KKP NEWSLETTER - SEPTEMBER UPDATE
15 September 2020
In this update, we examine the following:
Amendments to COVID-19 Rent Relief Provisions;
Insolvency, Bankruptcy & Debt Recovery Update;
The Importance of Updating & Maintaining your Wills & Estates; and
Employment & Workplace Relations Update – Maximising your Workforce for Recovery.
1. Amendment to COVID Commercial & Residential Tenancies Rent Relief
The COVID-19 Commercial and Residential Tenancies Legislation Amendment (Extension) Bill 2020 (“Bill”) has passed the Victorian lower house and provides for the extension of rent relief provisions, initially enabled by April’s COVID-19 Omnibus (Emergency Measures) Act (“Omnibus Act”) and accompanying Regulations.
As a snapshot, this Bill seeks to make the following amendments:
To extend the ‘relevant period’ to which rent relief applications apply for eligible leases, which is due to expire on 30 September 2020, to 26 April 2021;
To broaden the definition of what constitutes an “eligible lease”;
To provide the VSBC and VCAT with additional order making powers.
The stated purpose of the Bill is:
a) To amend the COVID-10 Omnibus (Emergency Measures) Act 2020 –
i. To extend the operation of Part 2.2 of the Act under which regulations may be made to modify the law relating to retail leases and non-retail commercial leases and licences until 26 April 2021; and
ii. To make further provision in relation to the subject matter of regulations which may be made under Part 2.2 of that Act, including the making of orders directing landlords under eligible leases to give or agree to give specified rent relief to tenants under eligible leases and conferring jurisdiction on VCAT to enforce such orders…
As noted above, the operation of the commercial tenancy rent relief period would be extended by the Bill. It is unclear why this period has been extended until the end of April or, indeed, beyond the end of this year.
Further, the “eligible lease” definition has been broadened. As we detailed in our earlier Omnibus review blog, an “eligible lease” requires the tenant to be an SME and eligible for, as well as a participant in the Federal Government’s JobKeeper scheme. This definition creates problems for tenants who are sole traders or operate a service company, and, unlike the requirements of the Federal Government’s Code of Conduct, necessitates active participation in JobKeeper rather than mere qualification. In any case, the amendments provided by the Bill should allow for a greater range of SME tenants to apply for rent relief.
In accordance with the Premier’s announcement on the VSBC’s ability to make orders for rent relief, the Bill allows for “the making of orders directing landlords under eligible leases to give or agree to specified rent relief to tenants under eligible leases (binding orders) and the content of such orders;
The process for applications by tenants under eligible leases for binding orders (rent relief applications) including the content of rent relief applications and documents that may accompany rent relief applications.” We presume the new regulations will specifically attach these powers to the VSBC.
The review and enforcement of binding orders by VCAT is also enabled by the Bill.
As the Bill is yet to be finalised, we will provide a further update once available, but recommend considering your financial positions and how these amendments affect you. Please contact us immediately with any questions in respect of these updates and in particular, where you require further amendments to be made to existing lease arrangements.
2. Insolvency, Bankruptcy, Debt Recovery & Director Relief Measures
The Federal Government has announced that it will extend insolvency relief measures, which were initially put in place from March and due to expire on 25 September 2020.
Under the proposed Regulations, the following amendments will be extended, effective until at least 31 December 2020:
Insolvent Trading – Provides temporary relief from personal liability for directors when trading insolvent, for all debts incurred “in the ordinary course of business”. Such relief does not extend to directors’ duties of the Corporations Act 2001 or common law.
Statutory Demands – Extends the temporary increase in the minimum debt for which creditors are able to issue a statutory demand from $2,000 to $20,000, and the maximum time period in which companies must respond to a statutory demand from 21 days to 6 months.
Although the stated intention of these amendments is to allow companies some leniency in adhering to their financial obligations in light of the current economic climate, they ostensibly overlook the significant negative impacts on creditor companies. In practice, these amendments provide greater opportunities for debtor businesses and directors to ignore outstanding debts, removing some of the more significant repercussions for doing so.
For businesses looking to recover debts, these extensions may mean you will have to look to recover your debts through the court system, or wait longer to be paid. We recommend ensuring that your contracts are updated accordingly, with front-loaded payments terms highly recommended to secure payment. Please contact us immediately with any questions or if you have any debt-related matters.
