Although it is generally accepted that employers do not have the ability to control employees conduct outside of the workplace, there are certain circumstances where an employee’s conduct outside of work may be inconsistent with their employment obligations. As such, certain out of work conduct may give rise to an employer’s right to terminate.
Cases are assessed on their individual circumstances to determine if there is a sufficient connection between the employee’s out of work conduct and their employment.
The Test
In Rose v Telstra [1998] AIRC 1592, the Court set out the guiding principles to be considered when determining whether conduct outside of work has a sufficient connection to the employment relationship. The Court found that it must be shown that:
This is a high bar for employers to satisfy themselves with as the Court concluded that the conduct must be of ‘such gravity or importance as to indicate a rejection or repudiation of the employment contract by the employee’.
Examples of when out of hours conduct can be connected to employment
There have been several cases in which the Court has examined the question of whether an employee’s out of work conduct falls within the scope of the employment relationship. The Courts have held that a sufficient connection exists in circumstances where:
Recent Case Example: Bobrenitsky v Sydney Trains (U2021/1757) [2021] FWC 3792
Recently the issue of out of work conduct was examined in Bobrenitsky v Sydney Trains (U2021/1757) [2021] FWC 3792 which examined Sydney Trains termination of Mr Bobrenitsky following his receipt of a Court Attendance Notice for driving under the influence of a prescribed content of alcohol (high range), outside of work hours.
Mr Bobrenitsky notified Sydney Trains of the charge as required by Sydney Train’s Code of Conduct. He was then suspended with pay. Subsequently, Mr Bobrenitsky was dismissed on 13 January 2021. Mr Bobrenitsky appealed this decision at the Transport for NSW Disciplinary Review Panel, which affirmed the dismissal on 18 February 2021. He then lodged an appeal with the Fair Work Commission.
The decision of Deputy President Cross held that the dismissal was unfair as the only connection to the workplace was Mr Bobrenitsky’s notification of the offence.
The Commission found that the offence lacked the required connection to employment as:
Accordingly, the Commission held that Mr Bobrenitsky’s dismissal was ‘harsh, unjust and unreasonable’ due to the conduct being outside of work and there being no sufficient connection between the offence and his employment. The Commission ordered that Sydney Trains reinstate Mr Bobrenitsky to his former position and that he be back paid.
Lessons for Employers
Employers should exercise care when considering terminating employees for out of work conduct. Employers must ensure a clear connection can be made between the employment and the conduct before taking any disciplinary action.
Additionally, employers should ensure that their workplace policies/Code of Conduct outline appropriate and inappropriate behaviour.
Contact the Workplace Law Team at Chamberlains Law Firm for any questions and concerns.
In a truly devastating circumstances, a husband and wife have successfully sued a Canberra Hospital and Obstetrician in negligence after suffering psychological injuries following the stillbirth of their child.[1]
Facts
The Plaintiff was originally pregnant with twins, but by 11 weeks was pregnant with one foetus. The Plaintiff and her husband attended frequent antenatal appointments and check-ups with her midwife and obstetrician during the pregnancy and were assured that the baby was healthy, despite being considered full term.
With great persistence, convincing and urgency, the plaintiff managed to convince their obstetrician to induce her at 40.5 weeks. On 13 January 2011, the plaintiff attended Calvary Private Hospital with her husband and was induced with frequent monitoring by a midwife through a cardiotocograph and a screen depicting both KS’s heart rate and the foetal heart rate for any abnormalities. However hospital records show that abnormalities began to commence at 4:58pm, lasting for 7 minutes returning the foetus heart rate at 160bpm. At 5:08pm and 5:11pm there was further episodes of bradycardia (abnormal slowness of the baby’s pulse). At 5:40pm there was another episode of bradycardia that lasted for six minutes. Unfortunately, what transpired is that the midwife did not adequately monitor these tests and did not urgently report these tests to the obstetrician. An urgent caesarean was ordered at 6pm but the baby was unfortunately a stillborn at 7:00pm.
Issues
The plaintiff and her husband claimed that the hospital was negligent in not recognising the prolonged bradycardia. The Court accepted evidence from the experts that it was more likely than not that if the midwife acted promptly the baby would not have been still born. Similarly, His Honour Burns J found that the obstetrician failed to advise the Plaintiff of the higher risks of still births, failed to arrange an urgent caesarean and his participation in other non-urgent tasks at the hospital resulted in a very serious departure from his duty of care. Experts found that had the obstetrician properly attended to the plaintiff’s cardiotocograph, he would have realised the urgent need to operate and there was a higher chance that the baby would not be stillborn.
