Here comes the Equality Act 2010

The majority of the Equality Act 2010 is set to become law this October, following some earlier confusion over the implementation time-table resulting from May’s change of government.

This is because it is now just over six months until 30 September 2011, which has been confirmed by the Government as the last day on which an employer will be able to require an employee to retire at the age of 65 without facing such a risk.

While this is a major change – positioned by employment relations minister Ed Davey as “great news for older people, great news for business and great news for the economy” – in fact some two-thirds of businesses already allowed people to continue working beyond 65.

What it will provide, however, is the right for all people who wish to continue working into their late 60s, 70s and even beyond not to be forced into retirement against their wishes. This is regarded by supporters as particularly important in a society where people are living longer and healthier lives.

While the move has been greeted by many with great enthusiasm, among them naturally the Department for Business Innovation and Skills which said “the freedom to work for longer will provide a boost to the UK economy”, many business leaders were less convinced.

Among these was John Cridland, the incoming Director General of the Confederation of British Industry (CBI), whose greatest concern involved how a business could retire employees who were no longer capable of doing their jobs. As he said: “There is not enough clarity for employers to deal with difficult questions on performance. The outcome will be more unpleasant and could involve costly legal action.”

There is also a concern that open discussion of retirement age with employees may provoke age discrimination claims, and that there will be serious difficulties in cases where there is disagreement over an employee’s fitness to work.

The CBI wishes to see greater simplification of the rules in this area, so that employees will not need to suffer “demeaning” reviews when there is a suspicion that age is causing a decline in performance. Ed Davey, on the other hand, said: “The evidence that performance and effectiveness decline after 65 is just not there.”

Anybody wishing to discuss the legal implications of this change in the law should contact one of our employment solicitors for advice on developing new policies and procedures.

The sales person who sold too much

A recent case has highlighted the importance of ensuring that clauses in employee contracts relating to bonus schemes should be very carefully and tightly worded.

The employer in question wished to incentivise a recently hired salesperson, so offered bonuses for meeting a range of sales targets. Her performance, however, was quite exceptional – so exceptional that she ended up being owed over £100,000.

This was even though the contract included a clause enabling the employer to limit bonuses paid during the year. This was not used, however, and the employee refused an offer of a bonus worth 130% of her annual salary. And when the case reached the Court of Appeal, it was felt that only a better worded capping clause should prevent the full payment from being made, and the salesperson won her case.

This is one of those ‘if only’ stories, where the employer will continually regret having neither tightened the capping clause nor invoked the one limiting bonuses paid. To ensure that your business never falls into similar traps, ensure that a specialist solicitor is involved in creating the appropriate clauses, and ascertain that your processes are sufficiently robust to take appropriate action when it is needed.

Busting the bank holiday myths

While it is a myth that employees are automatically entitled to a day off on a bank holiday, employers are required by law to give full-time workers the minimum annual leave as laid down in the Working Time Regulations (1998).

This stands at 28 days, including bank holidays – so for many, this year’s additional ‘holiday’ marking the royal wedding does not necessarily mean that they will get more time off.

If however a contract of employment stipulates “20 days’ holiday plus bank holidays”, then a worker will be entitled to the additional day over and above the standard number of eight UK bank holidays. Employers whose contracts simply give an entitlement of “28 days holiday per year” may well close down on the day itself, yet still require employees to take the day out of their annual allowance.

While many business owners bemoan the lost opportunity for trading that a bank holiday means – the Department of Business, Innovation and Skills estimates the loss to the British economy of the extra day at around £2.9 billion – they can console themselves that they are not operating in France (11 national holidays and five weeks’ paid vacation) or Spain (16 national holidays, plus regional holidays on top).

Are we moving towards flexible working for all?

This April sees the introduction of a new right for parents of children aged under 18 to request flexible working rights from their employers – a move towards an extension of flexible working rights to all employees, which is likely to come into force in April next year.

Until April’s change, the right was available to the parents of children aged up to 17 (or 18 only if the child had a disability).
It neatly coincided with a recent report from Orange, which says that 74% of all UK SMEs are planning or considering the introduction of flexible working options this year. A majority of these said that improved staff efficiency was a main driver of change.

While this suggests that the flexible working battle may have already been won, it is important that businesses adapt some of their practices to embrace the new legislation. It is recommended that they consider how this change might impact on other practices and policies and ensure that all employees with responsibility for staff working hours are fully aware of the change.

Anybody who needs to know more about flexible working in practice or wishes to introduce a flexible working policy to their business is advised to seek the help and advice of
our solicitors.

Every business needs an anti-corruption programme

Four new offences and a more effective anti-bribery framework are to be the main features of the new Bribery Act 2010, which comes into force later this year and covers organisations in both the public and private sectors.

