Common Legal Issues Faced by Australian Businesses

Australian Business Faced Legal Issues

Many factors influence the success or failure of any business. The reality is that more than ninety percent of businesses are destined to fail. Many of these go down because of the preventable legal pitfalls that new business owners did not predict or did not have enough protection against their businesses. When a business has proper foundations to protect their business against improper risk, one can devote their energy full time in making that their business is success of their dreams (Bell, Bryman and Harley 2018).

Mentioned below are some of the legal strategies that should be adopted by entrepreneurs to avoid any kind of legal risks in their business:

Ownership structure
In Australia, many entrepreneurs are placed out of business because they are not so developed because of lack in planning in sales. the common legal structure that businesses should adopt is sole trader, partnership, trust and company. Opting for the right kind of legal structure for a particular business from the beginning is very important as some structures provide protection against liability for debts and other legal disputes. Moreover, it also impacts the tax obligations and other expenses that are to be made to make it easier to sell their business in the future (Svantesson 2016).

Shareholder’s agreement
Despite the fact that when entering in a partnership, agreement is between the best of friends or mates, an agreement is a very important document that clearly states the rights and responsibilities of every shareholder in the company. In the absence of such agreement, the case of legal dispute can easily arise leading it to become a court case in the future. There is no “one size that can fit in all shareholder’s agreement.” Each agreement should  be drafted as per the unique set of situations and the outcome should be on the choice of the shareholders. The agreement contains important details pertaining to director’s appointment, funding, contribution and rights of the shareholder. Depending on the ownership of the company’s shareholding, the agreement shall act as a binding power (Crane and Matten 2016).

Commercial Lease
Commercial leases are very complex documents that state the rights and responsibilities of the landlord and the tenant. If a person fails to analyse and understand the lease document, then they may fail to analyse the utilities, taxes, repairs and other cost of documentation. A person may also face problems in renewing the lease document. Filing a case for lease terms is often very expensive in Australia and losing such a dispute may mean that the company needs to bear huge losses. Thus, it is important to understand the legal implications of the commercial legal document in details especially before signing (Wang and Skeldon 2016).

Safety equipment
If a business has warehouse for the purpose of storage, it is very important to have proper equipment and process in place so that it complies with the work health and safety legislation to protect their staff from preventable injuries. Loads that fall on the operators and other workers may account for a high percentage of accidents in the workplace resulting in injuries and other losses. Thus, the use of forklift cages prevents the accidents from happening. Such steps prevent the business from falling into unnecessary claims from the workers.

Bullying education and sexual harassment
It is important for workers or employees to understand the meaning of sexual harassment and bullying at workplace. It is the responsibility of the business owners to impart them with the knowledge of sexual harassment and bullying at workplace. As a business owner, if a person cannot dedicate their time and resource to train their workers in some kind of workplace conduct then such ignorance makes a company prone to legal actions. Companies have often paid fines for not complying with the workplace safety rules and healthy legislation. Thus, it is important to understand that legislation surrounding the safety and health of workers and the same knowledge should be imparted to the employees as well (Rose 2017).

Maintenance of detailed record
To maintain a detailed record is very important as it may for many reasons includes invoicing and other accounts that is receivable. If a company is not huge enough to hire a full time person as accountant or manager, record keeping is a process in which a person can perform all the tasks by storing all the relevant details pertaining to the work. Software namely Xero can be used for this purpose. In case, companies do not have enough time to maintain records, they can hire a accounting firm their operating area. Failure to keep records can impose serious problem to the business and the consequences of the same can doom the business even before it has started (Shenkar, Luo and Chi 2014).

Compliance with the Privacy Act
Depending on the nature of the business, a person may be collecting data about current customers and other potential customers. As an Australian business owner it is critical that they comply with their obligations under the Australian privacy principles to protect themselves from breaching the Privacy Act in a manner that there is proper collection, storage and usage of the data of the private information of the customers. Mishandling or misusing of the information can impose serious fines and penalties to the company.

Business registrations
All business owners in Australia have to register before starting any business activities. It is also very important to register a business name and pay taxes that their business needs to register. The same may be inclusive of the following:

    • An ABN or Australian Business Number
    • The Goods and Services Tax (GST)
    • A tax file number
  • Pay as you go up

If a business requires exclusive right and a proper business name then they will have to register themselves for proper business operations.

The laws of fair trading helps to ensure that business operates fairly and competitively and that there is proper information to the customers about the laws of fair trading, consumer laws, competition laws and Australian standards.

When a person agrees to perform a job in exchange for money or some other benefit then there is a likelihood that, they are entering into a commercial contract. This contract can be made legally enforceable and the same can be in the form of written agreement (Bell, Bryman and Harley 2018).

Unfair Dismissal
The small business fair code provides small businesses with the process to follow if they require dismissing an employee. The code shall be applicable to businesses if there are less than fifteen employees. Thus, every business should have a regulated unfair dismissal rules (Svantesson 2016).

Based on the discussion above, it can be stated that there are other additional legal obligations that can be given to people for establishing a business. The same includes:

    • Paying their employees their proper wages
    • Reimbursing their employees proper work related expenses
    • Abiding the work and healthy safety regulations and other codes of practice
    • Making sure that worker’s compensation insurance is given to every employee
    • Not acting in a manner that may damage the reputation of the employee causing mental distress or embarrassment
  • Making sure that there is no child that is associated with the business operations


Bell, E., Bryman, A. and Harley, B., 2018. Business research methods. Oxford university press.

Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.

Rose, C.V., 2017. The “new” law and development movement in the post–Cold War era: A Vietnam case study. In Law and Society in East Asia (pp. 91-138). Routledge.

Shenkar, O., Luo, Y. and Chi, T., 2014. International business. Routledge.

Svantesson, D.J.B., 2016. Private international law and the internet. Wolters Kluwer Law & Business.

Wang, X.S. and Skeldon, R., 2016. Reluctant exiles?: Migration from Hong Kong and the new overseas Chinese. Routledge. Protection Status
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