The Workers Compensation Policy - Essay Example

Essay, Law Q1 The main issue in this case is whether Gino can file a case to claim compensation after breaking his leg while at work under the workers compensation policy. Compensation issue Under the common law and Corporations Act 2001 workers are entitled to compensation from injuries resulting from injuries related to work (Butt, pg.56). This is an enterprise that has been registered by the name G&M Constructions as such falls under the workers compensation policy defined in the Workers Compensation Act (WCA) 1987. Under the policy, an employer is an institution that employs on the basis of full time, casual or hire whether orally or written contract and upon a workplace injury of an employee, the employer is required to compensate all employees with weekly benefits, medical and hospital expenses and rehabilitation services. (Waylexson Pty Ltd v Clarke). The standard compensation policy coverage provides medical benefits to employees that are injured in the course of employment as provided Workplace Injury Management Act 1998 (WIM Act). Depending on the job functions, various workers under the policy are assigned certain classifications which determine the premiums paid for compensations. The policy will accord compensation to workers regardless of fault by negligence. The state laws regarding workers compensation provides benefits such as medical coverage and treatment, disability whether permanent or temporary, vocational rehabilitation and death benefits (Hargreaves v Telstra Corporation Limited). The policy also covers bodily injuries by accident or injuries resulting from disease that occur within the policy period (Deneault & Mullins, pg.89). These diseases must however be accelerated by the conditions in the workplace for it to be covered. The compensation policy may however not apply where willful misconduct is committed, an employee is employed in violation of the law, safety and health regulations are not observed, and coercion and discrimination against employees are done violating the compensation policy. The manager breaks his leg whilst at work rendering he incapacitated. This constituted further employment as a replacement to ensure continued operations in the enterprise. Despite the fact that Gino is the manager and owns the business, he can claim compensation under the workers compensation policy or the Corporations Act 2001. This is to ensure that he attains compensation for his broken leg from the company which he suffered at work in the course of his duties (Denision, pg.102). This is possible if he can prove that he was a full time employee in the organization and suffered harm resulting from execution of his duties and if he observed due diligence and care in carrying out his duties. The employer accords him partial disability compensation for his injured leg under Workplace Injury Management Act 1998 (WIM Act). Q2 The accounts and tax returns for G&M Constructions have become excessively complex and necessitated the need for an accountant trained in that field to prepare the returns. The wife who is not well acquainted with the accounting procedures cannot cope with the necessary documentation due to lack of expertise as the business grows. The accountant now versed with the knowledge and having studied the financial statements of this sole proprietor suggests that he should incorporate (Derek, pg.45). This means that he should actually convert this sole enterprise into a limited company which would ensure that the firm has limited liability. Gino and Marcia question whether this limited liability means that they will never have to be at risk of paying the obligations of their business or even whether they will have to issue shares to other people who might buy them from then stock exchange and then share profits with them. Nature of limited liability companies Based on Associations Incorporation Act 2009 and the Partnerships Act 1982, it is true that Gino and Marcia upon incorporation into a limited liability company will not have to be at risk of meeting the obligations of their business. Incorporation of a company involves various steps such as preparation of proper financial and audited statements and memorandum of associations and articles of associations (Derek, pg.56). Several meetings are held by the leaders of the firm to approve the incorporations and important leaders such as the first directors, secretary and advisors are selected. The money held in stock is the then converted to shares and each shareholder is documented with the shares held. An institution is then registered with the registrar of companies when the proper documents are provided (Greenleaf & Spears, pg.146). The Partnership Act, 1892 (Cap 29) provides that a company can be limited by shares or by guarantee. In this case G&M Construction firm will be a company limited by shares upon incorporation and this means that they will have to issue shares to other people who might buy them from then stock exchange and then share profits with them (Adam vs. Newbigging) . A company limited by share is one whose liabilities are limited to the shares held in stock by the company (Comrass & Famcombe, pg.84). In this case, the debts and the liabilities of the firm are those limited to the shares that the firm holds. If the liabilities exceed the shares held, the owners of the company cannot meet them with their own assets nor can they be held liable for any transactions accruing thereafter like they had been as sole proprietors. Under the Company Act, a limited liability company that has been registered has varies connotation and characteristics which define them and gives the true nature of limited