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Can Doctors Use Testimonials in Australia?

Can Doctors Use Testimonials in Australia?

by | Nov 3, 2022 | Consumer Law, Law for Online Business, Legal

Can Doctors Use Testimonials in Australia?

Can Doctors Use Testimonials In Australia?

Doctors and other registered health practitioners can only use testimonials in a very limited fashion. 

As a general overview and in simple terms, the limits are:

  • star ratings are acceptable, without commentary
  • general commentary like “friendly prompt service” or “nice offices, comfortable waiting chairs” and similar comments that are not about the health service received, are acceptable.

Registered health practitioners in Australia are required to comply with AHPRA (Australian Health Practitioner Regulation Agency) advertising guidelines, which are set out in section 133 of the National Law (short for the Health Practitioner Regulation National Law).

Due to the complexity of what is, and what is not allowed in advertising of health services, AHPRA has created an advertising hub on its website to assist practitioners.  

Since the National Law commenced in 2010 testimonials have been specifically prohibited under section 133(1)(c) as follows:

  1. A person must not advertise a regulated health service, or a business that provides a regulated health service, in a way that—

(c) uses testimonials or purported testimonials about the service or business; …

In May 2022 hope appeared in the form of proposed amendments to the National Law which were tabled to remove the prohibition on testimonials. It was proposed that section 133(1)(c) would be deleted and that testimonials would be treated in the same way as other forms of advertising. 

The explanatory notes to the draft legislation acknowledged that the prohibition on testimonials was “…out of step with consumer expectations and current marketing and advertising practices. Testimonials and reviews are common online, and new forms of advertising, particularly on social media, have blurred the lines between information and advertising. Consumers increasingly expect to have access to reviews and testimonials when purchasing health services and expect to be able to share their views about health services and practitioners.”

The removal of that prohibition would have meant that doctors and other health practitioners could have started using testimonials, provided that the testimonials continued to comply with the other rules around advertising, such as not being misleading or deceptive. 

Note that a testimonial saying “Dr Yu cured me of diabetes with acupuncture” is still likely to be prohibited, because the practitioner who uses that testimonials would be required to produce evidence-based research showing a cure was possible through acupuncture treatment. The practitioner in that instance, if testimonials were permitted, would be wise to ask their patient to amend the comment to say something like – “After three months of treatment with acupuncture by Dr Yu I no longer experience any symptoms of diabetes.” 

Any use of the word “cure” raises red flags with regulators. 

However, we are getting ahead of ourselves. 

Although testimonials are still prohibited, penalties were increased significantly under the new legislation to $60,000 for an advertising offence by an individual and $120,000 for a company.

Some concerns were raised about removing the prohibition on using testimonials. One report that surveyed consumers on their beliefs about testimonials found “Testimonials were reported to be lacking in reliability (67.7%) and that they should not be used in healthcare in the same manner as they are used in other industries. Only 44.8% of participants reported that they felt confident to spot a review that was not written by a genuine user of a service.”

The straw that broke the camel’s back and reversed the proposal to remove the prohibition on testimonials, which was removed from the draft legislation before it was passed in October 2022 – is the fault of cosmetic surgeons. 

Cosmetic surgery is not an identified area of specialty governed by AHPRA and the title “cosmetic surgeon” is not a protected title. What that means is that a person can call themselves a cosmetic surgeon even if they have no special training or qualifications to carry out cosmetic procedures. 

In late 2021 an investigation into the cosmetic surgery industry by AHPRA and the Medical Board of Australia (also part of AHPRA) was announced in the wake of media published by Four Corners and Nine newspapers based upon their investigations into a string of clinics owned by an identified plastic surgeon. 

The media reports alleged hygiene and safety breaches, and patients suffering ongoing pain, physical and psychological issues. 

The report from the AHPRA investigation was published on 1 September 2022 and a number of recommendations were made around managing advertising of cosmetic procedures. 

Whilst no specific recommendation was made about the use of testimonials, it was noted that the use of testimonials would not be helpful in avoiding a lack of reliable information for consumers because “Testimonials, when selectively used by practitioners, are more likely to be the opposite; subjective and biased (even when they may not be false, misleading or deceptive). In these circumstances, the review is concerned that testimonials have the potential to further contribute to misunderstanding and confusion among consumers.” [page 87]

Due to the findings made in the report and the limited resources available to AHPRA to implement and monitor changes in its policies, procedures and guidelines, reforms for cosmetic surgeons have taken priority over the removal of the prohibition on testimonials. 

The explanatory notes to the legislation as passed note that the issue of patient testimonials needed to be consistent with actions and reforms for cosmetic surgery.  

There is no timeframe for AHPRAs work in reforming how cosmetic surgery is regulated, so doctors and other health practitioners should not anticipate a lift in the prohibition on using testimonials any time in the near future, and should keep in mind the significant increase in penalties. 

How can Onyx Legal help you?

If you are a health practitioner and worried about the risks in your advertising schedule an appointment with us to have it reviewed.

Make an Appointment

Save Money with Business Name Registration, Australia

Save Money with Business Name Registration, Australia

by | Oct 18, 2022 | Business Structures, Law for Online Business, Legal

Save Money with Business Name Registration, Australia

Save Money with Business Name Registration

You may be using a third party provider to keep your business name registrations up to date, but registering your business name directly through ASIC yourself may be the cheapest option and provide you with more certainty and control.

