Case law has consistently demonstrated the importance of procedural fairness when conducting workplace investigations. Workplace investigations which are not carried out in a robust and thorough way can result in headaches for employers, irrespective of their best intentions to address inappropriate behaviour, or cultural or systemic issues within their organisation. Where misconduct is reportable to a regulator such as the Victorian Institute of Teaching or Commission for Children and Young People, organisations may face additional scrutiny of investigation findings and whether the process was procedurally fair. In this article we highlight some key cases that demonstrate the pitfalls for employers when investigations are not carried out with using a robust, objective and thorough investigation process.

Robert Crook v CITIC Pacific Mining [2023] FWC 2446

Mr Crook alleged he was unfairly dismissed by CITIC Pacific Mining Management Pty Ltd (CITIC) after one of his female colleagues made a complaint alleging that during an end of shift bus ride, Mr Crook initiated an explicit conversation with other employees in the area where she was sitting. She further alleged that:

• Mr Crook exposed her to explicit images on a mobile phone while passing it to another male colleague; and
• on a separate occasion, Mr Crook stared at her in a ‘lewd manner’ and remarked to other employees, ‘Cooore look at that’,
  (together referred to as ‘the Allegations’).

Mr Crook was asked to provide an immediate written response in an initial meeting. Following an investigation and two further meetings, his employment was terminated.

The Fair Work Commission (FWC) found that the process followed by the employer was “deeply flawed”, “deficient” and “lacked rigour”, and therefore the employer did not have a valid reason for termination. In reaching this finding, Deputy President O’Keefe noted the following:

• the complainant and a witness were interviewed together, which had the potential to taint the evidence;
• the Allegations put to Mr Crook were somewhat imprecise;
• witnesses named by Mr Crook were not interviewed;
• CITIC did not seek to gather and review data which may have assisted with its investigation, including swipe card data, and relied heavily on the complainant’s account;
• Mr Crook sought to provide evidence, some of which supported his position and none of which corroborated the Allegations, however CITIC said he was not allowed to provide it;
• there was over three months between the date of the alleged incident and the investigation; and
• the evidence available to CITIC did not support the findings upon which the decision to terminate Mr Crook’s employment was made.

The FWC found Mr Crook was unfairly dismissed and ordered reinstatement, continuity of service and restoration of lost pay.

Kumar v Opal Packaging Australia Pty Ltd [2023] FWC 2090

Mr Kumar worked as a machine operator for Opal Packaging (Opal) for almost 30 years. Opal alleged that Mr Kumar failed to follow the proper ‘lock out tag out’ (LOTO) procedure when operating conveyor belt machinery, and that a failure to comply with this procedure could have had significant safety implications, such as injuring or even killing Mr Kumar or other workers.

Opal conducted an internal investigation into the alleged conduct. Following a week-long investigation conducted by an internal workplace specialist, Opal concluded that Mr Kumar had not complied with the LOTO procedure and terminated his employment on the basis of serious misconduct. Mr Kumar made an unfair dismissal application to the FWC.

The FWC found that Opal did not have a valid reason for Mr Kumar’s dismissal and identified a number of deficiencies with the investigation process. Those deficiencies included that the investigator:

• relied on unreliable records including witness interviews that were incorrectly recorded;
• posed leading questions that presupposed that Mr Kumar had engaged in wrongdoing and/or assumed that a breach had already taken place;
• relied on an apology made by Mr Kumar to his manager as an admission of wrongdoing without further context;
• failed to provide Mr Kumar with relevant material forming the basis for his decision before making findings, which was a requirement of the process set out in the applicable enterprise bargaining agreement;
• relied on several previous breaches of the LOTO procedure to suggest a pattern of behaviour that increased the likelihood of Mr Kumar engaging in the breach that was the subject of the investigation, without providing Mr Kumar an opportunity to contextualise the previous breaches. These breaches were found to have been unlikely to have occurred, which highlighted the risks of relying on tendency evidence as part of an investigation; and
• made errors in relation to the date of the alleged LOTO procedure breach which the FWC found demonstrated a lack of attention to detail given the seriousness of the allegation.

These deficiencies undermined the reliability of the investigator’s report and findings. As such, the FWC found Mr Kumar’s dismissal was unfair and ordered reinstatement and restoration of lost pay.

Mark Andrawos v MyBudget Pty Ltd [2018] FWC

Mr Andrawos was employed by MyBudget as a Personal Budget Specialist. Over a period of time, Mr Andrawos struck up a friendship outside of work with a man named James, who in December 2017 received a large inheritance. Mr Andrawos became concerned about James’ spending. He encouraged James to sign up for a MyBudget account, and subsequently advised him to transfer the remaining $90,000 of his inheritance into a MyBudget account with him as a co-signatory, so James could not access or spend that money on his own.

MyBudget undertook an investigation following a complaint by James’ mother. Mr Andrawos’ employment was subsequently terminated for serious misconduct. Mr Andrawos made an unfair dismissal application to the FWC.

