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ATKINSON VINDEN

Lawyers

Employment Law Standing your Ground With Employees

Commercial Dealing with Product Recalls

Banks Behaving Badly: Your Rights As a Commercial Borrower

In this issue:

Welcome to this edition of Law Talk, the Business Newsletter of Atkinson Vinden.

In this edition, Rod Berry provides some guidance on “standing your ground” with employees. When

is this important?

Sheena Joshi addresses the important issues which arise in relation to product recalls and

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provides practical tips for businesses which must confront this problem.

In addition, we include a brief article by Caitlin Watson on the rights of commercial borrowers in disputes with banks. This is an area of increased importance.

We trust that the information in Law Talk is of value and relevance to you.

Warm regards Guy Vinden

Standing Your Ground With EmployeesWe advise many businesses on the effective management of employees. In this article, Rod Berry suggests that sometimes it is necessary to stand your ground.

If employees are the greatest asset to a business, then they also pose the greatest risk.

The Cost of Keeping Bad EmployeesMore often that not, employers err on the side of giving poorly performing employees too much latitude. Part of this reticence is a fear of a claim being brought against the company. A wise employer will weigh the cost of keeping a difficult employee against the potential cost of a claim against the company.

What Should Not Be ToleratedThere are some circumstances where a poorly performing employee

Continued on page 2

Essential Boardroom BriefingA “must attend” briefing on important issues for business owners and their advisers

Commercial• Shareholders’ disputes: understanding the issues.• Preparing your business for sale: what you should have in place.• Traps in commercial and retail leasing.

Estate Planning• Superannuation: tips and traps.

Date: Tuesday 19 March 2013Time: 7.30am – 9.30am (A light breakfast will be provided)Cost: ComplimentaryVenue: Level 8, 10 Help Street, Chatswood

RSVP:Please RSVP names of attendees by 3 March 2013 (places limited!)By telephone: Janice on 9411 4466By email: jmartin@atkinvin.com.auBy fax: 9412 3657

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should not be tolerated. This includes situations where the employee:

• is not fulfilling the essential duties of their position; or

• is not complying with company policy, notwithstanding counselling bringing the issue to the employee’s attention; or

• is creating problems that significantly adversely impact on other staff.

Where these situations arise, the law requires that the employer:

• advise the employee that such conduct is unacceptable;

• communicate clearly what is required to address the issue;

• provide the employee reasonable opportunity to mend their ways, including the provision of any support that may assist the worker to improve performance; and

• advise the employee that further non-compliance will lead to further disciplinary action, which may include termination of employment.

These steps are not unduly onerous when common sense is applied to a situation. Records of relevant discussions should be kept, and ideally, the above processes should be reflected in written communications.

Notwithstanding the discomfort we feel when having to deal with the termination of someone’s employment, there is usually an enormous emotional relief felt by all when a difficult staff member has been removed. High performing staff members actually feel valued when a distinction is drawn between their valuable work, and the unacceptable standards of underperformers.

DishonestyIf an employee has clearly been dishonest, in most instances it will be reasonable to terminate the employee with immediate effect. An employer needs to be able to produce actual (rather than circumstantial) evidence to support such an allegation, if ever challenged in unfair dismissal proceedings.

It will normally be prudent to stand an employee down while you investigate the matter. A proper investigation may involve speaking to witnesses, and reviewing the worker’s email history.

Because there may be criminal implications for the worker concerned, it is important to put

any allegation of dishonesty squarely to a worker. Most employees in that situation will offer their resignation. If the taking of money is involved, the employee will usually offer to pay back what was taken. You should get their signed authority to deduct what is owed from any wages or other entitlements due to the employee.

Remember, if the conduct is a “serious indictable offence”, then the company has a positive duty to inform the Police, pursuant to section 316(1) of the Crimes Act (NSW).

Economic DownturnIn circumstances where there is insufficient work to keep all staff busy, an employer can deal confidently with redundancies. Sections 117 and 119 of the Fair Work Act now provide clear guidance on minimum entitlements in a redundancy, and these should be read in conjunction with any Award that may apply to the position. There are protections from unfair dismissal claims in the context of bona fide redundancies.

Unfair CompetitionSometimes employers will be loath to dismiss an employee for fear of what that employee might do in competition. Related to this is a common misconception that restraints of ex-employees are unenforceable. So long as the restraint is reasonable in its application there are reasonable prospects of the court enforcing the restraint.

Usually when an employer stands their ground on this issue through robust pre-litigation correspondence, the employee concerned will either capitulate, or negotiate a compromiset.

Our Rod Berry would be delighted to hear from you about any problem on (02) 9411 4466.

Standing Your Ground With Employees (Continued)

Employment LawRod Berry

In circumstances where there is

insufficient work to keep all staff busy, an employer can

deal confidently with redundancies.

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We have recently seen an increase in faulty products requiring recall in various industries. With the increase in production offshore, quality control and other standards need to be monitored carefully. If they are not, a product recall may be inevitable at significant expense to the supplier.

There are ways in which you can prevent a product recall but what happens when the recall is inevitable?

Below are some general helpful hints that you should know in case you are required to recall a product (either voluntarily or involuntarily).

The first step is to review the Product Recall Guidelines that have been developed by the Australian Competition and Consumer Commission (ACCC) in consultation with state and territory product safety regulators.

The purpose of the Guidelines is to provide guidance to suppliers on how to conduct a product safety recall. These Guidelines should be read prior to initiating any recall action. The Guidelines are provided for guidance only and are not legally binding.

