The latest privacy legislation changes do affect your business …you are not exempt…

On 12 March 2014 the manner in which businesses across Australia can legally deal with their customers’ personal information, like taking a customer’s details when responding to a quote enquiry, has dramatically changed.

The reforms to the Privacy Act 1988 (Cth) (‘Privacy Act’) significantly impact even the most basic practices in your business.

If your business fails to comply with these changes, you may face penalties of up to $1.7 million.

What are the changes?

The reforms introduced thirteen Australian Privacy Principles (‘APPs’) which cover the management, use, quality, access and correction of personal information. The APPs replace the former National Privacy Principles.

Each and every day, you will no doubt have contact with a customers’ personal information such as their name, phone number, residential address and email address. The reforms now impose greater restrictions on when and how you may collect, use disclose and store this information.

If your terms of payment are more than seven (7) days, you may also be caught by the revised credit reporting provisions. These provisions impose extra requirements on how you must deal with your customers’ account information.

In addition, if you provide credit card facilities, you will need to comply with the Payment Card Industry Data Security Standard. This is another ‘can of worms,’ so to speak, in relation to which we shall provide an update shortly.

How will the changes affect my business?

The reforms which are likely to apply to your business are as follows:

  1. You must now have both a privacy policy and a credit information management policy. These documents must be readily available or free of charge to your customers. The policies must set out how and why you collect an individual’s personal information, how it is used once collected, whether any of this information will be disclosed to overseas recipients (such as a cloud based data storage facility) and whether you will disclose an individual’s personal or account information to a credit reporting body, such as Veda. These policies must also outline your complaints handling process.
  2. Your business is also required to take proactive steps to implement practices and procedures to appropriately manage personal information you collect. This involves training your staff on the terms of the privacy and credit information management policies and establishing internal procedures to manage privacy risks. For example when you collect personal information from a customer (such as when taking their details over the phone), your staff are required to advise them of certain matters, including why you are collecting their information, whether the collection is required or authorized by law and where they can access your privacy and credit information management policies.
  3. You are only permitted to collect information from a customer that is reasonably necessary for you to provide them with your services. For example, you may not require a person’s date of birth to carry out work for them. Asking for this information may therefore constitute a breach of the Privacy Act. In contrast, it may be necessary to collect the person’s email address to provide them with a quote and this collection will therefore be permitted.
  4. Once you have collected personal information from an individual, you may only use the information for the purpose for which it was collected. For example, the information you have collected from a customer to provide them with a written quote may only be used to do that, unless you have the customer’s consent.
  5. Direct marketing is prohibited unless you satisfy an exception.
  6. Another significant change relates to disclosing information to overseas recipients. If, through cloud software, email backing up or any other means, you will disclose personal information to an overseas entity, you are required to make sure the overseas recipient, such as the cloud backup, does not breach the Privacy Principles. If the overseas entity does breach the Principles, your business may be responsible for their breach.

Please contact us on 1800 922 609.

Does the Goods and Services Tax (GST) apply to the sale of a business?

The obligation to pay GST depends on whether the seller is registered (or required to be registered) for GST purposes. If the seller is not registered and not required to be registered, then generally no GST will be payable on the contract. If the seller is registered they are obliged to pay the GST to the Australian Tax Office, unless some special exemptions apply.

If the buyer is registered for GST, they can claim the GST component in their next business activity statement. This can cause a cash flow problem for the buyer in having to fund the GST even if only for a short period. Stamp duty is also increased because it is payable on the purchase price inclusive of the GST.

A “GST-free” concession may apply to the business contract. If the seller supplies to the buyer all the things that are necessary for the continued operation of an enterprise and the seller carries on the enterprise until the date of completion, and the parties agree in the contract to claim the “going concern concession”, then this concession may apply.

This means that no GST is payable and the seller is obliged to provide all things to enable the buyer to continue the business. In most businesses, this will include supplying a fixed term lease of the premises, although in certain businesses such as a pie van, a lease of the business premises need not necessarily be required to enable the business to continue to trade.

It is vital that you take advice from your accountant over the GST implications before signing the contract.

Please contact us on 1800 922 609.

Porn in the workplace is not an automatic sacking offence

Fair Work Australia has ruled in favour of three Victorian postal workers who made unfair dismissal claims, after being sacked for sending explicit material at work.

The workers were caught using the Australia Post email system to distribute sexually explicit material around their workplace. Fair Work considered the 3 terminations to be unfair, because the Dandenong Postal Centre hadn’t taken any action to deal with inappropriate workplace behaviour that had developed over many years.

Fair Work is expected to hold a hearing behind closed doors later this week to decide if the three should get their jobs back.

What does this mean for employers?

The case is a wakeup call to all employers, including contractors, to have a set of behaviour standards in place, properly convey them to their workers, and enforce them consistently across the workforce. A contractor cannot ignore behaviour such as this for years, and then suddenly sack particular workers as a warning or deterrent to the rest of the workforce.

In response to this decision, workplaces should consider tightening their policies about the use of their business email systems. Solid ground rules should be set, stating that the sending of such material is serious misconduct and repeated offences could lead to dismissal.

Although this specific case involved the office email system, the same principles could be applied to the situation of workers sending sexually explicit material to each other via their smart-phones during work time. Policies involving the use of mobile phones, laptops and other such equipment during working hours, should also be scrutinised by employers, and then consistently enforced across a workplace.

Sexual harassment consequences

In particular, employers and contractors should be vigilant about workers sending explicit material to their colleagues because some workers could consider it sexual harassment. There is then the possibility of an employee who feels harassed making a claim against both their work colleague who sent the email, and the employer for not managing the said behaviour. What might be harmless to one person could be highly objectionable to another.

