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In October 2016, the Prime Minister commissioned Matthew Taylor, a former policy chief to Tony Blair, to look at how employment practices need to change in order to keep pace with modern business needs.
The Review, entitled 'Good Work', has now been published and makes many recommendations. These focus broadly on three challenges:
The Review supports maintaining the flexible and adaptable approach to labour market regulation that has benefited the UK so far, while focusing more closely on the quality of work as well as the number of people employed.
Whilst some of the recommendations are very specific and could easily be implemented, others are broader, although based on clear principles, and will require further consultation and consideration before implementation. Some are long term and strategic, indicating policy aims but not prescribing in detail how to achieve them.
These are just some of the recommendations contained in the report:
There are further recommendations, including on the rights of agency workers, holiday pay, the rights of workers on long-term sickness absence, ET powers to impose penalties, Information and Consultation arrangements and the enforcement powers of HM Revenue and Customs and the Department for Business, Energy and Industrial Strategy.
When you discover that a business has breached your patent, what should you do?
The answer to this question has two elements. The first is based on what you can do in law and the second is based on business strategy.
Firstly, before picking a fight with anyone over such a matter, it is important to make sure that you are on firm ground, so do your research carefully. Make sure there is a real infringement and that the infringement is in a market in which your patent applies.
In law, if a business infringes a patent, it is liable to pay damages to the patent owner, which will be based on the loss suffered by the owner. In theory, losses suffered will be compensated for but, in practice, allowing an infringement to continue while you negotiate with (or sue) the infringing business is a high-risk strategy. In most cases, especially where the effect of the patent infringement is severe (for example, where its use directly affects your sales), it is likely that you should send a legal notice to the offending business requiring it to cease the infringement immediately.
This will normally produce one of the following responses:
1. The infringer will agree, cease the infringement and (hopefully) enter into discussions with you about the appropriate payment to make to you by way of compensation. Regrettably, this is not the most common response.
2. The notice will be ignored. In this case, the infringer either hopes that your letter is a bluff and you will not take legal proceedings or believes that it has not infringed your patent and would win that argument were the matter to come to court. Under these circumstances, it is doubly important to do your homework and make sure of your position as legal proceedings are likely to be necessary.
3. Your notice will be met with a denial from the infringer (and occasionally a counter-claim that one of your products infringes its patent). In this case, there is a fight there if you want it (or sometimes even if you don’t).
No matter what the response, in the majority of cases the most satisfactory outcome will usually result from negotiation with the benefit of expert advice, rather than court proceedings. Commercial considerations must be kept at the forefront and it is normally advisable to leave the door open to a negotiated settlement. This is especially so as one of the common outcomes of such disputes is the creation of a licensing agreement, which will require specialist legal advice.
See guidance from the UKIPO.
Businesses that deal with members of the public are reminded that the Consumer Rights Act 2015, which received the Royal Assent on 26 March, becomes law on 1 October 2015. The Act replaces a number of laws with regard to business-to-consumer transactions, including the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982, and is designed to offer consumers comprehensive protection and enhanced rights of redress.
The Act is divided into three parts. Part One deals with consumer contracts for goods, digital content and services, Part Two deals with unfair contract terms and Part Three covers miscellaneous and general provisions, including enforcement powers.
Businesses affected by the new legislation can access guidance designed to enable them to comply with its requirements by the time it comes into force via the Trading Standards Institute 'Business Companion'.
In addition, the Competition and Markets Authority (CMA) has published new guidance (144 pages) on the unfair contract terms provisions, to give businesses a comprehensive guide to complying with their obligations under Part Two of the Act. This covers what makes terms and notices unfair, the likely consequences of using unfair wording in contracts, and gives tips on how to ensure terms and notices are fair and easy to understand. In addition, the CMA has produced further guidance including a flow chart providing an overview of the unfair contract terms provisions, aimed at helping traders decide whether or not a particular contract term is fair, a two-page summary of what businesses need to know about unfair contract terms, and a 28-page guide entitled 'Unfair contract terms explained'.
The various guidance documents can all be accessed here.
Since 1 October 2015, under changes introduced by the Consumer Rights Act 2015, it has been compulsory for most businesses to offer Alternative Dispute Resolution (ADR) to their customers if a complaint arises between them which cannot be settled by negotiation.
ADR is a process designed to resolve complaints without the need to resort to legal proceedings. It is less formal, and normally faster and less costly, than legal proceedings.
The Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 require a business which finds itself in this situation to inform its customer by a 'durable' medium (i.e. in writing or by fax or email) that it cannot settle the complaint, and to inform the customer of the web address of a provider of ADR services competent to deal with the complaint and whether or not the business is obliged to, or will, participate in an ADR process operated by that organisation.
In 2016 it will become compulsory for all businesses that sell goods or services online must put on their website a link to the EU Commission's Online Dispute Resolution platform.
Since the abolition of the Default Retirement Age (DRA), it is no longer permissible for an employer to dismiss an older worker on the ground of retirement unless this can be objectively justified under the Equality Act 2010.
This does not mean that employees will never be able to retire, but that an employer cannot lawfully force an employee to retire at a set age unless the age can be objectively justified under the Equality Act. If this is not possible, the employer faces the double threat of a claim for age discrimination and for unfair dismissal.
Employers therefore have two options. These are:
For a set retirement age to be objectively justified, its use must be a proportionate means of achieving a legitimate aim. This is not an easy test to pass, and businesses who do wish to have in place an EJRA are advised to seek legal advice before choosing this option. An EJRA will normally be appropriate for occupations where retirement at a particular age can be justified on health and safety grounds – for example for airline pilots or fire fighters. Employers must provide evidence that the chosen EJRA is necessary – not based merely on assumptions – and be able to demonstrate that no alternative or less discriminatory action could achieve the same result. Employers who have chosen to use an EJRA must follow a fair procedure, giving the employee adequate notice of their impending retirement and, if circumstances permit, consider any request to work beyond the EJRA as an exception to the normal policy. However, it is important to have procedures in place to ensure consistency of treatment of employees who request to stay on.