liability institutions (Dignam & Johny, pg.97). The nature of limited companies by Company law is that they can sue and be sued (Hickman v Kent and are separate from the members (Salomon v A Salomon and Co Ltd). This means that upon incorporation, the company G&M Constructions is different from Gino and Marcia and therefore he cannot be called upon to meet obligations that belong to the firm despite it being his. The company can sue him for mismanagement despite the fact that he began it because it is separate from the owner and has its own name. Secondly, the nature of the company is that is has a seal which is uses to authorize transactions with its own name because it is an entity, a person (Greenleaf & Spears, pg.134). Gino being a shareholder and the originator cannot give appraisals by himself and by word and claim that he has authorized transactions on behalf of the company. This would be a violation of laws regarding companies because it being an institution and its own person should carry out transactions separate from the owner and authorized through the seal. Thirdly, a limited liability company can own property. Property and assets that a company acquires upon incorporation do not belong to a particular individual in the firm and upon liquidation, these assets will be first used to settle any pending debts and the remainder is allocated to the shareholders based on their holding ratio (Hudson, pg.23). Accounted assets held by the firm are separated from the owners and upon winding up, they are shared or incase a member is voted-out; he cannot claim the asset because he no longer owns them (DHN Food Distributors Ltd v Tower Hamlets London Borough Council 1976). The assets held by G&M Construction, whether fixed or current solely and exclusively belong to the firm and even Gino or his wife have no claim over them upon incorporation. Fourthly, a company has perpetual succession (Bhullar v Bhullar) without winding up upon death or bankruptcy of a member (Harris, Hargovan & Adams, pg.63). In case one shareholder die, a limited liability company does not necessarily need to wind up like in the case of partnerships which must dissolve upon bankruptcy or death because they cease to exist. Fourthly, it can transfer property subject to some restriction as opposed to a partnership which cannot exist in the absence of a member and cannot transfer property based on their unlimited liability nature. Risks The Partnerships Act 1892 and the Corporations Act 2001, provide various risks that G&M Constructions might have among them, the high cost of conversion (Jain, pg.54). The act of registering the company entails various processes which incur many legal and administration costs which can be a setback to the initialization of the enterprise. The shares sold at the stock exchange may have a low par value and their calls may be minute. Besides this, once registered the limited liability company is required by law to prepare audited financial statements annually that are availed to the public for accountability in reference to Yenidje Tobacco Co. Ltd. This procedure is expensive and requires professionalism and due diligence where the cost for paying professionals is usually high (Jain, pg. 98). Nevertheless, a company may incur losses up to the point of winding up and the shareholders despite being owners have no claims on the assets even when they have vested in the company (Borne vs. Borne). The management of the firm can be sued upon misappropriation of funds, mismanagement or unaccountability even when it constitutes the owners because a company is a separate entity and can sue and be sued in its own name. There are different types of companies that can be formed relating to a company limited by guarantee or that limited by shares (James, pg.76). He cannot form a partnership whose liabilities are unlimited and has various disadvantages based of share transfer, succession and dissolution. His best option would be to convert to a company limited by shares where he would float shares to the public through the stock exchange to obtain more capital and thus reduce his overall disadvantages using the rule in Cox vs. Hickman. Q3 The case in this question relates to whether to involve their children in the business after incorporation and the best choice for decision making. These interests and involvement may be achieved through making them shareholders or through the management process (Keane & Ronan, pg.167). Company structure Margaret is well equipped with the management process because she has always been in contact with the construction enterprise and has performed various minor tasks on the building sites and office administration. Due to her vast knowledge and experience, Gino and Marcia need to consider her to make decisions in the company if each of the three children is given an interest in the company. When there are five people with interests in the company, Gino and Marcia may be part of the directors or the top management level of the company (Comrass & Famcombe, pg.90). Margaret may be part of the middle management due to her partial play and experience in the construction business while Nancy and Leon may be part of the lower level operation due to their inexperience of the building work. Any organization has various levels, organs and operations (Keane & Ronan, pg.176). The top management is composed of the directors and the CEO who in this case will be Gino and his wife Marcia. Their main role is to make strategic decisions and manage the company using the information provided by the middle manager in reference to Fisher and Sons case. (McConville, pg.151). They are the sole decision makers with the aid of decision and management