Breeze and Wyles Solicitors: Employment Law Newsletter May 2011

Dear Employer

As your employees are likely to have benefited from the recent deluge of bank holidays, we hope they have returned with renewed vigour to face the summer – that is, before they all go off on annual leave. Weather-wise, the long dry spell seems set to continue, but we hope that your business is not experiencing a drought and continues to flourish.

Please note that if you have an employment problem you should always seek specific advice – these newsletters are for information only.

If you have any comments or suggestions on this newsletter, please email newsletter@breezeandwyles.co.uk
Kind regards

The Employment Law Team

Some Recent Changes and Cases in Employment Law

1. CLARITY ABOUT TUPE FOR COMPANIES IN ADMINISTRATION

There has been confusion about the TUPE situation if a company goes into administration, especially when it is then sold off under a pre-packed administration deal. Employers have often been uncertain as to whether the employees transfer or not. The previous position was that decided by the case of Oakland v Wellswood (Yorkshire) Ltd. Under the case the EAT had ruled (controversially) that administrations generally fell within Section 8(7) of the TUPE regulations, meaning that employees would not automatically transfer to the transferee upon administration. The EAT has now decided that the case was wrongly decided and that all administrations (including pre-package administrations) fall within Section 8(6) of the TUPE Regulations. This means that if the transferor is the subject of “relevant insolvency proceedings” but “not with a view to the liquidation of the assets of the transferor”, then the employees will transfer and will receive unfair dismissal protection.

This recent case, therefore, makes the situation clearer. [OTG V Barke [2011]]

2. ABILITY TO REFUSE TIME OFF FOR PRAYER

The Employment Appeal Tribunal (EAT) has held in a recent case that refusing an employee permission to leave work to attend Friday prayers at a Mosque was a proportionate means of his employer achieving a legitimate aim – meeting the operational needs of the business. Mr Cherfi, a Muslim, worked as a security guard where his employer required all security officers to remain on site throughout their shifts. He was therefore refused permission to travel to Friday prayers at a Mosque in another area. However, there was a prayer room on site and Mr Cherfi had the option of working a Saturday or Sunday rather than Friday. He brought a claim for indirect discrimination under the Employment Equality (Religion or Belief) Regulations 2003 (now found in section 19 of the Equality Act 2010). The Tribunal dismissed Mr Cherfi’s indirect discrimination claim, finding that although he was placed at a disadvantage as a practising Muslim by not being allowed to attend prayers in congregation, the employer would be in danger of financial penalties or even losing its contract with its client if it did not maintain a full compliment of security staff on site throughout the day. The Tribunal therefore found that the requirement for him to remain at work on Friday at lunch times was a proportionate means of achieving a legitimate aim and therefore a claim for discrimination could not succeed. Mr Cherfi brought an appeal but the EAT dismissed it.

3. “RED-TAPE CHALLENGE” WEBSITE LAUNCHED

The Government has recently launched its “red-tape challenge” website, which allows business and the public to vote for regulations which they think should be scrapped. The challenge is to examine over 21,000 statutory rules and regulations currently active in the UK, focusing on regulations that the Government considers to place the biggest burdens on business and society. The website will operate until April 2013. Every few weeks the Government will publish all the regulations affecting one specific sector of industry. Employment regulations can be found under the “general regulations”. Respondents are able to say what is working and what is not, what can be simplified and what can be scrapped. Ministers then have 3 months to decide which regulations they will scrap, with the presumption that all burdensome regulations will go unless the relevant government department can justify to an independent reviewer why the regulation is needed. The Government intends to repeal scrapped regulations “as quickly as possible”.

4. DISMISSING EMPLOYEE WITH UNCERTAIN IMMIGRATION STATUS

The EAT has held that it was reasonable for an employer to dismiss an employee when the UK border agency failed to satisfy the employer that the employee had the right to work in the United Kingdom. The decision (based upon the complicated facts of the case) suggests that it is reasonable for employers to err on the side of caution to avoid possible penalties of up to £10,000 for employing illegal workers. (Kurumuth v NHS Trust North Middlesex University Hospital)

5. ADDITIONAL PATERNITY LEAVE

Additional paternity leave has now been introduced which allows up to 26 weeks of maternity (or adoption) leave to be transferred to the father. Also, any outstanding statutory maternity pay (SMP) can be taken by the father (and it will then be called additional statutory paternity pay (ASPP)). The rules, however, are relatively complex – for more information, please ask us.

