Employers can easily fall into dispute with their employees by failing to properly handle redundancies. There is often uncertainty surrounding redundancy, in terms of handling it within the law, as well as cost.

Redundancy commonly occurs when a business is sold and a new owner offers jobs to the vendor’s existing workforce. Some employees decline the offer of employment by the new owner. In this context, an issue can arise as to whether or not redundancy payments need to be made to an employee who rejects an offer of employment by the new owner.

Notice and Severance distinguished

Notice and severance payments should not to be confused. The period of notice provides the employee with a chance to seek other employment while a severance payment is intended as compensation for the loss of future entitlements to long service leave and accrued sick leave.

Redundancy

Let’s examine what redundancy means. The best way to define redundancy is that the employer no longer wishes the duties the employee has been performing to be undertaken by anyone. Termination of the employee on this ground has therefore nothing to do with poor performance or misconduct. Essentially the work or role is no longer required to be performed by any employee. Redundancy can also happen when an employer becomes insolvent or bankrupt, or following a re-structure, in order to increase the competitiveness or profitability of a business.

The employer must meet any requirements under a relevant award or enterprise agreement regarding redundancy. This includes discussions with the employee about the prospect of redundancy in view of operational changes or restructuring.

Employers need to be aware that a redundancy which does not meet the above criteria may expose them to an unfair dismissal claim. It should also be appreciated that a redundancy does not remove the need for notice or payment in lieu of notice.

Some employers fall into the trap of going through a ‘redundancy’ and then immediately afterwards advertising the same position. From an employer’s perspective it is prudent to assume the former employee will check your advertised positions.

It is not uncommon for an employer to seek to portray what may in fact be, a wrongful termination of an employee, as a “redundancy”.

The employer needs to ensure that, on examination of the facts, whilst the employee may have no legal claim to a severance payment, there is no basis of a common law claim.

What is a ‘genuine redundancy’?

If an employee has been made redundant and that redundancy is a “genuine redundancy” as defined by the Act then the employer will be able to defend a claim for unfair dismissal.

Under the Act, it is a “genuine redundancy” if:

• the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and
• the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy; and
• it is not reasonable for the employer to redeploy the person in the employer’s enterprise or an associated entity of the employer’s enterprise.

It is important that the employer who is making an employee redundant, not only complies with the consultation provisions of any applicable award or enterprise agreement, but also makes enquiries to make sure that there is not a suitable alternative position available within the employer’s business or any other “associated entity” of the employer.

When should a redundancy payment be made?

When an employee is made redundant then usually a redundancy payment will be required by the employer and this is often called severance pay.

However, the employee is not entitled to redundancy pay under the Fair Work Act if the employee:

• resigns
• is terminated other than due to redundancy, e.g. misconduct or performance issues
• has been employed for less than 12 months
• is employed in a small business with less than 15 employees
• was employed for a fixed term and that term has ended
• is a casual employee

The amount of any redundancy payment is calculated by reference to the employee’s years of service. By way of illustration if the employee has worked for a period greater than one year but less than two the redundancy period payable would be 4 weeks. If the term was between 9 to 10 years the period would be 16 weeks.

However, an employer may not be required to pay the redundancy for the full length of service if the employee did not have any redundancy entitlements with the employer in question, prior to 1 January 2010. In those circumstances the period from which redundancy payments are calculated is 1 January 2010 rather than the full length of service.

In conclusion – take care

It is easy to fall into one of these employment law traps and employers should be satisfied as to the circumstances that constitute a redundancy, carefully review payments to be made and comply with the Act’s requirements in relation to a “genuine redundancy”.

Regardless if you are an employer or employee, if you feel you need assistance call one of our employment lawyers on 02 9955 6692 or email admin@hslegal.com.au.

Testamentary trusts can be very effective estate planning tools to assist in providing for spouses, children and grandchildren, and are becoming increasingly popular as more people become aware of their advantages.

A Testamentary Trust is any trust established under a will, but the term is usually used in the context of a discretionary family trust established under a will.

Why are they becoming more popular?

Their increasing popularity arises from the very considerable benefits that can flow from their establishment and use, including the fact that although assets of the trust may be controlled by the intended beneficiary, they do not form part of that beneficiary’s estate. Major benefits of a testamentary trust include the ability to protect assets and to possibly reduce tax paid by the beneficiaries from income earned from their inheritance – providing a greater level of flexibility and control over the distribution of assets to beneficiaries.

Reasons why you should consider a testamentary trust include:

CGT benefits

Assets owned by the deceased that would have been subject to capital gains tax (CGT) had the deceased sold them before their death, can pass through their estate to a testamentary trust without a CGT event occurring.

If an asset was a pre-CGT asset, the trust will receive a cost base equivalent to the market value of the asset at the date of death. If the asset is a post CGT asset, then the trust will inherit the deceased’s cost base. This is particularly important where the assets have significant unrealised capital gains. This also provides a good opportunity to “reset” the ownership of assets subject to CGT.

