How do I protect my assets and wealth?

How do I protect my assets and wealth?

Business Sale, Private Law

The start of a new year is a time for reflection and planning for all of us. You might be setting some big, dreamy, personal goals that will outlast the hangover of New Year’s Day. 

But if you’re a business owner, you’re likely also in goal setting mode too and putting your ‘blue ocean strategy’ thinking hat on to create long term success. This is why asset protection should be a top priority for you in 2023. It’s a perfect time to think about what will happen to you and your business if things don’t quite go as planned.

What is asset protection?

If you’re a business owner, your assets may be at risk to creditors, which include lenders, suppliers, the trustee in bankruptcy, the ATO, and any other people or organizations you owe money to. You also need to consider any statutory obligations that come with your role as a director and/or employer.

Asset protection is the process of legally safeguarding your assets from creditors, lawsuits, and other types of claims. For example, what will happen to your assets if an unexpected event occurs, such as a litigation or a personal accident? What happens if your business falls into tough times and the creditors come calling? 

Strategies for asset protection

There are several ways to protect your wealth and assets. Some common strategies include:

  1. Creating a trust: A trust can be used to protect assets such as property, investments, and cash from creditors and litigants.
  2. Setting up a company: By transferring assets to a company, you can limit your personal liability and make it more difficult for creditors to access those assets.
  3. Superannuation funds: Superannuation funds can provide protection against creditors as long as they are set up correctly.
  4. Offshore structures: Some individuals may consider using offshore structures, such as foreign companies or trusts, to provide an additional layer of asset protection.
  5. Insurance: Obtaining insurance for assets can provide protection against risks such as theft, fire, and other types of damage.
  6. Estate planning: This is the process of organising and preparing for the distribution of your assets after you pass away. It involves creating a plan that takes into account your financial situation, your goals, and the needs of your loved ones (including creating a will, potentially setting up trusts, naming beneficiaries, having a lawyer draft up powers of attorney (giving a person, or trustee organisation the legal authority to act for you to manage your assets and make financial and legal decisions on your behalf) and appointing an enduring guardian to make decisions about your health and lifestyle in the event you cannot make these decisions for yourself.

Protecting the Family Home

One of the primary concerns of most people is protecting the family home. The family home is often one of the most significant assets a person can own but as it is generally held in an individual’s name, it can 
be at risk.

There are several ways a business owner can ‘ring-fence’ the family home from his or her business activities. However, there are some risks and misconceptions about protecting the family home. 

Establishing a business in a company or trust structure gives the owner the protection of the corporate veil and generally creditors only have access to the company’s or trust’s assets. But if a company or trust can’t pay its debts, there is a risk that creditors will be able access the personal assets of the director or trustee to pay some or all of the debts.

One strategy is to give majority ownership of the home to a person who is not at risk from any bankruptcy or litigation procedures, for example, your spouse. This might lead to some stamp duty exemptions and doesn’t usually result in any capital gains tax (CGT) liabilities.

However, under the presumption of resulting trust, a party can be treated as a beneficial owner of property under the law of equity, despite the fact they are not the legal owner of the property.  The presumption generally arises where a person contributes purchase money to a property but is not registered on title as an owner, or where a person transfers a property or part of a property to another for no payment.

If a resulting trust can be established, the creditors of the at-risk party may be able to lay claim to an interest in the family home – even if the home is solely in the name of the other partner – unless evidence shows the transfer was intended as a gift (referred to as the ‘presumption of advancement’). There are a number of other factors to consider under the Bankruptcy Law as to whether or not a presumption of advancement would arise, and it ultimately comes down to the intention of the parties.

Currently, the “presumption” of advancement applies only in cases of gifts or contributions made by a husband to a wife, or by a parent to a child, however the High Court in Bosanac v Commissioner of Taxation [2022] HCA 34 indicated that it is open to expanding the categories to align with current values.

An alternative strategy to signing over the home to the unexposed spouse is to borrow against the property and to allow a related charge to be made over the primary residence, meaning there is very little equity left for creditors to pursue. These are not the only options for business owners, however, so it’s best to obtain advice on the most appropriate strategy for you.

Next Steps

Prior to making any changes to your business structure and other asset protection decisions, it is important to review the potential costs or tax implications that may arise from such alterations in order to effectively protect your assets.