Decision
His Honour Burns J of the Supreme Court of ACT found both Defendants were at fault apportioning liability 30% to Calvary Private Hospital and 70% to the Obstetrician.
This loss caused significant psychological harm to both the plaintiff and her husband. Both were awarded pain and suffering damages for the psychological injury they endured as a result of the negligence of the Hospital and the Obstetrician. The wife was awarded a sum of $669,518.15, plus an allowance for legal costs and the husband was awarded the sum of $220,373 on the same basis
The loss of a baby to stillbirth or neonatal death is truly devastating. Any parent would have questions in a scenario like this, but if it becomes apparent that your child was the victim of negligent medical treatment, finding out what went wrong will be vital.
The impact of losing a baby can be far reaching and often impact relationships, work, and your mental well-being. Physical injuries to the mother can also have long lasting consequences. We understand that a stillbirth or neonatal death claim isn’t about the money. It’s about getting answers and helping you overcome the devastating effects of neonatal death negligence.
Please see below case summary of KS & XT v Calvary Health Care ACT & Dr Foote [2018] ACTSC 84.
[1] KS & XT v Calvary Health Care ACT & Dr Foote [2018] ACTSC 84.
There are a variety of businesses that are operating using cryptocurrency and NFT’s. Many entrepreneurs are pushing new ways to generate income from this unique area, such as play-to-earn gaming (P2E) businesses, bot trading strategies, launching non-fungible token (NFT) collections and infinite other possibilities.
Currently, many people are making significant money operating P2E guilds for Axie Infinity and other blockchain games – it is essential for these businesses to be structured just like any business for tax efficiency and asset protection.
These businesses do not fit neatly within the Australian tax system. Special care is needed to structure them to be tax-efficient and not get a nasty surprise with the impending ATO crackdown on cryptocurrency.
Owning wallets owned by entities
Before anything can be structured, the core moving part of a crypto-based business is the wallet which controls and accesses the crypto assets. It is certainly possible to have a company, trust, or partnership own a cryptocurrency wallet. This can either be:
– a custodial wallet with Binance, Independent Reserve or a variety of other exchanges, registered in the name of the entity (or the trustee in the case of a trust);
– A non-custodial wallet like MetaMask or Trust Wallet, owned by the company or trust and documented as such by a resolution; or
– A ‘cold wallet’ or hardware wallet, like a Ledger or Trezor wallet. Ownership of the wallet can be documented like any piece of physical property.
It will always come down to evidence. All wallets are recommended to be acknowledged in a legal form, such as a trust or director resolution and the accounts of the entity prepared to show the crypto value. It may also impact your ability to claim insurance.
In many ways, accounting is as vital as the legal structuring to show a coherent picture of where the crypto is owned.
Structure basics
The structuring of crypto businesses is the same as traditional businesses in many ways. The tax and asset protection considerations are key.
Often a business is recommended to be carried on in a company to take advantage of the corporate tax rate. The rate is either 25% or 30%, depending on whether the income is business income or capital gains. This is relevant for trading-based businesses, which need to consider if their activities meet the carrying on business tests.
The company will commonly be owned by a trust to allow for income splitting. Care should be taken with accounting for dividends paid in cryptocurrency and dealing with Division 7A issues for director drawings.
Takeaways
Crypto businesses are treated like regular businesses in many ways, with a few specific issues that a lawyer will almost certainly be required. If not dealt with, these issues can cause substantial tax problems where they could otherwise be avoided.
1. Can I require my staff to return to the office?
Generally, employers can require staff to return to the office so long as it is a lawful and reasonable request. It would be unlawful and unreasonable to require staff to return to the office if it is contrary to state lockdown rules and if the employer has not taken adequate steps to provide a safe working environment to safeguard employees from COVID-19.
Further, certain employees have the right to request flexible working arrangements, which may include working from home. This includes employees who have a disability or are over the age of 55, as they may be disproportionately impacted by COVID-19. Employers may only refuse this request on reasonable business grounds.
2. Can I require that all staff be fully vaccinated before returning to work?
Employers can only require their employees to be vaccinated where:
a) A specific law requires employees of a certain industry to be vaccinated (such as a state or territory public health order).