Older employees can retire voluntarily at a time of their choosing and draw any occupational pension to which they are entitled under the rules of the scheme. If an employee has given formal notice that they wish to retire, the employer is under no obligation to permit them to withdraw their notice should they change their mind. If, however, an employee has only told their employer that they plan to retire, they can change their mind before formal notice is given.
Great care must be taken if an older employee is performing badly. Procedures for dealing with performance issues must be fair and applied consistently across all age groups. To avoid a claim of unfair dismissal, any dismissal must be for one of the potentially fair reasons for dismissal under the Employment Rights Act 1996. Care must also be taken that any decisions taken by the employer do not discriminate against an employee who has a condition that constitutes a disability under the Equality Act. In such cases, the employer has a duty to make reasonable adjustments to remove any barriers to the employee’s performance.
Group risk insured benefits are exempt from the principle of equal treatment on the grounds of age, so employers who provide such benefits can cease to provide or offer them to employees who reach the State Pension Age, even if they continue to work beyond that age. The age at which group risk insured benefits can be withdrawn will increase in line with increases in the State Pension Age.
In addition, under the pensions auto-enrolment rules, employers are not obliged to enrol workers who have reached the State Pension Age.
Whilst the abolition of the DRA has given employees greater choice and flexibility over when to retire, the move has been criticised as having a negative impact on an employer’s ability to plan workforce requirements to meet future business needs.
The Advisory, Conciliation and Arbitration Service has published guidance for employers, entitled ‘Working Without the Default Retirement Age’, which contains useful advice on a possible framework for workplace discussions that will help identify an employee’s future aims, and gives examples of ways of raising the issue of retirement without asking questions that could be seen as discriminatory.
On 1 October 2011, changes to the Housing Grants, Construction and Regeneration Act 1996 (normally called the Construction Act) came into force. These apply to all relevant contracts entered into from that date.
The changes include:
The changes are significant and raise the possibility that disputes may increase because verbal contracts or variations of contracts are alleged to have been made. For contractors, the abolition of ‘pay when certified’ clauses may lead to significant financial issues. In addition, standard documentation will need to be revised. The Joint Contracts Tribunal will be issuing new standard documentation to accommodate the changes.
The Data Protection Act 1998 (DPA) requires data controllers to take appropriate technical and organisational measures to prevent unauthorised or unlawful processing of personal data and against accidental loss or destruction of, or damage to, personal data.
Where an employer allows workers to use their own personal devices, such as laptops, smartphones and tablet computers, this raises a number of data protection concerns. The trend, commonly known as ‘bring your own device’ or BYOD, can mean that workers’ own devices are used to access and store corporate information, including personal data. It is therefore important for data controllers to remember that they have a duty to remain in control of the personal data for which they are responsible, regardless of who owns the device used to carry out the processing.
The Information Commissioner’s Office has produced comprehensive guidance, entitled ‘Bring your own device (BYOD)’, to help data controllers comply with their duties in this respect. This recommends having a BYOD policy covering the types of personal data you are processing and the devices, including ownership, on which these will be held. The policy should be clearly understood by users connecting their own devices to your IT systems and regular checks should be carried out to ensure compliance. When drawing up the policy, the data controller will need to assess:
• what type of data is held;
• where data may be stored;
• how data is transferred;
• the potential for data leakage;
• blurring of personal and business use;
• the device’s security capacities;
• what to do if the person who owns the device leaves your employment; and
• how to deal with the loss, theft, failure and support of a device.
The guidance gives tips on each of these areas, including the use of passwords, data encryption and other security measures that may be introduced, such as ensuring that access to the device is locked or data automatically deleted if an incorrect password is repeatedly input and the facility to locate devices remotely and to delete data on demand.
There is also a section on making sure the BYOD policy facilitates compliance with other aspects of the DPA.
The guidance can be found here.
The Information Commissioner's best practice guide for landlords - written to to assist them in complying with the Data Protection Act can be downloaded from the Information Commissioner’s website. The guide includes a checklist which is intended to assist landlords in ensuring that the data they hold on their tenants is only given out to third parties in accordance with the Act. It also has a section on frequently asked questions on data protection matters.
You may have come across advertisements which make forming a company sound very easy, but before you go ahead there are some serious issues to think through. If you have decided that a company is the best vehicle for your new venture then here is a checklist:
Decide what to include in the Articles of Association and Memorandum of Incorporation. These documents lay down how the company is to be structured and what its operating procedures will be. Include the names of the director(s) and company secretary (if necessary). Include any positions that have special names or rights (e.g. managing director) and any specific limitations on directors;
Determine who will own the shares and in what proportions. Changing this later on is fraught with potential tax traps;
Check that any proposed name for the company is allowable;
If you own trademarks you need to decide whether to keep them or sell or lease them to the company;
If the company will use a property owned by a director you need to decide whether or not you should have a lease. There are many tax considerations attaching to this, so take advice before you act;
Cars can be a major source of friction is small businesses. Take advice on whether cars should be owned by the company or kept out, how they are financed, insured and how you are going to meet travelling expenses;
Give thought to what the ‘corporate look’ is going to be. If you plan to use a trade name, do a search to make sure the company name AND trade name can be used without legal ramifications. Companies House produce a free guidance on many company issues including basic guidance on the Companies Act 2006;
Your stationery, website and emails must show your registered number and other details. Adding your VAT number is usually a good idea (particularly if stationery will be used for invoices) so you will need to sort out these details before you can get your stationery printed. There is helpful information in the guidance issued by Companies House on company formation;
If your turnover is omore than the VAT limit you must register for VAT. You must also tell HM Revenue and Customs (HMRC) that the company is trading. Failure to do so within the time limit may lead to a fine. Even if you do not need an audit, you will probably have to appoint accountants to make sure your accounts comply with the Companies Act ;
By law employers must have employers’ liability insurance. However, very small companies which employ only their majority shareholder are exempt from the requirement to carry employers’ liability compulsory insurance. This has brought them into line with sole traders who do not employ anyone else;
Also, contact your local HMRC office for the employer's PAYE pack. The HMRC website has helpful leaflets;
Normally, you will not be able to open a corporate bank account until your bank has seen the company’s certificate of incorporation. If you need borrowing, consider what security can be offered and who will give guarantees if necessary;
Employees have numerous rights and it is important to know which laws apply to you and to be ready for forthcoming legislation. For example, all employees are entitled to a written statement of their terms of employment and almost all to have a pension scheme provided for them under the 'Auto-enrolment' scheme.
