Expanding or contracting your pharmacy? Don t forget Pharmacy Location Rule 121

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1 Dispensing sound legal insights r Insights Editor: Georgina Odell, Special Counsel T E godell@meridianlawyers.com.au In this edition of Pharmacy insights we invite you to visit us on Trade Stand 282 at APP2018 and provide important updates for pharmacists on the regulatory requirements for expansion or contraction of a pharmacy, new mandatory notifications for certain data breaches, tips for franchisees, and comments on recent trends in buying and selling pharmacies. Expanding or contracting your pharmacy? Don t forget Pharmacy Location Rule Misuse, interference or loss of personal information by pharmacists new mandatory notifications for data breaches 3 Pharmacy Franchise Law tips for franchisees 6 Unfair Dismissal claims under fixed term contracts 8 Recent trends in buying and selling pharmacies 10 NEWS, EVENTS & PRESENTATIONS Meet Meridian Lawyers at the APP Conference GOLD COAST, MAY 2018 Visit Meridian Lawyers at to meet some of the lawyers who provide specialist legal services to the pharmacy industry and leave your business card with us for a chance to win a $100 Myers voucher. Our pharmacy lawyers at the trade stand will be offering hints and tips about buying or selling a pharmacy, employing and managing staff, taking a franchise, obtaining finance, going into partnership, retail leases, and Pharmacy Location Rule issues. We will have a wide range of valuable pharmacy law information for attendees to take away. We warmly invite clients past and future to visit our stand and say hello. Hello Hello. Let s talk Let s talk Expanding or contracting your pharmacy? Don t forget Pharmacy Location Rule 121 Expansion of a pharmacy may take place where the floor size of a pharmacy is increased, for example by expanding the pharmacy into adjacent premises. An example of contraction of a pharmacy would be where the floor size of a pharmacy decreases, perhaps because part of the pharmacy is surrendered back to a landlord, or where part of the pharmacy is sub-let to a sub-tenant (for example, a health practitioner).

2 It is common for pharmacists to overlook the requirement in the Pharmacy Location Rules (as legislated by the National Health (Australian Community Pharmacy Authority Rules) Determination 2011) for the approval of the Australian Community Pharmacy Authority (ACPA) relating to expansion or contraction of a pharmacy. Rule 121 of the Pharmacy Location Rules requires that an application for expansion or contraction must meet the following criteria: the application is for an expansion or contraction of pharmacy premises, in which the proposed premises will occupy any of the space occupied by the premises. By Mark Fitzgerald, Principal T E mfitzgerald@meridianlawyers.com.au The effect of this requirement is that an application for expansion of a pharmacy cannot be used where there is effectively a relocation of the pharmacy premises. In addition to the specific criteria of Rule 121, a range of other general requirements of the Pharmacy Location Rules must also be met, including: that the proposed premises are not already approved premises the applicant has the legal right to occupy the proposed premises the proposed premises could be used for the purpose of operating a pharmacy which would be accessible by the public By Georgian Odell, Special Counsel T E godell@meridianlawyers.com.au the applicant will be ready to operate a pharmacy at the proposed premises within six months the proposed premises are not directly accessible by the public from within a supermarket. The Pharmacy Location Rules are prescriptive regarding the evidence which must be provided in order to satisfy the ACPA about these matters. Pharmacists may also be required to seek the consent of the pharmacy regulatory authority in their particular State or Territory for any expansion or contraction of his or her pharmacy. For example, in New South Wales, an application must be made to the Pharmacy Council of New South Wales for approval relating to the expansion/contraction at least fourteen days before the intended change and all documentation must be received by the lodgement date for the application to be considered at the next Council Meeting. By Laura Dhana, Senior Associate T E ldhana@meridianlawyers.com.au page 2

