The term, ‘non-refundable deposit’ is often used by business owners, but just because a deposit is referred to as ‘non-refundable’ does not mean that it actually is. Conversely, as a business owner, a deposit can be non-refundable if certain criteria are met.  

Meeting the Non-Refundable Criteria

Business owners need to be careful in how they charge a non-refundable deposit to ensure that it meets the relevant criteria. Non-refundable deposits are intended to protect a business in circumstances of sudden cancellation and to compensate the business for the time, effort and money expended up to that point. Therefore, it is crucial for a business to ensure that the non-refundable deposit that they charge in these circumstances is reasonable and proportionate with reference to protecting their legitimate business interests and is not excessive or used as a ‘penalty’ against a customer or client. What will be considered reasonable and proportionate will depend on the specific circumstances and will be different on a case-by-case basis.   

Documenting the Deposit Correctly

Not only does a business need to ensure that a non-refundable deposit is reasonable and proportionate in the circumstances, but they must also ensure they disclose all relevant information regarding the non-refundable deposit to their customers or clients. It is crucial for a business to disclose the terms of the non-refundable deposit in the correct way otherwise they may be seen to be engaging in misleading or deceptive conduct, which is against the law. 

At a minimum, the business must disclose the terms of a non-refundable deposit in a Terms and Conditions document (or similar) which is provided to the customer or client at the time of, or prior to, engaging them. 

Even better, the business should also seek to obtain an acknowledgement from the client or customer that the non-refundable deposit is reasonable and proportionate in protecting the business’ legitimate business interests. Again, this can be incorporated into the Terms and Conditions document being used by the business. You can also reiterate this to the client or customer when you request the payment of the deposit from them. Transparency is key!

But how does it work in real life?

By way of an example – let’s say you are a photographer who charges $300 for a photo shoot, with a non-refundable deposit of $100 payable prior to confirming the booking. Your Terms and Conditions (which your client signed and returned prior to engaging you) stats that the deposit is non-refundable and outlines that it is calculated with reference to the actual costs that your business incurs. Your client cancels the booking two days before the shoot. They allege that your business cannot retain the non-refundable deposit. In these circumstances, whether you can retain the deposit would depend on (as a minimum):

1. Whether your Terms and Conditions properly explain that the deposit is non-refundable;
2. Whether you have properly engaged your client/customer (by providing them the Terms and Conditions and making sure they have read and acknowledged them);
3. Whether the amount of the non-refundable deposit is reasonable, with reference to the actual costs that your business has incurred (including things like time involved in making the booking, the loss of profit if you are unable to re-book the session, any others costs that you have incurred etc.); and
4. Whether the non-refundable deposit is proportionate to the overall cost of the product or service that you are providing.

Without knowing any further information, on the above facts alone, it would appear that the deposit wouldbe non-refundable, as the document requirements appear to have been met and $100 may likely be considered to be a reasonable and proportionate amount. 

The Consequences 

What happens if a business fails to disclose the terms of the non-refundable deposit or doesn’t take the time to ensure they are charging a reasonable and proportionate amount? The customer or client may be entitled to get that deposit back and the business will not be entitled to be compensated for the loss they have suffered for the time, effort and costs incurred up until that point in time.  

What Every Business Should Do

If you are a business owner who wants to charge non-refundable deposits, then you should obtain advice from a specialist business lawyer regarding the drafting of your Terms and Conditions and an assessment of the reasonableness of the amount that you want to charge. Unfortunately, this is another circumstance where you cannot use terms that you have sourced from Google, as they are not customised to your business, which will affect the likelihood of the enforceability of the provisions. 

Are you looking to charge non-refundable deposits for your business’s services?

Don’t rely on dodgy downloaded templates - Speak to a specialist business lawyer from Enterprise Legal today!

We’ve helped hundreds of businesses of all sizes from all across Australia to draft watertight Terms and Conditions for their unique circumstances.

Get it done right from the start, at fixed-fee rates with NO hidden surprises – contact EL today for an obligation-free consult: 

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If the Coronavirus is Causing Disruption to your Construction Project Supply-Chain, are you Legally Protected?

Coronavirus or 'COVID-19' continues to spread across the globe, with the World Health Organisation (WHO) referring to the epidemic as a “public health emergency”.

With Australia’s reliance on China for providing goods and materials for the construction sector higher than ever before, many of Enterprise Legal’s construction clients have started raising concerns about how the outbreak could affect their projects, big and small – and when it inevitably does, what will their rights and potential liabilities be? 

Risks to Developers and Other Principals

Most Developers/Principals of construction projects care about three main things when it comes to their project delivery, that is - will the project be:

• on time;
• delivered within budget; and
• of a quality standard and within scope upon practical completion.

The recent shortage of materials from China as a result of factory closure and import limitations could see Developers and Principals alike exposed on all three of the above criteria.

Some key factors for Developers/Principals who have current projects or projects that are at the ‘sign-up’ phase to consider include:

• what materials and/or goods are at risk of not being supplied on time;
• delay damages – is the delay a compensable cause under the Contract which could see the Developer/Principal having to pay delay damages to the Contractor;
• extensions of time – does the Principal have an obligation to grant an extension of time under the Contract for the delays, in which case the project completion date could be significantly pushed out:
  • without giving the Principal the right to enforce liquidated damages; and
  • exposing the Principal to potential claims from future tenants, purchasers or alike;
• does the Developer/Principal have ‘good faith’ obligations under the Contract and how would those obligations apply in the current circumstances; and
• what practical steps can (and must) the Developer/Principal take to mitigate its own losses in respect of the project. 

Risks to Contractors

Conversely, the risk to Contractors are in the reverse. For example:

• could the Contractor be exposed to delaying the project without any entitlement to extensions of time, consequently exposing the Contractor to liquidated damages payable to the Principal/Developer;
• does the Contract’s ‘force majeure’ clause adequately protect the Contractor where the extension of time clause otherwise may not;
• what obligations do the Contractor have to its subcontractors, and what liabilities could it be exposed to in that regard; and
• what steps does the Contractor have to take from the outset to best protect itself from unnecessary exposure. 

What Should You Do?

Enterprise Legal’s advice is ‘be alert, but not alarmed’. Make sure that you arm yourself with the knowledge that you’re legally protected and the best way to do this is to see an expert construction lawyer to get guidance and advice on what the best way forward is for your specific project, so as to mitigate any liability or other exposure under the Contract or otherwise.

Most importantly, by arming yourself with the relevant information and taking practical steps without delay, you will maximise the chance of successfully delivering the project, which is a win-win for both Developer/Principal and Contractors alike.

If you are currently a party to a construction project or planning to sign an agreement in the near future, contact Enterprise Legal’s Construction Law Team for advice today! Ask to speak to our firm director and dedicated building and construction specialist, Sharné Lategan.

Always remember, prevention is better than cure – and being proactive is the best next step you can take!

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If you’re looking to enter into a domestic building contract for the construction of a new home or renovations to your existing home, there are many things you’ll need to think about, from the flooring to your paint choices. In addition to all of your aesthetic choices, there are plenty of things you specifically need to consider when it comes to your contract itself, as this will be the backbone of the entire construction project.

1. Initial Period

After you enter into a building contract, you will generally have a period of time where you are required to provide the builder with materials including proof of ownership, proof of loan approval and relevant building approvals.

If you need to obtain finance approval prior to being able to commit to the project, make sure the contract documents accurately reflect this to avoid a scenario where you are contractually bound to proceed with the contract, regardless of finance approval. Also make sure you clarify up-front who is responsible to obtain building approval, as often builders advise they will ‘assist’ but the ultimate responsible may lay with the home owner, which is not ideal.

2. Progress Payments

Progress payments are payments made to the builder at certain stages of the construction process, which should be clearly set out and identified in your contract. It is important to ensure you are aware of what is payable and at what time and that your contract does not impose any restrictions on progress payments. It is arguably more important that you make sure the work you are paying for has been carried out, in the manner required by the contract.