3. Wills and Estates – Securing Your Best Interests (and Those of Your Family)
Perhaps it has been in the back of your mind for a while…’I need to make my first Will’ or ‘I need to update my previous Will to reflect my current circumstances’. You may be getting married soon - or you are newly married or separated or divorced - or have added children to your family - or you want to protect assets intended for the children of your first marriage when you enter into a new relationship.
You may also have considered adding Testamentary Trusts in your Will to protect minor children and vulnerable beneficiaries, or protect your assets from third party creditors.
It might be time for you to amend your previous appointments of Executors in your Will, to reflect the persons you trust and can rely upon to follow your instructions. You may also have experienced significant changes to your financial circumstances since you last made a Will.
Having a valid Will may save your spouse, partner, children or next of kin from experiencing the uncertainty of intestacy. Your estate will be distributed according to your intentions, rather than the application of state laws imposed when you die without making a Will. Having a valid Will also minimises the delay and cost of administering your estate.
You may also want to ensure that you have appointed the appropriate people to manage your financial and personal affairs if necessary, either temporarily or permanently, by making appointments for Enduring Power of Attorney and/or Medical Treatment Decision Maker.
Kerr & Kerr Partners would be pleased to assist clients who are acting as executors and trustees of an estate to obtain a grant of probate and complete estate administration requirements.
There is no better time than the present to make these arrangements and feel confident that you are thoughtfully and responsibly protecting yourselves and your loved ones for the future.
At Kerr & Kerr Partners, we would be pleased to assist and we can take your instructions remotely if required, and we can safely and securely store your original documents if you wish.
4. Employment & Workplace Relations Update
The highly variable nature of the current economic climate has created challenges for workplaces across almost all industries. Amendments have been made to Awards and the Fair Work Act, which, combined with the Federal Government’s JobKeeper legislation, require all sizes of businesses to reassess their approach to workplace management. In particular, businesses must be cognisant of their ongoing obligations to consult employees where any major workplace change occurs, the necessary considerations where the question of redundancies arise, the need for flexibility and changes to workplace and OHS policies which may benefit your business moving forward.
Restructuring over redundancies
Although many businesses have already made significant cuts to their workforce, it is important to consider the broader practical and long-term effects of making substantial personnel change. Indeed, there are various strategies which should be prioritised over redundancies.
Businesses should consider the costs of redundancies and the flow on effects – including the costs of recruitment and training new staff once businesses return to their full capacity. Less tangible factors, such as staff goodwill and the motivation of those retained, are also at risk where businesses decide to make sweeping redundancies.
More effective businesses may look to restructure their existing and future staff utilisation. The Federal Government’s JobKeeper legislation has allowed businesses to make decisions on workplace change and amended requirements of the Fair Work Act to enable greater flexibility for employers. These changes allow for the reduction of hours, staff rotation and rosters, operational flexibility and forced leave, all of which are measures which should be preferred to sweeping terminations.
Consultation, notice and reasonable direction
However, these legislative changes are certainly not a free ride to unfairly alter the rights of employees. Any such directions by employers are subject to strict requirements around ensuring they are not unreasonable and a proper consultation process is completed. Unilateral decisions made without proper employee consultation will likely be deemed unreasonable and, therefore, unlawful. Indeed, employers should keep in mind the overarching purposes of the changes to the Fair Work Act, which focus on ensuring employees remain employed, productive and properly utilised.
We recommend maximising the use of your workforce, and, where necessary, utilising these legislative changes for your business’ benefit. Our team provides strategic advice to ensure the ultimate productivity of your workforce, whilst ensuring commercially sensible and legally sound decisions are made.
KKP Final Comment
We remain fully operational despite the current circumstances, and we understand that these times can be very stressful. Our expertise will allow you to focus on what matters, and you can rest assured that your legal matters are in good hands. We remain committed to ensuring we maximise your commercial interests and use our expertise for your greatest benefit.
If you need assistance with any legal matters or require an initial consultation, please do not hesitate to reach out to enquiries@kerrpartners.com.au or via our details below and contained in our email correspondence.