Nevett Ford March 2017 Newsletter

Entrepreneur Visa

The Government of Australia introduced the National Innovation & Science Agenda with the objective of taking Australia through extraordinary technological change that is intended to transform the way we live, work, communicate and pursue good ideas.

In order to advance the Agenda, the Government introduced the New Entrepreneur visa to attract the best overseas start-up talent into the country.

The new Australian Entrepreneur visa has been established for entrepreneur with innovative ideas and financial backing from third parties. The new visa allows entrepreneurs with AUD2000,000 in funding from specified third parties to develop and commercialise their innovative ideas into Australia. The most important part of this visa is the provision of a pathway to Australian permanent residency.

Eligibility (summary)

  • Business Innovation and Investment (Provisional) visa (subclass 188), Entrepreneur Stream
  • Applicant must be under 55 years of age, unless a waiver is provided by a state or territory government. A state or territory can waive the age requirement if the proposed complying entrepreneur activity will be of ‘exceptional’ economic benefit to the nominating state or territory
  • Applicant to provide evidence of ‘competent’ English at the time the applicant is invited to apply for the visa Applicant to undertake or propose to undertake a complying entrepreneur activity in Australia
  • Applicant has a genuine intention to continue this activity
  • Applicant must be nominated by a state or territory government.

Migration Regulation 5.19E sets out the criteria to be met for an activity to be a complying entrepreneur activity. This regulation requires that the activity must relate to an innovative idea that is proposed to lead to the commercialisation of a product or service in Australia or the development of a business or enterprise in Australia.

The following requirements must be met:

  • There must be one or more legally enforceable agreements under which funding is to be provided to the entrepreneurial entity (which may be the applicant, a body corporate, or a partnership) by one or more entities
  • The total amount of funding provided or to be provided under the agreement or agreements must be at least AUD200,000
  • If the applicant is not the entrepreneurial entity, the applicant must personally hold at least a 30% ownership share in the entrepreneurial entity at the time the agreement or agreements are entered into, which prevents more than three applicants being eligible in relation to any one entrepreneurial entity
  • Under the agreement or agreements, at least 10% of the funding must be payable to the entrepreneurial entity within 12 months of the day the activity starts to be undertaken in Australia (i.e. $200,000)
  • •There must be a business plan that is appropriately formulated to lead to an outcome.

Source of funds

Sources of funding are limited to:

  • Commonwealth agencies
  • State and territory governments
  • Publicly funded research organisations
  • Investors registered as a Venture Capital Limited Partnership/s (VCLP) or an Early Stage Venture Capital Limited Partnership/s (ESVCLP).

There are a number of state government funded grants for start-ups:

  • Victoria: Launch Vic have $60 million fund
  • New South Wales: Jobs for NSW – Minimum Viable Product Grants and Building Partnership Grants have $190 million over four years
  • Queensland: iLab incubator and Accelerator provided $80 million to date
  • Western Australia: Innovation voucher program
  • South Australia: Innovative voucher Program
  • Commonwealth Government: Innovation Program.

The main funding will come from Venture Capital Limited Partnership/s 9VCLP) and Early State Venture Capital Limited Partnership/s (ESVCLP) which have overseas and local investors who register under the Venture Capital Partnership/s Act 2002.

  • VCLP must have capital in excess of $10 million
  • ESVCLP must have capital between $10 million and $200 million.

Exclusions

The following activities are excluded:

  • Establishing, purchasing, investing or acquiring an interest in residential real estate. The term ‘Australian residential property’ includes any Australian land zoned for residential use
  • Establishing, purchasing, investing or acquiring an interest in labour hire companies; or
  • Purchasing, investing or acquiring an interest in an existing entity (including franchise).

Transition to Australian permanent residence

The criteria for transitioning to permanent residence in the entrepreneur stream are that:

  • An applicant holds a subclass 188 visa for a continuous period of four years;
  • An applicant has resided in Australia for two out of the last four years; and
  • An applicant has demonstrated an overall successful record of undertaking, whether alone or by participating in a business, activities of an entrepreneurial nature in Australia while holding a subclass 188 visa.

An applicant’s record of success will be based upon the number of Australian citizens employed, the nature of the funding and the annual turnover in relation to the activities undertaken.

The Government’s policy document for transition from subclass 188 to the subclass 888 (permanent residence) visa has not been finalised.

Nevett Ford Lawyers Melbourne can provide advice and assistance so please contact us if you are interested in this visa or any other visa type.

Is your business hiring employees or independent contractors?

In December 2015, the High Court of Australia handed down judgment in the matter of Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd.

