- Staff on long term sick leave qualify for full holiday entitlement
- Directors must follow their company’s articles of association
- OFT to assess the process of buying and selling homes
- Persistent flouting of planning regulations leads to loss of tenancy
- Alcohol retailers to face compulsory licensing conditions
- Creditors to get more information about firms in pre-pack administration
- New tribunal award limits come into force
- Know your rights if redundancy threatens
- Husband wins appeal against ‘excessive’ divorce settlement
- Changes to inheritance thresholds highlight need to make a will
- Family courts to come under more public scrutiny
Staff on long term sick leave qualify for full holiday entitlement
Staff on long term sick leave will be able to claim their paid holiday entitlement in full, following a ruling by the European Court of Justice.
It means a person who is off work for a year will be entitled to the four weeks annual leave accrued during that year in addition to the holiday entitlement they will accrue in the year ahead.
An employee who resigns or is made redundant while off sick will be entitled to payment in lieu of holidays. This must be in addition to any redundancy payment.
The European Court of Justice said: "A worker does not lose his right to paid annual leave which he has been unable to exercise because of sickness. He must be compensated for his annual leave not taken.”
The ruling was made after the ECJ considered two cases, one from Germany and one from the UK, in which it was asked to clarify the law relating to sick leave and holiday entitlement.
The ECJ ruling is likely to put more pressure on employers who may already be struggling because of the economic downturn. However, it only applies to statutory minimum holiday pay. Firms may be able to be more restrictive with contractual holiday entitlement which exceeds the statutory minimum.
Please contact us if you would like more information.
Directors must follow their company’s articles of association
The need for directors to follow their company’s articles of association when trying to resolve a dispute was highlighted in a recent case before the Court of Appeal.
It involved a man who was removed as a director of a company in which he owned 25% of the shares. Under the company’s articles of association he then had to transfer his shares back to other directors.
The procedures laid down in the articles meant that if the two parties could not agree a fair price for the shares, as in this case, then a third party accountant would be appointed to provide an independent valuation.
The company’s board identified a firm of accountants and signed a letter of engagement asking them to carry out the valuation. The director transferring the shares indicated his willingness to accept the appointment but he did not sign the letter. Instead, he reserved his position.
The company went ahead with the appointment but when the accountants provided a valuation the director refused to accept it. A judge then held that he was not bound by the valuation because he had not signed the engagement letter and agreed to its terms.
The company appealed and there then followed some legal argument about whether the director’s actions in indicating his willingness to accept the appointment amounted to him having actually accepted it and whether he should therefore be bound by it.
However, the Court of Appeal has ruled in favour of the director, saying that the company’s interpretation of its own articles of association would lead to surprising consequences. The accountancy firm held a powerful position because it not only valued the shares but it could also decide who should bear the costs of resolving the dispute.
With so much at stake it would be very surprising if the accountants could act as an impartial third party when they had only been nominated by the company.
The fact that the director had indicated his willingness to accept the appointment of the accountants was not enough to constitute an agreement. The company’s articles of association required that both parties and the accountants should agree and sign the terms of engagement before the valuation process could proceed and become binding.
Please contact us if you would like more information about this or any aspect of company law.
OFT to assess the process of buying and selling homes
The Office of Fair Trading is to conduct a study into the buying and selling of homes to ensure consumers are being protected and to see if the system can be improved.
The study will look at the traditional models involving estate agents and consider possible alternative approaches.
The OFT says it will concentrate on three main issues: the level of competition between service providers in terms of price and quality, the extent to which the existing regulatory framework protects consumers and the potential for entry for new providers including internet property retailers.
It may also examine the relationships between estate agents, mortgage brokers, surveyors, solicitors and other professions.
The OFT will discuss some of the main issues with the Government, industry stakeholders and consumer groups to help refine the scope of the study before it is launched.
Market studies by the OFT are carried out under the Enterprise Act 2002 which enables them to look at both competition and consumer issues. Possible outcomes of such studies include a reference of the market to the Competition Commission, recommendations for changes in the laws and regulations relating to the market and even enforcement action by the OFT. Alternatively, it could present the sector with a clean bill of health.
