May 2009 News Articles
Equality Bill outlines new approach to tackling discrimination
The Government has published its new Equality Bill which contains a range of measures affecting employers.
One of the key aims of the Bill is to narrow the pay gap between men and women.
Secrecy clauses in employment contracts will be banned so that employees can compare wages if they wish, enabling women to take action if they find they are being paid less than men for doing the same work.
Large firms with 250 or more employees will be required to report on the gender pay gap within their organisations.
Firms may also need to consider equality issues when tendering for contracts with public bodies. Organisations such as local authorities will be encouraged to use procurement as a way of promoting equality within private sector firms.
A Government statement gives this example of how it might work: “A council commissioning a construction project for a social regeneration scheme could require the contractor to run a positive action programme to train women in under-represented areas such as plumbing or carpentry, or pre-qualification criteria could be stated.”
Employment tribunals will be given greater powers. At the moment they can make recommendations to companies about how to improve work practices - but only in relation to the individual employee who brought the case. The Bill will allow tribunals to make recommendations which would benefit everyone in the workforce and help prevent similar forms of discrimination happening again.
The Bill will also enable employers to take positive action to rectify a situation where certain groups are under-represented within the workforce. They can balance things out if they wish by appointing someone from an under-represented group, provided the candidate is equally suitable. Such action will be optional. Positive discrimination which involves employing someone based on a particular characteristic regardless of merit will still be illegal.
There will also be more protection for carers against discrimination. It is currently illegal to discriminate against someone because of their association with a person of another race, religion or sexual orientation. The Equality Bill will extend this protection so it relates to age, disability and sex or gender reassignment. It means, for example, that an employer could not refuse to promote someone just because they were the carer of an elderly relative.
The Bill contains several other measures including some relating to promoting equality in society generally. For example, age discrimination will be illegal when selling goods or providing services such as in shops and hospitals or in relation to financial products and insurance.
However, it is in the workplace that the Bill will probably have the most impact. The Government says it is determined to eradicate inequality, particularly in relation to pay.
Vera Baird, Solicitor General and Minister who is taking the Equality Bill through the House, said: "Employers will no longer be able to rely on keeping their pay structure secret. We will ban secrecy clauses in employment contracts, so that women can challenge unfair pay. And we will encourage businesses to report on gender pay, but let us make no mistake: if voluntary measures do not work, we will take stronger measures to ensure equal pay for women."
The Bill will replace nine other pieces of legislation and approximately 100 measures introduced over the last 40 years. Most of the measures are expected to come into force by the end of next year.
Firms may wish to re-assess their equality policies in light of the new measures in the Bill. Please contact us if you would like more information.
Buy to let sentiment improves as landlords acquire more properties
For the first time in two years landlords are now buying more properties than they are selling, according to research by the Association of Residential Letting Agents (ARLA).
Meanwhile, rental returns are holding up at just under 5%.
The ARLA Members’ Survey of the Private Rented Sector found that more than double the number of agents reported landlords buying properties in the first quarter of this year compared with the last quarter of 2008. ARLA believes the figures show that sentiment in the buy to let market is changing for the better.
This is in spite of the fact that ARLA members also reported an oversupply of properties caused by non-professional landlords entering the market simply because they have been unable to sell their homes.
Ian Potter, ARLA Operations Manager, said: “The data shows that there are bargains to be had in the property market at the moment for those with a keen eye. This substantiates our belief that buy to let remains a viable long-term investment vehicle.
“And whilst in general it appears that there is an oversupply of rental properties to let, this does not mean that in certain areas of the country there isn’t a shortage of property. It very much depends on the type of property, the experience of the landlord and the quality of advice they receive that makes the difference in identifying a good opportunity to invest.”
The ARLA quarterly survey showed that rental returns have remained consistent during the first quarter of the year. The return on flats remains the same as the final quarter of 2008 at 4.9%, while the return on houses has fallen slightly from 4.9% to 4.8%.
Mr Potter said: “With interest rates at an all time low the figures speak for themselves. Flats clearly offer a sound return on investment against saving rates, particularly if you’re not looking for quick capital uplift.”
It’s good to see that some confidence seems to be returning to the market after the turmoil of the last few years, although it is still too early to say whether or not the worst is over.
Investors should still tread carefully when choosing properties and, of course, they should ensure that they are aware of the legal requirements involved in buy to let.
For example, landlords need a licence from the local authority if they want to rent out homes of multiple occupation such as student flats. The Housing Act also places obligations on landlords to ensure their properties are safe, secure and free from hazards.
New investors may need to familiarise themselves with the tenancy deposit scheme which is designed to protect a tenant’s money from unscrupulous landlords. All landlords should ensure that tenancy agreements are properly drawn up to provide them with as much protection as possible should disputes arise.
