Let s talk. Meet Meridian Lawyers at the APP Conference. Let s talk. Dispensing sound legal insights

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1 Dispensing sound legal insights Insights Editor: Georgina Odell, Special Counsel T E godell@meridianlawyers.com.au In this edition of we provide hints and tips on succession planning for your partnership, some trends we noticed in the sale and purchase of pharmacies in 2016, an article on real time prescription monitoring and what it means for health practitioners, stamp duty on the purchase of business assets, and important employment advice regarding workplace monitoring. Succession planning for your partnership 2 Is Big Brother watching? 3 Pharmacy sale and purchase trends during 2016: assignment of leases 5 Real time prescription monitoring: what does it mean for health practitioners? 6 Abolition of stamp duty on purchase of business assets in NSW 8 NEWS, EVENTS & PRESENTATIONS Meet Meridian Lawyers at the APP Conference GOLD COAST, MARCH 2017 Meridian Lawyers Principals Sharlene Wellard (Employment and Industrial Relations Sydney) and Scott Ames (Insurance Brisbane) are presenting at APP Sharlene is presenting the Business Bites session Changing employee behaviour with rewards and reprimands on Friday, 10 March 2017 at 8.30 am, and Scott is presenting the Business Workshop When things go wrong with Christie Boucher of Guild Insurance on Saturday, 11 March at 9.15 am. In addition, Meridian Lawyers is offering APP delegates a free 15 minute private consultation with Sharlene (employment), Laura Dhana (pharmacy business law) or Georgina Odell (pharmacy business law). Numbers are limited and appointments are recommended. The sessions will be held daily on March from 12 noon until 5 pm. Book your free session by to Sharlene Wellard, Principal, at Meridian Lawyers. Here are a few ideas of things you might like to discuss with our lawyers: ending employment National Employment Standards 101 dealing with bullying and harassment employment issues with social media effective use of part-time employment managing requests for flexible working buying and selling a pharmacy franchise agreements and franchising partnership agreements and business structuring loans and finance leases business names and trademarks Pharmacy Location Rules GEORGINA ODELL WILL ALSO BE AVAILABLE FOR CONSULTATION ON THE GUILD INSURANCE AND GUILD SUPER TRADE STAND AT THE WELCOME RECEPTION ON THURSDAY, 9 MARCH. COME AND SAY HELLO. Hello Hello. Let s talk Let s talk

2 COMMERCIAL AND BUSINESS LAW Succession planning for your partnership At Meridian Lawyers we are frequently asked to advise on succession planning for pharmacists, especially those in partnership (whether in the traditional sense or shareholders via a corporate pharmacy structure). Many partnerships continue over lengthy periods with little emphasis on exit arrangements in their formal partnership or shareholders agreement. In our experience, carefully considered exit arrangements in a partnership agreement (or shareholders agreement as the case may be) is essential in any partnership. This creates certainty for the partners and allows them to plan for the future. Some questions to ask when thinking about exit arrangements include: Is there a clear exit mechanism for a partner to leave the partnership e.g. by retirement? How much notice must a partner give to the other partners in the case of a retirement? Should the other partners have a right to purchase a retiring partner s interest or should the retiring partner have a right to insist that the remaining partners purchase his or her interest on retirement? In the event of retirement, death or disability of a partner, how is that partner s interest to be valued? How is the acquisition of that partner s interest to be funded by the continuing partners? Will the partners be taking out insurance to fund the buy-out of a partner in instances of death or disability? If so, is there an agreement in place providing that the insurance proceeds may only be used by the other partners to fund the buy-out of the deceased or disabled partner s interest? Have the partners considered tax implications of the exit arrangements and/or insurance arrangements? From a business continuity perspective, it is critical that the arrangements between the partners are properly documented so as to avoid uncertainty, unnecessary expense and angst for the retiring and continuing partners. From an estate planning perspective, well drafted agreements help ensure that if a partner dies or suffers a permanent disability, his or her estate or personal representatives have a clear pathway to convert a partnership interest into cash. By Mark Fitzgerald, Principal T E mfitzgerald@meridianlawyers.com.au By Michael Bracken, Principal T E mbracken@meridianlawyers.com.au By Laura Dhana, Senior Associate T E ldhana@meridianlawyers.com.au For business people with partnership or corporate interests, estate planning involves more than making a will and granting powers of attorney. You must also address how your partnership interests are dealt with in a range of circumstances. FOR MORE INFORMATION ABOUT SUCCESSION PLANNING FOR YOUR BUSINESS OR OWNERSHIP AGREEMENTS IN GENERAL CONTACT MARK FITZGERALD, MICHAEL BRACKEN, LAURA DHANA OR GEORGINA ODELL. page 2