You should consider seeking advice from a legal and financial professional before implementing any of these strategies to make sure that you are complying with all applicable laws and regulations.

For advice on business structure and asset protection, contact us at or call us on 

What is the difference between an Australian Financial Services Licence and an Australian Credit Licence?

What is the difference between an Australian Financial Services Licence and an Australian Credit Licence?

Business Sale, Regulatory Updates

What is an AFSL?

An Australian Financial Services Licence (AFSL) is a licence issued by the Australian Securities and Investments Commission (ASIC) that allows a company or organisation to provide financial services to clients. 

This can include a wide range of services such as:

  • Providing financial advice to clients, including advice on investment products, superannuation, and insurance.
  • Dealing in a financial product, such as buying and selling shares or derivatives on behalf of clients.
  • Making a market for a financial product, such as trading shares or derivatives on behalf of clients.
  • Operating registered schemes, such as managed funds or superannuation funds.
  • Providing traditional trustee company services, such as acting as a trustee for trusts, estates and other securities.

To obtain an AFSL, a company must meet certain requirements and comply with certain regulations, such as having sufficient capital and insurance, and maintaining proper records and reporting. As an AFSL holder, you have a general obligation to provide efficient, honest and fair financial services. You must comply with the conditions of your AFS licence and the Corporations Act 2001.

What is an ACL?

An Australian Credit Licence (ACL) is a licence issued by ASIC that allows a company or organization to engage in credit activities, such as:

  • Providing credit assistance, such as helping clients apply for a loan or mortgage.
  • Brokering credit, such as arranging loans or mortgages on behalf of clients.
  • Providing credit advice, such as giving advice on the best type of loan or mortgage for a client’s needs.

Credit activities include providing credit assistance, brokering credit, and providing credit advice. For example, a mortgage broker would need an ACL, but the bank providing the mortgage would need an AFSL.

To obtain an ACL, a company must also meet certain requirements such as training and compliance and be able to demonstrate its ability to conduct the credit activity and how it will engage in good credit practice.

You have general conduct obligations that include:

  • acting efficiently honestly and fairly
  • being competent to engage in credit activities, and ensuring your representatives are competent and
  • being able to ensure your clients are not disadvantaged by an conflicts of interest that you or your representatives may have in relation to your credit activities
  • ensuring you and your representatives comply with the credit legislation
  • having appropriate dispute resolution systems (including both internal systems and being a member of an external dispute resolution scheme) 
  • having appropriate compensation arrangements in place (which for some will include holding professional indemnity insurance) 
  • having adequate resources (including financial, technological and human resources) and risk management systems
  • having appropriate arrangements and systems to ensure compliance.

The applicable legislation is the National Consumer Credit Protection Act 2009 and the National Credit Code. The credit legislation also contains more specific obligations and requirements, including:

  • the responsible lending requirements (ascertaining and verify a consumer’s financial situation and assessing whether the credit contract is not unsuitable) 
  • requirements in the National Credit Code dealing with precontractual disclosure and conduct in relation to the terms of credit contracts and consumer leases
  • maintaining trust accounts (if you hold money on behalf of another person while providing a credit service).

The above list, however, is not an exhaustive list of your obligations. 

In summary, AFSL allows the holder to provide financial services, including credit services, while ACL allows the holder to engage in credit activities only.

An Authorised Representative (AR) of an AFSL is a person or entity that is authorised by an AFSL holder to provide financial services on their behalf. The AR must be appointed by the AFSL holder in writing and must meet certain requirements, such as having the necessary qualifications and experience to provide the financial services offered. The AR must also comply with the conditions of the AFSL and with all applicable laws and regulations. They essentially act as an agent of the licensee, providing financial services under the licensee’s AFSL and conducting responsibilities on behalf of that licensee.

If you’re receiving either credit or financial advice, you need to ensure that the company or person is authorised and properly licensed to provide the advice. 

We’ve represented clients who have encountered problems when they’ve been dealing with an unauthorised or unqualified professional and have lost a significant amount of money as a result.

Check the Registers

You can check if a company or organisation holds an Australian Financial Services Licence (AFSL) by searching the Financial Advisers Register on the Australian Securities and Investments Commission (ASIC) website.

