On 9 April 2020, the Federal Government enacted its changes to the Fair Work Act 2009 (Cth) and other amendments which will impact organisations as a result of the COVID-19 pandemic.
This article outlines the key changes introduced by the Coronavirus Economic Response Package (Payments and Benefits) Act 2020, the Coronavirus Economic Response Package Omnibus (Measures No.2) Act 2020 (the Acts) and Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (the Rules), and the impact of these reforms on employers.
The Acts and the Rules will operate from 30 March 2020 to 27 September 2020 and will be administered by the Commissioner of Taxation.
The Coronavirus Payments and Benefits Act introduces the Jobkeeper Scheme to provide wage subsidies for employees, and the Coronavirus Omnibus (Measures No.2) Act amends the Fair Work Act to provide organisations eligible for the JobKeeper Scheme with greater workplace flexibility in relation to their employees.
The main objectives of these reforms are to enable eligible employers that are suffering financially due to COVID-19 to:
These changes will override any modern award, enterprise agreement or employment contract, and are subject to strict legal requirements.
Employers will be eligible for the JobKeeper payment under the Acts and the Rules if:
To satisfy the decline in turnover test, an employer must be able show that the current or projected GST turnover in a:
is at least 15 percent, 30 percent or 50 percent less than the corresponding turnover period in 2019 for their relevant entity type. For example, if an ACNC registered charity (excluding a non-government school or university) can demonstrate that it carried on a business in Australia prior to 1 March 2020 and that its projected GST turnover in April 2020 is 15 percent less than its revenue in April 2019, it will satisfy the revenue reduction requirement of the JobKeeper scheme.
The Commissioner for Taxation has discretion to set alternative or additional tests to qualify for the JobKeeper Scheme by legislative instrument.
The following entities do not qualify for the JobKeeper Scheme.
The JobKeeper Scheme requires eligible entities and employees to comply with specific nomination requirements. An entity must notify an eligible employee that they intend to apply to the Scheme so that the employee can provide written notice in the approved form confirming that they are:
Employees that receive parental or partner leave pay at any time or receives workers compensation payments because they are totally incapacitated for work during any of the fortnightly period(s), will not be classified as eligible employees.
Entities will then need to:
If the Commissioner for Taxation is satisfied that the organisation meets the requirements of the Acts and Rules it will make the fortnightly JobKeeper subsidy payment of $1,500 to the organisation in accordance with the Acts and the Rules.[1]
The new stand down and workforce flexibility provisions allow an employer to direct an employee to:
An entity can do this provided that:
An employee can’t be usefully employed for the purposes of the Acts and the Rules when employee has no (or a reduced level of) useful work available to performed because of the COVID-19 pandemic or because of the Public Health Orders and state based Directions imposing restrictions on individuals and entities.
For example, a Victorian organisation that runs school camps in Term 2 of 2020 may not be able to usefully employ all staff due to the Victorian government’s restrictions and the decision to move to remote school learning. Therefore, there may be a period from April to June where the entity is captured by the JobKeeper Scheme, cannot have 100 percent of its employees undertaking their normal workload, and does not have any other or useful work available for the remaining employees to perform.
Useful work does not have to be the work that the employee ordinarily performs but needs to be genuine productive work that provides a net benefit to the employer. Employers should be able to demonstrate that the impacts of the virus or the Government’s measures to deal with it have caused the fact that there is none, or less useful, work available.
If a JobKeeper payment is payable to an employer for an employee for a fortnight, the employer must ensure that the total amount payable to the employee in respect of the fortnight is not less than the greater of the following:
This means that organisations must use the Jobkeeper payment to cover or supplement the normal wage of the employee, and cannot pocket this extra money or use it for other purposes. For example, if an employee is normally paid $1,750 per fortnight for the work that they do within the organisation, the organisation must still cover the remaining $250.
The amounts payable includes salary, wages, bonuses, commissions and allowances payable in respect of the fortnight.
If an employer provides and employee with a stand down direction, the employer must ensure that the hourly base rate of pay is not less than the rate that usually applies to the employee (as if the direction had not been given to the employee).