What’s in the pipeline

1. INCREASE TO NATIONAL MINIMUM WAGE

This will increase from 1st October 2011 as follows:
1. Adults from £5.93 to £6.08 per hour.
2. 18 – 20 year olds from £4.92 to £4.98 per hour.
3. 16 – 17 year olds from £3.64 to £3.68 per hour.
4. Apprentices from £2,50 to £2.60 per hour.
The Government estimates that nearly 900,000 of Britain’s lowest paid workers will gain from these changes. The Government also announced in the budget that it will invite the Low Pay Commission in its next report to consider the best way to give businesses greater clarity on future levels on the national minimum wage, including consideration of two-year recommendations. The Government believes this could provide greater certainty for business and help them plan employment and investment decisions.

2. POSSIBLE CHANGES TO PARENTAL LEAVE AND FLEXIBLE WORKING

The Government has published its consultation on a new system of shared parental leave and on extending the right to request flexible working to almost all employees.
Under the proposed system of parental leave, while the initial portion of leave will still be reserved to the mother, much of it will be shared as the parents see fit. For example, 18 weeks maternity leave will be available to be taken in a continuous block around the time of birth, while the remainder of existing maternity leave would be reclassified as parental leave. Each parent would have 4 weeks paid leave exclusive to them, with the remaining weeks available for either parent on an equal basis.

The consultation also considers the extension of the right to request flexible working to all employees employed for 26 consecutive weeks and would allow – but not require – employers to prioritise competing requests to take account of the employees’ personal circumstances.
This is very much a brief summary: more information when the consultation is completed.

The Employer Traps and Other Tips

1. QUESTIONS ON HEALTH

Remember that under the Equality Act 2010, an employer must not ask about a job applicant’s health (including any disability) before offering work. Such questions can be asked after a job offer is made in order to make reasonable adjustments if necessary, and assess whether the health condition would render that person unsuitable for the position when there are no reasonable adjustments that could be made. The safest thing, therefore, is to remove health questions from application forms. Although it is not active disability discrimination merely to ask about a job applicant’s health, if you rely on the information given, it could lead an Employment Tribunal to conclude that you have committed a discriminatory act. Similarly, although it is not unlawful to ask questions about the number of days absence that someone has had, it means that the use to which any answers may be put may prove problematic.

Can't Pay, Won't Pay - How to get results

Cash flow to most businesses in these difficult times is a key business objective. Are you spending too much time chasing bad debts, the can't pays and are you pursuing the rest, the wont pays. All such debts form part of your profits but do not equal cash.

Do you engage actively with your debtors to understand the most efficient way to get your money from them? Do you what is necessary to ensure that you are paid first?

Many businesses are experiencing cash flow difficulties and therefore are paying those creditors in the order of who shouts the loudest. By taking positive action to recover debt, business will apply pressure to these won't pay debtors, which should motivate them to move you to the top of their list and make payment early.

At a recent Hertfordshire Chamber Breakfast Meeting Maria Koureas-Jones, from Breeze & Wyles Solicitors LLP (a Chmaber Patron Member) delivered a presentation on the steps that businesses can take to improve their internal credit control processes to reduce their aged debts.

Regarding the won't pays, the internal credit control process should be applied diligently and timeously to encourage payment. If the debt remains unpaid after the credit process has been exhausted, it is recommended that the debt is referred to a solicitor.

A letter from the solicitor to the debtor informing them that legal action will be taken to recover the debt (before the solicitor issues a Court claim) is often effective; it is additional pressure on the debtor to settle the outstanding amount.

The negative issue for a business considering this addition to the credit control process is the cost associated with instructing a solicitor to recover the debt.

This is particularly true where a solicitor is charging an hourly rate for this service. These costs often deter a business from recovering its debts in this way because its is generally correct to assume that recovering debts in this manner will make the process non-cost effective. The outcome is often that a business will write-off the debt despite the fact that the debtor might have the means to pay.

