Social media and employee termination

Terminating an employee over inappropriate social media use may seem like appropriate action; however, employers need to be mindful of the legal minefields that can occur if the termination is unfair.

Social media blurs the boundaries between public and private, and employers are often worried that an employee’s “private” posts on social media can have a negative impact on their business. It is no surprise that the Fair Work Commission has had to rule the lawfulness of an employer terminating an employee’s employment over a “private” post on social media.

A social media policy should be implemented to provide employees with guidelines on what is (and is not) considered appropriate use of social media. Social media policies are the best way hold employees accountable for their social media conduct and can help protect employers from legal claims such as unfair dismissal.

Here are three things employers need to keep in mind when deciding whether to terminate an employee over a social media post:

• Employers must ensure that their social media policy specifies that employees must make a disclaimer when expressing their own personal opinions, or take steps to ensure that there is no link to their employer at all, when posting or tweeting to personal social media pages.

• Ensure that the conduct complained of is conduct that an employer is entitled to regulate, before deciding on termination. If you are entitled to regulate the conduct, ensure that the social media post is of such gravity as to justify termination.

• If termination of employment is justified, make sure that you have taken all relevant facts into account to ensure that the termination is not harsh, unjust or unreasonable. Consider the personal circumstances, the impact the termination might have on the employee and whether the employee has shown remorse before deciding to terminate an employee. Employers need to be reminded that termination is not the only remedy for misconduct, so consider other alternatives prior to dismissing an employee.

Misleading conduct on social media

Businesses are becoming increasingly dependent on social media as a marketing tool and way to interact with existing and potential customers.

Although social media draws many benefits for businesses and customers alike; social media needs to be treated like traditional forms of advertising in that comments and opinions are not false, misleading or deceptive. Business owners are responsible for the content on their pages, irrespective of who published it.

Consumer protection laws apply to social media in the same way they apply to any other marketing activities. The Australian Competition and Consumer Commission (ACCC) may require businesses to substantiate any claims that may be false, misleading or deceptive on their social media pages.

To avoid breaching any consumer protection laws, business owners should consider the following:

• Do not allow misleading claims in comments

Business owners are accountable for the posts and public comments made by others on their social media pages. Therefore, it is your business’s responsibility to monitor comments to ensure they are not false or likely to mislead and deceive consumers.

• Monitor social media accounts

Social media pages need to be regularly monitored to ensure followers of your business’s page do not post claims that could be considered false, misleading or deceptive. The amount of time you dedicate to monitoring your social media will depend on the size of your business and the amount of followers you have.

Consider establishing ‘house rules’ that apply to the behaviour expected from your social media followers, and ensure it is featured prominently on your pages. Followers who breach these rules should be blocked from your pages.

• Responding to misleading comments

Businesses can choose to respond to false or misleading comments instead of removing them but it may not override the false impression made by the original comments. In most cases, it is safer to remove comments as soon as you become aware of them.

Running an online business

For start-ups establishing an online business, there are many legal issues to be considered before your business kicks off.

Businesses must comply with their legal obligations to ensure their business and consumers are protected under relevant laws. Whether you run your entire business online or provide just some of your services, it is important to be aware of the legal issues involved.

URL
The first step to setting up your online business is registering your URL. When deciding on a URL ensure the name you intend to use is not already being used by someone else, is not already trademarked or can be protected by trademark registration. The best way to avoid this is by doing a trademark search and an organisations and business names search to ensure you do not infringe trademark or copy someone else’s name.

Website terms and conditions
Every website should specify the terms and conditions under which visitors can access it, even if your website does not sell any goods or services. Setting out terms and conditions ensures you have a clear agreement in place for visitors and allows you to set limits on what visitors can do with the intellectual property on your website. Also, it can minimise the risk of visitors taking legal action against you or your business.

If your website does sell goods and services you will need to provide refunds and exchanges to comply with the Australian Consumer Law. The Australian Consumer Law covers the basic rights for consumers in relation to rights to a repair, replacement or refund as well as compensation for damages and loss and being able to cancel a faulty service. Your website’s terms and conditions must cover this law.

Privacy policy
A privacy policy will describe how your business handles personal information to its website users. A privacy policy needs to state what information the business will gather from the users of the website and how it will use and secure the information. It serves as a disclosure document, alerting your users to the level of privacy they will be entitled to whilst using your website.

