Asset Protection and Discretionary Trusts (Part Two)

Posted by Byron Cannon on January 30, 2012

Discretionary TrustsIn a recent blog I discussed some general comments about Discretionary Trusts and asset protection.  In this blog I will speak more specifically about the limitations of Trusts in asset protection.

Limitations on Asset Protection of Discretionary Trusts

It is very important to understand some limitations that a trust has for asset protection strategies:

 

  1. Family law – for years Family Law Courts have looked through formal trust structures to make family settlements according to who had the de-facto ownership, or control, of the trust property;
  2. Trustee’s right of indemnity – a trustee is entitled to be indemnified from the trust assets from liabilities that it incurs as trustee of the trust. This means that assets of a trust could be available to pay creditors of a trustee if trust liabilities have been incurred by the trustee. If a trustee becomes bankrupt or insolvent, this right of indemnity will vest in the liquidator or trustee in bankruptcy who could sell trust assets to pay creditors. It is therefore very important that the trustee of a trust that holds valuable assets should not engage in any risky activity, like giving guarantees etc;
  3. Unpaid entitlements – if a trustee makes a distribution but does not immediately pay the distribution, the beneficiary (or its creditors) could call upon the trust to pay that amount; and
  4. Control – if a beneficiary effectively controls the trustees power to make distributions (for example if the beneficiary is an appointor, trustee or director of the trustee company), the Courts could decide that the beneficiary has effective ownership of the trust property and include that in the beneficiaries assets to be made available to creditors.

Steps to protect assets

A number of strategies can be implemented, but it is important to follow the following steps:

  1. Consider the assets you wish to protect;
  2. Consider who owns the assets you wish to protect;
  3. Who controls the assets that are at risk (trust assets);
  4. Decide who will hold the important roles in the trust such as trustee, appointor etc
  5. Separate the control from the risk – the appointor should not be taking on any risk such as personal guarantees etc and should have its own assets completely separated (for example:
    • Mum owns the family home,
    • Dad should run the business through a trust or a company that dad is the sole trustee and shareholder of;
    • The business should own no other valuable assets; and
    • Mum can be the appointor so she has effective control of the trust.

It is very important to ensure that detailed legal and accounting advice is provided before a structure is finalised. Please do not hesitate to contact me if you have any queries.

Asset Protection and Discretionary Trusts (Part One)

Posted by Byron Cannon on January 25, 2012

Discretionary TrustsI was recently requested by KMPG on the Sunshine Coast to address their accountants in relation to my thoughts on trusts and asset protection.  This is a very good topic and it highlights the importance of giving detailed consideration, and obtaining appropriate advice, before a business or asset ownership structure is established.

In this blog I will talk about what a trust is, the roles in a trust, and benefits of a trust.

What is a discretionary trust?

Generally speaking, a trust involves the legal ownership of the property by one person or entity (the trustee) for the benefit of other parties – the beneficiaries.

In a Discretionary Trust no individual person owns the benefit of the assets as it is up to the trustee to decide who receives income or capital distributions from the trust.

Roles in the trust

There are a number of very important roles in the trust and the people or entities that carry these roles, will have an impact on asset protection strategies. 

Settlor - The settlor’s function is to effectively establish or “settle” the trust and give the assets of the trust to the trustee to hold those assets for the benefit of the beneficiaries on the terms set out in the deed.  The settlor will have no further involvement in the trust after executing the trust deed. It is important that the settlor is not a beneficiary or trustee.

Trustee – The trustee holds the legal ownership of the assets of the trust.  The trustee is responsible for the assets of the trust, and the trust itself.  The trustee has the powers to manage the assets of the trust and conduct the trust on a day to day basis. Importantly, the trustee can decide who to distribute the income and capital of the trust to.

Beneficiaries – Beneficiaries have the beneficial interest in a trust.  They benefit from the trust income and assets if the trustee elects to distribute to a beneficiary.

Appointor – The appointor is the party who has the ultimate control over the trust because the appointor can appoint and remove the trustee. It is this position, along with the trustee, that needs to be considered very carefully when establishing a trust.

Benefits of a Discretionary Trust

There are a number of benefits from establishing a family trust including:

  1. Tax advantages – income from a trust can be distributed to different parties to assist in tax planning;
  2. Asset protection – subject to some limitations, a family trust can protect family assets from the liabilities of one or more family members;
  3. Succession planning – a trust allows family assets to pass to future generations with minimal tax and stamp duty implications; and
  4. Estate planning – a trust can be a useful tool to avoid challenges to a will.