To check if a company or organization holds an AFSL, follow these steps:

  1. Go to the ASIC website:
  2. Click on “View All Registers” on the top right menu
  3. Under “Financial Advisers”, click on “Financial Advisers Register”
  4. Search for the company or organisation using the name or Australian Company Number (ACN)
  5. The search results will provide information about the company or organisation, including whether it holds an AFSL and the scope of the licence.

It’s important to note that the Financial Advisers Register only includes information about companies and organisations that hold an AFSL for providing financial advice and related services, not for credit services.

If you want to check if someone holds an Australian Credit Licence (ACL), you can look it up on the National Credit Licence Register, which is also available on the ASIC website. You can search by the name of the company or individual, or the credit licence number. The register will show you the type of credit activities the licensee is authorised to conduct, the expiry date of the licence, and other related information.

Contact Us Now

If you’ve received poor professional advice from an adviser, or you’re looking to obtain an AFSL or ACL in order to provide advice to clients and consumers, please contact us at or call us on (02) 8318 5962

How do I enforce a judgment debt in NSW?

How do I enforce a judgment debt in NSW?


So a company or person owed you money and you’ve now managed to secure a judgment in a court of NSW ordering them to repay the debt (a judgment debt). What now?

When a person (the ‘judgment creditor’) obtains a court judgment ordering a person (the ‘judgment debtor’) to return goods or pay money, the judgment debtor will not always comply with the judgment. They may not have the money or resources to pay the debt or they may simply be avoiding payment.

In this situation, the judgment creditor has 12 years from the date of the judgment to enforce the judgment. This is known as an ‘enforcement’ action. Enforcing a judgment debt in New South Wales (NSW) involves a process of collecting the money that is owed to you by the judgment debtor.

Here are the general steps to enforce a judgment debt in NSW:

  1. Obtain a copy of the judgment: This can be obtained from the court that issued the judgment or from the Sheriffs’ Office. The ‘Office of the Sheriff of NSW’ is a government authority responsible for court security, administering the NSW jury system and specific law enforcement such as serving warrants and enforcing various court orders (such as a writ).
  2. Identify the judgment debtor’s assets: This can include property, bank accounts, vehicles, or wages. You will need to find out where the judgment debtor’s assets are located and how they can be accessed. You can do this through a court via an examination notice (a form the debtor must fill out responding to questions about their income, assets and liabilities) if the judgment debtor’s assets are not easy to ascertain. 
  3. Issue a Writ for Levy of Property: Once issued, this type of writ authorises the Sheriff to seize and sell at auction personal property belonging to the debtor to pay the debt. You will need to provide the Sheriffs’ Office with a copy of the writ of execution, the judgment, and a fee for their services. The writ is valid for 12 months. If there is not enough personal property to satisfy the judgment debt that is owed to you and the debt is over $20,000, you can apply for an order seeking the sale of real property (land).
  4. Issue a Writ for the Delivery of Goods: This can be used if the court ordered the judgment debtor to return certain goods to you and they haven’t been returned. It authorises the Sheriff to seize the goods and return them to you (the judgment creditor) or recover their value by seizing other property and selling it. This type of writ is also valid for 12 months.
  5. Garnishee Order: If the judgment debtor has income, such as wages or salary, you can obtain a garnishee order. A garnishee order directs the judgment debtor’s employer or other organisation that holds money for the judgment debtor to pay some or all of the money owing to you, directly to you from their bank account, salary or wages.
  6. Charging Order: In the case of a judgment debt of the District or Supreme Court of NSW, you may wish to obtain a charging order. A charging order creates security over a specific asset(s) owned by the judgment debtor to the value of the judgment debt and restrains the judgment debtor from dealing with the asset.
  7. Debtor Examination: If the judgment debtor fails to comply with an examination notice you may apply to the Court for an examination order. An examination order summons the judgment debtor to Court to provide details of their financial affairs. To obtain an examination order you must apply to the appropriate Court and then personally serve it on the judgment debtor. The judgment debtor will then be required to attend an examination hearing where they will complete a statement of financial position attaching all relevant documentation.
  8. Bankruptcy Proceedings: Where the judgment debt is greater than the statutory minimum and the judgment debtor is an individual, you may wish to serve a bankruptcy notice. The current statutory minimum for a bankruptcy notice is $10,000.00. A bankruptcy notice must be personally served on the judgment debtor. Once served with a bankruptcy notice the judgment debtor has 21 days to make payment, or otherwise enter into a suitable repayment arrangement. If the judgment debtor fails to comply with the bankruptcy notice then they have committed an “act of bankruptcy”, and you are able to present a creditor’s petition seeking a sequestration order which effectively makes them bankrupt. A trustee in bankruptcy is then appointed to investigate the debtor’s financial affairs for the benefit of creditors.


