The implications of a 'Hard' Brexit

brexit
Will we witness a 'hard' exit from the EU? Or will Britain go softly, softly?
 
Now seems to be the time to get thoughtful about the potential implications of the UK voting to leave the EU.  There could be significant repercussions for the way in which commercial counterparties within the European Union choose to contract with each other and for their ability to resolve international disputes. 


In January 2017, the House of Lords’ EU Justice Sub-Committee will hear evidence from two senior UK Judges on the significance of EU legislation designed to facilitate cross-border civil disputes.  However, it cannot be avoided that there is the smell of uncertainty about the detail of the consequences for us for ending the UK/EU relationship, if it ends hard.

For Contracts

At present, EU legislation protects parties’ abilities to choose what governing law there should be for their contractual relationships and the ability to choose forms a fundamental freedom offered by English law.

The current EU framework applicable to contractual and non-contractual obligations is enshrined in the Rome I and Rome II Regulations, respectively. 

It is not beyond the realms of possibility that a decision could be taken to leave the rules as set out in the above regulations intact after Brexit.  A possible consequence being that the English Courts would be the final arbiter of how the rules are applied - ultimately a job reserved for the European Court of Justice as things stand.  If that were to happen, then nothing immediate would change, but it is possible that the interpretation of the two regulations could start to differ between the UK and the remaining EU member states over time. 

If the Rome I and Rome II Regulations were no longer to apply following Brexit, then it is possible that the UK would revert back to the rules in force before those regulations became law.  As such, in regards to contractual obligations, the Rome Convention; which applied to the law governing contracts made between April 1991 and 17 December 2009 could apply, which, of itself, would not materially alter the present position as we know it. However, in regard to non-contractual obligations, the Private International Law (Miscellaneous Provisions) Act 1995 - which is a regime which is unlike to Rome II - could operate so that the parties would not have an express right to choose the law applicable to non-contractual relations between them. 

However, it’s anticipated that when the UK eventually leaves the EU, the courts of EU member states will continue to respect the parties’ choice as to governing law as before; so that on choosing English law the parties to a contract will still enjoy an application of the rules set out in Rome I and II.

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Faulty Christmas present? Know your consumer rights

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Most people will have heard of the Sale of Goods Act but a new law introduced in 2015 strengthens consumer rights against businesses.

If you have bought or been given something for Christmas that does not work it is important to know what rights you have.

Most people will have heard of the Sale of Goods Act, which for years has given consumers a right of redress against businesses who sell faulty goods, but few will have heard about a new law introduced in 2015 which strengthens consumer rights.

Nadia Fabri is a litigation solicitor at Pinney Talfourd. Below she explains the increased protection now available to consumers in the UK who purchase goods, services or digital content following the introduction of the Consumer Rights Act 2015.

The Consumer Rights Act

The Consumer Rights Act is designed to ensure that if something you purchase is faulty, not as described, or not suitable for the purpose for which it was intended, you have the right to insist that the business you bought it from does something about it.

Knowing your rights can help you challenge a retailer or supplier who fails to deliver on their promises. This is something that you might need to do at any time of the year but which tends to happen more frequently after Christmas.

Sale of goods

When a business sells you goods you have the right to be provided with goods that are of satisfactory quality, fit for the purpose for which they are intended to be used and as described in any literature or promotional material. If the goods are not of satisfactory quality, fit for purpose or as described, you have the right to do a number of things depending on the circumstances.

You have a short-term right to reject the goods within 30 days of purchasing them if you wish to do so. This is unless the goods you have bought are perishable, such as food, in which case rejection must happen sooner.

Once 30 days have passed you have the right to request that faulty goods, or goods which are not fit for purpose, or do not match their description, are repaired or replaced. If an attempt at repair or a replacement still falls below the expected standard you then have a further right to reject the goods or to ask for a price reduction.

Supply of services

When a business provides you with a service you have the right to receive a service that is provided with reasonable skill and care, which is charged at the rate agreed and which is performed within the time agreed. Where rates of pay or the timeframe for performance have not been agreed you have the right to be charged a reasonable rate and for the service to be provided within a reasonable time.