3 EMPLOYMENT LAW Is Big Brother watching? A common concern for many employers is the extent to which they can monitor employees in the workplace. Specific legislation regulating workplace surveillance exists in New South Wales and the Australian Capital Territory and in other states workplace surveillance is regulated by legislation dealing with specific electronic surveillance devices or methods. The overall implication for employers however, is that the legality of and requirements for an employer undertaking employee workplace surveillance depends on the state where the business is located. By Sharlene Wellard, Principal T E swellard@meridianlawyers.com.au Differences in state-based workplace surveillance regulation New South Wales The Workplace Surveillance Act 2005 (NSW) regulates the employer s use of electronic devices such as video cameras, computers and tracking devices to monitor employees. This legislation contains a general prohibition on employee surveillance, by the employer, except where employees have been given prior written notice not less than 14 days before the surveillance commences, or in the case of new employees, before the employee commences work. This notice must specify the type of surveillance being undertaken, how it will be carried out, when the surveillance will occur and whether it is ongoing or for a limited period. An employer may also undertake surveillance if they have obtained a covert surveillance authority. By Jessica Light, Solicitor T E jlight@meridianlawyers.com.au Depending on the type of workplace surveillance, there may be additional obligations on the employer to put up notices or have a policy in place concerning the manner in which surveillance is undertaken. Australian Capital Territory In the ACT, the Workplace Privacy Act 2011 (ACT) regulates workplace surveillance by use of optical devices, tracking devices and data surveillance devices; however there are no provisions in this legislation relating to the use of listening devices. An employer in the ACT will be required to give notice to employees if these devices are in use in the workplace and to consult with employees before the introduction of surveillance. There is a prohibition in the ACT on the surveillance of employees in some areas in the workplace including toilets, change rooms, nursing rooms, first-aid rooms and prayer rooms. By Leanne Dearlove, Solicitor T E ldearlove@meridianlawyers.com.au Similar to New South Wales, an employer may apply to obtain a covert surveillance authority to conduct surveillance without providing notice to employees. The Courts page 3

4 will only grant such an authority for the purpose of determining whether an employee is carrying out an unlawful activity. Victoria Surveillance in Victoria is regulated by the Surveillance Devices (Workplace Privacy) Act 2006 (Vic). In accordance with this legislation an employer is restricted from the use of listening devices, optical surveillance devices and tracking devices for the surveillance of workers in particular areas in the workplace such as toilets, washrooms, change rooms, or lactation rooms. There are however exceptions to these restrictions, such as where a warrant or other authorisation has been granted to allow surveillance. In Victoria, an employer may not publish or disseminate material obtained through surveillance. QLD, SA, WA, Tasmania & NT In Queensland, South Australia, Western Australia, Tasmania and the Northern Territory, there is no legislation dealing exclusively with surveillance in the workplace. In each state and territory however, there is likely to be surveillance legislation that can apply more broadly than the workplace and may regulate the usage of specific surveillance devices or forms of surveillance. For example, surveillance in these states may be regulated by the following: Invasion of Privacy Act 1971 (Qld) Listening Devices Act 1972 (SA) Surveillance Devices Act 1998 (WA) Listening Devices Act 1991 (Tas) Surveillance Devices Act 2007 (NT) In each instance it is likely that regulations on specific forms of surveillance extend to the workplace. Conclusion If your workplace wishes to undertake surveillance, it is important that this is done in accordance with the relevant legislation in your state. You may also wish to have a workplace surveillance policy available to your employees, setting out the types of surveillance undertaken and the rights and obligations of both the employer and employee when it comes to surveillance. FOR MORE INFORMATION PLEASE CONTACT SHARLENE WELLARD, JESSICA LIGHT OR LEANNE DEARLOVE Subscribe to your contact details to editor Georgina Odell to receive future editions of this newsletter. E: godell@meridianlawyers.com.au T: page 4