3. Pricing

Your building contract may be a ‘fixed-price’ or ‘cost-plus’ building contract. A fixed price contract is one where the total price is fixed, barring any variations, delays, or extenuating circumstances. The other form of building contract is ‘cost-plus’ where you may be given an estimated final price but the contractor will obtain the materials and services through the building process and pass the costs onto you, as well as charge their own time by the hour. This can become costly quite quickly, so it is always our recommendation that a fixed price contract be entered into, to minimise the risks of ‘blow outs’ to home owners.

4. Variations

When negotiating the construction contract, it is very important that the contract contains a clause that variations only be allowed where it is agreed to in writing by both parties, prior to the work the subject of the variation being carried out.

What can often happen is a simple site conversation where the home owner innocently changes a product or selection, thinking it will be the same cost, can end up resulting in a very costly exercise for the home owner. Where builders know that variations have to be subject to writing, they will make decisions more carefully and explain them to home owners’ in more depth, as ultimately the risks in those circumstances lies with the  builders.  

5. Defects Liability Period

The defects liability period is the period of time where the builder is required to return to repair any defects. This will usually start at the date of practical completion. It is important to check your contract to determine the length of any defect liability period before you enter into your contract to ensure that it is likely to be sufficient, builders will often try for a six month liability period where as twelve months is industry standard.

6. Prime Cost and Provisional Sum Items 

Prime cost items are fixtures and fittings that may be listed in the contract but not specifically identified and costed – usually because the exact type was not decided on at the time of signing – so the price is only an estimate. Ideally, you should avoid prime cost items as much as possible by deciding on as much as possible as early as you can. Provisional sum items are those that are listed in the contract for possible additional work where a builder is only able to make an estimate of the cost at the time. Items such as these should be avoided where possible as it can increase your overall costs.

Sometimes, however both prime cost and provisional sum items are unavoidable, and in these instances we recommend home owners negotiate a certain ‘capped amount’ with the builder, to ensure builder accountability in product estimation and selection.

7. Site Investigations

Before construction begins, it is important that your builder undertakes appropriate site investigations to determine the soil type, rocks that may need to be removed, and other things that could lead to unexpected price variations later on. Your contract should include warranties relating to any necessary site investigations, and it is very important that all these latent condition issues are covered off before hand, so as to avoid contract price blow out.

8. Date for Practical Completion

The date for practical completion is the date that the construction is scheduled to be completed, barring any unexpected delays. This date should not be left blank on your contract and it should be a realistic estimation of when the project is required to be completed.

9. Liquidated Damages

Something to consider when entering a contract is whether you want to include a liquidated damages clause. Liquidated damages are a set amount per day that the builder will pay you for every day past the date for practical completion that the work is not finished.

We always recommend that a liquidated damages amount be specified in the contract, because it will motivate the builder to complete the project on time. If there are no liquidated damages amount in the contract, the main remedies available to home owners for late delivery is a breach of contract claim, and most builders know this is a lengthy and expensive process so home owners are unlikely to go down this route.

10. The Builder Themselves

While it might seem obvious, it is important to ensure that your builder has the appropriate licences for the work they are contracted to do. You should also check whether their work is of a quality you are expecting and whether they have received formal orders from QBCC to rectify defective work. If there are a large number of these orders, you may want to steer clear of the relevant builder and engage a different builder instead. Always ask for references as well, and make sure you contact the references or do standard google review searches, to ensure previous good experiences with that specific builder.

To ensure you fully understand your contract and that there aren’t any hidden surprises, the team at Enterprise Legal can help. 

Make sure you contact us before you enter into the relevant construction contract, and we will gladly assist in the review and negotiation of same:

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Employers in the construction, clerical, food, manufacturing, telecommunications, storage and wholesale industries are among the many industries whose minimum Modern Award wages will be increasing on 1 November 2020.

Each year the Fair Work Commission reviews the minimum wages contained in all Modern Awards and this year it announced a 1.75% increase to minimum wages on 19 June 2020.

Whilst the wage increases usually apply from 1 July for all Modern Awards, this year the Fair Work Commission postponed a number of increases to industries hit hard by the COVID-19 pandemic. All Modern Awards were broken up to three groups, with Group 1 increases starting on 1 July 2020, Group 2 commencing on 1 November 2020 and lastly, Group 3 commencing on 1 February 2021.

The full list of awards that will be increasing on November 1 include:

The third group of awards that will increase on 1 February 2021 include:

To learn more about the Fair Work Commission’s wage increase or to speak to one of our Workplace Relations specialists, contact Enterprise Legal today.

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Obviously one of the biggest areas of uncertainty regarding the impacts of COVID-19 is on staff. Our expert Employment Law Team has put together the following overview, regarding standing-down employees and making employees redundant as a result of the current pandemic.

Employee Stand-Down

Pursuant to sections 524 and 525 of the Fair Work Act, employers can stand employees down without pay during a period in which the employee cannot usefully be employed because of:

• equipment breakdown;
• industrial action, when it’s not organised by the employer; or
• (most relevant given the corona virus outbreak) stoppage of work for which the employer cannot be held responsible.

During a legitimate stand down period, employees do not need to be paid but they will accrue leave in the usual way.

Whether a particular employee can be usefully employed is a question of fact to be determined having regard to the circumstances that face the individual employer and the specific employee. “Usefully employed” has not been defined, but Courts have in the past determined that if an employer is able to obtain some benefit or value for work that could be performed by the employee, then the stand down provisions will not apply.

For example, let’s say a local take away shop has to ‘shut its doors’ due to a government lock-down proclamation, then it may be reasonable to stand the front-line employees down without pay, but employees who do accounts, bookkeeping, marketing and alike may not be eligible to be stood down because there may still exist an opportunity for them to be ‘usefully employed’.

Awards, Enterprise Bargaining Agreements and Employment Agreements could alter the statutory position above, so EL always cautions clients against taking an action as drastic as stand down without pay until considered legal advice tailored to that client’s business and the specific employee(s) have been obtained.

Because of the significant impacts stand down without pay can have on employees, EL would treat such a step with extreme caution. Fair Work guides at the moment are saying that ‘best practice’ would be to discuss different options with each employee, and consider letting employees take leave on the basis of paid leave such as sick, annual, long-service etc. where available, or to allow them to work from home where possible.

However, EL recognises that sometimes when there is a stoppage of work, standing employees down without pay may be the only option available to our clients, and in those circumstances we encourage clients to contact us for a tailored, short-form advice from $1,350.00 (including GST).

Redundancy Option

Some EL clients may see their business take such a downturn that they need to consider making employee(s) positions redundant.

Essentially, a redundancy could be a potential strategy for employers where an employee’s position is no longer required by the employer due to restructure or operational changes in the employer’s business, which renders the position unnecessary. The work or role must no longer be required to be performed by any employee.

The Fair Work Act has strict requirements that employers must meet prior to qualifying for the redundancy provisions, and a relevant Employment Agreement, Award or Enterprise Bargaining Agreement may create complimentary and/or additional onerous obligations on employers in this regard.

Given the current climate, EL’s advice is to approach any redundancy decision with caution, and always ensure you have sought tailored legal advice so as to minimise any risk or unnecessary exposure to your business.

Contact Us

Our expert Employment Law team can also assist your business by developing a range of customised and appropriate policies and documents – please contact us to obtain a fixed fee quote for these services. In the interim, our team has prepared a generic Coronavirus Policy for your free download and use, to ensure that your business is on the front-foot.

The application of the existing law to the current situation is rapidly-developing, so we encourage all clients to ensure they regularly check our platforms for updates or to contact us directly with any concerns that they have.

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At Enterprise Legal, we always say that ‘prevention is better than cure’. So when it comes to commercial, industrial or retail lease disputes, the best way to prevent them is to ensure you understand what you are signing up for in the first place and to negotiate some protections at the time of entering into your lease. After all, a lease is typically one of the biggest financial obligations that your business may need to commit to, keeping in mind that you are usually committed to your obligations for a minimum of three or five years!