Where a business has told you certain things about a service or the person who will be providing it, and those things influenced you in your decision to buy the service, you also have the right to hold the business to account if the things you have been told are not delivered on or turn out to be untrue. This is a new right created by the Consumer Rights Act which makes it easier for consumers to seek redress when promises made by businesses are not honoured.

If services are not provided with reasonable skill and care, or fail to deliver on promises made by the business, you have the right to request that the business performs the service again so that it is performed correctly. Depending on the circumstances you may also have the right to claim a price reduction of up to 100 per cent.

Digital content

When a business sells you digital content, such as computer software and computer games or music downloads and films, you have the right to content which is of satisfactory quality, fit for its purpose and as described. If this does not happen you have the right to request repair or replacement unless this would be impossible or too expensive, in which case you have the right to a price reduction. If the digital content supplied has caused damage, either to other digital content or a device that you own, you may also have the right to claim compensation if you can show that the supplier of the digital content failed to exercise reasonable skill and care.

The rights in respect of digital content are new; previously digital content was treated as a general sale of goods contract and consumers did not have such extensive rights of redress when things went wrong.

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How to reduce sickness absence at work

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Alex Pearce, employment law solicitor, advises what steps you can take to reduce sickness absence within your organisation.

The average British worker takes 4.4 days’ sickness absence every year and minor illnesses such as coughs and colds are often cited as the reason. However, more days are lost on average to more serious complaints such as back, neck and muscle pain.

High levels of sickness absence can lead to reduced production, low staff morale, increased costs and poor customer service. For small employers in particular, this can be very disruptive.

 

Sickness absence policy

 

You should have a sickness absence policy in place so that employees understand what is expected of them. It should set out your arrangements for sick pay and for reporting and managing sickness absence. It will help managers to deal with sickness absence fairly and consistently.

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What the Autumn Statement means for Employment

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Following Chancellor Philip Hammond’s Autumn statement Alex Pearce, an employment law specialist, looks at those measures relevant to employers and employees.

From April 2017 employees participating in salary sacrifice schemes, in which an employee gives up part of their salary for a non-cash benefit with both the company and worker paying less tax, will be abolished. Most medium and large organisation offer salary sacrifice schemes, which may include gym memberships and mobile phone deals. This is likely to affect lower paid workers the most. Child care, ultra-low emission cars and cycling to work will not be affected. There is some limited comfort with any arrangement in place before April 2017 being protected until April 2018.

Mr Hammond also announced changes to the income tax threshold, which will increase to £11,500 in April 2017. The government will increase the higher rate income tax threshold to £50,000 by the end of the Parliament.

The National Living Wage to rise will increase from £7.20 an hour to £7.50 from April 2017.

Employer and employer NI thresholds will be equalised at £157 per week from April 2017.

Employers are advised to contact their accountant to discuss how these changes will affect their business in advance of the changes. You are also advised to speak to your employment lawyer regarding updates to employment contracts to reflect any changes to salary sacrifice schemes.

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Just “horsing around”? Accident or negligence?

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A recent equine case highlights the difference between negligence and genuine accidents. Kim Huggins explains  

The much publicised case of Ashleigh Harris who has been awarded in excess of £3 million pounds following paralysis after being thrown from her boyfriends family horse ‘Polly Perks’, has caused debate and concern from riders, horse owners and yard owners alike over the possible flood gate effect following this litigation. 

An estimated £4billion pounds per year is spent on horses in Great Britain, with over four million people riding each year, as such, there will inevitably be some accidents.

There is, however, a great deal of confusion over the difference between a genuine accident, occurring through no fault of anyone and an accident arising from exposure by another person to an obvious risk of harm.

Burden of proof of the Claimant:

Ultimately, for any case (equine or not) to be successful, it is for the Claimant to prove, on the balance of probabilities, that;

  1. The Defendant was negligent
  2. The negligence caused the accident
  3. The accident resulted in injury and loss.

Each case turns on its own facts and it is therefore important to seek advice from a solicitor, whether you wish to bring a claim or defend a claim being made against you. 

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Discrimination Appeal fails for Christian bakers

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Alex Pearce, employment law specialist explains how far the Equality Act can protect against direct discrimination.