Click here to view to view the complete list of workers required to be vaccinated.
b) An enterprise agreement, other registered agreement or employment contract permits the requirement.
For example, an applicable employment contract or enterprise agreement may contain a “Covid-19 Vaccination Clause” which provides that the employee is required to be vaccinated against COVID-19.
c) The direction would be lawful and reasonable (this is assessed on a case-by-case basis).
For an employer’s direction to be vaccinated against COVID-19 to be lawful and reasonable it must comply with any employment contract, enterprise agreement or other registered agreement as well as any applicable Commonwealth, state or territory laws (for example, anti-discrimination laws).
There are several factors taken into consideration in determining whether a direction to an employee is lawful and reasonable, including:
3. When will a mandate to be vaccinated breach anti-discrimination laws?
By imposing a blanket mandate on employees to be vaccinated against COVID-19, employers need to be cautious not to engage in indirect discrimination. Unlawful indirect discrimination can arise where a group of people are less able to comply with the requirement (for example, because of medical reasons or religious beliefs).
Employers should ensure that any COVID-19 Vaccination Policy implemented contains appropriate carve outs for those with medical or other contraindications to mitigate the risk of discrimination claims.
Note: Each Australian jurisdiction has its own discrimination law(s) and they are not uniform. The differences between the Commonwealth, State and Territory laws will impact what will be considered unlawful discrimination and what exceptions may exist.
4. Can I require my staff to advise me if they have been vaccinated or intend to be vaccinated? Can I ask them for proof?
It is not unlawful to enquire as to whether an employee is/is not vaccinated. However, information about an employee’s vaccination status is sensitive under Privacy Law and employers need to ensure they comply with privacy obligations in collecting such information.
An employer should only direct an employee to provide information about their vaccination status where required/authorised by law and when the employer has lawfully mandated vaccinations in the workplace. In such circumstances, employers are able to require an employee to disclose their vaccination status and require an employee to provide evidence of same.
5. Can I terminate a staff member if they refuse to get vaccinated?
If an employee refuses to comply with an employer’s lawful and reasonable direction to be vaccinated against COVID-19 without a legitimate reason the employee may be subject to disciplinary action, which may include termination.
An employee may have a valid reason on the grounds of medical and health advice not to be vaccinated. Other legitimate reasons for refusal to be vaccinated can also arise on the grounds of the employee’s religious beliefs. Employers should seek appropriate evidence as to the employee’s refusal to get vaccinated (for example, a medical report by a treating medical practitioner).
An employer’s decision to terminate an unvaccinated employee will only be valid to the extent that the original direction on the employee to be vaccinated was lawful and reasonable. As set out in point 2 above, there are several factors considered in determining whether a direction is lawful and reasonable. Prior to a decision to terminate an employee, an employer should ensure they comply with any disciplinary process and consultation requirements to mitigate a claim of unfair dismissal.
6. Is it discrimination to terminate an employee because they are not vaccinated?
Disability discrimination laws require employers to make ‘reasonable adjustments’ for people with a disability. What reasonable adjustments can be made will depend on the facts and circumstances surrounding the employee’s role. An example of a reasonable adjustment that could be made where an employee has a medical reason for not being vaccinated may be to require the employee to undergo periodic testing or another control measure such as wearing a mask.
However, there are circumstances where an employer is not required to accommodate an employee’s legitimate reason for refusal where it would cause an unjustifiable hardship on the employer, for example, employer’s in aged care facilities where the risk of allowing unvaccinated employees on site is too great.
Additionally, it will not be discrimination to terminate an employee where being vaccinated is an ‘inherent requirement’ of their role. This would apply in circumstances where a public health order/direction requires certain groups of workers to be vaccinated.
7. Can I prohibit contractors, customers or other attendees from attending my business premises if they are not vaccinated?
Generally, the owner or tenant of a premises can restrict entry to their premises or impose conditions of entry on those seeking access those premises. However, in choosing whether to allow access or refuse entry to any person, businesses must ensure they do not breach any anti-discrimination laws.
8. Is it discrimination if I refuse entry to someone because they are not vaccinated?
Under disability discrimination laws it is unlawful to discriminate against a person on the grounds of that person’s disability by refusing to allow that person access to or use of a premises that the public is allowed to use.
There is an argument that if a person who is unable to be vaccinated against COVID-19 for medical reasons is refused entry to premises they would be discriminated against on the grounds of disability (this does not apply where a person simply chooses not to be vaccinated against COVID-19 without a medical exemption).
