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Business owners enter commercial arrangements every day, many of which have legal implications. Dynamic Business speaks to Chiara Rawlins and Tim McDonald, principals from McCabe Curwood, about the most important ways in which business owners can protect themselves from legal exposure.
Undertake a general legal health check
Ms Rawlins believes that being proactive is key for businesses. Like check-ups at the doctor, businesses need to conduct regular legal health checks to ensure they are not unknowingly exposed to legal risk. At a minimum, a legal health assessment is essential at the beginning of the financial year.
“Businesses of all shapes and sizes can suffer from hidden risks and areas of potential legal exposure that often go undetected. These risks can arise from legislative requirements and changes, business practices, through to how an agreement has been drafted,” she said.
“Given the level of complexity of legal requirements, it is unsurprising that these risks go unaddressed.”
To conduct a legal health assessment, businesses can use the free ‘MC Health Check’ online app developed by McCabe Curwood, which can be accessed here.
Review your standard form contracts
Earlier this year, changes were made to the Unfair Contract Terms regime, which has broadened unfair terms in standard form contracts to more businesses.
“The Commonwealth government is also currently looking at proposed reforms to the regime, including the introduction of civil penalties for businesses in breach. Businesses need to check that their standard form contracts comply with the changes to avoid legal exposure,” says Ms Rawlins.
As a general overview, there are four unfair contract terms that businesses should be aware of:
- Allowing one party to avoid unilaterally, vary, assign or terminate the contract without the consent of the other party
- Allowing one party to unilaterally vary the price of the goods or services (without giving the other party the right to terminate)
- Restricting a party’s rights to terminate the contract
- Suspending or terminating the services being provided to the consumer
‘MC Act’ is a free tool that assists businesses to identify unfair contract terms in their standard contracts.
Review your compliance with workplace laws, particularly regarding super
Mr McDonald says businesses should regularly review their compliance with workplace laws and update their employment contracts and policies.
“With the minimum wage now increased by 2.5 per cent, a raft of updated modern awards issued last year, and the reforms to casual employment, it’s timely to check that you are compliant with your awards and agreements.
“Employers need to issue Casual Employment Information Statements and check their casual contracts and casual conversion obligations.”
There are also superannuation changes coming into effect.
“The compulsory superannuation rate will increase to 10 per cent on July 1, so review the drafting of your employment contracts to see how the business will meet these obligations. Where an employee’s remuneration is expressed as a base salary exclusive of superannuation, the increase to the superannuation guarantee will come at a cost to employers,” said Mr McDonald.
“Failure to pay the increased super amount can see businesses investigated by the Australian Taxation Office, so it’s essential to get this in order now.”
Revisit ‘working from home’ policies
Many businesses were forced to quickly implement working from home arrangements in early 2020 in response to the COVID-19 outbreak. With this trend here to stay, employers need to be more sophisticated in managing employees working remotely.
“The changes to workplace laws which provided greater flexibility during the height of the pandemic have now largely expired,” said Mr McDonald.
“Where working from home arrangements are to continue, consideration must be given to what types of policies and contractual terms should be in place, and whether they are compliant with employment and Workplace Health and Safety (WHS) regulations.”
One area that employers must not overlook is ensuring the physical safety of an employee working from home and managing psychological risks.
Mr McDonald said: “This might mean communicating with them frequently and providing resources to support their mental health and wellbeing.”
Take the necessary steps to avoid personal liability
Directors and managers are increasingly at risk of becoming personally accountable for incidents in the workplace.
Last month, an employer in Western Australia was found liable for gross negligence and sentenced to two years in prison after the death of a 25-year-old worker.
Mr McDonald said: “This case highlights that directors and managers are becoming more at risk of being found liable in employment and WHS matters. Investing in necessary processes and training to protect against liability is essential.”
As well as reputational damage, a failure to take reasonable steps to eliminate sexual harassment and other risks can result in employers being liable.
“Brittany Higgins and other high profile sexual harassment claims, and high damages awards, have prompted a need to give greater attention to how Australian workplaces respond to reports of sexual harassment and assault. Employers need to look at their culture, training, policies and processes.”