FIXED COST DEBT RECOVERY SERVICE

It is for this reason that Breeze & Wyles Solicitors LLP has launched a fixed-cost debt recovery service for commercial debt recovery. A Letter before Action costs as little as £2.00 plus VAT, making it affordable for businesses to chase unpaid debt, irrespective of amount.

In the event that a debtor still does not make payment after receiving this letter, the scheme also gives businesses the opportunity to issue County Court proceedings and to enforce a County Court judgment at a fixed price.

A business's claim will be enhanced through the inclusion of interest, costs and compensation to which the business will be entitled. Depending on the age of the debt and the terms agreed this additional sum can be quite significant.

The Service aims to ensure cost transparency to enable clients to remain in control at every stage. Breeze & Wyles Solicitors LLP expect this service to offer business value for money.

One final thought: assume that the debtor is suffering cash flow problems sufficient to lead to short term insolvency. How do you know when this will happen? Isn't the important question 'Will it happen before or after i get paid?' One of the debtors other creditors will eventually consider taking action to recover its debt and then you will only be entitled to a few pennies in the pound. Make sure you are one of those creditors who gets paid in full.

For a copy of the debt-recovery tips, e mail Maria at maria.koureas-jones@breezeandwyles.co.uk


Landlord left with £270,000 property repair bill after consultation blunder

Failure to consult with tenants over works means landlord has to carry the cost say Court of Appeal

Landlords who fail to consult with flat owners before carrying out works cannot expect help from the courts if the tenants refuse to contribute to the expense.

This was the decision of the Court of Appeal, in the case of Daejan Investments Ltd v Benson and Others.

Where flats are sold on long leases there will always be a clause that says tenants must contribute towards the cost of maintaining and repairing the building.

For any leases granted after 31st October 2003, regulations under the Landlord and Tenant Act 1985 say that landlords must consult with tenants about works that they propose to carry out.

If the landlord fails to consult, he can recover only a limited amount from each tenant.

In these circumstances, the landlord’s only hope is to ask the Leasehold Valuation Tribunal to order that the requirement to consult should be dispensed with, which the Tribunal may do if it is satisfied that to do so is reasonable.

In the Daejan case the landlord carried out major works to the building at a cost of £270,000. The tenants refused to contribute on the grounds that the landlord had not consulted them properly.

Daejan Investments then asked the Leasehold Valuation Tribunal for an order to dispense with the need for consultation, but the Tribunal refused saying that it had no power to do so solely because of the financial consequences for the landlord. The Court of Appeal has now upheld that decision.

Said Hannah Collins, property law expert with Breeze & Wyles Solicitors LLP: “This case is a stark reminder of the perils of not taking professional advice. Here, the landlord incurred expenses of £270,000 on the building work and was only allowed to recover £250 from each of the five tenants. Landlords need to check where they stand and undertake the necessary consultation before embarking on any work, whether it’s small fry or a major investment such as this.”

Web site content note:

This is not legal advice; it is intended to provide information of general interest about current legal issues.

Don’t panic says Bribery Act Guidance

The sporting season looks safe following the announcement of the long-awaited Guidance on the Bribery Act 2010

“Be prepared, but don’t panic” is the message being sent out to business by the Ministry of Justice in its long awaited guidance on the Bribery Act 2010.

The Act, which will come into force on 1st July 2011, simplifies and consolidates existing law on corruption and creates a new crime of failing to prevent bribery.

In simple terms, bribery is defined as giving or offering a person a financial or other advantage in order to induce them to act improperly. Receiving or requesting an inducement in return for acting improperly is also a crime.

When the Act was passed it caused quite a storm, with some commentators suggesting that it marked the end of corporate hospitality. The Guidance published by the Ministry of Justice on 1st April has allayed those fears, stating clearly that: “hospitality is not prohibited by the Act”.
As well as clarifying that providing tickets to sporting events and taking clients to dinner are not criminal offences, as long as the gift is reasonable and proportionate, the Guidance points out that a prosecution under the Act can only be brought if the Director of Public Prosecutions or the Director of the Serious Fraud Office believes that the prosecution is in the public interest.
With the 2012 Olympics on the horizon, as well as the regular sporting season events, this has brought a sigh of relief from organisers as well as for businesses who host corporate entertainment.