Where a person holds a valid medical exemption in the form currently required by the various jurisdictions and are refused access to premises they could argue that they have been discriminated on the grounds of the medical condition/disability.
9. Can I ask a candidate if they are vaccinated during an interview?
If an employer can establish that being vaccinated is an inherent requirement of the job and the employer can contractually require that a prospective employee be vaccinated against COVID-19, they may enquire as to the prospective employee’s vaccination status/seek proof or evidence of same.
Employers should be mindful of the discrimination principles set out below to ensure any decision not to employ an unvaccinated candidate does not enliven a claim of discrimination.
10. Is it discrimination if I refuse to employ someone because they are not vaccinated?
In circumstances where adjustments to the position to accommodate the unvaccinated employee would cause an unjustifiable hardship to the employer, it would not be considered discrimination and a decision could be made not to employ someone because they are not vaccinated. Additionally, it would also not be discrimination where being vaccinated is an inherent requirement of the role (see question 6 above) or has been mandated in that workplace by the Government. Such circumstances would provide a valid defence to any claim of unlawful discrimination.
11. If I mandate vaccinations, will I be liable to the employee if they suffer illness or medical issues as a result of getting the vaccine?
The Federal government recently introduced the COVID-19 Vaccination Claims Scheme for large claims. This means employers will not be liable where an employee suffers medical issues from the vaccine at a cost greater than $5,000.
For claims under $5,000, employers may be liable for adverse side effects if they mandate the vaccine in the workplace. Under Worker’s Compensation laws an employer may be liable for a ‘personal injury’ arising out of employment. However, ‘injury’ does not typically include mild and temporary symptoms like headache, fever and chills as common sides effects of the vaccine. Therefore, the extent of an employer’s liability will be case dependent.
12. If an employee contracts COVID-19 at work am I liable to them for any damages they suffer?
Worker’s Compensation
Employees will be entitled to worker’s compensation if they contract COVID-19 while carrying out activities induced or encouraged by their employer (for example, travel). Therefore, employers must be mindful when telling employees to enter high-risk COVID-19 settings.
Work Health and Safety
If an employee contracts COVID-19 due to an employer’s failure to provide a safe working environment, the employer may be liable for breaches of workplace health and safety laws. Such liability may arise in circumstances where an employer disregards public health advice.
13. Where can I get assistance?
The Fair Work Ombudsman and State/Territory Government websites are frequently being updated with information to assist employees further.
We recommend employers/business owners seek workplace advice to ensure they adhere to public health orders/directions, registered agreements/workplace instruments and work health & safety regulations. Book an appointment with Chamberlains specialised Workplace Law Team today.
* The information provided in this article is based on the applicable legislation, orders and directions in force as at 20 October 2021.
Miles v Doyle (No 2) [2021] NSWSC 1312
The assessment of damages for historic abuse cases was considered in the recent NSW Supreme Court decision of Miles v Doyle (No 2) [2021] NSWSC 1312. The case highlights the importance of establishing causation in relation to abuse and economic loss, which can be particularly difficult in historic abuse matters where a victim may not develop a recognised psychiatric illness until many years after the actual assault.
In Miles v Doyle, the Plaintiff was abused as a teenager in 1985 by Philip William Doyle, former Kogarah cinema owner, who has been convicted of a series of historical sexual assault charges. The Plaintiff sought damages in the sum of $7 million for the long-term psychological problems he has suffered as a result of the abuse that he claims changed the course of his life entirely. The Plaintiff argued that, were it not for the abuse, he would had had a successful career in the military and then as a commercial pilot. In fact, the Plaintiff did attend Duntroon Military College after school, but he dropped out after only a few weeks. Subsequently his life has not developed in the way that he hoped it might and the Plaintiff is currently unable to work due to psychiatric injury.
In historic abuse matters, the plaintiff bears the onus and must establish the loss for which he or she seeks compensation and the causal connection between those losses and the assaults committed by a defendant. In other words, a plaintiff must establish causation and loss on the balance of probabilities. In Miles v Doyle, Judge Cavanagh held that the Plaintiff had been unable to establish this on the evidence before him.