Whether you’re a Landlord or Tenant, here are our top five tips to keep in mind when entering into your next lease:

1. Heads of Agreement/Letter of Offer Terms

Quite often, before a lease is prepared, the parties will sign a short document or letter outlining the key terms of the deal. This document is usually referred to as a ‘Heads of Agreement’ or ‘Offer to Lease’ and is often prepared by the real estate agent managing the deal.

Although usually an Offer to Lease is not binding on the parties, it forms the basis of the formal lease terms. This stage of lease negotiations is the best time to negotiate key terms, before either party incurs the expense of preparing and negotiating formal lease documents. If either party seeks to amend terms that are agreed in a Letter of Offer after formal lease documents have been prepared, it can create friction between the Landlord and Tenant at a very early stage in their association.

We recommended that you seek legal advice on the terms of an Offer to Lease, to ensure a smoother lease negotiation process and to avoid the potential for a dispute.

2. Permitted Use 

A frequent issue in lease negotiations is whether a Tenant will have the exclusive right to operate their business type (specified as the ‘permitted use’) in the centre/complex. This means that it’s very important for a Landlord to consider whether any Tenant’s proposed use conflicts with any rights the Landlord has already given to existing Tenants in the centre/complex.

A more commonly overlooked issue around permitted use is which party is responsible for ensuring that the intended use can lawfully be conducted from the premises. The widely accepted position in leasing matters is that the Tenant is responsible for all aspects of ensuring their intended use can be carried out from the relevant premises. A Landlord will typically include protections in the Lease under which the Landlord expressly states they do not warrant or guarantee that the premises will be fit for the Tenant’s intended use, and further that the Tenant is obliged to obtain all necessary consents/approvals (i.e. liquor licences, council approval etc) to run their business from the premises.

Landlords should always ensure this protection is included in their Lease and Tenants should understand that it is a matter for them to ensure that the premises will be fit for their specific purpose. To avoid disputes, a Tenant should make enquiries early (prior to signing a lease!) to ensure they can lawfully conduct their business from the premises. Failure to do this can result in having to comply with notices from applicable authorities (eg. Council), which can be extremely expensive!

3. Repairs to Equipment 

Another common area of dispute relates to responsibility for fixing certain equipment (such as air-conditioning equipment) in the premises if they need repairing.  

A lease should cover off on the responsibility of the parties to maintain equipment, and to repair/replace it when it breaks. Typically, a Tenant is responsible for ‘wear and tear’-related repairs, whereas a Landlord will be required to attend to all repairs or replacement that are of a ‘capital nature’ provided that the Tenant has regularly serviced or maintained that equipment during the Term and has not deliberately or wilfully contributed to the damage. However, that will not always be the case and it is important that both parties check the relevant clauses in their Lease to understand their obligations. It is also beneficial (especially for the Tenant) to take steps to understand the condition of any relevant equipment (such as air conditioning) at the time of entry into the Lease.

4. Insurance 

Tenants in particular should always consider the specific wording of any clause in their Lease that deals with insurance obligations, to ensure the Landlord’s requirements will be commercially acceptable to the Tenant, especially in light of their intended business use.

Some practical examples are:

• Where the Lease requires insurance to be taken jointly in the names of the Landlord and Tenant.This seems innocent enough, but the practical reality is that this type of insurance cover can be onerous and expensive for a Tenant to obtain. Realistically, a Landlord generally requires this so that they can receive notice if a Tenant makes a claim on their insurance policy in relation to the Premises. The practical compromise is that the insurance clause should only require the Tenant to note the Landlord as an ‘interested party’, which does not cause extra cost and which requires the insurer to provide notice to the Landlord if any claim is made.

• Where the Lease requires business interruption insurance. This is a ‘big hitter’ as far as the cost of insurance is concerned. A Tenant should consider whether they really require and whether they can afford this type of insurance, before they agree to be bound by a lease to obtain it.

5. Landlord’s Right to Redevelop/Relocate

Landlords of multi-tenant centres or complexes (eg. shopping centres or strip-malls) typically include clauses which give them the right to relocate Tenants to comparable locations within the centre/complex, or to redevelop or demolish part of all of the centre/complex.

Tenants should always carefully consider the specific wording of these clauses and the practical implications. At a minimum, the clause should stipulate that any relocation must be to a comparable location and it should deal with how the rent will be treated in those circumstances, but as a further step, the Tenant should consider whether they want to (where practical) have the right to return to the original location. It is also important to contemplate who will be responsible for the costs of the Tenant’s fit-out in the new location in these circumstances.

A well drafted and well-understood lease will go a long way to avoiding a dispute arising between the Landlord and the Tenant. To avoid a costly dispute, engage the expert Enterprise Legal Business Law team to help you with your next lease negotiation:

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Fixed term contracts are back in the spotlight after a recent decision of the Fair Work Commission in Michael Nasr v Mondelez Australia Pty Ltd [2021] FWC 2802 (Nasr), where the Commission held that an employee engaged over a 30-month period under eight separate and successive fixed term contracts, was not dismissed within the meaning of section 386(1)(a) of the Fair Work Act 2009 (Cth) when his last contract came to an end.  

Why is this important? Well, as a general rule, employers need to be very careful when engaging workers on rolling fixed-term contracts, even if there are legitimate business reasons to do so, because there is the risk that such contracts build an expectation that the employment relationship (not just the employment contract) will continue following the expiry of the contract, leading to potential unfair dismissal claims when the final contract is not renewed.

The decision in Nasr sheds some useful light on how employers may still be protected under section 386(2)(a) of the Fair Work Act 2009 (Cth) in circumstances where an employee’s employment is terminated at the end of a fixed term contract.

What Happened?

Following a period of casual engagement as a labour hire worker with confectionery and food giant Mondelez, Mr Nasr was subsequently employed directly by the company over a 30-month period under eight separate and successive fixed term contracts (ranging in duration from one month to 12 months), prior to his final contract expiring on 31 December 2020.

Following the cessation of his employment, Mr Nasr subsequently lodged an unfair dismissal claim and sought to be reinstated in his position on the basis that by his eight contract he had a reasonable expectation of ongoing or permanent employment. Mondelez, on the other hand, claimed that there had been no dismissal within the meaning of s386(1)(a) of the Fair Work Act 2009 (Cth) as Mr Nasr’s employment had not been terminated at the initiative of Mondelez. Instead, his employment came to an end at the expiry of his contract, which is excluded from the meaning of dismissal under section 386(2)(a) of the Fair Work Act 2009 (Cth).  

The Decision

The Commission held that Mr Nasr’s application had no jurisdiction to proceed, on the grounds that his employment had not ceased at the initiative of his employer and Mondelez were subsequently protected under section 386(2)(a) of the Fair Work Act 2009 (Cth).  

The Commission relied on the decision of Khayam v Navitas English Pty Ltd which confirms the principles in determining whether a dismissal occurred ‘at the initiative of the employer’ when an employment contract reaches its expiry date. Such principles include (inter alia):

1. where a series of fixed-term contracts exists, the question is whether the parties genuinely agree that the employment relationship in totality (not just the employment contract) would come to an end at the expiry date of the last contract and importantly;
2. where it has been agreed that a contract will end on a particular date the parties have not agreed that the employment relationship would also terminate, it is arguable that there is an expectation of an ongoing employment relationship and therefore the termination of employment at the end of the contract may still constitute termination at the initiative of the employer; and
3. where the terms of a fixed-term contract reflect a genuine agreement that the employment relationship is not to continue following the end of the contract, the relationship is terminated by agreement, not at the initiative of the employer.

