July News Articles
Equality bill to promote equal pay and ban age discrimination
The Government has announced new measures to promote equality by banning age discrimination and helping women to achieve equal pay with their male counterparts.
The law will also be changed to allow positive discrimination in favour of women and ethnic minorities to promote more diversity in the workplace.
The measures will be contained in the new Equality Bill to be published later this year.
The Government says the Bill is needed because although there has been a lot of progress towards equality, there is still a long way go. “Women are paid on average 12.6% less per hour than men; disabled people are two and a half times more likely to be out of work, and ethnic minorities a fifth less likely to find work; and two thirds of over-fifties feel that they are turned down for a job because they are too old.”
Harriet Harman, the Minister for Women and Equality, outlined some of the main provisions in the Bill in a statement to the House of Commons. It will include powers to ban all unjustified discrimination against older people, such as denying them medical treatment. Age discrimination is already banned in the workplace.
There will also be measures to make pay scales more transparent to ensure that inequalities between men and women cannot be hidden. Employers will be obliged to reveal details about their pay structures to see if there are any discrepancies between male and female employees doing the same work. A Government statement says: “The Equality Bill will ban 'gagging clauses' so that work colleagues can compare wages and challenge employers who unlawfully pay them less. Nearly a quarter of employers ban their staff talking about their wages, with women more likely to be in the dark about colleagues' pay than men.”
Employers will be allowed to use positive discrimination when choosing between two equally qualified candidates to ensure a more diverse workplace if particular groups such as women or ethnic minorities are under-represented. The law will also allow positive discrimination in favour of men if the circumstances call for it. For example, a school which employs mainly women teachers may be able to discriminate in favour of a man to redress the balance.
The Equality Bill is clearly intended to create more protection for women and various groups who have been treated unfairly. However, the law already provides considerable protection against various forms of discrimination. Anyone who feels they have been treated unfairly, particularly in the workplace, should seek legal advice as soon as possible.
Accountancy firm wins appeal to strike out £88m negligence claim
An accountancy firm has won its appeal against a court decision refusing to strike out an £88m claim against it for professional negligence.
This “astounding claim” in the words of Lord Justice Mummery involved a company called Stone & Rolls Ltd and the chartered accountants, Moore Stephens, who acted as its auditors.
The basis of the Stone Rolls case as put before the Court of Appeal was that Moore Stephens failed to uncover the dishonest behaviour of Mr Zvonko Stojevic, who effectively acted as the sole directing mind and will of the company.
The court was told that Mr Stojevic used the company to perpetrate frauds on banks which enabled him to channel money to himself and others. A Czech bank eventually sued and was awarded substantial damages against both the company and Mr Stojevic.
The company was unable to pay and went into liquidation. A claim for damages was then brought by the company through its liquidators. The claim for US $174m – approximately £88m – was against the accountants for their alleged negligence in failing to detect the deceits during the audits.
The accountants denied negligence and argued that the claim should be struck out because the company was effectively asking them to indemnify it against liabilities incurred by its own fraud. It said such a claim was barred by the long established legal principle that anyone involved in illegal actions cannot then claim damages arising out of those illegal actions.
The judge at the original hearing declined to strike out the claim so the accountants took the case to the Court of Appeal which has now ruled in their favour. Lord Justice Mummery said: “Mr Stojevic and his company together defrauded the bank. To suggest that the corporate creature used by Mr Stojevic as the vehicle for the fraud was the victim of the fraud committed by him with it turns the world upside down. There is no prospect of establishing at trial that the company was the victim of the fraud.”
He said the accountants could not be held liable for what happened. “As a general rule a fraudster, individual or corporate, is legally liable for the losses that flow directly from the fraud and cannot blame such losses on the negligence of another person, such as the victim or whoever.”
“Does common sense matter? Yes. It is contrary to all common sense to uphold a claim that would confer direct or indirect benefits on the corporate vehicle, which was used to commit the fraud and was not the victim of it, and the fraudulent driver of the fraudulent vehicle.”
UK retains right for people to work more than 48 hours a week
The UK has retained its right to opt out of the EU Working Time Directive which limits the working week to 48 hours.
The Government made the announcement after reaching an agreement on both the Working Time Directive and the Agency Workers Directive at the EU Employment Council.
Under the compromise arrangement, workers will continue to be able to work more than 48 hours a week but will be subject to a cap of an average of 60 hours per week.
As another part of the compromise, agency workers will have to wait 12 weeks before they receive the same rights as full time employees. The EU had wanted the UK to grant equal rights from the first day of employment but this had proved unacceptable to the British Government.
Business Secretary John Hutton said: "This agreement means that people remain free to earn overtime and businesses can cope during busy times.
