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Don’t Go Chasing Waterfalls – COVID-19 Safe Harbour is (still) not Safe

The temporary safe harbour protection from director liability for insolvent trading expires on 31 December 2020. However the Government has not corrected a critical timing issue which exists in the COVD-19 safe harbour legislation. This means directors must appoint an external administrator to their company on or before 31 December 2020, if they wish to take advantage of the COVID-19 safe harbour protection from insolvent trading .

The temporary protection is found in section 588GAAA of the Corporations Act 2001 (Cth). There has been some recent debate about whether the words “before any appointment during that period” of an external administrator, mean what they appear to say, namely that any appointment must take place “during that period” of the temporary safe harbour expires.

Our Stephen Mullette has recently responded to the alternative view – that an appointment can be delayed until the new year. Unfortunately, the conclusion is that the better view is still that to take advantage of  the safe harbour defence, the directors must have appointed an external administrator before 1 January 2021. You can read the further consideration here, and make up your own mind.
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Danger – COVID-19 Safe Harbour STILL Requires Early External Administrator Appointment

The Government has recently extended COVID-19 business protection measures introduced in March, including the temporary safe harbour protection from director liability for insolvent trading. These protections will now expire on 31 December 2020. However the Government has not corrected a critical timing issue which exists in the COVD-19 safe harbour legislation. This means directors must appoint an external administrator to their company on or before 31 December 2020, if they wish to take advantage of the COVID-19 safe harbour protection from insolvent trading.

In March Parliament passed a raft of legislative reforms in an attempt to provide protections for businesses an ameliorate the economic effects of the coronavirus in Australia. One of these amendments was temporary legislation to protect directors from liability for insolvent trading during the global COVID-19 pandemic. This temporary protection is found in section 588GAAA of the Corporations Act 2001 (Cth). This safe harbour protection from insolvent trading will mean that directors will not be personally liable for debts incurred in the ‘ordinary course of business’, provided those debts were incurred during the operation of the temporary legislation, presently which will now expire at the end of 31 December 2020.
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Danger – COVID-19 Safe Harbour Flaw Requires URGENT External Administrator Appointment

A fatal flaw exists in the government’s COVD-19 safe harbour legislation. This means directors must appoint an external administrator to their company on or before 24 September 2020, if they wish to take advantage of the COVID-19 safe harbour protection from insolvent trading.

At the beginning of the global pandemic the Australian Federal Government introduced temporary legislation to protect directors from liability for insolvent trading during the global COVID-19 pandemic. This safe harbour protection from insolvent trading will excuse directors for liabilty in respect of debts incurred in the ‘ordinary course of business’ during the operation of the temporary legislation, presently due to expire at the end of 24 September 2020.

However, for reasons which are not clear, but possible linked to the urgency with which the legislation was passed, the drafters included an additional fundamental and crucial requirement to gain the benefit of this COVID-19 safe harbour protection from insolvnt trading. That requirement is that in order to gain this COVID-19 safe harbour protection, an external administrator (either a voluntary administrator or a liquidator), must have been appointed before the legislation expires at the end of 24 September 2020.
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Simone Brew appointed Managing Director of Matthews Folbigg Lawyers

1 September 2020

Matthews Folbigg Lawyers is delighted to announce the appointment of our new Managing Director, Simone Brew. Simone is the head of the firm’s Litigation, Planning and Local Government groups.

Matthews Folbigg Lawyers is the premier medium sized firm in Western Sydney, based in Parramatta, with 8 practice groups and over 60 lawyers and legal service professionals. This is the first time in the firm’s 60 year history that the firm has had a female Managing Director. Even more notably the firm is owned 50% by our experienced female lawyers.

Chairman of Matthews Folbigg Lawyers, Jeff Brown said “Matthews Folbigg is delighted to announce Simone’s appointment as Managing Director. She has been an integral part of the firm’s Executive group for many years and in particular has been instrumental in leading the firm’s response to the COVID-19 pandemic. This is just one example of the strengths that make her qualified to lead our firm into the future”.
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Warning! Casual Employee Entitled to Annual Leave

In a major decision, the Full Bench of the Federal Court has held that a worker expressly engaged as a casual was entitled to annual leave and other entitlements upon termination.

In our view, in doing so the Court has cast doubt on decades of accepted industrial practices and the decision threatens to undermine casual employment relationships around the country.

The Facts

In WorkPac Pty Ltd v Skene:

  • the employee was employed by a labour-hire company in the mining industry as a dump-truck operator and the employment was governed by the WorkPac Pty Ltd Mining (Coal) Industry Workplace Agreement 2007 (Agreement)
  • although the letter of employment stated he was a casual, he was subject to a continuous 7 day ‘fly-in, fly-out’ pre-set roster arrangement, worked regular and systematic shifts, stayed in accommodation at/near the mine and was expected to attend each shift
  • an ‘all-in flat rate’ of pay was payable for each hour of work although WorkPac did not specify what entitlements this flat rate of pay purported to absorb
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