If an employer has directed the employee to perform different duties to normal, the employer must ensure that the employee’s hourly base rate of pay is not less than the greater of the:
For example, if an employee was earning $25 an hour prior to the stand down, they must still receive the equivalent of $25 an hour despite the change in working hours or arrangements. The only exception is if the duties of the employee have changed and the hourly base rate should be the greater of the rate for the previous duties or the rate applicable to the new duties now being performed.
An employer can only provide a workforce flexibility direction (e.g. changes in duties/tasks, location of work and working hours, taking leave) if the employer has information before them that leads them to reasonably believe that a JobKeeper direction is necessary to maintain their employment.
In short, this means that organisations need to satisfy itself that “but for this direction, the employee would be made redundant”.
Moores is currently providing advice and support to our clients who are navigating the complex requirements of the JobKeeper Scheme. If you’d like to understand your rights, responsibilities and options to ensure your workforce is safe, sustainable and prepared to brace the ramifications of COVID-19, please do not hesitate to contact us.
[1] See Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 sections 14 and 15 at https://www.legislation.gov.au/Details/F2020L00419
[2] Note that this can also occur by request or agreement. Organisations can also request or agree with an employee that they take double leave on half pay. For example, an employee agrees to take four weeks leave but only has two weeks annual leave deducted from their leave balance and is only paid for two weeks’ worth of leave.
Victorian registered schools are now permitted to mark the roll once per day, instead of twice, which is required by the Minimum Standards (Attendance register, under Enrolment Minimum Standard).
Consistent with our advice to school clients, the VRQA however notes that:
“It’s important schools continue to ensure the care, safety and welfare of their students, including child safety and the risks posed in an online environment. Schools should consider the duty of care owed to their students and that different and sometimes greater measures need to be taken for younger students or students with disabilities.
The ministerial direction is in place for the duration of Victoria’s state of emergency or until a date determined by the Secretary, during which time the VRQA is to refrain from:
The Ministerial Direction dated 14 April 2020 will last for as long as the state of emergency lasts, and applies to school compliance from 14 April 2020 until end of the state of emergency.
Attendance Recording Advice has also been published by the Department. One FAQ provides:
“Schools may use a range of mechanisms to determine if students are attending in a remote learning context. This includes:
If you have any questions about your compliance with the Minimum Standards during this time, please do not hesitate to contact us.
While most States are still finalising plans for Term 2, it is clear that school is going to look very different in light of COVID-19. Many schools will be moving online and utilising remote learning environments.
Guidance from the Office of the eSafety Commissioner and other digital organisations have been that the combination of remote learning and increased online activity by students is likely to create increased child safety risks. Whilst regulators are expected to announce some flexibility or accommodation in relation to curriculum learning areas, child safety and risk management obligations will not change. Parents have a duty to maintain a safe physical environment, while schools will be required to maintain a safe online environment.
This article covers our key tips for schools to facilitate a child safe remote learning environment and mitigate risks to students.
This section provides a summary of the guidance provided by each State regarding Term 2. Please note that this is continuously changing and the information provided is relevant as at 10am on the date of this article. Schools should refer to the relevant government department for the most up to date information.
Schools should also keep in mind that other requirements may also apply, such as requirements in most states that camps, excursions, assemblies, sports and other activities be postponed or cancelled.
Moving to remote learning will lead to both an exacerbation of existing child safety risks and create new hazards. Schools need to be mindful that their child safety obligations continue to comply, including their duty of care, reporting requirements and compliance obligations.
Some of the key risks include:
To ensure schools maintain a child safe remote learning environment, we recommend that schools keep in mind the following top tips.
For further information or guidance on how to respond effectively to COVID-19, please do not hesitate to contact us.
Are you a member of a self managed superannuation fund (SMSF)?
Does your investment strategy includes ownership of a commercial property?
Is your business run out of the property, and you pay rent to the SMSF trustee?
According to the Australian Taxation Office (ATO), there are currently almost 600,000 self managed superannuation funds (SMSFs) nation-wide, owning over $70 billion worth of non-residential property among them.
Given the strict regulation of SMSFs, many of our clients have been wondering whether they are permitted to grant rent relief to their tenants in the context of the economic difficulties we’re seeing arising in the COVID-19 environment.
Thankfully, the ATO has now provided some guidance on this issue.
As you would likely be aware from media coverage, many tenants are approaching their landlords seeking rent relief to help them deal with the increasing economic impact COVID-19 is having on their income.