In my next blog I will discuss the limitations on asset protection for trusts, and discuss some asset protection strategies for trusts.

It is very important to ensure that detailed legal and accounting advice is provided before a structure is finalised. Please do not hesitate to contact me if you have any queries.

Restraint Of Trade Clauses

Posted by Byron Cannon on January 11, 2012

Franchise AgreementsI was recently asked by a client to obtain a Barrister’s opinion in relating to specific restraint of trade clause in a commercial agreement that he had signed.  I often get asked by clients about the enforceability of restraint of trade clauses and whether or not they are void.

Is a Restraint of Trade Void?

It has long been established at common law that a term of a contract that is an unreasonable restraint of trade is, in the first instance, contrary to public policy and void (Peters (WA) Ltd v Peters Ville Ltd (2001) 181 ALR 337).

Some general principles in relation to “reasonability” are as follows:

  1. “Reasonable” means reasonable both in relation to each party and in relation to the public interest;
  2. The onus is on the party attempting to enforce the restraint provision to prove that the restraint is reasonable as between the parties (Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288 at 317)
     
  3. The subject of the restraint bears the onus of proving that the restraint is in the public interest (Amoco Australia at 308, 317);
     
  4. It is not common however for restraints that are found to be valid as between the parties, to be against public interest;
  5. A restraint is reasonable in relation to the party seeking enforcement of the clause if it is necessary for the “adequate protection of that party”; it is reasonable in relation to the party sought to be restrain if it preserves the fullest liberty of action consistent with that protection (Brightman v Lamson Paragon Ltd (1914) 18 CLR 331 at 337 per Issacsj);
  6. The restraint therefore must be not wider than is necessary (Buckley v Tutty (1971) 125 CLR 353 at 476);
  7. Some agreements have an express term stating that the restraint is reasonable.  This is not conclusive evidence that a restraint is in itself reasonable (Queensland Co-operative Milling Association v Pamag Pty Ltd (1973) 133 CLR 260 at 268).

Is a Restraint in a Franchise Agreement Valid?

In order for a restraint to be reasonable, the party seeking to enforce the clause must establish an identifiable interest that they need to protect.  In the case of a franchise arrangement, such  recognised interest includes the interest of a franchisor in protecting patronage built up through the operation of the franchise, as well as the preservation of confidentiality of information provided to a franchisee, which could be used by the franchisee to compete with the franchisor.  (KA&C Smith Pty Ltd v Ward (1998) 45 NSWLR 702 at 722).

Is a Restraint on an Employee Valid?

The Courts have, generally speaking, drawn a distinction between restraint on employees on the one hand, and restraints of a commercial nature on the other (Geraghty v Minter (1979) 142 CLR 177 at 185).  The general principle permeating these cases is that a person has rights to work in a trade or profession without unjust restriction.  Restraints on employees competing with employers are normally valid only if required to prevent misuse of information or solicitation of customers (Artcraft Pty Ltd v Chandler [2003] QSC 102).

It is very important that each restraint of trade is considered individually, given the variations in the drafting of these clauses.  Specific and detailed legal advice is needed in both the drafting and interpretation of these sometimes difficult clauses.

Please do not hesitate to contact me if you require assistance in relation to restraint of trade provisions in a contract.

Buying A Franchised Business

Posted by Byron Cannon on December 15, 2011

Franchise AgreementFranchised businesses differ from other businesses in a number of ways.  They essentially offer the ability to run your business utilizing the franchisor’s “system” in a way that allows you to gain benefit from the name, marks, brand, image, and general “know-how” of a much bigger and more expansive organization.

Whilst operating a franchised business provides you with a great number of benefits, there are nonetheless a number of pitfalls that prospective franchisees need to look out for when entering into their franchise agreements.

Franchising in Australia is governed by the Franchising Code of Conduct which operates to regulate the conduct of both franchisors and franchisees.  As an offshoot of the Australian Competition and Consumer Regulations, it also provides for sanctions against non-complying entities.

At its most fundamental level, the Code dictates that before you enter into a franchise agreement, the Franchisor must provide you with a copy of the following documents:

  1. A copy of the Code;
  2. A copy of the franchisor’s “Disclosure Document”; and
  3. A copy of the Franchise Agreement in the form in which is to be executed by you, at least 14 days before you enter into the Franchise Agreement or make a non-refundable payment to the franchisor.