This was a case where the Plaintiff did not develop any recognised psychiatric illness until many years after the abuse when he was compelled to relive and confront the events in criminal and civil proceedings. The Plaintiff had been unable to provide any medical records or reports for the period from 1987 to 2010 indicating that he had suffered from any psychological condition as a result of the abuse until this later date. Judge Cavanagh therefore did not accept that the Plaintiff’s military career come to an end as a result of the sexual assault, stating that ‘Causation is not established by establishing only that there is a possibility that the events would not have happened but for the tortfeasor’s conduct.‘ (at [191]). It was held that, in reality, the Plaintiff made other career choices that, on balance, were not related to the abuse perpetrated against him.
As a result, the Plaintiff received a total of just under $1.3 million, rather than the $7 million he had argued he was entitled to. This included a sum of $35,000 for aggravated damages. Whilst Judge Cavanagh held that the Plaintiff had developed a psychiatric injury only later in life, he considered that the Plaintiff had experienced distress, hurt feelings and shame throughout his whole life as a result of the abuse whereby an award of aggravated damages was justified.
If you would like to read the case yourself, click the link here https://www.caselaw.nsw.gov.au/decision/17c7c09f9206b886b6a5c354
Part 1: A Broad Overview of Bankruptcy
‘As privileged professionals, who live by the words of the English language, lawyers have a special duty to be clear in what they say and write’[1]
When discussing any area of law, precision is essential.
A common source of confusion amongst both lawyers and the public generally is the difference between insolvency and bankruptcy. Though you may see the terms being used interchangeably (especially in legal dramas), the two concepts are distinct.
Insolvency and Bankruptcy: A Distinction
Insolvency is defined by the Corporations Act 2001 (Cth) as the inability to pay one’s debts as and when they fall due.[2]
There are two types of insolvency: personal and corporate insolvency. Whilst it may appear arbitrary, this classification is important as the two areas are governed by different legislative requirements.
Personal insolvency refers to individuals who become insolvent. Insolvent individuals may be declared bankrupt and must comply with the provisions of the Bankruptcy Act 1966 (Cth).
Corporate insolvency refers to insolvent companies. Insolvent companies may enter liquidation and are required to comply with the Corporations Act 2001 (Cth).
Insolvency and Bankruptcy: Jurisdictional Requirements
Bankruptcy:
As mentioned, personal insolvency is governed by the Bankruptcy Act, which includes both the Bankruptcy Schedule 2 rules and the Bankruptcy Regulations 1996 (Cth).
This regime is administered by the Australian Financial Security Authority (AFSA).
Some important key players in bankruptcy include:
The key courts for bankruptcy matters are:
Insolvency:
Insolvency is governed by the Corporations Act 2001 (Cth) which includes both the Corporations Schedule 2 rules and the Corporations Regulations 2001 (Cth).
This regime is primarily overseen by ASIC, although the Court has considerable jurisdiction under s 57AA of the Corporations Act.
Key Takeaway:
Whilst this distinction between personal and corporate insolvency may initially appear arbitrary, it is indeed important. This distinction determines both the jurisdiction and legislative requirements applicants will need consider and adhere to in their claim. Moreover, an understanding of this distinction will make reading any case law or media release far easier.
Part 2: Voluntary Bankruptcy
‘Insolvency is not a very thrilling or amusing subject’,[3] but ‘uninteresting as it may be, it is nevertheless a very important subject area’[4]
Having discussed the differences between corporate and personal insolvency, it is useful to now consider how a person can become bankrupt. There are two ways this can happen.
First, by a debtor’s petition, also referred to as voluntary bankruptcy.
Second, by a creditor’s petition, also referred to as involuntary bankruptcy.
For simplicity, this article will only consider the former type.
Voluntary Bankruptcy
Debtors may voluntarily choose to go bankrupt. In practice, this is a common course of action with 90% of all bankruptcies being voluntary.[5]
Debtors who are unable to pay their debts essentially have two options: present a ‘debtor’s petition’ or file a ‘debtor’s intention to present a debtor’s petition’.
Debtor’s Petition
A debtor’s petition is presented to the Official Receiver. This can be done by an individual debtor,[6] joined debtors,[7] or by partnership debtors.
Assuming an individual debtor’s petition, the debtor needs to provide the following documentation:
In practice, debtor’s petitions are ordinarily uncontroversial and typically accepted. However, the Official Receiver does have discretion under s 55(3) to reject a petition albeit usually for non-compliance with the administrative requirements.
Upon acceptance of a debtor’s petition, the debtor is formally bankrupted.
