7 Common Legal Issues Businesses Regularly Face

As a business owner, you must have noticed the increase in class actions and litigations against companies over the past few years. Whilst this problem doesn’t only affect Australia, without the right type of risk mitigation strategies in place, your organisation can easily become a victim of these lawsuits. So, to help you avoid these legal pitfalls, here are seven common issues that SMEs often face in Australia and the strategies to reduce your company’s risks.

1.    Unhappy customers

Faulty products, inadequate services or incorrect advice can result in class action suits, and individuals can also sue your business under the Fair Trading Act. The way to reduce these risks are to always be proactive as far as customer complaints are concerned. Develop an experienced customer support team, educate your employees about customer’s rights and consumer law, and ensure that your business deals fairly with customers. In addition, be quick to recall faulty products and address these concerns with your customers.

Having a dedicated social media manager to look after your social profiles is also very important, especially if you get lots of reviews on these channels. Quickly responding to every comment (whether it be good or bad) shows you care about customer service and will let you address issues straight away.

2.    Incorrect business structure

In Australia there are four legal structures for businesses: sole traders, partnerships, trusts and companies. Selecting the wrong structure can place your livelihood and personal assets in jeopardy. Obtaining advice on which type of structure is suitable for your business will reduce your personal risk under these circumstances. Engaging a reputable business lawyer is advisable and the costs involved could save you a lot of money in the long run.

No one business solution is right for everyone so it’s important you get a customised plan that works for you.

3.    Bullying & sexual harassment

Business owners must ensure that their employees are educated about bullying and sexual harassment in the workplace. Any such instances must be dealt with immediately and reported to the relevant authorities – if it’s believed that a criminal offence has taken place.

More and more people are realising what is unacceptable behaviour, but that doesn’t mean you can sit back and do nothing. Education is the key, as well as fostering a workplace culture that does not tolerate this type of behaviour. If you make it clear what is right then even new staff will come in and act appropriately.

4.    Unfair dismissals

If an employee believes they have been dismissed unfairly, they can make an application to the Fair Work Commission for reinstatement or compensation. Unfair dismissal can result in financial penalties and prosecution to the employer. To reduce these risks, your company needs to have processes in place to ensure that all dismissals are legitimate, and to deal with any unfair dismissal cases if they occur.

5.    Copyright & patents

Whether it’s a copyright or patent violation, penalties can be extremely high if you breach either of these laws. To reduce these risks, you need to research all patents that could have an impact on your product development, as well as ensuring that all photos and web copy used by your business are original.

There are some fair exemptions when it comes to copyright law. Parody, news reporting, scholarships and others are all safe from copyright law. It’s important to note that these will unlikely protect businesses so be sure to follow the legal guidelines appropriately.

6.    Workplace discrimination

Discrimination based on age, gender or race is illegal in Australia, so you must have processes in place to avoid these situations occurring. If an accusation is made against your company, you must also have processes in place to steer your way through the legal ramifications. Providing education concerning discrimination in the workplace is also an effective strategy.

7.    Noncompliance with Privacy Act

With the increasing reliance on the internet and the collection of so much customer data, privacy has become an important topic. There are now laws in place to protect customer privacy and breaches can be very costly. As a business owner, you must be aware of these privacy laws and ensure that all business operations are within these laws.

If you are concerned about your business’s level of risk to these and other legal lawsuits, your best strategy is to consult an experienced legal expert. They can provide actionable advice to make sure your business stays safe from legal issues.

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