"The agreement on agency working will give a fair deal for agency workers and prevent unfair undercutting of permanent staff while retaining important flexibility for businesses to hire staff for short-term seasonal contracts or key busy times."
Buy to let rises above the credit storm
Buy to let is one of the few areas of the economy to defy the downturn caused by the credit crunch and all the indicators suggest that it is actually benefiting.
The Royal Institution of Chartered Surveyors reported a 29% increase in instructions from people wanting to let property in the first quarter of the year. That was in stark contrast to a 2% fall in the previous quarter.
The reasons for the turnaround are quite straightforward. House sales may have fallen but people still need somewhere to live and so they turn to rented accommodation.
The Association of Residential Letting Agents (ARLA) reports that demand for rented accommodation is outstripping supply in many areas. A survey of its members showed that 39% of agents say there are more tenants looking for accommodation than there are properties to house them.
In turn, more people are looking to the private rented sector as a good investment. Many sellers who can’t get the prices they want for their properties are choosing to let instead, some as a long term investment and some as a short term measure while they wait for mortgage lenders to offer better deals to potential buyers so the housing market can start to rise again. In the meantime, they can look forward to taking advantage of rising rental yields.
Investors already involved in buy to let are also standing firm and looking for increased returns in coming years. ARLA recently reported that 90% of investment landlords had no intention of selling their properties even if house prices continued to fall. Most of them see buy to let as a long term investment and many see it as part of their pension provision.
Many investors are just as active and busy as ever as they respond to changing market conditions. Some are taking advantage of the drop in house prices to add to their portfolios. Some properties are being sold below market value so the vendor can avoid repossession.
Of course, while buy to let is holding firm in an uncertain economic climate, it is not without its pitfalls. Investors need to be careful where they place their money and make sure they choose the right properties in the right areas to suit their needs. They should also remember that there are numerous legal requirements landlords have to meet such as obtaining licences for some houses in multiple occupation, fulfilling all their obligations to tenants and entering into tenancy deposit schemes.
All landlords run the risk of sometimes having to deal with problem tenants. Some may fail to keep up with the rent or not treat your property as well as they should. In these circumstances you may need to take legal advice so you can take action to recover rent arrears or to recover your property from bad tenants when necessary.
As the figures show, buy to let remains an attractive proposition for both small and large investors as long as they are prepared to plan carefully and follow the correct legal procedures at all times.
OFT approves estate agents redress scheme
A redress scheme is being set up to allow consumers to refer complaints about estate agents to an ombudsman.
The Office of Fair Trading (OFT) has already given approval to the Ombudsman for Estate Agents Company Ltd to set up a redress scheme under the Consumer Estate Agents and Redress Act 2007. Two other applications to run estate agent redress schemes are also being considered.
An OFT statement said: “Once it becomes compulsory for all estate agents to join an approved scheme, buyers and sellers of residential property will be able to refer complaints concerning members of the scheme to an ombudsman to be determined.
“The ombudsman will have the power to make a range of awards, including requiring a member to pay compensation. The ombudsman's decision is binding on the estate agent, although a complainant can choose to reject the decision and pursue their complaint through the courts.
“The OEA's approved redress scheme will be a free service to complainants.”
It’s expected that all estate agents will be required to join an approved redress scheme by 1st October this year.
Don’t let your will be a DIY disaster
Few people would trust themselves or an unqualified acquaintance to draw up complex legal documents relating to business contracts or the buying and selling of a house.
However, the same sense of caution does not always extend to drawing up a will in spite of the numerous examples of what can go wrong in the absence of professional legal advice.
In one case highlighted by the Law Society recently, an elderly lady drew up a will for just £24 with a man who advertised in her local paper. The lady had lost touch with her son and did not want him to inherit anything because he had treated her badly in the past. Instead, she wanted her estate to go to her long-time devoted carers.
However, when she died, the will turned out to be invalid because it had not been properly drawn up and contained several legal errors. The carers received nothing and the son inherited everything despite the old lady’s wishes.
The problem is that there is no regulation covering unqualified people offering will making services. The rising number of DIY will-making packs on sale at local shops and supermarkets are also unregulated.
In contrast to this, solicitors who draw up wills need a valid practising certificate and are regulated by the Solicitors Regulation Authority.
Using a DIY will or seeking the help of an unregulated provider may seem a cheaper option but the scope for something going wrong is considerable. If your will is not properly drafted then it may have no legal value. This could cause serious problems for your loved ones who could lose some of their rightful inheritance.
There’s still time to make the most of tax benefits from trusts
Families have been granted more time to rearrange their “income in possession trusts” without becoming subject to the new Inheritance Tax (IHT) regime.