The Commission found that each of Mr Nasr’s contracts contained a clear expiry date and expressly stated that Mr Nasr’s employment (not just the contract) would terminate at the end of the relevant period, and also that there was no guarantee of further employment beyond the expiry date. It was also important that Mr Nasr was not working in the same position under each of the contracts, moving between departments and in various roles which further supported the Commission’s views that the contracts were necessary based on the genuine operational requirements of the company and that there was a real indication that Mr Nasr’s engagement was limited to the scope of each contract.

While the Commission recognised that Mr Nasr had been employed under successive fixed-term contracts for a “greater period than is ordinarily the case”, the Commission accepted that there were genuine operational reasons for him to be engaged under the rolling fixed term contracts.

Important Message for Employers

It is encouraging to see the Fair Work Commission recognise and uphold the genuine and useful role fixed term contracts have in the workforce, however it is also a very important reminder to employers that fixed term contracts need to be done right or the exposure could be significant. Had Mondelez’s contract not been well drafted, the company would have no doubt been exposed and the Commission has set the bar for what is required in order to be protected under section 386(2)(a) of the Fair Work Act 2009 (Cth).  

If you’re wanting to have a chat about whether your current fixed term agreements are up to scratch, or if you would like some guidance on the most appropriate way to engage your employees, contact our dedicated Workplace Relations team today:

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It is difficult to know what has spread more prevalently over the last two weeks – COVID-19 itself or the vast, vast amounts of information, misinformation, tips, tricks, commentary, opinions, guidance etc. regarding COVID-19! Like all things at EL, we don’t seek to ‘add to the noise’ by replicating some of the great content that has already been published, but instead, our focus is on assisting business owners to implement practical, easily-adoptable strategies to help lower the immediate impact of the Corona-situation on their business.

So, you own or manage a business? Read on to find out what you can do…

Have staff? Read this Info and Download this Policy...

Obviously one of the biggest areas of uncertainty regarding the impacts of COVID-19 is on staff. Our expert Employment Law Team has put together the following overview here, regarding standing-down employees and making employees redundant as a result of the current pandemic.

Of course, it is imperative for businesses to understand that the application of the current law to their employees can significantly differ on a case-by-case basis, so be very wary of adopting generic advice. Our Employment Team is across this topic and can provide properly-considered, tailored advice to ensure your specific business is covered.

We can also assist by developing a range of customised and appropriate policies and documents – please contact us to obtain a fixed fee quote for these services. In the interim, our team has prepared a generic Coronavirus Policy for your free download and use, to ensure that your business is on the front-foot.

The application of the existing law to the current situation is rapidly-developing, so we encourage all clients to ensure they regularly check our platforms for updates.

Have a Shopfront? Let’s Negotiate…

Brick and mortar stores are already suffering, with people (rightly) avoiding unnecessary trips to the shops. If you run a business with a shopfront, we strongly recommend that you engage us ASAP to commence negotiations with your landlord regarding potential rent reductions, delayed rent payments or adopting other mitigation strategies. There are plenty of commercial proposals that can be put to landlords during this time and reaching early agreement on these matters will assist businesses to survive and landlords to keep their shops tenanted. The terms of your lease may also offer some assistance at this time.

Service Provider? Can You Cancel? Can Your Clients Cancel?

Face-to-face service-based businesses will unfortunately suffer hardest from COVID-19, particularly those in the wedding, events and conferences sector. Business operators and customers alike are shortly going to have to make some tough decisions about cancelling contracts and the implications around refunds and re-bookings will be important. Contact EL ASAP so that we can advise you on your legal obligations in this regard and provide you with practical, commercial suggestions for ensuring the long-term survival of your business.

Losing Customers? It’s Time to Innovate!

The EL team is of the view that businesses need to be careful not to assume that they can ‘simply weather the storm’ of Corona, by holding tight for a few months.. The reality is that no-one really knows the length of the economic disruption that Covid-19 will cause, so our advice is for all businesses to stop and consider how they can innovate within their business during this time. Already, there are plenty of businesses leading the charge in this regard, with home delivery, new product development (hello family roll – Google it if you haven’t come across it yet!) and new delivery methods being adopted by small business in an effort to leverage opportunity from an otherwise difficult situation. There has never been a better time to evaluate your businesses’ strengths and weaknesses and pivot so that it is heading in the right direction!

Feeling Overwhelmed? Keep Calm and Carry on!

Unless you are a doctor or a scientist, the number one way that you can help society at this time is to be a socially-responsible human being, who adopts and promotes common sense at all times! This extends to making sensible, balanced decisions for the ongoing viability of your business and not ‘sticking your head in the sand’ about the situation.

The Enterprise Legal team are not your average lawyers – we are able to assist you with navigating this challenging time for your business, by bringing our uniquely commercial approach to the legalities of the situation! Call our team today.

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Let’s be honest – legal entities and business structures can sound like a pretty dry and complicated topic. We can’t really sugar coat that, but we can tell you that if it’s not something that is addressed and set up to suit your business, you could be missing out on some very important advantages, and exposing your business and your assets to more risk than is necessary. Stick with us on this topic – it can be the difference between a business that thrives and a business that struggles.

Do You Even Know What Entity You Have?

As a threshold issue, if you don’t know exactly what your current entity structure is, then that’s ok (it’s not easy, and it’s not necessarily a ‘water cooler’ kind of topic), but this article is definitely for you and you should contact our expert Business Law Team so that we can help you identify it.

Common Entity Types 

This three most common entity structures we encounter at EL are:

1. Sole Trader/Individual: 

This is effectively the ‘starting point’ for many businesses. A sole trader is a single person who is carrying on a business under an ABN. An individual is of course capable of suing and being sued. In order to change the business structure, a sole trader must ‘transfer’ the business to another entity, which can be costly and will require payment of transfer duty based on the value of the transfer.

Income Distribution: all income of the business is distributed to the individual, which is to be declared in conjunction with any other income that individual earns. This is typically not an issue in the initial phase of a business while profit is building, but can be problematic if the individual is already paying a high rate of tax, as all profit earned by the business is also taxed at that rate.

Risk Profile: all assets owned by the individual can be at risk in any claim against the business. For example, if a customer/client or employee of the business sues the business and is successful, the individual may be required to sell other personal assets in order to pay out the claim, or risk declaring bankruptcy if the value of those assets are not enough to pay the claim.

2. Company:

A company is a separate legal entity to the people/persons that control it. The company is capable of suing and being sued. The controlling persons can be easily changed from time to time, which allows flexibility for business owners wanting to sell or bring other business partners on board.

Income Distribution: companies have additional flexibility when it comes to distribution of income, as it is ultimately distributed to the ‘shareholders’, which could be the individuals who control the company, another entity controlled by those individuals (for example another company or trust), or another entity controlled by a third party (for example an investor who has contributed funds to the business but does not assist in the day-to-day running of it). However this flexibility is somewhat limited, as the income must be distributed in accordance with the percentage of shares held by the shareholders.

Risk Profile: the company can be sued, and all assets held by the company are at risk in any claim against the business. If the company does not hold enough assets to pay the claim, the company may be required to wind up. Except in limited circumstances, typically the assets of the individuals who control the company are safe from any claim, so at worst the business will fold, but the individuals will maintain any other personally-held assets.

3. Trust:

A trust is again a separate legal entity to those persons/entities who control it. The trust is capable of suing and being sued, and the controlling persons can also be easily changed from time to time by amending the trustee.

Income Distribution: trusts also have greater flexibility to distribute income, as it is distributed to the ‘beneficiaries’ of the trust, which can be individuals, companies, other trusts etc. A trust can be set up as a ‘discretionary’ trust, which allows the trustee flexibility to distribute income to the beneficiaries in any proportion that they determine.

Risk Profile: the risk profile of trusts is similar to that of companies, in that a trust can sue and be sued, and all assets held by the trust are at risk in any claim against the business. If the trust does not hold enough assets to pay the claim, the trust may be required to wind up, but similar to companies the assets of the trustees and beneficiaries are safe from any claim. In this situation, the business would fold but the individuals will maintain any personally-held assets.