Requirement Status
Obtain a copy of the judgment
Identify the judgment debtors assets
Issue a Writ for Levy of Property
Issue a Writ for the Delivery of Goods
Garnishee Order
Charging Order
Debtor Examination
Bankruptcy Proceedings

The process of enforcing a judgment debt can be complex and time-consuming, and it may be necessary to seek the advice of a lawyer or a debt collection agency. 

Additionally, there may be limitations on the amount and types of assets that can be seized, and there are certain exemptions that apply, such as a principal place of residence and other assets with exemptions by law.

For help recovering a judgment debt, reach out to us at or call us on (02) 8318 5962 for assistance and advice from one of our experienced litigation and commercial lawyers.

What is the DIN Regime?

What is the DIN Regime?

Commercial Law

The Director Identification Number (DIN) regime in Australia is a system established under the Corporations Act 2001, which requires directors of companies incorporated under the Act to apply for and hold a DIN. 

This includes directors of a company, registered Australian body, registered foreign company or Aboriginal and Torres Strait Islander corporation.

Are you a director of one of the following?

Are you a director of: Status
Registered Company
Registered Australian body
Registered foreign company
Aboriginal and Torres Strait Islander corporation

The DIN is a unique eight-digit number assigned by the Australian Securities and Investments Commission (ASIC) that is used to identify directors of companies. 

The DIN is linked to the personal details of the director, such as their name and date of birth, and is used to maintain accurate and up-to-date records of the director’s activities and responsibilities within the company. 

The regime was introduced with the Corporations Amendment (Director Identification Numbers) Act 2018, which added a new Part 2D.6 to the Corporations Act 2001. The Director Identification Number Rules 2018 made it mandatory for all directors (existing and new) of companies incorporated under the Corporations Act 2001 to apply for a DIN, effective from 28th May 2018.

The regime aims to improve the accuracy and completeness of information held by ASIC about directors of companies and enhance regulatory compliance. 

As illegal phoenixing (which occurs when a new company, for little or no value, continues the business of an existing company that has been liquidated or otherwise abandoned to avoid paying outstanding debts) has become a significant problem in Australia, the regime is also intended to reduce identity fraud and make sure directors do not engage in unlawful conduct.

A person cannot act as a director of a company without holding a DIN, and it’s now a criminal offence if an individual acts as a director while disqualified or while not holding a DIN. 

Companies are required to check the validity of the DIN of their directors and ensure they hold a valid DIN before they take office. 

If you are a director of an Australian company and you missed the DIN deadline of 30 November 2022, you should apply for a DIN immediately. 

If you need any further advice on corporate governance and legislative requirements for companies and directors, please reach out to us at

My Supplier Cannot Meet Their Obligations. What Are My Contractual Rights?

My Supplier Cannot Meet Their Obligations. What Are My Contractual Rights?

Business Sale, Commercial Law

As a business owner or manager, it is important to understand your contractual rights against a supplier when things do not go as planned. A supplier is a company or individual that provides goods or services to another company.

There are several ways in which a supplier may fail to meet their obligations under a contract, including:

  1. Failure to deliver goods or services: A supplier may fail to deliver the goods or services that have been ordered by the buyer, either in whole or in part. This can lead to delays and additional costs for the buyer.
  2. Poor quality goods or services: A supplier may deliver goods or services that are not of the required quality or that do not meet the specifications set out in the contract. This can result in dissatisfied customers and lost sales for the buyer.
  3. Late delivery: A supplier may deliver the goods or services after the agreed upon delivery date, causing delays and potentially resulting in lost profits for the buyer.
  4. Breach of contract: A supplier may breach the terms of the contract in various ways, such as by failing to provide the required goods or services or by failing to meet certain performance standards.
  5. Disputes over payment: A supplier may dispute the amount that the buyer has agreed to pay for the goods or services, or may claim that the buyer has not paid the full amount owed.
  6. Intellectual property disputes: A supplier may use the buyer’s intellectual property without permission, leading to a dispute over ownership or licensing fees.

