Norman Waterhouse

Normans Briefly

In this issue

Welcome to the March edition of the Normans Corporate and Commercial Briefly.

>   Walking the Talk Industrial Relations Seminar
>   Government Announces Changes to Tax Anti-Avoidance Provisions
>   Foreign Workers in Australia and Their Right to Work
>   Public Ancillary Funds Need to Review Their Compliance
>   Employment Law and Social Media - Recent Developments

Walking the Talk Industrial Relations Seminar

It can be difficult to keep on top of all the developments in the constantly dynamic field of workplace relations.

The Norman Waterhouse Employment and Industrial Relations Team is conducting a day-long seminar on Tuesday, 3 April 2012, entitled Walking the Talk - Industrial Relations in the Real World, which we believe will be an invaluable opportunity for you to be updated on the most important recent developments in workplace relations law, and some practical advice on what they mean for your organisation and you.

We have put together a program that addresses some of the critical issues that confront CEOs, human resource professionals, and anyone who manages others in the workplace, including presentations about:
• how to deal with bullying complaints;
• how to manage fraud and misconduct investigations; and
• how to make flexible working arrangements work for both the employee, and your organisation.

Click here to view the full program. To register, please email

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Government Announces Changes to Tax Anti-Avoidance Provisions

Treasury has announced that it is proposing to change the general anti-avoidance provisions contained in the Income Tax Assessment Act 1936 to reduce the scope for taxpayers to plan their way around the intended operation of Australia’s tax law.

Currently the general anti-avoidance provisions require that a taxpayer must enter into a “scheme” with the dominant purpose of obtaining a “tax benefit” in connection with that scheme.

In two recent cases, taxpayers have been successful in arguing that they did not obtain a tax benefit because without the tax benefits afforded by the particular scheme they would not have entered into the relevant arrangement. 

Treasury is concerned that such arguments undermine the operation of the general anti-avoidance provisions and is now seeking to amend the legislation to “protect the integrity of the tax system”.

In addition, Treasury has indicated in its press release that it intends new anti-avoidance provisions take effect from 1 March 2012 so as to minimise any potential for taxpayers to obtain unintended tax advantages before the new legislation is enacted.

This means taxpayers will be forced to comply with the new law from 1 March without knowing precisely what the amendments will entail.  We therefore recommend that any taxpayer entering into or in the process of effecting a transaction carefully consider the commercial and tax implications in light of Treasury’s announcement.

Consultation on the proposed amendments is expected to include public consultation and exposure draft legislation with the proposed legislation to be introduced into Parliament in the Spring 2012 sitting.

Please click here to view the Treasury press release.

For more specific information on any of the material contained in this article please contact Kale Rigano on 8210 1207 or or Tom Walrut on 8210 1218 or

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Foreign Workers in Australia and Their Right to Work

Australian businesses may have occasion to employ a foreign person who is temporarily residing in Australia.  Provided that certain checks are completed, there is no reason why such persons should not be employed.  This is the first part in a series that will introduce the various employer nominated and business visa programs.

Where a foreign person has been identified to fill a vacancy within the workplace, the first step is to determine that the person holds a valid visa and has the right to work.  A valid visa is one that is currently in effect and has not expired.

If the visa contains a “No Work” condition, this will mean that the person cannot legally undertake work in Australia.  It is important to note that the Migration Regulations 1994 define work as “any activity that, in Australia, normally attracts remuneration”.  There are strict guidelines as to whether unpaid voluntary work breaches the “No Work” condition.

Where there is no prohibition to work, the foreign person will usually be eligible to work with certain restrictions that may affect the capacity or nature of work. 

The following points of good practice which assist employers in identifying any impediments to employment:

  1. Incorporate the process of checking an individual’s work rights early on within the recruitment process.  If a suitable candidate is not an Australian citizen or permanent resident, then request a copy of their passport biodata and visa label/visa approval notification issued by the Department of Immigration and Citizenship (DIAC).  Retain records of this information within your human resource management systems.
  2. It is insufficient to rely solely on the visa holder’s advice regarding their visa status and right to work.  These details should be verified via DIAC’s free online service VEVO (Visa Entitlement Verification Online) which will provide the employer with an up to date snapshot of the individual’s work entitlement, corresponding with DIAC’s records.  To access VEVO, please register here. It is recommended that a copy of the VEVO result is also retained on file.
  3. Record important events/dates (eg visa expiry dates) and follow up as necessary.  In cases of upcoming visa expiries, request documentary evidence that a subsequent visa application has been made and that the applicant has been granted a bridging visa.  It is recommended that the visa holder is contacted no later than four to six weeks prior to their visa expiry to ascertain the plan of action.  We strongly recommend that technical advice is sought where the employee is the holder of a bridging visa, to verify that they hold lawful immigration status during the transitional period with no changes to their work entitlement. 

It is a criminal offence under the Migration Act 1956 to allow or refer an illegal person to work, or to allow or refer a non-citizen to work in breach of their visa conditions.  These offences attract a maximum prison term of two years as well as fines of up to $13,200 for natural persons and $66,000 for corporations.

In the next series topic, we will look at Business Sponsorship and the 457 visa program which is a program specifically designed to enable Australian businesses to sponsor skilled overseas workers on a temporary basis.     

For more specific information on any of the material contained in this article please contact Anna Hsiao on 8217 1357 or

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Public Ancillary Funds Need to Review Their Compliance

The Tax Laws Amendment (2011 Measures No. 7) Act 2011 (the Act) was passed into law on 29 November 2011. The Act introduced numerous changes which affect the establishment and operation of public ancillary funds (PAFs). The changes also affect previously existing PAFs which, at the end of 31 December 2011, were recognised as an ancillary fund (but not a private ancillary fund) and were endorsed as a deductible gift recipient (DGR) (from here referred to as ‘existing’ PAFs).

