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January 2017

Monthly Archives
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The hidden dangers in Employment Contracts

In the lead up to mid-year salary and performance reviews it is timely for employers to take stock of arrangements under employment contracts.  In particular, employers should consider whether their employees are engaged under a fixed term or an ongoing (permanent) contract of employment.

Some employers may be considering employing workers on fixed term contracts. Contracts of employment are generally of two types – those which terminate with the effluxion of time (fixed term contracts) and those which terminate by the giving of notice.

A fixed term contract is for a specific time period, for example, from 1 July 2017 to 30 June 2018, but it can be for any specified term. Contracts for two or three year’s duration are quite common.

The advantage of a fixed term contract is that there is no need to give notice of the end of the contract and a redundancy payment is not applicable.  The contract simply ends on the specified date.  However, the difficulty with a fixed term contract is that circumstances may and often do change during its term.  At common law, an employer who wishes to end the contract before the specified end date, will be required to make a payment to the employee equivalent to what would be payable for the balance of the term of the contract. If this is not done, the employee may be entitled to damages (with interest and costs) for income lost or to make an unfair dismissal application seeking reinstatement or compensation. On the flip side, an employee may also be liable in damages to their employer should they terminate a fixed term contract before it expires.

Another disadvantage of a fixed term contract is that it cannot be extended beyond its original term without changing the nature of the employment relationship from temporary (with no expectation of a continuing relationship) to permanent. A series of fixed term contracts entered consecutively overtime will evolve into a permanent employment relationship giving rise to a legitimate expectation by employees of continuity.  If this happens, the employer will be liable for accrued entitlements including redundancy pay and payments in lieu of notice of termination.

An early termination clause can be inserted into a fixed term contract, allowing it to be terminated by notice before the end date. This can help to overcome the pitfalls we have identified. A hybrid contract allows the employee to be employed “up to” the end date specified in the contract. Providing the full term is worked, there is no need for notice of termination and the employee has no statutory unfair dismissal rights or redundancy pay rights at the end of the contract.

The benefit of a hybrid contract is that it can be terminated at an earlier date by the employer without having to pay the full balance of the contract. A potential drawback to such a clause is that the employee may have statutory unfair dismissal rights and an entitlement to redundancy pay if they have served the required minimum employment period under legislation.  There is also the possibility that an employee might claim damages for breach of contract, arguing that the parties intended that early termination was only to occur in exceptional circumstances. In addition, unless the hybrid arrangement is clearly stated, there is a danger that a court or tribunal will view the inclusion of a notice provision as changing the very nature of the employment relationship from a temporary to permanent.

The “take home” message is that employer’s need to exercise caution in the preparing employment contracts. Fixed term or hybrid contracts should not be used to avoid or replace permanent employment and associated obligations. Where there is a finite or temporary demand for employees in your workplace, casual, fixed task or seasonal employees should be considered.  Where fixed term contracts or hybrid contracts are used, expiry dates must be properly diarised, managed and reviewed where necessary.

If you are reviewing your employment contracts, you would be wise to seek professional advice. Our solicitors at Just Us Lawyers have had many years of experience in assisting both employers and employees with employment law advice. Call or email Just Us Lawyers for assistance in drafting your employment contract today!


business woman holding open sign

Tenants afforded additional protection under amendments to the Retail Shop Leases Act

By Natalie Smyth

The Retail Shop Leases Act 1994 (Qld) (“the RSLA”) regulates the retail shop leasing sector in Queensland. It was introduced in an effort to address the imbalance of negotiation power between large landlords and small retail tenants by imposing mandatory minimum standards for retail shop leases.

On 25 November 2016, the Retail Shop Leases Amendment Act 2016 (“RSL Amendment Act”) came into effect, imposing a number of key changes to the RSLA. The Amendments offer further protection for retail tenants by imposing additional disclosure requirements on retail landlords. Some of the key changes to the Act can be summarised as follows:-

What is a retail shop lease?

