Commercial Law & Contracts

Employment law changes from 1 July 2019 - take note !

Employers should take note of changes to the employment landscape that take effect on 1 July 2019.

Increase in the National Minimum Wage and modern award rates

As discussed in a separate Williams + Hughes Insight, from 1 July 2019 the: 

• national minimum wage  will increase to $740.80 per week or $19.49 per hour (an increase of $21.60 per week or $0.56 per hour); and
• minimum full time wage rates set out in modern awards will increase by 3%. Allowances will increase in accordance with the provisions of the relevant modern award.

Changes to the Maximum Superannuation Contributions Base

The Maximum Superannuation Contributions Base is set by the Federal Government each year. It is used to determine the maximum limit on any individual employee’s earnings base for each quarter for superannuation guarantee payment purposes. An employer does not have to pay the superannuation guarantee for the portion of earnings above this limit. 

From 1 July 2019 the Maximum Superannuation Contributions Base increases to $55,270 per quarter, up from $54,030. So, the maximum superannuation guarantee payments that an employer is liable to pay from 1 July 2019 per employee is 9.5% of $55,270, or $5,250.65 per quarter. Calculations should always be made on a quarterly, not annual, basis.

Changes to the High Income Threshold

From 1 July 2019 the high income threshold will increase to $148,700 per annum (from $145,400 per annum).  This is important because the high income threshold sets the limit on an employee’s ablity to bring unfair dismissal proceedings.  If an employee’s annual rate of earnings is more than the high income threshold, the employee is not able to bring an unfair dismissal claim unless they are covered by a modern award or enterprise agreement.

The increase to the high income threshold also means that the maximum payable compensation for unfair dismissal increases to $74,350, which is 50% of the new high income threshold.

The increase to the high income threshold also sets the minimum guaranteed earnings hurdle for an employee to be a “high income employee” for the purposes of modern award coverage.  If a high income guarantee is entered into, the employee is not subject to the application of any modern award.

When calculating earnings for the purpose of the high income threshold, the following items are included:

• wages and salary
• any amounts applied or dealt with on the employee’s behalf (for example salary, sacrifice amounts)
• the agreed monetary value of any non-cash benefit (for example, use of a company car, laptop or mobile phone).

The following are not included as part of an employee’s earnings:

• payments that cannot be determined in advance (for example bonuses, commissions, incentive‑based payments and overtime, unless the overtime is guaranteed)
• reimbursements for business expenses
• superannuation guarantee contributions.

New whistleblower laws

Under the new whistleblower regime, public companies, proprietary companies that are trustees of a superannuation entity and large proprietary companies must have a compliant whistleblower policy and must provide it to their employees.  

As discussed in a separate Williams + Hughes Insight, from 1 July 2019 new asset, revenue and number of employees thresholds apply when determing whether a company is a large proprietary company. 

The new whistleblower regime takes effect from 1 July 2019. Although the new regime applies to disclosures made on or after 1 July 2019, the disclosures may relate to conduct that occurred before that date. 

The requirement to have a whistleblower policy in place commences on 1 January 2020, although a small proprietary company that becomes a large proprietary company after 1 January 2020 will have an additional six months to establish a whistleblower policy.

Given that companies need to comply with the new laws from 1 July 2019 and must have compliant policies in place by the dates referred to above, companies must take steps to prepare compliant whistleblower policies. Managers and staff must also be trained to properly handle disclosures that are protected under the new whistleblower laws - the new laws require this. The whistleblower policies must also be made available to officers and employees of the company. 

Williams + Hughes can assist you in several ways:

• drafting or reviewing policies that comply with the new legislation;
• providing training for managers to understand the new whistleblower regime and how to properly handle whisteblowing disclosures; and
• preparing "cheat sheets", templates and protocols for managers to use when a whistleblowing disclosure is made.

For further information on how these changes may impact on your business please contact Damian Quail or Matthew Lenhoff on +61 8 9481 2040 or damian.quail@whlaw.com.au or matthew.lenhoff@whlaw.com.au.

This article is general information only, at the date it is posted.  It is not, and should not be relied upon as, legal advice.  This article might not be updated over time and therefore may not reflect changes to the law.  Please feel free to contact us for legal advice that is specific to your situation.