Declaration to Present a Debtor’s Petition:
The Bankruptcy Act has provisions which grant debtors breathing space to consider their options in dealing with bankruptcy, including a 21-day moratorium against civil debt recovery processes.[8] Not all debtors are permitted to complete this declaration, with certain classes of debtors specifically precluded from doing so, for example, debtors against whom a creditor’s petition is pending.[9]
However, to access these protections, debtors must provide the Official Receiver with:
Debtors who complete this declaration should receive information on the consequences of being declared bankrupt as well as alternatives they can pursue.[10] Despite the clear benefits of completing this declaration, in practice debtors often do not take advantage of this scheme, with only 511 declarations made between 2014-15 (out of a total of 17,000 bankruptcies).[11]
Key Takeaway:
Voluntary bankruptcy is commenced by the debtor themselves. There are two ways this can be achieved: through a debtor’s petition or through a declaration of intention to present a debtor’s petition. Both ways have their own respective advantages and limitations. To achieve the best outcome in any bankruptcy matter, it is essential to consult a professional who can tailor their advice to your unique financial position and desired outcomes.
Part 3: Involuntary Bankruptcy
‘Many, and possibly most, of the petitions in the bankruptcy lists of this country seek the bankruptcy of honest, albeit unbusinesslike or naïve, people whose indebtedness springs from causes which evoke sympathy rather than indignation.’[12]
In the previous article we discussed voluntary bankruptcy (through a debtor’s petition). This article will discuss the second type of bankruptcy: involuntary bankruptcy through a creditor’s petition.
Creditor’s Petition
An unpaid creditor may ‘petition’ (apply) the court for a sequestration order against the debtor. The effect of this order is that the debtor will be declared bankrupt and a trustee will be appointed to their estate.
Approaching the Court:
Only the Federal Circuit Court and the Federal Court can make sequestration orders. However, the other courts do have a general ‘sequestration’ power to enforce contempt orders for example, under r 55.13 Supreme Court Rules 1970 (NSW).
Which Creditors Can Present a Petition?
Any creditor, be it an individual, corporate, or joint creditor may present a petition to the courts.[13] This petition can be against an individual debtor,[14] a limited partnership,[15] or against joint debtors.[16]
Petition Formal Requirements:
Creditors must satisfy the following three criteria in their petition:
What are the acts of bankruptcy?
Conceptually, the acts of bankruptcy provide evidence that the debtor is in fact insolvent.
There are 14 acts of bankruptcy under s 40 Bankruptcy Act 1966. A creditor only needs to establish one of these acts their petition.
Two of the more common acts of bankruptcy include:
The Effect of a Sequestration Order
It is important to remember that the making of a sequestration order is a matter for the court’s discretion.[19] Given the seriousness of bankruptcy and its legal ramifications for the debtor, the courts do not make sequestration orders lightly.[20]
If a sequestration order is made, then the debtor is formally bankrupted, and a trustee will be appointed to manage their estate for the benefit of creditors. Attached to a finding of bankruptcy are several legal and personal repercussions which will be considered in the next article.
Part 4: Life Post-Bankruptcy
In season 4 of The Office (US), the show’s protagonist, Michael Scott, encounters financial difficulties and receives questionable legal advice from his colleague, the illusive Creed Bratton:
Creed Bratton: Bankruptcy, Michael, is nature’s do-over. It’s a fresh start. It’s a clean slate.
Michael Scott: Like the Witness Protection Program.
Creed Bratton: Exactly.
Whilst clearly satirical and purposely exaggerated for comedic effect, this exchange does reflect the misconception that declaring bankruptcy is a ‘cure-all’, absolving debtors of all their liabilities. Unfortunately, this is simply untrue.
Declaring bankruptcy is a significant decision. Indeed, it is a decision carrying profound legal and financial consequences which may be irreversible. These consequences are extracted below.
1. Employment Restrictions:
A bankrupt is prohibited from managing a corporation or serving as a direct without the court’s approval.[21]
2. Travel Restrictions:
A bankrupt must relinquish their passport to the trustee and is unable to travel without their consent. It is an offence to travel overseas (or even do preparatory acts such as purchasing a ticket) without consent. Breach of this offence carries a maximum penalty of three years’ imprisonment.[22]
3. Credit Restrictions:
During the bankruptcy period, a bankrupt cannot obtain credit above the prescribed amount (presently $6,017)[23] without disclosing their bankrupt status to the lender. Once bankrupted, your name will permanently appear on the National Personal Insolvency Index (NPII) and credit reporting agencies will keep a record of your bankruptcy for either:
4. Obligation to Assist Trustee:
A bankrupt must, unless excused by the trustee or prevented by illness, provide all books (including those of bankrupt’s associated entity) relating to their examinable affairs to the trustee.[24] Further, a general obligation exists requiring the bankrupt to ‘aid to the utmost of his or her power in the administration of his or her estate‘.[25]
5. Obligation to Make Contribution Payments:
If your income exceeds the prescribed amount (currently, $60,515.00 after-tax, no dependents), you are be required to make compulsory payments to the trustee. These payments can be then used to pay off your debts. The amount to be paid is determined by the trustee.