Quest Serviced Apartments (“Quest”) employed two housekeepers over several years. It then entered into a contract with Contracting Solutions whereby the two women would become independent contractors engaged by Contracting Solutions, though they continued to work for Quest and performed the same roles.

This arrangement was effectively sham contracting, which is prohibited under Commonwealth legislation.

Section 357 of the Fair Work Act 2009 (Cth) restrains an employer from representing to an individual that they are working as an independent contractor when they are working as an employee.

As a result of its sham contracting, Quest now faces pecuniary penalties, which can be as high as $54,000 per breach for a corporation.

So how do you know if your employees are genuinely employees or independent contractors? There is no hard and fast rule and it can often depend on the individual circumstances of the situation.

There are several indicators to consider when determining the nature of your employment relationship, such as how the worker is paid, who makes the taxation payments and whether the worker is a representative of the business.

The entire arrangement will need to be considered to determine the nature of the working relationship.

If you are unsure whether your workers are employees or independent contractors, speak to one of the Workplace Relations team at Nevett Ford on (03) 9614 7111.

Employer penalised for deducting monies from wages

Late last month, a Victorian cleaning business learned that deducting or withholding monies from employees is not permitted except in very specific circumstances.

Oz Staff Career Services Pty Ltd employed 102 casual cleaners pursuant to the Cleaning Services Award 2010. The employer deducted monies from its employees’ pay for meals without authorisation on three occasions over two months.

After conducting an audit of the business, the Fair Work Ombudsman took legal proceedings in the Federal Circuit Court against the company and its chief executive officer. It was found that the employer contravened the Fair Work Act 2009 (Cth) .

Under the Act, employer deductions are prohibited, unless the employee has provided written consent. The employee must expressly agree to reimburse the employer for any costs to be deducted from any final termination payment and must specify the amount of the deduction. This authorisation can be withdrawn in writing at any time.

A failure to comply with these requirements may breach your obligations as an employer under the Act, leaving you liable to civil penalties of up to $61,000 per breach.

If you believe you are entitled to recover monies from employees for overpayments or permitted deductions, contact the Workplace Relations team to Nevett Ford on (03) 9614 7111 to ensure that you comply with your requirements as an employer and avoid the risk of litigation and penalties.

You’ve been working there for HOW long?

How long does an employee have to be employed before they’re eligible to make an unfair dismissal claim? The short answer is “that depends on the size of your business.” If you’re a small business, the employee will have 12 months before they can claim eligibility. If you employ more than twelve employees, they will only have six months. But how is that six months calculated?

In Emma Wells v ABC Blinds & Awnings [2016] FWC 8260 the Applicant was employed between 4 February 2016 and 4 August 2016. She was originally engaged as a casual employee for the first three months and was subsequently offered a permanent position, which she retained for another three months.

It’s important to note that during her casual employment, the Applicant worked regularly on a roster based system and took two days of unpaid leave within this period.

The Applicant was handed a notice of termination shortly after arriving at work on 4 August 2016 – exactly six months after her first day of work with the Employer.

The Employer argued that 1) the Applicant’s service as casual employee should not be included when calculating continuous service and 2) if the casual employment were deemed to be included, her continuous service would not add up to six months as she had taken two days off during that time.

The Fair Work Commission found that the Applicant’s employment was regular and systematic and therefore it could be included as part of her continuous service.

However, in light of the unpaid leave taken during her casual employment, the Applicant was found not to have served the minimum employment period, meaning she was not a person protected from unfair dismissal and her application was dismissed.

So what are the lessons here?

  1. An employee’s casual employment may be classified as continuous service for the purposes of the unfair dismissal laws depending on the regularity of their work schedule and also their expectations of future employment.
  2. Any unpaid leave taken during casual employment will not break an employee’s continuous service, but it will also not contribute their continuous service with an employer.

If this all sounds too confusing and overwhelming, never fear! Call one of the workplace relations lawyers at Nevett Ford on (03) 9614 7111 for advice and assistance on all of your employment law matters.

ASIC warns about scam emails

On 17 January 2017, ASIC issued a Media Release warning its customers to be vigilant of a scam involving emails to customers purporting to be issued by ASIC.

The media release reports that ASIC “is aware of some customers having received emails containing attachments or links to the fake invoices. Fake emails may look different to ASIC emails and generally instruct the recipient to click a link so make a payment or download an invoice”.

The media release suggests the scammers are using viruses, spyware or malware programs to access or steal personal information of ASIC customers.

Corporate entities and those within those companies who have company secretarial responsibility should be vigilant about responding to emails purporting to be issued by ASIC. If there is any doubt about the authenticity of an email purporting to come from ASIC the recipient is urged to notify ASIC.