Updating your SMSF trust deed

Self-managed superannuation funds (SMSF) are governed by the rules set out in the trust deed, therefore, trustees need to ensure any actions do not breach the rules in the deed.

As the trust deed is a legal document providing the governing rules for establishing and operating your SMSF, it needs to be reviewed and updated to reflect changes to superannuation legislation. The trust deed covers provisions such as whether binding death nominations are allowed, whether certain investment strategies are permitted, whether the fund can pay a pension income stream etc.

Out-of-date provisions may result in significant adverse effects on members’ benefits, estate planning and breaches may result in potential administrative fines.

For example, non-lapsing binding death nominations are not covered in older trust deeds, meaning that some SMSF members may have unintentionally created three-year lapsing nominations.

As a binding death nomination must be updated every three years according to superannuation law, the implication of this is that members may either have an invalid nomination, or may die without a nomination. This means a deceased member’s wishes will be ignored due to a technicality.

Generally, your trust deed should be updated after legislative changes to superannuation, if the deed has not been amended within the past five years or when a member wishes to undertake a course of action that may not be authorised by the deed.

Deciding on an executor

Whether you are updating or creating a Will, designating an executor is not an easy decision.

The role of executor requires a great deal of commitment. The executor of a Will holds the responsibility of administering your estate and ensuring your wishes are carried out in a time-efficient manner.

When choosing an executor, a will maker must consider who is best to take on the role and associated responsibilities. There can be more than one person nominated as executor for the Will. In many situations, the executor(s) can also be a beneficiary of the estate.

Some of the immediate responsibilities of an executor include arranging the funeral, requesting and obtaining the death certificate, finding the original copy of the Will and beginning to protect and insure assets – such as changing locks on property and photographing expensive assets.  

The executor is also responsible for obtaining probate, collecting any debts or investment income, claiming life insurance, selling assets and distributing the remainder on the estate. The full administration of a deceased estate can take up to a year.  

Due to a large amount of responsibilities, it is best to discuss the role of executor with the intended person(s) before you nominate them in your Will. The nominated executor should also be informed of where your Will is kept.

What happens when a SMSF trustee enters bankruptcy

The SMSF sector in Australia has experienced enormous growth over the past decade, and many of the funds set up are made up of two members, usually a husband and wife or de facto couple.

While having more control over your superannuation savings has become a popular option amongst couples, members need to be aware of the many rules that govern the establishment and continuation of SMSFs, such as what to do when one or both members become bankrupt.

The bankruptcy of a member can have significant ramifications for the other member of the SMSF, as well as the bankrupt.

When a member of an SMSF enters bankruptcy, the ATO provides a six-month ‘grace period’ before the SMSF is ceased, to allow a restructure of the SMSF so that it either makes the essential conditions required or can be rolled over into an industry fund.

During the six-month grace period, the ATO requires:

• the bankrupt to remove themselves as trustee as soon as possible

• the bankrupt to inform the ATO in writing using Form NAT 3036

• to be notified within 28 days if there is a change in trustee

If one member of an SMSF enters bankruptcy, they must resign as trustee as soon as possible. The other member will need to remove the bankrupt’s property from the SMSF before the grace period is over, as well as:

• sell any real estate and halve the proceeds

• transfer the bankrupt’s share of the liquid assets to a managed fund

• consider whether they want to remain as a single member SMSF, or roll over their entitlements to a managed fund.

If both members enter bankruptcy, they must sell all assets for the market value available at the time, and then transfer all of the liquid assets to a managed fund.

Agreement or deed?

The decision on whether to use a deed or an agreement can make a significant difference to the success of a transaction or project.

An agreement (or contract) must meet the following pre-conditions to be valid and enforceable:

• each party must have the intention to be legally bound

• there must be an offer from one party that is accepted by the other party

• consideration must flow between the parties

For a deed to be considered valid and enforceable, it must:

• be in writing

• be signed

• be witnessed by a person who is not a party to the deed

• use wording that indicates that the document is a deed i.e. ‘this deed’ or ‘executed as a deed’ and ‘signed, sealed and delivered’ should be used in the execution clauses. The wording in the document must be consistent.

• be provided to the other party or parties

• be supported by evidence that the parties intended the document to be a deed and are bound by it

The main difference between an agreement and a deed is that there is no requirement for consideration to make a deed binding. This is because of the idea that a deed is intended, by the executing party, to be a solemn indication to others that they truly mean to do what they are planning to do or are doing.