The system a supplier has in place to ensure the recall of unsafe consumer products from consumers and from within the supply chain should be tailored to the type of product and the risk they pose to consumers. A supplier should always seek legal advice regarding the system it develops or has in place for conducting a consumer product recall as these vary from industry to industry.

The Guidelines have been developed to help suppliers plan for, and respond to, an incident where the recall of potentially unsafe consumer products is required. It does this by setting out:

• the legal requirements for suppliers in relation to a consumer product recall specified in the Australian Consumer Law.

Product Recalls – What You Should KnowCommercial

Sheena Joshi

• the role and responsibilities of suppliers and government agencies when a recall is necessary, requirements for conducting a recall, including notification, recall strategy, retrieval of the product and reporting on the recall.

In addition to reviewing and adhering to the Guidelines, a written recall notice must also be issued. This notice should include:

• Product description - a clear description of the product, including the name, make and model and any distinguishing features, batch or serial numbers. Dates the product was available for sale should also be included.

• Picture of the product - a photograph or drawing of the product will provide the consumer with a convenient and effective means of identifying the product.

• Description of the defect - a clear description of what the defect is. The defect should be described in simple terms so that the average consumer can understand what the problem is. Suppliers should refrain from using overly technical terminology wherever possible.

• A statement of the hazard - a description of the maximum potential hazard and associated risk. Where available, an appropriate hazard symbol should be included.

• A section titled “What to do”, which explains the immediate action the consumer should take. For example, “Cease use immediately and return the product to the place of purchase for a full refund”. It should be clear that the consumer should return the product and not dispose of it. Suppliers should ensure they minimise the inconvenience to consumers in order to encourage consumer compliance with the recall notice.

• A section titled, “Contact details”, which explains who consumers should contact to receive a refund or have the product repaired or replaced. Business and after-hours telephone numbers should also be included (preferably toll free), as well as email and website addresses.

Most importantly, the recall notice should not include the words ‘voluntary recall’.

Suppliers undertaking safety-related recalls are required under the Australian Consumer Law (subsection 128(2)) to notify the Minister for Competition Policy and Consumer Affairs within two days of commencing recall action. The ACCC monitors and audits the effectiveness of product recalls for general consumer goods. Depending on the product being recalled, it may also be necessary to notify a specialist Commonwealth regulator or a state or territory electrical/gas safety authority of the recall.

If you would like any more information regarding product recalls, please contact Sheena Joshi on (02) 9411 4466.

ATKINSON VINDEN

Lawyers

Keeping in Touch COMMERCIAL & BUSINESS

Sheena Joshi – sjoshi@atkinvin.com.auAnne Goodrick –agoodrick@atkinvin.com.au

DISPUTE RESOLUTION & LITIGATION

Rod Berry – rberry@atkinvin.com.auCaitlin Watson – cwatson@atkinvin.com.au

EMPLOYMENT & INDUSTRIAL

Rod Berry – rberry@atkinvin.com.auTom Howard – thoward@atkinvin.com.au

ESTATE PLANNING & WILLS

David Atkinson – datkinson@atkinvin.com.auFrank Windeyer – fwindeyer@atkinvin.com.au

FAMILY LAW

Annabel Murray – amurray@atkinvin.com.auNathan Avery-Williams – navery-williams@atkinvin.com.au

INFORMATION & COMMUNICATION TECHNOLOGY

Rod Berry – rberry@atkinvin.com.auSheena Joshi – sjoshi@atkinvin.com.au

PROPERTY

Sue Falkner – sfalkner@atkinvin.com.auChris McClure – cmclure@atkinvin.com.auBill Dockrill – bdockrill@atkinvin.com.au

RETIREMENT VILLAGES

Guy Vinden – gvinden@atkinvin.com.auAllison Paten – apaten@atkinvin.com.au

TELEPHONE: (02) 9411 4466

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Banks Behaving Badly - What to do When the Bank Closes In

Tips and Traps

As real estate prices continue to decrease, the value of your major asset falls. This changes your financial circumstances without any action taken by you. If your financial position is tight, the Bank may call in the mortgage. So what happens if your business overdraft is tied to your family home or investment property?

The Bank will be in touch quickly if it is concerned about your level of debt. The Bank should consider the financial health of your business and other real property holdings.

In the above circumstances, as a business owner you should initially:

• perform your own financial health check on your business and debt level. You may be able to address the Bank’s concerns and improve your business.

• seek copies of your statements and check the payments are accurate.

• negotiate directly with your banker, who knows your business. Some businesses have seasonal troughs which do not illustrate an ongoing trend.

• if you are not already, contact the private wealth section of the Bank. Specialised bankers will have a better understanding of your business.

• if appropriate, you may offer the Bank further security.

If the Bank doggedly decides to call on the loan/s, your options are:

• refinance with an alternative lender; or

• sell one or more of the real property holdings to reduce the debt.

Dispute Resolution

In unusual circumstances when an irregularity has taken place, you can enter dispute resolution with the Bank. This will allow you further time to actively resolve any issues with the Bank, from incorrect payments to serious issues of fraud. At this point, you should obtain preliminary legal advice.

The dispute resolution process is:

1. Speak to your banker;

2. If the dispute cannot be resolved, apply for internal dispute resolution. The Bank is required to offer this service;

3. If the dispute cannot be resolved, apply to the Financial Services Ombudsman (FOS) or the Credit Ombudsman Service Limited (COSL);

4. If the dispute cannot be resolved, you may consider legal proceedings against the Bank.

If you experience problems with the Bank, please call Caitilin Watson on (02) 9411 4466 who can assist you to promptly resolve any issues.

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Caitilin Watson