3 Pharmacists should also consider whether the proposals to expand or contract the pharmacy require any other consents, such as the consent of the current landlord where part of the premises are to be sub-let thereby giving rise to a contraction in the size of the pharmacy premises. FOR ASSISTANCE WITH APPLICATIONS FOR APPROVALS FOR EXPANSION OR CONTRACTION OF PHARMACIES, OR ANY OTHER ISSUE CONCERNING THE PHARMACY LOCATION RULES, PLEASE CONTACT (MELBOURNE) ON OR (SYDNEY) ON Misuse, interference or loss of personal information by pharmacists new mandatory notifications for data breaches On 22 February 2018, mandatory data breach notification requirements were incorporated into the Privacy Act 1988 ( ) and now apply to all entities regulated by the Act. Typically, health service providers such as pharmacists will be bound by the Act irrespective of the size of their business, because they provide a health service and because of the highly sensitive nature of the health and other information they hold. Prior to 22 February 2018 there was no requirement to notify an individual who may be affected by a data breach, resulting from misuse, interference or loss of personal information. However, since that date, health service providers are under a statutory obligation to promptly notify the Office of the Australian Information Commissioner (OAIC) and affected individuals if an eligible data breach occurs. The key objective of the data breach notification regime is to provide individuals, whose personal information has been compromised in a data breach, with an opportunity to take remedial steps to lessen the adverse impact arising from the breach. For example, if the data breach is the loss of a customer s credit card information, prompt notification of the loss of this information to the affected individual, may enable the individual to cancel the credit card and prevent financial loss from occurring. By Michael Bracken, Principal T E mbracken@meridianlawyers.com.au By Levina Chim, Senior Associate T E lchim@meridianlawyers.com.au By Greg Bawden, Solicitor T E gbawden@meridianlawyers.com.au page 3

4 What kinds of data breaches require notification? Data breaches can occur in a variety of ways in practice, including: unauthorised access to software systems by third parties (hacking) sight of paper records by unauthorised third parties loss of data and information (for example, data left on public transport) theft of data or records (for example, theft in the postal system or burglary of a pharmacy) Mandatory notification of such breaches is only required if an eligible data breach has occurred. An eligible data breach takes place where: there is unauthorised access to, or unauthorised disclosure of personal information and a reasonable person would conclude that the access or disclosure would be likely to result in serious harm to any of the individuals to whom the information relates; or the personal information is lost in circumstances where unauthorised access to, or unauthorised disclosure of, the information is likely to occur and assuming that occurs, a reasonable person would conclude that the access or disclosure would be likely to result in serious harm to any of the individuals to whom the information relates. Serious harm is not defined in the Act but guidance provided by the OAIC, indicates that serious harm to an individual may include serious physical, psychological, emotional, financial, or reputational harm. In assessing whether serious harm is likely to occur, the organisation should have regard to: the kind of information and the sensitivity of the information (for example, information which reveals sensitive health information, information about ethnicity, sexual orientation or Australian visa/residency or asylum status would be more likely to cause serious harm than merely a person s name) whether the information is protected by any security measures and the likelihood that any of those security measures could be overcome the kinds of persons who have obtained, or could obtain, the personal information (for example, a data breach from one Governmental agency to another may be less likely to result in serious harm than a data breach where personal information has been stolen and is therefore in the possession of thieves or potential fraudsters) if a security technology or methodology was used and which was designed to make the personal information unintelligible or meaningless to unauthorised persons the likelihood that the persons obtaining the information having the intention of causing harm to an individual the nature of the harm. page 4

