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Coronavirus: Business Questions Answered

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There's a lot of legal issues surrounding COVID-19. From employment to tax relief, current circumstances mean that businesses are and will inevitably be affected.

To help, we’re running a special webinar on COVID-19 at 12:00pm on Thursday 2 April 2020. In this webinar, experienced business lawyer Damin Murdock will cover:

- Options for business owners on retail, commercial and residential leases

- Leave entitlements for staff who are in self-isolation or who have been diagnosed with COVID-19

- How to implement an effective Working From Home (WFH) arrangement

- Managing employees and restructuring your business

- Managing your cash flow

- How to know if your insurance covers you for interruptions caused by pandemics

We will also be dedicating time at the end of the webinar for Damin to answer your questions.

Published in: Law
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Coronavirus: Business Questions Answered

  1. 1. COVID-19: Business Questions Answered With Damin Murdock
  2. 2. Today’s Presenter Damin Murdock ● Co-Founder: MurdockCheng Legal Practice ● Top Commercial Lawyer on Lawpath network ● Expertise in business law, consumer law, litigation, IP law & more
  3. 3. What we’ll cover ● Occupational Health and Safety ● JobKeeper and JobSeeker Payments ● Leave allowances for staff who are self- isolating, in quarantine or ill ● What you can do if an employee has COVID-19 ● Implementing remote working ● Legal requirements for redundancy & standing down employees ● Consumer and contract guarantees ● Managing cash flow and paying invoices ● Important changes to insolvency laws
  4. 4. Just before we start... ● Please note: we encourage you to ask questions and really value your input. ● Although we would love to answer every question we unfortunately won't have the time to cover every single question we have received. DISCLAIMER: This webinar is general information only and does not substitute for the need to obtain legal advice on specific circumstances.
  5. 5. COVID-19 and Businesses Occupational Health & Safety
  6. 6. Occupational Health and Safety World Health Organisation Getting Workplace Ready World Health Organization - Getting Workplace Ready for COVID-19 ● Disinfect surfaces (desks and tables) and objects (phones and keyboards) regularly ● Access to hand sanatiser ● Display posters promoting hand washing ● Access to face masks (if applicable) and paper tissues ● Ensure all employees with mild symptoms stay at home (and do not take over the counter medications if not required as it can mask the symptoms) ● Meetings should be held electronically, or if required in person, comply with the local State laws on gatherings of people
  7. 7. Occupational Health and Safety Federal Government Information for Employers Department of Health - Information of Employers • Wash your hands • Cover your cough and sneeze • Avoid contact with others (stay more than 1.5 metres from people) SafeWork NSW SafeWork NSW Website • Regular Alerts such as safe lifting, etc • Industry specific hazards and policy requirements • Review your exposure and infection control policies and procedures, development and implement safe systems of work, continue to monitor, continue to comply with statutory requirements
  8. 8. Occupational Health and Safety Work Health and Safety Act 2011 (NSW) – Primary Duty of Care (s 19) A person conducting a business or undertaking must ensure, so far as is reasonably practicable, the health and safety of: • Workers engaged, or caused to be engaged • Workers who perform activities in carrying out work, while the workers are at work in the business or undertaking. A person conducting a business or undertaking must ensure, so far as is reasonably practicable, the health and safety of other persons is not put at risk from work carried out as part of the conduct of the business or undertaking (including the work environment, provision of adequate facilities, information, training or supervision that is necessary to protect all persons from risks to their health and safety, and the health of workers is monitored)
  9. 9. Occupational Health and Safety Work Health and Safety Act 2011 (NSW) – Duty of Officers (s 27) A person conducting a business or undertaking must exercise due diligence to ensure they comply with that duty and obligation, which means: • Acquire and keep up-to-day knowledge of work health and safety matters • Gain an understanding or hazards and risks • Has available for use, and uses, appropriate resources and processes to eliminate or minimise risks • Have processes for receiving and considering information regarding incidents, hazards and risks and responding to them in a timely manner
