Research Report: Business Law & Regulation
Introduction
Plastics U Need is a small plastics manufacturing company operated by and . The firm has been operating for five years now with twenty employees working in the production plant in New South Wales. The firm manufactures plastic accessories for electronic gadgets and wires including sockets, plastic plugs, wire and cable clumps, wire and cable ties, terminal connectors, transistor holders, fuse holders, plug connectors, and insulation material. The company serves industrial clients in various industries such as household appliance manufacturers, computer assemblers, telecommunications service firms, and other companies involved in electronic products. The production plant has an area of 2,500 square meters upon which a new building was built before the commencement of operations five years ago. All employees including management or administrative staff and production employees work in the plant. Although, the primary market is local industrial clients, the company has also commenced exportation of products to Asia and Europe.
1 Ownership Structure
(a) The firm was established through the general partnership of and as the partners. The decision to have partnership as the business structure was due to a number of benefits. One is the simplicity of the business structure with the partners as operators and the management or supervisory team and employees as the other members of the organisation. The simplicity of the structure allows a bottom-up and top-down exchange of information on the current and expected operations and performance of the company necessary in decision-making and strategy adjustment. Second is greater control due to the hands-on management of the operators of company operations. Since the operators raised funds through the pooling of their personal assets, there is greater incentive to take on an active role in management to ensure business viability. Third is the ease in accountability. Small business size and involvement of proprietors in business management result to the easy development of accountability culture. However, there are also some disadvantages, such as the greater risk to the assets of the partners because of their joint and several liability ( 2007a) and the existence of the business depends upon the partnership so that the dissolution of the partnership also dissolves the business because of the lack of separate identity of the firm from the partners.
(b) The partnership holds several legal responsibilities that come with setting up and operations of the business. In setting up the business, the partners should have partnership agreement that contains the issue of assets, profits, liability, dispute resolution and termination. However, the partnership can operate without the agreement because state law on partnership applies to the partnership. Another legal responsibility is the registration of the business name, especially since the partners have added other words to their names. In running the business, the partners have to register as self-employed with the Australian Taxation Office for purposes of taxation and keep individual income records as well as partnership income records including employee income information. The legal responsibilities of partnership are governed by the Partnership Act 1892, Taxation Administration Act 1996, and other pertinent laws. ( 2007a) Compliance with these responsibilities is complied with through the keeping of necessary firm records especially for purposes of taxation and other regulatory activities.
2 Registrations, licences, codes, regulatory requirement
(b) License is required to be obtained by a business if it has workers covered by the compensation insurance policy by virtue of their employment on a regular, contractual or casual basis. The license extends for a period of twelve months or lesser depending upon the situation. Obtaining the license has the effect of the insurance premium payment covering the insurance of the employees computed based on the wage rates. The extent of premium payable also depends upon the level of risk involved in the industry. Workplace Injury Management and Workers Compensation Act 1998 govern licensing for compensation insurance policy. ( 2007b) Implementing this procedure involves knowledge of the risk classification of the plastic manufacturing firm, determination of risk-based and wage-based insurance premium, payment of premiums, and obtaining of a certificate of currency to prove payment. ( 2007a)
(c) Information on changes in the regulatory requirements is obtained best through membership in industry associations that provide current information on business and employment changes. These organisations usually have a legal department that keeps the members abreast of changes.
3 Occupational Health and Safety
(a) In New South Wales, the following legislations govern occupational health and safety: 1) Occupational Health and Safety Act 2000; 2) Workers Compensation Act 1987; 3) Workplace Injury Management and Workers Compensation Act 1998; 4) Workers Compensation () Act 1987; 5) Workers Compensation () Act 1942; 6) Sporting Injuries Insurance Act 1978; and 7) Rural Workers Accommodation Act 1969. There are also regulations governing manufacturing companies in New South Wales such as: 1) Workers Compensation Regulation 2003; 2) Workplace Injury Management and Workers Compensation Regulation 2002; 3) Workers Compensation (General) Regulation 1995; 4) Workers Compensation (Insurance Premiums) Regulation 1995; 5) Workers Compensation Transitional Regulation 1997; 6) Workers Compensation (Bush Fire, Emergency and Rescue Services) Regulation 2002; 7) Occupational Health and Safety Regulation 2001; 8) Occupational Health and Safety (Clothing Factory Registration) Regulation 2001; 9) Dangerous Goods (General) Regulation 1999; and 10) Dangerous Goods (Gas Installations) Regulation 1998. Moreover, codes of practice exist to regulate manufacturing companies, which are: Workplace Amenities, Work in hot or cold environments, Storage and Handling of Dangerous Goods, Rural Workers Accommodation Amendment Act 2005 No 37, Codes of Practice, Codes of Practice- Hazardous Substances, Codes of Practice-Workplaces, Collection of Domestic Waste,
Labelling of Workplace Substances, Manual Handling: National Code of Practice, Noise Management and Protection of Hearing at Work, Occupational Health and Safety, Consultation, Overhead Protective Structures, Control of Workplace Hazardous Substances, Preparation of Material Safety Data Sheets, and Risk Assessment.