There are of course other entities that you might encounter (such as partnership, unit trusts, etc), but they are largely either ‘outdated’ or only used in very specific circumstances. That does change from time to time based on things such as legislation and market preferences, but for now the three structures we have mentioned above are the most common.

Accounting Benefits v Legal Risk 

In any decision around appropriate entity structures, often the accounting and legal advice are the same, which makes a decision easy. However, sometimes that advice can be conflicting, and you might find that trading in a certain entity will give you the greatest tax and accounting advantages, but will expose you to greater legal risk.

The classic example of this is a start-up business – in that example, while income is on the lower end because the business is starting out and growing, you’re often better starting off as a sole trader and minimising your accounting and set-up costs. The trade-off here is that you carry additional risk because your personal assets are exposed in the event of any claim. Depending on the type of business you operate and the personal assets you hold, you might be happy to accept that risk in favour of gaining some tax and accounting advantages.

At Enterprise Legal, we understand the competing accounting and legal benefits and risks, and we like to work with your accountant to discuss the best structure for you, both now and in the future. This way, you are armed with the knowledge from both sides and can make an informed decision.

How Enterprise Legal Can Help

At Enterprise Legal, we offer a free Business Health Check, in which we arrange a time to meet with you in-person or by phone/Zoom to assess your business needs. In addition to assessing other legal needs, this includes an in-depth analysis of your existing entity structure, and a discussion with you around other options, and the steps involved to change your structure.

We work with your accountant and other financial advisors to give you all the information, and discuss the best way to move forward. We can even create your new entity, amend your existing structure, or draft supporting entity documents to support your entity structure (such as company constitutions, association rules, shareholder’s agreements etc). 

If you have any concerns or questions about your existing entity structure for your business, contact our expert Business Law team today: 

☎️ | (07) 4646 2672
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Disclaimer: because we are #lawyers, we have to say that the advice in this article is generic in nature and not intended to apply to everyone’s personal circumstances. Please contact our EL Business Team, as well as your accountant, for customised advice regarding your business structuring.

In response to the current Coronavirus pandemic and the impact that it has had on businesses, the Federal Government recently introduced temporary measures that will assist in relieving companies and their Directors in these times of financial difficulty. It is no secret that impending insolvency and/or bankruptcy is currently a very real risk for many Australian businesses and as any Director will know (or should know!) the implications of trading insolvent can be significant.

What is the Government’s Intention?

The intention of the relief being provided by the Government at this time is consistent with the overall theme of the relief being provided to all businesses and that is, to keep them trading while we all navigate these rapidly changing and challenging times by:

1. helping them to stay solvent during the pandemic; and
2. reducing the imminent threat of personal liability for Directors if a company does become insolvent as a result of the pandemic.

What Measures Have Been Introduced?

The relief measures that were passed by Parliament in late March will be in place for the next six months and include:

1. an increase to the threshold amount and time to respond to statutory demands;
2. an increase to the threshold amount and time to respond to bankruptcy notices against individuals; and
3. a temporary ‘pause’ on Director’s personal liability for insolvent trading.

Both the threshold amounts for statutory demands and bankruptcy notices have been increased significantly, to $20,000, and the time to respond has been increased to six months. What this means is that the Government has recognized that companies and individuals alike may very well incur more debt while their businesses are affected during this time and will likely require more time to ‘get back on track’ and be in a position to pay their creditors. It seeks to ensure that companies and individuals are able to ‘stay afloat’ for as long as possible, rather than having to enter voluntary liquidation or declare bankruptcy.

These measures will no doubt provide some comfort for businesses who are concerned about outstanding debts owed to their creditors.

What About Personal Liability for Directors?

In the event that a company does find that the impacts of the pandemic have effected their business to a point where they are still struggling to pay their debts, the Directors of that company can rest assured that they may be relieved of any personal liability associated with insolvent trading that occurs over the next six months. It is extremely important for Directors to understand that this relief only applies to insolvent trading that has occurred during the ordinary course of the company’s business, it does not apply to cases of dishonesty or fraud (which will still be subject to criminal penalties). Directors must continue to ensure that they are still taking active steps to deal with financial stress and consider options for ‘staying afloat’, but are simply being given some breathing room to do so.

What Should Businesses Do Next?

Regardless of the relief being provided by the Government, it remains as important as ever for business owners to consider how they might diversify their businesses to keep income coming in and keep the debts owed to creditors down. For that reason, we encourage businesses to seek professional advice wherever they can these matters and how they might take advantage of the other forms of relief being provided by the Government. Every business’ situation will be different, especially given the current climate, and seeking assistance earlier rather than later could make all the difference to how a business comes out of this on the other side.

We Can Help!

As a small business our self, Enterprise Legal is extremely passionate about assisting businesses wherever we can in these difficult times and have already identified ways in which we can do so. To that end, we have prepared a number of free ‘Coronavirus Resources’ for businesses which are available via our website. 

Please do not hesitate to get in touch with us to chat about how your business has been effected by the pandemic and how we might be able to assist you to survive and thrive!

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Since March 2018, Project Trust Accounts have been a requirement in certain building, construction and services projects involving government departments and hospital and health services in Queensland. From 1 January 2022, the Project Trust Accounts regime is being rolled out to the private sector and a broader range of government entities.

What is a Project Trust Account

The Project Trust Accounts regime requires a head contractor to establish one Project Trust Account (PTA) for each ‘eligible contract’ for ‘project trust work’, along with a Trust Account for any retention monies held across all of the head contractor’s eligible contracts. 

Who Will Need a Project Trust Account

From 1 January 2022, Project Trust Accounts are applicable to:

• all Queensland Government contracts (including HHSs) valued at $1 million or more; and
• private sector, local government, Queensland statutory authorities and government-owned corporations, for contracts valued at $10 million or more; and
• state authorities can continue to opt-in early and require a project trust account for contracts valued between $1 million and $10 million.

The regime applies to contracts where over 50% of the contract price is for 'project trust work'. This includes the erection or construction, renovation, alteration, extension, improvement or repair of 'buildings', and related site work. Buildings are defined broadly to include any fixed structure that is wholly or partly enclosed by walls or a roof. There are a range of exclusions for particular sectors and types of work or contract, such as pure maintenance contracts.

How Will This Impact Me

These trust accounts will need to be opened with an approved financial institution, and there are extensive requirements for head contractors who have to act as trustees and establish and manage these trust accounts. They also have to hold any retention monies in a retention trust account. 

Principals who are awarding contracts over $10 million also have obligations under the Act, including to ensure that a trust account is established if they know that one ought to be, and to make payments only into that account. 

Contract terms will generally require some updating to deal with the regime, particularly given the hefty penalties for non-compliance, some examples of penalties include:

• failure to open a project trust account at a financial institution in accordance with the legislative requirements (including timeframes, type of account, ensuring only 1 account etc.) – $68,925.00;
• failure to set up a retention trust at a financial institution prior to withholding the retention amount from payment – $68,925.00;
• failure to ensure the trust accounts are held at an approved financial institution – $27,570.00;
• failure to ensure the trust accounts are held under a name that includes the trustee’s name and the word “trust” – $27,570.00;
• failure to ensure the deposits to and withdrawals from the trust accounts are made only using methods which create an electronic record – $68,925.00.
• failure to provide notice to certain parties (with the required information) within 5 business days of opening, changing the name, closing or transferring the trust account – $27,570.00;
• failing to keep trust records in accordance with the requirements (including currency, language, provision of certain information, timeframes, etc) – $41,355.00 or 1 year’s imprisonment.

If you need assistance with preparing or implementing systems for this new phase of the rollout, or if you need assistance with whether or not it applies to your business or project, contact the Enterprise Legal team today:

☎️ (07) 4646 2621

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A Letter Of Demand Can Help You Recover Your Debts 

Minor Debts Are Not Minor Problems

Minor debts can be the cause of many sleepless nights for small to medium business owners. The problem is that while an amount owed to you might cause inconvenience to you should you not recover it, it might not be so large a sum that you want to incur further costs engaging a lawyer or a debt recovery agency to collect your money, especially when that might cost more than the actual debt!