It has been unclear whether SMSF landlords would be breaching their obligations under the Superannuation Industry (Supervision) Act 1993 (SIS Act) by granting such a request. On the face of the legislation, it is likely that such action would render a SMSF non-compliant.
However, guidelines just released by the ATO provide assistance for SMSF landlords who are considering offering rent relief to its related party tenant, allowing this to be done without risking non-compliance with the landlord’s SIS Act obligations.
The ATO guidelines (available here) confirm that for the 2019-20 and 2020-21 financial years, that no action will be taken if the SMSF trustee offers “a temporary rent reduction” to a related party tenant. It appears that so long as the rent reduction is temporary in nature, SMSFs are free to determine the amount of rent reduction and the rent reduction period amd market evidence is not required to support those numbers. However, it’s important to note that the current ATO concession does not apply to other lease incentives or relief which are not a ‘temporary rent reduction’.
The guidelines make no distinction between commercial and residential leases – it appears that both are within the scope of the ATO concession.
In considering whether rent relief should be granted, the significance of non-compliance with SIS Act obligations should not be underestimated.
Substantial monetary penalties can be imposed by the ATO on the SMSF trustee for non-compliance with requirements of the fund to deal at arm’s length (as if with an unrelated third party) and to meet sole purpose test (to increase a member’s retirement benefit).
It is important that all reasons and arrangements are properly documented and as such, we recommend that SMSF trustees to consider seeking expert advice on each individual lease, property and tenant circumstances.
If you are considering whether rent relief is appropriate in your SMSF arrangements, please get in touch with our team for further information or guidance. Senior Lawyer, Kate Drummond and Associate, Rowdy Johnson can be contacted on (03) 9843 0402.
While there is some relief for Victoria and Northern Territory associations, all associations should be aware of penalties that may apply in their own State or Territory. Registered charities will benefit from the ACNC’s announcement of an aligned approach to interpreting Governance Standard duties.
The temporary coronavirus insolvency safe harbor offers some protection to directors of corporations in respect of debts incurred by companies that are or become insolvent in the next six months (this period may be extended). Provided debts are incurred honestly and in the course of ordinary business, directors will be protected from civil penalties (of up to $200,000) and personal liability to compensate creditors or the company from losses arising from trading while insolvent. The protections apply to directors of both for-profit and not-for-profit corporations.
Incorporated associations are separately regulated in each State and Territory of Australia. This means that the extent to which the Corporations Act duty to prevent insolvent trading applies differs in each State and Territory. For the purposes of the temporary coronavirus insolvency safe harbor, the key differences are as follows:
The temporary coronavirus insolvency safe harbor provisions do apply to Committee members – they are protected from the civil penalty for trading while insolvent and from liability to compensate creditors or the association for losses in the next six months.
The temporary coronavirus insolvency safe harbor provisions do apply to Committee members – they are protected from the Corporations Act civil penalty for trading while insolvent and from liability to compensate creditors or the association for losses in the next six months.
However, there is no protection from the separate offence in the Associations Act 2003 (NT) of incurring debts not likely to be paid (maximum penalty $62,800 or two years)
The Corporations Act duty to prevent insolvent trading does not apply to New South Wales associations.
There is a separate offence under the Associations Incorporation Act 2009 (NSW) of incurring debts while insolvent (or that cause the association to become insolvent). A maximum penalty of $8,000 or one year’s imprisonment applies.
The Corporations Act duty to prevent insolvent trading does not apply to South Australian associations.
There is a separate offence under the Associations Incorporation Act 1985 (SA) of incurring debts while insolvent (or that cause the association to become insolvent). A maximum penalty of $5,000 applies.
The Corporations Act duty to prevent insolvent trading does not apply to Western Australian associations.
There is a separate offence under the Associations Incorporation Act 2015 of incurring debts while insolvent (or that cause the association to become insolvent). A maximum penalty of $5,000 applies.
The Corporations Act duty to prevent insolvent trading does not apply in these jurisdictions.
There is no separate offence of incurring debts while insolvent.
The Australian Charities and Not-for-profits Commission has advised that it will align its interpretation of the Governance Standard duties (which includes a duty “not to allow the charity to operate while it is insolvent”) for all charities with the insolvency safe harbour provisions.
