Employment Newsletter March 2012

Dear Employer

Having had a glorious period of uninterrupted sunshine, can we look forward to more of this or will we pay the price? Is it too good to be true? We could ask that question of some of the Government’s proposals in the pipeline which seem as though they will favour employers but watch this space.

Meanwhile we wish everyone a happy Easter and a well-earned break.

If you have any particular employment issues, please do not hesitate to contact us: details are at the end of this letter. If you have any comments or suggestions on this newsletter, please email newsletter@breezeandwyles.co.uk

Kind regards

The Employment Law Team
Some Recent Cases in Employment Law

Confirmation of Age Discrimination Decision

Regular readers may remember that we recently reported a case in which a Tribunal found that a redundancy dismissal, the timing of which was arranged to avoid the cost of enhanced pension if the employee was still employed at the age of 50, was justified age discrimination. It went on to the Court of Appeal, which upheld the EAT’s decision, i.e. found that Mr Woodcock’s dismissal was not purely treatment aimed at avoiding costs. The Court of Appeal (like the Tribunal and the EAT) considered that the dismissal was done with the aim of giving effect to the employer’s genuine decision to make Mr Woodcock redundant. It was a legitimate part of that aim for the employer to ensure that it avoided additional costs (i.e. the enhanced pension). However, the Court of Appeal also summarised the effect of European case law as being that “An employer cannot justify discriminatory treatment solely because the elimination of such treatment would involve such increased costs.”

Please remember that all cases turn on their own facts.

(Woodcock v Cumbria Primary Care Trust)

Overtime working

The Employment Appeal Tribunal (EAT) has upheld a Tribunal decision that a group of employees were not entitled to paid overtime under their contracts. The EAT rejected the argument that the requirement to work overtime can arise merely because an employee is asked to do more work than can be accomplished within their normal working day. In this case the hotel employees’ contracts expressly stated that overtime was voluntary but also required them to cooperate if the hotel required them to work overtime at short notice. In order to clean the requisite number of rooms a day the employees claimed that they took only half of the lunch break they were entitled to. They subsequently brought claims for unlawful deduction from wages for the non-payment of overtime relating to the half hour per day they worked in their breaks. The employees failed at Tribunal stage. They appealed.

The EAT rejected their appeal on the basis that the contractual requirement to co-operate could not limit the express condition in their contracts that overtime was voluntary. They were trying to turn the requirement for co-operation into a general requirement to work overtime, which is not what their contracts said. Their evidence simply amounted to a generalised complaint that they had been unable to take their full contractual breaks.

(Blair and Others v Hotel Solutions of London Ltd) (See Employer Traps and other Tips)

What’s in the pipeline

Two Year Qualifying Period

From the 6th April 2012 the qualifying period for unfair dismissal will increase to two years. However, this will apply only to those starting employment on or after that date, i.e. it will not apply to existing staff. As advised in previous Ezines although this may look like a benefit for employers, care needs to be taken in dismissing those who may instead allege have a claim in discrimination, because there is no minimum qualifying period for such claims.

Costs Cap

In those (still rare) cases when costs are recoverable in Employment Tribunal Claims, the current cap of £10,000 is to increase to £20,000 from April. This may be coupled with a move away from a general “no costs” presumption towards the current County Court system of the loser paying the winner’s costs (this will make litigation riskier for Claimants, even those with seemingly meritorious claims, but it will also make the consequence of losing more serious for Respondents).

The “Industrial Jury”

Instead of having the panel of three (Chairman and two others), Employment Judges will be allowed to hear cases alone (unless they direct otherwise).

Deposit Orders

Where the Tribunal orders that a Claimant has to pay a fee before being allowed to continue with his or her claim, the figure will increase from £500 to £1,000.

Possibility of No Fault Dismissal for “micro firms”

Vince Cable has announced that the Government will launch a call for evidence on introducing no fault dismissal for “micro firms”, with fewer than ten employees. No formal invitation has yet been issued, so the time table and scope of the call for evidence is as yet unknown. However, if the proposals do result in no fault dismissal, then that could have huge benefits for employers. Watch this space.