If for example, mum and dad own the shares in a company that is the corporate beneficiary of their family trust. The shares may have a nominal cost base but because of trust distributions made over a number of years (and often not paid in cash) the company may have become very valuable. All of that increased value is potentially subject to CGT if mum or dad changed the ownership of these shares during their lifetime. However, after their death the shares can be moved to a testamentary trust and dividends from the company can then be distributed by the trust to a range of beneficiaries, tax effectively.

In addition, trust assets may be transferred to beneficiaries without incurring CGT (but only in respect of assets of the trust that were owned by the deceased when they died).

Income Tax advantages

Income can be distributed from a testamentary trust to infant beneficiaries (under the age of 18) and taxed in those children’s hands at adult marginal tax rates (instead of at the top marginal tax rate as would otherwise be the case). Testamentary trusts may, over time, sell and replace the original assets received from the estate and the distributions to infant beneficiaries will continue to be taxed at (more beneficial) adult rates.

With the tax free threshold of $18,200 since 2013/14, testamentary trusts are even better vehicles for clients because children and grandchildren under the age of 18 years who receive income from a testamentary trust are taxed on that income at adult rates, and enjoy a tax free threshold of $18,200 (or $20,542 if the low income tax offset applies) and the marginal tax rates which apply to adults.

Without this special provision trust distributions to minors may only access a tax free threshold of $416 and thereafter the effective tax rate applied to the minor’s income is 66% of income up to $1,307 and 45% after $1,308, on the entire amount of income received.

Flexibility to the Trustee

The trustee can buy and sell underlying assets of the trust (and thereby enhance the value of the trust) without losing or endangering any tax advantage.

We suggest it is desirable that clients provide the trustee with some guidelines about the administration of the trust, but they should be carefully framed in order to avoid any confusion or legal or accounting complications.

Protection of assets

Testamentary trusts provide a level of protection to the assets held in the trust, including against creditors of the beneficiaries who may want to recover from the trust assets an amount owing to them by a beneficiary, and in the Family Law Court in the case of the divorce of a trust beneficiary.

It is quite common for a wife to guarantee her husband’s business venture and vice versa, to some extent we can all be at risk whether in high risk occupations or not. However, if a bankrupt has received an inheritance through a testamentary trust it will be protected from creditors.

In the Family Court, an inheritance held within a testamentary trust is unlikely to be the subject of a Family Court order in the case of a marriage break-up.

Protecting ’at risk’ beneficiaries

It is not uncommon for people suffering a variety of disabilities to be unable to properly manage their financial affairs.  At the same time, families may wish to ensure that an adequate fund is set up to meet the beneficiaries’ reasonable needs, and so as not to affect any pension rights they may have.

These people can be described as being ’at risk’, a description that may for example include people who are drug or gambling addicted, mentally or physically disabled or simply spendthrifts who are not capable of looking after any wealth that is left to them.  For these people a testamentary trust can be managed by a trustee (who should be) a responsible and capable person (or people) who take action for the benefit of the ’at risk’ person.

Summary

It is becoming much more common to steer away from the traditional husband and wife will, which provides for a husband and wife giving everything to each other and then to the children, and to replace this with one or more testamentary trusts controlled by the surviving spouse and/or children under which the spouse and children are potential beneficiaries.

If the funds in the estate justify it (and remember this may include the proceeds of life insurance policies, or superannuation), wills providing for testamentary trusts can provide that on the death of the spouse, sub-trusts come into existence for the benefit of each child and that child’s family – controlled by the child concerned.

Testamentary trusts are a very powerful and useful estate planning tool. The flexibility of such trusts, especially if combined with a memorandum of wishes as to how the trust should be administered, can be an appropriate arrangement as well as providing a highly advantageous tax mechanism, for many years into the future.

To find out more about how testamentary trusts can benefit you, contact us to speak to one of our Estate Planning Lawyers on 02 9955 6692 or email admin@hslegal.com.au.

The Family Court of Australia was one of the first courts to recognise self-representation by litigants as a permanent and significant client group in family law matters.

Research indicates that 20 to 30 per cent of Family Court cases involve a party who is self-represented at some point.

It is important to weigh up the benefits of using a lawyer even if you don’t have to as the consequences of not following the correct process, filing incorrect documents or filing them out of time could be disastrous.

In this article we examine some of the issues that can be encountered.

How the Family Court can help

The Court has gone to considerable lengths to streamline the process for self-represented litigants at court, providing them with increased support by simplifying its procedures to encourage the early resolution of disputes, and to make the Court more user-friendly.

The Court now provides do-it-yourself kits for guidance and assistance on completing some of the most common forms, including consent orders, financial statement, affidavit and service.

In addition and where possible, the Court provides a duty registrar to assist self-represented litigants with Court processes and procedural advice.