Disclosure Document

The Disclosure Document  is designed to provide you with as much  information as possible so you can make an informed decision when considering entering into a Franchise Agreement with the franchisor.  Although it is important that you consider all of the information contained within this document, I generally advise my clients to pay particular consideration to the following:

  1. The experience of the Franchisor, including its management and directors;
  2. Whether the Franchisor has been involved in previous litigation or other Court proceedings;
  3. Details of other current franchisees and their locations;
  4. The number of franchisees that have exited the system;
  5. Details of costs and expenses that may be passed on by the Franchisor to you; and
  6. The Franchisor’s financial reports and accounts.

Franchise Agreement

Your franchise agreement is just like any other contract and as such it is imperative that you read it and fully understand it before signing it.  Considerations that you should pay particular attention to in this document include:

  1. Whether or not your site and/or territory are exclusive to you and whether or not the Franchisor can grant additional franchises within your area or even operate their own business in competition with you.
  2. The extent of the fees, levies, and/or other expenses that you are required to pay under the franchise system.
  3. The exact nature of the rights that you are granted under the franchise system and the restrictions on your use of the franchisor’s brand.
  4. Whether or not the lease of your business premises is to be held in your name or in the name of the franchisor.
  5. Whether or not you are required to undertake a fit-out or refurbishment of the business premises during the franchise term.
  6. The extent of the training/assistance that will be provided to you by the franchisor at the beginning of, and throughout, the franchise term.
  7. The process that is involved should you wish to sell your franchised business at some stage in the future.

Whilst franchised businesses can be easier to operate than other businesses in many circumstances, they are accompanied by very specific restrictions in the way in which you are able to operate your business to ensure that the Franchisor’s interests are protected.  For this reason it is essential that anyone considering entering into a franchise agreement seeks legal advice before doing so.

An Urgent Alert For All Australian Businesses - Are you ready for PPSA?

Posted by Byron Cannon on December 07, 2011

Personal PropertyThe Personal Property Securities Act (“PPSA”) will come into effect early in 2012. This legislation is very important and you need to act now. It will dramatically alter the way in which security over personal property can be protected.

“Personal property” is any property, whether tangible or intangible, e.g. machinery and equipment, inventory, motor vehicles, book debts, receivables, stock, crops, trademarks and patents.  Only land, fixtures and certain licences are excluded from the definition of “personal property”.

If you answer yes to any of the following questions, you need to urgently get legal advice to protect your interests

  • Do you own any equipment, goods or other property that you hire to other people?
  • Do you sell goods on consignment?
  • Do you manufacture and sell goods?
  • Do your conditions of sale include a retention of title clause?
  • Do you lease chattels as part of a lease of land?      
  • Do you have security over a motor vehicle, boat or aircraft?
  • Do you have security over property which has a serial number identification?
  • Are you involved in transactions under which debts are assigned to you?
  • Are your security agreements in writing?
  • Are your security agreements registered on existing registers?
  • Do you lend money for purchase of inventory or for specified articles of personal property?
  • Do you take security over intellectual property e.g. design, patent, plant breeder’s right, trademark?
  • Do you have “fixed and floating” charges?
  • Do you have an interest in livestock, crops or equipment not in your possession?
  • Do you buy or sell personal property either with real estate or on its own?

IF YOU DO NOT PROTECT YOUR SECURITY IN PERSONAL PROPERTY YOU RISK LOSING IT

If you feel that any of your transactions will be affected by PPSA, you should ensure you have proper advice about protecting them.  This posting sets out some areas affected by PPSA which may be unexpected.  If you have transactions in any of these areas, you should urgently seek advice about protecting your interests.

Register to protect your interests

Registering a security interest gives qualified priority.  Any delay in registering the interest or any inaccuracy in the registration could be disastrous.  Any new security interests created after the commencement of PPSA must be registered quickly (there are strict time limits for some securities) and may be registered before the transaction is effected.

Our role

It is not my normal practice to promote our business on this Blog, but this legislation is very important and you need to act now.  Because of this we have a special offer for December 2011for all of the subscribers of this blog and for anyone one that you may feel will benefit.

We are offering a free review of your documents so that we can let you know whether you are protected.

Failure to protect security interests could be expensive.  I therefore urge you to think seriously about the matters raised.

Please contact either Cheré Meakins or Byron Cannon to discuss this.  Given the urgency of this for your business, our offer at Ferguson Cannon to review your documents free of charge will only last to 19th December 2011.