Please contact us for more information about any aspect of commercial property law.
Court rules that a company shareholder can also be an employee
The Court of Appeal has ruled that there is no reason in principle why a person who is a director and shareholder of a company could not also be one of its employees and benefit from the legal rights that go with being an employee.
The case is important because it means that such directors, even if they are a controlling shareholder, could qualify for compensation payments from the National Insurance Fund if their company becomes insolvent.
The case involved two director/shareholders from two separate companies. They each received salaries, paid tax and national insurance as an employed person and said they had an oral contract of employment with their companies.
They had both given personal guarantees relating to company business and one had made a personal loan to his company.
When their two companies became insolvent they were deemed by an employment tribunal not to be employees under Employment Rights Act 1996 and so were not entitled to redundancy payments or any other compensation from the National Insurance Fund.
They then took their case to the Employment Appeal Tribunal which ruled in their favour and said they could be classified as employees. The Secretary of State for Business, Enterprise and Regulatory Reform then took the two cases to the Court of Appeal so the law on the issue could be clarified.
The Appeal Court judges have now ruled that there is no reason in principle why a shareholder or even a controlling shareholder could not be an employee under a contract of employment.
The court gave some guidance to help determine whether or not a shareholder could also be classified as an employee. It would be necessary, for example, to determine whether the contract of employment was genuine or just a sham. Inquiries should be made as to what work had actually been done under the contract and whether the shareholder in question was actually an employee at the time of the insolvency.
The court also said that questions such as whether a person had a controlling interest in a company or the extent of his personal investment should not ordinarily be of any special relevance in deciding whether or not he had a valid contract of employment.
This is a very important ruling and will influence the way these issues are decided in future. There were in the region of 12,000 claims by directors to the National Insurance Fund in 2008 and as the recession deepens, that figure could be exceeded this year.
Please contact us if you would like more information.
Invoice errors are not a reason to escape late payment interest
The fact that a supplier makes some mistakes on its invoices is not a good enough reason for a customer who doesn’t settle the account on time to avoid late payment interest.
That was the ruling handed down by the Court of Appeal in a case that will give encouragement to all businesses facing cash flow problems because of late payments.
The case involved a company called Ruttle Plant Hire Ltd and the Department for Environment, Food and Rural Affairs (DEFRA). Ruttle had carried out some work for DEFRA but the contract had been arranged in a hurry and the terms of business had not been clearly defined.
When the invoices were not paid on time, Ruttle claimed it was entitled to charge interest under the Late Payment of Commercial Debt (Interest) Act 1998. However, the judge ruled against Ruttle because there were mistakes on some invoices which were calculated using the wrong rates for plant hire.
Ruttle then took the case to the Court of Appeal. Lord Justice Jacob said the issue was whether or not the “notice of the amount of the debt” required that the invoice should be correct before the provisions of the Act would apply.
DEFRA submitted that any error, regardless of how small, would be enough to prevent the Act applying and interest being payable. The Appeal Court judges rejected this argument saying there was no reason to interpret the requirements of the Act as meaning that the amount stated on the invoices should be “the true amount, the whole true amount and nothing but the true amount”.
He said it would make no sense to suggest that the Act required the invoice to be perfect before interest could be charged. If that were the case then a customer might start looking for the smallest detail of error in an invoice so he could avoid being charged interest if he failed to pay on time and so the purpose of the Act would be frustrated.
It would be acceptable for a company to withhold payment for sums which were in doubt but that right could not be extended to paying nothing at all and then expecting to escape the high rates of interest chargeable under the Act.
Britain retains the right to opt out from 48-hour maximum working week
Britain has retained the right to opt out of the 48-hour maximum working week.
The European Parliament voted last year to end the opt-out within three years of the new EU Working Time Directive being adopted.
The vote put the parliament in conflict with the Council of Ministers which negotiated a deal with the UK government last summer allowing the opt-out to continue in return for Britain accepting improved rights for temporary workers.
It meant that the Council and the parliament had to negotiate a compromise. However, they have failed to reach an agreement and so the opt-out will remain in place.
Employment Relations Minister Pat McFadden said: "Everyone has the right to basic protections surrounding the hours that they work, but it is also important that they have the right to choose those hours.
"In the UK and many other Member States, choice over working hours has operated successfully for many years. The current economic climate makes it more important than ever that people continue to have the right to put more money in their pockets by working longer hours if they choose to do so."
Company faces corporate manslaughter charge under new act
The Crown Prosecution Service (CPS) has authorised a charge of corporate manslaughter against a company following the death of one of its employees.
It’s the first such charge to be brought under the Corporate Manslaughter and Corporate Homicide Act 2007.
The CPS authorised the charge of corporate manslaughter against Cotswold Geotechnical Holdings Ltd in relation to the death of Alexander Wright on 5th September 2008.