You can register for an ASIC Connect account, or you can use the ASIC business registration system.

If the website you are using to register a business name doesn’t include .gov.au in the domain name, then you will be paying extra to use the service. In 2022, you can register a business name directly with ASIC for just $39 per year, or $92 for 3 years. 

Once registered, provided you keep your contact details up to date, you will receive notice of renewal from ASIC before your registration expires. If you discover that your registration has expired, then you will still have 30 days after the registration date to apply to re-register that name before it becomes available to the public.   

If you receive letters from third party registration providers, they will usually be looking for annual fees that are more than what you would pay ASIC. Their additional fees cover the cost of their operations and their profits. ASIC publishes a list of what third party providers can and cannot do and you can complain to the provider if you have any concerns. 

You should definitely NOT be paying more than one third party provider for registration services of the same name, and NOT for registration of your own name. 

Do I Need An ABN To Register A Business Name?

Yes, you need an ABN to register a business name. 

An ABN is an Australian Business Number, and it is attached to whatever entity you use to conduct your business, whether that is as a sole trader, through a trust, or as a company or incorporated association. 

For people setting up private foundations who think they don’t need an ABN – check here. 

Do I Need To Register My Company Name As A Business Name?

No. 

If your company name is the same as the name of your business, then you don’t need to register them separately. 

If you register a business name, no one will be able to register a company with the exact same name, and when you register your company name, no one will be able to register exactly the same name as a business name. 

On the other hand, if you want to have separate business divisions with different names under the same company, then you can register multiple business names and, through your company ABN, they will be linked to your company, even though the company and the businesses have different names. 

Sole traders can register multiple business names consistent with the different areas of business they are involved in. Those business names will be linked to their sole trader ABN.

Be aware that some third party providers will write to you encouraging you to register your business name without checking to see if you have changed your business structure and set up a company with the same name. Their interest is in receiving your payment for registration, whether or not it is required. 

Do All Business Names Need To Be Registered?

Yes, and No. 

Under the Business Names Registration Act 2011 (Federal), it is an offence to carry on a business under a name that is not registered. The penalty is 30 penalty units, which in 2022 equates to about $6,660. Doesn’t seem worth risking when its only $39 per year to register, does it?

Did you know you can be fined $6,660 for carrying on business without registering your business name?

If you use your personal name as a business name with a description of what you do – eg. “Emma Lee Accounting”, or “Sanjay Singh Consultants”, then you don’t need to register it, as using your own personal name for your business is not an offence. The same goes for a company that uses the company name to operate a business.

How Do You Check If A Name Is Taken For A Business?

Business name availability is easy to check, and a quick check can save you lots of money in the future.

The first thing you should do is complete a quick Google or other browser search on your chosen name. If you find a competitor in the same country with the same or a very similar name – go back to the drawing board. It’s not worth the hassle and you create the risk of having someone send you nasty legal letters telling you to stop using that name. 

Secondly, complete a trade mark search. In Australia, you complete a trade mark search through IP Australia. If someone has a registered trade mark in broadly the same area of business as you, you risk getting a nasty legal letter telling you to stop using that name. The Onyx Legal team can help you assess whether or not you have any concerns about a registered trade mark, or would like to register your business name as a trade mark. Simply send us an email to advice@onyx.legal with “Trade Mark Registration enquiry” in the subject line and we will respond to your promptly. 

Thirdly, and now that you are reasonably certain no one else has a name the same or very similar to what you want to use, then do a name availability check on ASIC. Select “Organisation and Business Names” then complete some or all of the words you want to use in the “Name or Number” field and select “Go”. 

A list of Organisation and Business Names should appear. If there are more than 10 names, there will be multiple pages. You can change the settings to display up to 50 names at a time. When looking at names, anything that says “Registered” next to it in the “Status” column is not available to you. 

For example, we searched “forthright”, which produced 20 results. 10 of those results are registered. In the “type” column, you can identify whether they are business names or company names.

 

You won’t be able to register a business name if it is already being used by a company, and vice versa. Names that are identical or nearly identical to an existing registered business name are not allowed.

You can, however, add an additional word to the name – in this example some additions are “consulting”, “international” or “enterprises”, to register the same name.

Do I Have To Register My Business Name With ASIC?

Yes. 

Until 2012 business name registration was state based, but it has now moved to one national register managed through ASIC. 

Because your business name is linked to an ABN, your business name contact details will also be searchable through the ABN register. 

What Is The Difference Between A Trading Name And A Business Name?

A trading name refers to a name a business might use that is not currently registered. If you are using a trading name, or have used a trading name in the past and you want to continue using that name, then you should now register than name as your business name. 

ABN Lookup will continue to display trading names until 31 October 2023. From 1 November 2023, ABN Lookup will not display trading names and will only display registered business names. What this means for your business is that anyone who checks ABN Lookup to ensure your business is legitimate is unlikely to find you unless you have a registered business name. 

Business Name Registration Renewal

You don’t have to renew your business name registration every year. If you register through ASIC, you can register the business name for three years. 

