Home Articles What are the top 5 legal risks Australian start-ups face in 2014?

What are the top 5 legal risks Australian start-ups face in 2014?


Each year brings a new round of changes to the regulations governing the sphere in which small businesses operate.

The sheer number of issues can leave you overwhelmed and unsure of where to start. In fact, it may feel at times that keeping up to date with it all is a full time job in itself.

Well, I have compiled a list of the biggest legal challenges small businesses are likely to face in 2014, combining both the newly implemented laws and those recurring legal issues that continue to catch entrepreneurs offside year after year.

1. New anti bullying laws

Changes to the Fair Work Act came into effect on 1st January 2014.

A worker who has been bullied in the workplace can now apply directly to the Commission for an order to stop the bullying. The Commission has the power to intervene but cannot award financial remedies which means you won’t be hit with a compensation claim.

It’s essentially a form of external dispute resolution but as always, prevention is better than the cure and the best approach is to ensure all workers in your business feel comfortable bringing to your attention instances of bullying and knowing they will be dealt with fairly and effectively.

2. Changes to the Privacy Act

Changes to the Privacy Act relating to the handling of personal information by businesses came into play on the 12th March 2014. The new laws tighten protections on the way organisations collect, handle, use or disclose an individual’s personal information.

If in doubt over whether these changes impact you, check out this privacy checklist for small businesses by the Office of the Australian Information Commissioner (OAIC).

3. You’re the boss: know your obligations

As an employer, you have certain legal obligations. These stem from a variety of sources including federal and state legislation, industrial awards and agreements as well as employment contracts, both written and verbal.

Your main obligations will include but aren’t limited to:

  • Paying the correct award wages
  • Ensuring a safe work environment, this includes creating codes of practice such as those that deal with discrimination, harassment and bullying
  • Forwarding PAYE tax instalments to the Australian Taxation Office
  • Making the required superannuation contributions
  • Reimbursing workers for any work-related expenses

4. Not putting things in writing

Get everything in writing. Make sure you document important terms and conditions and any agreements between partners, contractors and suppliers, and even seed investors.

Here are the top three things you ought to have in writing:

A shareholders’ agreement

So you and a close mate, family member or partner had an awesome idea and have decided to set up a business together. What could possibly go wrong you ask? You’d be surprised!

The best way to avoid any disputes that could arise is to have a shareholders’ agreement; this document clearly outlines the structure, ownership matrix and expectations placed on the partners, ensuring that should anything go wrong down the track, there is little doubt as to how things will be dealt with.

An exit strategy

Having the pragmatic conversation regarding an exit strategy with your partner isn’t the easiest topic to broach. It’s a bit like discussing a pre-nup. Of course we’d all like to think things will last forever but the simple fact is they don’t and a formal agreement before the fact, without emotions involved, will save you and your business a great deal of time and money in the long run.

To avoid costly legal battles when one partner decides to leave, ensure you have something in writing that clearly states how a departure will be dealt with and what will happen to the business upon this occurring.

Partnership Roles

It is essential you clearly define your roles as partners and responsibilities from the outset in writing. This will ensure expectations are met and one person isn’t left carrying the can so to speak.

5. Taming the tweet

In this age of the Internet, more and more business is being done online. This translates into unprecedented access to the consumer 24/7, but it also means your business is subject to trial by social media on a daily basis so it’s essential you are aware of this.

Also, if you have people in your employ, ensure you provide them with policies relating to their social media use to protect your business.

Kate Horman is the founder of The Lazy Lawyer, a website dedicated to providing consumers with essential legal insights and documents at a fraction of the cost. Prior to this Kate worked at a corporate law firm and a large multi-national.