The other area of controversy caused by the Act was the crime of failing to prevent bribery, which meant that a company could be guilty of a crime as a result of the actions of another person, who might not even be an employee.

Again, the MoJ’s Guidance offers reassurance. Firstly, a company can only be guilty when an act of bribery is committed by another person if it does not have adequate anti-bribery measures in place. Secondly, the Guidance stresses proportionality: in the case of a small local business the risk of bribery is minimal and so the anti-bribery procedures will be minimal, while in the case of a large corporation tendering for defence contracts abroad, there is a higher risk of bribery and so the anti-bribery procedures must be very robust.

The Guidance provides advice on the factors that make for adequate anti-bribery measures:

· Commitment: A top-level commitment to create an anti-bribery culture in the company
· Risk assessment: a careful study of the markets in which the company does business
· Due diligence: a company must know its clients, know its employees and know its agents
· Communication: a company must ensure that its employees and agents know and understand the company’s anti-bribery policies
· Monitoring and review: markets change and companies move into new markets. In either case the assessment of risk must be continual

Said Jane Dismore, Employment Expert with Breeze & Wyles Solicitors LLP “Businesses will welcome the plain-speaking guidelines now issued by the Ministry of Justice, but they cannot simply look at the MoJ’s Guidance, breathe a sigh of relief, and ignore the Bribery Act.

“Every business, no matter how small, must carry out a risk assessment, review their standard terms for employees, and review induction procedures for new employees. If the risk assessment throws up any potential opportunities for bribery, employers should alert staff and make sure that they are on their guard. These steps should be recorded in writing.”
www.justice.gov.uk/guidance/bribery.htm

Web site content note:

This is not legal advice; it is intended to provide information of general interest about current legal issues.

Landlords left confused on disability ruling

Landlords have been left baffled where they stand on the Disability Discrimination Act after the Court of Appeal rejected a claim by a disabled tenant.

In the case of Beedles v Guinness Northern Counties Ltd, the Court of Appeal ruled that The Disability Discrimination Act 1995 (DDA) did not require the landlord to carry out repairs and redecoration which were the responsibility of the tenant under the terms of the tenancy. But the judgement also implied that an assessment must be made in each individual case where disabled tenants look for special auxiliary services from landlords.

Mr Beedles was the tenant of Guinness Northern Counties (Guinness) under an assured tenancy. Under the tenancy agreement, he was obliged to keep the interior of the flat in good decorative repair. His flat was in a very shabby condition but could be made respectable by minor work including sticking back peeling wallpaper and thorough cleaning.

Mr Beedles was on benefits and, although he could afford the materials required for the job, he could not afford to pay someone else to carry out the work. Being disabled, he could not safely climb ladders and so he made a request under the DDA, asking Guinness to carry out the work as an auxiliary aid or service, but Guinness refused.

For landlords, the DDA requires them to provide auxiliary services at the request of a disabled person if that service would enable or facilitate the disabled tenant’s enjoyment of premises. In court, the case turned on the interpretation of the words ‘enjoy’ and ‘enjoyment’.

Mr Beedles argued that ‘enjoy’ meant that he ought to be able to live in his flat and feel comfortable in his surroundings as would any other tenant. The Court of Appeal rejected this and held that ‘enjoyment’ meant no more than being able to use the premises in an ordinary lawful way.

But the judgement implied that an assessment must be made in each individual case, as to whether the auxiliary service requested would enable the tenant to live in the premises as would any other typical tenant.

Said Hannah Collins, property law expert with Breeze & Wyles Solicitors LLP: “Although this judgment should be of some comfort to landlords, the exact extent of landlord responsibility remains far from clear.

“One of the judges, Lord Carnworth, suggested that he was not sure whether a statute could transfer an obligation from a tenant to a landlord unless it was expressly intended. It is a pity the Court did not consider this in more detail, because it might have provided a much more certain guide as to what was required of a landlord.”

She added: “It means landlords will need to have processes in place to make sure that each request of this sort is carefully considered in future.”

Beedles v Guinness Northern Counties Ltd [2011] EWCA Civ 442 (19 April 2011)
http://www.bailii.org/ew/cases/EWCA/Civ/2011/442.html

Web site content note:

This is not legal advice; it is intended to provide information of general interest about current legal issues.