No “green-light” to porn in the workplace

Employees shouldn’t regard Fair Work’s ruling as a “green light” for sharing this type of material in the office email system. Rather, the distribution of explicit material doesn’t seem to be regarded as unacceptable to the social norms, in the way theft from the workplace is usually regarded as an automatic sacking offence.

If you’re unsure about whether your workplace policies adequately address the above issue, or any other workplace matters, contact McKays Solicitors for advice and assistance to steer your business in the right direction.

Brisbane Office – Ian Heathwood / Louise Nicol
Mackay Office – Cyndel Muscat
Gold Coast Office – Scott McSwan

Contact us on 1800 922 609.

I have set up a company to own and operate my business – so why do I need to worry about asset protection?

Having set up a company to operate the business is often a great first step to limit your personal liability (although it may not produce the best tax result with respect to capital gains down the track) – but even with a company you are still at risk.

Personal negligence – You are personally liable to compensate anyone who has suffered loss as a result of your personal negligence. This applies even if you have set up a company to carry on the business and you are merely an employee or working director of the company.

Personal guarantees – Even if you set up a company to operate your business to limit your personal liability we all know that banks, landlords, trade suppliers and others will not deal with you unless you, the director, sign a personal guarantee. If the business fails then you are still liable for any liability you have guaranteed.

Insolvent trading by a company – If you allow your company to trade when it cannot pay its debts then, as a director, you may be personally liable to the creditors even if you haven’t personally guaranteed them.

Alleged breaches of Work Health and Safety Regulations – There is a tendency for the authorities to take the view that if an accident occurs then someone must be at fault. The directors of a company can often face large punitive fines – even if the injury occurs, not to an employee of the company, but a visitor to the workplace.

Directors of corporate trustees – There has been a recent court decision which found that the directors of a company that is trustee of a trust are personally liable for the liabilities of the trust so that, if there are insufficient trust assets, a director’s own assets may be used to meet the debt.

Unpaid PAYG tax, unpaid company tax, unpaid superannuation – These can result in personal liability for the directors.

For more information call us on 1800 922 609.

Who grants intellectual property rights?

In Australia, patents, trademarks, designs and copyrights have been Commonwealth functions since Federation. Some IP rights are automatic while others are granted only after application and examination against the relevant criteria by government agencies:

  • IP Australia administers patents, trademarks, design and plant breeder’s rights with an examination and registration process
  • The Attorney-General’s Department administers the legislation for automatic rights to copyright and circuit layout rights

Monitoring and defending your rights

Once you own IP, you are responsible for monitoring the way it is used and protecting it against infringement. This means you must be diligent in appropriately safeguarding and maintaining secrecy, communicating your legal rights and if necessary, defending your rights through legal action. This is to ensure that only you can turn your ideas into a commercial reality.

Strategies for protection and exploitation

You can protect your IP by using one or a combination of the following strategies:

Commercial strategies

  • Trade secrets to keep processes or formulae secret
  • Confidentiality agreements to protect proprietary knowledge
  • Rapid production and development for products with a short life span

Registered rights

  • Patents – for inventions for new or improved technology
  • Trademarks – for distinguishing your goods and services from other traders
  • Designs – for the appearance of products
  • Plant breeder’s rights – for new plant varieties

Unregistered rights

  • Copyright – for works of art, literature, music, films, broadcasts and computer programs
  • Circuit layout rights – for integrated circuits and computer chips

Legal Protection

You can take action under common law for infringement of trade secrets, passing off of trademarks and breach of confidentiality agreements.

Legal protection of IP is also covered under consumer protection (fair trading) legislation in the Trades Practices Act.

For more information call us on 1800 922 609.

What actually happens to my assets if I go bankrupt?

You stand to lose any assets in your own name such as your house, investment assets, your motor vehicle etc. This includes any shares you own in any private companies. You may even lose some of your superannuation entitlements.

You may have to contribute a share of your income to your creditors. The extent to which you have to contribute depends on a number of factors including the number of family members who are financially dependent on you. Your source of income may be affected as your bankruptcy may result in termination of a partnership or affect your entitlement to carry on a trade or profession.

You may lose any inheritance that you receive during your bankruptcy. Property that is inherited becomes available to your creditors. This is a good reason why you should also ask your parents or anyone else who may leave you an inheritance to review their wills so as to not leave property directly to you but to leave it to you as a trustee of a testamentary trust.

For more information call us on 1800 922 609.

Power of Attorney and Enduring Power of Attorney: Do you know the difference?

Unfortunately in the fast paced world we live in, accidents, serious illness, long term physical or brain injuries are all too common. Can you afford to be one of those people who think “it will never happen to me”? A Will operates on your death. An Enduring Power of Attorney operates during your life, where you or your partner are injured or become too ill to make financial and health decisions for yourself or your children.

What is a power of attorney?

By signing a power of attorney you may grant someone (your attorney) the legal power for that person to sign or take some action on your behalf.

Why give someone your power of attorney?

In some circumstances you may be unable to sign documents yourself; you may be overseas and wish to have someone to have power to manage your affairs in your absence; you may be selling a house but be unavailable and want someone to sign the transfer papers on your behalf and/or you may become incapable and need someone to manage your affairs.

What is an “enduring” power of attorney?

An ordinary power of attorney is useless if you lose your ability to make decisions for yourself because your attorney must act on instructions from you, which you are no longer able to give. This also means that you cannot use an ordinary power of attorney to appoint someone to make decisions about your health.

An enduring power of attorney between you and your partner and/or a trusted relative or friend will give someone of your choice the power to act on your behalf – even if you lose capacity to act for yourself. The power “endures” throughout the period of your incapacity.

For more information call us on 1800 922 609.