Employee vs Contractor

Posted by Byron Cannon on December 01, 2011

Employee vs ContractorI have recently had a number of clients query as to whether they can hire people as contractors rather than employees.  The difference is substantial and the consequences are significant if not done properly

To give you an indication of the legal difference between an employee and a contractor I advise as follows:

Employee

An employee is generally a person who is employed under a “contract of service” to provide his or her personal service to the employer, usually either for a fixed or indefinite period of time.  An employment relationship can be easily identified provided that most components of the relationship are significantly controlled by the employer. 

This extends to what work is being performed by the employee and the manner in which it is being performed.  Often, the employer also controls where and when that work is performed by the employee.  The employer is also responsible for the payment of leave and superannuation payments.  In summary, the employer has a significant amount of control over the employee on a daily basis.

A checklist of indicators in an employee/employer relationship include:

  1. The employer has substantial capacity for control;
  2. The engagement of the employee is not limited by the completion of a particular task or project;
  3. The employee performs the work personally and does not delegate;
  4. The employee is an individual and not a corporation or trust;
  5. The employee works exclusively/substantially for the employer;
  6. The employee’s hours are set by the employer;
  7. Most tools and equipment are provided to the employee by the employer;
  8. The employer pays all work related expenses;
  9. The employer is liable for any defects in the employee’s work;
  10. Professional indemnity risks are ensured by the employer;
  11. The employee is entitled to pay the leave benefits.

Contractor

A contractor is engaged under a “contract for service” to achieve a particular result, or to complete a particular task.  When preparing a Contractor Agreement the focus is placed more on the particular outcomes which the contractor is to achieve, rather than on the nature of the relationship between the contractor and principal.  The reason for this is that the principal has very little control over the manner in which the contractor goes about delivering the intended outcome, provided that the intended outcome is ultimately achieved. 

Unlike employee/employer relationships, the contractor is not necessarily required to individually provide the services personally.  The contractor can engage subcontractors to work with them to achieve the intended outcome.

A checklist of indicators for a principal and contractor relationship include:

  1. The principal has no substantial capacity for control over the contractor;
  2. The engagement is dependent on the completion of a particular project;
  3. The contractor may perform the services by delegating them to a third party;
  4. The contractor may be a corporation or trust;
  5. The contractor is free to provide services to the world at large;
  6. The contractor regulates its own hours of work;
  7. The contractor provides its own tools and equipment;
  8. The contractor pays its work related expenses;
  9. The contractor is liable for all the risk of the facts or necessary corrections to services being provided;
  10. The contactor is liable for its own professional indemnity insurances;
  11. The contractor is paid for particular outcomes;
  12. The contractor does not entitles to any paid leave benefits;
  13. The contractor conducts its own business;
  14. The contractor is entitled to work for other parties;
  15. The contractor is liable for its own superannuation and/or other tax obligations.

The Consequences

You are at considerable risk if you enter into a contractor relationship with someone who is actually an employee.  Your risk includes:

(a)            The requirement to pay superannuation obligations;

(b)            The requirement to pay PAYG obligations;

(c)            The risk of not having appropriate WorkCover insurance in place and therefore being sued if the employee is injured;

(d)            Workplace Health and Safety issues.

Please do not hesitate to contact me should you wish to discuss this very important issue.

Sunshine Coast Excellence in Business Awards

Posted by Byron Cannon on November 24, 2011

Sunshine Coast Excellence In Business AwardsI would like to thank Ed Gainer from Sunshine Coast Regional Council Economic Development for inviting me to the 2011 Sunshine Coast Excellence in Business Awards.  Ed is doing a fantastic job in driving economic activity on the Coast and bringing business here.

It was a fantastic evening attended by more than 600 guests, and it showcased the innovation, entrepreneurship and pedigree of the Sunshine Coast business community.