Keeping your financials “off the record”: from 1 July 2019 fewer companies need to lodge their financial accounts with ASIC

Recent changes to the Corporations Act 2001 remove the need for many companies to lodge annual financial accounts with ASIC.

With effect from 1 July 2019, the criteria in the Corporations Act 2001 for classification as a “large proprietary company” have been changed. The revenue, asset and employee thresholds that determine whether a proprietary company is considered “large” will double.

Why is this important?

Large proprietary companies are required to prepare and lodge an annual financial report, a director’s report and an auditor’s report with ASIC each financial year. This can be both costly and time consuming.

In addition, reports that are lodged with ASIC become publicly available documents - so competitors and customers can easily access sensitive, private financial information about a company.

If a company is required to lodge the required reports but fails to do so, penaltieDamian Quails can be imposed on the company and its officers.

Avoiding the requirement to lodge financial reports with ASIC will not only save a company time, money and effort, but will also keep private financial information confidential. With some exceptions, small proprietary companies generally do not need to comply with these requirements to lodge (but are required to keep sufficient financial records).

So, it pays to be small!

What is the change?

The Corporations Amendment (Proprietary Company Thresholds) Regulations 2019, which will commence on 1 July 2019, amend the definition of “large proprietary company” by doubling the current revenue, assets and employee thresholds. A proprietary company will be “large” if it meets two of the three thresholds at the end of its financial year, as shown in the table below:

The doubling of the thresholds will relieve many proprietary companies from the ASIC reporting obligations. The Federal Government estimates the changes will reduce SME regulatory compliance costs by $81.3 million annually, with a third of proprietary companies currently classified as large expected to fall below the new mandatory reporting thresholds.

What should you do now?

If your company is currently classified as a large proprietary company you should closely consider the revenue, gross assets and employee thresholds to determine whether the company may fall below the increased thresholds from 1 July 2019. If so, your company may be relieved from the time and costs associated with the compliance obligations of a large proprietary company. And you can keep your private financial information out of the hands of your customers and competitors!

For further information on how these changes may impact on your business please contact Damian Quail on +61 8 9481 2040 or damian.quail@whlaw.com.au.

This article is general information only, at the date it is posted.  It is not, and should not be relied upon as, legal advice.  This article might not be updated over time and therefore may not reflect changes to the law.  Please feel free to contact us for legal advice that is specific to your situation.

Minimum wage increase to apply in Australia from 1 July 2019

All employers should be aware of the Fair Work Commission's (FWC's) decision regarding the 2018/2019 annual wage review.

The FWC announced a 3% increase from the first full day period on or after 1 July 2019 to the:

• national minimum wage, which will increase to $740.80 per week or $19.49 per hour (an increase of $21.60 per week or $0.56 per hour); and
• minimum full time wage rates set out in modern awards. Allowances will increase in accordance with the provisions of the relevant modern award.

The FWC’s decision is lower than last year’s 3.5% increase to the national minimum wage (and lower than the 3.3% increase from the previous year). The FWC stated that the prevailing economic conditions justified a lower increase this year.

In light of the FWC’s decision, it is important that employers review their rates of pay before 1 July 2019 to ensure employees are appropriately paid in accordance with the new wage rates. There can be significant penalties against employers, and potentially directors, who fail to meet their minimum wage obligations.

For further information on how these changes may impact on your business please contact us on +61 8 9481 2040.

This article is general information only, at the date it is posted.  It is not, and should not be relied upon as, legal advice.  This article might not be updated over time and therefore may not reflect changes to the law.  Please feel free to contact us for legal advice that is specific to your situation.

The ACCC is targeting the Australian Wine Sector- winemakers must update their supply contracts with growers

On 3 June 2019 the Australian Competition and Consumer Commission (the ACCC), Australia's competition and consumer protection regulator, released an Interim Report drawing attention to harmful market practices that could be restricting competition in some Australian wine grape growing regions and limiting the potential for growth of Australia’s wine industry. More details can be found on the ACCC's website at Wine Grape Market Study. Stakeholders in the Australian wine industry are encouraged to make submissions on the interim report by 28 June 2019.

Why is the ACCC concerned?