You cannot incorporate a company using any name you like. Some names are prohibited (for example, those which suggest a connection with the Government or the Crown) and names will not be allowed if they are too similar to the names of existing companies.
The list of restricted names, which surprisingly allows the use of names such as 'National', 'United Kingdom', 'Register' and 'Authority' can be seen here.
Companies House provides guidance on the rules for choosing names for new companies. Don't forget to check that the associated Internet domain name is available as well. Different rules entirely apply to the registration of domains on the Internet and the regulations also vary from country to country. For example, some countries will not allow the country's domain suffix to be registered to a domain unless there is an active trade mark and/or trading presence in the country.
The Companies Act 2006 became fully effective from October 1st 2009. It is the principal source of law relating to the conduct of companies incorporated in England and Wales.
Companies House provides useful information on the Act on its website.
In 2015, Companies House launched a project to make corporate information accessible free. This includes:
This is accessible here.
The Institute of Directors has published useful guidance on the rights and responsibilities of directors.
Businesses that deal with the public are reminded that legislation will come into effect soon to give consumers better protection under the law than they currently have.
The Consumer Rights Act 2015 received the Royal Assent on 26 March and became law on 1 October 2015. It applies to virtually all contracts between traders and consumers for the sale of goods and services and the provision of digital content. The Act is extensive – it runs to more than 100 clauses and contains ten schedules – and is designed to offer consumers comprehensive protection and enhanced rights of redress.
Businesses affected by the new legislation can access guidance designed to enable them to comply with its requirements via the Trading Standards Institute 'Business Companion'.
The Act repeals the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982.
A handbook produced by the Health and Safety Executive (HSE) outlines the responsibilities of both the contractor and the client in situations in which work is carried out by contractors rather then employees. It does not apply to circumstances in which the Construction (Design and Management) Regulations apply or to work done by agency workers.
The leaflet begins from the premise that 'all parties must co-operate to ensure that health and safety is properly managed'.
Under health and safety law, both the contractor and the client have responsibilities. The client must identify all aspects of the job that they want the contractor to do and then carry out a risk assessment. They must satisfy themselves that the contractor they have chosen is competent to carry out the job without unacceptable health and safety risks and must explain their procedures and systems to the contractor sufficiently well for them to understand them and act in accordance with them.
The risk assessment should be carried out with the contractor, who will normally be responsible in the same way as the client for any sub-contractors, who should also be part of any relevant risk assessment.
Clients, contractors and sub-contractors must keep their employees properly briefed on any matters that may affect their health and safety.
The guide is another illustration of the Government's intention to improve compliance with health and safety regulations. What is most problematic here is the need for the client to assess the competence of the contractor, which is a potential source of problems for many firms. We can advise you on any legal issues arising out of health and safety matters.
Recent case law has made firms responsible for a number of actions taken by subcontractors, especially where they are under the direct control of the ultimate employer. Just because a person is employed directly by another business they will not necessarily be their responsibility alone.
In April 2008, the Corporate Manslaughter and Corporate Homicide Act 2007 came into effect, which has profound implications for businesses. The Ministry of Justice has issued a comprehensive guide.
As of November 2014, nine prosecutions had been commenced under the Act - all against smaller companies - and successful prosecutions obtained in all cases so far decided. Fines of up to £500,000 have also been imposed.
Since the Companies Act 2006 came into effect, the incorporation of a company has been straightforward as the Act provides an easy to use set of model articles of incorporation.
However, before you rush off and buy an ‘off the shelf’ company, pause to consider this – it is usually much more sensible to start with the right articles than to amend ‘standard’ articles to say what you mean later.
Articles tend to be of little importance to directors and shareholders until the company has ‘grown up’ a bit – by which time vested interests can be strong and changes to the internal regulations, such as alteration of share capital rights and so on, can be difficult and full of hidden pitfalls. These sorts of issues can prove a disaster when there are discussions ongoing relating to the retirement of director-shareholders or a proposed purchase of the business or of a shareholding in it.
With businesses becoming insolvent in large numbers, opportunities abound to acquire assets from their administrators. However, the low prices sought for the assets are due, at least in part, to the additional risk to the purchaser.
Here are some of the main issues to be aware of when buying property from an administrator:
• Vacant possession of a property will not normally be guaranteed and the cost of clearance of items left in the building should be borne in mind;
• No guarantees or warranties regarding the property will be given – undertaking proper due diligence to reduce risks is advisable;
• There may be items that appear to be a part of the property being sold which do not in fact belong to the insolvent business; and
• The administrator acts only as agent for the insolvent company and will accept no liability for errors or omissions.
Buying a property from an administrator is a risky business. We can help you to control the legal risks.
A recent YouGov survey showed that 47 per cent of all UK employees now use their smartphone, tablet PC or other portable device for work purposes and the Information Commissioner’s Office (ICO) has now issued a warning that organisations are failing to update their data protection policies to account for this growing trend.
The warning comes after the Royal Veterinary College was found to have breached the Data Protection Act 1998 when a member of staff lost a camera that held a memory card containing the passport images of six job applicants. It emerged that the College had no guidance in place explaining how to safeguard personal information stored on personal devices for work purposes.
ICO Head of Enforcement Stephen Eckersley said, “Organisations must be aware of how people are now storing and using personal information for work and the Royal Veterinary College failed to do this. It is clear that more and more people are now using a personal device, particularly their mobile phones and tablets, for work purposes so it is crucial employers are providing guidance and training to staff which covers this use.”