The Employer Traps and Other Tips

Fixed Term Employees

Do remember that if you have an employee employed on successive fixed term contracts for over four years, they are automatically regarded as a permanent employee.

Agency Workers

If you have any agency workers, it may be an idea obtaining advice as to their status, given the recent legislation.

Equal Opportunities Policy

For many employers, this needs to be updated. Under the Equality Act 2010 the relevant term for each type of discrimination is “protected characteristic”. If you are unfortunate enough to have a discrimination claim against you, the policy is the first thing a Tribunal will ask for.

Overtime

The recent case referred to in this Ezine is a reminder of the importance of having the appropriate contractual term in your employees’ contracts about overtime and to ensure that you and they understand what is meant by “overtime”.

Other news from Breeze and Wyles

Breeze & Wyles will be exhibiting at the Property Investor Show

The Property Investor Show will be taking place on 19th and 20th April 2012 at ExCel, London. Breeze & Wyles are pleased to announce that not only will they be exhibiting but also Brendan O’Brien, Director, will be presenting a seminar.

Why not pop along and introduce yourself?

Further details can be found at:

http://www.propertyinvestor.co.uk/spring/about.asp

Debt Recovery Service

We offer a low cost, fixed fee debt recovery service aimed at assisting businesses to chase unpaid invoices. An initial letter to a debtor costs just £2.00 plus VAT. This means that businesses can cost effectively chase their aged debtors. Many businesses now use this service to chase debts that otherwise would have been written off, because it offers such a cost effective and efficient solution. For further information please contact Rita Wright at:

rita.wright@breezeandwyles.co.uk or telephone 01992 558411.
Breeze and Wyles Solicitors LLP are a leading law firm with offices throughout Hertfordshire and Middlesex, providing quality legal service in all of the mainstream areas of the Law for over 90 years.

We are one of very few law firms that offer services online. Check out our services Solution for volume legal instruction at www.breezeplus.co.uk

We have been awarded Lexcel Accreditation and are regulated by the Solicitors Regulation Authority. For further information on any of the issues referred to in this newsletter, or any other employment matter, please contact Jane Dismore at:


Where do First-Time Buyers go next?

Prior to the Budget last week property professionals had hoped that the current stamp duty holiday for first-timers buying property up to £250,000 might be continued.

With inflation higher than the savings interest rates and strict lending criteria this has caused low first time buyer numbers, but these were starting to ease. Over the previous 6 months with inflation falling and lenders becoming more flexible in their lending criteria the cessation of the stamp duty holiday is seen as a blow to the property market.

The challenge to first-time buyers is while having to save sufficient funds to provide a deposit on the property and the legal fees and disbursements they now have to save the stamp duty, in addition, thereby delaying any purchase chain of which they might form part.

The importance of first time buyers as the first link in the property chain and therefore as a driver to the rest of the market cannot be understated. The government should be doing everything possible to encourage first-time buyers and allow them to encourage the rest of the market.

Market commentators will draw on the statistics provided by lawyers about matters that completed in the run up to the cessation of the holiday as an indicator that the continuation was warranted.

Given that it appears necessary to the health of the property market, what will replace the stamp duty holiday?

Builders are considering incentives to the sale price of their properties to encourage first-time buyers to buy with them and avoid having to save but this has its own problems. Incentives reduce lending as the lender will factor them when considering the maximum amount that they will lend.

Lenders are considering using ‘stamp duty’ devices for first-time buyers to increase loyalty to their brand. A lender has created a product that will enable first-time buyers who save with them to obtain a cash-back of up to £2,000 if they save with the lender for 6 months or more. Whilst this will work the product is likely to be a short-term approach as it will be too costly for a commercial lender.

In the end, the best outcome was that the government would continue the holiday and spread the loss of stamp duty tax revenues across the stamp duty collection process and value bands. However, the government seems to have some difficulty with tax policy when balancing public finances rebalancing with encouraging growth.


Try our time saving low cost Will Service. No need for a Lawyer!

