Can employee equity motivate key staff without creating tax and governance problems?

Employee Share Schemes can be a powerful way to align incentives, preserve cash and reward employees who contribute to business growth. But they are not simply an HR tool or a standard incentive template. If the structure is not properly considered, an Employee Share Scheme can create upfront tax exposure, shareholder dilution, voting issues and future exit complications.

In this episode of Explain That by Velocity Legal, Andrew Henshaw is joined by Edward Hart and Archana Manapakkam to discuss the commercial and tax realities of Employee Share Schemes, including when they work well and what businesses need to resolve before issuing shares or options to employees.

The discussion covers:

• why businesses use Employee Share Schemes to align incentives and support retention;
• how equity incentives can help startups and growth businesses preserve cash;
• the tax treatment of discounted shares and options;
• upfront taxation, deferred taxation and the real risk of forfeiture;
• the startup concession and when it may be available;
• valuation issues for private companies;
• dilution, voting rights and minority shareholder protections;
• why ESS documents need to align with the constitution and shareholder agreement;
• good leaver and bad leaver provisions, drag along rights and restraints of trade;
• loan-funded Employee Share Schemes and related tax risks; and
• the strategic questions businesses should ask before offering equity to staff.

A practical discussion for founders, business owners, directors, executives, accountants and advisers considering employee shares, options, loan-funded arrangements or other equity incentive structures.

For advice on structuring, reviewing or implementing an Employee Share Scheme, contact Velocity Legal’s Commercial and Tax teams.

Can a Binding Financial Agreement give couples certainty if a relationship ends?

A Binding Financial Agreement, often called a prenup, allows couples to agree in advance how property, assets and liabilities will be dealt with if they separate. Without one, property settlement is determined under the discretionary framework in the Family Law Act, which considers contributions, future needs and what outcome is just and equitable.

In this episode of Explain That by Velocity Legal, Andrew Henshaw is joined by Thomas Jenkins to discuss Binding Financial Agreements, when they are used, how they can protect separate property or family wealth, and why enforceability depends on more than simply having a signed document.

The discussion covers:

• what a Binding Financial Agreement is;
• how BFAs differ from ordinary property settlement under the Family Law Act;
• when an agreement can be entered into, including before, during or after a marriage or de facto relationship;
• common structures for joint and separate property;
• how BFAs can protect inheritances, family wealth and assets from earlier relationships;
• why full financial disclosure matters;
• the grounds on which a BFA may be challenged or set aside;
• duress, timing pressure and agreements signed shortly before a wedding;
• why online templates and DIY agreements can create risk;
• the importance of independent legal advice; and
• how a well-prepared agreement can reduce the risk of future family law litigation.

A practical discussion for couples, separated parties, blended families and families seeking to protect inheritance, business interests or existing assets before relationship issues arise.

For advice on preparing, reviewing or challenging a Binding Financial Agreement, contact Velocity Legal’s Family Law team.

When has a business outgrown its original structure?

Many Australian businesses start with a simple structure, such as a sole trader, company or trust arrangement. Over time, that structure may no longer suit the way the business operates, particularly as risk, asset protection, succession planning and commercial complexity increase.

In this episode of Explain That by Velocity Legal, Andrew Henshaw is joined by Tyson Bateman to discuss the Small Business Restructure Rollover, how it works in practice, and why it should be approached as a genuine commercial restructure rather than a simple tax concession.

The discussion covers:

• what the Small Business Restructure Rollover is designed to do;
• when eligible businesses may transfer active business assets without immediate income tax consequences;
• why the rollover does not apply automatically;
• the requirement for a genuine restructure of an ongoing business;
• how the ATO approaches commercial purpose and tax-driven arrangements;
• the importance of maintaining ultimate economic ownership;
• why discretionary trusts can make the ownership analysis more difficult;
• how to identify eligible active business assets;
• the interaction between the rollover and other tax rules, including CGT concessions;
• why the rollover is often more useful for long-term planning than immediate sale preparation; and
• the importance of documenting the commercial reasons for the restructure.

A practical discussion for business owners, accountants and advisers considering a business restructure, succession plan, asset protection strategy or transfer of business assets between entities.

For advice on the Small Business Restructure Rollover, business restructures, active asset transfers or tax issues arising from a proposed restructure, contact Velocity Legal’s Tax team.

A commercial contract is easy to overlook when the relationship is working. It usually becomes important when something changes: payment is delayed, the scope expands, performance falls short, or one party wants to exit.

That is why contract drafting is not just about recording the deal. A well-drafted agreement gives the parties a clear framework if the relationship deteriorates. A vague one can turn an ordinary disagreement into a costly commercial dispute.

In this episode of Explain That by Velocity Legal, Andrew Henshaw is joined by Director Jess Hill to discuss how clear contract drafting can help prevent business disputes before they arise, and why contracts should be prepared with enforcement, disagreement and commercial risk in mind.