The ICO has made available guidance on this subject, entitled ‘Bring Your Own Device (BYOD)’. This highlights some of the key issues organisations need to be aware of when allowing staff to use personal devices for work. Recommendations include the following:
The Government provides guidance for businesses on complying with the Bribery Act 2010, which came into force on 1 July 2011. The Act was originally scheduled to take effect in April 2011, but its implementation was delayed to allow the final version of the guidance to be completed.
Section 7 of the Act makes it an offence for a commercial organisation to fail to prevent bribery. A business can provide a defence by showing that it had in place adequate procedures to prevent bribery from taking place, however, and the guidance details the approach that should be taken when implementing such procedures. The overriding point is that these should be proportionate in view of the likelihood of bribery occurring, which will depend on the size of the business and the countries and markets in which it operates. Although the principles remain similar to those in the draft guidance, published in September 2010, the advice in the final version is more detailed.
Section 14 of the Act provides that where an offence is committed with the consent or connivance of a senior officer of an organisation, that person (as well as the body corporate or partnership) is guilty of the offence and liable to be proceeded against and punished accordingly.
Under Section 11 of the Act, the maximum penalty for individuals is 10 years’ imprisonment or an unlimited fine, or both. The maximum penalty for commercial organisations is an unlimited fine.
The guidance includes case studies to illustrate what approach businesses might take in certain situations and can be found here. There is also a ‘quick start guide’ to the Act.
The first prosecutions under the Act were brought in 2012. In both cases, the prosecutions involved corruption of public officials. in 2014, the first successful prosecution was brought relating to offences committed outside the UK.
The long-running series of disputes between employers in the hospitality industry and HM Revenue and Customs (HMRC) concerning the taxation of employees’ tips and their National Insurance (NI) status seems to have been concluded by the issue of guidance on the operation of ‘troncs’.
HMRC have, in effect, accepted the industry’s contentions regarding these. The following points have been clarified:
From 1 October 2009, tips have longer been counted as part of the National Minimum Wage, regardless of how they are paid.
Most business people know that for family businesses there are generous Inheritance Tax (IHT) reliefs, which generally operate to make assets used in the business exempt or partially exempt from IHT. The reliefs take various forms but have been collectively known as Business Property Relief (BPR), although HM Revenue and Customs (HMRC) have changed the name to 'Business Relief'.
Consider, however, the common situation whereby a business is owned by a small number of people and, in order to preserve the business in the event of the death of a shareholder before retirement, an agreement is made whereby on death the deceased’s personal representatives are required to sell their shareholding to the remaining shareholders, who are required to buy it. Such arrangements are normally funded by writing life assurance policies to cover the purchase.
Regrettably, such an arrangement will prevent the operation of BPR. This is because HMRC regard such an arrangement as a binding contract for sale on death and where such a binding contract exists, BPR is not given. This problem can be avoided by granting each side the appropriate option, rather than making the requirement to buy the shares contractual.
BPR is also not given on family company shares if the company is wholly or mainly engaged in dealing in shares or securities, dealing in land or buildings or making or holding investments. The normal practice of HMRC is to define ‘mainly’ as being ‘more than fifty per cent’. The fifty per cent test is applied to all of:
In other words, a ‘whole business’ view has to be taken. Needless to say, this has led to much dispute over the years.
Lastly, a business which is too ‘cash rich’ can also face a denial of BPR insofar as it applies to the cash on the balance sheet at the date of death if this is in excess of the amount required for the purposes of the company’s business. Cash in excess of that required for the company’s future business is ‘excepted’ from eligibility for BPR. In one case, the shareholders of a company which had £450,000 in its balance sheet, but which was reckoned by the tax inspector to need only £150,000, faced an IHT charge on the ‘excess’ of £300,000. One way which this type of charge may be avoided is to hold board meetings and minute the need for cash balances to be held on the balance sheet in order to finance future (stated) investment and/or trading needs.
HMRC provides guidance on BPR on its website. In 2013, an important case was decided in which BPR was denied for a furnished holiday letting business on the basis that the range of services provided was not sufficient to justify the claim that the enterprise was a 'business'. It remains to be seen to what extent this case will be used to justify denials of relief in similar curcumstances.
Employee absences can be both costly and disruptive.
It is advisable to have systems in place to measure and analyse these costs so that you can identify problem areas. Are there patterns of absence? Does a particular department have a below average record?
Unhappy, demoralised employees are more likely to take time off work. Workplace stress is a common cause of long-term sickness among non-manual workers. Creating a friendly working environment, where staff feel valued as part of a team and where flexible, ‘family friendly’ policies are in force is likely to pay dividends, keeping absenteeism to a minimum.
To manage absence effectively, make sure staff are well informed as to your sickness policy and procedures. Make sure these are seen to be followed and keep accurate records. These must be kept for at least three years after the appropriate financial year-end.
When hiring new staff, make sure you check their attendance record with the previous employer. If new staff are absent it is good practice to make sure you know if there are problems preventing them from settling in. How staff are treated in the first weeks of a new job is vital. Inadequate training can leave them feeling disillusioned.
It is sensible for employers to ensure that contracts of employment allow them the right to get an independent medical assessment in the event of an employee taking more than a few days off work. You may consider requiring all potential employees to undergo a medical examination with an occupational health adviser.
As a matter of company policy always carry out a ‘return to work’ interview. This may range from ‘hope you’re better, we missed your contribution’, to an identification of underlying problems that will affect your management strategy. It may also deter malingerers.
Long-term sickness must be handled sensitively. You must have an employee’s permission to apply for a medical report. It is vital to keep in touch so that the employee doesn’t feel isolated. Consider referring them to an occupational health specialist. This can identify ways of helping them return to work and give you information as to how long the absence is likely to last.
Disciplinary action for unacceptable absence must be distinguished from dismissal on health grounds. Employers need to be aware of the full range of conditions that count as a disability for the purposes of the Equality Act 2010. Where an employee is suffering from a condition covered by the Act, reasonable adjustments must be made to help them return to work.
