in the social justice sector.

“An unfortunate consequence of the pandemic is that many firms cut back on their graduate intake,” Mr Nerurker said. “Everyday Justice will give back to the profession by providing a comprehensive training program for aspiring lawyers.”

This training program will cover all areas of the firm’s practice and provide the opportunity to help make a meaningful impact on the lives of those in need, in a supportive, stimulating and diverse learning environment, he said.

“We want to equip more young lawyers with the practical skills needed to help Australians with their everyday legal issues."

COMMUNITY CONNECTIONS

Two of the charity’s senior figures are well-credentialled in pro bono representation. Mills Oakley partner Luke Geary will chair the Everyday Justice Board and managing lawyer Amy Burton will be responsible for day-to-day pro bono operations.

Both Ms Burton and Mr Geary have been recognised for their contribution to accessible justice. Amy Burton was named Pro Bono Lawyer of the Year at the Lawyers Weekly Women in Law Awards, while Luke Geary's many accolades include Managing Partner of the Year at the Australian Law Awards, in recognition for his work at a previous firm, and Anzac of the Year for services to the legal profession and the community.

Everyday Justice will continue to work closely with the many charities supported by Mills Oakley, who will refer clients to the service.

Everyday Justice will also formally partner with The College of Law to identify suitable candidates for the internship program. Terri Mottershead, executive director of the college’s Centre for Legal Innovation, will serve on the board of Everyday Justice. 

Mills Oakley partner Vera Visevic will also serve on the Board.

“Every charity needs to have roots in the community,” Mr Nerurker said. "It is vital to have a consultative approach, taking advice and seeking engagement from as wide a cross-section of stakeholders as possible. We are not here to re-invent the wheel – we are here to follow best practice and to assist as many vulnerable people as we can.”

ACCLAIM FOR PRO BONO APPROACH

The decision to launch Everyday Justice was welcomed by Australian Pro Bono Centre CEO Gabriela Christian-Hare.

"Mills Oakley is to be congratulated for establishing and investing in Everyday Justice as a vehicle through which vulnerable Australians can obtain pro bono legal support across a range of critical areas," Ms Christian-Hare said. "The charity will also help to build the next generation of lawyers committed to access to justice, the public good and community service through pro bono work."

Mr Nerurker said the launch of Everyday Justice reflected the evolution of Mills Oakley into a modern, progressive national firm. Mills Oakley has passed many milestones in the past five years, including appointing the firm’s 100th partner, crossing the $200m revenue mark and opening a Perth office to become a truly national law firm.

“We have enjoyed tremendous success in recent years," Mr  Nerurker said. “But with that success and national profile comes an obligation to give back to the community in equal measure.

"While we have been active in the community for many years, it is time to step up and take our pro bono strategy to the next level. This is a coming of age moment for Mills Oakley.”

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'Safe harbour' business lifeline to end on New Years Day

CORPORATE INSOLVENCY advisory firm MacKay Goodwin is urging business leaders to address insolvency issues before New Years Day, when the Federal Government's 'safe harbour' moratorium ends.

MacKay Goodwin has warned struggling businesses have just days to seek professional help. Directors of companies trading while insolvent will no longer have protection from January 1, 2021, which could leave them open for involuntary liquidation proceedings.

During the pandemic, the Corporations Act suspended provisions that would otherwise hold directors personally liable for trading while insolvent.

"It is critical to get the message out that from New Years Day, company directors could face penalties if their business is found to continue trading while insolvent," Mackay Goodwin CEO Domenic Calabretta said.

"Originally the Safe Harbour provisions were due to end in September but were extended when it became clear the economic effects of the pandemic weren't going to be rectified sufficiently by then.”

Under the current economic conditions, it is up to directors to get their accounts and records in order before the deadline passes. If companies have been trading insolvent during 2020, they are strongly encouraged to seek professional financial help.

Companies in serious trouble should have a professional financial adviser, specialising in restructures or insolvency, appointed ahead of the December 31, 2020 deadline, Mr Calabretta said.

"Safe harbour laws state that an external administrator must be appointed to your company before the moratorium's expiry on 31 December 2020, if the debts incurred during COVID are to be excluded from a liquidator's claim for insolvent trading," he said. 

"I really encourage companies to take the time now to examine their businesses and identify if it is still viable, or suffering from temporary liquidity challenges. Those companies could undertake a restructure, which could see them continuing to trade, but in a stronger financial position. With the right advice, they may come out of COVID stronger than they went in."

"Where a company is placed into formal insolvency, directors will need professional advice on compliance with regulatory obligations, such as the provision of books and information and assistance to a liquidator, administrator or controller," Mr Calabretta said.

He said Mackay Goodwin also strongly encourages companies to undertake a general health check to ensure they have viable plans for recovery and subsequent growth.

"Directors may need advice on lending, cash flow, restructuring, forensics, and improving efficiencies to avoid financial trouble. A professional adviser is best placed to help," Mr Calabretta said. "Sound planning is best achieved through a collaborative process between you and an advisory expert.

"While I recognise the holiday season is a terrible time of year to factor in major business health checks, I can't stress enough how important it is for struggling businesses to get on top of it before the moratorium ends. From 2021, directors can be liable if they have not sought help or taken appropriate action to mitigate claims, and the last thing we want is for the new year to be as miserable as 2020.”

Mackay Goodwin is offering several free advisory activities for businesses that find themselves in trouble. Aside from free webinars, it has also released a downloadable business survival pack. It is also providing an initial free consultation with businesses, and to assist the business community its staff have committed to providing two hours of their day free of charge to affected businesses for the next six months.

www.mackagoodwin.com.au

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Improving technology neutrality of Treasury portfolio laws

THE Institute of Public Accountants (IPA) chief executive officer, Andrew Conway has highlighted that modernising business communication is a key driver of Australia’s future economic growth -- and that must include modernising the Treasury.

“The call for public consultation on improving the technology neutrality of Treasury portfolio legislation is timely,” Mr Conway said.

“If anything, good has come from the COVID-19 pandemic, it is the push to continue Australia’s deregulation agenda and ensure legislation is drafted so that it may stand the test of time and eliminate unnecessary business processes. 

“This consultation is essential as one of its objectives is to ensure Australia does not restrict the use of current and future technologies," he said.

“It is vital that businesses benefit from consistency in the way law treats similar types of business communication now and into the future. That is why the De-Regulation Taskforce is seeking to ensure a principles-based approach to legislative reform for business communications is applied,” Mr Conway said.

Andrew Conway is a member of the Department of Prime Minister and Cabinet Deregulation Taskforce Expert Advisory Panel but he said he has made these comments in his capacity as chief executive of the IPA.

The consultation period closes on February 28, 2021, and information on making a submission can be sourced here.

www.publicaccountnats.org.au

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