The Media Release also suggests suspected scam emails be notified to the ACCC via Scamwatch “Report a scam” page.

Renewing Victorian Retail Leases

Where a tenant has an option for a further term granted to it under the terms of a lease (or a subsequent deed varying the lease), in the majority of cases for standard commercial (non-retail) leases it is the tenant that takes the first step in exercising the option.

For the exercise of the option to be valid, the option must be exercised within the option exercise period defined in the lease. If the tenant exercises its option outside the option exercise period, the landlord is generally not obliged under the terms of most leases to renew the lease for the further term, and the lease will terminate at the end of the current term.

However, for leases of “retail premises” governed by the Retail Leases Act 2003 (VIC) (Act), the landlord is required to act first.

As mentioned in our earlier blog on 13 October 2016, Section 28 of the Act provides:

  • If a lease contains an option exercisable by the tenant to renew the lease for a further term, the landlord must notify the tenant in writing of the date after which the option is no longer exercisable (Last Date for Exercising the Option). That notice (Notice) is to be given at least 6 months and no more than 12 months before the Last Date for Exercising the Option.
  • However, the landlord is not required to provide the Notice if the tenant exercises or purports to exercise the option before receiving the landlord’s Notice;
  • If the landlord fails to provide the Notice to the tenant within the required timeframe, the lease is taken to provide that the Last Date for the Exercising Option is extended to a date which is 6 months after the date landlord provides the Notice to the tenant (Extended Last Date);
  • If the Extended Last Date occurs after the expiry date of the current term set out in the lease, the lease continues until the Extended Last Date;
  • If the tenant exercises the option prior to the Extended Last Date, the new lease commences at the expiry date of the old lease, rather than the total term of the lease being extended.

Consequently, an unplanned extension of the option exercise period may occur where a landlord fails to provide, or is late in providing, the Notice to the tenant.

For tenants, however, it would be prudent to formally exercise their option for a further term within the option exercise period, rather than wait for the landlord to serve the Notice. Section 28 does not prevent tenants from the exercising their options prior to receiving the Notice.

In circumstances where:

  1. a retail leasing tenant has failed to exercise its option for a further term within the option exercise period recorded in the lease; and
  2. the landlord has indicated that it is not willing to accept the tenant’s exercise of its option outside that option exercise period, and has required the tenant to vacate the premises at the end of the current term,

Section 28 may provide a solution (by extending the Last Date for Exercising the Option) if the landlord has not served the Notice on the tenant.

If you require assistance regarding exercising an option under a retail premises lease in Victoria, please contact Andrew Bini, Senior Commercial Lawyer, Nevett Ford Melbourne.

Retail Leasing

Landlords should avoid delays in providing executed Lease document to tenants

Section 22 of the Retail Leases Act 2003 (Vic) (RLA) provides:

  1. Within 28 days (or such other period as is agreed in writing between the landlord and the tenant) after being given a copy of the retail premises lease signed by the tenant, the landlord must give the tenant a copy (which may be a photocopy) of the lease signed by the landlord and the tenant.
  2. If the landlord fails to provide the executed lease to the tenant within that period, the tenant may give the landlord a written notice of termination of the lease at any time within 28 days after :
  • the tenant is given a copy of the lease signed by the landlord and the tenant; or
  • entering into the lease,

whichever happens last.

3. If the tenant gives the landlord a notice of termination in accordance with the above, the lease terminates 14 days after the notice is given.

Accordingly, Section 22 requires a landlord to give to the tenant a copy of the lease document signed by both the landlord and the tenant within 28 days of receiving a copy of the lease document signed by the tenant.

A failure by a landlord to provide the fully executed lease document to the tenant within that 28 day period, places the tenant in a position where the tenant obtains a window of opportunity to terminate the lease.

In an effort to avoid the situation where the tenant is empowered to terminate the lease under Section 22, we suggest that if, prior to the execution of the lease documents, a landlord anticipates a delay in returning the fully executed lease document to the tenant, then the landlord should ensure the lease contains a provision which allows the landlord to return the executed lease document to the tenant outside of the 28 day period. This is allowable because Section 22 clearly states “within 28 days, or such other period as is agreed in writing between the landlord and the tenant”.

If you require assistance with retail leasing please contract Andrew Bini.

AUDIT AND AMEND YOUR APPARENT CREDIT RISK PROFILE

The Personal Properties Securities Register (PPSR) established under the Personal Properties Securities Act 2009 (Cth) (PPSA) records security interests held by creditors over certain personal property of debtors.