Care must also be taken to avoid a claim for unfavourable treatment 'because of something arising in consequence' of an employee's disability.
As regards the accrual of holiday pay when a worker is on long-term sick leave, workers have the right to carry forward four weeks of their statutory holiday entitlement to the next leave year if they are unable to take it or choose not to do so in the current year owing to long-term illness. However, the leave, or the right to payment in lieu of that leave, will be lost if it is not taken within 18 months of the end of the relevant year in which the entitlement to that leave accrued.
Dealing with long-term absences, in particular, is a difficult area of the law. Each case must be decided on its own merits and proper procedures must be followed. Employers who have not done so for a while are advised to review stress management and long-term absence policies and procedures so that potential problems are identified early on and remedial action is taken as soon as possible.
The Agency Workers Regulations 2010 (AWR) came into force on 1 October 2011. They apply to those workers who are supplied by a temporary work agency to work temporarily for and under the supervision and direction of a hirer.
All temporary agency workers are entitled, from the first day of their assignment, to information on any job vacancies and to make use of collective facilities and amenities available to comparable workers and employees. These may include staff canteens, childcare facilities, transport services (such as local pick-ups and drop-offs and transport between sites – but not company car allowances or season ticket loans), staff common rooms, prayer rooms and car parking.
Employers should ensure that temporary agency workers know how to access information relating to job vacancies and are aware of all relevant facilities. This can be done either by providing details directly to the worker, as part of an induction pack, or by providing details to the employment agency to pass on to the agency worker as part of the information on the assignment.
Agency Workers Who Have Completed a 12-Week Qualifying Period
Once a temporary agency worker has worked in the same job for the same hirer for a period of 12 calendar weeks, they are entitled to the same basic employment and working conditions as if they had been recruited directly by the employer.
Because the working patterns of temporary agency workers can be irregular, the AWR provide for a number of circumstances in which breaks do not prevent them from completing the qualifying period. Employers are therefore advised to study the rules for calculating this period in order to avoid errors.
Basic employment and working conditions include:
The rights with regard to pay include:
Some payments may require those recruited directly to complete a period of service – e.g. enhanced entitlement to annual leave after 12 months. A temporary agency worker will need to complete the same period of service to become eligible. This should be calculated from the start of the 12-week qualifying period.
The rights with regard to pay do not include:
Temporary agency workers are covered by the automatic pension enrolment scheme. For further information, see the website of the Pensions Regulator.
To ensure equal treatment after 12 weeks’ service, employers who use temporary agency workers should have in place proper job descriptions and pay structures for the roles they perform. In addition, to facilitate calculation of the qualifying period, a record should be maintained showing the dates and hours worked, the location of their work and their job role. Employment agencies should be provided with information on the basic terms of comparable staff hired directly by the employer.
The AWR contain anti-avoidance provisions which prevent a series of assignments being structured so as to prevent a temporary agency worker from completing the qualifying period. Breaks between assignments will not, therefore, necessarily prevent agency workers from gaining the same basic employment and working conditions as staff recruited directly.
Detailed guidance on the AWR can be found on the website of the Department for Business, Innovation & Skills.
Following a recent case in which a dispute regarding a property owner’s right to light was unexpectedly dealt with by the granting of an injunction against a developer, a more recent case has offered guidance on how much compensation might be payable by a developer who takes the light of another property in the more normal circumstance in which the court rules that compensation is payable.
The principles which will normally apply in assessing the damages payable are that they should be:
In the case in point, the court awarded the applicant a sum estimated to be 30 per cent of the developer’s expected profits. If unchallenged, the practical implication of this case is that developers whose developments are likely to take the light of adjacent property owners should be aware that failing to negotiate a favourable position at the outset might lead to a considerable reduction in the development profit should the matter end up being decided in court.
In a more recent case, the court ordered that the builder of an office block must demolish the top two stories (part of which were already tenanted) because they took the light of a nearby listed building. This decision is currently under appeal. Unless specifically granted, the right to light can be very difficult to establish and in a 2012 case it was ruled that where such a right is established by way of an 'easement' (normally where there has been 20 years' uninterrupted access to light), the easement does not transfer to a new owner of the affected property.
If loss of light is an issue for you, the Royal Institute of Chartered Surveyors provides guidance on the subject.
The levels of protection available for different investments underwritten by the Financial Services Compensation Scheme (FSCS) are detailed on their website.
The FSCS protects the deposits of small companies, which are those which meet two of three criteria:
From 1 January 2016, the limit is £75,000 limit. Protection is also available for unincorporated organisations, partnerships and sole traders, but in the latter case the limit would apply in total to all (i.e. business and personal) accounts held by the customer with the same lender.
One possible area for concern is whether deposits held in different members of the same banking group are covered separately. In this case, if each of the banks is separately authorised by the Financial Conduct Authority, the FSCS would pay compensation up to the limit of £75,000 per person per authorised institution. If each of the banks is not separately authorised but is covered by the parent company's authorisation, the FSCS would pay compensation up to the limit of £75,000 once, irrespective of how many different group members a person held accounts with.
If the customer has deposits at and loans from the same bank. These are now 'netted off' for the purposes of compensation, which will improve the position for some customers. However, since companies and their directors are separate people in law, netting off would not occur in these circumstances.
Deposit takers in the Channel Islands and Isle of Man are not covered by the scheme.
The Companies (Trading Disclosures) Regulations 2008 set out the the requirements as to where and when company trading names, names of directors etc. need to be shown. The Statutory Instrument implementing the changes is both short and straightforward.
In particular, Section 6 is important. It specifies that every company shall disclose its registered name on:
• business letters, notices and other official publications;
• bills of exchange, promissory notes, endorsements and order forms;
• cheques purporting to be signed by or on behalf of the company;
• orders for money, goods or services purporting to be signed by or on behalf of the company;
• invoices and other demands for payment, receipts and letters of credit;
• applications for licences to carry on a trade or activity; and
• all other forms of its business correspondence and documentation.