  10. 10. Occupational Health and Safety Work Health and Safety Act 2011 (NSW) – Duty of Workers (s 28) A worker must: • take reasonable care for his or her own health and safety • take reasonable care that his or her acts or omissions do not adversely affect the health and safety of other persons • comply with any reasonable instruction that is given by the person conducting the business • co-operate with any reasonably policy or procedure of the person conducting the business
  11. 11. COVID-19 and Businesses 1. JobKeeper Payment
  12. 12. JobKeeper Payment STEP 1: Eligible Employers • Less than $1 billion turnover and the turnover has fallen by more than 30 percent due to COVID-19, when comparing to a “typical month” in the last 12 months • The law has not been enacted, but based on commentary, this does not mean March 2020 turnover is 30% or less than March 2019, and it does not mean the employer must have been trading for 12 months The ATO will consider: • where the usual or average turnover has decreased by 30% • additional information which shows the company is “significantly affected by the impacts of the Coronavirus” • Discretion having consideration to specific circumstances • Using tolerances where the employer has acted in “good faith” and there is a slightly smaller fall • “the economic downturn due to the Coronavirus has adversely affected” the business and expects the turnover to fall
  13. 13. JobKeeper Payment STEP 2: Eligible Employees • Was engaged by the employer as at 1 March 2020 (does not matter if terminated after 1 March 2020, can be re- engaged) • All full-time and part-time employees plus casuals employed on a regular basis for more than 12 months as at 1 March 2020 • Over the age of 16 • Is a permanent resident, citizen, protected special category visa holder, non-protected special category visa holder who has been residing in Australia for more than 10 years, or New Zealand citizens on 444 visas • Must not be receiving the JobSeeker Payment • It does not apply to temporary visa holders such as bridging visas, 457 or 482 visa holders • It does include self-employed via an ABN plus statutory declaration regarding the business activity
  14. 14. JobKeeper Payment STEP 3: Employer Apply • Register your interest at www.ato.gov.au • Apply via an online application • Must identify which employees will receive the JobKeeper Payment • Pay the employee $1,500.00 per fortnight, before tax • Superannuation is not compulsory on the JobKeeper Payment, but discretionary • Receive reimbursement from the ATO (not a credit) of $1,500.00 per employee on 1 May 2020
  15. 15. JobKeeper Payment STEP 4: How does it work? • The purpose is to keep people in jobs, and not at the doors of Centrelink and to subsidise wages, not payment 100% • It is to minimise redundancies and terminations where employers have no other option but to stand down employees • It is on top of the cashflow assistance program (up to $50,000.00 credit on PAYG paid discussed later) Employee 1 • Normally pay $3,000.00 per fortnight before tax (and super on $3,000) • You pay $3,000.00 per fortnight before tax • ATO refunds you $1,500.00 via the JobKeeper Payment as a subsidy Employee 2 • Normally pay $1,000.00 per fortnight before tax • You pay $1,000.00 per fortnight before tax (and super on $1,000) • You pay $500.00 more per fortnight before tax (no super required) • ATO refunds you $1,500.00 via the JobKeeper Payment as a subsidy
  16. 16. COVID-19 and Businesses 1. JobSeeker Payment
  17. 17. JobSeeker Payment What is it? • Payment to employees who have been stood down or dismissed from employment (but must be over the age of 22, and under the pension age; meets the income test meaning; and meets the residency rules) • Self-employed, casual workers, and contract workers who now earn less than $1,086.50 (Income Threshold) per fortnight due to COVID-19 • Those who are caring for someone with COVID-19 If an employer closes its office, is the employee entitled to JobSeeker Payment? • Yes, after any income maintenance payment (for instance, if employer paid 4 weeks notice or accrued but untaken leave, then may need to wait 4 weeks + leave paid) If an employee offers an employer to take reduced salary, is the employee entitled to JobSeeker Payment • Yes, if the employee is a casual and as a result of the reduced salary, it falls below the Income Threshold • Yes, if the employee is a permanent employee and they have been stood down or dismissed If an employee is made redundant, but is redeployed into a new role with 20% less pay, is the employee entitled to JobSeeker • Only if their income is now less than the Income Threshold, however, if their income is now 20% less than original salary, but salary is not below the Income Threshold, they are not entitled to JobSeeker (but may be granted access to superannuation release)