A consequence of registration of security interests over the assets of a debtor, is that registration may also provide an indication of the apparent credit risk of the debtor to the world at large. For example, numerous PPSR registrations over a company is likely to indicate that the company may be indebted to numerous creditors. This may have an impact on that company’s ability to raise necessary finance.

However, not all registrations of security interests on the PPSR may be current or legitimate. It’s common with some debtors that their PPSR registration profiles may contain registrations which no longer apply, or worse, were improperly recorded on the PPSR.

We have been advising clients that if they wish to improve their apparent credit risk profile on the PPSR, they should seek to have the non-current and improperly registered security interests removed from the PPSR.

The PPSA sets out a process for dealing with those registrations, which involves:

  • written demands by the debtor to the secured parties to remove or amend the registrations on the basis that the registrations no longer (or never did) secure any obligation from the debtor to the secured parties, including the payment of monies owed (e.g. in circumstances where the debtor has paid the creditor/secured party all amounts owed); and
  • if the secured parties do not remove or amend the registrations within 5 business days of service of those written demands, the debtor may apply to the Registrar under PPSA and seek assistance to have the registrations amended or removed.

If you would like assistance with the removal or amendment of registered security interests on the PPSR, please contact Andrew Bini.

3 FAQs from Victorian Retail Leasing Tenants

The following are typical of the FAQs we receive from tenants:

1. I have been given a Letter of Offer to lease retail premises by the landlord’s real estate agent. What should I do now?

Ideally, you should not sign the Letter of Offer before:

(a) conducting physical due diligence of the building structure and the landlord’s fixtures, plant and equipment contained within it. In this regard, we recommend a building report be obtained from a qualified tradesperson. Similarly, a suitably qualified tradesperson should inspect all landlord fixtures, plant and equipment within the premises, such as air-conditioning, for example. Any problems arising out of those reports should be dealt with as amendments to the Letter of Offer, requiring the landlord to rectify those problems prior to the commencement of the Lease; and

(b) speaking to a retail leasing lawyer. The lawyer should conduct legal due diligence of the premises and the landlord and advise you on the terms of the proposed Lease as described in the Letter of Offer. If necessary, the lawyer may be able to negotiate any changes you may require to the Letter of Offer before it is signed. The lawyer should also advise you on whether the Letter of Offer constitutes a binding agreement to enter into the proposed Lease. Many Letters of Offer we see require tenants to pay significant deposits to the landlord’s agent. Those deposits may be jeopardised if the tenant does not proceeding with the Lease after having signed the Letter of Offer.

2. After signing a Letter of Offer, I have been given copies the landlord’s Disclosure Statement signed by the landlord and Lease documents for execution. What should I do now?

Ideally, you should provide the documents to a retail leasing lawyer to:

(a) ensure the terms of the documents correspond with what you have agreed to in the Letter of Offer and to check the terms of the documents against the requirements of the Retail Leasing Act 2003 (Vic) (RLA);

(b) advise you on the wider legal terms of the Lease which were not mentioned in the Letter of Offer;

(c) seek amendments to the terms of the documents which do not correspond with the Letter of Offer, the RLA or your understanding of how you will occupy the premises; and

(d) advise you on the tasks you (as the incoming tenant) may need to undertake before you can take possession of the premises, which may include:

(i) obtaining the landlord’s approval to any proposed fitout;

(ii) the provision of a cash security deposit or obtaining a bank guarantee (and complying with the requirements for bank guarantees under the terms of the Lease); and

(iii) obtaining public liability insurance coverage which complies with the insurance requirements of the Lease (which will usually include noting the landlord’s interest as an insured party on the insurance policy);

(e) assist with the timely execution and return of the Lease documents to the landlord’s agent; and

(f) seek from the landlord the return of the fully executed Lease documents and, where relevant, the consent of any mortgagee on title to the grant of the Lease by the landlord.

3. I have entered into a Lease and have taken possession of the premises. Is there anything more I should do concerning the Lease?

Yes, at a minimum you should:

(a) ensure you and your employees comply with the various obligations applying to the tenant under the Lease document;

(b) ensure that you and your employees comply with the tenant’s obligations under any building rules which might apply (where the premises are located within a larger building: for example, a shopping centre);

(c) diarise the last day you can exercise any option to renew the lease for a further term (noting that if you exercise the option after that last date, the landlord might not be obliged to extend or renew the Lease);

If you would like assistance with your retail leasing, please contact Andrew

Contact Details

Melbourne Office

Level 16 South Tower

Rialto

525 Collins Street

Melbourne Victoria 3000 Phone: +61 3 9614 7111

Fax: 03 9614 3192

Email: melbourne@nevettford.com.au

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