information systems. The directors of the firm act on behalf of the shareholders and report to them regarding company control and growth. The middle management reports to the top management and forms basic departmental heads, which are responsible for the various departments in the institution such as sales and marketing, accounting and finance, human resource and research and extensions (Taylor, pg. 79). These managers ensure that the various departments in the firm are well coordinated and work efficiently. The lower level management operates within individual units at the operational level of the firm and relate to cheerleaders and team heads (McConville, pg.155). They motivate their colleagues and report to the middle management on any inconveniences and problems encountered at work. Other organs operational in the company relate to accountants, cleaning staff, auditors, information technology experts and advisors who ensure the proper running of the firm. In my opinion, an internal structure of the company that ensures that Gino and Marcia retain control of the affairs of the enterprise would be instituting various levels of management and departments in the firm and ensuring that the several mangers report to them (Sec 3 (1)). They should be the overall supervisors in all the departments such that any decision made has to be first approved by them. In this case, they ensure that they are in total control and that activities being conducted are well known to them (Pedlo, pg.132). The Partnerships Act (cap 29) maintains that any challenges that the firm faces are known in advance and can be controlled. They need to institute a top management level, middle management and low level management which are wired together to ensure the overall running of the institution through provision of proper internal control and information systems to coordinate proper exchange of information (Rose, pg.123). Besides this, the organization needs to provide proper communication and motivation mechanisms that ensure that information flow to the top management is good and promote proper relationships at work to avoid breakdowns of activities (Bourhill vs. Young) Q4 In this case, Gino intents to know his position after being voted out based on whether he can obtain and sell the tools and equipment due to the fact the company owes its success to him. The issue is also based on whether he can be voted out by his children. Voted out Penalty provisions were introduced in the Corporations Law in 1992 to ensure civil penalties against company directors who breached the duty of due diligence and care. Based on the rulings of John Phillip Donovan vs. ASIC 1998, shareholders in the company can indeed choose the management to represent them. In the case of mismanagement and unaccountability in a company, a manager holding a top position can be voted-out and substituted. In this case, Gino can be voted out because his decisions are not viable and not geared towards the goals of the organization (s 33). Secondly, he can indeed be voted out due to time mismanagement where he decides to spend his time at home instead of at work. This constitutes lack of professionalism and conflict of interests on the part of Gino. Due to his age, the children require him to retire and this could be a sound decision based on their ability to run the firm using the vast knowledge and experience they have garnered over the years under the Act. Tools and equipment Under the Corporation Act 1992, a company is a legal entity separate from its members. This is endorsed by the ruling in Solomon VS. Solomon. It is true that upon incorporation, Gino and his wife had acquired tools and equipment which upon conversion became assets to the company valued at the market price. Once he is voted out, Gino cannot sell the tools and equipment that he acquired before the firm was converted into a company (Solomon vs. Solomon 1897). This is because these items do not belong to him but to the company. The nature of a company is that it is a legal person separate from its owners and that it can acquire and possess property. A company can also transfer property (Garner vs. Murray). Upon incorporation, the assets owned by individuals are valued and converted to be owned by the company where ownership is transferred legally to belong solely to the company. These tools are valued annually and appear in the books of accounts and financial statements. No individual, director or member can claim the assets because a company is a legal person separate from its members and members have no interest on the property of the company. Macaura v Northern Assurance Co Ltd (1925) AC 619 (Taylor, pg. 51). Therefore despite having bought the tools and equipment before conversion, Gino cannot sell these same tools after incorporation because they belong to the company having been transferred from his possession to the company’s name at the time of incorporation. However, if the tools have been authorized to be sold and disposed by the company, he can proceed to sell them under seal (Petrofina vs. Martin). In case he sells the tools and equipment, it is a breach of company law and G&M Constructions can sue him in their name and obtain compensation or damages. Works cited Butt Peter. Butterworths concise Australian legal dictionary. Chatswood, N.S.W. LexisNexis Butterworths, 2004. Print. Comrass Roger & Famcombe Martin. Atomic reforming the business landscape into new structures for tomorrows. Chichester: Capstone. 2004. Print. Deneault Alain& Mullins Rhonda. Paul martin and companies: sixty theses on a legal nature of tax havens. Vancouver: Talon books. 2006. Print. Denision Daniel. 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