Provided you keep your contact details up to date, you will receive notice of renewal from ASIC before your registration expires. If you discover that your registration has expired, then you will still have 30 days after the registration date to apply to re-register that name before it becomes available to the public.

Business Name Registration Qld, NSW, Vic etc

Business name registration moved from a state based system to a national system back in 2012. If you had previously registered under the state system, your registration should have been migrated to the national ASIC register. Some registrations were lost in that process because people did not keep their details up to date. 

If you lost your registration and someone else is now using that name, you may need to adjust your business name in order to get it registered again. 

You don’t have any ownership rights in a business name. The purpose of registration is to identify who is behind a business and demonstrate the credibility of a business. 

What Happens If My Business Name Is Not Registered?

Failing to register your business name, or to keep your registration up to date, can mean that someone else can register that business name and use it instead of you. If you allow your registration to lapse and someone else registers the same name, you have lost it and don’t have any automatic legal right to demand it back from the new business. 

There may be a legal argument as to why they should hand it over, but to prove that right and get the order for them to handover the name, you would have to go through a court process. Court is costly, time consuming, stressful and provides no guarantee of success.

Can Someone Else Use My Business Name?

There are various legal arguments why someone else cannot use your business name without your permission. Whether you have an argument depends on all the circumstances, and we would need to have a discussion with you about your situation before advising. 

Do I Own My Business Name?

Business name registration does not give you ownership rights. If you want the right to stop other people from using your business name, or something similar to your business name, then you may be better to register that name as a trade mark. Be aware that not all names are capable of achieving trade mark registration.

How can Onyx Legal help you?

Need help understanding your business name situation, or want to register your business name as a trade mark? Make an appointment with one of our team. 

Make an Appointment

What Happens When Business Founders Want to Split Up?

What Happens When Business Founders Want to Split Up?

by | Aug 31, 2022 | Business Structures, Dispute Resolution, Law for Online Business, Legal

What Happens When Business Founders Want to Split Up?

Business Break-ups Can Be Messy!

Unless the founders had something clear in writing beforehand, there is no end to the variety of things that can happen when founders want to go separate ways.

If there is nothing in writing and the split is not amicable, all sorts of time consuming, distracting and stressful things can happen. 

Here are some of the worst-case scenarios we have seen in practice, all where there was nothing in writing to start:

1. A Founder Dies Unexpectedly  

Whilst tragic at a personal level, it can also be very difficult for a business where one of the founders passes unexpectedly. Sometimes the family is aware of their business involvement, and sometimes they are not. In this case the family wanted the company to buy out the deceased founder’s interest in the business immediately and had some unrealistic expectations of what that interest was worth. 

Animosity was growing between the parties due poor communications. We were able to present a strategy which allowed for the progressive buy out of the deceased founder over a two year period, without interference by the family in the business, and at an amount set by a ‘desk top’ valuation completed by the company’s accountant. The family of the deceased founder were offered the opportunity to get an independent valuation, but at their cost, and the $11,000 price tag put them off.

2. One Founder Is Stealing Money From The Business, And Another Finds Out

Unfortunately, this is not an uncommon scenario. 

We’ve seen this occur in a variety of businesses from software to building and construction, and it is rarely pretty, and usually a long and slow process of separation if nothing was agreed in writing when the business was founded. 

Too many people think “we don’t need a shareholder agreement, we will be fine” when they are all excited about getting started, and then when things go wrong, they have no protection.  

In one example with a tech company, there were four sets of lawyers involved and the end result was a comprehensive deed of release covering the transfer of shares, forgiveness of debts, payment of money, and indemnities from the exiting partner. There were no admissions of liability in the deed. The deed took more than 15 months to negotiate and some shareholders meetings to approve decisions. 

As long as the negotiations remain between the parties and their lawyers, law enforcement need not be involved. There is nothing that legally requires you to incriminate yourself or anyone else in the business. When fraud or theft is discovered and reported, it is usually through a third party.

3. A Founder Walks Away Without Notice, Making Demands

Things happen in people’s lives (like death, illness, an amazing job offer etc), and they can suddenly want out. This can be very hard on the people who want to continue with the business and a shock if not contemplated before one partner leaves. Business break ups are often referred to as like going through a divorce by the people affected. 

Sometimes people want out, and they want their money, whether or not there is any owed to them at the time. Many people exiting a business think in terms of the future value of the business, rather than where it is as they exit, and vastly overestimate both what it is worth and the capacity of the other parties, or the business to pay for the exit. 

If shares are to be transferred to existing business partners, then those individuals need to have the money to purchase the shares at the agreed value. In a start up phase, this is likely to be $1 a share and not onerous, but if the business has been running for a while and has some value, the remaining shareholders might not have thousands of dollars required to purchase those shares.

If the shareholder is exiting and the company is making a distribution or buying back the shares (not a simple process) then there needs to be sufficient funds in the company to pay out the exiting party. 

As long as you have clarity around ownership of assets, intellectual property and a realistic value of the business, then its just a process to be undertaken when someone leaves suddenly. If there is nothing in place, then it is a process of negotiation and often heartache before a resolution can be agreed. 