  18. 18. COVID-19 and Businesses 1. Employees Leave
  19. 19. Leave for your employees ● This all depends on whether your employee comes under a national award or employment contract. ● Most Awards have a consultation requirement (Clause 8), close-down clause (Clause 34), advance payment of annual leave (Clause 34) and excessive leave accruals (Clause 34). ● If you have an employment contract, see whether an employee can take forced leave, otherwise, s 94(5) of the Fair Work Act allows for forced annual leave if it is reasonable. ● This also depends on whether your employee is a casual or permanent employee - to be permanent, an employee needs to have been employed on a casual basis for at least 12 months.
  20. 20. ● You cannot dismiss an employee simply for having COVID-19 ● Section 352 of the Fair Work Act says "an employer must not dismiss an employee because the employee is temporarily absent from work because of illness or injury." ● Regulation 3.01 of the Fair Work Regulations also provides "it is not a temporary absence if the employee's absence extends for more than 3 months or the total absences of the employee, within a 12 month period have been more than 3 months (exclusive of an absence on paid personal/carer's leave or workers compensation)". ● You can enforce self-isolation provisions that have been legislated by the government, i.e. you can prevent them from coming into work if they are sick. What if an employee tests positive for COVID-19?
  21. 21. If your employees will be working from home, you should have policy in place because: ● You are liable for Occupational Health and Safety of Staff whilst at work (this includes if employees are at home) ● You are required to have a safe working environment, free from hazards ● You should state which insurance will apply - WorkCover or Home Public Liability Insurance Be sure to monitor and communicate with staff regularly through: ● Maintaining time recording ● Having clear KPI requirements recorded and having regular meetings/check-ins ● Using remote working tools such as Slack, Zoom, and WorkflowMax Current circumstances have meant that many businesses need to implement measures to allow their employees to work remotely Working From Home (WFH)
  22. 22. ● Redundancy occurs where an employer no longer requires the person’s job to be performed by anyone because of changes in the operational requirements of an employer AND the employer has complied with any Modern Award requirements to consult (see section 389 of the Fair Work Act) ● A redundancy needs to be genuine in order to be legal (see section 385 of the Fair Work Act) ● Redundancy is not a genuine redundancy where the employer could have taken reasonable steps to redeploy the employee into another position (see section 389(2) of the Fair Work Act) ● Casual employees are not entitled to redundancy pay, and small businesses are not required to pay redundancy pay, unless otherwise stated in a Modern Award (ie, s 17 of the Building and Construction General On-Site Award 2010) Redundancy
  23. 23. Grounds for Refusal You must consider the legitimacy of the refusal to attend work Legitimate concerns include lawful compliance with Government sanctions; people at risk (see Department of Health - People at Risk); evidence they can expose other people at risk; evidence that the employee could be exposed if attended work; evidence the employer has failed to minimize risk; employee is acting reasonably Unreasonable or Unlawful Refusal Consider disciplinary action; warning letters; flexible work arrangements; standing down employee and if only necessary, dismissal but risking General Protection Application on grounds that the dismissal is an adverse action due to the employee exercising a legitimate workplace right to safety (get legal advice) My Employee Refuses to come to work
  24. 24. COVID-19 and Businesses 2. Guarantees and supplies