5 The Act provides that if there has been an eligible data breach then the individual or individuals concerned are at risk as a result of the breach. It will always be important to take swift action when an eligible data breach takes place. Section 26WF of the Act contains provisions which, put simply, effectively remove the existence of an eligible data breach if action is taken by the organisation which held the information which removes the likelihood of serious harm occurring to the individual. Whenever an entity suspects that there may have been an eligible data breach of the entity, the entity must carry out a reasonable and expeditious assessment of whether there are reasonable grounds to believe that the relevant circumstances amount to an eligible data breach and take all reasonable steps to ensure that the assessment is completed. In the event that there are reasonable grounds to believe that an eligible data breach has occurred, and the entity has not been able to take remedial action to remove the likelihood of serious harm, then an entity must notify the OAIC within 30 days. The website for the OAIC contains a link to an online form of the statement required. The Act additionally requires that, if there has been an eligible data breach and the entity has prepared a statement to the OAIC, then the entity must notify the contents of the statement to each of the individuals to whom the relevant information relates or who are at risk as a result of the breach, if it is practicable for the entity to do so. If it is not practicable for the entity to contact the affected individuals (for example, if the entity no longer has their contact details), then the Act provides that the entity should publish a copy of the statement on the entity s website and take reasonable steps to publicise the contents of the statement. Notification to individuals must take place as soon as practicable after the completion of the preparation of the statement to the OAIC. Enforcement by OAIC There are a range of enforcement options which can be undertaken by the OAIC in the event of a breach of the Act including undertaking an investigation, seeking an enforceable undertaking from organisations and applying the civil penalty provisions under the Act resulting in a financial penalty for the organisation involved. A breach of the requirement for notification of eligible data breaches would be taken to be an act that constitutes interference with the privacy of an individual. Section 13G of the Act provides that serious interference with the privacy of an individual attracts a civil penalty of 2,000 penalty units. For an individual, this could amount to a penalty of $420, and for a body corporate, the OAIC now has the right to apply to the Federal Court for an order that a penalty of up to five times the amount of the pecuniary penalty must be paid. page 5

6 Consequently, there is potential for bodies corporate to be subject to a financial penalty of up to $2,100, for serious interferences with the privacy of an individual. The OAIC has prepared a guide to assist businesses to prepare for and respond to data breaches in line with their obligations under the Act. The prevention of privacy breaches in the first place is key to protecting personal information and protecting a health provider from compliance action, penalties and reputational damage which flows from data breaches. Health providers (including pharmacists) should develop a Data Breach Response Plan to enable them to respond quickly to suspected data breaches thereby reducing the impact on the individuals concerned, and providing for a post data breach review of what went wrong and how further, similar breaches can be prevented in the future. Meridian Lawyers can assist you to understand your privacy obligations and advise on compliance with the Notifiable Data Breaches regime and its impact, and in developing a Data Breach Response Plan. FOR FURTHER ADVICE PLEASE CONTACT OUR PRINCIPAL SENIOR ASSOCIATE ON AND Pharmacy Franchise Law tips for franchisees Many pharmacy business owners are interested in becoming franchisees in order for them to trade with the benefit of national brand recognition, marketing power and tried and tested operating systems. However, it is crucial that pharmacists understand the content, substance and implications of the franchise documentation before they sign or make any non-refundable payment to the franchisor. The Franchising Code of Conduct ( ) is legislated by the Competition and Consumer (Industry Codes Franchising) Regulation 2014, and is an Australia wide code which regulates the conduct of franchising participants towards each other. The party granting the franchise is known as the franchisor and the party taking, or accepting, the franchise is known as the franchisee. By Georgina Odell, Special Counsel T E godell@meridianlawyers.com.au page 6 By Laura Dhana, Senior Associate T E ldhana@meridianlawyers.com.au