4. A Shareholder Stops Contributing

 In situations where you have people with different skills coming together to build a business, not everyone necessarily has the same energy to keep the business on track. We’ve come across several businesses where a lot of effort was required of one party in the initial set up (for example someone building an App or a Website) and then their contribution become maintenance only. Another person in the business might be responsible for promotion, and there work is constant, requires review and reinvention, and never lets up. 

An example we have is a digital business where the person responsible for service delivery got fed up with the lack of interest of the developer who originally built the website for the business. Their ongoing contribution was minimal and yet their deductions from the business stayed the same and the service deliver person felt like they were working to support two families, without any recognition.  

Differing levels of effort over time could have been written into a shareholder agreement and appropriately dealt with, with the service delivery person gaining a greater interest in the distributions over time. Unfortunately, they had nothing documented. Fortunately, the exiting party, being the person who initially built the site, was prepared to accept an independent valuation of the business and to be paid out over six months rather than an immediate exit. 

In another tech company, the exiting person was someone who thought that they were indispensable to the business, but kept upsetting customers to the extent they left. Again, and independent valuation was agreed and they accepted payment over time, but the process of getting to that point took 4 months and was disruptive to the business.  

5. A Founding Partner No Longer Gets On with Anyone Else In The Business

This was a strange scenario and there was no shareholder agreement. One of the founders had moved into the position of CEO of the business but was no longer on speaking terms with anyone in the business, whether other founders or staff. There were six founders, four of whom no longer had any involvement in the day-to-day operations of the business, but all were looking for a financial exit. 

The company did have prospects, but a sale was not going to be possible whilst the CEO still had voting power to stop it.  There was not enough cash in the business to buy out the CEO without adversely affecting cashflow. 

Through a succession of negotiations including an independent business advisor, we were able to get the CEO’s agreement to retire and stop being involved in the day-to-day operations, as well as converting his shares to a preference share which would be paid first in the event of any declaration of dividends or sale. The preference share had no voting rights. Tax consequences for the business and the individual were also examined before the transaction went through. 

Business operations were a lot smoother without the former CEO’s involvement and a sale was achieved within 12 months, with all founders getting paid. 

It is always easier to think through future scenarios and what is fair when everyone is excited about the business and getting started, and still friends. It is significantly harder, and more costly, to attempt to resolve an acrimonious split a couple of years down the track. 

We provide clients with questionnaires to help identify potential needs in the business, and how people might exit to get you thinking about what might become important when you get started, whether setting up a joint venture or a shareholder or unitholder situation. There a lots of options available.

How can Onyx Legal help you?

If you are or plan to go into business with someone else and you’d like to secure the future of your business, make an appointment with us to talk through your options. 

Make an Appointment

Employers’ Obligation to Protect Employee Mental Health 

Employers’ Obligation to Protect Employee Mental Health 

by | Jul 29, 2022 | Employment, Law for Online Business, Legal

Employers’ Obligation to Protect Employee Mental Health 

What Obligations Do Employers Have For Employee Mental Health?

 

We’ve all taken a ‘doona day’ off work because we just can’t face it on that day. Or we know someone who has. It doesn’t matter whether the stress is arising from work or not, some days, you just want the world to stop, so you can get off.

But what about your obligations as a small business employer?

Employers have a duty to provide a safe system of work, which includes a duty to take reasonable care to avoid psychiatric injury to employees.

In the 2022 decision of Kozarov v Victoria, the High Court has stated that “the circumstances of a particular type of employment may be such that the work to be performed by the employee is inherently and obviously dangerous to the psychiatric health of the employee (just as other kinds of work are inherently and obviously dangerous to the physical health of the employee). In any such case, the employer is duty-bound to be proactive in the provision of measures to enable the work to be performed safely by the employee.”

So, it is clear that if you have a business where the work is known to create a risk of PTSD (such as
emergency services), then you have an obligation to take steps to protect your workers. In the Kozarov case, the Court found that as a result of the type of work done (by a solicitor working constantly with young victims of sexual assault), the duty of care arose at the time the employee started work, and that no later event was required to raise a duty of care.

But what if you run a business which has no obvious inherent risk, like retail? There may not be an
immediately obvious duty of care, beyond the general duty to provide a safe work environment.

There is an earlier 2005 case (Koehler v Cerebos) in which the High Court states that an employer “is entitled to assume, in the absence of evident signs warning of the possibility of psychiatric injury, that the employee considers that he or she is able to do the job.”

What Is An Evident Sign? 

As a small business employer your employment contracts may include a request that employees disclose any pre-existing condition or injury which might affect their ability to fulfil their role. Increasingly, and with less stigma being attached to mental health conditions, employees are disclosing existing conditions such as anxiety and depression in those declarations.

If you haven’t closely reviewed your employee acceptances of employment, perhaps now is a good time to do so.

There are also instances where employers engage people from employment agencies known to support individuals who have been out of the workforce for an extended period, or who experience a form of disability which impacts their ability to gain work. Some of those services are proud to state that they support people with mental health conditions. For example, EPIC shares that “Among EPIC’s cohort of job seekers, 38% have a diagnosed mental health condition.”