The FWC found breaches of the Code of Conduct and Mr Andrawos’ employment duties were valid reasons for termination. However, the Commission found there was evidence that MyBudget had already decided to terminate Mr Andrawos’ employment before the investigation had taken place, and Mr Andrawos was given an opportunity to respond in form and not in substance. That evidence included the following:

• at the time Mr Andrawos was suspended pending investigation into the complaint, the Human Resources Manager had formed the view that the conduct was likely to be serious and wilful misconduct;
• Mr Andrawos was prevented from providing information about his relationship with James and his mother before he was suspended;
• MyBudget initially gave Mr Andrawos only 24 hours to respond to the allegations, which indicated it had only a ‘limited interest’ in his explanation;
• despite Mr Andrawos requesting them, MyBudget failed to provide him with copies of telephone recordings and the transcriptions of those recordings that it relied on as evidence of misconduct. While it may not always be appropriate to share recordings due to obligations related to privacy and surveillance, here, the FWC found that the recordings provided evidence of breach but also evidence of mitigation, and MyBudget’s failure to make them available was evidence of the employer’s propensity to focus on breach at the expense of explanation and mitigation;
• the investigator was not made aware of Mr Andrawos’ claim that James’ mother had made accusatory and threatening statements to him the night before she made her complaint;
• MyBudget did not seek out further information after it interviewed Mr Andrawos, even though he provided information that was not known to it at the time, which the Commission described as a “poor decision”; and
• at no stage did MyBudget speak to James, which the FWC criticised as “especially unfair”.

Having found substantial mitigating factors and that the failure to provide procedural fairness had a ‘material impact’ on the decision-making process, the FWC ultimately concluded that the dismissal was harsh, even if it was not unjust or unreasonable.

Key Takeaways

These cases show why it is critical that employers undertake a robust and thorough investigation into alleged misconduct. This is particularly relevant where the investigation findings may lead to disciplinary action up to dismissal.

When considering potential misconduct, employers should take care to:

• gather all relevant available evidence;
• consider that evidence with an open mind;
• avoid making pre-determined decisions until the investigation is complete and findings have been made;
• ensure all relevant evidence is provided to the respondent in a timely manner having regard to relevant policies and industrial instruments (unless there is a lawful and reasonable excuse for not providing that information e.g. due to breaches of privacy or surveillance laws);
• ensure that investigators have the appropriate skills or qualifications to consider the relevance and weight of evidence, including tendency evidence.

How we can help

Our Workplace Relations and Safeguarding teams can assist with managing workplace and safeguarding investigations into allegations of potential misconduct in a procedurally fair manner with minimal risk.

Contact us

Please contact us for more detailed and tailored help.

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Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.

Is your not-for-profit (NFP) contemplating a merger? This is part three of a five-part article series that will offer some practical guidance to your board or merger advisory committee. Subscribe to receive the remaining articles in the series.

While each not-for-profit (NFP) merger is unique, most NFP mergers will tend to follow some, or all of the steps set out below. This article provides an overview of those steps, which help NFPs navigate the complexities of a merger whilst ensuring purpose alignment, legal compliance and operational continuity throughout the process.

1. Confirm alignment

Ensuring purpose and cultural alignment is a crucial step for parties considering a merger.

• Purpose: As a preliminary step, NFPs and registered charities proposing to merge must consider whether there is purpose alignment. An organisation’s purpose is principally ascertained from the purpose (sometimes referred to as “objects”) set out in its governing document. Registered charities must be able to demonstrate that they are meeting the requirements of Governance Standard 1 – which includes working towards their charitable purpose. Similarly, NFP’s that are not registered charities must act within the scope of their purposes.

If there is insufficient purpose alignment, merger types that maintain separate incorporation of the merging parties may be appropriate (such as one entity becoming a subsidiary of the other entity). Purpose alignment will be more important if the merger is likely to involve a significant transfer of assets from one entity to another (such as where one entity transfers its assets, operations and employees to the other before closing).

Additionally, NFPs that are endorsed as a Deductible Gift Recipient (DGRs) must ensure they are acting in a manner that is consistent with the conditions of their endorsement. For example, if a DGR is wound up in the course of a merger, it is prohibited from transferring its assets to another entity that is not endorsed as a DGR.

• Culture: A merger can look great on paper but fail due to lack of cultural alignment. Culture encompasses an organisation’s values, management practices, and operational norms. Parties that propose to merge should evaluate how each NFP’s mission and vision are reflected in the NFP’s daily practices and decision-making processes. The assessment of cultural alignment includes both a structured and an informal element. The structured element is discrete and involves obtaining and reviewing formal data such as staff surveys, retention rates, exit interviews and net promoter scores. The informal element is continuous and will be ongoing until any merger agreement becomes unconditional. This informal assessment includes observations (both at board and management level) gleaned from engagement with the prospective merger partner through the merger process – Is there transparency? How is conflict resolved? How are challenges addressed? Are behaviours consistent with the organisation’s espoused values?

2. Identify the appropriate merger type

The next step is to consider and agree on an appropriate merger type. The appropriate merger type will depend on factors including: the current legal structure of each party; the nature and extent of each party’s assets, operations and employees; the role each party will have post merger; and the appropriate governance framework for the merged entity. More information on common merger types can be found in part two of our article series.

Depending on the preferred merger type, parties may need to make preparatory changes including: changes to governing documents, changes to director appointments and changes to membership.