The Finance Act of 2006 changed the rules so that trusts will be hit by IHT every ten years. Holders of existing trusts were given until 6th April this year to rearrange their trusts, such as by transferring it to a different family member, while still remaining under the old tax regime.
That transitional period has now been extended until 5th October. This is a welcome benefit to families who may have left it too late to rearrange their trusts and then missed the April deadline.
Some people may find it helpful to replace an older beneficiary with a younger family member enabling them to hold on to the tax advantages for longer.
If an existing trust is coming to an end it is also possible to replace it with a new interest in possession trust for the same beneficiary without coming under the new rules as long as the trust is drawn up before 5th October.
Trusts can seem complicated but they are worth exploring because if properly drawn up they can help to reduce an otherwise heavy tax burden. Families that already have such trusts should consider whether it would be advantageous to rearrange them before the October deadline. If they rearrange them after the deadline then the trust will become subject to the new IHT rules.
Please contact us if you would like more information.
Homebuy schemes expanded to help first time buyers
The Government has expanded its Homebuy programme to help more first time buyers get on to the housing ladder.
The system works by providing buyers with equity loans of up to 50% of the value of the property. The buyer provides the rest of the money by traditional methods such as a mortgage. The advantage is that there is no interest to pay on the equity loan and it can be repaid at market value when the property is eventually sold.
There are two schemes on offer. MyChoiceHomeBuy provides equity loans of between 15% and 50% of the purchase price. The Ownhome scheme provides equity loans of between 20% and 40%.
In the past, the programme has only been available to key workers such as nurses, teachers and social housing tenants.
Now it is being expanded to all first time buyers with a household income of £60,000 or less. A Government statement points out that the money can be used to boost your buying power. “For example a household with an income of £32,000 could afford a house of £200,000, paying £760 each month - as opposed to £1,350 without the scheme.”
Both schemes are funded by the Government in partnership with various housing associations and other organisations.
Rising dementia figures highlight value of powers of attorney
A group of scientists has warned the Government that the number of dementia cases could double within a generation.
The scientists, from leading universities around the UK, say more investment is needed or the health service as we know it may become unsustainable. The warning has been backed up by the Alzheimer’s Research Trust. The Chief Executive, Rebecca Wood, said: “If underinvestment persists, the economic consequences arising from dementia care costs will be catastrophic.”
Despite these and similar warnings, research by the insurance company Standard Life shows that three out of four people have made no arrangements to enable someone to manage their financial affairs should failing mental health make it impossible for them to do so themselves.
This is in spite of the fact that it can be difficult and time-consuming to unfreeze the assets of a family member who suddenly becomes mentally incapacitated.
Fortunately, the law has been modified to make it easier for people to prepare for a time when ill health or mental incapacity means they are no longer able to make decisions for themselves.
In the past it was possible to use the Enduring Power of Attorney (EPA) system to appoint someone you trust to operate your bank account and manage your financial affairs if you became incapable of doing so yourself.
The Mental Capacity Act has now replaced EPAs with a revised provision called a Lasting Power of Attorney (LPA). The LPA has to be registered with the Office of the Public Guardian before it can be acted upon which should make it more secure and less open to abuse. It also needs to be accompanied by a certificate signed by someone like a solicitor or a doctor confirming that you understand what it means to grant someone power of attorney over your affairs and you are entering into it freely.
The new system also provides more scope. LPAs can be used to cover financial matters like EPAs used to do but they can also cover health and personal welfare. It means you can say in advance the extent of the medical treatment you would like to receive if you become incapacitated and delegate an attorney to make such decisions on your behalf.
Setting up an LPA gives you more control over what happens to you in future and makes it easier for your family to administer your affairs.
Please contact us if you would like more information.
Injured motorcyclist awarded damages and care costs for life
A motorcyclist who suffered multiple injuries in a road accident has been awarded compensation for his suffering together with various awards to cover his loss of earnings and the cost of his future care.
The victim was a 37-year-old mechanic and self-employed builder when he was knocked off his bike by a car driver who admitted liability. He had to undergo 11 operations after sustaining fractures to his spine, head, pelvis and legs as well as his hand and wrists. He can now only walk short distances and has to use a wheelchair most of the time.
The accident had also caused him to suffer from a psychiatric disorder. He had been looked after by his fiancé for the five years since the accident happened but she is now exhausted by the effort and needs more help.
Before the accident the victim was fit and hardworking and was starting a new market stall business. He enjoyed playing sports and had a full and active life with his fiancé and her children. Now he will never be able to work again and needs constant care.
He was awarded £157,000 for the pain and suffering that he had endured. There were also several other large awards made to cover his loss of future earnings and the ongoing cost of providing him with carers for the rest of his life.