In some aspects, it is simply easier to write the debt off. However, those minor debts can add up and if you are consistently writing off $5,000.00 to $10,000.00 every other month, this will cause significant detriment to the viability of your cash flow and business. 

Good Reasons to Send a Demand Letter

Having a formal Letter of Demand issued by a law firm sends a clear message that you are serious about recovering the debt and will not be so easily dismissed. The purpose of the Letter of Demand is also two-fold - first, it puts the debtor on notice of your intention to commence legal proceedings unless payment is made within a stipulated time frame. Secondly, the Letter can be used as evidence in subsequent court proceedings as written proof of your attempt to settle the matter early.

The Letter will also clearly set out the parameters of the dispute and may even account for any offset due. The Letter should attach a copy of any agreement, invoices or relevant text messages to assist any reader to identify the transaction and the liability to pay. This often assists in reducing the scale of the dispute to something more easily managed and addressed.

It is also our experience that you as a client feel emotionally better about the situation, after having decided to send a Letter of Demand. Having a trusted and knowledgeable advisor to discuss the problem with puts the problem into perspective. Often just having a plan and set steps to follow removes the stressful burden of figuring out what to do next by yourself.  

What are the Possible Outcomes from Sending a Letter of Demand?

The best result is receiving prompt payment from the debtor, with a side benefit of tightening up your trading terms and conditions to reduce the risk of debts arising again.

Another outcome is the creation of ‘industry reputation’. It may be to your benefit for your general customers to know that you are serious about being paid for your services and that you are willing to engage legal assistance when required. This perception is worth every metaphorical penny, as it can weed out the time wasters and non-payers from the very beginning.

Frequently though, no response nor payment is received. This at least crystallises your available options and we can let you know the costs associated with each subsequent step. The true power of a demand letter is being prepared to act on the foreshadowed step of commencing proceedings, otherwise the debtor may simply be calling your bluff.

Our highly experienced Disputes team at Enterprise Legal provides a full debt recovery service and can assist you from reviewing your contracts and debts, to sending Letters of Demand (at fixed fee rates) all the way through to commencing proceedings and obtaining Judgments, a winding-up Order or sequestration (bankruptcy) orders against a Debtor. 

If you need assistance, Enterprise Legal will work collaboratively with you and financial advisors to assist to limit the damage whilst also ensuring your legal rights and interests are protected.

Contact EL’s Principal Legal Advisor – Disputes, Kirsten Woolston to discuss your options today: 

☎️ | (07) 4646 2621
✉️ | Submit an Online Request

With businesses starting to receive JobKeeper payments, the economy is in the midst of transitioning to the ‘new normal’ and business owners are finally starting to feel like they can, at least somewhat, breathe again. Consequently, now is the time to ‘take stock’, conduct an audit and ensure that the measures that your business implemented (most likely in haste), over the past few months are not now leaving your business exposed to potential claims and other legal risks.  

Notably, a new section was introduced into the Fair Work Act 2009 (the Act), which allows the Commission to deal with disputes specifically regarding employer ‘JobKeeper directions’. This dispute mechanism allows for employees to lodge an application (at no cost) detailing their dispute, to which an employer must then respond to the application in the relevant time frame. Once the application and response has been submitted, the Fair Work Commission will deal with the dispute via arbitration, mediation, conciliation or alike, and it has broad powers to make orders “to give effect to a direction, set aside the direction, substitute the direction for a different direction or any other direction it considers appropriate”. There are also civil penalties that can be imposed on the employer, in certain circumstances.

New figures revealed by the Fair Work Commission show that its overall workload is already up by 40% compared to April 2019, with the increase apparently due to more cases about unfair dismissal, JobKeeper directions and JobKeeper payment disputes.

As at 7 May 2020, the Fair Work Commission had already received 212 disputes pertaining to the JobKeeper scheme, with the leading dispute topic being JobKeeper directions pertaining to changes to employee working hours. 

Most businesses had to respond quickly to be able to adapt to the COVID-19 impacts and this saw a number of businesses taking drastic measures both in the restructuring of their businesses (such as new service offerings and operating hours), but also in the restructuring of their employees and the basis on which they are employed (such as reduced hours, different hours, change of duties and roles, change of location of work and so on). Most of these changes to employees’ employment can be made legally in certain circumstances, provided they strictly comply with the requirements of the Act. The problem is, most of these changes were made in a ‘reactive’ manner by businesses and when businesses ‘react’ they can often fail to comply with the myriad of applicable legal requirements. 

Here are a few things that employers must know in relation to JobKeeper payments:

• no employer is entitled to (and is taken never to have been entitled to), a JobKeeper payment unless it complies with record keeping requirements under the relevant Acts and Regulations - this could very well mean, that if employers and businesses have been receiving JobKeeper payments but they did not comply with the record keeping requirements, they could be required to repay the JobKeeper payments;

• JobKeeper enabling directions cannot be made retrospectively - this means that directions given before the Act was amended on 9 April 2020 are not authorised, meaning they could be construed as unlawful and employees may have remedies against their employers in this regard (or civil penalties may apply);

• JobKeeper enabling directions will not be valid unless an employer gave the requisite written notice to employees (3 days before the direction commenced) and consulted with the employees in accordance with the requirements under the Act; and

• the JobKeeper payments must be dealt with strictly in accordance with the relevant parts of the Act, otherwise the employer risks a claim by the employee and also civil penalties being imposed against the employer.

The above examples are a mere snapshot of certain key considerations that employers ought to turn their mind to, so as to avoid unnecessarily exposing their businesses to legal claims and potential civil penalties. 

It is now critically important that businesses audit the decisions they made over the past few months, to ensure those decisions strictly complied with the relevant laws, regulations and rules. Where it is found that decisions didn’t comply, a number of corrective measures are available to businesses to correct or mitigate any potential impacts.  

If your business needs assistance, our team of employment law experts are standing by ready to guide you through this audit process. 

EL has further put together an exclusive JobKeeper Audit Package, available to the first five businesses (with under fifteen employees) who contact us, under which we will audit your business and provide you with a compliance report and summary of required corrective measures (if necessary) for a fixed fee of $2,200.00 (incl. GST).

Call our team today to take advantage of this exclusive offer:

☎️ (07) 4646 2621

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The need for companies to be able to sign documents electronically has become more apparent than ever during the COVID-19 pandemic. With that, the Federal Treasurer has implemented some temporary, progressive changes to the signing provisions contained in the Corporations Act 2001 (the Corps Act).

Enter the Corporations (Coronavirus Economic Response) Determination (No.1) 2020 (the Determination), which now allows for company officers (i.e. Directors) to sign agreements and deeds in electronic format.

Previously, the Corps Act required company officers to physically sign a document in order for it to be valid and legally binding. Now, the Determination makes it possible for company officers to:

1. sign a document in counterparts (eg. the officers do not need to sign the same copy); or
2. use an electronic communication which reliably identifies the person signing and indicates the person’s intention in relation to the document. 

The usual requirement remains that if there is more than one director of a company then two directors are required to sign, but the Determination makes it possible for this to occur from a (safe) distance.

Further, if electronic signatures are being used (i.e. copied and pasted signatures, signing using a stylus or finger on a tablet or laptop or DocuSign) the relevant thresholds will also apply. This includes:

1. ensuring that the electronic signature is reliable as appropriate in the circumstances in order to identify each person signing the document; and
2. that it is clear that it was the intention of each party who signed that they actually intended to sign the document.

Do not get too used to this process, however, as the changes are only temporary and intended to assist businesses in the wake of COVID-19.

The changes implemented by the Determination are only in effect for a six (6) month period commencing from 6 May 2020.