3. Set clear expectations

Before time, resources and energy are invested, it is important for the parties to articulate their expectations for the merger. This helps to guide critical decisions during the merger process, as well as informing the final assessment of whether the merger will be beneficial and should proceed. This process involves:

• defining non-negotiables upfront. This might include continuity of certain services, continuing to service particular client groups, requirements around geographic reach, branding changes, how redundancies will be managed and who will hold key leadership roles in the new entity.
• developing shared merger principles that guide critical decisions aligned with the collective vision and goals.

These expectations should be documented in a letter of intent or memorandum of understanding.

4. Conduct due diligence

Thorough due diligence is essential to mitigate risks and ensure informed decision-making by the board of each NFP. While the primary role of due diligence is to assist the boards to determine whether or not the merger should proceed, it also has a secondary role in identifying issues that may need to be prioritised and addressed as soon as practicable following the merger. The due diligence process should include:

• defining the scope and objectives of the due diligence process (this is dependent on the size and complexity of each organisation and the proposed merger type).
• coordinating efforts among the board, executive team, legal advisors (particularly those with expertise in dealing with NFPs), accountants, and other consultants to efficiently review the documents and information disclosed.
• assessing potential risks, including legal, operational, strategic, and reputational risks, to evaluate the feasibility and benefits of the merger. These risks should be assessed in the light of each organisation’s risk appetite and objectives for the merger.

More information on the due diligence process will be in part four of our article series.

5. Document the merger

Formalise the merger agreement once due diligence is complete and all conditions are met:

• include conditions precedent that must be fulfilled before the merger can proceed. These could include: the establishment of a merger advisory committee; obtaining regulatory approvals; member support; and obtaining agreement from key funders to the assignment of contracts.
• define completion obligations that must be carried out at completion to give effect to the merger. These could include: delivery of documents to demonstrate that conditions precedent have been satisfied or waived; necessary board or member resolutions taking effect; asset transfers, and regulatory filings.
• allow for a trade-out period post-completion to manage any remaining contractual obligations or transitions smoothly.

A comprehensive completion checklist that includes provision for conditions precedent, completion obligations and post completion obligations is invaluable. The checklist can provide a structure for regular meetings with the other NFP (and any steering group) until completion to ensure that everything remains on track for a successful merger.

How we can help

The Charity and Not-for-profit Law team at Moores regularly assists NFP and charitable clients through all stages of the merger process, from preliminary assessment, to due diligence through to effecting the merger.

Contact us

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Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.

As you may have picked up in recent media, the Victorian Government has passed new legislation which will, over time, replace transfer (stamp) duty with a new tax scheme for commercial and industrial properties – the Commercial and Industrial Property Tax (‘CIPT’) scheme.

The Commercial and Industrial Property Tax Reform Act 2024 (Vic) (‘CIPT Act’) came into effect from 1 July 2024 and affects all contracts of sale for commercial and industrial property which are signed and settled after 1 July 2024.

Read on to find out the key facts which organisations need to know about the new scheme.

How does the CIPT work?

CIPT will be an annual payment in addition to existing rates and taxes on the land. The rate of CIPT will be equal to 1% of the unimproved value of the land. CIPT will apply:

• to properties with a “Qualifying Use”;
• after a 10-year transition period following an “Entry Transaction”; and
• where no exemption applies.

CIPT will commence to be payable by the owner of the land at the time when the 10-year transition period expires.

Qualifying Use – which properties are caught by the CIPT net?

‘Qualifying Use’ is defined in the CIPT Act as a property which:

• has a commercial or industrial property classification under the Australian Valuation Property Classification Code (200-499 or 600-699); or
• is used for student accommodation.

These codes will be displayed on the property’s council rates statement, or a land tax clearance certificate provided by the State Revenue Office.

Properties with a mixed use will be within the CIPT net where the property is used primarily for a Qualifying Use.

What is an Entry Transaction?

Properties with a Qualifying Use will enter the CIPT scheme where one of the following four property dealings occurs after 30 June 2024:

1. Transfer of more than 50% of the land
   More than 50% of the total land ownership is transacted and transfer duty is payable (where the parties entered into the agreement to transfer the land after 30 June 2024).
   
2. Change in ownership of landowner
   More than 50% of the ownership of a landowning entity is transacted and landholder duty is payable (where the parties entered into the agreement to transfer ownership of the landholder after 30 June 2024).
   
3. Consolidation
   A plan of consolidation is registered, in which 50% or more of the consolidated land is already subject to the CIPT scheme.  The remainder of the land will be brought within the scheme when the plan of consolidation is registered, and will be deemed to have the same CIPT entry date as the existing CIPT land.
   
4. Subdivision
   A plan of subdivision is registered, where the parent title was already subject to the CIPT scheme (noting the subdivision won’t bring the child lots into the CIPT scheme since they were already in it, but the child lots will retain the same CIPT entry date as the parent title).

Importantly for organisations with non-profit status, the sale of land with a Qualifying Use is not an entry transaction where the sale is exempt from duty pursuant to the Duties Act 2000. For example, where a charitable entity purchases land with a qualifying use and is entitled to an exemption from transfer duty, that purchase is not an entry transaction and therefore will not trigger entry into the CIPT scheme.

Selling or purchasing CIPT land?