Some of the legislative changes affecting PAFs are purely administrative, such as revising the terminology used in Australia’s Taxation Acts with respect to PAFs. However, the Act also provided other more significant changes to the operation of a PAF – although some of these changes are governed by a transitional period and so may not immediately affect PAFs that existed before 31 December 2012.

In addition, legislative guidelines (guidelines) setting minimum standards for the governance and conduct of PAFs were created by the Treasurer. The guidelines came into effect on 1 January 2012 and must be complied with by all PAFs in order for them to remain endorsed as a DGR.

The guidelines describe the manner in which a PAF can invest, borrow money, make distributions and accept donations. PAFs will also need to prepare annual accounts and financial statements, and be reviewed or audited every financial year.  Depending upon the way in which each PAF currently conducts their financial affairs, some of these changes may not be difficult to implement.

It should be noted that these legislative changes and guidelines were deemed to be ‘accepted’ by existing PAFs on 1 January 2012. This means that unless a transitional exception applies, both existing and new PAFs must comply with all of the new amendments and guidelines. 

In particular, existing PAFs may now need to change their trust deed so that it:

  • clearly sets out and reflects the purpose of the fund;
  • reflects that it is a not-for profit entity;
  • places limitations on the transferral of net assets on a winding up; and
  • prohibits the Trustee from being indemnified against a loss caused by actions which were dishonest, negligent or reckless.

Further, where a PAF updates its trust deed, the Commissioner of Taxation must be notified of the change within 21 days.

Another notable amendment is that the trustees for all new PAFs must:

  • be a constitutional corporation, unless the only trustee of the trust is the Public Trustee of a State or Territory;
  • have agreed, in the approved form, to comply with the Guidelines as in force from time to time; and
  • not have revoked that agreement.

However, these requirements are moderated for existing PAFs, where the requirement for the trustee to be a corporation will not apply until the earlier of:

  • the existing PAF appointing a corporation as their trustee; or
  • one of the existing PAF trustees revoking their agreement to comply with the Guidelines.

Provided none of the events described above occur, the trustee of an existing PAF can remain in that capacity indefinitely, irrespective of the new requirements.

Considering the large number of changes that affect existing PAFs, it is strongly recommended that trustees now review their trust deeds and current operational procedures to ensure that they will maintain DGR status and, if there are any concerns, to seek legal advice.

For a comparison of these amendments and previous ancillary fund requirements, please click here.

For more specific information on any of the material contained in this article please contact Nicola Pearce on 8210 1240 or at

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Employment Law and Social Media - Recent Developments

The cyber-world of social media and the internet creates an increasing layer of legal risk for employers if such sites are misused by employees, particularly where employers provide employees with email and internet access at work. The raft of potential liabilities include defamation and workplace bullying and harassment.

A more critical issue is the extent to which employers may rely on information accessed or posted on the internet and social media in a disciplinary context. Traditionally, it has been difficult for employers to place prohibitions on the conduct of employees outside of work hours, unless the conduct has a sufficient connection with the employment. The wide-reaching nature of social media sites and the internet generally is making it easier for employers to establish a sufficient connection with employment in such circumstances. However, as the cases highlight below, having a comprehensive email, internet and social media policy is essential to establish the ‘sufficient connection’ with employment.

Recent decisions

Recently, in the decision of Griffiths v Rose, the Federal Court of Australia considered whether an employer (the Commonwealth) was entitled to monitor an employee’s use of its laptop computer outside of office hours, and then use the information it obtained to justify terminating the employee’s employment. The employee was dismissed after an investigation revealed the employee had accessed pornographic material in his home, whilst using his own internet connection, but whilst using the employer’s laptop computer. The employer had in place a policy which stated that “employees are prohibited from using departmental facilities to deliberately access, display, download, distribute, copy or store… pornography.”

In affirming the dismissal, the Court reinforced the right of an employer to take disciplinary action when the conduct is sufficiently connected with the employee’s employment. In this instance, the policy clearly prohibited the conduct in question, even though it took place outside of work hours, in the employee’s home and at the employee’s own cost.

More recently, in Strutsel v Linfox, Fair Work Australia ordered that an employee be reinstated despite the employee making derogatory remarks about his manager on his Facebook page. Importantly, the employer had no policy dealing with social media and the employee believed that his Facebook page was private. In these circumstances, the termination of the employee’s employment was held to be unfair.

With these cases highlighting that employment obligations can extend beyond the office and outside of work, it is increasingly important for employers and employees to find a balance in the appropriate use of social media sites.

How can employers regulate social media in the workforce?

The key protection for employers is ensuring there is a thorough internet and social media policy, and that policy is reviewed regularly. Similarly, just as social media sites change and evolve, so should the policy. An employer is more likely to be in a position to successfully justify a dismissal if it has a clear policy in place.

A social media policy must be clear in its expectations of employees, so too should be the consequences for non-compliance. Even if the use of social media is banned in a particular workplace, consideration must also be given to conduct which may occur outside of the workplace.

Some common areas which social media policies cover include:

  • Prohibiting the inappropriate use of social media and the internet whilst using the employer’s property;
  • Prohibiting using the employer’s name, whether directly or indirectly in social media;
  • Prohibiting any bullying and harassment of fellow co-workers on social media sites;
  • Reinforcing that any confidential information acquired through the employment relationship must remain confidential and must not be the subject to any posts on social media sites; and
  • Prohibiting the positing of inappropriate comments, including comments about co-workers, customers and clients.

Every workplace is different and will have differing expectations. Therefore, a social media policy is an important tool for defining the standards of behaviour which are expected.

For more specific information on any of the material contained in this article please contact Lincoln Smith on 8210 1203 or

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