A deed is considered to be binding on a party when they have signed, sealed and delivered the deed to the other parties, even if the other parties have not yet executed the deed document.

Each state in Australia has specific legislation regarding the period of time in which a claims or actions can be lodged following the breach of an agreement or deed.

A claim following a breach of an agreement must be submitted within 6 years of the breach occurring. The period is longer for those who make a claim following a breach of the terms of a deed.

Since the length of time usually depends on the law of each state, it is important to have a jurisdiction clause in your deed or agreement.

Employment laws you may be breaking

Despite an employer’s best intentions, it can be surprisingly easy to accidently breach some of the laws and regulations that govern employment relationships in Australia.

However, disobeying the law can carry severe penalties. Violating Australia’s key employment legislation, the Fair Work Act 2009, can expose a business to penalties or up to $54,000 and up to $10,800 for individuals.

Here are three common practices that many businesses may be unwittingly carrying out that can land them in hot water:

Using unpaid interns to carry out productive work
Internships are an attractive option for students and jobseekers wanting to gain experience and get a ‘foot in the door’ to certain industries. However, if your business has hired an intern who is not part of a school program or tertiary degree but is performing productive work for your business, you may have unwittingly employed them.

If this is the case, unless the business pays and treats the intern like an employee, it is at risk of breaching the National Employment Standards in the Fair Work Act, on top of minimum award conditions.

Failing to consult employees about proposed changes to the workplace
Around 60 per cent of Australian workers have their minimum employment conditions underpinned by modern awards. Modern awards require employers to consult with the employees when major changes are going to be made that are likely to impact employees.

Failure to consult, or consult adequately, with employees of this change can be a breach of the relevant award.

Not providing allowances owing under an award
Along with minimum wages and overtime, many awards entitle employees to allowances. Some employers have been found to pay over the minimum award rate of pay and then rely on the greater payment to cover allowances.

However, the Fair Work Commission has stated that unless a written employment agreement specifies that an over-award payment will be made to cover those specific minimum entitlements, award entitlements will be payable on top of the higher rate of pay the employer gives to the employee.

Commercial leases

A retail or commercial lease is a legally binding contract between a landlord and a tenant of a retail shop that allows the tenant to use the landlord’s asset (property) in return for rental payments.

While leases can be complex and difficult to understand, it is essential for both parties to have a thorough understanding of the terms and conditions before making a commitment.

It is equally as important that both parties understand their rights and obligations in relation to the lease to be able to deal with any disputes that may arise.

Unfortunately, disputes can arise between tenants and landlords. To resolve these disputes cost-effectively and with as little damage to the relationship as possible, those involved must be logical and clear about the facts.

In many cases, having a well-written lease or other associated documents can set out what both parties agreed to, and help determine the correct action to be taken.

It may be in both parties’ best interests to seek financial and/or legal advice before making a commitment to buy, lease, or incur other obligations, signing an offer to lease, making a payment of any deposit or occupying the leased premises.

Dealing with unsecured family debt

Many loans exist between family members, such as parents helping their children to buy their first home or siblings helping each other out in emergencies. These types of loans are often informal and rely on the trust and relationship of the family members involved.

However, this lack of security can carry damaging consequences for a family’s relationships as well as for the enforceability of the loan. When a loan is not a gift, it should be documented and secured to the extent possible.

When families apply to the Family Court for a property or debt settlement, the court takes the assets and the debts of the parties into account. However, the court may disregard the debt in the division of the parties’ assets where an unsecured debt owed to family members is included.

If a debt is genuine, the fact that it is owed to friends or relatives of the party is not relevant. The court will instead take the debt or interest into account when determining the division of assets between the parties.

Issues can also arise when the loan:

• is vague and uncertain

• was unreasonably incurred by one party

• is a strategy to decrease the assets available to be divided with the other party

• is unlikely to be enforced/collected.

Determining whether a debt is genuine and repayable often depends on written evidence, how the parties have treated the debt and the credibility of the parties.

If any evidence provided by the parties is vague, or if there was an “understanding” that the debt would not have to be repaid, the court may find that the debt was not repayable. However, the court will only take this step after careful consideration of the evidence and circumstances of the case.