December News Articles
Employment Act sweeps away unpopular dispute resolution procedures
The Employment Act 2008 has received the Royal Assent and will now sweep away the current dispute resolution procedures which have proved so unpopular with employers since they were introduced in 2004.
One of the main changes is that the dismissal of an employee will no longer be considered automatically unfair if there is a breach of procedure by the employer.
It will still be possible for a dismissal to be deemed unfair on procedural grounds but a tribunal will be able to adjust the level of compensation - or decline to award compensation at all - if it considers that the dismissal would have taken place anyway, even if the correct procedures had been followed.
Tribunals will also have the power to adjust awards by 25% if either side has failed to reasonably comply with a relevant code of practice. In unfair dismissal cases, this will be the Code of Practice on Disciplinary and Grievance Procedures drawn up by ACAS which is due to come into effect on 6th April 2009.
The Act gives tribunals the power to determine a case without a hearing if both parties put their consent in writing or if the respondent in the case fails to present a response.
Tribunals will also be able to award compensation for financial loss in certain cases, for example, where an employee is making a claim in relation to deductions from wages or redundancy payments.
The Act also introduces tougher sanctions against employers who fail to pay the National Minimum Wage (NMW).
There will be a new way of calculating arrears for workers who have been underpaid. The arrears will be calculated with reference to the NMW rate at the time when the underpayment is rectified as well as the rate at the time when the underpayment originally took place.
It means the employee could be repaid the arrears at a higher rate than he would have originally received had no underpayment taken place, assuming that the NMW has increased in the meantime. The formula for the calculation will take into account the length of time the arrears have been outstanding.
This is intended to compensate the employee for having to wait for full payment and also to act as a deterrent to employers.
Revenue and Customs officers will be given further powers to obtain information from employers relating to NMW payments and will be able to take documents away for copying. Enforcement officers will also be able to impose penalties for underpayment.
There will also be changes to the way criminal offences under the NMW Act are investigated and enforced with the most serious cases being tried in the Crown Court.
The new measures are due to come into effect in April 2009. Meanwhile, Business Secretary Peter Mandelson has launched a campaign to increase people’s awareness of the national minimum wage.
The "It's Your Call" roadshow is visiting 28 towns and cities, offering people advice on their entitlements and how to make a complaint if they have been underpaid.
Lord Mandelson said: "Of course, most businesses treat staff fairly, but the small number who cheat their workers are flouting the law and undercutting honest competitors.
"Our changes will make sure everyone caught not paying their workers properly faces a stiff penalty - we are determined to ensure workers are paid fairly."
The changes introduced in the Employment Act are important and are likely to affect all employers. Please contact us if you would like more information.
Landlord loses appeal over failure to consult with tenants
A landlord has lost his appeal against a decision by a Leasehold Valuation Tribunal that he failed to consult tenants properly about work carried out at a block of flats.
It means he is now limited in the amount he can recover through service charges.
The tribunal was told that the landlord had instructed a managing agent to oversee work at the flats. The agent wrote to the tenants to inform them about the project and to notify them that the estimates for carrying out the work were available at its office for them to inspect.
The letter to the tenants didn’t include copies of the estimates. The tenants’ solicitor wrote to the agent saying he had failed to comply with the statutory requirement to consult with tenants under the Landlord and Tenant Act 1985. The agent responded by sending copies of the estimates to the solicitor and then proceeded with the works.
Later, the solicitor wrote to the agent saying the tenants objected to the agent appointing a sole trader to carry out the work. It then turned out that the work was unsatisfactory and additional repairs had to be carried out.
The case came before the Leasehold Valuation Tribunal which held that the landlord had failed to comply with the consultation requirements and so there was a limit to the amount he could recover from the tenants through service charges.
The landlord appealed to the Lands Tribunal saying he had complied with the consultation requirements by virtue of the agent having written to the tenants informing them that copies of the estimates were available for inspection at its office. He further submitted that even if he had failed to comply, it was reasonable to dispense with the requirement because there was no evidence to suggest the outcome would have been any different if the tenants had seen the relevant estimates.