The definition of “retail shop lease” has been amended to exclude the following lease categories from the operation of the RSLA:-

  1. retail shops with a floor space of more than 1000m2;
  2. leases of premises for the conduct of a retail business by a tenant who is the landlord’s employee or agent; and
  3. certain non-retail leases located within a retail shopping centre that are ‘not used wholly or predominantly for carrying on a retail business’.[1]

This change will see a number of tenants excluded from the protection offered by the Retail Shop Leases Act, but will also allow these tenants the ability to negotiate commercially agreeable lease terms.

Major Lessees

Tenants who operate five or more retail shops in Australia (“major lessees”) will no longer need to obtain legal and financial advice in order to waive minimum standards imposed by the RSLA with respect to the timing and calculation of rent reviews (e.g. the rent may not be reviewed more than once in each year of the lease). Now, major lessees will be able to negotiate rent review terms that are commercially agreeable to both landlord and tenant, provided that they give a written waiver notice to a landlord.[2]

Outgoings

Under the new amendments, a retail tenant is permitted to withhold payment of outgoings until such time as the landlord has provided the tenant with an estimate of the outgoings[3]. The estimate of outgoings prepared by landlords must also now include a breakdown of the centre management and administrative fees.[4]

For those tenants who contribute towards a landlord’s marketing and advertising costs, the landlord must now issue a marketing plan at least one month prior to the start of each accounting period outlining the landlord’s proposed promotion and advertising costs.[5]

Tenants that pull out of the Lease

A retail tenant will now be required to pay a landlord’s reasonable legal fees if the parties agree on the terms of the lease and the lease has been prepared by the landlord but the tenant fails to execute/enter into the lease with the landlord.[6]

Disclosure requirements

Under section 22 of the RSLA, landlords are required to provide tenants with a disclosure statement and a draft copy of the lease at least 7 days prior to entering into the lease. Tenants are now able to agree to shorten or waive the 7 day disclosure period by providing the landlord with a legal advice report and waiver notice.[7]

Section 22(5) of the RSLA has been removed. This section imposed a limitation on the rights of a tenant to terminate a Lease based on a defective statement if the landlord had acted reasonably and honestly and the lessee is in substantially as good a position as the lessee would have been if the disclosure statement were not a defective statement.[8]

Tenants will now be required to provide landlords with a lessee disclosure statement at least seven days  before entering into the lease, rather than simply prior to entering into the lease.[9]

Options

Unless the tenant provides a signed waiver form to the landlord, landlords will now need to provide tenants with a current disclosure statement within 7 days of the tenant providing notice to the landlord exercising their option to renew the lease.  After receiving the updated disclosure statement, the tenant will have 14 days to withdraw from exercising the option.

The tenant will now have the right to terminate the lease within 6 months of the option date in the event that the landlord does not comply with this condition or the disclosure statement provided by the landlord to the tenant is defective.[10]

Conclusion

The amendments certainly offer additional protection for tenants, especially with the additional disclosure requirements imposed on retail landlords.

Landlords, in particular, will need to ensure that they are fully across the new amendments, update their standard leasing documentation and ensure they have diarised important dates to ensure they comply with the new disclosure requirements around renewals/options. Failure to comply with these new disclosure obligations could see a tenant exercising their right to terminate the lease.

If you have any questions about retail leasing in Queensland, or require the drafting of a commercial lease, please don’t hesitate to contact our property and commercial solicitor, Natalie. Call/email Just Us Lawyers – we have extensive experience in dealing with commercial and business transactions and with business planning, structuring and compliance issues.

[1]S5A(3) RSL Amendment Act.

[2]S24(2) RSL Amendment Act. The Notice will need to state that section 27(2) – (7) does not apply.

[3]S33(4) RSL Amendment Act.

[4]Ibid.

[5]S35 RSL Amendment Act.

[6]S49 RSL Amendment Act.

[7]S21B(2).