In addition, it requires that every company shall disclose its registered name on its website.
Exactly when notice of termination takes effect can impact on an employee's entitlement to certain benefits or employment rights. In a recent case, the Court of Appeal ruled that, in the absence of an express term in the employee's contract, notice of termination takes effect when the employee actually receives it in person (Newcastle upon Tyne NHS Foundation Trust v Haywood).
Sandi Haywood had worked for the NHS for more than 30 years. She held a senior role as associate director of business development for Newcastle and North Tyneside Primary Care Trusts. In April 2011, following a merger of the two bodies, she was informed that she was at risk of redundancy. On 13 April, at a meeting to discuss her situation, it was accepted that she was entitled to 12 weeks' notice and she was told that no final decision on redundancy had yet been taken. She said that she would be entitled to an NHS pension of about £200,000 if she were made redundant after her 50th birthday on 20 July 2011 and reminded her employer that she was about to go on annual leave, including a trip to Egypt.
On 20 April 2011, while Ms Haywood was away on holiday, her employer sent three communications, all terminating her contract with 12 weeks' notice, thus purporting to end her employment five days before her 50th birthday. One was a letter sent by recorded delivery, another was sent by normal post and a third copy was sent to the email address of Ms Haywood's husband. Her father-in-law collected the letter sent by recorded delivery and left it at her home on 26 April. She subsequently opened it at 8:30am on 27 April. Her husband did not read the letter emailed to him until later the same morning.
The question was whether the employer posting the letter terminating Ms Haywood's employment contract was enough by itself to trigger the notice period, whether it had to have arrived at her home or whether, as she argued, the effective date of termination was 12 weeks after she had actually read the communication. If the date was on or before 26 April, her pension entitlement would be significantly reduced.
The High Court ruled in favour of Ms Haywood and the Trust appealed.
In a majority ruling, the Court of Appeal found that in the absence of an express provision stating when a notice of termination is effective, notice is served when it is actually read by the recipient. The Court was confident that Ms Haywood had not unreasonably avoided receipt of the communication and the Trust had been aware that she was absent from home. On that basis, her notice period expired after her 50th birthday and she was thus entitled to an enhanced pension payment.
The Court added that the notice sent by email to Ms Haywood's husband's account was not, in any case, effective as she had provided a postal address and, although she had used that email address herself on a past occasion, she had not given permission for it to be used for delivery of her notice of termination.
For the avoidance of any doubt, employers are advised to ensure that written notice is given to an employee in person and the nature of the communication is confirmed.
The Public Interest Disclosure Act 1998 – often referred to as the 'Whistleblowing' Act – inserted provisions into the Employment Rights Act 1996 (ERA) in order to protect employees from unfair treatment for reasonably raising, in a responsible way, genuine concerns about wrongdoing in the workplace.
The Enterprise and Regulatory Reform Act 2013 made certain changes to those provisions, one of which was to insert the words 'in the public interest' into Section 43B(1) of the ERA so as to reverse the effect of the decision in Parkins v Sodexho Limited, in which it was held that disclosure of a breach of a legal obligation owed by an employer to an employee under his or her own contract of employment could constitute a protected disclosure.
In Chesterton Global Limited and Another v Nurmohamed, the Employment Appeal Tribunal (EAT) was called upon to decide whether or not an employee's disclosures satisfied the 'public interest test'.
Mr Nurmohamed was the director responsible for sales at estate agent Chestertons' Mayfair office. In January 2013, his employer introduced a new commission structure which he feared would have a negative impact on his salary. Having examined the accounting information in detail, he twice reported his concerns to the area director that the level of costs had been misstated and the profit and loss figures used to calculate commissions and bonus payments were inaccurate, one of the effects of which was to reduce the amount of remuneration paid to him and 100 other senior managers. He also raised the issue with the director of human relations.
Mr Nurmohamed was dismissed and claimed that he had suffered detriments and had been automatically unfairly dismissed for having made protected disclosures. His claim was upheld by the Employment Tribunal (ET). In reaching its decision, the ET held that a matter was in the public interest where a section of the public would be affected by its disclosure, rather than just the individual concerned. It found that Mr Nurmohamed believed that his disclosures were in the interest of the 100 senior managers and the belief was reasonable.
Chestertons appealed on the ground that the ET had erred in concluding that disclosures made in the interest of the senior managers could qualify as being in the public interest when these related to personal contracts in each case. Furthermore, it argued that it was for the ET to determine objectively whether or not the disclosures were of real public interest and it had failed to do so.
The EAT dismissed those arguments and upheld the ET's decision. The task of the ET in such cases is to determine whether or not the employee's belief that the disclosure was made in the public interest was objectively reasonable. The test may be satisfied even if the employee's belief was mistaken. Furthermore, the amendment to Section 43B(1) was introduced in order to do no more than prevent someone from relying upon a breach of his or her own contract of employment where the breach is of a personal nature and there are no wider public interest implications. What is sufficient to satisfy the public interest test will depend on the individual facts in each case and there will be cases in which disclosures relating to a relatively small group of people will satisfy the test. Whilst recognising that Mr Nurmohamed was most concerned about his own loss of earnings, the ET was satisfied that he also believed his disclosures were in the interest of the other managers.
The EAT also concluded that the fact that the employer in this case was a private rather than a public company had made no difference to its decision.
The Commonhold and Leasehold Reform Act 2002 gives tenants of qualifying premises the right to have the landlord's management functions transferred to a right to manage (RTM) company so that they can take responsibility for managing their premises.
The Act sets up a mechanism for an RTM company to be formed and the management of the premises to be transferred from the existing manager to the RTM company.
However, failure to follow the procedures as laid down can cause significant problems, as a recent decision shows.
The tenants had set up an RTM company and served the required notices of invitation to participate on the qualifying tenants and then issued the claim notice on the freeholder.