This means a charitable association will not be in breach of the ACNC Governance Standards if it trades insolvent between now and 25 September 2020, provided it:
For further assistance or guidance on any of the matters above, please do not hesitate to contact us.
For more information regarding changes to Insolvent Trading Duties for Directors, please read our article here.
As part of its response to the national emergency arising from the spread of the Coronavirus, the government announced changes to insolvent trading duties in March 2020.
This will assist organisations under pressure to keep going, pay necessary staff and be positioned to return to normal business.
The relevant legislation (Coronavirus Economic Response Package Omibus Act 2020 (Cth) (the Act)) came into effect on 24 March 2020.
Critically, the laws have been softened, not repealed, and other directors’ duties remain in place.
By providing some relief to insolvency provisions of the Corporations Act, the changes seek to avoid otherwise robust organisations going into financial distress and collapsing due to the COVID-19 pandemic. For the next six months (which may be extended), if a debt is incurred in the ordinary course of a company’s business while that company is insolvent or that causes that company to become insolvent:
Note these protections will not apply if a director dishonestly fails to prevent a debt being incurred. Further, this moratorium is not retrospective and does not apply to debts incurred before 24 March 2020.
For companies that are registered charities, the Australian Charities and Not-for-profits Commission has advised that it will align its interpretation of the Governance Standard duties (which includes a duty “not to allow the charity to operate while it is insolvent”) for all charities with the insolvency safe harbour provisions. This means a charitable company will not be in breach of the ACNC Governance Standards if it trades insolvent between now and 25 September 2020, provided it:
This does not cover dishonesty and fraud but does include debts deemed necessary to facilitate the continuation of the business during the 6 month period commencing on 24 March 2020.
This emphasises the need to ensure directors still exercise sound judgment and do not breach other directors’ duties. The laws have been relaxed, not repealed entirely.
These would still be problematic: an organisation increasing director pay, entering into agreements which involved a director’s conflict or interest, or entering into an unnecessary agreement involving excessive payments (in the school context, an example would be a prohibited arrangement).
However, entering into a modelled temporary insolvency to pay staff who are still working and who will be needed after the crisis, in the context of considered and suitable cost cutting, would be much less problematic.
In good news for employees, the Explanatory Memorandum specifically notes these would be likely to be in the ordinary course of business:
As this legislation was passed swiftly to enable businesses to survive in these extreme conditions, it could be expected that the term “ordinary course of business” will be widely interpreted.
In conjunction with this additional relief given by the Act, directors are still able to rely on the existing provisions of the Corporations Act which provide “safe harbour” from insolvent trading where they:
Start developing one more courses of action that are reasonably likely to provide a better outcome for the company than an immediate liquidation or administration. Directors are protected from insolvent trading liability arising from debts incurred directly or indirectly connected to such course of action.
That is, a debt incurred as a result of rescue financing may be provided safe harbour protection, if not by the new provisions of the Act.
Proper financial modelling is therefore key.
Further amendments to the Corporations Act include a temporary increase to:
Previously, creditors could issue a statutory demand on a company for a debt of $2,000 or more. This threshold has now increased to $20,000. The time limit to respond to a statutory demand has been extended from 21 days to 6 months. Once again, these amendments only apply to statutory demands issued after 24 March 2020 and will only last for 6 months, unless the provisions are extended.
In summary, the laws allow you to sleep at night, but diligent work is still required. Follow the 6 actions above to ensure you have the protection of the new regime.
If in doubt or you require further information and/or guidance, please do not hesitate to contact us.
For more information on how Incorporated Associations are separately regulated in each State and Territory, please read our article here.
This story focuses on the work we did for a frail and elderly woman in her early 90s who wanted to recover money from a loan to a nephew.
Our client approached Moores to prepare a new will and powers of attorney. Our client was in her early 90s and her only brother had passed away in recent years. She never married or had children and was feisty and independent. During our initial meeting, she mentioned that she was worried that her nephew was accessing her bank accounts via online access and withdrawing money. Our client also said she had transferred a large sum of money to him some years prior, and she wanted the money back.
Our client wasn’t able to give us specific details about the transfer of money to her nephew, or particular transactions of concern. While our client had some documents at home that she had brought in, it was a considerable task for her to provide us with what we needed given her advanced age.