Mr Wright, who was employed as a junior geologist by the company, was taking samples from inside a pit which had been excavated as part of a site survey when the sides collapsed and crushed him.
A CPS statement said: “Peter Eaton, a director of the company, has been charged with gross negligence manslaughter and with an offence contrary to Section 37, Health and Safety at Work Act 1974. Cotswold Geotechnical Holdings Ltd has also been charged with failing to discharge a duty contrary to Section 33, Health and Safety at Work Act 1974.”
Kate Leonard, reviewing lawyer for the CPS Special Crime Division, said: "Under the Corporate Manslaughter and Corporate Homicide Act 2007 an organisation is guilty of corporate manslaughter if the way in which its activities are managed or organised causes a death and amounts to a gross breach of a duty of care to the person who died.
“A substantial part of the breach must have been in the way activities were organised by senior management. I have concluded that there is sufficient evidence for a realistic prospect of conviction for this offence."
Mr Eaton is due to appear at Stroud Magistrates' Court on 17th June. He faces charges both as an individual and on behalf of the company.
The Corporate Manslaughter and Corporate Homicide Act 2007 came into effect on 6th April 2008. A conviction for gross negligence manslaughter carries a maximum sentence of life imprisonment. A conviction for corporate manslaughter attracts an unlimited fine.
Man who worked 30 years for nothing finally inherits farm
Solicitors often advise clients to make a will so they can settle their affairs and prevent problems arising for their families in the future.
The stress that can emerge from failing to make a will were illustrated in an extraordinary case involving an agricultural labourer who worked without pay for 30 years on the understanding that he would eventually inherit his cousin’s farm.
David Thorner spent most of his adult life helping out on a farm in Somerset owned by his cousin Peter Thorner. He agreed not to take any wages on the understanding that he would inherit the land, worth £2m, when his cousin died. He lived on little more than pocket money from his parents in the meantime.
Peter made a will leaving the estate to David. Later he made an alteration to the will relating to a completely different matter but then never returned it to his solicitor. When he died the will could not be found.
In the absence of a will, other members of Peter’s family claimed the estate. The case ended up in the High Court which recognised David’s remarkable commitment and accepted that his cousin Peter had wanted him to inherit.
David was awarded the farm with the remainder of the estate, valued at over £1m, going to other members of the family.
However, Peter’s sisters challenged the ruling and won their case in the Court of Appeal. Lord Justice Lloyd said David Thorner had a strong moral claim to the farm but it would be a dangerous precedent for him to inherit it. "This is another case, where, what appear to have been a man's testamentary intentions have failed because, for whatever reason, he did not take the proper steps to put them into effect.
"It may be thought that David had a strong moral claim to inherit Peter's farm, after the unstinting help he gave to Peter, both on the farm and in personal support to him in his life, over almost 30 years."
However, Lord Justice Lloyd then added that there was no evidence that anything had been said "which in terms amounted to a statement, still less a promise, that David would inherit the farm.
Mr Thorner refused to accept the Court of Appeal’s decision and took the case to the House of Lords, which has now ruled in his favour. It means he will be able to inherit after all.
The case illustrates the problems that can arise if someone fails to make a will or fails to keep it up to date. It might be said that justice was done in the end as Mr Thorner will inherit after all, but he has had to fight a long legal battle to win his case. All that stress could have been avoided if his cousin had simply updated his will.
Anyone who has not made a will or updated it to reflect changes in their circumstances should consider doing so as soon as possible. Please contact us if you would more information.
OFT to review process of buying and selling homes
The Office of Fair Trading has begun a market study into the process of buying and selling homes to ensure that consumers are getting a good service.
The provision of Home Information Packs (HIPs) will be one of the areas coming under scrutiny. The study will examine competition on price and quality between service providers, particularly estate agents.
It will also look at the relationships between estate agents and mortgage brokers, surveyors, solicitors and other professional advisers.
The move has been welcomed by the Law Society which says a review that considers “the lack of transparency around the role, responsibilities and payment of estate agents, is desperately needed”.
The study will try to establish whether the existing regulatory framework strikes the right balance between protecting consumers and ensuring that the market remains competitive and innovative.
The Law Society president, Paul Marsh, said: “The Law Society has been asking for a review of this kind for over five years and it is clear that the lack of clarity regarding the legal obligations of estate agents in the market is a problem for all involved.
“There is a clear distinction between advertising properties for sale and the much more complex handling of detailed negotiations between a buyer and a seller.
“An independent review of HIPs has been needed since it was first introduced, we are extremely pleased that at last it is going ahead.
“Solicitors are highly regulated and the system has been reformed recently by the Legal Services Act. It is about time that everyone involved in the property market stepped up to an appropriate level of regulation for the benefit of the consumers and for fair competition.”
