Legal impacts for Australian business owners post-COVID

While much has been written about protecting ourselves, our businesses, our staff and our clients during the pandemic, as Australia posts its highest quarterly growth in 44 years, there is more to consider than just being COVIDSafe.

As the business support that has been afforded by the government is phased out, there will be new commercial issues to manage, with associated risks to mitigate, including:

• Leases and property
• Taxation
• Employment and staff
• Privacy and data protection
• Debt recovery and insolvency

Leases and property in the New Normal

Much of the relief provided under the Commonwealth Cabinet’s Mandatory Code of Conduct for SME Commercial Leases (the Code) aimed at managing cashflow for tenants and landlords has now lapsed, or will do soon.

In some cases, where the protection under the Code has expired but businesses are still suffering disruption to their operations, the same principles may be applied ongoing, while the tenant is still eligible for JobKeeper, on a fair basis between the tenant and landlord.

During the recovery period, the guidelines and ‘good faith’ agreements are still relevant. At the end of the day, landlords generally recognise that it’s better for them to have a reliable tenant in an uncertain climate than have premises sitting vacant for unknown or extended periods of time.

Rents overall will likely be affected as demand for office space reduces in line with the increase in employees working from home (i.e. prices will be impacted by supply and demand rather than historic fixed rental pricing and review practices).

Taxation in a post-pandemic landscape

Just as the government encouraged the public’s ‘buy in’ of the economic measures taken in response to the pandemic, similarly, it is likely to measure public sentiment before introducing any further or new tax reforms in the early stages of 2021. This will help ensure any changes are meaningful and that reasonable timeframes are put in place to allow for  understanding and effective implementation.

The ATO encourages SMEs and other business operators to ensure their financial record keeping is up to date.

Your records should include all regular financial transactions and responsibilities, including debts. Records should also be retained for any grants that you have been awarded, JobKeeper payments, cash flow boosts, and instant asset write-offs.

Employees at home and in the workplace

There’s no doubt that the pandemic has forever changed the workplace as we knew it. Employers who previously had little to no remote workforce have now had to consider how to provide a safe workplace for those working from home, and comply with Workplace Health and Safety legislation in order to do so.

Most SMEs now should have in place a COVID-19 Safety Plan whether or not employees are working onsite or from home. Monitoring staff numbers on-site will need to be considered as staff start transitioning back to workplaces in the new year. Maximum numbers in lifts, meeting rooms, reception and other areas, including bathrooms, will need careful monitoring.

Additionally, workplaces should have a process in place for:

• Implementing a rapid-response plan if a COVID-19 case does arise that impacts on its workforce;
• Revising office arrangements to adapt to changing lockdown restrictions, which may include:
  • temporary changes to operational hours;
  • alternating staff start and finishing times; and
  • moderating numbers of staff travelling on public transport to and from workspaces.

Redundancies and leave entitlements also need to be factored into returning to work.

Many SMEs have had the ability to keep operating with the support from JobKeeper, but real consideration needs to be given to preparation for possible redundancies. Staff leave will need to be managed in a manner compliant with relevant Awards, the Fair Work Act, and anti-discrimination legislation.

Privacy and data in a post-COVID world

Business owners should already be familiar – and comply – with the Privacy Act 1988 (Cth) (Privacy Act) as it applies in relation to the collection, use and disclosure of personal information.

A major concern during the dislocation of workplaces and the rapidly-introduced work from home model, is that businesses may have inadvertently cut corners around privacy regulations during the process.

Risks around poor or improper data handling have been exacerbated by the ongoing pandemic. Even with the best security systems in place, data breaches and cyber-attacks still happen and a remote workforce can increase vulnerability of systems.

To minimise exposure, protective measures can be put in place, including ensuring that staff:

• Only use and access trusted networks, software and cloud services, and ensure updates are consistently loaded to devices, virtual private networks and firewalls;
• Use only work email accounts for work-related communications and emails at all times, and ensure that all electronic devices are stored in safely and securely; and
• Set up multi-factor authentication for remote access to systems and business resources.

Now is also an opportune time to consider how long you are retaining your business’ data. There are specific business records that are required, under legislation, to be kept for set time periods. However, keeping data for long periods where staff that access that data are working remotely may leave your business exposed to potential risk of a data breach.

Businesses should review their Data Breach Response Plans to ensure that they remain effective in the context of current working arrangements. Can your remote staff easily notify relevant team members of a suspected data breach and access methods of containment off site?

Recovering debts and insolvency for COVID-affected SMEs

Currently, bankruptcies are down across the states, likely assisted by the Government support during the pandemic and the existing moratoriums that have extended until year-end. Public and private money is being pumped into businesses (and households), yet many experts believe this ismerely a Band-Aid hiding the reality of what many SMEs are experiencing.

The ensuing annual quarter will likely see a greater number of businesses seeking assistance with, or applying for, debt recovery and insolvency, as the ‘debt cliff’ approaches.

While the Government has extended its Safe Harbour protections, the Treasurer also announced changes to the insolvent and restructuring laws, to take effect 1 January  2021. Hailed as the most radical changes in this area in 30 years, the approach is designed to help small businesses that are having difficulty to have greater flexibility, better capacity to restructure with the help of their adviser/s, and hopefully survive the impact of the pandemic..

As the end of the moratoriums approach, consideration should be given to:

• Cashflow and the work you need to do with regard to insolvency options including capital, creditors and expenses
• Profitability of your business as assistance packages wind down.
• Potential decline or disruption of business post-pandemic (for example, due to shifts in consumer behaviour).
• Pending insolvency reforms.

Be nimble, be ready, be smart, be reasonable

If this pandemic has taught us anything, it’s that the best laid plans are not always practical. Many SMEs have pivoted and displayed remarkable agility and resilience, but others have been sorely tested.

To ensure businesses can put themselves in the best position possible to recover as we head into 2021, planning is essential. Knowing your legal rights and responsibilities, and those of your staff, clients, creditors, and/or debtors is critical.

We need to take the lessons we’ve learnt to this point and keep applying them with humility, compassion, patience, and integrity.

For advice on how to manage your business’ planning for and transition into 2021, contact a PB Lawyer today. Email us or call 1300 774 788.