I was particularly excited to see so many clients, supporters and friends of Ferguson Cannon Lawyers as either finalists, or award winners.  I thought it fitting that I mention the following individuals and businesses who have close relationships with our firm:

 

  1. Andrew Stevens of KHA Development Managers who won the prestigious Outstanding Business Person of the Year Award;
  2. Savvy Business Sales who won the Outstanding Business of the Year Award;
  3. Verified Businesses who won the Business Services Award;
  4. Fertility Solutions Sunshine Coast Pty Ltd who won the Small Business Professional Services Award;
  5. Sunshine Coast Radiology who won the Large Business Professional Services Award;
  6. Bank of Queensland Maroochydore  who won the Businesses Services Award;
  7. Bruce Campbell of Action Coach who was a finalist for the Outstanding Business Person of the Year Award;
  8. Vickie Magic of Sunshine Coast of Business Matters Magazine who was a finalist in the Outstanding Business Person of the Year Award;
  9. Mark Stitt of Suncoast Fitness Health Club who was a finalist in the Outstanding Business Person of the Year Award;
  10. Bebrok Excavations who were finalists in the Building/Manufacturing Award;
  11. Haycroft Workplace Solutions who were finalists in the Business Services Award;
  12. Smith & Geyer Property Valuers who were finalists in the Business Services Category;
  13. Business Matters Magazine who were finalists in the Creative/Knowledge Industries category;
  14. The Suncoast Fitness Centre who were finalists in the Lifestyle Services Category;
  15. Keating & Associates Accountants who were finalists in the Professional Services Category;
  16. Complete Framing Maroochydore who supplied the awards for the evening.

I am proud to be involved with so many successful individuals and businesses who excel in their individual fields.  Congratulations to all of them and I look forward to next year’s awards.

Capital Gains Tax and Life Insurance Policies in Business Wills

Posted by Byron Cannon on November 17, 2011

Life InsuranceI was recently asked to give a presentation for Business and Estate Planning Specialists. This company specialises in selling risk insurance for businesses and individuals. They had asked that I explain to their team the taxation implications for various forms of life insurance policies. 

One issue that was discussed is why it is so important to structure life insurance policies properly when preparing Business Wills or Buy/Sell Agreements.

Is Life insurance a Capital Gains Tax asset?

The Capital Gains Tax legislation treats insurance policies as a Capital Gains Tax asset, and the payment of the insurance proceeds as a disposal of the asset.

Capital Gains Tax asset a Chose-in-action

The definition of a Capital Gains Tax asset includes a “chose-in-action”. A chose-in-action is a contractual promise to do something or to pay something.  An insurance policy is a chose-in-action as it is a contractual promise by the insurer to pay the amount insured upon the occurrence of an event (ie. death). This asset will be disposed upon the performance of the contract (ie. the payment of the insurance proceeds). This results in the disposal of a Capital Gains Tax asset.

Now that it is established that an insurance policy is a Capital Gains Tax asset, careful consideration needs to be given as to whether any of the Capital Gains Tax exemptions apply.

Capital Gains Tax exemptions

Death benefits will only be exempt from Capital Gains Tax where the recipient is either:

(a)     The original beneficial owner - this can include two or more people such as the case when policies are owned by business partners over each other, and can also include a company or trust; or

(b)     Acquired the interest in the policy for nil consideration.

The term “original beneficial owner” has also been stated by the ATO to be the first person who:

(a)     At the time the policy is effected, holds the rights under the policy; and

(b)     Possesses all the normal incidents of beneficial ownership.

Ownership of policies by surviving business owners

It is very important that if insurance policies are owned by surviving business owners, there are no changes to the ownership of the business between the time that the policy was taken out, and the death of the deceased owner. 

The reason for this is that if new owners are introduced into the business, and those owners wish to take advantage of the insurance policy, the definition of “original beneficial owner” may not be met as:

(a) That person would not have been the original beneficial owner; and

(b) If money was paid to purchase the share in the business, and the interest in that life insurance policy, there would not have been an “acquisition in the interest of the policy for nil consideration”.

It is therefore essential that if new owners are introduced into the business, that the existing policies are terminated and new policies entered into.

Ownership by deceased estate

If insurance policies are owned by the deceased estate, the deceased estate would be the “original beneficial owner” and the estate would be exempt from Capital Gains Tax in relation to the life insurance proceeds. 

However, for Capital Gains Tax purposes, the estate would be deemed to have disposed of the interest in the business, at a deemed market value, and would have to pay Capital Gains Tax on the capital gain realised upon their disposal of the interest in the business.

Business Wills

It is essential that when drafting Business Wills, careful consideration is given to the ownership of life insurance policies so that unwanted Capital Gains Tax consequences are not brought about.  Please do not hesitate to contact me if you would like to discuss any aspect relating to Business Succession, Business Wills, Estate Planning, or the ownership of life insurance policies.

New Work Health and Safety Laws

Posted by Byron Cannon on October 17, 2011

Safety FirstAre you ready for The New work health and safety laws?