6. Relinquishing Assets
A trustee can sell your assets to pay off your debt. Certain assets are not available to the trustee (referred to as ‘exempt property’) and include:
An interesting example of what constitutes ‘tools of the trade’ is Vaughn v Official Receiver,[26] where a bankrupted wine presenter attempted to argue that his 115 wine bottles were trade tools. Unsurprisingly, the Federal Court dismissed this and concluded that trade tools were an ‘instrument of manual operation’.
Key Takeaway:
The period before declaring bankruptcy has been aptly referred to as a ‘financial sweatbox’.[27] Whilst it is true that bankruptcy can offer respite from this sweatbox, it is by no means a cure all. The aim of this article was to demonstrate the consequences that flow from bankruptcy and emphasise the importance of carefully considering whether bankruptcy is the best solution to your financial situation.
The Bankruptcy Bible – List of Sources
If you have any questions or concerns please contact Chamberlains and talk to one of our insolvency and restructuring lawyers today.
In attempting to arrive at the correct amount of tax that needs to be paid by taxpayers, the Commissioner of Taxation has a number of tools at their disposal, one of which is a written notice issued under Section 353-10 of Schedule 1 to the Tax Administration Act 1953 (Cth), more commonly known as a 353-10 notice.
The notice requires the recipient (which may either be the taxpayer or a third party that has information about the taxpayer) to:
A 353-10 notice is a powerful tool that allows the Commissioner to compel the recipient to produce information that might assist with the Commissioner’s inquiries into a taxpayer’s affairs. It is often used by the Commissioner to obtain a better understanding of the:
Importantly, there are very few grounds to resist these notices.
Failure by a person to answer questions or provide information requested by the Commissioner is considered a strict liability offence and may be subject to civil penalties.
The short answer is yes, there are certain communications which are protected because of the nature of the relationships that exist between the recipient and their advisor. Some common examples are documents covered by:
You should take care when attempting to resist an ATO information notice by relying on LPP or otherwise. In recent cases the ATO has challenged this through the courts and has been fairly successful. On the other hand, providing the documents with a valid LPP claim could waive LPP with severe non-tax implications.
Over 600 journalists from 177 countries, as part of the International Consortium of Investigative Journalists (ICIJ), recently released more than 11.9 million files containing the financial activities of some of the worlds richest and most powerful people. Like the previously released Panama and Paradise Papers, the Pandora Papers reveal how the ultra wealthy hide their assets and minimize tax through complex cross border offshore networks.
How do they do it?
The Pandora Papers spotlights the booming offshore financial services industry, where shell companies in tax havens are set up using specialist firms, who are paid to establish and run the companies on behalf of the wealthy. These specialists will provide addresses and names of paid directors who appear on the company records but who may not have any real connection with that company. Assets owned by offshore companies in these jurisdictions can be hidden through layers upon layers of trusts and companies, where it can be hard to find the true beneficial owner of an asset.
These offshore companies exist in name only, have no staff or office and are prominent in jurisdictions such as the Cayman Islands, Panama, Switzerland, the British Virgin Islands and Singapore. The term ‘offshore’ simply means that these companies or territories have favourable rules and regulations allowing persons to easily set up a company in their jurisdiction, have laws that make it difficult to identify the owners or beneficiaries of companies and trusts and they have a low or no corporate tax rate.
Is this Legal?
In Australia, it is legal to be the beneficiary of an offshore company or trust. As an Australian tax resident, you must report your worldwide income as part of your assessable income, on your Australian tax return. It is illegal in Australia to fail to report this income.
Special rules can apply for foreign companies and trusts controlled from Australia. These include the Controlled Foreign Company (CFC) rules, transferor trust rules, or simply a finding that an entity is in fact a resident of Australia. This was the outcome in Bywater Investments v FCT [2016] HCA 45, where the central management and control of entities was in Australia.