If you are engaging people you know have a mental health condition, or whom you should reasonably suspect may have a mental health condition, then a finding that there were “evident signs” of risk of psychiatric injury may well be made out. In those instances, as a small business employer, you should have in place a policy or process to ensure that someone in the workplace has the ability to identify and assist people with a mental health condition in order to provide a safe work environment.

As someone who has a lived experience of a suicidal crisis, MHFA Instructor, Donna Thistlethwaite, is passionate about creating safer workplaces.

“Often people spend more time with colleagues than they do with family and friends which may result in others miss the signs of poor mental health. 

 

Having the support of a MHFA trained colleague can facilitate someone accessing treatment and can speed up their recovery, allowing them to return to strong performance and reducing the impacts of poor mental health which can include absence, conflict and poor performance. The skills a MHFAider learns improves their communication skills in other areas of business.

 

Mental Health First Aid helps to break down stigma and educates participants to recognise the signs that they, or someone else, is experiencing a mental health problem. Early intervention results in faster recovery which is great for both the individual and the business.”

Donna Thistlethwaite Mentally Wealthy

You Have A First Aid officer. Why Don’t You Have A Mental Health First Aid Officer?

You might be in a position where you suspect there are people in the workplace with mental health issues, but don’t have the first clue about how to identify who they are and, in another instance, you might know you have people with mental health problems, but not how to get the best out of them.

So Where Do You Start?

Take responsibility for the mental health of your workforce at work. If you sometimes wonder why it’s your problem and why employees can’t just ‘leave those issues at home’ and get on with their work, then someone with mental health first aid training could be a real asset in your workplace.

Once you realise you have the ability to make an impact, you empower yourself and your workforce and gain the potential to decrease the impact of mental health problems in the workplace.

Consider that almost 45% of people of working age are likely to experience mental health problems at some stage in their lifetime (ABS 2007), whether at home or at work, and if they are affected, their productivity will be too.

There are a large variety of support programs available for free to employees and small business employers, including the following:

Mental Health Resources for You and Your Workforce

 

Heads Up – https://www.headsup.org.au/ 
Mental wellbeing support for small businesses and individuals, including resources for employers, employees, managers and small business owners.

New Access – https://www.beyondblue.org.au/get-support/newaccess/about-newaccess 

A free coaching program, designed to provide accessible, quality services for anyone finding it hard to manage life stress using Low-intensity Cognitive Behavioural Therapy practices aimed to help people break the cycle of negative or unhelpful thoughts. 

Ahead for Business – https://aheadforbusiness.org.au/ 

Personalised resources and tools tailored to the specific needs of you as a small business owner.

[NSW] Mental Health at Work – https://www.nsw.gov.au/mental-health-at-work

– Free training and coaching for your workplaces, and other resources.

[QLD] Your Mental Wellbeing – https://mentalwellbeing.initiatives.qld.gov.au/ 

– Improving mental wellbeing resources for individuals.

[TAS] Mental Health and Wellness –
https://www.business.tas.gov.au/manage_a_business/mental_health_and_wellness. 

[VIC] Wellbeing and Mental Health Support for Victorian Small Business –
https://business.vic.gov.au/grants-and-programs/wellbeing-and-mental-health-support-for-victorian-small-businesses 

Mental health support for the challenges of running a small business.

[WA] Managing Stress and Anxiety – https://www.smallbusiness.wa.gov.au/people/managing-stress-anxiety. 

Some businesses and professional industry organisations also offer Employee Assistance Programs (EAP), which have been around for a long time and are relatively easy to implement. Unfortunately, some issues with EAPs have been the small amount of use due to lack of knowledge of their existence, the cost to the employer, and employees who may be concerned that their problems will be reported to the employer if they use the service (even though that usually does not occur).

Just as you train First Aid officers in the workplace, you can now also have trained Mental Health First Aid officers. The training is usually offered in mixed mode or face to face and provides valuable insight into recognising mental health conditions and how to support people with those conditions in the workplace.

Case Study

We were recently approached by a client who was concerned about the behaviour of a casual employee who failed to turn up for their shift after a discussion with their supervisor where the supervisor asked them to ‘go home and think about what you have done’.

Over the following weekend some text messages were exchanged between the supervisor and the employee attempting to clarify whether or not the employee was required for work on the Monday. One of the supervisor’s messages included words along the lines of ‘as long as there is no drama’.

These exchanges occurred in a context where the employer had engaged the employee from a disability support employment agency and knew that the employee suffered a mental health condition. In fact, the employee had stated “you told the agency you had experience working with people like me”. In the context of the employee’s condition (anxiety and depression), the condescending language expressed by the supervisor was more than unhelpful – it probably increased the employee’s anxiety and precipitated the employee’s failure to show for work on the Monday.

The employer consulted us about dismissing the employee for abandonment of employment.

Leaving aside that in a casual employment relationship an employee is entitled to refuse a shift without penalty (although here there was no clear communication to that effect), it is important that employers start considering the training of supervisors in the workplace to recognise and more appropriately respond to mental health conditions than was evidenced in the case study above.

Any employer that has more than 15 employees (so not a small business) should consider Mental Health First Aid training and having a Mental Health First Aid Officer (similar to a First Aid officer) in their workforce to better manage situations like that described here.

