When running a company, there’s a multitude of rules and regulations that will apply. It’s important to have a strong understanding of how these regulations might affect your business, as a misstep could be costly for your business later down the track.
In this article, we’ll break down the key details of regulations that affect your corporation in Australia.
Corporations Act 2001
Directors and other company members should refer closely to the Corporations Act 2001, as it is the main regulatory framework that governs companies in Australia. The Act covers the main aspects of running a company, from its conception to its dissolution. For example, it covers some of the following:
- Directors duties
- Shareholder rights
- Signing a contract
- Company structure
The legislation has been adopted by all Australian states and territories, making it applicable throughout Australia.
The Act also contains a set of replaceable rules. The rules largely govern the duties of directors and the conduct of shareholders; however, these rules can be overridden by a Company Constitution.
If you have a Shareholders Agreement in place, it’s worth noting that this will not replace your rules. It’s a separate agreement, so it’s important to understand your obligations under the Corporations Act.
Australian Consumer Law
The Australian Consumer Law (ACL) is another piece of federal legislation that outlines the rights of consumers and the duties businesses have towards their customers. The ACl is set out in Schedule 2 of the Competition and Consumer Act 2010.
For example, the ACL covers some of the following matters:
- Unfair contract terms
- Consumer guarantees
- Product safety
- Lay-by agreements
- Unsolicited agreements
- Penalties, enforcement and redress for any wrongdoings
The ACL deals closely with misleading and deceptive conduct, which is an essential concept for business owners to understand. This means that you cannot give customers the wrong impression about what your products do or serve to do, and these laws are designed to protect consumers.
Our expert lawyers can chat you through your obligations under the ACL as part of our ACL Consultation Package. Feel free to reach out to us for legal help.
Privacy Act 1988 (Cth)
It’s quite common for businesses to collect personal information from customers, particularly in the eCommerce world. For example, you might be collecting emails and phone numbers as part of your business activities.
This is where the Privacy Act 1988 (Cth) comes in. The Privacy Act regulates how businesses must protect this information, how they can use, how they must store the information and their responsibilities towards keeping all their client details confidential.
It’ll also contain obligations around disclosure. For example, you should disclose to customers whether you’ll be sharing their personal information with third parties. The Privacy Act generally only applies to businesses with an annual turnover that exceeds $3 million (there are some exceptions to this, such as if your business is collecting health information), however it’s highly recommended that your business complies with these privacy obligations regardless.
Work Health And Safety
As a business owner, it’s important that you take into consideration the safety of your workers and whether their working conditions are acceptable. . Work Health and Safety (WHS) regulations outline the responsibility of business owners to create an environment that ensures employees are protected against risks or dangers.
If your office space has a small leak in the roof which has led to mildew growth, then it will inevitably cause your employees to feel sick. As an employer, you would be in breach of Work Health and Safety regulations as the workplace is a risk to their health, giving your employees grounds to file a complaint against you.
Each state has their own WHS regulations. Depending on the kind of business you have, it’s important to be aware of the standards of safe practices and act accordingly.
This may involve supplying appropriate equipment, ensuring there’s plans for emergencies such as fires and training in the use of machinery. Overall, these regulations help to ensure employees are kept safe at work.
What Regulatory Bodies Should I Know About?
The Australian Securities and Investments Commission (ASIC) regulates some key aspects of running a business. ASIC is involved from the moment you register your business to the moment you potentially decide to wind up your company.
It is important to keep ASIC up to date with the affairs of your company, including changes to the company directors or shareholders (these require submitting certain forms, so it’s good business practice to consult a lawyer to ensure you’re doing this right!).
Non-compliance with ASIC’s notification periods will likely result in late fees.
Fair Work Commission
The Fair Work Commission regulates the standards for employees. When hiring people to work in your company, the employment conditions need to meet the regulations set out by the Fair Work Commission.
For example, there may be a particular award that applies to your employees. This would set out standards around their pay, hours, leave entitlements and other key matters in their employment with you. The Fair Work website makes it accessible to calculate wages, leave, employment conditions as well as provides general advice.
The Australian Competition and Consumer Commission (ACCC) is an independent body that has been established to enforce the Competition and Consumers Act 2010.
The ACCC regulates the interactions between consumers and businesses, including protecting consumer rights and ensuring fair trade. For example, if you are a business owner and have been provided with questionable contractual terms by a supplier, the ACCC will likely assist you through this process.
Our expert lawyers can guide you through this process to make sure you don’t miss any key steps.
The Office of The Australian Information Commissioner (OAIC) investigates any businesses that have not been complying with their obligations under the Privacy Act.
Like we mentioned before, any business that has an annual turnover of less than $3 million will not have obligations under the legislation. However, regardless of turnover amount, if your business collects any kind of personal information (such as health information), then it may attract the terms of the Privacy Act.
Therefore, it’s important for any business owner to ensure their practices are compliant under the 13 Australian Privacy Principles.
What Other Obligations Should I Consider?
Hiring people to work for you comes with an array of legal responsibilities. Unfortunately, there may be instances where you will need to let certain employees go.
In this case, it is imperative to ensure that your conduct is consistent with unfair dismissal laws to avoid a former disgruntled employee making a complaint against your business.
Dismissal terms can often be found in contracts usually demanding a written notice and a certain time frame for the employee (our lawyers can review your contracts for you and highlight key issues that may cause headaches later down the track).
Immediate dismissals are only warranted in extreme circumstances. For example, if an employee has engaged in criminal activity such as embezzling money or acting inappropriately with another person, then these could be grounds for immediate dismissal.
Obligations To Contractors
As an employer, it is likely that you will engage with an array of different employees, including full time and part time employees (and possibly even contractors!).
An employer will not have the same legal obligations towards a contractor as they do their employees; however, an employer still owes the contractor a level of duty of care. It’s imperative to ensure the rates and contractual obligations you have set for contractors are within relevant industry standards and legal requirements.
So, it’s important to understand the key differences between an employee and a contractor.
Like we mentioned before, workplace safety regulations demand a physically safe working environment for employees. However, it’s equally imperative that the social environment of your business is a positive one.
Behaviour such as intimidating, inappropriate teasing, exclusion and harassment are all considered forms of bullying. Essentially, any act that causes another person physical, mental or emotional harm should not be tolerated in the workplace.
As an employer, it is your duty to set the standards and rectify behaviour that amounts to bullying.
To better understand how your obligations look like under this area of law, it’s worth looking through the Anti-Discrimination Act 1977.
If you intend on growing your business, you may look into franchising. If this is the case, then the Competition and Consumer (Industry Codes- Franchising) Regulation 2014 will apply.
This legislation essentially describes the code of conduct that must be adopted by businesses owners, acting in good faith and transparency. It also covers matters regarding the franchise agreement, disputes, obligations of the franchisor and the terms of the franchise agreement. It is essential to ensure your franchise agreement is in line with the regulations of the legislation.
A business may be a passion project or a way to make a profit. Regardless, the law applies in almost every aspect of running a business. Legal obligations need to be a constant consideration for business owners.
At Sprintlaw, our lawyers are happy to chat with you about your options and assist you with your legals. When it comes to ensuring your business is compliant with the relevant regulations affecting your corporation, you want to avoid making mistakes.
If you would like a consultation on your options going forward, you can reach our team of legal consultants at 1800 730 617 or firstname.lastname@example.org for a free, no-obligations chat.
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