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Employment Bill promises better ways to resolve disputes
Government outlines timetable to implement Companies Act
Most firms now offer flexible working for staff
HIPs contribute to sharp fall in house prices
Family members fail to get aunt’s will overturned
Should I buy or lease?
Buy to let landlords remain confident about the future
Employment Bill to repeal dispute resolution regulations
The 2004 Dispute Resolution Regulations have been widely criticised over the last few years. They were intended to make it easier and quicker to resolve workplace disputes but many employers feel they had the opposite effect.
Now they are to be repealed. The newly published Employment Bill will replace them with a new code drawn up by ACAS. One important change is that in future, employment tribunals will be able to amend awards if either party fails to comply with the statutory code.
If the employer is at fault then the award could be increased by up to 25%. If it is the employee who fails to abide by the code then the award could be reduced by up to 25%. In an effort to streamline the system, employment tribunals will be able to reach a decision without a hearing in certain circumstances.
The Bill will also provide greater protection for agency workers and introduce tougher sanctions against firms that breach minimum wage legislation. The maximum fine for failing to pay the national minimum wage is currently £5,000. In future, there will be no limit on the fine that can be imposed. Serious cases of non-compliance will be tried in the Crown Court.
There will be a fairer method for dealing with national minimum wage arrears so that employees don’t suffer any losses because of underpayment.
There will also be stronger penalties for agencies that try to exploit workers and undercut legitimate businesses. The Employment Agency Standards Inspectorate will be given greater investigative powers allowing it more scope to access financial information to check whether a worker's complaint is an isolated instance or an example of widespread abuse. The maximum penalty for employment agency offences will be raised from a £5000 fine to an unlimited fine.
Employment Relations Minister, Pat McFadden, said: “The National Minimum Wage was a key right this Government introduced to ensure workers were paid fairly. These changes would make sure everyone who is caught not paying their workers will be punished, with the potential for unlimited fines.
"No business should be allowed to get away with unfairly undercutting legitimate operators by exploiting workers.”
Government outlines timetable to implement Companies Act
The Government has outlined the final timetable for implementing the Companies Act 2006.
Most of the measures coming in to effect on 6th April this year have already been announced and include those relating to the need for company secretaries, the certification and transfer of securities, and mergers and divisions of public companies.
In addition, the Government has confirmed that measures relating to registers of members, the removal of entries relating to former members and the inspection of registers of interests will also take effect from 6th April this year.
Provisions coming into effect on 1st October this year include those relating to:
- objection to company names
- trading disclosures
- corporate directors and under-age directors
- general duties of directors in respect of conflicts of interest
- declaration by a director of an interest in an existing transaction or arrangement
- new procedure for private companies to make capital reductions supported by a solvency statement instead of by a court order
- repeal of the restrictions under the Companies Act 1985 on financial assistance for acquisition of shares in private companies
The Government has also confirmed that measures which are dependent on changing processes within Companies House will now come into force in October 2009 rather than October this year.
These include provisions on company formation, internal constitution and share capital.
Most firms now offer flexible working for staff
Nine out of ten employers now offer some form of flexible working for staff, according to figures released by the Department for Business, Enterprise and Regulatory Reform (BERR).
The number of workplaces offering help with childcare arrangements has more than doubled from 8% in 2003 to 18% in 2007.
The survey found that men are becoming keener to work flexibly. They accounted for 43% of employees who requested a change to their working patterns over the last two years.
The right to request flexible working was introduced in 2003 and at that time only applied to parents with a child under six or a disabled child under 18.
On 6th April 2007, this right was extended to carers of adults. Employers are obliged to consider such requests seriously and only refuse them if there are good business reasons.
Now the Government has announced that it intends to entitle parents of older children to request flexible working. A review is now being carried out as to what the cut-off age for older children should be.
The review body is expected to produce recommendations by the spring.
HIPs contribute to sharp fall in house prices
The extension of Home Information Packs (HIPs) to all homes regardless of size has contributed to a sharp fall in house prices, according to the property website Rightmove.
Rightmove measured 108,240 asking prices for houses put on sale by estate agents in the UK between 11th November and 8th December 2007.
It showed that the average price dropped by 3.2%. The decrease is partly caused by the fact that the run-up to Christmas is traditionally a quiet time when prices tend to dip. However, the Rightmove survey suggests that seasonal factors only account for about two thirds of the fall.
It believes the Government decision to make HIPs obligatory on all homes from 14th December also had a major impact. Thousands of people put their homes up for sale before the deadline to avoid having to pay for a HIP.