We shall keep clients informed of developments.
Persistent flouting of planning regulations leads to loss of tenancy
A tenant who persistently flouted planning regulations on premises within a green belt area has lost his appeal to have his tenancy renewed.
The judge rejected his application after hearing that the tenant had breached planning controls while operating several businesses on the land such as crushing concrete, demolition and haulage.
His local authority had served an enforcement notice requiring him to stop using the land for business purposes. He did not comply and then six years later, the authority decided to grant temporary planning permission to enable him to continue his business crushing concrete for seven years on condition that he made good the environmental damage and returned the land to grass.
He only carried out a small amount of restoration work and so failed to comply with the condition as agreed. The authority served a breach of condition notice requiring him to cease the concrete crushing within six months. The tenant responded by seeking a judicial review and he also applied for a certificate of lawfulness for other aspects of his business that were separate to the concrete crushing. This application was rejected.
He then applied to renew the tenancy but his application was dismissed by the judge who made possession order in favour of the landlord. The judge said most of the tenant’s activities on the site amounted to criminal offences as they breached either the enforcement notice or the condition notice.
That ruling has now been upheld by the Court of Appeal which said that the tenant’s appalling planning record meant he had committed several criminal offences.
Alcohol retailers to face compulsory licensing conditions
The Government is to impose compulsory licensing conditions on all alcohol retailers as part of its efforts to tackle problem drinking.
The move follows a review which found that many retailers are not abiding by the industry’s voluntary standards for the selling and marketing of alcohol.
The Government is now to consult on a range of compulsory measures it wants to introduce. These include banning offers such as “all you can drink for £10” and cheap drink promotions to certain groups such as women only.
Retailers will also have ensure that staff selling alcohol are properly trained and outlets will be prevented from obliging consumers to buy large quantities of alcohol in order to qualify for price discounts. There could also be limits on the display or advertising of discounted price offers.
It will become a requirement that consumers can see the unit content of alcohol before buying and bars will have to ensure that minimum sized glasses are available for customers who want them.
Licensing authorities will be given new powers to clamp down on specific problem premises in their areas and they will be able to use these powers against several premises at once.
The Government also plans to change the offence of persistently selling alcohol to children from three times within three months to twice within three months.
The measures are part of a £4.5m crackdown on alcohol fuelled crime and disorder. The money includes £3m which will be used by Crime and Disorder Reduction Partnerships to tackle problems in 190 specific areas across the country. These partnerships will also step up their efforts to tackle underage sales and confiscate alcohol from under-18s.
The Government undertook a public consultation last July and says that 90% of the 2,000 respondents supported a mandatory code of practice for the industry. The code will apply to all licensed premises including private members clubs. Breaches could lead to a loss of the licence or a maximum fine of £20,000. Offenders could also face six months imprisonment.
The Government is undertaking a consultation on what measures to include and will then legislate to impose the new mandatory code.
We shall keep clients informed of developments.
Creditors to get more information about firms in pre-pack administration
Creditors are now entitled to be given more information when a failing company is involved in a “pre-pack” administration – a practice which is becoming more widespread.
Under the pre-pack system, a buyer is lined up before the company actually goes into administration. Pre-packs tend to be used when swift action is needed because of particular commercial pressures.
New regulations came into force on the 1st of January obliging administrators to reveal to creditors the name of the buyer and the price paid for the failing company. The new rules, the Statement of Insolvency Practice (SIP) number 16, also require administrators to explain the background to their appointment and why they decided that a pre-pack would be in the best interests of creditors.
They must also reveal information about the relationship between the buyer and former directors or shareholders.
Graham Horne, Deputy Chief Executive of the Insolvency Service said: "The Insolvency Service welcomes the greater transparency that the new rules relating to "pre-pack" administrations will provide. Creditors will have better access to information about the new owners of a troubled business providing them with greater clarity about the administration process.