The following process will apply to any sale of land with a Qualifying Use where the contract of sale was signed after 1 July 2024 and no exemption is available:

• At settlement of the Entry Transaction, transfer duty will be payable one final time.
• A 10-year transition period commences from the date of settlement. During the transition period, no CIPT or transfer duty is payable in relation to the property. In theory, the property could be transacted multiple times during the transition period without payment of transfer duty, as long as it continues to be held for a qualifying use.
• CIPT will first be payable for the calendar year commencing immediately after the 10 year anniversary of the original qualifying settlement. As an example, if the Entry Transaction settlement occurs on 30 June 2025, CIPT will start to be payable in 2036.
• From there onwards, CIPT will be payable annually at a rate of 1% of the unimproved value of the land.

Importantly, vendors cannot adjust CIPT under the contract of sale or otherwise make the purchaser liable to reimburse the vendor for any CIPT liability, except where the sale price exceeds the ‘high value threshold’ (currently set at $10 million).

Landlords also must not require any residential or retail tenants (as defined by the Residential Tenancies Act 1997 and Retail Leases Act 2003 respectively) from paying or reimbursing the CIPT. However, there is no restriction from recovering CIPT from non-retail commercial tenants.

Transition loan scheme

The Victorian Government is offering transitional loan schemes to finance the payment of transfer duty on the Entry Transaction. This is an optional program to allow purchasers to spread out the cost of transfer duty over a 10 year period at a fixed interest rate.

The loan will be secured with a statutory charge over the property and must be repaid over the 10 years following settlement (i.e. the transition period).

Change in use

If, during the transition period, the property ceases to be used for a qualifying use (e.g. it is redeveloped into residential premises), no CIPT will be payable. However, the next sale of the property will be subject to the usual transfer duty.

If the transition loan scheme applies to the property, the loan must be repaid immediately upon the change of use or sale of the property.

Exemptions from CIPT

CIPT is chargeable on land which, at 31 December in the preceding year:

• was subject to the CIPT scheme;
• was no longer in its 10-year transition period;
• had a Qualifying Use; and
• was not eligible for any exemptions from land tax under the Land Tax Act 2005.

Therefore, properties which qualify for an exemption from land tax (such as properties used and occupied exclusively for charitable purposes) will also receive an exemption from paying CIPT.

How we can help

The Commercial Real Estate team at Moores has extensive experience in all types of property dealings and can provide tailored advice on how CIPT may impact on your organisation’s properties.

Contact us

Please contact us for more detailed and tailored help.

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Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.

We’ve heard a lot about consent in the news lately, especially in the context of bodily autonomy, and safe and respectful relationships. There is however, another type of consent that is arguably just as important; and which has historically, often been overlooked by school authorities. We speak of course about consent to collect and use personal information.

Protections for photos and videos

In the current digital landscape, where AI bots are running wild with our information and intellectual property, Australians are growing increasingly concerned about the control of their personal information, and that of their children. It can be disconcerting at best, to see a photograph of yourself (or worse, your child), published without your express knowledge and/or consent. Under the Privacy Act 1988 (Privacy Act) photographic images and videos (from which you can be reasonably identified) are considered your personal information.

Photos and videos of individuals are therefore subject to protection under Australian privacy laws. Independent schools in Australia are required to manage personal information (including photographs) in accordance with the Australian Privacy Principles (APPs). For government schools, state and territory-based privacy schemes, such as the Victorian Information Privacy Principles (IPPs) set out ostensibly the same requirements.

The APPs (and corresponding state/territory-based schemes) set out numerous requirements regarding how personal information may be collected, stored, used and disclosed. This article is focussed on one aspect of these requirements, being consent. Specifically, we discuss the consent that schools must obtain from individuals in order to lawfully publish (i.e. disclose) their image.

Traditional enrolment agreements and consent

Traditionally, school enrolment agreements have taken the form of ‘take it or leave it’ standard-form contracts. There are of course, good reasons for this (consistency between contracts, fairness, reducing administrative burden etc.). However, the inherent power-dynamics of these kinds of agreements can tend to disempower the consumer (in our case, the parent) from asserting their rights or interests in a transaction. This can, in turn, affect schools’ compliance with the APPs. We discuss how below.

There are a couple of key features of standard-form contracts that can cause problems when it comes to privacy protection and compliance:

1. The ‘opt-out’ privacy provision: ‘Click here to opt-out of receiving marketing emails’ or ‘tick this box if you do not consent to us sharing your personal information’. Many of us have been caught out by these provisions – I know I have. It’s easy to become confused by a negatively framed consent mechanism. These kinds of ‘opt-out’ clauses often lead to unwitting, and ultimately invalid expressions of consent. As we explain below, consent requires much more than ‘not ticking a box’ (i.e. opting out) in order to be considered valid.
2. We often see consent for photographic disclosures framed as a pre-condition for the provision of services. Here’s an example: ‘by completing this application form, you agree to us using your photograph in advertisements and other communications’. This kind of provision offers no opportunity for an individual to opt-out at all – the implication of such provisions is that if a person wants to obtain a good or service, they must agree to the provider’s terms or miss out on the benefits on offer. The problematic nature of such provisions is amplified when they are part of a contract for essential goods or services – education for example. Parents are often captive to the terms and conditions of the school they have chosen for their children, and do not hold the requisite bargaining power to say ‘no’ to pre-conditions that form part of standard-form enrolment agreements.

Why are the traditional methods of consent an issue?