Things to consider about the Court process

• Where one or more of the parties is a self-represented litigant, the principal effect on the judicial officer is to increase the time spent on the case, both before and during the trial and may include more delays than is usual and more adjournments. Family Court staff and court officers while not being able to give legal advice, are required of necessity to explain the court processes and procedures to the litigant.
  • Self-represented litigants often fail to identify a known cause of action in their pleadings.
  • A common complaint is that judges extend too much leniency to self-represented litigants in making submissions. There may be a perception that judges sometimes take the line of least resistance and let the self-represented litigant ‘get it off their chest’.
  • Situations frequently arise, particularly in the family law or domestic relationships jurisdictions, where self-represented litigants use the court proceedings as an opportunity to embarrass or harass their former partner. This may or may not be deliberate.
  Instructing a lawyer too late
  We have encountered many potential clients who are either in the process of representing themselves in the Family Court or where their matter is already complete.
  What we usually discover in these cases is that the outcome could have been better, the matter requires the immediate attention of an experienced lawyer or that it may have been so badly put together or presented that it is past the point where even the best lawyer can help.
  There are also many practical issues that your lawyer can advise you about, that don’t appear in a DIY kit, if you are separated or in the process of divorce.
  Some tips, traps to avoid and issues to consider
  • Agreeing to move out of the matrimonial home can cost you a lot of money. Seek legal advice first.
  • Everything you say, text, email, tweet or put on Facebook including things said in the strictest confidence to family or friends can get back to your former partner.
  • Don’t rely on memory – keep a diary but remember it may be read by the Judge, so be careful what is written. Perhaps limit it to points that will jog your memory.
  • If you decide to engage a lawyer, then make it worthwhile and have a comprehensive discussion, not just those points that you feel are in your favour.
  • Before you separate take photographs or photocopies of bank books or accounts, taxation records and superannuation papers, so the sums and account details are identifiable.
  • Before you move out take all your personal papers with you, including jewellery and your personal items.

Conclusion

What many people attempting a DIY divorce don’t know is how much they don’t know. It is like many tasks where experience can help speed the process and lead to a more successful outcome.
Self-represented litigants often have difficulty identifying and pleading a cause of action, which may result in more court attendances as well as confused and lengthier trials.
It is most advisable to see an experienced family lawyer first to identify the appropriate issues, advise you on your options on those issues, fight for a positive outcome on those issues, and make sure all of the issues have been examined.
If you know someone who may need assistance get them to call one of our experienced family lawyers on 02 9955 6692 or email admin@hslegal.com.au.

This might seem a basic question but so many people simply do not know what their legal rights are. If you have teenage or adult children it is prudent to check their understanding. For some in the community, particularly if they are young or unworldly this can unexpectedly land them in trouble with the law. Unfortunately this can have consequences later in life.

The following information is for general information and is not legal advice. You should always contact and consult a lawyer for advice specific to your circumstances and before deciding on a course of action. It’s best to have a lawyer in mind rather than to be handed the Yellow Pages by a Policeman.

What then are my legal rights?

Generally if a policeman asks, you don’t have to tell him your name and address. However there are cases when you are required to, for example, when you are the driver of a motor vehicle. There are other cases as well and rather than expect you to remember them should we list them, our advice is, avoid confrontation.  You do not need to go further though, by telling them anything else or answering any other questions subject to them telling you why you are being asked. Generally in cases where you must answer questions you will be told that if you refuse to answer you may be liable to be charged.

What if you are being arrested?

If you are being arrested the arresting office should tell you that you are being arrested and why you are under arrest.

If this happens remember that it is an offence to resist arrest, pulling your arm away or resisting in the slightest way, can result in another offence.

It is fundamentally important to know that you have the right to silence. You do not need to say anything (after giving your name and address) and often admissions are freely made by people when otherwise the offence could not be proven if they had remained silent.

You are entitled to contact your lawyer.

If you have been arrested and need medical help, you have the right to that.

You also have the right to contact a friend or relative and notify them of your whereabouts.

If you cannot understand English you have the right to be provided with an interpreter, or other qualified person.

Do I have to submit to a search?

Yes, if you have been arrested the police are allowed to search you and take your photograph, fingerprints and a DNA sample.

What do I do if the police want to search my home or car?

In some circumstance the police can search your home or car without a warrant. Some (but not all) of those occasions are:

• If the owner, occupier or operator consents; or
• If the police enter the property to make an arrest; or
• If you, or an occupant, are under arrest, or
• If the police have reasonable suspicion a crime is being committed or has been committed or will be committed; or
• If they suspect terror related activities.

What do I do if the police want to interview me?

The Police may request you attend, or accompany them to, a police station to answer questions however you are not required to go with them unless you have been arrested in relation to an offence.

You do not have to answer any questions (other than to provide police with your personal details) and you are not required by law to participate in a video record of interview.

We recommend at this point, if you have not already done so, that you contact a lawyer. We would advise you in this sort of case not to consent to an interview and under current laws it would be unwise for a solicitor to be present when that advice is given. If a solicitor is present then your refusal to participate in an interview and depending on the charges your refusal could be used against you in a later trial.

If you proceed and take part in a police interview anything you say on or off camera can be used against you in court.

It is also worth remembering, even if the police are proceeding, with proper legal representation you may have the ability to minimize the penalty by having competent representation in court, applying for bail or possibly even negotiating with the Police to have them proceed with a less serious charge or to submit a set of facts to the court that you find more accurate.

We recommend you keep a note of our contact details should this ever happen to you or someone close. Call us on 02 9955 6692 or email admin@hslegal.com.au.