The freeholder, who did not wish to have an RTM company established, served a counter-notice objecting to the RTM company's application, alleging that the appropriate procedures had not been complied with.
The grounds for the objection were that the invitations to participate were not supplied with a copy of the RTM company's articles of association, nor did they comply with the law when specifying a place at which they could be inspected. Inspection was offered on Monday, Tuesday or Wednesday only, but the legislation requires that inspection must be offered on at least one day over the weekend.
The legislation also requires that a copy of the claim notice has to be served on anyone who is a landlord under a lease for the whole or any part of the building. There was an intermediate landlord of one of the flats who did not receive a copy.
The argument ended up in the Court of Appeal, which essentially took the view that the statutory right to acquire the RTM overrode minor failures to comply with the procedures laid down under the Act.
The Supreme Court has handed down a ruling which means that all married gay couples and civil partners should receive equal pension rights.
Under Paragraph 18 of Schedule 9 of the Equality Act 2010, employers and pension funds are permitted to exclude civil partners from spousal benefits under a pension scheme the rights to which accrued prior to 5 December 2005, which is when Section 1 of the Civil Partnership Act 2004 (CPA) came into force.
This exemption was challenged in Walker v Innospec Limited and Others.
John Walker had worked for the Cheshire-based chemicals group Innospec Limited for more than 20 years until his retirement in 2003. For most of that time he was in a relationship with his partner and the couple entered into a civil partnership in 2006 and subsequently married. It was Mr Walker's expectation that, upon his death, his partner would receive the same benefits under the company's pension scheme as would a surviving spouse had he been married to a woman. Innospec, however, relied on the exemption and refused Mr Walker's partner entitlement to a survivor's pension.
Mr Walker's employer had informed him that, were he to die, his partner would receive the statutory minimum pension of £1,000 per annum. Were he married to a woman, however, his widow would receive two thirds of his pension.
Mr Walker took his case to the Employment Tribunal (ET), which found that the operation of the exemption meant that the Innospec pension scheme discriminated against Mr Walker both directly and indirectly. Furthermore, although the scheme complied with domestic legislation, it was in breach of the EU Equal Treatment Directive and EU law. In the ET's view, civil partners should receive benefits based on the deceased's full length of service, not just from the date on which the CPA became law.
Innospec's challenge to that decision was supported by the Secretary of State for Work and Pensions, who instructed counsel in the matter.
The Employment Appeal Tribunal (EAT) upheld the appeal. Whilst it accepted that a pension scheme which paid survivor's benefits to a spouse of the opposite sex but not to a same-sex partner was clearly discriminatory, the EAT found that the effect of the scheme on Mr Walker was nevertheless lawful by virtue of the exemption contained in the Equality Act.
Mr Walker took his case to the Court of Appeal, which ruled that it was not unlawful for there to be discrimination in respect of access to a benefit payable in respect of periods of service prior to 5 December 2005.
In a ground-breaking decision, the Supreme Court has now upheld Mr Walker's appeal, ruling that his spouse should enjoy the same right to a survivor’s pension as a wife would have done. The Court disapplied Paragraph 18 on the basis that it is incompatible with EU Directive 2000/78/EC (the Framework Directive), which bans discrimination on various grounds, including sexual orientation.
The Court noted that, although EU law does not impose a duty on member states to recognise same-sex partnerships, the Court of Justice of the European Union (CJEU) has ruled that, if a status equivalent to marriage is available under national law, it is directly discriminatory for an employer to treat a same-sex partner less favourably than an opposite-sex spouse.
Recent decisions of the CJEU had put the success of Mr Walker's claim beyond doubt. They established that, absent evidence that there would be unacceptable economic or social consequences, there is no reason to treat the spouse in a same-sex marriage unequally. Mr Walker's spouse is thus entitled to a full survivor’s pension so long as Mr Walker pre-deceases him and they remain married on the date of his death. The pension will be calculated on the basis of all Mr Walker's years of service.
When a sale of shares in a company is in progress, there are often a large number of threads that have to be tied up and sometimes this leads to unintended consequences.
In a recent case, a shareholder had entered into a contractual obligation to a third party which limited his right to sell his shares, so before they could be sold he had to buy his way out of that obligation. He did so, at a cost of £17.5 million.
That done, he sold the shares for £100 million.
When he came to complete his tax return, he calculated the gain chargeable to Capital Gains Tax by deducting from the sale proceeds the cost of the shares and also the cost of securing the right to sell them.
The relevant tax law (Section 38 of the Taxation of Chargeable Gains Act 1992) states that the deduction from the sale proceeds which is permitted in order to calculate the taxable capital gain in such circumstances is:
'a) The amount or value of the consideration, in money or money's worth, given by him or on his behalf wholly and exclusively for the acquisition of the asset, together with the incidental costs to him of the acquisition or, if the asset was not acquired by him any expenditure wholly and exclusively incurred by him in providing the asset,
b) The amount of any expenditure wholly and exclusively incurred on the asset by him or on his behalf for the purpose of enhancing the value of the asset, being expenditure reflected in the state or nature of the asset at the time of the disposal, and any expenditure wholly and exclusively incurred by him in establishing, preserving or defending his title to, or to a right over, the asset,
c) The incidental costs to him of making the disposal.'
HM Revenue and Customs did not accept that his expenditure met the above definition and, in an argument that went to the Court of Appeal, they successfully defended their right to charge the tax without the deduction claimed. The earlier agreement was not something that affected the shares but was an agreement personal to the shareholder. Nor could it be argued that the payment in effect re-established his title over the shares which had been forgone by his earlier agreement.
Public tendering exercises almost inevitably leave unsuccessful bidders dissatisfied but the courts will only intervene if there is a legal flaw in the process. A consortium behind a failed bid to acquire a government-owned bank found that out when the High Court declared its complaints unarguable.
During the course of a tendering exercise, the Department for Business, Energy and Industrial Strategy had accepted a group of companies – but not the consortium – as preferred bidders for the bank. That status meant that the group would enjoy an exclusive period in which to negotiate with the Department.