If you own your own home or a couple of expensive cars or have a fairly sophisticated investment plan, there's a pretty good chance that you NEED a will.

What if you don’t have one?

A will is an important document and without one, your assets, property and money might be distributed according to rules called the ‘Rules of Intestacy’. These rules mean that in some circumstances, all of your assets might go to the government!

Use the will checker http://www.breezeandwyles.co.uk/willsprobate/willtest/index.html to see what happens to your assets if you don’t make a will.

If you dont have the time to see lawyers to create a will that reflects your wishes then you need look no further. Breeze & Wyles Solicitors LLP introduces to the market an option that allows you to create you own will (or one for you and your spouse) without spending more time than is necessary to do so. If wish to create your own will then follow the link https://www.clientspace.org/index.asp?firm=891A41B9&id=1

Brendan O'Brien


Need a Will but no time to see Lawyers

New Online Products available – more to come!

Today Breezeplus launches free and pay-to-download online documents.

Breezeplus are delighted to announce the launch today of our new online document service powered by DirectLaw

Clients can now create legal documents via our website by completing online questionnaires. The documents will then be reviewed by our qualified staff for free and then made available for download at the clients convenience.

Initially the service will offer around 20 different documents but we aim to have over 80 documents available by the end of April with further additions later in the year.

We at breezeplus are always looking for new ways to increase accessibility of legal services to consumers. The pressure of modern life means that people need an alternative to taking time out to visit lawyers in their offices.

We believe that our new online service offering comprising both free and pay-on-demand legal documents will provide consumers with far greater flexibility in their access to legal services allowing them to create legal documents at any time and any place to suit them.


Why it is good for me? Getting the terms of Trading right

A basic understanding of the law

English law requires four elements for the formation of a contract:
• an offer;
• a corresponding acceptance;
• consideration; and
• an intention to create legal relations.
Having properly drafted and signed terms and conditions will ensure that these four requirements are met.

Clarification

Terms and Conditions allow you to ensure that each party is clear on the agreement and what will happen if either party fail to fulfil their obligations. In the unfortunate event there is a disagreement then referring to the terms and conditions may clarify matters and prevent the need for costly litigation.

Restrict your Liability

If things do go wrong then you want to restrict your liability. Know what you can or cannot limit and use your terms and conditions to protect you and your company.
An important point is that of limiting legal jurisdiction to England and Wales; e.g. if you provide a service to a foreign Company and it refuses to pay then unless you have specified that in the event of a dispute the laws of England and Wales will prevail you may have to sue in the other party’s country, under foreign laws.

Debt Recovery

Your terms and conditions can specify payment requirements and the consequences of late payment. Provisions relating to interest and compensation for late payments can be set out in your terms and conditions, equally early payment discounts could also be included to encourage prompt payment.

Intellectual Property

If Intellectual Property is likely to be created in the process make sure each party knows who will own it. Unless specified the creator owns it but this may prevent the party from using the products or services later if they do not ensure that those rights are transferred to them. Additionally if the creator is generating new Intellectual Property Rights you should make sure that when you finish the contract those rights are licensed to you in perpetuity so that you cannot later be prevented from using it.

Supports an Excellent Service

Use your terms and conditions to back up an excellent service and/or product. Your terms and conditions are an insight to how you run the rest of your company – what do poorly drafted terms and conditions say about the rest of your company?
Most importantly......

Use your terms and conditions! Ensure that each customer/client returns a signed copy to you prior to commencement of their order. Finally keep the terms and conditions up to date – things change, such as VAT rates – you don’t want to be out of pocket due to outdated terms and conditions.

For further information or a review of your existing terms and conditions please contact Brendan O’Brien brendan.obrien@breezeandwyles.co.uk or telephone 01992 558411.


On yer ‘ead - scoring a goal for career freedom

Like Wayne Rooney, everyone has the right to reap the benefits of their career success, and employers cannot stall the progress of key employees by imposing conditions after someone moves on – it’s got to be in their contract, and even so any restriction has to be reasonable.

Wayne Rooney did it, and now an ex employee of Caterpillar has done it....