( 2007b)
(b) In plastic manufacturing, the key legal requirements for employers is the establishment or implementation of health and safety guidelines in the workplace to ensure the health and well-being of their employees including the organisation of the workplace and use of safety equipment, setting up of warnings and other signage, information and training of employees on safety in the workplace, establishment of funds or system for compensation or benefits in case of injuries.
(c) There are also responsibilities falling upon employees, such as complying the with firm’s health and safety guidelines, heeding warnings and signage, using safety equipment, and cooperating with co-employees in taking responsibility for personal a group safety.
(d) Being updated about changes in occupational health and safety requires having a channel for information sharing. The firm have access to updates on occupation health and safety through vigilance in industry news as well as membership of industry organisations responsible for updating their members of changes in this regulatory policy.
4 Industrial Law
(a) Basic awards apply to the plastic manufacturing firm. These basic awards include: 1) terms of engagement covering the employment of status of employees and the corresponding work period and compensation; 2) wages in the amount of the minimum wage and including increases according to the salary grade increases for length of service and promotions; 3) termination of employment covering the grounds for termination, period of notice, and the rights and responsibilities of the employer and employee in case of termination; 4) hours of work that covers the regular working hours per day and the number of working days per week together since work done outside of the regular working hours is covered by overtime subject to additional payment, with the amount depending upon the time or day that additional working hours are incurred; 5) overtime that covers additional time of work for two to three hours usually involving a pay of additional 50 percent and double time beyond the three hours that involves 100 percent additional pay as well as allowances and benefits to compensate additional working hours; 6) awards superannuation involves the contribution of the employer of its counterpart payment for benefit funds such as social welfare, health care or retirement; 7) meal breaks, tea breaks or crib breaks that provides for a break period of at least 30 minutes for every meal that happens after five hours from the start of work time as well as provisions for other breaks; 8) public holidays for the purpose of determining entitlements in case of work during these days usually 100 to 150 percent more than the daily wage; 9) sick leave that covers the paid sick leaves and arrangement for encashment or accrual to the succeeding period if unused; 10) annual leave loading covered by the Annual Holidays Act 1944; and 11) other company awards such as hazard pay, first aid allowance, and annual check-ups issued by the company due to the nature of the business. ( 2007)
(b) The best way to obtain information on legislations covering awards or agreement arising in the employment relations is through the employer association channels who regularly issue updates through newsletters, meetings and conferences.
(c) In relation to awards and agreements, the Industrial Relations Act (NSW) 1996 mandates employers to exhibit current copies of relevant awards in the business premises or workplace. This means that employers should always keep copies of the awards documents for purposes of posting as well as reference in case of claims or disputes over any area of the awards.
5 Taxation Law
(a) Tax registrations for the partnership includes registration of the partners are individual employees with the Australian Taxation Office and their payment of taxes based on their individual income. Tax registrations for the business include: 1) registration as Pay As You Go (PAYG) withholder; 2) Goods and Services Tax (GST) registration; 3) registration for Fringe Benefits Tax; 4) Pay-roll Tax Registration; 5) Tax File Number registration; 6) registration for Australian Business Number. ( 2007)
(b) Withholding tax for employees under the Pay as You Go (PAYG) system is covered by the Taxation Administration Act 1953. The law provides for the obligation of the employer to withhold portions of the income of their employees to be applied as tax payments. Business tax is governed by A New Tax System (Goods and Services Tax) Act 1999 that covers the registration and payment of taxes of businesses with an annual turnover value of at least ,000. Fringe benefit tax that covers the benefits outside of wages given the employers to their employees is covered by the Fringe Benefit Tax Assessment Act 1986.
(c) There are five major records that businesses have to keep for taxation purposes, which are: 1) sales records; 2) purchase or expense records; 3) year-end income tax returns; 4) records on payments made to employees; and 5) PAYG withholding records pertaining to business payments. The first three relate to income tax and goods and services tax while the remaining two pertain to income tax for the partners as well as the employees. ( 2007a)
(d) Activity statements for each month of the financial year should be lodged with ATO usually on the 21st of each month for the statement covering the previous month. Quarterly statements should also be lodged with ATO usually on the 28th of the months immediately following the end month of each quarter. Apart from these monthly lodgement dates that business firms should consider, the Annual Investment Income report covering the immediate past financial year should be lodged with ATO by October 31, 2006. Fringe Benefit Tax Returns should be lodged by the 21st of May 2007. Annual Goods and Services Tax should be lodged with ATO either on October 21, 2006 or February 28, 2007 depending upon the lodging period preferred by the firm. The firm’s income tax returns should have been lodged by October 31, 2006. PAYG withholding payment summaries should have been lodged by August 14, 2006. Overall, the firm should file monthly, quarterly and annual reports for every financial year. ( 2007b)
(e) The process of preparing and lodging records for taxation purposes is a monthly, quarterly and annual continuous process that involves the business dealing with the Australian Taxation Office through its agent or representative. This frequent dealing allows for the exchange of information on taxation legislation change. The business juts have to diligently keep its record lodging and payment responsibilities.