However, the Lands Tribunal held that the landlord had failed to comply with the consultation requirements because the estimates had only been available at the agent’s offices which were more than eight miles away from where the tenants lived.
The Act required that such documents should be displayed in a convenient and obvious place where they would be likely to come to the attention of the tenants quickly and easily. Placing the documents more than eight miles away did not meet that criteria and therefore there had been no full consultation period.
The Tribunal also held that it was not possible to dispense with the consultation requirements because the landlord had not acted reasonably. There weren’t many tenants involved and only a few documents were required so it would not have been difficult to comply.
The landlord also acted unreasonably when the tenants’ solicitor wrote informing him that he had failed to comply with consultation requirements. He simply sent copies of the estimates and then pressed ahead with the works.
In doing so, the landlord had forfeited the chance of hearing objections from the tenants which may have resulted in a more capable contractor carrying out the works, thus avoiding unnecessary costs for remedial work later.
Homebuilders to draw up code of conduct and consumer redress scheme
The homebuilding industry has agreed to draw up a code of conduct and a redress scheme for consumers following a report by the Office of Fair Trading (OFT) saying that the public needs more protection.
The report contained several positives for the industry saying that it was broadly competitive and that barriers to entering the market were quite low.
However, there were some issues affecting homebuyers which needed to be addressed.
These included faults in new homes, delays to moving-in dates and “issues around the sales process including reservation fees, the clarity of information provided to homebuyers and potentially unfair terms and conditions in contracts”.
The industry has responded quickly to the findings by agreeing to form a representative body to draw up a code of conduct and consumer redress scheme. It’s hoped the measures will be in place by March 2010. If they are not, the OFT will recommend the introduction of a statutory redress mechanism which would be funded by an industry levy. It would be able to award compensation to homebuyers for delays, contract shortcomings or failings in the sales process.
The OFT Chief Executive John Fingleton, said: “We have found the homebuilding market to be generally competitive, with no evidence that individual homebuilders have the ability to restrict supply in order to inflate prices or to hoard land for anti-competitive reasons.
“However, we have concluded that homebuyers need more protection when buying a new home and we have worked hard with the industry to help it develop a new approach to self-regulation that will improve consumer protection.”
The voluntary code of conduct will be produced by the Cross Industry Steering Group which is made up of the Construction Employers Federation (NI), Council of Mortgage Lenders, Federation of Master Builders, Home Builders Association, Home Builders Federation, Homes for Scotland, LABC New Home Warranty, National House Building Council, Premier Guarantee, Retirement Housing Group and Zurich Building Guarantee.
Agency workers on short contracts become eligible for sick pay
Agency workers who have a contract or a series of contracts for three months or less now have the same right to statutory sick pay (SSP) as other workers – subject to them meeting the usual qualifying conditions.
The entitlement applies to any new period of sickness that started on or after 27th October when the regulation came into effect.
It will not apply to a period of incapacity for work that started before that date.
Employers must pay the SSP in the same way and at the same time as any wages to which the agency worker would be entitled.
The qualifying rules for SSP remain the same and continue to apply.
The full title of the new regulation is the Fixed-term Employees (Prevention of Less Favourable Treatment) (Amendment) Regulations 2008 [SI 2008 2776].
New guidelines to help prevent ‘irresponsible lending’
New guidelines to help prevent irresponsible lending are being drawn up by the Office of Fair Trading (OFT).
The move follows changes introduced in the Consumer Credit Act 2006 which mean the OFT now has to consider the possibility of irresponsible lending before granting a consumer credit licence.
It is now in the process of consulting with business, consumer groups and other stakeholders to identify potential problems it may need to address. An OFT statement says: “The study will consider all forms of consumer credit lending which the OFT licences and all participants in the market, including lenders, brokers and other intermediaries.