The report identified a number of practices adopted by wine makers when entering into supply contracts with grape growers which were described by the ACCC as concerning, including:

• a lack of transparency and certainty over how grapes are priced and quality assessed;
• exclusive and lengthy supply contracts with automatic and long term extensions;
• lack of price certainty for growers during the supply contract term;
• lack of publicity of prices and strict confidentiality obligations preventing price disclosure by growers, making it difficult for growers to assess whether price offers they receive are competitive; 
• delayed payment terms, in some instances up to nine months after grapes have been delivered to a winery; and
• difficult termination clauses.

What has the ACCC recommended? 

The ACCC made a number of interim recommendations aimed at addressing the power imbalance between winemakers and growers, including: 

• winemakers in warm climate regions should be required to provide indicative and final grape prices to an independent third party for simultaneous public release;
• payment terms for wine grapes should be shortened so growers are paid within 30 days of delivering grapes; 
• objective standardised testing for wine grape quality assessments should be developed; and
• the dispute resolution processes in the Australian Wine Industry Code of Conduct (the Code) should be improved.  

Wait, we already have a wine industry code of conduct! 

The Code was established in 2008 by industry participants in an attempt to address ongoing issues within the wine industry  - but participation in the Code is voluntary.

To be an effective mechanism to improve industry practices, the ACCC states that participation in the Code by major winemakers is essential. With that end in mind, the ACCC recommends that Australian winemakers with more than 10,000 tonnes of processing capacity sign the Code. However, the ACCC states that current participation levels are problematic. The ACCC states that if participation levels by major winemakers do not improve the ACCC may recommend to Government that a mandatory code be introduced.

So, what should winemakers and grape growers do?

The ACCC will publish its final report in September 2019. Putting aside for a moment the recommendations that are yet to be implemented, the ACCC has identified a range of contract terms which it considers may be unfair under the Australian Consumer Law (the ACL). The ACL applies to many business to business transactions. While the current ACL unfair contract term regime does not go further than rendering some unfair contract terms unenforceable, the Government recently announced plans to strengthen protections to small businesses from unfair contract terms. As part of this plan, the Government will consult on amending the unfair contract regime to make unfair contract terms illegal and attach fines to breaches.

Winemakers and grape growers looking to get ahead of the curve must review their supply contracts with these changes in mind, especially those contracts that are coming up for renewal or renegotiation. Unfair contract terms should be removed - they can't be enforced, may attract bad press and could, in future, result in a hefty fine.

For further information on how these changes may impact on your business please contact please contact Amy Knight or David Williams on +61 8 9481 2040 or amy.knight@whlaw.com.au and david.williams@whlaw.com.au.

This article is general information only, at the date it is posted.  It is not, and should not be relied upon as, legal advice.  This article might not be updated over time and therefore may not reflect changes to the law.  Please feel free to contact us for legal advice that is specific to your situation.

New laws imposing mandatory requirements for businesses that supply services: your T&C’s and website must be updated by 9 June 2019

Recent amendments to the Competition and Consumer Regulations 2010 impose new mandatory wording requirements in relation to the supply of services and also the supply of goods in combination with services.

The new requirements take effect on 9 June 2019. Failure to comply with the new laws can attract a $50,000 fine.

Australian businesses that have not updated their trading terms and conditions, product manuals, warranty cards, marketing materials, product packaging and websites must act quickly to avoid breaching the new laws.

The new mandatory wording requirements make it compulsory for businesses to inform consumers that any warranties or guarantees against defects that are contained in a business’ documents or website do not override the statutory consumer guarantees provided in the Australian Consumer Law (the ACL).

The new requirements apply in respect of any services supplied at a value of $40,000 or less or in respect of any services of a kind that are usually acquired for personal, domestic, or household use or consumption.

The new laws prescribe mandatory text that must be reproduced verbatim. The specific wording required depends on whether the warranty or guarantee against defects applies in relation to the supply of services or the supply of goods in combination with services. The supply of goods alone is already covered by mandatory text requirements that have been part of the ACL for some time.

The ACL also imposes other requirement that warranty documentation and T&C’s must comply with. Now is a good time to ensure your documents and websites are up to date.

For further information on how these changes may impact on your business please contact Damian Quail, Director at Williams + Hughes on +61 8 9481 2040 or damian.quail@whlaw.com.au.

This article is general information only, at the date it is posted.  It is not, and should not be relied upon as, legal advice.  This article might not be updated over time and therefore may not reflect changes to the law.  Please feel free to contact us for legal advice that is specific to your situation.