The OFT intends to complete its study before the end of this year. We shall keep clients up to date with developments.
In the meantime, anyone wishing to buy or sell a property should get legal advice from a solicitor to protect their interests and ensure everything goes smoothly.
Please contact us if you would like to know more about Home Information Packs or any aspect of buying and selling a property.
Husband tried to use bankruptcy to avoid maintenance payments
A court has annulled a man’s bankruptcy order after the judge decided that he was simply using it as a way to avoid having to pay maintenance to his wife.
During the divorce proceedings the wife had obtained an order for interim maintenance. The husband then successfully issued a petition for his own bankruptcy saying that he was unable to meet his debts.
The wife immediately applied for the order to be annulled because she believed it was simply a device to enable him to avoid paying maintenance. After a long and complicated hearing, the judge questioned the husband’s honesty and agreed to annul the order.
The husband then took the case to the Court of Appeal but it too ruled against him after hearing that at the time he petitioned for bankruptcy, he had assets of £1.2m and debts of only £136,000. The court held that with such substantial assets, the onus was on him to prove that he was unable to pay his debts.
He had not been able to do this and so the judge at the original hearing had been right to conclude that the husband was able to pay his debts at the time he was petitioning for bankruptcy. His motive had simply been to defeat his wife’s maintenance claim and so the decision to annul the bankruptcy had been correct.
Please contact us if you would like more information about this or any aspect of divorce proceedings.
Teacher wins constructive dismissal case
A teacher who says he resigned because he had been told not to employ a person who was deaf has won his claim for constructive dismissal.
The teacher worked as the head of care at a school. When he recruited a woman who was deaf, the owner of the school called him to a meeting. The teacher said the owner instructed him to dismiss the woman because of her disability. The owner denies giving such an instruction.
The teacher then resigned because he was unwilling to dismiss someone for reasons of disability. His complaint of constructive unfair dismissal was upheld by an employment tribunal which found that although the school owner had not explicitly ordered that the deaf employee should be dismissed, the discussions about terminating her employment were as clear an instruction as it was possible to give without using express words.
That view was later upheld by the Employment Appeal Tribunal.
The school then took the case to the Court of Appeal, submitting that there was no evidence that there was an implied instruction to dismiss and so therefore the tribunal findings were perverse and wrong in law.
However, the Appeal Court has upheld the tribunal decision, saying that evidence of oral discussions such as that between the teacher and the owner did not have to satisfy standards of perfection. It only had to be more likely to be true than the evidence offered by the other side after taking all the relevant circumstances into account.
The tribunal had therefore been entitled to find that on the balance of probabilities, the teacher had resigned because he had been instructed to dismiss the disabled employee, even if his evidence recalling the meeting was not an exact account of what was actually said by the owner.
Please contact us if you would like more information about employment issues.
Father granted residency of his children during school term time
The Court of Appeal has upheld a ruling that a father should be granted residency of his two children during school term time despite opposition from the mother.
At one stage during the couple’s relationship, the father had been the primary carer of the two children and had been responsible for sending them to the local school. When the relationship broke up, the mother took the children with her to live with her family.
The father then applied for a residence order so the children could return to him. The judge said he preferred the father’s evidence but noted that it was a finely balanced case and the children would thrive with either parent.
He then decided that the children should be returned to the father during term time so they could continue their education at the school they used to attend before their mother took them away. They should then spend alternate weekends and the school holidays with their mother.
The mother appealed saying the status quo was with her – that is, the children were already living with her and they should not be disturbed from their settled environment – especially as the judge had already said they would thrive with either parent.
However, the Court of Appeal upheld the judge’s ruling. It said that having decided the issue was finely balanced, the judge had been mindful of the need to consider the child welfare checklist as directed in the Children Act 1989. On that basis he had decided it was in the children’s best interests that they lived with their father during term time.
The Appeal Court judges said there was no reason to interfere with that decision.
Woman who fell on shop staircase awarded damages
A shop customer who suffered wrist and head injuries when she fell on a staircase has been awarded £3,625 damages.
The woman was looking at souvenirs when the accident happened. She said the staircase was not marked and she had not noticed it because her attention was diverted by merchandise which covered the banister.
She suffered a fracture to her wrist together with bruising to her head and leg. She was off work for two weeks and was unable to attend the gym for two months while her wrist was in a cast. It’s likely that she will continue to suffer minor aching in the wrist when she holds children for long periods.
The shop owner disputed liability but the customer won her case. She was awarded £3,500 for the pain and loss of amenity she suffered, plus a further £125 in interest and for miscellaneous losses.
Anyone who suffers an injury as a result of someone else’s negligence is entitled to claim compensation. Please contact us if you would like more information.