We needed to understand what had happened – if anything – before we could recommend a strategy. Our first step was to obtain copies of our client’s bank account statements, the terms and conditions for those accounts and any authority to operate forms. We identified that the money our client recalled transferring to her nephew had actually been transferred to his family trust, so we also obtained copies of the trust deed and other trust related documents. We mostly worked with our client by phone, and used post and courier (in the absence of email) – on occasion she would attend our office by taxi. The use of Excel to analyse the financial data over a decade allowed us to see a large number of transactions that seemed out of place.
We obtained instructions to write to and meet with our client’s nephew. At that meeting, our client’s nephew provided further documents and explained a number of transactions, and asked us to continue discussions with his lawyer.
There were a number of factual and legal issues in dispute such as:
The family trust was fully flexible, which meant there was no simple legal mechanism to compel repayment of the funds to our client. By working through the issues constructively with his lawyer, we were able to neutralise or resolve a large number of matters.
The outcome we achieved for our client was that the nephew paid to her over 80% of what we had sought on her behalf without the need to resort to any legal action or a protracted process.
Moores is one of the few law firms in Australia that has a practice and is expert in elder financial abuse and elder law. For more information or guidance, please do not hesitate to contact us.
Melbourne has cemented itself as one of Australia’s fastest growing cities over the last five years. With an ever expanding population, it is to be expected that property growth corridors emerge and properties previously owned in a rural or environmental zone are rezoned into urban land creating an increase in value.
In determining a property settlement, the Family Law Act 1975 (Cth) requires the Court to consider the initial contributions of each party as well as the financial and non-financial contributions during the marriage.
The recent case of Jabour & Jabour [2019] FamCAFC 78 (“Jabour”) considered how an initial contribution of land which significantly increased in value due to the land being rezoned should be treated in the context of a separation.
The primary issue for determination before the Court was whether the increase in value of Property A could be attributed to the Husband alone given he brought both properties into the relationship, or should it be considered as a joint contribution of both the Husband and Wife.
Of note, at the time of the Hearing, the parties had three adult children. The main asset in the property pool available for distribution was property A. Neither of the parties were high income earners. The parties agreed that their other contributions throughout the marriage were equal.
The Wife’s position was the property pool should be divided on an equal basis. The Husband sought the property pool be divided 70/ 30 to him on the basis that he should receive a significant adjustment in respect of his financial contribution..
The primary judge held that the Husband should receive 66% of the property pool and the Wife 44% on the basis that “the Husband in bringing property A into the relationship has made a significant financial contribution which needs to be appropriately recognised.”
The Wife appealed the decision to the Full Court of the Family Court.
On Appeal, the Full Court overturned the decision of the Trial Judge so that the Wife should receive 47% and the Husband 53%.
The Full Court considered the following in reaching their decision:
Jabour emphasises that careful consideration needs to be given to all contributions made throughout a relationship in determining how those contributions are to be treated in the event of separation.
For more information or guidance from our expert Family Law team regarding property settlement, please do not hesitate to contact us.
Right now, church properties across the country are underutilised as a result of the government directions to slow the spread of Coronavirus. But churches (particularly those constructed in the last 30-40 years) typically have great car parking and large level spaces which can be easily adapted.
As the need arises (which is starting to happen now), church properties should be made available for COVID-19 testing stations. Apart from places of worship, there are not many properties that are better placed for this kind of activity.
Absolutely. Charities are required by law to use their assets solely to further their stated charitable purposes. It might seem that this use is not sufficiently ‘on purpose’ for a religious organisation. However, many various activities are an expression of faith. Churches hold car boot sales to connect with their communities. Plenty of other ancillary activities happen within religious organisations as part of its overall activities. This kind of activity is easily characterised as an expression of religious observance (eg, “love thy neighbour”).
Even if it was not strictly ‘religious’ in nature, it falls easily into the category of “other purposes beneficial to the community”. In our view no church would compromise any property tax exemptions by engaging in this kind of temporary use. Moores has been able to obtain confirmation from some revenue authorities that confirm this view.
Many church congregations are autonomous in relation to the day-to-day use of church property. Take steps to make connection between congregations and your relevant church property trust. And although Moores is not a broker for finding COVID-19 testing station sites, we are willing to help in any way we can.
