James Macdonald Principal: Melbourne
Bianca Jennings Partner: Adelaide
Erin McCarthy Partner: Adelaide
What trends are law firms seeing and how would they advise their clients to conduct business as usual?
The impact of COVID-19 has clearly been uneven across the economy. Sectors such as aviation, tourism, the performing arts and hospitality including the corporate events market have been decimated.
The trends we are seeing are increased demand in areas such as employment, litigation and perhaps surprisingly corporate as businesses either restructure or raise capital to survive or take advantage of the current conditions to acquire bolt- on competitors. The pandemic has also seen many companies ask for advice on their standard form contracts and to consider supply chain risk in their trading relationships.
Whilst insolvency has so far been quiet due to the impact of the various government measures described below, we expect 2020 will be seen as the eye of the storm, with 2021 seeing an increase in this sector.
Property and construction has been impacted by the extended lock-down measures in Victoria, and the eviction moratorium combined with the significant decrease in retail trade may see some commercial landlords struggle with financing obligations and reduced rents.
The key areas of additional advice we have been providing clients to help them conduct their businesses through the pandemic relate to ensuring COVID- safe practices have been implemented, that the move to remote working (and back again) has been handled safely, being aware of the various forms of government assistance available and how clients need to continue to transact with customers and key stakeholders in a more virtual world.
How have governments reacted to protect businesses whilst encouraging investment?
Governments have introduced a number of COVID- 19 response measures that have protected businesses and assisted them to retain staff and maintain financial viability, whilst encouraging investment. Key measures have included:
Temporary changes to Australia’s foreign investment regime, which saw all monetary screening thresholds reduced to $0, was designed to safeguard Australian businesses and assets from predatory foreign takeovers. Despite initial views that this would deter investment (particularly when these changes were coupled with an announcement that deadlines for assessment would be extended by up to six months), we have found that Treasury has been turning around applications in a reasonable timeframe and has been willing to work within legal and commercial deadlines, prioritising urgent applications that protect and support businesses and jobs.
Fair Work Act reforms
The introduction of the JobKeeper scheme, which in addition to the material financial benefits that it brought, also enabled employers who received financial assistance via JobKeeper to utilise a range of additional flexibilities as a consequence of that eligibility. These measures operated to overrule existing employment contracts, award and enterprise agreements. The types of flexibilities available included changing hours and days of work, requiring employees to take annual leave entitlements and partial stand downs where reasonable to do so. These flexibilities continue to apply post 28 September 2020 for those employers who qualified for the second tranche of JobKeeper and for those who did not qualify but whose revenue has reduced by 10% or more.
Flexibility around electronic execution of documents and virtual meetings
Temporary changes were made to electronic transactions legislation to facilitate the electronic execution of documents and the remote witnessing of signatures, and to the Corporations Act to enable companies to provide notices of meetings to their members electronically and to hold meetings virtually using electronic means. A welcome announcement by Treasury on 19 October indicated the Commonwealth government’s intention to introduce more permanent reform in this area.
Insolvency safe harbours
Insolvency protections for companies, including a moratorium on insolvent trading liability and an increase in the monetary threshold for, and period for responding to, statutory demands. These measures are due to expire 31 December 2020.
Other measures include various other stimulus measures, protections for tenants in commercial leasing arrangements and state and territory tax relief packages for land tax and payroll tax.
What risk mitigation factors can be advised and what technology is available to assist in-house and directors?
Risk mitigation has been particularly front of mind for in-house counsel, and staying on top of the many changes has been an enormous challenge. Putting systems in place to deal with contracting risks, workforce issues, occupancy issues, and for foreign owned businesses increased FIRB regulation has added enormously to their usual workload. In both private and in-house practice mental health is an increasingly important consideration, and at Piper Alderman we have introduced a number of programs to assist all our staff.
For directors business interruption risk has been paramount. Previous reliance on overseas suppliers, customers, migration, tourist dollars and unrestricted movement of people and goods has now been called into question. Added to this, the bushfires at the start of the year in Australia and the claims made against the Retail Employees Superannuation fund (where it was alleged that REST failed to inform fund holders how it took into account environmental and climate change issues in managing the fund) raised the stakes in climate change discussions at board level.
Our advice on these types of risk and their mitigation has been both client specific and general via our online portal, newsletters and conducting client webinars. Our website provides a comprehensive series of freely available guides for our clients to assist them to stay on top of the key developments in their industries, and to provide them with the support of our industry experts.
Online meetings and webinars have been hugely successful and in our view paved the way for structural reforms to continue post-2020. Any discussion on how technology can play a part must also consider cyber security and how our clients can put physical and technological systems in place to best defend themselves from, and reduce the impact of, cyber attacks.
We remain of the view that those organisations who invest in secure and efficient technology to facilitate their workforce to be able to work capably from anywhere, will reap the benefits from higher productivity and retaining talented employees who wish to work flexibly.
About Piper Alderman
- Australian Digital Health Agency
- Australian Executor Trustees
- Australian Unity
- Bendigo and Adelaide Bank
- Beyond Bank Australia
- Blackmagic Design
- BOC Limited
- Bridgestone Australia Ltd
- Bus Queensland
- Charter Hall Group
- CPB Contractors
- Clarke Energy
- Coopers Brewery
- DGO Gold
- Duxton Capital
- Fulton Hogan Construction
- Hasting Deering
- LCM Litigation Fund Pty Ltd
- Linfox Armaguard Pty Ltd
- McColl’s Group Holdings Pty Ltd
- Members Equity Bank Pty Ltd
- Melbourne Health
- Morgan Stanley
- Omni Bridgeway
- People’s Choice Credit Union
- Pitcher Partners
- Port of Brisbane
- Red River Resources Limited
- Redarc Electronics Pty Ltd
- SA Power Networks
- Warakirri Asset Management
- Zoetis Australia
- YMCA Australia