When operating a successful business that hires out promotional models to clients for different events, you should be mindful of several legal issues. We set out below what you need to know to ensure your business is legally compliant and that you understand your obligations.
Firstly, do you have the right business structure for what you wish to achieve? You may want to operate as a sole trader, which is a straightforward and cost-effective structure. However, you will have personal liability for the business meaning that if your business owes any debts, your personal assets are at risk.
If you wish to grow your business, you may consider an alternative structure such as a company or a trust with a corporate trustee. It is important first to speak with your accountant about the tax implications of changing structures, and determining what may be the best solution for you and your business.
Terms and Conditions
As you are going to be providing services to clients by hiring out promotional models, you are going to need terms and conditions between your business and your clients and between your business and your models.
Depending on how you pay your models and the services they provide, they may be either an employee or a contractor. It’s necessary that you understand your legal responsibilities if your models are employees. It is the law, and not your business, that determines their classification. You can take the test at the Australian Taxation Office’s website to see if they are an employee or contractor, and for you to better understand your tax and superannuation obligations.
Once you have determined their classification, you will then need either an Employment Agreement or a Contractor’s Agreement. This sets out the following:
- Their job description or the services they provide;
- How they will be paid;
- What entitlements they receive (if an employee);
- The term of their contract or employment; and
- Whether there will be any non-compete or restraint of trade clauses.
You will also need to have an Employee or Contractors Handbook that covers all of the key human resource policies essential to protecting your business. It will typically address:
- Dress code;
- Social media use;
- Bullying, discrimination and harassment policies;
- Occupational health and safety; and
- Complaints and dispute resolution procedures.
It will clearly set out what your employees or contractors can and can’t do while working for you.
Once you have finalised the agreements between your business and your models, you will need a Labour Hire Agreement between your business and your clients setting out the following:
- Term of the arrangement;
- Services the models will provide;
- Fees that you will be paid;
- Your client’s obligations; and
- Warranties and indemnities to protect your business.
It will also include a clear dispute resolution and termination procedure and will cover whether or not this labour hire is an exclusive arrangement. This agreement will ensure you get paid appropriately and will allow you to take legal action if your client does not meet their end of the deal.
- What personal information your business collects;
- How your business uses the information; and
Under what circumstances the information will be disclosed to third parties, e.g. for marketing purposes.
Once you have addressed each of these legal issues, you will be better placed to begin operating a successful promotional models agency. If you have questions about the right structure for your business or assistance with drafting your agency’s agreements, let our business lawyers know on 1300 544 755.