In the ‘old-world’ organisations could more or less get away with a kind of set and forget approach to privacy. In relation to student photos, that might look like (1) the school’s enrolment agreement contains a photographic consent pre-condition (2) the parents agree to this at the point of enrolment – and (3) the school proceeds on the basis of rolling consent for the use of the student’s photographs for the duration of enrolment.

The uncomfortable truth about this approach is that reliance on this alone may not be lawful. As a school, if you do not have valid consent for disclosure, and you publish an individual’s image – you will very likely find yourself in breach of APP 6. In summary, APP 6 sets out that an APP entity (i.e. a school in this case) may only use or disclose personal information for the primary purpose for which it was collected, or if the individual has consented to that use or disclosure. Schools operate to provide education and care, and necessarily collect student information to provide that education and care. It would be a long bow for a school to argue that publishing student photographs on the school’s social media is a primary purpose for the use of student information. Therefore, valid consent it required for that publication to be lawful.

Schools should also consider their duty of care to students when dealing with their personal information. In short, the duty requires schools and teachers to take reasonable steps to reduce the risk of reasonably foreseeable harm occurring. There may be occasions where sharing a student’s image online or in a newsletter could present a risk to their safety – for instance in scenarios where there may be family violence or other complex family dynamics. This is one reason why currency of consent (which we discuss below) is so important. Not only may a school find itself in breach of the APPs due to a social media post – it may be held liable in negligence for failing to protect its students from harm.

This doesn’t mean schools can’t share photos of their students. It is wonderful to share student success and give communities the chance to congratulate and rejoice in our young people’s success; you just need valid consent.

What is considered valid consent with regards to sharing personal information?

Consent requires more than saying ‘yes’ (or not saying ‘no’). The Privacy Act sets out the four elements of consent, without which – consent is not considered valid:

1. the individual is adequately informed before giving consent
2. the individual gives consent voluntarily
3. the consent is current and specific, and
4. the individual has the capacity to understand and communicate their consent.

There are a couple of key reasons why, in consideration of these elements of consent, the traditional approach of consent as a pre-condition may no longer be appropriate, or lawful:

1. Making consent a pre-condition to enrolling a child at a school may impact on the voluntariness of that consent.
2. Some enrolment agreements will persist for up to 13 years (if a child is enrolled at Prep and continues to year 12). How can a school be sure that consent given at a point in time is still current years later?  

How do schools ensure consent is valid?

First of all, don’t panic. Many organisations are still catching up to the ‘new world’ of privacy requirements. Taking pro-active steps now can still put you ahead of the curve! Many schools are soon due to update student and parent consents on parent portals. This is a great opportunity to check if your school’s portal consent functions stack up against the requirements of the APPs.

Now is also a great time to review your School’s overall privacy compliance. When was your privacy policy last updated? Do you have in place tailored, compliant collection notices with appropriate consent mechanisms? There are 13 APPs that must be complied with; and we have only discussed one in this article.

How we can help

If you haven’t already, now is a fantastic time to review your enrolment documentation and privacy practices. Given the recent decision of Brindabella, and changes to the Consumer law, many schools have sought our advice to ensure their enrolment contracts are enforceable, and free from unfair terms that could attract the ire of consumer regulators.

We can review, amend, and re-draft your enrolment policies, terms and conditions, and privacy documents to ensure they are not only compliant, but represent best industry-practice and protect your commercial interests. Contact one of our education and privacy specialists today to discuss how we can optimise and future-proof your school’s enrolment practices.

Contact us

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Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.

Are you a Registered Training Organisation (RTO) or are you a School with a third party arrangement with an RTO? Fill out the form below to receive the latest news and updates regarding RTOs.

Registered Training Organisations (RTOs) and Schools that have third party arrangements with RTOs to deliver Vocational Education and Training (VET) in schools for their students need to prepare for revised RTO Standards that will come into effect in mid-2025.

The Commonwealth Department of Employment and Workplace Relations released the policy versions of the revised standards on 1 October 2024.

In this article we look at some of the Revised Standards and how they will influence RTO operations and arrangements with schools in Victoria.

How are the RTO Standards changing?

The current RTO Standards 2015 (Current Standards) are being replaced with new standards which will come into regulatory effect from 1 July 2025 (Revised Standards). They include:

• The Outcome Standards – focused on delivering quality vocational education and training to learners with strengthened self-assurance requirements for RTOs;
• Compliance Requirements – focused on supporting the integrity of training products including through clearer fit and proper person requirements;
• The Credential Policy – clarifies trainer and assessor requirements.

The Revised Standards provide for a more streamlined set of standards compared with the Current Standards, although RTOs should factor in the separate legislative instruments and policy for compliance and trainer and assessor credentials. 

Who will be impacted by the Revised RTO Standards?

Victorian RTOs, including schools which are also RTOs, that are regulated by the VRQA will not be impacted and remain subject to the AQTF 2010 Essential Conditions and Standards for Continuing Registration and the VRQA VET Provider Guidelines.

Schools engaging with RTOs under third party arrangements to deliver VET in schools to students may be impacted. For example, if you are a school delivering training under the auspices of an RTO that is regulated by the Australian Skills Quality Authority (ASQA), then your third-party agreement arrangements will need to consider the Revised Standards.