How far does The Equality Act protect against discrimination? In the recent ‘gay cake’ dispute in Northern Ireland, an Appeal Court upheld the decision that religious belief does not override the law against discrimination.

The Northern Ireland Court of Appeal has handed down its decision deciding on the question of whether religious beliefs overrides the law against discrimination in the supply of goods and services on grounds of sexual orientation.

The appeal was issued following the Court’s decision that Ashers Bakery, owned by Mr & Mrs McArthur cancelled an order to decorate a cake with a picture of Bert & Ernie and the caption 'Support Gay Marriage'. The McArthurs are devout Christians who believe that gay marriage is sinful. They had accepted they cancelled the order because of that belief.

The Northern Ireland Court of Appeal upheld the county court's decision. It held that the benefit from the slogan could only accrue to gay or bisexual people, and that the McArthurs would not have objected to decorating a cake saying 'Support Heterosexual Marriage'. The 'reason why' they cancelled the order was that the message related to gay marriage, and there was an exact correspondence between those of the particular sexual orientation and those whom the message supported the right to marry. This was a case of 'associative discrimination' with the gay and bisexual community, and amounted to direct discrimination.

The Court of Appeal held that the McArthurs' own right to free speech (i.e. objecting to gay marriage) was not being infringed.

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Disability claims can cost employers dearly

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Employment tribunal claims for disability discrimination can lead to huge financial penalties for employers. Read how to reduce the risk of claims.

It pays to be aware of your responsibilities to disabled persons under the Equality Act 2010. 

From determining whether it is discriminatory to ask a job applicant about their health and abilities, through to justifying a refusal to allow a disabled worker to opt out of shift working, to dismissing a disabled employee for high rates of disability related absence – consideration of the law relating to disability discrimination is needed at all stages of the employee life-cycle.

Alex Pearce, our employment law specialist outlines the key principles and ways to reduce the risk of disability claims.

What is a disability?

For the purposes of the Equality Act, a disability is a mental or physical impairment which has a substantial and long-term adverse impact on a person’s ability to carry out day-to-day activities. When assessing the adverse impact of any impairment, the effects of medication or physical aids should be disregarded.

There is no need for a person to be registered as disabled in order for them to be classed as having a disability. This is clear from case law, in which severe eczema, anxiety, chronic fatigue, and even obesity have all been found capable of amounting to a disability.

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Autumn 2016 employment law update

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Alex Pearce, employment law specialist outlines the main changes for October and the action you need to take as a result.

This is a round-up of the main employment law changes that have recently come into effect, including those taking place from Autumn 2016. 

National minimum wage rises

The national minimum wage is reviewed every year and traditionally any increases come into force in the autumn. The new hourly rates from 1 October 2016 are:

  • adult rate (21 to 24): £6.95;
  • youth development rate (18 to 20): £5.55;
  • young workers’ rate (16 and 17): £4.00; and
  • apprentice rate: £3.40.

It is understood that these rate changes will only apply for six months because the government has decided to align all further changes with the national living wage changes, which will take effect on 1 April each year.

This also means that the national living wage, payable to workers aged 25 and over, will not go up on 1 October 2016 as expected but will change on 1 April 2017. The national living wage is currently £7.20. The Low Pay Commission is set to recommend to the government later in the month the level of rates to apply from April 2017.

The accommodation offset limit has risen to £6.00 per day.

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Your responsibilities as a company director

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Aside from the obvious duties, such as filing reports at Companies House, there are numerous other duties and liabilities all directors should know about.

If you fail to comply with your duties your position on the board may be under threat, as you can be held liable by the company and in some circumstances by minority shareholders. In the most serious of cases directors may be disqualified or face criminal sanctions. 

The duty to avoid conflicts of interest

A director must avoid a situation in which they have a direct or indirect interest that may conflict with the interests of the company. This duty is extremely broad, extending to situations where any information or opportunity available to the director is exploited for their own benefit. The liability of the director who breaches this duty is severe: they will be personally liable to account to the company for any profits or benefit they have received as a result of the breach. The conflict of duty may be breached even in situations where there has been no actual loss caused to the company, it continues after a director has resigned.

The easiest way to avoid liability for a conflict of interest is to obtain advance authorisation from the company for any proposed activity, unless the articles of association prohibit them. Directors who have a personal interest in a proposed transaction can avoid liability by declaring their interest in advance.