Clear, specific communication without the frustrated condescension may have completely changed the results of our client’s interaction with their employee.

Providing A Safe Work Environment

As a small business owner, you don’t need another job to do that detracts from your revenue generating activities. However, you still need to provide a safe workplace.

Safety at work is making sure that workers and visitors are not exposed to avoidable risks and hazards. This is usually done by assessing the risks in your workplace and putting in place safeguards to reduce or avoid those risks. People in workplace health and safety can help you with this, otherwise there are a large variety of resources online to help identify and manage usual risks in, say, an office. You then have a policy or procedure or both in place to help employees manage that risk.

Not every single risk needs to be identified and managed. Every person is expected to have a reasonable measure of common sense; like, don’t stand on a chair with wheels to reach something on a high shelf!

Assessing risks and managing them has to be reasonable in the context of the workplace and the people working there. If you know you have people in your workplace with mental health conditions, then having something in place to support them is reasonable.

“Many workplaces are recognising the importance of having Mental Health First Aid, the training can provide participants with the skills to recognise signs of mental health, assist during a mental health crisis, offer initial help, and connect individuals to the appropriate professional, peer, or social services. It is important to recognise that a MHFA is not to provide counselling, their role is to assist and support, but with ongoing professional development training, a Mental Health First Aid Officer can play a vital role in the workplace by implementing wellbeing tools to create a mentally healthy working environment.”

Jo Stevens from The Zen Zone is an advocate for Mental Health and provides Professional Development Training for Mental Health First Aid Officers.

Mental Health First Aid training

Mental Health First Aid Australia offers a variety of training and courses to train mental health first aid officers for your workplace. A first aid officer is not a medical officer and doesn’t provide diagnosis or treatment. It’s about learning the skills necessary to recognise symptoms of mental health conditions and support someone with a mental health condition to identify that support is available and where to find it.

Mental Health First Aid training with The Thrive Movement

You will learn. How to assist an adult who may be experiencing a mental health problem or mental health crisis until appropriate professional help is received or the crisis resolves, using a practical, evidence-based action plan. Including Depression and Anxiety, Psychosis, Substance Use Problems, Suicidal Thoughts and Behaviours, Deliberate Self Harm, Severe affects of Drug and Alcohol Abuse.

This course is based on guidelines developed through the expert consensus of people with lived experience of mental health problems and professionals.

Why Attend. Evaluations consistently show that MHFA training is associated with improved knowledge of mental illnesses, their treatments and appropriate first aid strategies, and confidence in providing first aid to individuals with mental illness. It is also associated with decreased stigma and an increase in help provided. An added benefit you will know how to look after your mental health better.

What’s the Format?
The 12-hour course can be delivered in 1 of 3 ways:

  • Face-to-face: a 2-day course led by an accredited MHFA Instructor.
  • Blended face-to-face: a self-paced e-learning component, followed by a 4-hour face-to-face session led by an accredited MHFA Instructor.
  • Online: a self-paced e-learning component, followed by 2 x 2.5-hour video conferencing sessions led by an accredited MHFA Instructor.

Course and Instructor. For further information and enquiries for attending this course or a bespoke training for yourself or your team contact- ‘Derek Rogers of The Thrive Movement Australia’

How can Onyx Legal help you?

If you need help reviewing a risk assessment, an employment agreement, or preparing employee policies or procedures to support better mental health in your workplace, or simply concerned about managing one of your employees, make an appointment to talk with one of our team.

Make an Appointment

Selling Your Business? 6 Common Mistakes to Avoid

Selling Your Business? 6 Common Mistakes to Avoid

by | Apr 4, 2022 | Buying or Selling a Business, Law for Online Business, Legal, Website Terms

Selling Your Business? 6 Common Mistakes to Avoid

Before you make the decision to sell your business, you need to know how to avoid making the most common mistakes. 

Before you make the decision to sell your business, you need to know how to avoid making the most common mistakes. A little thoughtful preparation can save you time and money and help you avoid making decisions you might regret later.

For some people, going through the process of really thinking about what they are selling has led them to reconsider and make other adjustments in their business instead.

1. Not knowing what you want to sell

It sounds like common sense, doesn’t it? “I know what I want, I want to sell my business!”

But what does that look like?

We have worked with a few clients lately at different ends of the spectrum of preparation for sale. Some people know exactly what they are selling, have identified the assets to be sold and those not transferring with the sale, and know how much they want for it. They know whether the premises are part of it and what it looks like to transfer the premises.

Surprisingly, other people come to us to prepare contracts for sale, and we spend weeks trying to get clarity on what is included, what is not included, and what is actually necessary to ensure that the sale is made as a going concern and will therefore not attract GST.

And yes, if you didn’t get around to documenting a business sale when it occurred and would like it documented after the fact, that is still possible. Although it has its own peculiarities. 