These changes will no doubt assist in the efficiency and practicality of company execution of documents, so here’s hoping the changes are here to stay but you will need to stay tuned to find out! We will be following the developments in this regard closely and as always will ensure that we keep our clients up to date on any permanent developments.

If your business needs any assistance navigating the changing landscape brought upon by COVID-19, contact the EL team today:

☎️ (07) 4646 2621

✉️ Submit an Online Request

In early June the Federal Government announced a $680 million HomeBuilder scheme to stimulate the construction sector as Australia begins the economic recovery following COVID-19. This scheme will allow eligible owner-occupiers to access a tax-free grant of $25,000 to build a new home, or substantially renovate their existing home from now until 31 December 2020.

To check whether you are eligible, click here to view the HomeBuilder Frequently Asked Questions PDF.

Things to Consider

If you are interested in taking advantage of the HomeBuilder grant, there are a few things you should consider before you jump in.

Consider Your Timeline

One of the requirements of the grant is that construction begins within three months of signing the contract. Due to this tight time frame, it is important that you are organised and prepared, so you should consider whether you will have the sufficient time to have plans drawn up, obtain council approval and commence building within three months when signing the contract. From our experience, three months is a ‘tight timeframe’ to achieve the latter, so preparation is key!

Consider Your Finances

In addition to the HomeBuilder grant, you should consider whether you may be eligible for other grants, which may include the first home owner grant and the regional home building boost grant. You won’t be able to use the grant in your initial deposit as it is expected that it will take some time for it to be awarded. As such, you will need to ensure you have sufficient financing for any initial costs that you may have.

Choose Your Builder Carefully

It is very important that your builder is registered or licensed, otherwise you will not be eligible for the grant. You also cannot do the building work yourself as an owner-builder, or engage family or close friends. When selecting a builder, you should also review their proposed prices to ensure they’re reasonable and that you aren’t being ‘ripped off’ by builders capitalising on the HomeBuilder grant. Be on the lookout for builders who only commenced operating following the HomeBuilder announcement, as they are more likely to be taking advantage of the scheme than longstanding builders. Lastly, always make sure that you perform a QBCC license search on your builder, as this search will show you:

• the date your builder became licensed;
• the value of projects your builder completed since inception, and each financial year; and
• whether the QBCC has had to take any disciplinary action against the builder, such as notices to rectify, issuing of defect notices etc.

Review Your Construction Contract Carefully

It is very important that you do not simply ‘sign up’ to the contract your builder presents. The financial commitment you are making is likely one of the biggest in your life, and it should be treated with the same caution and respect as any other financial arrangement of that size. There are a number of key clauses that you need to pay very careful attention to, and a number of standard amendments you ought to request.

Make sure you check out our knowledge page in the coming weeks for our ‘Top 10 Domestic Construction Contract Clauses to Consider’ article.

In the meantime, if you would like to take advantage of the HomeBuilder grant and it feels like there is too much to consider, the team at Enterprise Legal can help.

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Purchasing a unit that is still getting built at the time of signing the contract seems hassle free, and a weight off your shoulders with not having to think about costing, delays, daily discussion with builders and to be presented with a brand-new beautiful unit at the end!

In some sense, purchasing off-the-plan can be great, but because of the lack of control during the build process, there can be pitfalls too! Ensuring that you obtain the benefit of enforcing the warranties with the builder is one of the most important things to do when you are purchasing to ensure you can continue on hassle free once settlement has occurred. 

What Are Warranties And Why Are They Important?

A warranty in a construction contract is written guarantee given by the builder to the owner that they will fulfil their obligations under the contract. Some of the most important warranties that are commonly in construction contracts are:

1. that the materials used will be of good and merchantable quality;
2. that the work will be carried out in a good and workmanlike manner;
3. that the work and materials used to complete the works will be fit for purpose; and
4. that the materials used and the completed works themselves will be reasonably fit for the purpose for which they are required.

It is obvious to see why every owner would want to see these warranties in their construction contract. These warranties set a standard for the industry and will ensure that your home is built correctly and safely by qualified people.

Another imperative contract term that is common to explicitly see in a construction contract is a defects liability period. This is usually one year from the date of completion. This allows the owner to call upon the builder for any defects that has occurred in the building and the Builder must come and rectify that defect within a reasonable time period.

Minor defects are common in the first 12 months post construction, this is why the defects liability period and warranties are so important. 

If a warranty is not fulfilled by a Builder or the defects liability period not complied with, the Builder  would be in breach of the construction contract and the other party to the contract typically has a  claim against the builder to force them to comply. 

Who Would The Warranties Be Given To In The First Instance?

Just like any construction contract, the Builder would be providing warranties to the person that has engaged them to build the unit. In this case it would be the person/developer that is selling you the finished unit. 

In some instances, the Developer can be the Builder, and, in that instance, there would most likely not be a construction contract in place. 

What About Home Warranty Insurance?

Whilst the Home Warranty Insurance (that is required to be undertaken before any works is commenced) stays with the property, which means an incoming purchasers may be able to rely on it , there are other things to consider that may not be included under that scheme. For example, any manufacturer warranties in respect to any of the work under the construction contract or goods and equipment like appliances, washing machines and/or garage roller doors that also form part of the work under the construction contract. Equally, there are a number of pre-set criteria that must be met prior to being eligible for the Home Warranty Insurance, and home owners are often left out of pocket because the scheme doesn’t apply to them and their circumstances on the basis of specific criteria not being met and/or exclusions. 

It is also important that you do a search of insurance when purchasing the property to ensure that the Builder has actually taken out that insurance that they are required to on the property.

What Does That Mean For You As The Purchaser?

Unfortunately, what we see at Enterprise Legal, is people who find themselves with defects in the property or with the equipment provided, and very little to no control in being able to get this fixed. Due to the lack of assignment of the warranties under the Property Contract, the Seller ‘wipes their hands clean’ once settlement has taken place and the have received their funds from the sale. Without the correct documents and special conditions in place in your Property Contract, you would have no right to ensure the builder replace the defects (e.g. roller door, air conditioning unit, defective roofing system etc.).

How Can You Ensure You Can Enforce Those Warranties Once You Have Purchased The Unit And A Defect Occurs?

To ensure that you have the benefit to enforce the warranties with the Builder once settlement has taken place, you should make sure the warranties under the construction contract between the Builder and Seller are assigned to you. It is important to cover off on the assignment of warranties prior to signing the Property Contract. As such, at Enterprise Legal, we recommend a Deed of Assignment of Warranties is put into place between yourself, the Seller and the Builder. This Deed will ensure that any warranties provided to the Seller by the Builder under the Construction Contract is assigned to you so you may rely on them should a defect occur in your unit once settlement has taken place. Typically, Builders also have a 12 month defect liability period post construction, during which period they have an obligation to rectify defects promptly and effectively. The Deed can also assign this defects liability to you, as the incoming Purchaser. 

At Enterprise Legal we recommend to all clients that the engage us to review their draft Property Contract, not only from a property perspective, but from a construction perspective to ensure that things like warranties are considered as it can be something easily missed and unfortunately could cost a Buyer a lot of time and money down the track should it not be address at the beginning of the process. 

If you are looking to purchase an off -the-plan unit and need assistance, please reach out Enterprise Legal's expert property conveyancing team:

☎️ | (07) 4646 2621
✉️ | 

Employees covered by the Nurses Award 2010, Health Professionals and Support Services Award 2020 and Aged Care Award 2010 who are employed by residential aged care providers or are required to work in residential aged care facilities are now entitled to two weeks’ paid pandemic leave following a recent announcement from the Fair Work Commission. 

What is the Entitlement?

Permanent and casual employees engaged on a regular and systematic basis under the aforementioned modern awards are now entitled to take up to two weeks’ paid pandemic leave on each occasion they are prevented from working when:

• the employee is required to self-isolate or quarantine by government or medical authorities or their employer;
• the employee is required to self-isolate or quarantine following receipt of medical advice because they are displaying symptoms of COVID-19 or have come into contact with a person suspected of contracting COVID-19;
• the employee is isolating while they await their tests results;
• because of measures taken by the government or medical authorities in response to the COVID-19 pandemic. 