“The issues the review could consider include the advertising and marketing of products, selling techniques, product design, use of credit scoring techniques, appropriateness of products to borrowers, sale of associated products and management of consumers' accounts including handling of defaults and arrears.”
The main objective of the process is to produce clear and concise guidelines on practices which the OFT believes to be irresponsible and unacceptable. Failure to comply could result in a licence being revoked.
There are currently 120,000 consumer credit licence holders in the UK.
Ray Watson, OFT Director of Consumer Credit, said: “Credit is an important part of everyday life so it is vitally important that consumers are safeguarded from irresponsible lending and that businesses have clarity about what this constitutes.”
Landlords and developers must provide Energy Performance Certificates
Landlords and developers now have to provide Energy Performance Certificates (EPCs) when they build, sell or rent out flats and commercial properties of all sizes.
EPCs have been required since 6th April 2008 for all new homes being built and also for the construction, sale or rent of commercial properties with a floor area of more than 10,000sq metres. On 1st July, the threshold was reduced to 2,500sq metres and now, since 1st October, the regulations apply to all remaining buildings apart from a few minor exceptions.
The changes place new responsibilities on anyone constructing a new building or selling or renting out an existing property.
For example, when a new building is completed, the person responsible for the construction must obtain an EPC and provide it to the owner. This is obligatory under Building Regulations. The same thing applies if a building is converted into more or fewer units and there are changes to the heating and hot water provision or to the air conditioning system.
When selling an existing building, the owner will have to provide a certificate for all prospective buyers. Landlords will have to do the same for prospective tenants of commercial properties. However, there is no need to provide a certificate for an existing tenancy, only for a new one. Commercial property certificates are valid for 10 years and if they are still in date when a tenancy changes there is no need to obtain a new one.
Landlords letting out rented accommodation must also provide EPCs for prospective tenants if the property concerned is self-contained. The certificates are not required for situations where the tenant rents a room and shares facilities.
Some buildings are exempt from the regulations but not many. EPCs are not required for places of worship, stand alone buildings of less than 50sq metres (except for homes), temporary buildings which won’t be used for more than two years and buildings with a low energy demand such as barns and farm outbuildings. In some circumstances, buildings due to be demolished may be exempted.
Some estate agency HIPs ‘are misleading house buyers’
An investigation by trading standards officers has revealed that house buyers are being misled by false information in Home Information Packs (HIPs) produced by some estate agents.
Officers from Birmingham Trading Standards selected six HIPs from different estate agents in the city and subjected them to a detailed inspection. They found that five of them were unsatisfactory and contained errors.
Some said that that certain information was not available or answered questions by stating “not as far as is known” even though the information was readily available from the local authority. The officers concluded that the errors probably arose because private search companies are trying to save by money cutting corners.
The Trading Standards report gives the following examples of faults contained in the HIPs they inspected:
- Claiming there is no planning history on the property when it is readily available
- Providing inaccurate dates for planning proposals
- Stating there are no planning restrictions when there is a restriction on permitted development
- Claiming a property is within 200 metres of a proposed conservation area when it is actually inside the proposed conservation area
- A claim that planning history only dated back as far as 1990 when the local council held paper records dating from 1948
The investigation was carried out in Birmingham but the officers fear that the same thing is happening in other areas across the country.
The Law Society said the Birmingham findings coincided with reports it had received that some estate agents are being paid commission by search companies to include poor quality searches in their HIPs. The society president, Paul Marsh, urged sellers to consult a solicitor for advice about HIPs.
Mr Marsh said: “If the pack is to provide any value to the consumer at all it needs to be accurate and contain reliable information. That requires those who compile these packs to understand what they are doing.
“Anyone who buys a HIP from an unregulated estate agent or HIP provider might as well throw their money away.
“It makes perfect sense in a slow market to use the time you have properly and instruct a solicitor not only in the preparation of a HIP but on all the paper work that is involved in the selling of your home, including the contract, as soon as possible.
“All the research shows that instructing a solicitor early on in the transaction will speed up the process of selling a property significantly and ensure it runs as smoothly as possible.”