The discussion covers:

• why informal or vague agreements often lead to disputes;
• the contract terms that most commonly create uncertainty, including scope, payment, timing and termination;
• how unclear drafting can increase cost, delay and negotiation pressure once a dispute arises;
• why governing law and jurisdiction clauses should not be treated as an afterthought;
• how dispute resolution clauses can affect where and how a dispute is resolved;
• why boilerplate clauses can have real commercial consequences; and
• how business owners can use contracts as a practical risk management tool.

A practical episode for business owners, directors and advisers who want their contracts to do more than get a deal signed. The right drafting can give the parties a clearer path if the relationship breaks down, and reduce the risk of a dispute turning on what was assumed, implied or left unsaid.

For advice on contract drafting, dispute prevention or managing commercial risk, contact Velocity Legal’s Commercial and Disputes teams.

Statutory demands do not take a holiday.

For creditors, serving a statutory demand just before the Christmas shutdown can feel like a decisive move. Offices close, key people are away, and the 21-day deadline keeps running. For debtor companies, that timing can create immediate pressure.

But Christmas statutory demands can also create risk for creditors. If the demand is defective, the debt is genuinely disputed, or the timing is strategically misjudged, the demand can unravel and expose the creditor to cost consequences.

In this holiday special episode of Explain That by Velocity Legal, Andrew Henshaw is joined by Seamus Ryan and Sasha Kenny to discuss statutory demands, why the Christmas period is particularly risky for both creditors and companies, and what the Victorian Supreme Court’s decision in Three Pillars Lynbrook Pty Ltd [2022] VSC 540 reminds us about using statutory demands carefully.

The discussion covers:

• why statutory demands are often served before the Christmas shutdown;
• why the 21-day response period does not pause over the holidays;
• the risks for companies that receive a demand while offices or advisers are unavailable;
• when a Christmas statutory demand can backfire for creditors;
• defective demands, disputed debts and applications to set aside;
• the cost risks of using a statutory demand as pressure rather than strategy;
• lessons from Three Pillars Lynbrook Pty Ltd [2022] VSC 540; and
• what creditors and debtor companies should be thinking about before December.

A practical holiday episode for creditors, directors, debtor companies, accountants and advisers dealing with debt recovery, statutory demands, insolvency risk or commercial disputes during the holiday period.

For tailored advice on statutory demands, insolvency risk or dispute strategy, contact Velocity Legal’s Disputes and Insolvency teams.

A relationship does not need to look like a marriage to have family law consequences.

Many couples share parts of their lives without marrying and may not realise that their relationship already meets the legal threshold for a de facto relationship. Once that threshold is met, the parties may be treated in a similar way to a married couple for property settlement and financial matters under the Family Law Act.

In this episode of Explain That by Velocity Legal, Andrew Henshaw is joined by Shannon Hilton and Rohan Kelly to discuss how de facto relationships are assessed in practice, why the labels used by the parties are not decisive, and the financial consequences that can follow if a relationship is found to be de facto.

The discussion covers:

• what a de facto relationship means under Australian family law;
• why there is no single test for determining de facto status;
• how courts assess whether parties were living together on a genuine domestic basis;
• why living together full time or combining finances is not always required;
• common misconceptions about the two-year guideline;
• when a de facto relationship may be recognised earlier, including where there is a child, substantial contributions or registration;
• how de facto status can affect property settlement and spousal maintenance;
• why contributions can be difficult to assess in shorter relationships;
• what happens where the existence of the relationship itself is disputed;
• why disclosure may be limited until the threshold issue is determined; and
• practical steps people can take if the nature of the relationship is unclear.

A practical discussion for people in new relationships, blended families, second relationships, separated couples and advisers dealing with property, maintenance or asset protection issues where de facto status may be disputed.

For advice on de facto relationships, property settlement, spousal maintenance, Binding Financial Agreements or family law risk, contact Velocity Legal’s Family Law team.

A dismissal does not always end when the employment relationship ends.

Even where an employer has carefully managed a termination process, the employee may still bring a Fair Work claim. Once that happens, the focus shifts from managing the dismissal to managing the dispute. The deadlines are short, the documents matter, and the type of claim will shape the risk from the outset.

In Part 2 of this Explain That discussion, Andrew Henshaw is joined by Jess Hill and Katherine Stewart to discuss what employers should do when a Fair Work claim is made after dismissal, including how to respond to unfair dismissal and general protections applications.

The discussion covers:

• the difference between unfair dismissal claims and general protections claims;
• why employers need to identify the type of claim early;
• the short timeframe for filing a response;
• the documents and evidence employers should gather immediately;
• how unfair dismissal matters usually proceed through conciliation;
• why general protections claims can carry higher risk;
• the reverse onus of proof in general protections claims;
• how workplace complaints, sick leave, mental health issues, discrimination and WorkCover issues can complicate a dismissal dispute;
• why decision-maker evidence and contemporaneous records matter;
• the financial and operational cost of defending Fair Work claims; and
• how employers can prepare for conciliation and assess settlement options.

