Profit margins, process improvement, daily operations and pushing your company towards its next goal generally take up 200% of your working day.
When things are running smoothly we often don’t stop consider the legal environment — until it is too late.
Legislation and regulations change throughout the year and can impact your business. If your company has taken on extra employees or has achieved a higher turnover, while excellent indicators of growth, they also have the potential to attract new legal obligations.
Here are 4 commonly overlooked legal concerns that should part of your quarterly review:
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Competition and Consumer Law
A breach of the Competition and Consumer laws can result in significant fines and loss of reputation as well as personal liability.
The Australian consumer laws make it unlawful to impose unfair contract terms in your business dealings. This includes all contracted relationships including customers, contract workers and suppliers.
Being aware of what constitutes an unfair contract term is important if you use standard contracts that provide little or no opportunity to negotiate.
It may be worth reviewing your standard form contracts to ensure they comply with new provisions. If a dispute arises, your company could be relying on terms that may be rendered void.
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Privacy Principles
The Privacy Act 1998 was subject to amendments in 2015 and the Privacy Principles were updated.
If your company experienced growth last financial year and and now has an annual turnover of more than $3 million it will trigger the Privacy Act. There are also legislative triggers for smaller businesses that deal with personal or sensitive health and financial information.
Once you trigger the Privacy Act, your company will be required to have a Privacy Policy that complies with the Australian Privacy Principles.
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Finance arrangements
Most businesses have in place some kind of financing, loans or securities.
It’s important to note that finance arrangements contain often-overlooked requirements that can put you in breach for failure to comply. It may be as simple as having a prescribed insured value for secured property, or notifying your financier about a change in value of company assets.
Sometimes, however, these requirements may not be obvious. Most financiers have broad and inclusive provisions requiring you to either provide notice or seek consent, notwithstanding that a given event does not directly affect secured assets. This can include, for example, a guarantee provided by the company to a supplier to secure goods or services.
Failure to comply can put you in breach of your loan agreement and may be enough for a financier to recall a loan. In the absence of any other risk factors these incidents won’t register on the radar. If, however, a major financial event occurs you may find your bank uncooperative when you need them most.
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Employee or contractor?
Australia’s workforce is experiencing a significant shift away from the employee/employer relationship towards contracting and freelance-style relationships. This offers both companies and their workers more flexibility and control.
Business owners often believe that this relieves them of many of the traditional employer obligations, such as superannuation.
The Superannuation Guarantee states that if you pay more than $450 per month in any quarter for labour you may in fact still be required to make super contributions. This guarantee applies across many industries and positions, from cleaners to CEOs.
Additionally, employers should be aware that simply stating that a relationship is a contractor relationship does not make it so. The law considers the nature of the whole relationship and may in fact deem it to be one of employer/employee, giving rise to all that entails.
4 indicators of a contractor
- Do you supply them with equipment?
- Do you control the hours they work?
- Do you absorb any risk associated with their work?
- Do they have the ability to delegate their work?
If you answered Yes to any of these questions, you need to consider whether your contractor in fact an employee.
A little attention at your quarterly review can help secure your company’s legal position so you can confidently focus on what matters most to your business.