“We will be working closely with the bodies that regulate administrators to ensure that SIP 16 is put into practice. We will also be looking to use our enforcement powers to clamp down on any directors who misuse the administration process to disadvantage creditors or seek to gain benefit for themselves."
Directors of insolvent companies can be banned from holding a directorship for up to 15 years if their conduct in the period leading up to the insolvency is deemed to be unfit.
New tribunal award limits come into force
The maximum awards that can be made by employment tribunals rose on 1st February in line with the increase in the retail price index.
The limit on the amount of compensatory award for unfair dismissal increased from £63,000 to £66,200. The maximum amount of a nominal week’s pay – the amount used for calculating various awards including redundancy payments – increased from £330 to £350. The limit on the amount of guaranteed payment to an employee in respect of any particular day rose from £20.40 to £21.50.
The increases are made under the Employment Rights (Increase of Limits) Order 2008 and are in line with the rise in the Retail Price Index between September 2007 and September 2008.
Know your rights if redundancy threatens
The worsening economic climate means that thousands of people are being made redundant every month.
It’s a worrying time for everyone but people facing the threat of redundancy should know that they have legal rights to ensure they are treated fairly and get the best possible severance deal from their employer.
To begin with, your employer should consult with you individually or, if there are to be a large number of redundancies, with your staff or union representatives as soon as possible. This should be at least 30 days before the first redundancy if there are between 20 and 99 jobs to go and at least 90 days in advance if the number is over 100.
You should be provided with written details about such things as the reasons for the redundancies, the numbers and categories of people involved and how the employees affected will be selected. The company can decide how the selection process will work but it must be fair and based on evidence rather than who the employer likes or dislikes.
If you are selected then your employer should consult with you individually and explain why. He must also consider whether there are any alternatives to redundancy. If the employer fails to do this then the redundancy may be considered unfair.
If you feel you have been selected unfairly then you can appeal and if necessary take your case to an employment tribunal.
You will be entitled to statutory redundancy pay if you have worked continuously for your employer for two years or more. The entitlement varies from half a week’s pay for each year of service to one and a half week’s pay depending on your age. The statutory maximum weekly pay has just risen to £350 but your firm may have an in-house agreement providing better terms. The first £30,000 of redundancy pay is tax free.
You are also entitled to work your full notice period or be paid in lieu if your employer wants you to leave earlier.
Your firm may want to enter into compromise agreements with redundant staff. The agreements set out the terms and conditions relating to the termination of employment and once signed will prevent the employee bringing tribunal claims in future, except for personal injuries or pension issues.
The firm may provide an enhanced redundancy package to encourage you to sign. Because you will be waiving the right to bring an employment claim in future, you must receive independent legal advice before entering into a compromise agreement to ensure you know and understand all the implications.
This advice should be provided by a law firm that is experienced in employment matters and is not acting for the company making the redundancies.
The costs are often paid for by the employer of the redundant workers as it provides a cost effective way to reach a settlement.
The agreements are not restricted to financial matters. For example, confidentiality clauses are quite standard procedure these days to prevent the employee from disclosing the terms of the agreement.
It is also possible to include clauses preventing the employee making derogatory statements about the company or its management.
Of course, the employee may also wish to include conditions such as requesting that the employer provides a reference. There is no legal obligation on the employer to do this but if they do then the reference must be accurate and fair.
Compromise agreements can be beneficial to both sides as long as you are fully aware of what you are doing.
Redundancy can be a very difficult period in a person’s life and the rules and regulations covering it seem daunting so it is always advisable to seek legal advice if there are issues you are unsure about.
Please contact us if you would like more information about redundancy arrangements or any aspect of employment law.
Husband wins appeal against ‘excessive’ divorce settlement
A husband has won his appeal against a court order that he should transfer 30% of his assets to his wife following their divorce.
The Court of Appeal said the order was excessive considering that the marriage had not lasted very long and the husband had acquired most of his assets after the couple had separated.
For the duration of the marriage the couple had lived in the husband’s local authority flat. He acquired the right to buy shortly after his wife moved in. The couple had two children but the marriage only lasted four years.