Birmingham Trading Standards plans to investigate further and has contacted the companies found to be at fault in the inspection, asking them to explain the inaccuracies.
Family challenges will giving £1m estate to doctor
The family of a woman who died when she was 91 after a long illness have succeeded in preventing her £1m estate passing on to a doctor described as manipulative and calculating.
The High Court was told that the doctor had treated the elderly woman for several years and then eventually moved in to live with her. The woman had made a will in 1978 leaving her estate to her family but then she made a further two wills in October 1990 leaving all her estate to the doctor.
The woman’s family, including her brother, challenged the new wills saying their elderly relative lacked testamentary capacity at the time she made them. In 1998, however, the High Court ruled against them saying the woman had known what she was doing and approved of the contents of the wills.
That might have been the end of the matter but further evidence then emerged as a result of police investigations into the woman’s death. Two witnesses to the woman’s third will said they had not actually seen her sign it and they hadn’t signed any documents to that effect. They said they had simply signed a document without knowing what it meant.
This led the family to renew their challenge and now they have been successful. The High Court has ruled that the two contested wills are invalid because the woman was suffering from dementia at the time and so lacked testamentary capacity when she signed them.
The judge described the doctor as “untruthful, manipulative and calculating”. The ruling means that the elderly woman’s family will now inherit the estate under the terms of a will she made in 1978.
We are happy to offer advice on all aspects of wills and probate. Please contact us for more information.
Tougher measures on the way to enforce child maintenance payments
The Child Maintenance and Enforcement Commission (CMEC) is preparing to use new powers to force unwilling parents to meet their responsibilities for child maintenance.
CMEC is replacing the Child Support Agency which has been widely criticised for failing to administer the system adequately.
Janet Paraskeva, the Chair of CMEC, said: “The Commission will have increased powers to take firm and effective enforcement action against those parents who fail to meet their responsibilities to their children.
“From 2009/10, to enable swifter enforcement the Commission will have the power to issue a liability order without the need to apply to the courts.
“Additional measures, also due to be introduced in 2009/10, include the power to deduct child maintenance debt directly from bank accounts; apply to the courts for travel disqualification and curfews; and recover debt from the estate of a deceased non-resident parent.”
The CSA is to continue operating the two current statutory maintenance schemes for the time being. Then, in 2011, CMEC will introduce a new scheme in which maintenance calculations will be based on the gross income rather than the net income of the parent without day-to-day care.
Meanwhile, the child maintenance system has been modified to give all parents the right to make their own arrangements instead of having to follow the old CSA provisions.
The changes were introduced by CMEC and became effective on 27th October.
All parents with day-to-day care of their children can now choose the kind of child maintenance arrangement that suits them best. Previously, parents claiming benefits had to use the statutory service provided by the CSA.
Woman awarded damages after suffering burns at beauty salon
A woman has been awarded nearly £4,000 compensation after she suffered burns to her back during a massage therapy at a beauty salon.
The court heard she still had a scar four years after the treatment.
The woman, who was 46 when the incident happened, had gone to the salon for massage therapy that involved her lying on hot stones. Following the treatment, she was aware of a tingling sensation on her back and then discovered red areas and blisters on her skin.
The therapist apologised and applied a cold flannel to the affected areas. The woman’s pain and discomfort increased when she went home and her GP later confirmed that she had suffered burns to her back.
The woman, who is now aged 50, experienced pain and discomfort for about 15 months after the therapy. She became very sensitive about the appearance of a scar that had formed and worried about it showing through light clothing. She felt restricted in what she could wear and was unable to go swimming because she was self-conscious about her appearance.
The salon disputed liability and negligence. It claimed the woman had extra sensitive skin and had failed to fill out its questionnaire correctly.
The court ruled in the woman’s favour and awarded her damages of £3,863 to compensate for her pain, suffering and loss of amenity together with her care costs and other expenses.
Anyone who is injured as a result of someone else’s negligence is entitled to claim compensation. Please contact us if you would like more information.