6 Insurance
Insurance for small businesses can cover all aspects of the business from physical structure of the business premises or the workplace, to the movable equipment and vehicles, and even liabilities arising in the employer-employee relations or between the firm and third persons. Generally, businesses obtain a business owners policy with insurance companies that covers insurance for the difference areas but involving the payment of a specified premium amount. However, if the business prefers to obtain separate insurance policies, there are several basic policies that may be obtained. First is property coverage that encompasses business interruption and other extra expenses that may be incurred by the business. Business interruptions or extra expenses could cover repairs, burglary and theft, mechanical breakdown, employee actions and even fire or disasters involving hazardous materials. The coverage of the business owners policy depends upon the agreement of the business and the insurance company. Second is liability insurance covering liability risks such as injuries, court litigations, and even environmental charges. Third is business auto insurance that covers the vehicles used for business purposes. Separate personal auto insurance applies to vehicles used for individual use. Fourth is workers compensation insurance depending upon the rules in New South Wales. (2007) These are the basic insurance policies and the business could obtain other policies to cover more areas of business operations.
7 Consumer Law
(a) Fair Trading Act (NSW) 1987 and the Consumer Claims Act (NSW) 1998 constitute two consumer legislations that encroaches upon business operations. Fair Trading Act mandates upon business firms the obligation to operate their firms in a fair manner. Factors considered as unfair business practice include: making of false claims regarding the product or service being sold the consumers; operating the business in a manner that misleads or deceives consumers so that this covers product advertising; taking advantage of the vulnerabilities of consumers that constitutes an unconscionable conduct such as unreasonably increasing the price of the product due to the lack of competitors or because the product is a necessity; and other business conduct that creates an unfair relationship between the firm and consumers to the detriment of consumers. This legislation imposes upon businesses the obligations to comply with fair business dealing and non-compliance involves a corresponding penalty. The Consumer Claims Act covers the right of consumers to file claims with the Consumer, Trader and Tenancy Tribunal covering any claims for payment, the delivery or supply of goods and services, return or replacement of goods, and relief from paying for a product or service for contractual breaches. This legislation empowers consumers disadvantaged in the contract with a business firm by providing the right, venue and processes for the consideration of these claims.
(b) Compliance with these legislations first involves knowledge of the rights, obligations and penalties provided by these laws. With sufficient information of these rights and obligations, the business firm can develop and apply policies and guidelines for its operations to act as preventive measure for the incurring of legal liabilities and penalties.
8 Intellectual Property Law
(a) The plastic manufacturing business deals with intellectual property law in the registration of a product design, registration of its trademark, and application for patent grants.
(b) Registering a business trademark involves five basic steps. First is the provision of the personal or business details of the applicant including names and addresses. Second is ensuring that the mark being registered constitutes a trademark, which could be a word, word written or printed using a particular typeface or font, phrase, letter, number, device such as a logo, series mark, colour or distinct combination of colours, shape, sound, smell or other signage. Third is the provision of the goods or products linked to the mark or intended to be marketed through the mark. Fourth is the specification of the convention application especially when claiming priority by including the details of the priority claims. Fifth is the identification of the authorised users of the mark for purposes of clarifying infringement complaints or disputes. After identifying the information described above, the business can now file an application with IP Australia together with he payment of the required fees. IP Australia will then examine the application and determine existence of any opposition. ( 2007)
9 Contract Law
(a) The plastic manufacturing firm have to arrange a written contract in purchasing the property upon which the plant was built, employment contracts for clarity, and sales contracts with industrial consumers.
(b)(i) The sale of real property for the construction of the building commences with the selection of a business site and the sending of an offer for purchase to the owner including the price and other necessary terms to indicate the intention to engage in a sales contract. If this is approved by the property owner, then the contract together with the title and other documents will be exchanged, the change in ownership registered with the local authorities, and the payment made to the owner. In completing the contract, care should be made to ensure that all the elements of a valid contract exist and all salient terms are agreed upon.
(ii) The seller holds the responsibility to accept the offer if the terms are amenable to the owner, produce the title to the property and other documents to show the status of the property such as the existence of encumbrances, cooperate in the registration of the change in ownership, and provide an statement of receipt upon receiving full payment. The owner should also vacate the property and endorse this to the firm or its partners.
(iii) Breach of contract involves any actions or inactions made by any of the parties that defeats compliance of the obligations in the contract such as the non-payment of the down payment and full payment by the buyer and the failure to provide the title to the property or vacate the property.
10 Business Premises
The business premises will be obtained through a sale so that the partnership owns the land and plant building. In purchasing the property instead of leasing it, there are three issues that the business considered. First covers environmental issues that the business expects to meet in the future by conducting an environmental due diligence test. The possible environmental issues should then be weighed to determine if the property will be purchase or a new site will be considered. Second are zoning issues that cover the possible restrictions that the business may have in establishing a plastic manufacturing plant in the area such as proximity to residential areas, protected natural areas and other installations. Third are land taxes and duties relative to the cost of establishing the plant in the area and the benefits derived from supplier or consumer proximity of the premises.
References
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