The Act represents a major move away from the current fragmented laws covering bribery and corruption, and places obligations on organisations to have strong anti-corruption procedures in place. Having adequate procedures means that companies could escape liability for the potentially corrupt activities of its employees.

The new offences involve two concerning the payment and receipt of bribes, covering promising, offering, agreeing to or requesting them. There is also a separate offence of bribing foreign officials, and corporate offence of failing to prevent bribery.

As well as setting up a full anti-corruption programme and addressing their corporate governance, risk management, procurement and other procedures, organisations will also need to create a whistle-blowing resource, gifts and a hospitality policy and register.

This is an important and wide-ranging new piece of legislation with very serious implications for organisations of all types, meaning that owners, directors and senior managers need to be familiar with its demands and implications. Seek advice from one of our commercial solicitors if you are unsure how to proceed.

HMRC is poised to punish poor record-keepers

Under a planned clamp-down by HMRC, over two million SMEs suspected of poor record-keeping face investigation in 2011 and the years to come.

These comprise the 40% of all UK small businesses that HMRC believes may owe unpaid tax due to book-keeping failures. It is expected that some 50,000 will face investigation in 2011, and that penalties will be imposed for significant failures.

One of the biggest concerns facing such businesses is that they might face penalties under several different kinds of tax, such as income tax, PAYE, VAT, CGT and more, each of which has a separate set of penalties.

While HMRC has no clear definition of what constitutes poor book-keeping, it has said that inspectors are expected to look for ‘untidy and unanalysed’ records, such as boxes stuffed with invoices, bank statements and cheque stubs, signs of irregular updates and significant numbers of ‘round’ sums.

Being investigated can be a highly stressful and costly experience; insurance is available to cover the associated costs, but it is clearly advantageous not to be a candidate for investigation in the first place. If you are being or about to be investigated, it is advisable to talk to one of our solicitors to gain an understanding of your rights if a penalty is imposed.

Let the buyer beware

How many people fully check out the background of a used car before they buy it? A recent case suggests that perhaps more people should be doing so.

This particular motorist was delighted with the nearly new Mercedes he bought for £39,000 – right up to the point when he was told that the so-called vendor did not own it in the first place. It was actually the property of a hire purchase company, which seized the vehicle as soon as it discovered that it had been fraudulently sold.

The deeply unhappy buyer sued the company, setting in motion a case that involved a detailed examination of both the Sales of Goods Act 1979 and the Hire Purchase Act 1964. It eventually fell to the Court of Appeal to make a decision. It found in favour of a much-relieved buyer, on the basis that the decision to sell to the innocent motorist only arose once the hire purchase arrangement was in place.

If you find yourself in the innocent purchaser’s position, be sure to seek the services of our law firm. Every case is decided upon its own merits, so do not assume an easy victory because this motorist won his case.

The perils of not making a Will

A survey undertaken last year for the children’s charity Barnardo’s highlighted yet again one of the most important social issues in the UK – that a clear majority of adults (58% of the 2,221 people polled) have not made a Will.

At the time, the charity’s Gifts in Wills Marketing Manager Ginny Harris commented: “We know from this poll that most people believe they should make a Will, but they put it off for a variety of reasons.

“One of the most concerning findings is that a quarter of those over 55 who had not made a Will say ‘the money will go to my family anyway’. Yet dying without a Will can cause a lot of problems for those who are left behind. Making a Will really is the best way of protecting the interests of family and loved ones.”

In the absence of a Will, a court might have to make decisions regarding who receives a bequest. This can be a very slow, stressful and expensive process, and it is always possible that recipients might not be those intended by the deceased person.

The time and expense involved in making a Will are greatly lower than this alternative – contact us to find out what is involved.

Protection for a tenants deposit

For many private tenants, the day when they expect to receive the return of their deposit has in the past too often been tinged with disappointment.

However, in recent years landlords have been obliged to protect their tenants’ deposits under a tenancy deposit protection (TDP) scheme that guarantees the return of the deposit provided tenants meet the terms of the tenancy agreement and do not damage the property.

A TD scheme has to be used to protect anybody renting on an assured shorthold tenancy (AST), and there are three legally approved schemes to choose from: the Deposit Protection Service (DPS), MyDeposits and the Tenancy Deposit Scheme (TDS).

While these schemes do not cover ‘holding’ deposits (which have the aim of reserving a property for a prospective tenant), as soon as the prospect becomes a tenant the deposit converts to one that needs to be protected.

Landlords who do not protect their tenants’ deposits face being taken to court and the possible penalty of repaying the full deposit plus three times its face value.

Seek the advice of our residential property solicitors if you would like to know more about TDP schemes or anything else to do with letting a property.