No, she’s not in the premier football division, and she’s never scored for England, but she has managed to beat an attempt to stall her career success.

England and Manchester United player Rooney went to the High Court when an agent refused to end the image rights contract the footballer had signed as an 18 year old rookie player at Everton, which gave them the cream of his footballing career.

And for Huesca de Crean, landing a job with the customer she had been serving at Caterpillar looked like a step up in her career, until the move stopped her former bosses in their tracks, leading to a stand-off over a gagging order as they thought confidential information could be at stake.

Although Huesca won at every stage, her case went all the way to the Court of Appeal, where the judges came down firmly on her side, saying that it’s up to the company to get their employment contracts right for key employees if they want to restrict who they work for in any new job.

“The company could have imposed a reasonable level of restriction on Ms de Crean if they had done it through her contract, and the message from the Court was that they would not close the stable door for them, once the horse had bolted,” explained employment specialist Jane Dismore of Breeze & Wyles Solicitors LLP. “Companies can’t expect the courts to deal with their oversight.”

When Huesca de Crean worked for Caterpillar Logistics Services she was responsible for the relationship with a particular client under a long term logistics services agreement, where she had access to a large amount of confidential information including legal advice in relation to the client’s contract.

When the client offered Huesco a job, she accepted, knowing that there was a clause in her contract with Caterpillar that meant she could not discuss the confidential information outside the company, but there was nothing to stop her from taking up the new job.

But Caterpillar applied to the courts, to try and get a barring order that would stop her being involved in anything to do with their contract, and demanding that she be kept out of any dealings. They also tried to get a court injunction to prevent her from disclosing any confidential information.

The case went first to the High Court and then to the Court of Appeal, and each time they refused both the barring order and the injunction. The barring order was refused on the grounds that it was excessive in an employer/employee relationship, because it was trying to restrict freedom in the labour market.

And the injunction was rejected as well, because Huesca had already given Caterpillar an undertaking not to release any confidential information and the judges said this was sufficient, looking at her good conduct record.

She added: “If you have a key employee and you want to make sure they don’t move to a client or a competitor, then you need to put a clause in their contract of employment that stops them from doing so.

“But if you do this, it’s known as a ‘restrictive covenant’ and these clauses need to be drafted very carefully because they are anti-competitive. This means that they are against public policy and will only be enforceable if they go no further than is necessary to protect the employer’s business. Any further, and courts will kick out the whole covenant, so you’ll be left with nothing.

“A good example of this was the recent case of Wayne Rooney’s management contract which he signed as a rookie 18 year old player whilst at Everton. The contract bound him to use the managing agents for eight years, which was most of his footballing life, and the courts said this was unfair, and allowed Rooney to break the contract.”

ENDS

Caterpillar Logistics Services (UK) Ltd v Huesca de Crean (EWCA/Civ/2012/156)
Web site content note:

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


NewBuy Guarantee Scheme – Is this really going to fix the broken property market ?

Earlier this month to great trumpeting from No 10, and following numerous pre-announcements the Government launched its NewBuy Guarantee Scheme.

The scheme is intended to be the solution to kick-starting the ailing property market.

The theory being that the whole market is stalled because first time buyers can’t raise sufficient deposits or borrow sufficient mortgage funds to get on the property ladder in the era of tight lending conditions following the credit crunch. Without sufficient first time buyers the whole house moving market can do no more than limp along at its current low levels of activity.

The government is desperate to repair the damaged market because a properly functioning transactional market would do much to improve the economic situation of the country as a whole.

How does the scheme work ?

House builders pay to the mortgage lender 3.5% of the purchase price on a new- build property while the government provides an additional guarantee of 5.5%. This is meant to encourage the mortgage lenders to lend to people with lower deposits on a higher loan to value basis at a reduced risk. The government suggests that this will help 100000 first-time buyers onto the property ladder who would otherwise have been frozen out by tight lending requirements.

Will this scheme deliver the return to normal business that housing minister Grant Shapps predicts. Unfortunately, I suspect not.