What is the ATO’s position?
The ATO has released a statement indicating that it will be analysing the information to identify any possible Australian links and evidence of Australians engaging in tax evasion. ATO Deputy Commissioner Will Day stated there are a number of legitimate reasons that someone may have an offshore bank account or structure and that most Australians are doing the right thing. However any attempt to hide ownership interests or financial misdoings offshore will be investigated by the ATO.
If you have any questions about existing or proposed offshore companies, tax havens, or your reporting obligations, Chamberlains Law firm has a team of international tax specialists who can assist with all your structuring questions.
“Sham contracting” occurs when an employer misrepresents or disguises the engagement of a person as an independent contractor when they are an employee.
The obligations that an employer owes its workers are defined by the worker’s status as an “employee” or “independent contractor”. All employees are entitled to the National Employment Standards, which set out the 11 minimum employment entitlements, including maximum weekly hours, annual leave, personal leave and notice for termination. Whereas an independent contractor is not necessarily owed any minimum entitlements and their benefits and entitlements are determined by agreement.
Many employers, therefore, prefer to engage independent contractors rather than employees as this limits their costs and obligations. However, where employers can find themselves in hot water is when they go so far as downplaying employment by understating their control over employees, or by entering into labour-hire agreements to avoid direct employment.
Treading the fine line between employee and independent contractor has potentially onerous consequences for employers under the Fair Work Act 2009 (Cth) (FW Act).
Employee or independent contractor?
Simply labelling a worker as an “independent contractor” will not define their employment status. Rather the circumstances of the relationship must be analysed to determine if the worker is considered an employee or independent contractor.
If the issue is brought before the Court it will apply a multi-factorial test to determine the true nature of the relationship, including, but not limited to assessing:
Based on the circumstances of the engagement and a balance of the above factors the Court will determine the status of a worker. In circumstances where a worker who was purported to be an independent contractor is determined to be an employee, the employer may be liable under the sham arrangements provisions.
What are the sham arrangements provisions?
Sections 357 – 359 of the FW Act are designed to prevent employers from disguising employment relationships as independent contracting arrangements. The provisions prohibit employers from:
Ramifications
If the Court determines that an independent contractor is really an employee, the consequences for employers can include an order by the Court for compensation or reinstatement into employment as well as penalties of up to $66,000 for corporations or $13,320 for individuals.
Additionally, employers may also be liable to tax fraud implications. In this respect, the Fair Work Ombudsmen works closely with the ATO in addressing sham contracting.
Lessons for Employers
Employers have a responsibility to ensure that all their workers are classified correctly. Determining whether a worker is an employee or an independent contractor can be difficult given the number of facts to consider. Employers should exercise care when engaging anyone as an independent contractor and seek legal advice when entering into an independent contracting arrangement.
The terms of the actual contract will be crucial and it is important that the document is properly drafted to take into account the relevant factors and avoid uncertainty. Additionally, employers should review their independent contractor arrangements from time to time to ensure the relationship has not changed.
Contact the Workplace Law Team at Chamberlains Law Firm for any questions and concerns.
Alison McNamara has been named as a finalist in the Lawyers Weekly Women in Law Awards 2021 for Wellness Advocate of the Year.
The Lawyers Weekly Women in Law Awards is the benchmark for excellence, recognising the outstanding women influencing the legal profession in Australia displaying key leadership qualities and providing a role model for future female leaders in law to aspire to.
This incredible event was created to celebrate the women taking charge and influencing change within the industry and provides a platform for women leading in their field to be acknowledged for their achievements and contributions to the industry as we collectively join the charge for a more gender-balanced world.
The finalist list, which was announced on 12 October 2021, features 295 high-achieving professionals within the legal industry, across 31 submission-based categories.
“Recognising women that make up the legal profession remains of utmost importance to Lawyers Weekly and is something we’re committed to encouraging and facilitating both now and into the future,’ said editor Emma Ryan.
“We’re incredibly humbled to be able to provide a platform to showcase the significant impact being made from women across all areas of the law.
“Congratulations to all of the deserving finalists. We’re looking forward to celebrating your success soon.”
Alison McNamara, Director at Chamberlains Law Firm, said that she was humbled to be recognised and proud to be named as a finalist in the Women in Law Awards 2021.
“Chamberlain’s recognition for our outstanding contribution to the law industry reinforces the strength of our service and dedication to provide a quality and positive experience,” she added.