The survey showed that the proportion of homes coming on to the market with two or fewer bedrooms surged to 48% of the total market. In the same period last year the figure was only 38%. These smaller homes tend to be cheaper so the sudden increase in numbers accounted for about a third of the 3.2% fall in average prices.
Rightmove believes January’s figures will be similar but we should then see a rebound in February when the HIP effect will have finally worked through the system.
Please contact us if you would like more information about HIPs or any aspect of buying or selling a home.
Family members fail to get aunt’s will overturned
The family of a woman who left £10m to the owners of a restaurant have failed to get the will overturned in the High Court.
Golda Bechal made a will in 1994 leaving nearly all her estate to her best friends, Kim Sing Man and his wife Bee Lian, who run a Chinese restaurant in Essex. When she died in 2004 at the aged of 88, her five nephews and nieces challenged the will claiming she didn’t know what she was doing when she drew it up because she suffered from dementia and she wasn’t fully aware of the extent of her estate. They claimed that they should inherit instead.
The court heard that Mrs Bechal had known the Mans for several years but then became particularly close to them after the death of both her husband and then her son Peter who was only 28 when he died. She visited them regularly at their restaurant and even took holidays with them.
Judge Sir Donald Rattee dismissed the family’s challenge saying he was satisfied that Mrs Bechal had “testamentary capacity” when she drew up the will and was well enough to understand and approve of its contents.
The family is now considering whether to appeal.
Should I buy or lease?
The dilemma of whether to lease or buy a property is one that not only taxes most new businesses but quite a few well established firms as well.
There are pros and cons to each approach and any decision will be influenced by several factors including budget, the type of business and the estimated rate of growth.
The great advantage of leasehold is the flexibility it offers. A firm that sees itself expanding will not want to buy a property that it’s likely to outgrow within a few years. By leasing, it can leave itself free to move on a few years down the line, or simply expand within the landlord’s existing premises by taking on new units if they are available.
You can negotiate a short lease of say, three to five years, if you think you are likely to want to move to somewhere larger in future. Or if you want longer term stability but are unsure how well your business might perform then you could take out a longer lease with a three-year break clause. This would enable you to walk away if things don’t work out as you hope.
There are potential pitfalls however. If you don’t exercise the break clause then you will be tied in for the remainder of the lease.
Leaseholders may also be able to negotiate a rent free period to help cover the cost of fitting out the premises. The landlord may also be prepared to contribute to the cost, especially on a longer term lease.
There are also, of course, advantages in buying and it will often be the better option for more settled businesses where future growth and development is more predictable.
If you feel you are likely to want to remain in a property on a long term basis with little change in your space requirements then buying may well work out more cost effective. Most landlords work on the general rule of charging an annual rent that is 10% of the value of the property.
If you choose to buy then you could own the property outright within ten years for the same price as leasing it. You will then be operating rent free as well benefiting from the capital growth.
The problem may be finance as banks are unlikely to provide loans of more than 75% of the value of the property leaving you to find the rest yourself. You would also have to pay for the fitting out costs which could be quite high.
There are advantages but also potential pitfalls in both approaches so make sure you check out the small print and get good legal advice before making any commitments.
Buy to let landlords remain confident about the future
Buy to let landlords remain confident about the future despite the current fall-out from the credit crunch, according to research carried out by the National Association of Landlords (NLA).
The NLA found that 23% of landlords intend to expand their portfolio of properties over the next five years. A further 60% intend to maintain their current portfolios over the same period.
Fewer than 18% said they would reduce their holdings and only 2.4% said they would abandon the private rented sector completely.
The chairman of the NLA, David Salusbury said: “The fall-out from the so-called credit crunch has dominated public attention in recent weeks, but in times of financial uncertainty people continue to need a roof over their heads. That landlords are committed to invest further in the private rented sector over the next five years demonstrates that they remain confident about their businesses over the medium term.”
It is not only existing landlords who are confident about the future. According to a survey carried out by the consumer research company Mintel, the buy to let sector could double over the next three years as new investors enter the market.
It is encouraging to see that confidence remains strong. However, it is important that investors should be 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 will also need to familiarise themselves with the tenancy deposit scheme which is designed to protect a tenant’s money from unscrupulous landlords. When a tenant pays a deposit, the landlord has 14 days to hand it over to a government approved private company.
New landlords and those with smaller portfolios are particularly at risk of falling foul of commercial property legislation which could prove costly.
Please contact us for more information about all aspects of commercial property law.
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