Following on from Part 1, which focused on managing dismissal risk before termination, this episode looks at what happens once a claim has been filed and the employer needs to respond quickly.

A practical discussion for business owners, directors, managers, HR professionals and advisers responding to employee claims, dismissal disputes, unfair dismissal applications or general protections risks.

For advice on Fair Work claims, unfair dismissal, general protections applications, workplace complaints or employment disputes, contact Velocity Legal’s Employment team.

Dismissals rarely become risky because of one conversation. The risk usually builds through unclear expectations, undocumented warnings, poor timing, unresolved complaints or uncertainty about why the employee is being dismissed.

When performance issues arise or an employment relationship breaks down, the way an employer manages the process can be the difference between a clean exit and a costly claim.

In this episode of Explain That by Velocity Legal, Andrew Henshaw is joined by Jess Hill and Katherine Stewart to discuss how employers can manage dismissals, minimise legal risk and maintain professionalism when dealing with performance issues, misconduct or workplace complaints.

The discussion covers:

• the difference between performance-based dismissals and conduct-based dismissals;
• why performance issues often require structured feedback and documentation;
• why employers do not necessarily need to issue three warnings before dismissal;
• the importance of clear warnings that employment may be at risk;
• the difference between unfair dismissal claims and general protections claims;
• why timing matters where an employee has made a complaint, taken leave or exercised a workplace right;

• when a commercial resolution, transition package or settlement deed may be appropriate;
• how employers should respond when a performance process is met with a bullying complaint or counter-allegation;
• why senior employees can still bring legal claims even if they are above the unfair dismissal income threshold;
• the role of employment contracts, policies and procedures in reducing dismissal risk; and
• why employers should act quickly when serious conduct issues arise.

A practical discussion for business owners, directors, managers, HR professionals and advisers dealing with employee performance issues, misconduct, complaints, termination risk or workplace claims.

For advice on dismissals, performance management, workplace investigations, unfair dismissal claims or general protections risks, contact Velocity Legal’s Employment team.

Separation is complicated enough without a business sitting in the middle of the property pool.

For business owners, a relationship breakdown can raise issues that go well beyond dividing personal assets. The value of the business, access to cash flow, control of the company, trust structures, tax consequences and future income can all become part of the family law settlement.

In this episode of Explain That by Velocity Legal, Andrew Henshaw is joined by Shannon Hilton to discuss how family law intersects with business ownership, and what business owners and their advisers should understand when separation occurs.

The discussion covers:

• how a privately owned business may be treated in a family law property settlement;
• why business valuation is often one of the first major issues;
• the role of single joint experts in valuing a business;
• how market conditions, COVID-19 impacts or business volatility can affect valuation;
• why a valuable business may not have enough available cash to fund a settlement immediately;
• how staggered payments or structured settlements may help preserve business operations;
• when separated spouses may continue owning or operating a business together;
• why financial agreements need to deal clearly with control, exit rights and trigger events;
• how family trusts, companies, retained profits and UPEs can complicate the property pool;
• why tax issues, including CGT and Division 7A, should be considered before settlement terms are finalised; and
• why accountants, financial advisers and lawyers should be involved early.

A practical discussion for business owners, directors, accountants, financial advisers and separated parties dealing with a family law property settlement involving a private business, trust, company or family group structure.

For advice on family law property settlements involving business interests, trusts, company structures or complex asset pools, contact Velocity Legal’s Family Law team.

Blended families are increasingly common, but they can create some of the most difficult estate planning disputes.

When there are children from earlier relationships, a current spouse or partner, jointly owned assets, family trusts, superannuation and competing expectations about inheritance, a simple will may not be enough. The real issue is not only who receives what, but who controls the assets and whether the plan will actually work when challenged.

In this episode of Explain That by Velocity Legal, Andrew Henshaw is joined by Doyle’s Guide-recognised Director Jennifer Maher and Senior Associate Elisha Raucci to discuss estate planning for blended families, including how to protect intentions while balancing the needs of “yours, mine and ours”.

The discussion covers:

• why blended families can be more exposed to estate disputes;
• why asset ownership and control matter when preparing an estate plan;
• when stepchildren may be able to challenge an estate;
• the risks of assuming a simple will is enough;
• life interests and practical alternatives for providing for a surviving spouse;
• why family trust deeds and control mechanisms need to be reviewed;
• superannuation death benefit nominations, including SMSF issues;
• conflict risks where superannuation does not pass through the estate;
• why powers of attorney need to align with the broader estate plan; and
• how defensive estate planning can reduce the risk of future disputes.

A practical discussion for people in blended families, second relationships, stepfamilies and family groups who want to protect their estate planning intentions while reducing the risk of conflict after death.

For advice on blended family estate planning, wills, trusts, superannuation nominations, powers of attorney or estate disputes, contact Velocity Legal’s Wills, Trusts & Estates team.