Fakin’ it when they should have been makin’ it....

The partner of a millionaire estate agent who died suddenly has been found guilty of creating a fake will, when she discovered his divorce had never been finalised.

But Gillian Clemo, who forged the will of her lover Chris John, would have had an excellent chance of receiving a large pay out from his estate if she had obtained legal advice on her rights, instead of taking the law into her own hands.

That’s the view of legal experts following her conviction for forgery.

Mr John was a wealthy estate agent from Wales whose wife, Helen, left him when had an affair with Gillian Clemo. Acrimonious divorce proceedings followed and Mr John and Ms Clemo set up home together.

Seven years later Mr John died leaving an estate valued at £5 million but with no will. A dispute over who should administer the estate developed and in the midst of this it was discovered, to the surprise of everyone involved - including Helen John herself - that the divorce between Mr and Mrs John had never been finalised. The result was that Mrs John and her daughter would be entitled to the estate between them.

A few days later, Ms Clemo claimed to have discovered a will, in which Mr John left the estate to his daughter and appointing his sisters to be executors.

In a bizarre twist, his ex wife Helen then produced what she claimed was a codicil, an addition to the will, changing the executors. This was quickly shown to be a forgery and Mrs John was cautioned by the police, but soon suspicion fell on the will recently discovered by Ms Clemo, as the signature did not look like Mr John’s and his daughter’s name was mis-spelt twice.
When the case reached court, it took the jury just 90 minutes to decide that Ms Clemo was guilty of having forged the will, in the apparent hope that Mr John’s sister would allow her to continue to live in the home she had shared with Chris John.

“The sad aspect of this case is that any solicitor skilled in this area of the law would have advised Ms Clemo that she would have an excellent chance of benefitting from the estate if she made a claim under the Inheritance (Provision for Family and Dependants) Act 1975,” said contentious probate expert Jane Dismore of Breeze & Wyles Solicitors LLP: “ This Act allows certain people to make a claim to the Courts if they feel that the will of a person who has died, or the intestacy rules if the deceased left no will, do not make ‘adequate financial provision’ for the person claiming.”

The class of people who may make a claim under the Inheritance Act includes a person who has, for at least two years ending with the date of death, been living in the same household as the deceased if they were living ‘as man and wife’.

On this basis Ms Clemo would have qualified to make a claim, and although there is no guarantee of success, the courts can take a very wide range of factors into account. The fact that the Johns’ divorce was never finalised because of an oversight that remained undetected would be one of them. The courts have power to make a wide variety of orders which can include that a claimant can carry on living in a particular property, which appears to have been all that Ms Clemo was seeking.

Mrs Dismore added: “This is an extraordinary story and the awful mess could so easily have been avoided if either Mr John or Ms Clemo had taken legal advice. Mr John could easily have made a will that would have satisfied Ms Clemo’s need for security without denying his daughter any of her reasonable expectations. And even with that will missing, Ms Clemo would very likely have succeeded in obtaining her fairly modest wish to remain in the couples’ house in Cardiff, if she had made a claim under the Inheritance Act.”

Web site content note:

This is not legal advice; it is intended to provide information of general interest about current legal issues.

Thinking of Retiring from your business - No-where to turn?

After many years of hard effort riding the roller coaster of business success and downturns are you ready to relinquish control of your business. At the same time have you considered your business as part if not all of your pension.

If the latter is true, are you able to sell and than cash in your pension fund. If this is not possible then retirement is a pipedream.

For those in this position, the following article provides some interesting insights into the issues and decisions that need to be made.

http://www.luminarinternational.com/retiring-business-owners-need-not-struggle-to-sell-their-ventures/


The Advantages of Deferred Consideration in a Business Sale

An interesting articles for those who may be at a loss both as to what is 'Deferred Consideration' or why does this benefit me?

http://businessgrowthanddevelopment.blogspot.com/2011/05/luminar-international-advantages-of.html

Perhaps the only issues arising are control or lack of in respect of future business performance. Reducing this risk requires strict guidelines on what can or cannot be done with the business for the period during which the earner/deferred consideration is calculated.