Please get in touch if your church is in a position to “love thy neighbour” in this way. Do not hesitate to contact us here.
Much of the business of For Purpose organisations is necessarily conducted through meetings – both regular meetings of your responsible persons (your Board or Committee) throughout the year and a meeting (typically annual) of your members.
New social distancing measures will be in place for at least six months, with the possibility of enhanced restrictions. Current restrictions limit non-essential gatherings to less than 100 people with no more than one person per four square meters. For organisations with a significant number of members, in-person annual general meetings will no longer be feasible. Even if your annual general meeting or Board or Committee meeting might be compliant with social distancing, many organisations and individuals are likely to prefer not to meet in person at this time.
Here’s what you need to know before you schedule that video conference.
Your governing document (a constitution for companies or rules for associations) sets out how decisions are made by your responsible persons or members. A well-drafted governing document will provide for meetings to be held by technology and confirm that decisions made at those meetings are legally effective. For example, the ACNC template constitution for a charitable company limited by guarantee reads:
The company may hold a general meeting at two or more venues using any technology that gives the members as a whole a reasonable opportunity to participate, including to hear and be heard.
Unfortunately, many governing documents are silent on the use of technology or were prepared long before technology existed to facilitate voice or video conferencing (this is one of many reasons why you should dust off your governing document and make sure it is still fit for purpose). In this case, the legislation that applies to your organisation may help.
You also need to be aware of the requirements of your governing legislation.
Corporations
The requirements for companies limited by guarantee differ depending on whether or not your organisation is a registered charity.
If your organisation is not a registered charity, you may benefit from the “no-action” position taken by the Australian Securities and Investments Commission (ASIC). ASIC has advised that it will not take action against companies that breach their constitution by holding a hybrid (online and in person) or online only AGM. ASIC will also allow companies to defer AGMs due to be held on 31 May to the end of July. ‘No-action’ means you may still be in breach of your constitution or the Corporations Act, but ASIC will not act on the breach. Be aware that a vexatious member might not overlook the breach. There is detailed information here (albeit targeted at larger companies) about the position of companies limited by guarantee that are not registered charities.
The ‘no-action’ position for companies limited by guarantee applies to members meetings only. It does not apply to meetings of directors. The replaceable rules permit directors’ meetings by technology (if your constitution does not expressly exclude the replaceable rules or include a contrary provision).
If your organisation is a registered charity, its principal regulator is the Australian Charities and Not-for-profits Commission (ACNC), not ASIC. Although registered charities are exempt from the Corporations Act provisions which regulate meetings, they must comply with the Governance Standards. Among other things, the ACNC Governance Standards require you to be accountable to your members. This includes holding members’ meetings and complying with the provisions of your constitution that regulate meetings.
The ACNC has been proactive about relaxing requirements in the past for charities that have legitimate compliance challenges. For example, reporting deadlines were extended for charities affected by the bushfires. However, the current ACNC guidance falls well short of providing reassurance to registered charities that propose to extend their AGM date or hold a hybrid or online-only AGM in breach of their constitution due to coronavirus concerns.
Registered charities must also comply with the provisions of their constitution that regulate directors’ meetings. Your constitution may permit the use of technology or circular resolutions. If you’re unsure, seek advice to make sure that your directors’ resolutions are valid.
Associations
In some cases (such as all Victorian associations meetings and Queensland associations Committee meetings) the legislation permits associations to hold a meeting by technology even if the rules don’t expressly allow it. In other cases, you can seek an extension to your AGM date.
Again, associations would benefit from additional guidance from their State regulator and/or the ACNC (in the case of charitable associations).
A meeting held using technology must still meet the other requirements of your governing document. Don’t forget to:
If your organisation hasn’t used video conferencing to hold its meetings before, make sure you:
It is helpful to remind participants of the protocol before the session commences.
This is an issue that may last from some time, or could recur in the future. Having the flexibility to hold an online Board, Committee or members’ meeting without compliance concerns is always valuable. Additionally, if your governing document predates technology or is silent as to the use of technology, there’s a good chance it may not include other important provisions too.
If you’d like advice about the provisions in your current governing document or how they might be updated, get in touch with the For Purpose team at Moores. Please do not hesitate to contact us here.