7 The Code requires franchisors to provide certain documentation and information before a franchisee signs or makes a non-refundable payment. These documents are: an Information Statement for prospective franchisees; a disclosure document which sets out key up to date information about the franchisor and it s network; the franchise agreement in final form; and a copy of the Code. Pharmacy franchise agreements will differ according to which franchisor entity you approach. It is possible that the franchise agreement will contain terms you may wish to negotiate, such as: any exclusive area or territory being granted to you any restraints on your ability to operate a pharmacy other than the proposed franchise any restrictions on your freedom to sell your business during the term of the franchise costs associated with the franchise and any transfer of the franchise agreement to a future buyer of your pharmacy business. Pharmacists should also be aware that the Code contains an obligation for each party to a franchise agreement to act towards the other party with good faith in respect of any matter arising under or in relation to the franchise agreement and the Code. The obligation to act in good faith also applies to a person who proposes to become a party to a franchise agreement in respect of: any dealing or dispute relating to the proposed agreement the negotiation of the proposed agreement the Code. Civil penalties may apply to any breach of the duty to act in good faith, and in deciding whether a party has acted in good faith a court may have regard to: a) whether the party acted honestly and not arbitrarily; and b) whether the party cooperated to achieve the purpose of the agreement. The obligation to act in good faith does not prevent a party to a franchise agreement, or a person who proposes to become a party, from acting in his, her or its legitimate interests. WE RECOMMEND THAT PHARMACISTS SEEK ADVICE IN RELATION TO THE CONTENT OF PHARMACY FRANCHISE AGREEMENTS BEFORE SIGNING OR MAKING ANY NON-REFUNDABLE PAYMENT. PLEASE CONTACT (MELBOURNE) ON OR (SYDNEY) ON FOR FURTHER ADVICE. page 7

8 Unfair Dismissal claims under fixed term contracts In order to be eligible to bring an Unfair Dismissal claim against an employer, an employee must, among other things, have been dismissed at the employer s initiative. Historically, employees engaged on a term contract were generally not eligible to make an Unfair Dismissal claim as the contract ended due to the effluxion of time rather than at the employer s initiative. However, a recent decision of the Full Bench of the Fair Work Commission in Saeid Khayam v Navitas English Pty Ltd t/as Navitas English [2017] FWCFB 5162 ( ) may change this approach in the future. Two types of term contracts are generally used fixed term and maximum term contracts. As the name suggests, a fixed term contract ends on a specified date and there is no provision to terminate the contract earlier unless the employee engages in serious misconduct. In contrast, a maximum term contract ends on a specified date however has a provision allowing either party to terminate earlier by providing notice to the other party. The Navitas Case In Navitas case, Mr Khayam had been employed on a number of maximum term contracts from approximately 2012 until Mr Khayam s contracts made provision for either party to terminate the contract by providing 4 weeks notice to the other party. The contracts stated that the employment would terminate automatically on the nominated expiry date unless either party had terminated it earlier. Navitas made the decision not to renew Mr Khayam s contract citing performance related concerns. Mr Khayam filed an Unfair Dismissal Application with the Fair Work Commission which was challenged by Navitas on the basis that the termination was not at the initiative of the employer and therefore Mr Khayam did not have jurisdiction to bring the claim. The matter was heard by Commissioner Hunt at first instance who rejected the Application by applying the Full Bench of the Australian Industrial Relations Commission in Department of Justice v Lunn (2006) AIRC 756 ( ). By Sharlene Wellard, Principal T E swellard@meridianlawyers.com.au By Jessica Light, Senior Associate T E godell@meridianlawyers.com.au By Leanne Dearlove, Associate T E ldearlove@meridianlawyers.com.au page 8

9 Mr Khayam appealed the decision to the Full Bench to consider the interpretation and application of the Lunn decision. In particular, Mr Khayam argued that the approach in Lunn (decided prior to the introduction of the Fair Work Act 2009) ( the FW Act ), meant that the exclusion at 386(2)(a) of the FW Act was redundant. Mr Khayam also argued that if the approach in Lunn continued to be followed, casual employees should be prevented from making Unfair Dismissal claims as their contracts terminate at the end of each engagement. A 2:1 majority of the Full Bench found that the Lunn decision was not applicable to the Fair Work Act 2009 and provided guidance as to how Section 386(1)(a) should be interpreted. In particular, the Full Bench found a distinction between termination of the employment contract immediately before cessation of the employment and termination of the employment relationship. Consideration must be given to the entire employment relationship not just the terms of the final employment contract. Implications of Employers Employers can no longer assume that they are protected from Unfair Dismissal Claims simply because an employee s contract has an end date. Careful consideration must be given to terminating term contracts, particularly when the employee has been engaged under successive term contracts. Conversations with employees being engaged on maximum term contracts both at the commencement of the contract as well as when deciding not to offer a further contract will be critical in determining whether the employment has been terminated at the initiative of the employer. The employer will have to show that the employee was aware that, and agreed to, the employment relationship ending at the expiry date. IF YOU WOULD LIKE ASSISTANCE WITH FIXED TERM EMPLOYMENT CONTRACTS, OR EMPLOYMENT RELATED ISSUES, PLEASE CONTACT A MEMBER OF OUR EMPLOYMENT TEAM, PRINCIPAL, SENIOR ASSOCIATE OR ASSOCIATE. Subscribe to your contact details to editor Georgina Odell to receive future editions of this newsletter. E: godell@meridianlawyers.com.au T: page 9

