Legal expenses re employment contract

Discussion in 'Accounting & Tax' started by qak, 26th Jul, 2019.

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  1. qak

    qak Well-Known Member

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    I'm trying to work out if legal expenses incurred by an employee for employment contract review are likely to be deductible in this situation:
    - employer's business is sold, employees will remain working in the business (ie employment continues, just a different employer) and were told the employment conditions would be the same.
    - the changeover is a Friday/Monday situation; the employee arrives to work on the Monday and is then presented with a new contract of employment to sign (no previous advice of this)
    - Salary is the same but employment conditions are different so employee seeks legal advice; they provide feedback to the different employer a couple of days later; a completely different contract is then presented, after additional legal advice and several revisions of the second contract, the employee agrees to sign the new contract.
    - this all takes a few weeks and the employee continues to work and is paid
    - the contract does have terms in it indicating that it is a continuation of employment (eg LSL start date is preserved).

    Is this "negotiating current employment contracts in respect of existing employment arrangements" (deductible) or "negotiating employment contracts with a new employer" (not deductible)?
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    The employer is new.
     
  3. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Agree its a new employer.

    I would also argue it likely to be a cost the employee should not incur under a employment change. It could have a Fair Work Act concern. The employer may be liable for meeting the cost of ensuring the employee is provided sufficient legal advice to make a revision to their contract which is enforceable upon the new employer. Is wrongful termination the only other option ? Coercion is prohibited by the Fair Work Act.
     
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  4. qak

    qak Well-Known Member

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    Where would I find more information about the employer being liable for the legal costs?
    Which employer should be paying for that - old or new?
    And how far back would the employee be able to claim for those legal expenses (if it's 21 days that long gone)?
     
  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Fair Work or a solicitor acting for you. (Chicken or egg !!) FWA may consider it a matter for you to seek your own advice on. Maybe start with a verbal request to the employer that you believe you may need independent legal advice to agree to any variation of the existing contract. And you feel it fair they reimburse your costs. Puts them on notice as to why you wont sign it.

    In tax we often get engaged by employees to address mistakes made by employers who will pay us. eg over payments, underpaid tax and so forth. Employer agrees to pay us for specific services to the employee eg to amend a mistake. Would do this 3+ times a year.

    Start with FW and see what they think. They may have a simple answer.

    Union ?

    Get ther lawyers who gave advice to submit a claim ? Likely a FWA process for this. Or if its refused its a conciliation issue
     
    Last edited: 26th Jul, 2019
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