RTOs regulated by ASQA will need to comply with the Revised Standards.

Emphasis on quality within the Revised Standards

The new Outcomes Standards are framed against four quality area outcome statements under the pillars of:

• Training and Assessment (8 Standards);
• VET student support (8 Standards);
• VET Workforce (3 Standards and incorporating the Credential Policy); and,
• Governance (4 Standards).

Compliance will be determined at the standard level under each quality area. RTOs will have a greater autonomy in how they demonstrate compliance with the Outcomes Standards. ASQA has published Outcome Standards Policy Guidance to accompany the release of the Outcome Standards.

Outcome focused training and assessment

The Revised Standards move away from leaning on requirements for “training and assessment strategies and practices” and adopt outcomes-focused performance whereby RTOs must deliver training which is “engaging and well structured” (Standard 1.1), demonstrate “effective engagement with industry, employers and/or or community representatives” (Standard 2.2), and have an “assessment system” that is “fit for purpose” and “is quality assured…through a regular process of validating assessment practices and judgments.” (Standards 2.3-2.4).

Supporting VET Students

Schools will be familiar with the concept of providing a culturally safe school environment for students in accordance with obligations under Ministerial Order 1359. The Revised Standards introduce Standard 2.5 requiring RTOs to demonstrate how they foster “a safe and inclusive learning environment for VET students” and “a culturally safe learning environment for First Nations people”. Schools with purchasing or services arrangements with RTOs regulated by ASQA can point to their child safety and wellbeing policies and child safety commitment to engage with RTOs about the needs of VET in school student cohorts. RTOs will need consider how they consult with industry, the community and students to create a safe and inclusive learning environment.

Standard 2.4 specifically requires RTOs to make reasonable adjustments to support VET students with disability to access and participate in training and assessment on an equal basis For Schools purchasing VET services from RTOs, both the School and the RTO have separate obligations to students with a disability.

Strengthened governance oversight for U18 VET students

The Revised Standards introduce risk management obligations for RTOs offering training and assessment to VET students aged under 18 years. RTOs will be required to identify and manage safety and wellbeing risks “consistent with principles for child safety organisations, having regard to the training content and mode of delivery (Standard 4.3).

RTO’s will need to review their child safety and wellbeing policies and codes of conduct if they do not already have in place and consider how child safety risks are managed at the organisational level. This is a positive step for schools with VET in schools arrangements as these types of arrangements fall within the meaning of the “school environment” under Ministerial Order 1359. Schools will be required to review the terms they have in place with third party providers, including RTOs, to meet Ministerial Order 1359.

What should you be doing?

To support your readiness to comply:

• RTOs will need to plan for transition to compliance with the Revised Standards by mid-2025.
• RTOs will need to review their child safety and wellbeing policies and codes of conduct as they prepare for compliance in 2025.
• Schools and RTOs will need to review their VET in schools arrangements.

How we can help

Contact our Education and Training team for tailored advice on how the Revised Standards may impact to your organisation, whether you are an RTO impacted by the Standards or a school that partners with RTOs. We can also help to review and develop policies as well as review third party arrangement contracts.

Register your interest in receiving RTO news and updates

Fill out the form below to be added to our RTO information list.

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Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.

Division 7A and Deemed Dividend

Division 7A of the Income Tax Assessment Act 1936 (“Div 7A”) deems certain payments and loans from private companies to their shareholders (or associates of those shareholders)¹ and forgiveness of certain debts owed by the shareholder (or associates)² as dividends paid by the private company to a shareholder, out of the profits of the company.³   

An exception to the above deemed dividend rule is available where a loan from a private company is not fully repaid before the company’s lodgement day for the income year in which the loan was made and a loan agreement that complies with the requirements set out in Division 7A has been entered into before that day (“Div 7A Loans”).⁴

Div 7A Loans

Despite an increase in minimum repayment requirements reflecting the heightened interest rates of late, Div 7A Loans continue to provide a safe harbour and effective tax planning tool for payments out of companies, which would otherwise be taxable as dividend income in the hands of the shareholder.

While the repayments of Div 7A Loans might be manageable during the lifetime of the borrower from other sources of income or dividend offsets, it could prove challenging for the executor to meet the minimum repayments or make a full repayment of such loans that remain owing post-death. Also, repayment requirements may affect the executor’s ability to fund the distribution of the estate in accordance with the borrower’s will and Div 7A Loans, particularly secured loans with 25-year terms, could delay completion of the administration of the estate.

Identifying and specifically planning for any loans, including Div 7A Loans, as part of the estate planning process during the lifetime of the borrower is therefore critical to address funding issues that may arise during the administration of the estate and mitigate unintended tax consequences to the estate.

Dealing with Division 7A Loans

If loans are owing by a deceased estate to a private company, the executors may consider the following actions during the administration of the estate:

1. Ascertain whether the loans comply with Div 7A
   Assessing whether a purported Div 7A Loan is indeed compliant with Div 7A can be complex, but if the relevant loan was not made under a written agreement or the minimum repayments have not been met, the loan is likely to be non-compliant. If the loan is non-compliant and the borrower is a shareholder or an associate of a shareholder of the company, the loan could instead be taken as a deemed dividend under Div 7A in the year the payment was made or a minimum repayment was not met.
   