5 COMMERCIAL LAW Pharmacy sale and purchase trends during 2016: assignment of leases During 2016 Meridian Lawyers acted for many pharmacists in the successful sale or purchase of their pharmacies. Where a pharmacy occupies premises under a lease, the lessor may not always be pleased to learn that their tried and trusted tenant wishes to sell the business to a new owner. The lessor may try to oppose the transfer of the lease. By Georgina Odell, Special Counsel T E godell@meridianlawyers.com.au Commercial leases will typically contain provisions which prohibit the tenant from assigning or transferring a lease without the prior written consent of the lessor. Generally, before a lessor will provide consent to assignment they will require information from the proposed new tenant (the assignee) about their business experience and financial status, before deciding whether to grant consent. During 2016 we experienced lessors who opposed the assignment of the lease on the basis that the new tenant was not as experienced or financially sound as the current tenant. Fortunately, we were able to identify terms of leases or relevant legislation (such as retail leases legislation) which assisted in the assignment of the lease, for example, provisions which require the lessor not to be unreasonable in withholding consent to assignment. By Laura Dhana, Senior Associate T E ldhana@meridianlawyers.com.au We have also experienced a lessor seeking to impose very high costs on the vendor of the business in respect of their legal costs of dealing with an assignment of a lease, and also seeking to impose extremely onerous increased security deposit requirements on the purchaser. TIPS: It is important to ensure that sale of business contracts contain suitable conditions precedent to completion including a requirement for the lessor to consent to assignment of the lease on terms no less favourable than are contained in the current lease this can sometimes help to protect a purchaser from a lessor which seeks to impose new, onerous terms on the incoming tenant. Be aware that the lease itself or relevant legislation (such as retail lease legislation) may limit the lessor s power to refuse consent to assignment. Before exchanging contracts for the sale of a business, agree with the vendor who is to pay the lessor s legal costs of dealing with an assignment. FOR MORE INFORMATION ABOUT THE SALE AND PURCHASE OF PHARMACY BUSINESSES OR RETAIL LEASE ISSUES PLEASE CONTACT LAURA DHANA (MELBOURNE) OR GEORGINA ODELL (SYDNEY). page 5

6 HEALTH LAW Real-time prescription monitoring: what does it mean for health practitioners? Since at least 2012 there has been an increasing push in Australia for the implementation of a national real-time prescription monitoring system that alerts doctors and pharmacists to people who are misusing prescription drugs. More than 20 Coronial Inquests in New South Wales, Victoria and Western Australia alone have recommended a real-time prescription monitoring system in an attempt to reduce the number of lives that are lost as a result of overdosing on prescription medications. Peak industry bodies have been strong supporters of such a system and have been urging its implementation for several years. The question for health practitioners, and in particular allied health practitioners such as pharmacists, is to what extent it will impact on their professional responsibilities and obligations. Status of Australia s system In 2008, Tasmania implemented the Drugs and Poisons Information System Online Remote Access system (known as DORA ) in response to the state s higher use of oxycontin per capita than any other state it now has the lowest. In 2013, the Australian Government developed and funded an Electronic Recording and Reporting of Controlled Drugs system ( ERRCD ) and licensed the system to each State and Territory in Australia. The ERRCD is based upon the DORA system. The EERCD aims to provide immediate access to data relating to dispensing by pharmacists of certain controlled drugs, and online access to authorised health professionals of up-to-date information relating to patient dispensing histories. It is believed that an effective nationwide EERCD will provide practitioners with a clinical tool to minimise the number of patients who are doctor and pharmacy shopping and help practitioners make informed clinical decisions, including early identification of patients who have, or are at risk of, addiction. The difficulty in implementing the system Australia-wide has been due to the technical, legal and financial hurdles that have to be overcome. NSW and ACT have been actively trialing a real-time prescription monitoring system and over the past year other states are taking steps in the same direction. In April 2016 Victoria announced it was allocating approximately $30 million over 4 years to implement its ERRCD system and anticipates it starting in Whilst the ERRCD system is currently restricted to Schedule 8 medications, such as oxycodone, Victoria is considering expanding the model to include certain other drugs such as By Julie Somerville, Principal T E jsomerville@meridianlawyers.com.au page 6