In mounting a judicial review challenge to that decision, the consortium argued that the Department had been obliged to accept its offer, it having submitted the only tender that complied with the terms upon which offers were sought. The Department, however, took the view that, although none of the tenders was fully compliant, the group's offer was better and was more likely to satisfy the Government's objectives.
In rejecting the consortium's complaints as misconceived, the Court noted that the terms of the exercise were tailored to give maximum discretion to the Secretary of State. Whether or not the process might be considered unfair or unduly weighted in favour of the Government, the consortium had agreed to take part in it on the Department's terms. The challenge had not been launched promptly and the Court noted that, even if it had detected a legal error in the conduct of the process, it would have exercised its discretion to refuse relief to the consortium.
It is normally necessary to be careful to comply fully with tender terms. Many tenders fail because they do not adhere to the submission instructions and professional advice is useful to ensure compliance.
The Supreme Court has now handed down its judgment in an important case, Essop and Others v Home Office (UK Border Agency), brought by a group of workers who claimed to have suffered indirect race and/or age discrimination. The Court has ruled that in order to succeed in an indirect discrimination claim, it is not necessary to establish the reason for the particular disadvantage to which the group is put. The essential element is a causal connection between the provision, criterion or practice (PCP) complained of and the disadvantage suffered, not only by the group but also by the individual. Whilst this may be easier to prove if the reason for the group disadvantage is known, this is a matter of fact, not law.
The members of the group had all failed a Home Office Core Skills Assessment (CSA) and could not, therefore, qualify for promotion. They were all aged 35 or over, or were from black and minority ethnic (BME) backgrounds. A statistical report commissioned by the Home Office in 2009, to assess the equality impact of the CSA, had shown that candidates in those categories were less likely to pass the test than those who were younger and white. A further report in 2011 had confirmed that the differential impact was statistically significant. However, no reason was identified to explain it. Also, many BME and older candidates had passed the exam and there was no particular personal factor specific to any individual that might explain the statistical difference.
On the basis that the requirement for all employees to pass the CSA in order to demonstrate eligibility for promotion was a PCP that put them at a disadvantage compared with those who did not share the same protected characteristics, the group launched proceedings under the Equality Act 2010 alleging indirect race and age discrimination.
It was agreed between the parties that a pre-hearing review was necessary to determine whether the claimants were required, for the purposes of Section 19(2)(b) and/or (c) of the Act, to prove what the reason for the lower pass rate was. The Employment Tribunal (ET) held that they did have to prove the reason. The claimants appealed against the ET's decision and the Employment Appeal Tribunal held that they did not. It was enough to show that the group had suffered, or would suffer, the particular disadvantage of a greater risk of failing the CSA and that each individual had in fact suffered the disadvantage of failure. In allowing the Home Office's appeal against that decision, however, the Court of Appeal ruled that in order to prove a group disadvantage, it was necessary to show not only that the CSA had produced apparently unequal results but also the reason why that was the case. Each member of the group was under an evidential burden to show that he or she had been discriminated against on the basis of a protected characteristic.
In unanimously allowing the workers' appeal against that decision, the Supreme Court provided clarification of the law and gave examples to illustrate its application. There is no express requirement in the Act for a person claiming indirect discrimination to show why a particular PCP puts one group at a disadvantage when compared with others. It is not necessary to establish that the reason for the disadvantage is itself unlawful, or that it is within the control of the employer (although sometimes it will be). Instead, it requires a causal link between the PCP and the particular disadvantage suffered by the group and the individual.
Reliance on statistical evidence is commonplace in indirect discrimination cases and there is no requirement to show that all members of a protected group have been put at a disadvantage. It was irrelevant that some BME or older candidates could pass the CSA. What mattered was that members of those groups failed it disproportionately.
A further salient feature in indirect discrimination cases is that it remains open to an employer to demonstrate that a PCP is justified, despite having an apparently discriminatory effect. The Court noted that a degree of reluctance to reach this point can sometimes be detected, but ETs should not shy away from this aspect of the decision-making process. There is no finding of unlawful discrimination until all four elements of the definition in Section 19(2) are met. There may well be very good reasons for the PCP in question and there is no shame attached to an employer for seeking to justify it. However, a wise employer will seek to modify such PCPs in order to avoid the necessity of explaining disparate effects.
The Court noted that a candidate who had failed to turn up for or finish the CSA would be unable to establish that he or she had suffered any harm. The case was therefore returned to the ET for consideration of each individual claim in the light of the Court's ruling.
The law protects tenants against mistreatment and landlords who ignore their tenants' rights are courting disaster. In one case that strikingly proved the point, a landlord who unlawfully entered his tenant's bedsit and threw out his possessions ended up being sued for more than £900,000 in compensation.
In upholding the tenant's claims of unlawful trespass to goods and land, a judge found that his landlord had given in to frustration in respect of alleged substantial rent arrears and taken the law into his own hands. He had changed the locks to the tenant's room in his absence before removing his possessions and piling them up in the street.
The tenant had valued his claim on the basis that the goods he lost included rare books, one of them an original John Wycliffe Bible dating from 1383. The judge, however, found it unlikely that books of such value would be in the possession of an apparently impoverished student. The tenant's claim had been grossly exaggerated and his damages were assessed at £5,000. The landlord, however, was left facing very substantial legal costs bills.
Argos is a well-known retailer in the UK and owns its trade name. However, the argos.com web domain is owned by a US company which specialises in computer-aided design and that company uses 'Argos' on its website as well as in its domain name.
Argos took exception to this, especially given that Google's 'AdSense' program was actually placing its ads on the US company's web page.
Argos argued that the US company unlawfully infringed its trade mark and was guilty of 'passing off' (holding itself out to be Argos and thus trading on Argos' goodwill).
The claims failed on various grounds, but the case emphasises the points that care needs to be taken to secure relevant Internet domain names and that thought should be given to the likely outcomes of using different forms of web-based marketing before a specific campaign is put in place.
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