[8]S15 RSL Amendment Act.

[9]Ibid.

[10]Ibid.


Picture of Natalie Smyth

Get to know just us….Natalie Smyth

NATALIE SMYTH – SOLICITOR 

What T.V show/movie are you ashamed to admit you love?

The Vampire Diaries – adventure, romance, and ridiculously good looking vampires – what more could a girl ask for.

 

You’re happiest when?

I am at home in my PJs watching re-runs of the Vampire Diaries and snuggling up with my ginger cat, Prince Harry.

 

What children’s character can you relate with most? Why?

Belle from Beauty and the Beast – I am such a bookworm.  I also have brown hair and brown eyes and hope to own a horse named Phillipe.

 

Best vacation you’ve been to?

When I was little we went to the Pet Porpoise Pool at Port Macquarie and I was chosen out of the crowd to brush the dolphin’s teeth with a giant toothbrush.  Very proud moment!

 

What aspect of your role do you enjoy the most?

I love problem solving for my clients. Especially, spotting hidden clauses in contracts that are contrary to my clients’ interests. If spotted early in the contract negotiation stage, many of these clauses can be removed, redrafted or reworded to better protect my clients’ interests.

 

What did you want to be when growing up?

I always wanted to be a painter or a writer.  I still write in my spare time, and hope to publish my own novel one day!  It will be a romance, of course – but no vampires.

 

What places have you lived in?

I lived in Ireland for five months whilst participating in an exchange program through my university. It was the best experience. It helped me develop a new sense of self and gave me a lot of confidence.

 

What is your family like?

Think, my Big Fat Greek wedding.

 

What are two career lessons you’ve learned thus far?

Say yes to all opportunities that come your way and never say you can’t do something – you never know how much you are capable of until you try!

 

Just Us Lawyers – for the best Conveyancing lawyers in Brisbane call/email Just Us Lawyers or complete our enquiry form for a quote today


Man Running up Building

High Court takes new approach to vicarious liability of employers

For many years our legal system has grappled with drawing a clear line in determining the liability of employers for the negligence of employees. The recent High Court decision of Prince Alfred College v ADC has clarified the Court’s approach to what is a tricky area of law.

The test previously used by Courts was to consider whether the negligent acts were committed by an employee in the usual course of their work. Applying this test requires other questions to be answered first, such as:

  • Was the person acting as an employee or contractor?
  • Was the act committed in the performance of their usual duties?

Applying the usual test, employers have been found liable for the actions of persons deemed to be their employee and who wrongfully performed their duties. However, the Prince Alfred College matter highlights the difficulty in applying the usual test to novel cases, especially those involving criminal acts or intentional wrongdoing.

Prince Alfred College involved proceedings brought by a former pupil seeking compensation from the school for sexual abuse inflicted by their boarding master. In such a case, it is clear that the person was acting as an employee but less clear that the abuse occurred in the “usual course of employment”.

The High Court noted the limitations of the usual test and cautioned against its application as a hard and fast rule to determine liability. Instead, the Court preferred to characterise the usual test as a “touchstone” for considering whether an employer is vicariously liable.

In their judgment, the majority found that an employer will not be found to be vicariously liable merely because employment provided the opportunity or occasion for wrongdoing. A key feature of the approach taken by the majority was considering whether the employer has assigned the employee to a special role that placed them in a position of power and control with respect to the complainant.

Although the Court found that the employer in Prince Alfred College was not liable, the status of the “usual course of employment test” has been downgraded from a rule to a “touchstone” for determining liability. It remains to be seen whether such fine grained distinctions will result in employers being found to be vicariously liable more or less often. However, the decision serves to remind all employers to consider the possibility of being held liable for the actions of employees entrusted with duties that place them in a position of power and control over others.

Whether you an employer or employee, the team at Just Us Lawyers have decades of experience in employment law and can guide you through the system to ensure you get the best outcome, call/email Just Us Lawyers