If not...now is time to make sure you are ready, because on the 1 January 2012, the new harmonised national Work Health and Safety laws will commence. The Queensland Act will be known as the Work Health and Safety Act 2011 (WHS Act 2011).

Company Officers

Under the new Work Health and Safety Act 2011 Company Officers will have new and increased obligations to ensure their businesses are complying. The definition of ‘officer’ includes:

  • Directors, company secretary, partner, officeholder
  • Those involved in making decisions that affect the whole or a substantial part of the business
  • Those with the capacity to affect significantly the organisation’s financial standing
  • Receivers, administrators, liquidators

Penalties

Under the new laws, officers could be personally liable for up to $600,000 in fines and/or 5 years' imprisonment if they are deemed to have breached their primary duty of care.

The primary duty of care is to ensure, so far as is reasonably practicable, the health and safety of workers at work in the business. The primary duty is broad and provides for:

  • a work environment without risks to health and safety
  • safe plant and structures
  • safe systems of work
  • safe use, handling, storage and transport of plant, structures and substances
  • adequate facilities for the welfare of workers
  • information, training, instruction or supervision that is necessary to protect persons from risks to health and safety arising from work
  • monitoring of the health of workers and conditions at the workplace.

A self-employed person must also ensure, so far as is reasonably practicable, his or her own health and safety while at work.

Act Now

Directors and management of businesses throughout Australia are now in a position to influence the occupational health and safety regime of their organisation.  It is imperative to address this now so that appropriate procedures are in place come 1 January 2012.  It is very important to establish a culture now to ensure safety is taken seriously. Therefore officers will have to exercise a positive duty of care and this will be achieved by conducting on an ongoing basis "due diligence" that will include:

  • gaining an understanding of risks and hazards associated with the operation of their business
  • assessing and  ensuring that there are  appropriate  resources  and processes in place to eliminate or minimise risks
  • timely response to incidents
  • implementation of a process to ensure legal compliance to the WHS Act 2011
  • ensuring that their business complies with its safety obligations
  •  keeping up-to-date with all work health and safety matters;

The clock is ticking and you only have 10 weeks to get your business prepared for the new laws. There will be no grace period after commencement. Therefore I urge you to take the time now to assess your situation, understand your Work Health and Safety obligations which will be dependent on your business and industry and make sure that come January 1 2012 you have a new set of Work Health and Safety processes in place and communicated to your people. 

Please contact me to discuss any questions or queries you may have.

Working Safely From Home

Posted by Byron Cannon on October 05, 2011

I recently read an interesting article in the Financial Review on the hidden costs of working from home. The article by Fiona Carruthers detailed the problems which Telstra faced just recently when it was found liable for physical and psychological injuries sustained by one of its employees who were working from home. Telstra may now face paying hundreds of thousands of dollars in compensation.

This article got me thinking about some of the ways in which businesses could minimize the risk of their employees and subcontractors being injured while working from home. With the introduction of the new Australia wide Workplace Health and Safety Act 2012, which will come into effect on 1 January 2012, issues of safety when working from home will be paramount.

Many business owners want to give their employees the opportunity to work from home. Particularly, with the new trend of having a work-life balance, I have found that there is an increased pressure on business owners to be more flexible in the working conditions they set for their employees. However, it’s equally important for employers to understand that this can come at a very high price, if the right foundations are not set from the very start.

One of the best ways for business owners to protect themselves from liability is to ensure that each individual who is engaged to work from home, signs a Workplace Health and Safety Agreement. This Agreement may form part of the individual’s employment agreement or may be an entirely separate agreement. Either way, it is essential that both the employer and employee are aware of their obligations under what are a very comprehensive set of regulations.

The benefit of having a Workplace Health and Safety Agreement drawn up is that both parties understand their obligations under the law. Procedures may be put in place under the Agreement to ensure that both parties are complying with the relevant procedures and taking appropriate measures to identify and minimize the risk of potential injury. The Agreement can also require that both parties inform each other immediately in the event of a possible breach so that it may be rectified in the most efficient way possible.

Business owners should note that the clauses necessary in a Workplace Health and Safety Agreement differ based on the nature of the relationship between the parties entering into the agreement. For example, if the Agreement is between a principal and contractor, the burden of liability will be far more heavily placed on the contractor than the principal. This is distinct from an Agreement between an employer and employee as the relationship between those two parties at law is very different compared to that of a principal and contractor.

If you have any concerns regarding how the new Workplace Health and Safety laws may affect you or your workplace, please feel free to contact me.