The Australian Taxation Office (ATO) guidelines for sale of a going concern are straightforward:

  • everything necessary to continue to operate the business, including staff, equipment and premises
  • continue to operate the business up until the sale date
  • buyer must be registered for GST
  • there is a written agreement showing that ‘going concern’ has been agreed between the parties, dated before the sale is finalised
  • both parties are to be a single purchasing entity and a single selling entity to claim the GST exemption – there can be multiple enterprises but these have to operate as separate sales (ie. land and business)

To be a sale of a going concern you need to transfer everything that is necessary to the ongoing operations of the business. This still occurs in context. You might use certain software in your business (like Xero or MYOB) and consider that essential, but the buyer might have different software and no intent of changing. What is essential for the business is the customer and sales data, not necessarily the software.

Prudent buyers will complete searches and due diligence before offering to purchase your business. Ideally, you will have anticipated and prepared all the information the buyer might want to see before promoting your business for sale; this makes the due diligence process much smoother and quicker.

Apart from knowing what it is you want to sell and what you want for it, it is also important to consider whether it is important to you, or the continuation of the business, to sell the company or the assets.

Obviously, if you are operating through a trust, it is an asset sale, but if you are operating through a company, there may be an option to sell the shares in that company. Lots of advisers will caution against purchasing shares because more due diligence is involved, and you may not be able to discover any skeletons in the company closet until after the transfer is complete. Yes, we can write in indemnities etc., but it is considered a higher risk position that purchasing assets. 

However, there are regulated businesses where it may be much easier to transfer the company than attempt to transfer assets. For example, selling a business with government contracts, selling a business which has licenses or permissions that require an involved process, such as an RTO (Registered Training Organisation) if you are looking for potential buyers who do not already have that compliance set up.

2. Not getting advice early, whether legal, financial or from a business broker

Working with a business broker can help you identify what you are selling and the value of what you have to sell, before you go to market. Some business brokers are great, will work closely with you to achieve what you want and really look after your interests. Some aren’t.

We’ve worked with business brokers in the past who are so focused on getting their commission that they write the sales contract in favour of the buyer, and insist on controlling the contract contrary to any legal advice to the parties. This is where it helps if you understand what you are selling and what you want to achieve. You’re not likely to be persuaded to just take any sale.

Sellers don’t always consider planning for life after the sale of business (apart from much needed holidays) and may struggle to ensure they have adequately provided for their next venture, or even retirement. You want to be better off financially at the completion of the sale, instead of regretting your decision.

Achieving the best possible price means that careful planning needs to be in place; a quick sale due to financial pressure or personal reasons is can potentially impact your ability to achieve the best price for your business.

You can put processes in place to limit your risk and protect your interests. You can put boundaries around what you are prepared to commit as part of the sale in terms of your assistance to the buyer after settlement.

If you get appropriate advice before you sign anything, you have the opportunity to walk away from a transaction that is only going to cause you grief in the future.

I would add addressing PPSR’s, as they tend to get overlooked and can cause a big problem with completion. The main issue I have found is that most sellers do not have a comprehensive exit plan that details every step, especially the preparation stages that will make the process more seamless. 

Another process which is becoming more popular is to engage a registered business valuer, or other expert to complete a pre-sale audit report that that will highlight the true strengths, weaknesses, opportunities and threats confronting the business. 

Hugo Martin, Business Broker and Registered Business Valuer 

Getting appropriate tax advice

It is essential to consult with a tax professional to make sure you understand that tax implications of your sale and the amount of tax liability you will have to pay. GST, CGT and income tax may all need consideration depending on what you are selling, when and in what structure.

We are not tax lawyers, and you will need to consult your tax adviser for advice appropriate to your circumstances.

Ideally you will have your financial reporting for the past 2-3 years available for inspection by the buyer (after they have signed an NDA) and a business structure that is attractive to a potential purchaser. As part of the business purchase, the buyer will want to review the financial records of the business, because this supports the price you are asking the buyer to pay.

Another consideration will be the way the selling price is determined and if the future performance of the business will generate a percentage to be paid to you as the seller.

Stamp duty

Depending on which state or territory you are located, and where the buyer is, there may be transfer duty or stamp duty on the sale of the business.

Duty is usually calculated on the arm’s length value of the business sale. So, if you transfer the business to a friend or relative at a discount, you may need to submit an independent valuation with the application for assessment.

Depending on the value, nature and place of business, an item like goodwill can still attract transfer duty. The sale of goodwill alone does not always attract stamp duty, but that type of sale is also not likely to be a sale of a going concern. Lots of different things need to be taken into consideration.

Case Study

An example of where goodwill was found not to be included in a sale was a case involving the sale of two McDonald’s restaurants in NSW. The Chief Commissioner for Taxation assessed stamp duty on the sale price and included an element for goodwill. The restaurant owner argued that the goodwill was not sold and instead remained the property of McDonald’s due to their licence agreement. The Court held that any goodwill the restaurant owner enjoyed would be terminated at the end of the licence agreement. In those circumstances it was determined that no goodwill was transferred, and no duty was payable by the restaurant owner in respect of goodwill.

3. Not understanding the ownership of the assets in the business sale

A little careful pre-planning for sale will ensure that the correct assets are in the correct business entity name and will attach to the sale.

We’ve had interesting situations in the past where clients have, at the last minute and only after we’ve reviewed a contract from the potential buyer (it’s not always the seller who prepares the contract, although that is a good idea) that it was discovered some of the assets sat in a forgotten entity that was about to be deregistered by ASIC. The company was quickly reinstated and added to the sale contract as one of the sellers.