The wife moved to another local authority flat while the husband remained in the marital home. He exercised his right to buy and then sold the flat at a good price. He put the profit towards another property which he bought with the help of a loan from his family.
The wife then applied for ancillary relief. The court ordered that the husband should pay her a lump sum of £75,000 and also make periodical payments.
However, the Court of Appeal has now overturned that order describing it as excessive given the short duration of the marriage. The order for periodical payments was struck out because the court held that a clean break was appropriate in this case. The lump sum payable to the wife was reduced to £40,000.
Please contact us if you would like more information about divorce issues.
Changes to inheritance thresholds highlight need to make a will
The amount of money a husband or wife can automatically inherit if their partner dies without making a will has been substantially increased.
However, it could still leave the surviving spouse at risk of losing the family home or other valuable assets. The Government has urged everyone to make a will to protect their families and ensure that their money is passed on according to their wishes.
It is a common misconception that if a person dies without making a will, all their estate automatically passes on to their surviving spouse. In reality, however, the estate is divided between surviving relatives in a manner laid down by the law.
Until now, if the deceased person had children then the surviving spouse received £125,000 from the estate. If there were no children then that figure increased to £200,000.
The rest of the estate was shared out between the children or other relatives if there were no children. These thresholds - known as the statutory legacy for people dying intestate, that is, without having made a will - have been in force since 1993.
On 1st February this year, these figures were increased to £250,000 for the surviving spouse, when a deceased person leaves children and £450,000 when there are no children.
It offers some extra protection to the spouses of people who die intestate but it must be remembered that the increase is well below house inflation over the same period and also below the figures recommended by the Department for Constitutional Affairs in 2005. It suggested £350,000 and £650,000 respectively.
The level of the threshold is very important because most people’s main asset is their house. If the value of the house is above the threshold, the surviving spouse may have to sell up so the deceased’s children can receive their share of the inheritance. There have been several occasions where this has happened and it can cause great hardship.
As many people’s family circumstances become more complicated due to second marriages, it is possible that this may become more of a problem in future.
Announcing the increases, the Justice Minister Bridget Prentice, said: “Married couples and civil partners should not assume that when their spouse or civil partner dies, they will automatically be entitled to everything. It is up to individuals to make sure that their wishes are respected by making a will.
“My message to people is, don't leave it to chance. Make sure your loved ones are properly provided for by leaving a will.”
This remains good advice. It’s your money; you worked hard for it all your life. Make sure it is handled exactly according to your wishes.
Please contact us if you would like more information about wills and probate or any aspect of inheritance planning.
Family courts to come under more public scrutiny
The media will soon be able to attend family court hearings. The Government hopes that by subjecting proceedings to more scrutiny it will increase public confidence in the system.
However, the Justice Secretary Jack Straw insists that the welfare of children and vulnerable adults will still be protected. Announcing the new measures in a statement to the House of Commons, he said: "It is critical that family courts make the right decisions and the public have confidence they are doing so. A key part of building trust in the system is that people understand how it works.
"At the same time, we must protect the privacy of children and families involved in family court cases so they are not identified or stigmatised by their community or friends.”
Under the proposals, the media will be able to attend family courts unless the judge decides that access should be denied in order to protect the welfare of a child, or for the safety or protection of other participants in the case such as witnesses.
Some people may be concerned at the thought of a reporter attending a hearing in which they are involved but in reality, only a tiny proportion of cases are likely to attract media attention.
There are also safeguards. People involved in a case will be able to request that the media be excluded if they feel there are valid reasons why the proceedings should not be publicised. The court can also place restrictions on what can be reported in order to protect the welfare of children and their families.
There are also proposals to give people involved in a case a copy of the judgment so they have a record of how the court reached its decision. The Government is also looking how court judgments might be retained so that children involved in proceedings can access them when they are older and able to understand the reasons for decisions affecting their welfare.
A pilot project to test out some of the proposals is due to begin in the spring.
Please contact us if you would more information about family law.
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