  25. 25. T&Cs and the Australian Consumer Law (ACL) Now is an important time to check your terms and conditions. It’s also important to check those of your suppliers. Check for: ● Termination clauses ● Extension of time notices ● Dispute resolution provisions ● Refunds, credits, replacements ● Delivery
  26. 26. If you have no terms and conditions, the ACL contains guarantees (see 51 to 64 of Schedule 2 of the Competition and Consumer Act 2010). For goods there is: ● A guarantee as to acceptable quality (fit for purpose, free from defects, safe, durable ● A guarantee as to fitness for any disclosed purpose etc. (fit for any disclosed purpose) ● A guarantee relating to the supply of goods by description ● A guarantee as to repairs and spare parts (there is a guarantee that the manufacturer of the goods will take reasonable action to ensure that facilities for the repair of the goods, and parts for the goods, are reasonably available for a reasonable period after the goods are supplied) Australian Consumer Law (ACL) continued
  27. 27. Australian Consumer Law guarantees regarding services: ● Guarantee as to due care and skill (this includes within a reasonable period of time) ● Guarantees as to fitness for a particular purpose etc (if the service is to be rendered by a particular date, for a particular purpose) ● Guarantee as to reasonable time for supply (fixed date, agreed term or reasonable time) Australian Consumer Law (ACL) continued
  28. 28. How to minimise the impact of breaching a Guarantee ● Communicate with your supply chain (write to suppliers, communicate with your supply chain and get commitments from them) ● Communicate with your customers (notification that there will be a delay, there are no spare parts but there are limited replacements) ● Offer refunds or replacements if you can Australian Consumer Law (ACL) continued
  29. 29. COVID-19 and Businesses 3. Managing cashflow
  30. 30. Financial modelling ● Start preparing your cashflow, projections and forecasting ● Know when you need to pull the trigger and start retrenching staff and cutting costs ● Consider whether you need to raise short term funds, and if so, where are you going to find those funds and what documents do you need prepared for obtaining a loan? ● What kind of funding do you require (R & D funding, line of credit, credit card, private funding)? ● Consider extending your tax due dates or enter into payment plans with the ATO ● Also consider financial relief being offered by the Federal Government
  31. 31. Collecting debts Collection of debts ● For undisputed debts, issuing a Statutory Demand may be appropriate ● For disputed debts, you should take legal action quickly Issuing your invoices ● issue all invoices upon completion of your work, not at the end of the month ● Maintain your payment terms of 7 to 14 days ● Take payments in advance ● Consider taking a personal guarantee from a director ● If you have a lawyer, ask your lawyer to take deposits ● Remember that ‘the squeaky wheel gets the oil ● Do you have any business interruption insurance, and if so, does it cover pandemics i.e. COVID-19?
  32. 32. Temporary Changes to the Corporations Act Significant changes have been made to Australian insolvency laws for the next 6 months to help businesses cope in the wake of COVID-19. The key changes are: ● Threshold to issue a statutory demand is increasing from $2,000 to $20,000 and the time limit to respond is increasing from 21 days to 6 months before the debtor will be presumed to be insolvent ● Threshold to issue bankruptcy proceedings is increasing from $5,000 to $20,000, with the time limit to respond to a bankruptcy notice extending from 21 days to 6 months ● Period of protection from claims by unsecured creditors for those who declare an intention to file for voluntary bankruptcy will increase from 21 days to 6 months ● Company directors will be relieved from personal liability for insolvent trading for the next 6 months
  33. 33. Commercial Leases Key Provisions in a Commercial Lease • Right to quiet enjoyment • Right to amenities • Frustration • Force majeure What can you do? • Ask for a rental abatement (where you have lost your quiet enjoyment or amenities) • Negotiate with your landlord • Seek orders from QCAT, NCAT, VCAT for rental abatement • See if Frustration or Force Majeure applies • Communication is key and wait for more Government updates