   If it is determined that the Div 7A Loan is non-compliant, specific tax advice or a private ruling from the Commissioner should be sought as to the tax treatment of such non-compliance and potential tax implications to the estate, particularly if the non-compliance arose within the statutory amendment period.
   
2. Repay the loan
   If the loans comply with Div 7A, the executor can decide to continue to make minimum repayments or otherwise make the loan repayment in full. This decision will depend on the funding requirements, beneficiaries under the will, and the terms of the loan agreement.
   
   Where an estate’s capital and income entitlements are divided between different classes of beneficiaries, the administration of Div 7A Loans in an estate can be further complicated. An income beneficiary’s interests could be defeated by minimum yearly repayments out of income, or a capital beneficiary’s interests could be reduced if the estate’s capital is used to repay the loan in full. Therefore, consideration should also be given as to which class of beneficiaries should pay the different costs associated with repayment of Div 7A Loans.
   
3. Seek forgiveness of the loan from the company
   If funding is an issue, the executor could request that the company forgives the loan. Company directors are not required to comply with such a request and may be unable to do so. Where there are multiple shareholders, the directors will owe a duty to the other shareholders to consider how writing off a debt will affect them.
   
   Where a company resolves to forgive a loan owed to it by a deceased estate, it is likely that a deemed dividend will arise to the estate at the time of forgiveness of the loan.

How we can help

The circumstances of each estate are unique and must be carefully considered to determine an executor’s best course of action, so that the interests of the beneficiaries are best protected and adverse tax consequences are minimised.

The Wills, Estate Planning and Structuring team at Moores is one of the largest in Australia with expertise in succession planning, estate administration and taxation. We can assist you with managing the loans forming part of the estate, including loans owing from private companies, in the estate administration process in the most tax effective manner.

Contact us

Please contact us for more detailed and tailored help.

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Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.

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¹Sections 109C, 109D and 109E of Income Tax Assessment Act 1936 (“ITAA36”)

²Section 109F of ITAA36

³Section 109Z of ITAA36

⁴Section 109N of ITAA36

The breakdown of a marriage or de facto relationship can be an unsettling and stressful time.

As a starting point, Moores Special Counsel, Sarah Lacey and Bani Mishra, sat down in a Moores Q&A to answer some common questions you may have before and after a separation.

These steps do not have to be taken alone. We recommend you seek expert legal advice to guide you through the process and address all concerns specific to you and your circumstances.

If there has been family violence in the relationship, seek advice and support from a family violence professional or service.

On 22 October 2024, the Office of the Australian Information Commissioner (OAIC) published updated guidance for charities and not-for-profit (NFP) organisations relating to compliance with the Australian Privacy Principles (APPs).

While the APPs themselves have not changed, updates to official guidance offer a fantastic opportunity for organisations to review their privacy policies and practices. We know that official guidance offers a valuable insight into the mind of the regulator – it tells us how the regulator interprets regulatory obligations, and what they expect from regulated entities. When you implement recommendations contained in official guidance, you are putting yourself on the same page as the OAIC – which can only be a good thing!

What are the updates?

This recent guidance update deals predominantly with considerations for engaging third-party providers, such as for fundraising, or software vendors.

When you engage a third party to fundraise for you, or you install new software, you need to take steps to be satisfied that the third party, or third party software system is protecting personal information in line with all relevant privacy obligations. It can be dangerous to assume that other parties will be as privacy-minded as you are – such assumptions could result in data breaches and bad publicity for your organisation (even if it wasn’t technically your organisation that had the data breach).

In releasing the updated guidance, the OAIC noted the issue is “topical in the wake of high-profile data-breaches affecting charities and NFPs”. You may have seen recent news reports about a cybersecurity breach involving Pareto Phone and a number of Australian charities. According to reports, Pareto Phone was contracted by numerous Australian charities to conduct fundraising on their behalf and as such, was provided with personal information of thousands of donors. When Pareto Phone subsequently had a data breach, it was the donors whose personal information was subsequently published on the dark web. This kind of event can be devastating: not just to the individuals whose data has been compromised, but also to the charities, and the very deserving beneficiaries of charity efforts.

Charities and NFPs are right to be concerned about these privacy risks; and we are here to tell you that there are things you can do right now to help safeguard personal information held by your organisation. A great place to start is to familiarise yourself with the APPs, and the OAIC’s guidance on how to implement good privacy practices.

There’s a wealth of NFP-specific and general privacy guidance at the OAIC’s website. The APP guidance is a great place to start if you’re unsure about what the APPs are, and what they require.

Do I have to follow this guidance?

If you are a charity of NFP, the APPs may or may not apply to your organisation – there are a number of threshold requirements to determine who is (or is not) an ‘APP entity’ (i.e. an entity that must comply with the APPs). If you’re not sure whether the APPs apply to you, you can reach out to one of our privacy experts, who can provide you with tailored advice on this issue.

Regardless of whether or not you meet that threshold, it is just good practice to develop sound privacy practices, supported by thorough policies and staff training. It will also help you to build upon your relationship of trust with your members and donors, who will appreciate knowing you take their privacy seriously.

How we can help

If you are a charity or NFP looking to review, improve or develop your privacy compliance, we can help. We have dedicated privacy specialists who can work with you to design tailored policies, plans and procedures; train your staff; and help set you apart as a best-practice organisation, committed to the privacy of its valued community. 