In these cases, the buyer (the company receiving the goods or services) may have certain rights under the contract to seek remedies.

One common remedy is the right to cancel or terminate the contract and seek a refund or damages. This may be appropriate if the supplier has breached a fundamental term of the contract, such as by failing to deliver the goods.

Another remedy is the right to require the supplier to perform their obligations under the contract. This may be appropriate if the supplier has only partially performed their obligations, or if they have performed them poorly.

It is important to carefully review the terms of the contract to determine what rights and remedies are available in the event of a breach. These rights may include the right to terminate the contract, the right to require the supplier to perform their obligations, and the right to seek damages.

To minimize the risk of disputes with suppliers, it is important to carefully review the terms of the contract before signing it, and to ensure that the contract clearly sets out the rights and obligations of both parties. This can help to avoid misunderstandings and ensure that both parties are held accountable for their obligations under the contract.

In summary, understanding your contractual rights against a supplier is important to protect your business and ensure that you receive the goods or services that you have paid for. Carefully reviewing the terms of the contract, seeking legal assistance if necessary, and taking action to enforce your rights can help to minimize the risk of disputes and ensure that your business is protected.

How do Force Majeure clauses work in supply agreements?

The purpose of a force majeure clause is to protect a party from being held in breach of contract if they are unable to perform their obligations due to circumstances beyond their control such as natural disasters, war, pandemics, or other events that could not have been reasonably anticipated or avoided. 

The clause will typically specify the types of events that will trigger the clause and the duration of the excuse from performance. It may also allow either party to terminate the contract if the specified event continues for an extended period of time and prevents either party from performing their obligations under the contract.

If a force majeure event occurs, the supplier may be excused from performing their obligations under the agreement for a specified period of time. This may include their obligation to deliver goods or services to the buyer. The supplier must typically give notice to the buyer as soon as possible after the force majeure event occurs, specifying the nature of the event and the extent to which it has affected their ability to perform their obligations under the agreement.

The force majeure clause may also specify how long the excuse from performance will last. This may be a fixed period of time, or it may continue until the force majeure event has ended or its effects have been mitigated. In some cases, the clause may allow either party to terminate the agreement if the force majeure event continues for an extended period of time and prevents either party from performing their obligations under the agreement.

A key example from the past few years is the global pandemic which caused a range of postal, shipping and delivery issues by suppliers, which resulted from government orders and lockdowns outside of their reasonable control.

It is important to note that a force majeure clause will only excuse a party from performing their obligations if the specified event has caused a true inability to perform. The supplier must show that the force majeure event has caused a genuine inability to perform, and not just an inconvenience or a financial burden. In addition, a force majeure clause will not excuse a party from performing their obligations if they have already breached the contract before the specified event occurred.

If you have a supply agreement that includes a force majeure clause and you believe that it may apply to your situation, it is a good idea to seek legal advice to understand your options and the best course of action to take.

Insurance and Risk

Insurance and risk are important considerations in supply contracts, as they can help to protect the parties involved in the event of unexpected losses or liabilities.

Here are a few ways that insurance and risk can be addressed in a supply contract:

  1. Indemnity clause: An indemnity clause in a supply contract may require one party (the indemnifying party) to compensate the other party (the indemnified party) for any losses or liabilities that the indemnified party incurs as a result of the indemnifying party’s actions or inactions. For example, if the supplier’s goods cause damage to the buyer’s property, the supplier may be required to indemnify the buyer for the damages.
  2. Insurance: A supply contract may require one or both parties to maintain certain types of insurance coverage, such as liability insurance or property insurance. This can help to protect the parties against potential losses or liabilities that may arise in the course of the contract.
  3. Limitation of liability: A supply contract may include a clause that limits the liability of one or both parties for certain types of losses or damages. For example, the supplier may be limited in their liability for damages caused by their goods to the amount of the purchase price of the goods.
  4. Risk of loss: The supply contract may specify which party is responsible for bearing the risk of loss for the goods being supplied. For example, the risk of loss may pass to the buyer once the goods have been delivered to them.

Can I make a claim under the Australian Consumer Law? 