Looking first at the numbers, normal transactional volumes pre credit crunch were around 1.5m housing transactions p.a. , post credit crunch we are seeing volumes nearer the 900,000 level. Even taking the governments predictions at face value (i.e. assuming that there are 100000 first time buyers all waiting to buy new build houses all of whom will suddenly become eligible to buy) 100,000 new first time buyers in the market is not going to have a significant impact in improving the overall transaction levels. The best you will see is a 10% increase which will still leave the market trading at 30% or more down from its normal level.

Since the scheme only applies to new-build properties each of these first-time buyers is only going to be involved in a chain of one buyer and one seller. If the whole market is waiting for first time buyers to buy from the bottom of the chain so every one else can buy further up then encouraging first time buyers to buy from house-builders rather than private sellers is not going to help the rest of the market. In fact if anything the scheme will decrease first time buyer demand for private purchases and stagnate the rest of the market further

The property market got into trouble in the first place because we all borrowed more than we could afford on our properties. The intrinsic nature of the NewBuy Scheme is that we are encouraging mortgage lenders to lend more monies to individuals than they would otherwise consider it safe to do so. Is this really the solution to problem? Creating a short term fix by reintroducing the same bad habits that caused the mess in the first place.

My view is that the scheme is misplaced tinkering, and, as with much that the coalition has done in the last couple of years has been introduced more as a way of showing the people that it is trying to boost the economy rather than with any great expectation that it will do so.

Market economics will dictate when the property market will return to normal. This will happen as and when the lenders are capable of borrowing funds more easily and more economically, and when the consumers have more money in their pockets and therefore greater demand to buy.

Over the last 4 years I have been deluded as others into believing that there was something we could do to make lenders lend or to increase demand but I have reached the realisation that the housing market cannot be significantly manipulated by outside intervention (other than short term fixes) and that as with everything in economic cycles the market will return to normal when its good and ready.

NewBuy scheme – It’s good that the government are doing something to help a few but it is not going to have any major impact in improving the housing market in the short term


Are you ready for the changes The Localism Act will make to an unprotected deposit?

Of all the issues that confuse and cause problems for my Landlord and Agent clients “the deposit” is definitely top of the list.

The goalposts have continually been moved by a number of decisions and the government has finally starting to resolve the problems posed by these cases that have radically amended the original legislation. The Localism Act will come into force around the 6th April 2012.

In particular the decisions in two cases the new Act will seek to change are those in: –

Tiensia v Vision Enterprises Limited (t/a Universal Estates) where it was decided that a Landlord can protect the deposit any stage, even if more than 14 days have elapsed since it was received, without penalty as long as they do so before the case comes to court.
And

Gladehurst Properties Ltd v Hashemi in this case it was decided that the Tenant could not bring a claim for an unprotected deposit at all once the tenancy was over.

The Localism Act will have the effect of overriding these decisions and closing a number of loopholes exposed by the courts.

Under the old provisions the Landlord is obliged to protect the deposit and provide the prescribed information to the Tenant and any relevant person within 14 days of receipt. Under the new legislation this will change to 30 days from the date of receipt.

The decision in Tiensia and Hashemi will no longer assist Landlords and their Agents in that if they fail to protect the deposit within the 30 day period, they can do so before the hearing to avoid the penalty. Where a Tenant issues proceedings for the Landlord's failure, he will still succeed notwithstanding that the Landlord secures the deposit before the hearing. A Tenant will also be able to issue proceedings for the Landlord's failure after the tenancy has ended.

However, it is not all doom and gloom for the Landlord, compensation for failure which is currently three times the value of the deposit will also cease. The court will have a discretionary power to award a penalty between one and three times the value of the deposit.

A reasonable Landlord who protected the deposit as soon as they became aware will be penalised less than a Landlord who has simply ignored the legislation, although it will never be less than one times the deposit.

Some of the decisions in Tiensia and Hashemi have not changed. For example there is no change in the definition of deposit or restriction on taking property as part of the deposit instead of money .

Therefore, taking last month’s rent in advance at the start of the tenancy will probably be regarded as a deposit. Also the obligation to serve the prescribed information properly and in full also remains unchanged.