We can also draft tailored contracts for you to engage third parties in a way that aligns with and protects your commercial interests, while also prioritising the privacy of your members and donors.

Contact us

Please contact us for more detailed and tailored help.

Subscribe to our email updates and receive our articles directly in your inbox.

Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.

Is your not-for-profit (NFP) contemplating a merger? This is part two of a five-part article series that will offer some practical guidance to your board or merger advisory committee. Subscribe to receive the remaining articles in the series.

There are a range of available NFP merger types depending on the legal structure of the organisations that propose to merge. Determining which of these available merger types is most appropriate requires an assessment of what is important to your NFP, including control, structural simplicity and containment of risk. Identifying the preferred merger type early on will:

• inform the drafting of the pre-merger agreement;
• help determine the focus and scope of the due diligence process;
• enable the parties to determine what stakeholder decisions will be required to enable the merger to proceed;
• inform each board’s risk assessment (as part of the decision regarding whether or not to proceed with the merger); and
• if the parties decide to proceed, inform the drafting of the merger agreement.

The five most common merger types are summarised below, together with their pros and cons. Note that, depending on the structure of the merging organisations, some merger types may not be possible.

1. Transfer from NFP B to NFP A

3. Establish NFP C and close NFP A and NFP B

4. New parent for NFP A and NFP B

5. Amalgamate NFP A and NFP B to form NFP AB

How we can help

Choosing the appropriate merger type is essential. The Charity and Not-for-profit Law team at Moores can help you understand the available merger types available to your merging organisations including the pros and cons of each option.

Contact us

Please contact us for more detailed and tailored help.

Subscribe to our email updates and receive our articles directly in your inbox.

Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.

As at the 2021 Census, over 10% of families with dependant children were blended or step families¹. These can present additional challenges in estate planning, particularly in relation to balancing the needs of a new spouse and those of children from a prior relationship.

What if you get it wrong?

In an ideal world, an estate plan should provide for all the important people in your life in a manner that ensures the risk of family conflict is minimised.

There are two main risks if the estate planning in a blended or step family is not adequate:

1. People will miss out – in a traditional family, the estate planning is often on the basis that a surviving spouse will take the estate, with a reliance on them to pass it on to mutual children in due course. Even in this traditional scenario, there is some risk that the survivor will re-partner, fall out with intended beneficiaries or otherwise be influenced to change their planning from what was originally agreed. In a blended or step family, this risk is heightened given there may not be as strong a relationship between step parent and step child or the same feeling of obligation towards them.
   
   Equally, if the planning goes entirely the other way and exclusively benefits children then it may be the spouse that misses out.
   
2. Dispute – a significant proportion of estate disputes involve step children and step parents and this is often motivated by the fear of missing out on an inheritance. The step parent may have every intention of passing on the inheritance to step children in due course, but that intention (unless formalised and binding) is unlikely to prevent any claim from either being made or succeeding.

Common strategies for planning with blended families

There are a number of strategies that can be utilised to mitigate the above issues in a blended or step family context:

1. Life interest – this is a form of trust that can be created by a Will to allow a particular person to have use and benefit of assets for lifetime, while preventing them from dispersing the underlying capital. A common example is for a homeowner to provide a life interest to their spouse permitting them to live in the home for life, before it then reverts to their children. There needs to be consideration of issues like trustee selection, funding maintenance and debt, and tax outcomes. This can be very effective in the right situation and provides great certainty of benefit for the eventual beneficiaries.
   
2. Mutual Wills Agreement – this is an agreement between parties (usually a couple) not to change their Will in the future to defeat an agreed distribution. The fact that a couple create Wills together does not give rise to a Mutual Wills Agreement in itself. There needs to be an actual agreement (usually in writing) that they are prevented from changing their planning in the future. While such an agreement is binding and enforceable, it does have some limitations and cannot prevent legitimate third party claims (eg/ family law claims or estate challenges) from impacting the estate. It nevertheless remains a useful planning tool in the right scenario.
   
3. Direct gifts – where the size of the estate permits it, there may be merit in making direct provision for intended eventual beneficiaries up-front, rather than only when surviving spouse has also passed. This provides certainty that, regardless of the surviving spouse’s own planning, the eventual beneficiaries will have received a portion already. It also reduces or eliminates the need for step children to ‘look over the shoulder’ of their step parent to see how assets are managed and what may be becoming of their inheritance.

Whether these strategies are workable in your estate planning will depend on a number of factors including how assets are owned, age of relevant parties, the value of the estate, whether any structures (companies, SMSFs or trusts) exist, and, ultimately, the people involved and their relationship with each other.

How we can help

No one wants to leave a mess for their family when they pass. The planning in blended or step families requires careful consideration. This article touches on some key planning strategies for this scenario but is only the ‘tip of the iceberg’. Estate planning advice should be sort on your particular circumstances.

For expert advice or guidance regarding Estate Planning the Wills, Estate Planning and Structuring team at Moores are well equipped to ensure the interests of your family are protected.

Contact us

Please contact us for more detailed and tailored help.

Subscribe to our email updates and receive our articles directly in your inbox

Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.

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¹https://aifs.gov.au/research/facts-and-figures/families-and-family-composition