In that instance it was a trade mark registration, but it could just as easily have been a motor vehicle, manufacturing machinery or office equipment.

To help you think about your business, the assets of the business are defined in the Real Estate Institute of Queensland (REIQ) Business Sale Contract, under Clause 3.1 to include the following:

  • Goodwill
  • Fixtures
  • Fittings
  • Furniture
  • Chattels
  • Plant and equipment
  • Industrial and intellectual property
  • Work-in-progress
  • Stock in trade
  • Permits
  • Licenses
  • Any other assets listed by the parties

There are usually warranties in the contract for sale of business that you as a seller give, promising that the assets are ‘unencumbered’ or not subject to the interests of another party, like a financier.

It will be a necessary part of the sale to provide clear title for the assets, including paying out any lenders who hold the existing loans and securities registered under the Personal Property Securities Register (PPSR). If this does not happen before or at settlement, then if the buyer defaults on the payments, the financier can repossess the asset.

4. Not understanding what is going to happen with your employees

Do you tell them, or don’t you? And when?

If you are about to list your business with a broker, then it’s a good idea to have a discussion with your staff beforehand. You don’t want to embarrass your employees by having them find out from someone else that their job might be at risk.

Some buyers will be interested in all your staff. Some buyers may be interested in some of your staff and some buyers just want the assets and don’t want any people. The size of your business, and the size of the purchaser, are likely to make a difference.

If you are listing with a broker, you can let the broker know what your expectations are around your staff – that they buyer will take them, or the majority of them.

It is the option of the purchaser to make your employees an offer, or not. You can’t force a new owner to take all your employees. You also can’t force your employees to work for a new owner. Some careful negotiation may be needed.

As a seller, you will be under an obligation to give all the employee details for transferring employees, their entitlements, any accrued leave and the pay rates and any Awards they might be employed under.

If the purchaser does not take your employees, then you will need to pay out their entitlements, which may include accrued bonuses, annual leave, long service leave, notice or redundancy. If you are thinking ahead and have a year or so before you expect to put your business up for sale, you might consider reviewing what entitlements have been accrued and suggesting some people use their leave.

Once offers and agreements with the employees have been made by the buyer, there is likely to be an adjustment to the purchase price for some entitlements, such as personal leave, annual leave, long service leave and accrued bonuses.  

If you need advice on understanding what is going to happen and what your responsibilities will be, and even answering your employee’s questions, then let us know and we are happy to help.

5. Not thinking about what you will do with the premises if not part of the sale

Not every business requires an office and with the changes in working habits brought about by COVID, a buyer may not be interested in taking over any premises you have for your business. So where does that leave you?

If the buyer does want your premises:

  • If you lease the premises, then you will need the landlord’s consent to a novation or assignment of the lease. A novation gets you out of any liability associated with the lease and an assignment means you are still on the hook (financially liable) until the lease ends, which may include option periods.
  • If you own the premises, you may be able to negotiate a sale in conjunction with the sale of business.
  • If you own the premises, you may be able to negotiate a lease with the new business owner, and yes, the lease still needs to be documented separately from the sale of business.

Most landlords are prepared to agree to an assignment but not a novation. Why not have two people responsible for covering the lease when you have no obligation to let the first tenant out?

If the buyer doesn’t want your premises:

  • Think about how much time you have left on the lease.
  • Think about alternate uses for the premises.
  • Consider whether you still have a use for the premises, or if you need to break the lease.
  • Instead of breaking the lease, you may be able to find someone else to take over the lease – again by novation or assignment, or you may be able to find someone to sublet some of the space from you to reduce your costs.

It is not uncommon for a business to ‘hold over’ after the end of a lease on a month-by-month tenancy pending a sale of business to limit the risk of having to maintain a lease without a business to fund it. We’re happy to talk through your options with you.

6. Forgetting to transfer licenses, permists and social media accounts

Some businesses need specific licences and permits to trade.

Think about:

  • food business licences
  • liquor licences
  • building trade licences
  • transport licences
  • commercial parking permits
  • and so on

The buyer’s expectation will be that the business sale contract includes at least reference to necessary llicences and permits, and possibly your cooperation in transfer, if that is available. Some permits require a new application from the buyer and that takes time. The buyer might ask you to stay in the business as the licence holder pending their application. If so, you will need to think about your risks if their application is unsuccessful. It is possible that the sale will fall over if the purchaser cannot get the necessary permits or licenses.

Online assets

Business brokers don’t always consider your online assets when helping you prepare for sale. In our online world where people increasingly search online to find what they are looking for, online assets can have a significant impact on the continued operation of the business.

Whatever you use to promote your business online is your intellectual property and needs to be part of the sale.

Your domain name, business website (a domain name and website are different things) and social media accounts will also need to be transferred across to the new owner. Different platforms have different requirements and its important you understand what you have to do when settlement comes around.

How can Onyx Legal help you?

If you are thinking of selling, have a chat with us before the deal is done. If you’ve found a buyer and want to move forward, we can prepare your contract for sale and if you’ve somehow sold without any written agreement and would just like to clarify any remaining liability before anyone forgets what the agreement was.

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