  34. 34. Relief for small business owners & SMEs The Government has announced a raft of changes aimed to help businesses manage in this time. These include: Cashflow assistance ● Employers will receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000 ● An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments they have received ● This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments ● Payment will be delivered by the ATO as an automatic credit on your ATO Activity Statement account, not cash injected back into your business.
  35. 35. Example Teresa runs a hair salon, and employs 12 stylists on $50,000 each per year ($600,000 total per year) and withheld $8,788 each month ($600,000/12 months x tax withholding rate, in this case 17.57%) for the third quarter of the 2019/2020 financial year. She can receive: 1. A credit of $26,364 ($8,788 x 3) for the March period, equal to 100 percent of what she withheld. 2. A credit of $8,788 each for April and May, totalling $17,576 ($8,788 x 2) 3. A credit of $6,060 for June period, before she reaches the cap of $50,000 ($26,364 + $8,788 April + $8,788 May + $6,060) 4. She will also receive an additional payment of $12,500 for the June period, equal to 25 percent of her total Boosting Cash Flow for Employers payments 5. An additional payment of $12,500 ($50,000 x 25%) for the July period, equal to 25 percent of her total Boosting Cash Flow for Employers payments 6. An additional payment of $12,500 for the August period, equal to 25 percent of her total Boosting Cash Flow for Employers payments 7. An additional payment of $12,500 for the September period, equal to 25 percent of her total Boosting Cash Flow for Employers payments.
  36. 36. 1. Increase to the instant asset write-off ● Instant asset write-off threshold will be increased from $30,000 to $150,000 ● It was also be expanded to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020 Relief for small business owners & SMEs
  37. 37. 2. Support to the flow of credit to SMEs Under the Coronavirus SME Guarantee Scheme, the Government will provide a guarantee of 50 per cent to SME lenders to support new short-term unsecured loans to SMEs. The Government will provide eligible lenders with a guarantee for loans with the following terms: ● Maximum total size of loans of $250,000 per borrower ● The loans will be up to three years, with an initial six-month repayment holiday ● The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan Relief for small business owners & SMEs
  38. 38. 4. Quick and efficient access to credit for small business The Government is providing an exemption from responsible lending obligations for lenders providing credit to existing small business customers for six months. 5. Reserve Bank of Australia – Supporting the flow and reducing the cost of credit The Reserve Bank of Australia (RBA) announced a package on 19 March 2020 that will put downward pressure on borrowing costs for households and businesses. Relief for small business owners & SMEs
  39. 39. 6. Temporary early release of superannuation The Government is allowing individuals affected by the Coronavirus to access up to $10,000 of their superannuation in 2019- 20 and a further $10,000 in 2020-21. Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments. To apply for early release you must satisfy any one or more of the following requirements: ● You are unemployed; or ● You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or (continued next slide) Relief for small business owners & SMEs
  40. 40. On or after 1 January 2020: • You were made redundant; or • Your working hours were reduced by 20 per cent or more; or • If you are a sole trader — your business was suspended or there was a reduction in your turnover of 20 per cent or more. Relief for small business owners & SMEs
  41. 41. Our Working from Home (WFH) policy can be downloaded for free here: https://lawpath.com.au/legal- documents/working-from-home-policy You can also sign documents on our platform for free here: https://lawpath.com.au/esignature Guides ● Remote Working: How to Introduce it to Your Business: https://lawpath.com.au/blog/remote-working- how-to-introduce-it-to-your-business ● COVID-19 and Small Businesses: What Financial Relief is There?: https://lawpath.com.au/blog/covid- 19-and-small-businesses-what-financial-relief-is-there ● Insolvency Laws See Sweeping Changes to Help Businesses Cope: https://lawpath.com.au/blog/insolvency-laws-see-sweeping-changes-to-help-businesses-cope ● How Should Employers Deal With Coronavirus?: https://lawpath.com.au/blog/how-should-employers- deal-with-coronavirus Resources
  42. 42. COVID-19 and Businesses Questions?

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