There is a defence relating to unforeseeable conflicts, where ‘the situation cannot reasonably be regarded as being likely to give rise to a conflict of interest’.

The duty not to accept benefits from third parties

A director must not accept a benefit from a third party that arises as a result of being, or doing anything as, a director. Such benefits commonly occur as a ‘commission’ paid to the director personally whilst the director is in the process of negotiating a business transaction on the company’s behalf.

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Changes to new minimum wage rates

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Alex Pearce, employment law solicitor, reminds us that the new minimum wage rate comes into effect today.

From 1st October 2016 the new minimum wage rate increase comes into effect. The increases now mean that those aged over 21 years will benefit from a 4% pay rise:

21-24 year olds increases from £6.70 to £6.95
18-20 year olds increases from £5.30 to £5.55
16-17 year olds increases from £3.87 to £4.00
Apprentice rate increases from £3.30 to £3.40

(From 25 years you are entitled to the national living wage. This did not change on 1 October)


'New To work' guidance

ACAS has also published new guidance for young people who are starting work for the first time, setting out what their rights and obligations are. The guidance provides essential advice on legal issues that young people may face at work, including special employment rights for 16 and 17 year olds, information on apprenticeships and the national minimum wage.

Read more here 

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Tougher penalties for employing illegal immigrants

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Alex Pearce, our employment law solicitor, advises on how employers can avoid illegal working traps.

On 12 July 2016 changes to illegal working offences in the Immigration Act 2016 came into force, introducing tougher penalties for employers found to be flouting the rules.

As the government is keen to crack down on employers who turn a blind eye to employing illegal migrants, with fines of up to £20,000 per illegal worker and possible disqualification for directors, it is more vital than ever for employers to make sure employees have the correct right to work documents. The Home Office also names and shames employers found employing an illegal worker, so your business reputation could be on the line too.

Alex Pearce, employment law specialist at Pinney Talfourd in Essex, advises on how employers can avoid illegal working traps.

Checking workers’ status

Under current law, employers can only legally employ an individual who has permission to live and work in the UK.

To stay on the right side of the law, you will need to ensure that your existing procedures for checking that all new workers have the legal right to work in the UK are being complied with before they start work. Also, you should ask to see the documentation of existing workers and diarise reminders to check the paperwork again when their documents are near to expiry. As long as you make these checks, and take action where necessary, there will be nothing to fear.

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Should voluntary overtime be included in holiday pay?

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Alex Pearce, employment law specialist at Pinney Talfourd in Essex advises on whether you should include voluntary overtime in your holiday pay calculations.

The issue of how to calculate holiday pay has rarely been out of the news in the last few years with a steady stream of case law on the topic. We turn our attention to an issue on which there has been little guidance: voluntary overtime.

Alex Pearce, employment law specialist at Pinney Talfourd in Essex advises on whether you should include voluntary overtime in your holiday pay calculations.

Compulsory overtime

In Bear Scotland Ltd v Fulton [2014] the Employment Appeals Tribunal (EAT) decided that employers have to take into account compulsory non-guaranteed overtime payments when calculating holiday pay in respect of the four weeks’ annual leave given by the Working Time Regulations 1998 (WTR). So, if you do not guarantee overtime but your employee must work it if required, then you will need to include payments for this in their holiday pay.

But the Bear Scotland case did not give us any answers on what to do when it comes to voluntary overtime. Voluntary overtime is work that you do not have to offer and which your employee can turn down if they do not wish to work it.

Voluntary overtime

A new case, albeit only an employment tribunal case, which is not actually binding on other tribunals or the EAT, has given some guidance on whether voluntary overtime should be included when you work out holiday pay. Pending any appeal there may be against this decision, it does give an indication of how tribunals are likely to approach the issue. In White and others v Dudley Metropolitan Borough Council [2016], the 56 claimants worked as skilled tradespeople, maintaining the council’s stock of social housing. They were invited to work on a Saturday on a voluntary basis and they also agreed to be on a standby rota, every four weeks, for emergency call-outs and repairs. Many of them gained another £725 every month for the week they were on standby.