The Australian Consumer Law is set out in Schedule 2 of the Competition and Consumer Act 2010 (Cth) (ACL) and provides a set of consumer guarantees that apply whenever goods are supplied to “consumers” as defined under the ACL.

And yes, it is possible to make a claim under the ACL against a supplier. The ACL sets out the rights and obligations of consumers and businesses, and provides remedies for consumers in the event that their rights are breached. 

If you are a consumer (an individual or a small business with an annual turnover of less than $10 million) and you have purchased goods or services from a supplier that are defective, not of acceptable quality, or not fit for their intended purpose, you may be able to make a claim under the ACL. You can make a claim against a supplier if they have breached their obligations under the ACL, such as by:

  • Supplying goods that are not of acceptable quality
  • Supplying goods that are not fit for their intended purpose
  • Supplying goods that do not match their description or sample
  • Supplying goods that are unsafe
  • Engaging in deceptive or misleading conduct

Section 259 sets out the rights of a consumer to require a supplier to remedy a failure to meet a statutory guarantee in relation to the supply of goods. Under s 274 of the ACL, 

The supplier may also be able to bring an indemnity claim against the manufacturer for defective goods. A supplier has 3 years within which to make that indemnity claim against the manufacturer under section 274(4) of the ACL. 

There are a range of claims available under the ACL and the time limits for bringing such claims vary depending on the type of claim and the jurisdiction in which the claim is brought, so it is best to seek legal advice when disputes arise.

If you are able to successfully make a claim under the ACL, you may be entitled to remedies such as a refund, replacement, repair, or compensation for damages.

Key Takeaways

  1. Make sure you have a written contract: A written contract can help to protect your interests and provide a clear record of the terms that have been agreed upon. It is important to carefully review the terms of the contract before signing it, and to ensure that it clearly sets out the rights and obligations of both parties.
  2. Know your rights: It is important to understand what rights you have under the contract in the event that the supplier fails to meet their obligations. These rights may include the right to cancel the contract, the right to require the supplier to perform their obligations, and the right to seek damages.
  3. Understand the terms of the contract: The terms of the contract will determine what rights you have and how you can enforce them. It is important to carefully review the terms of the contract to ensure that you understand your rights and obligations.
  4. Consider seeking legal assistance: If you are unable to resolve a dispute with a supplier, it may be necessary to seek legal assistance. A lawyer can help you understand your options and negotiate a resolution with the supplier.
  5. Take action to enforce your rights: If a supplier breaches the contract, it is important to take action to enforce your rights. This may involve cancelling the contract, requiring the supplier to perform their obligations, or seeking damages.

If you have a dispute with a supplier and you believe that your rights have been breached, it is a good idea to seek legal advice to understand your options and the best course of action to take.Contact us at Law Quarter for help with your supplier agreements and advice regarding disputes with suppliers. You can email us at or you call (02)

What Employers Need To Know about Unfair Dismissal Claims

What Employers Need To Know about Unfair Dismissal Claims

Private Law

In 2020, unfair dismissal claims shot up by almost 70% during the coronavirus crisis with the Fair Work Commission dealing with an “unprecedented” caseload.

Recently, the NSW District Court awarded a former Aussie Toyota employee and Dad a damages award of $276,000 on the basis that the company could not prove he had engaged in serious misconduct and had unlawfully terminated him only one day before he was to due to receive a massive redundancy package.

So what if you need to dismiss an employee and want to minimise the risk of those consequences? 

In a challenging economic climate, it can be overwhelming as an employer to consider terminating an employee when you may face the complexities of an unfair dismissal application.

Here’s the lowdown for employers on unfair dismissal claims:

Who can make an unfair dismissal claim?

In order to bring an unfair dismissal claim in Australia, a dismissed employee must have been employed for a minimum period of time, which period depends on whether the employer is considered to be a small business employer.

A small business employer is defined by the Fair Work Act 2009 (Cth) as an employer that employs fewer than 15 employees at that time.  

The Fair Work Act says that when calculating the number of employees at the time of an employee’s dismissal, all employees are to be counted including employees of associated entities (as defined under section 50AAA of the Corporations Act 2001 (Cth)), the employee being dismissed, and any other employee(s) being dismissed at the same time.

You don’t count casual employees unless at the time of the relevant employee’s dismissal, the casual employee(s) are working on a regular and systematic basis.