Are There Exclusions?

Yes, employees will not be entitled to access paid pandemic leave if:

• they are not covered by the aforementioned awards;
• they are able to work from home or remotely;
• circumstances dictate that they should access personal/carer’s leave (for example, if the employee was actually unwell, they would be entitled to personal leave);
• they are covered by an Enterprise Bargaining Agreement that does not expressly incorporate the aforementioned awards.
  Importantly, the leave is conditional on employees taking a COVID-19 test at the earliest opportunity. 

Employees requesting pandemic leave are also required to: · provide their employer with notice and the reason why they are taking the leave, as soon as practicable; and if required · provide evidence that would satisfy ‘a reasonable person’ that the leave is being taken for one of the specified reasons; and produce a medical certificate.

Employees are still entitled to workers’ compensation if they test positive for COVID-19 and their paid pandemic leave ceases, provided COVID-19 was contracted during their employment. 

What About Other Industries?

At this point in time it is uncertain whether or not this entitlement will be broadened to other modern awards and employers in other industries are understandably curious and nervous. The Fair Work Commission, in their statement, confirmed that the paid pandemic leave is in response to “The seriousness of the position in the aged care sector”, however time will tell if this will broaden further in the rapid changing times. 

If you have any questions or need any support with your workplace during these times, do not hesitate to contact EL's Principal Legal Advisor – Workplace Relations, Amie Mish-Wills:

☎️ (07) 4646 2425

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The Fair Work Commission (the Commission) has stepped in to provide support for the real estate industry and commission-only real estate agents who are covered by the Real Estate Industry Award 2020 (the Award), by removing the months of May, June, July, August, September and October 2020 from the calculation of Minimum Income Threshold Amount (MITA) for the preceding 12-month period.

The MITA will be subsequently adjusted in proportion to the number of months disregarded, provided that, where the commission-only employee’s review date falls partway through any COVID-19 month, that month may only be disregarded where the review is due after the 14th of the month.

The Commission has also amended the Award to suspend the eligibility for the engagement of further commission-only agents for the period 6 August 2020 to 1 November 2020. Specifically, the Award has been amended to state:

“An employee who is not employed as a commission-only salesperson as at 6 August 2020, shall not be eligible to be employed on a commission-only basis prior to 1 November 2020.”

The aforementioned changes are in operation from the 6th of August 2020, however, for those recently employed, they do not take effect until the start of the employee’s first full pay period that starts on or after 6 August 2020.

You can read the Commission's decision on The Treasury's website.

Changes to JobKeeper

The recent changes to JobKeeper announced on the 7th of August 2020 will also provide an element of reprieve for some, with businesses now only needing to demonstrate that their GST turnover has fallen in one quarter, instead of two, in order to qualify for the recently extended scheme.

Instead of the requirement to demonstrate a decline in turnover for both the June and September quarters, the 7th of August 2020 announcement confirms businesses will now only need to show that GST turnover has fallen in the September quarter, compared to the corresponding period in 2019.

Employee eligibility and payments have also changed, to the extent that the scheme has been amended to cover those who have been working since at least 1 July 2020, instead of the original deadline of 1 March 2020. The payment rate will also drop from October to $1,500 to $1,200 for full-time workers, and to $750 for part-time workers, before dropping again in January to  $1,000 per fortnight for full-time workers and $650 for part-time workers.

Employers will need to use the two fortnightly pay periods to either 1 March 2020, or 1 July 2020 to calculate JobKeeper payment tiers and if an employee has been eligible for JobKeeper since March 1, the fortnightly period with the highest number of hours worked should be used. 

Click here to read the 7 August 2020 announcement from The Treasury detailing the changes to JobKeeper.

If you have any questions or need any support with your workplace during these times, do not hesitate to contact EL's Principal Legal Advisor – Workplace Relations, Amie Mish-Wills:

☎️ (07) 4646 2425

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The recent decision in Broadlex Services Pty Ltd v United Workers’ Union [2020] FCA 867 highlights the risks employers will face if they reduce the hours of their employees without consent.

Broadlex, a cleaning company, experienced a downturn in business which triggered it to advise full-time employee, Ms Vrtovski, that her employment status would be reduced from full-time to part-time, reducing her hours from 38 hours per week to 20 hours per week (with a proportionate reduction in salary).  

Ms Vrtovski declined to sign a form consenting to the change but nevertheless worked the reduced hours as she felt she had no choice. She later filed a dispute and upon examination, Justice Katzmann of the Federal Court of Australia held that Ms Vrtovski was entitled to redundancy pay on the grounds that:

1. Section 119 of the Fair Work Act 2009 (Cth) confirms that a redundancy requires:

• the employee’s employment to be terminated
• the termination to be done at the employer’s initiative because it no longer requires the job to be done by anyone.

2. by reducing Ms Vrtovski’s hours without consent, Broadlex had repudiated her contract of employment, which was accepted by her when she refused to sign the consent form. This, in turn, had the effect of terminating Ms Vrtovski’s full-time employment and when she commenced working on a part-time basis, she did so under a new contract of employment;

3. as the termination of Ms Vrtovski’s employment was initiated by Broadlex (when they changed her employment to part-time), who did not require her full-time role to be done by anyone, Ms Vrtovski’s circumstances met the requirements of section 119 and she was therefore entitled to redundancy pay.

Lesson for Employers 

The decision in Broadlex serves as an important reminder that employers need to be very careful when making changes to an employee’s employment.

If you find yourself in a situation where you are considering making similar changes within your business, we encourage you to contact EL's Principal Legal Advisor – Workplace Relations, Amie Mish-Wills for advice & support:

☎️ (07) 4646 2425

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Provisions of the Building Industry Fairness (Security of Payment) and Other Legislation Amendment Act 2020(Qld) (the Act) will take effect on 1 October 2020, introducing significant payment security reforms.

In particular, the Act introduces a new remedy for head contractors that have not been paid an adjudication debt by a principal/client following the filing of an adjudication certificate. This remedy allows a head contractor to request a charge over the property on which construction work was carried out where:

• the construction work or related goods and services relate to the adjudicated amount; and
• the principal/client, or a related entity, is the registered owner of the property.

Importantly, this charge is lodged with the registrar of titles and is to exist for 24 months after registration unless discharged, set aside, or the adjudicated amount is paid.

Additionally, a head contractor is able to enforce the charge by application to the Court for orders that the property is sold, which will authorise the sale of the property free of all encumbrances and will have effect regardless of any encumbrances. The Act defines ‘encumbrance’ to mean:

• a mortgage, lien or charge over the property;
• a caveat claiming interest over the property by way of security; or
• a writ affecting the property.

This mechanism means that a head contractor is able to apply to have the property sold, even if there are prior encumbrances.

On settlement of sale of property ordered by the Court, sale proceeds would be applied in the following order:

• first – payment of sale costs and the head contractor’s costs in seeking the sale;
• second – payment of amounts to satisfy any registered encumbrances, including the charge registered by the head contractor, in the priority order under the Land Title Act 1994 (Qld); and
• third – payment of any balance to the registered over of the relevant property or to another at the discretion of the owner.

This is a very powerful tool available to head contractors because it provides them with practical, relatively straightforward and economical leverage to force compliance by principals/clients or risk serious ramifications that typically otherwise only eventuates in very limited circumstances.

To avoid any charges being registered and enforced, principals/clients should ensure that any adjudication amounts are paid as a matter of priority. Under the Act, payment must be made 5 business days after the adjudicator’s decision, or a later date if decided by the adjudicator, so it is important that principals act quickly to prevent the registration and enforcement of potential charges.

Need further clarification? Enterprise Legal are Toowoomba's construction law experts - make a time to see us today:

☎️ (07) 4646 2621

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