10 QUICK TIPS - RECENT TREND IN BUYING AND SELLING PHARMACIES Meridian Lawyers acts for pharmacists in the sale and purchase of their pharmacy businesses. Issues which arise in these transactions commonly include: the negotiation of the contract for sale of the business in order that the written contract reflects the wishes of the parties the obtaining of necessary approvals and consents (such as Pharmacy Council of NSW approval and a PBS approval from the Department of Human Services) the grant or assignment of the premises lease the treatment of employee entitlements on transfer of a business the requirements of lenders for security including right of entry deeds. Recently, we have seen an increased resistance by lessors to consent to the assignment of pharmacy leases. In our experience, lessors are requiring more information about a prospective assignee, and additional security for the lease such as increased bank or personal guarantees than has traditionally been the case. The legislation governing retail leases in a particular State or Territory can sometimes assist in securing lessor s consent, as can the wording of the relevant lease which might dictate the circumstances in which a lessor can withhold consent. FOR ASSISTANCE WITH THE SALE OR PURCHASE OF A PHARMACY BUSINESS PLEASE CONTACT (MELBOURNE) ON OR (SYDNEY) ON FACING A PHARMACY BUSINESS OR RELOCATION DISPUTE? CONTACT OUR COMMERICAL LITIGATION & DISPUTE RESOLUTION PRINCIPAL DOUGLAS RAFTESATH E: draftesath@meridianlawyers.com.au T: Disclaimer: This information is current as of May 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 Perth page 10

11 Meet our team Commercial, commercial litigation and employment team CORPORATE ADVISORY & COMMERCIAL LAW Michael Bracken, Principal T E mbracken@meridianlawyers.com.au CORPORATE ADVISORY & COMMERCIAL LAW Mark Fitzgerald, Principal T E mfitzgerald@meridianlawyers.com.au EMPLOYMENT & INDUSTRIAL RELATIONS Sharlene Wellard, Principal T E swellard@meridianlawyers.com.au LITIGATION & DISPUTE RESOLUTION Douglas Raftesath, Principal T E draftesath@meridianlawyers.com.au COMMERCIAL PROPERTY Penny Evans, Principal T E pevans@meridianlawyers.com.au COMMERCIAL & REGULATORY LAW Georgina Odell, Special Counsel T E godell@meridianlawyers.com.au COMMERCIAL PROPERTY Laura Forsyth, Special Counsel T E lforsyth@meridianlawyers.com.au CORPORATE ADVISORY & COMMERCIAL LAW Levina Chim, Senior Associate T E lchim@meridianlawyers.com.au PROPERTY, COMMERCIAL & BUSINESS LAW Laura Dhana, Senior Associate T E ldhana@meridianlawyers.com.au EMPLOYMENT LAW Jessica Light, Senior Associate T E jlight@meridianlawyers.com.au IP, TRADE MARKS & COMMERCIAL LAW Janette Li, Associate T E jli@meridianlawyers.com.au EMPLOYMENT LAW Leanne Dearlove, Associate T E ldearlove@meridianlawyers.com.au COMMERCIAL & COMMERCIAL LITIGATION Gabrielle Parra, Associate T E gparra@meridianlawyers.com.au CORPORATE ADVISORY & COMMERCIAL LAW Greg Bawden, Solicitor T E gbawden@meridianlawyers.com.au