Agents can still be sued for failing to protect the deposit in preference to the Landlord, however the new variable penalty will now allow courts to make an order against the Agents with the lower penalty if they were not responsible for registering the deposit.

It will also be necessary for any claim for an unprotected deposit to be commenced by all the tenants together and not by one acting without the consent of the others .

What does this mean for the service of a S21?

Where a deposit has not been registered and the prescribed information not sent to the tenant within 30 days if the Landlord wishes to seek possession it would appear that his only option is to hand back the deposit before serving notice.

We're not sure yet whether these new provisions apply to pre April 2012 tenancies and hopefully this will be clarified once we get nearer to the date.

So to all Landlords and Agents beware and make sure you look at your deposits and tenancy agreements and make sure that any deposit has been secured and the prescribed information sent to the tenant before the new Act comes into force.

Rita Wright

Chartered Legal Executive
Head of Undefended Debt Recovery
For more information please visit
www.breezeandwyles.com/debtrecovery


Only Firm in Hertfordshire with LEXCEL and ISO9001 accreditation

Breeze & Wyles Solicitors LLP is proud to announce that this week it has been recommended for registration to the ISO9001:2008 Standard.

The Standard recognises:

"Without satisfied customers, an organization is in peril! To keep customers satisfied, the organization needs to meet their requirements. The ISO 9001:2008 standard provides a tried and tested framework for taking a systematic approach to managing the organization's processes so that they consistently turn out product that satisfies customers' expectations."

Breeze & Wyles Solicitors LLP already holds the Law Society LEXCEL accreditation.

Martyn Bateman, the Practice Manager of the firm said: "I am very pleased and proud that Breeze & Wyles Solicitors LLP is the first Law Firm in Hertfordshire to achieve this dual accreditation. It demonstrates the high standards of service that our clients can expect from us. I must mention the staff of the Firm whose continuing efforts to produce that quality of service from day to day has allowed the firm to achieve this recognition."


You need tighter control on your overseas contracts

Business must take care when entering agreements with overseas organisations to avoid problems if disputes arise.

A High Court judge in London has been hearing a case that involved Brazilian companies who were in dispute over a contract covering the construction of one of the world's largest hydro electric facilities. The contract was for construction work in Brazil, it was governed by Brazilian law and was subject to the jurisdiction of the Brazilian courts.

But the dispute ended up in the English courts because parts of the original agreement were not precise enough, and the message to UK businesses trading overseas is to make sure they don’t fall foul of badly drafted contracts, particularly in emerging markets.

The contract in the Brazilian case said that any dispute had to be mediated and, if that failed, the dispute must be referred to arbitration in London. When the validity of the arbitration clause was challenged, the issue turned into a dispute as to whether the English courts or the Brazilian courts has jurisdiction to rule on the validity of the clause.

The judge ruled that the parties were obliged to arbitrate their dispute in London, and that English law applied to the arbitration.

The case has been highlighted as a clear lesson for anyone who has dealings with foreign companies. Whenever there is any foreign element, for example export of goods or foreign nationals as clients, the contract or terms of business must be clear about which country’s law will apply to the contract and which courts have jurisdiction. Any other details must then be consistent with the basic terms concerning the applicable law and jurisdiction.

Explained commercial law expert Brendan O'Brien of Breeze & Wyles Solicitors LLP: “The devil is in the detail. It is absolutely essential that the contract states the applicable law, because you need to be certain as to the effect of the terms - both at the time the contract is being drawn up and later if there is a disagreement. Otherwise you may find yourself in a very difficult position where your only option is expensive and difficult action involving foreign courts and procedures.

“If the contract says nothing, quite possibly the laws of another country might apply. And of course those laws might be quite different from ours. The situation is different for consumer contracts within the EU because consumers are protected by EU regulations.”

ENDS

This information is not intended as legal advice
Sulamerica CIA Nacional de Seguros SA & Ors v Enesa Engenharia SA & Ors [2012] EWHC 42 (Comm)
http://www.bailii.org/ew/cases/EWHC/Comm/2012/42.html