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Employment practices at Sports Direct

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Employment Solicitor Alex Pearce looks at the recent report on employment practices at Sports Direct.

On 22 July 2016, the Business, Innovation and Skills Committee published its report on the employment practices at Sports Direct.

Sports Direct has over 400 stores staffed by employees, on zero-hour contracts and is the largest sporting retailer in the UK. The Company’s headquarters and warehouse is situated in Shirebrook, Derbyshire. There it has 200 permanent employees and over 3,000 agency workers.

The Committee heard a series of accounts of worker mistreatment, including staff being penalised for matters such as taking a short break to drink water and for taking time off work when ill – the ‘six strikes and you’re out’ policy.

On 22 July 2016, the Business, Innovation and Skills Committee published a highly critical report on its employment practices. In particular, the Committee considered that:

"The way the business model at Sports Direct is operated, in both the warehouse at Shirebrook and in the shops across the country, involves treating workers as commodities rather than as human beings with rights, responsibilities and aspirations. The low-cost products for customers, and the profits generated for the shareholders, come at the cost of maintaining contractual terms and working conditions which fall way below acceptable standards in a modern, civilised economy. There is a risk that this model - which has proved successful for Mr Ashley - will become the norm. We will be considering the full implications of this business model in the context of our broader inquiry into the labour market." (Paragraph 34.)

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Small Business, Enterprise and Employment Act 2015

No more annual returns, simplified statements of capital... Looks at what's new in the world of company law for June 2016.
   
The latest provisions from the Small Business, Enterprise and Employment Act 2015 are due to come into effect on 30 June 2016. 

The Act is designed to improve transparency around company ownership and to tackle directors involved in misconduct. At the same time, the Government has taken the opportunity to introduce a number of company filing reforms. This simplifies the current filing requirements and should improve the accuracy and integrity of information held on the public register at Companies House.

The provisions in the Act are coming into effect in stages. Agata Rumbelow, our company commercial expert looks at the latest stage of the Act:

No More Annual Returns

Companies will no longer be required to file an Annual Return (AR01); instead they must file a Confirmation Statement once a year confirming to the Registrar of Companies that the information held at Companies House is still current. Annual Returns will not be accepted for filing after the end of the month.

The Confirmation Statement fee is the same as that currently for the Annual Return (£40 for paper and £13 for electronic filing).

Of course, information that changes in the course of the year (e.g. directors resigning or new directors being appointed) must still be notified to Companies House as they occur, as previously.
 

Statement of Capital Simplified

This is to make it clearer how much (if anything) shareholders owe the Company on unpaid shares, so that anyone using the Register to check a company’s financial health can access the information more readily.
 

Company Registers

Private companies (i.e. not PLC’s) now have the option of just recording information about directors and shareholders at Companies House without a requirement to keep separate registers at their Registered Office.
 

Register of People with Significant Control

From the end of the month, the information that companies are now required to keep on those who hold or control (directly or indirectly) more than 25% of the shares or voting rights in a company, will also have to be provided to Companies House once a year with the Confirmation Statement.

 

Find out more

If you require any further information on different types of business structure or any company and commercial law matter, contact our Company and Commercial team on 01277 246833. 

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at June 2016.
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Have you included a "purpose" in your commercial contract?

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A recent Appeal Court case confirms the importance of a contract having a clear purpose in law.   

Without a purpose, one or other of the parties may not get the benefit they were expecting from the agreement.

But how can the purpose of a contract be unclear? It should be fairly obvious you might think, especially if the parties have specified what it is. Well, not necessarily. The Judge in the leading case on this point stated "A person's purposes are almost always to some extent mixed, and the ordinary principle is that the relevant purpose is the dominant one".

In other words, Judges will make a distinction between

  •  the sole purpose
  •  the dominant purpose
  •  one of several purposes, all of varying importance.

So, it is easy to see how the parties might end up with something they did not intend, and which one or the other of them did not want.

If you have an important commercial contract in the pipeline, are you sure that you will get what you want out of it? If not, why not get it checked out by Pinney Talfourd’s experienced Company/Commercial team.

If you require any further information on different types of business structure or any company and commercial law matter, call 01277 246833. 

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at May 2016.
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