7 diazepam and codeine. This will be particularly relevant given that the Australian Government announcement in December 2016 that certain codeine medication will be available on prescription only by In January 2017 Western Australia implemented new regulations which, amongst other things, promote the safe dispensing of controlled drugs and establish the legal framework for the transfer of information about the prescribing and dispensing of controlled drugs through the ERRCD. The ERRCD will require changes to existing ways of practice and will be rolled out in stages. The WA transition to the system, including ongoing training and support to pharmacists and doctors, is expected to be completed by late What will it mean for health and allied health practitioners? In addition to the changes that will need to be made to a practitioner s administrative and technological systems (for which further training and presumably funding will be provided), evidence of a practitioner s knowledge and use of ERRCD is likely to have particular significance in coronial, civil and disciplinary proceedings. A common feature in many of the recent coronial inquests in relation to deaths arising from overdoses of prescription medication, and the disciplinary cases for professional misconduct involving doctors and pharmacists, is the lack of education about the legal and clinical aspects of drugs of dependence and the regulations application in each state. There are often differences between each state and territory as to the regulations applicable to prescribing (and consequently dispensing) drugs of dependence. Both health practitioners and pharmacists need to ensure they are well educated on both the current regulations, and any changes to regulations and practice guidelines, that are made as the ERRCD is implemented in their state or territory. Prescribers will also no doubt be expected to have a system in place whereby regular checking of a patient s dispensing history on the ERRCD is undertaken prior to writing a prescription for a drug of dependence and to turn their mind to whether the patient is addicted, or at risk of developing an addition, to the medication. Many practitioners regularly have such a thought at the forefront of their minds, however once an ERRCD system is in place, one would anticipate that evidence of performing such a check will be expected of the practitioner in civil and disciplinary proceedings. Pharmacists will need to be equally vigilant. As pharmacists must make an independent judgment as to whether a prescription presented is valid, the medication safe and appropriate for a patient, and whether it is consistent with the prescriber s intention, pharmacists will need to ensure that personal dispensing guidelines are updated to include checking any ERRCD system, and recording and acting upon the results. That may require further enquiries with the prescriber or previous dispensers and/or refusing to dispense medications. While the additional step in a health, and allied health, practitioner s practise is adding to the workload of already busy professionals, most would welcome and support the additional step. The potential benefits to the community in assisting professionals provide their patients the care they require far outweighs the inconvenience. As a whole the profession is actively embracing a nationwide ERRCD system. However, as every good lawyer and insurer will say, just make sure you keep a record of your knowledge and use of it. FOR MORE INFORMATION, CONTACT JULIE SOMERVILLE ON T: WHILE THIS INITIATIVE CERTAINLY IS IN THE COMMUNITY INTEREST, IT WILL HAVE AN IMPACT ON PHARMACISTS AND HAS THE POTENTIAL TO BRING WITH IT AN INCREASED LEGAL LIABILITY EXPOSURE. PAUL BAKER, MANAGING PRINCIPAL, MERIDIAN LAWYERS page 7

8 STAMP DUTY UPDATE Abolition of stamp duty on purchase of business assets in New South Wales On 1 July 2016 certain duties were abolished in New South Wales, including stamp duty on the purchase of certain business assets. A business s purchase price can be, and often is, apportioned between a number of items including goodwill and plant and equipment, and often the most significant portion of the business s purchase price is related to its goodwill. A business s goodwill and intellectual property, which have been exploited in New South Wales, are classes of business assets that no longer attract stamp duty, which is good news for many purchasers. By Greg Bawden, Solicitor T E gbawden@meridianlawyers.com.au However, as a business purchaser, technically you may still be liable to pay duty in NSW on a range of other assets included in the transaction, including land (and interests in land such as a lease) and certain other goods (including business plant and equipment) if certain circumstances exist. However, there may still be a reprieve for stamp duty on plant and equipment in circumstances where the value of the plant and equipment is more than 90% of the total dutiable value of dutiable property transferred. In these circumstances the Commissioner of State Revenue may disregard the plant and equipment value for stamp duty purposes and duty will only be payable on the remaining dutiable property, which will very often be a nominal value of the lease. Tips: whether stamp duty is payable on the purchase of a business in NSW requires careful consideration of the individual circumstances of your purchase; and it will still be necessary to have the form of transfer of a NSW lease stamped prior to registration. IF YOU REQUIRE ADVICE ON YOUR SALE OR PURCHASE OF A BUSINESS IN NSW, CONTACT MICHAEL BRACKEN, T: FACING A PHARMACY BUSINESS OR RELOCATION DISPUTE? CONTACT OUR COMMERICAL LITIGATION & DISPUTE RESOLUTION EXPERT: PRINCIPAL DOUGLAS RAFTESATH E: draftesath@meridianlawyers.com.au T: Disclaimer: This information is current as of February These articles do not constitute legal advice and do not give rise to any solicitor/client relationship between Meridian Lawyers and the reader. Professional legal advice should be sought before acting or relying upon the content of these articles. Meridian Lawyers Melbourne Sydney Newcastle Brisbane meridianlawyers.com.au