If the employer is a small business employer, the employee needs to have been working for the employer for at least 12 months before they are eligible to make a claim under the legislation.

If you’re not a small business employer, the employee needs to have worked for your business for a minimum period of 6 months before becoming eligible to bring an unfair dismissal claim. 

If there’s been a change of business ownership, service with the first employer may count as service with the second employer when calculating the minimum employment period.

The employee must also be either covered by a Modern Award or an enterprise agreement, or if not, have an income less than the high-income threshold (see s 382 and 332 of the Fair Work Act).  

The high income threshold is currently $153,600 however this figure is adjusted annually on 1 July. For a dismissal which took effect on or before 30 June 2020, the high income threshold was $148,700.

If an employee does not meet the above eligibility requirements, they cannot bring a claim for unfair dismissal under the Fair Work Act however they may have a potential claim under the ‘general protections’ (otherwise known as ‘adverse action’) provisions of the Fair Work Act

What other type of claim can an employee bring?

Employees may also have other options available than just an unfair dismissal claim, some of which may entitle them to a lot more compensation because, unlike unfair dismissal claims (where you can only claim up to 6 months of your wages as compensation), the compensation available in relation to other common law claims may be ‘uncapped’ or subject to a higher jurisdictional amount. These include:  

  • Breach of Contract Claim;
  • Adverse Action Claim (General Protections Claim);
  • Discrimination Claim; or
  • Unlawful Termination or Wrongful Dismissal Claim.

What constitutes an unfair dismissal?

Under s 385 of the Fair Work Act 2009 (Cth) (FWA), a person has been unfairly dismissed if the Fair Work Commission is satisfied that the dismissal was harsh, unjust or unreasonable. The Commission must also be satisfied that the dismissal was not a case of genuine redundancy. If the employee worked for a small business employer and they failed to comply with the Small Business Fair Dismissal Code, this can also be grounds for dismissal under the Act.

Criteria for unfair dismissal

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Fair Work Commission must take into account the following (s 387 of the Fair Work Act):

  • whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees)
  • whether the person was notified of that reason
  • whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person
  • any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal
  • if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal
  • the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal
  • the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal, and
  • any other matters that the Commission considers relevant.

What should an employer do if it receives a Fair Work Commission claim?

An employee has 21 days to file an unfair dismissal claim before the Commission, from the date the dismissal took effect. Once you receive a claim form, before filing a response to the claim, the first thing you should do as an employer is seek legal advice. 

You may be able to lodge an objection to the matter being dealt with by the Fair Work Commission, such as the claim being lodged outside of the requisite 21-day time frame. You could argue that the employee is not eligible to make a claim for unfair dismissal, or that the claim is vexatious, frivolous or has no prospects of success.

An employer is otherwise required to file a response after which time the matter proceeds to a conciliation conference with a Fair Work Commission conciliator. This gives both parties a chance to state their case and try and resolve the dispute. 

Fair Work Commission stats show that approximately 80% cases are resolved before ever getting in front of a Commissioner, being either “resolved informally by agreement of the parties” or because the applicant dropped the claim.

If a claim is not resolved on or before the Commission conciliation conference, upon request, the Fair Work Commission has the authority to conduct a hearing and make a determination in the matter after hearing the evidence of both parties.

If a resolution cannot be achieved, the employee will receive a certificate from the Fair Work Commission stating that the parties have attempted conciliation and the employee will then have access to the Fair Work Commission, the Federal Court of Australia or Federal Circuit Court of Australia to seek a determination in the matter.

Once the matter has proceeded to a hearing in the Fair Work Commission, Federal Court of Australia or Federal Circuit Court of Australia, the parties will be provided with a written decision which contains reasons for the decision

Next Steps

At Law Quarter, we’re experienced in providing employers with pre-dismissal guidance and advising and representing employers in relation to unfair dismissal claims and employment-related claims. We’d love to help. Contact our team on 02 8324 1333 for a free consult today.

The articles on this website comprise legal general information and not legal advice. It is general information presented and must not be relied upon without specific legal advice being sought in each individual case. In the event that you wish to obtain legal advice on the contents of this general information, you may do so by contacting our office to discuss.

Jacqui Jubb

Law Quarter


PS Need more advice as an employer in managing employees in the new flexible working climate? Check out our COVID-19: Working from Home Guide here