How holiday pay might affect your business – solvent or not.

How holiday pay might affect your business – solvent or not.
5th September 2014
A recent ruling by the Court of Justice of the European Union (CJEU) has changed the way employers must now calculate holiday pay, with implications for both trading solvent businesses and insolvent businesses.

Lock v British Gas Trading Limited has confirmed that employers are required to include commission in calculating holiday pay for those workers who regularly receive it as part of their remuneration package.
Furthermore, a set of joined appeals currently being considered by the Employment Appeal Tribunal (EAT) are expected to determine that employers will also need to factor in additional payments including overtime [and other elements of pay like allowances] going forward.
There are obvious implications for trading companies and their funders in terms of cash flow and debt serviceability. Additionally, trading insolvencies (existing and/or proposed) will be affected in terms of the level and nature of claims, and the funding required to trade.
It is widely expected that the ruling will be such that employers will need to adjust future holiday pay calculations. There is also potential that employers may need to meet backdated claims for underpaid holiday pay.

What should you do?
We advise businesses to consider the potential implications, and, to the extent possible, undertake some contingency planning and advice. Here are some of the issues you might want to consider:

Trading Solvent Business / Funders of Trading Solvent Businesses should consider:

How is your workforce comprised and what is the existing basis of remuneration – i.e. do you already include elements such as commission and overtime in calculating holiday pay?
Is HR/your internal legal team aware of the position, and are there appropriate tools in place to enable holiday pay calculations to be amended to cater for changes in the legal position?
Is there sufficient headroom available in the existing budgets and forecasts to meet any existing holiday pay claims which include commission; and is there any ability to create a ‘buffer’ fund for potential additional claims for other remuneration elements e.g. overtime and/or for backdated claims?
What is the potential impact of the increased employment costs (if any) in terms of debt serviceability and/or ongoing funding requirements.
Insolvent Trading Business and insolvency practitioners or creditors in a trading insolvency should consider the relevant points above as well as:

How does this impact on the level of preferential claims?
What will be the effect on the trading costs and expenses? In particular, will there be sufficient funding available to meet increased holiday pay claims and potentially any historic holiday pay claims which relate to a period post appointment?
What is the impact on the estimated outcome statement / the level of recovery available to the creditors?
Will this impact on the intended strategy / options available in the context of the insolvency or in contemplation of the insolvency?
Breakfast briefing
We anticipate that a decision of the EAT regarding overtime and other payments will be made towards the end of the year. We hope there will also be more clarity around how commission payments should be calculated and what the position is regarding how far back claims for underpaid holiday pay can go..
Once the position is clearer, HBJ Gateley will host a breakfast seminar with a view to advising you more fully on the practical implications for businesses.
If you would like any more information about holiday pay please contact Sarah Gilzean (Employment) or Allana Sweeney (Corporate Recovery) on 0131 228 2400 who will be happy to speak to you regarding any issues. We will return with any updates in due course.

How holiday pay might affect your business – solvent or not.

How holiday pay might affect your business – solvent or not.
5th September 2014
A recent ruling by the Court of Justice of the European Union (CJEU) has changed the way employers must now calculate holiday pay, with implications for both trading solvent businesses and insolvent businesses.

Lock v British Gas Trading Limited has confirmed that employers are required to include commission in calculating holiday pay for those workers who regularly receive it as part of their remuneration package.
Furthermore, a set of joined appeals currently being considered by the Employment Appeal Tribunal (EAT) are expected to determine that employers will also need to factor in additional payments including overtime [and other elements of pay like allowances] going forward.
There are obvious implications for trading companies and their funders in terms of cash flow and debt serviceability. Additionally, trading insolvencies (existing and/or proposed) will be affected in terms of the level and nature of claims, and the funding required to trade.
It is widely expected that the ruling will be such that employers will need to adjust future holiday pay calculations. There is also potential that employers may need to meet backdated claims for underpaid holiday pay.

What should you do?
We advise businesses to consider the potential implications, and, to the extent possible, undertake some contingency planning and advice. Here are some of the issues you might want to consider:

Trading Solvent Business / Funders of Trading Solvent Businesses should consider:

How is your workforce comprised and what is the existing basis of remuneration – i.e. do you already include elements such as commission and overtime in calculating holiday pay?
Is HR/your internal legal team aware of the position, and are there appropriate tools in place to enable holiday pay calculations to be amended to cater for changes in the legal position?
Is there sufficient headroom available in the existing budgets and forecasts to meet any existing holiday pay claims which include commission; and is there any ability to create a ‘buffer’ fund for potential additional claims for other remuneration elements e.g. overtime and/or for backdated claims?
What is the potential impact of the increased employment costs (if any) in terms of debt serviceability and/or ongoing funding requirements.
Insolvent Trading Business and insolvency practitioners or creditors in a trading insolvency should consider the relevant points above as well as:

How does this impact on the level of preferential claims?
What will be the effect on the trading costs and expenses? In particular, will there be sufficient funding available to meet increased holiday pay claims and potentially any historic holiday pay claims which relate to a period post appointment?
What is the impact on the estimated outcome statement / the level of recovery available to the creditors?
Will this impact on the intended strategy / options available in the context of the insolvency or in contemplation of the insolvency?
Breakfast briefing
We anticipate that a decision of the EAT regarding overtime and other payments will be made towards the end of the year. We hope there will also be more clarity around how commission payments should be calculated and what the position is regarding how far back claims for underpaid holiday pay can go..
Once the position is clearer, HBJ Gateley will host a breakfast seminar with a view to advising you more fully on the practical implications for businesses.
If you would like any more information about holiday pay please contact Sarah Gilzean (Employment) or Allana Sweeney (Corporate Recovery) on 0131 228 2400 who will be happy to speak to you regarding any issues. We will return with any updates in due course.

Time is money – but what about wasted management time?

Time is money – but what about wasted management time?
Posted on 05/09/2014

It’s a well-known fact that if you win your case at court you can claim from the other side in order to get your legal costs paid for. But what about all the man hours wasted beyond that – the hours preparing for court or hours spent dealing with problems caused by the other side’s breach? Is there any way that, as a litigant, you can claim that back?

Legal costs aside, the court procedure can be timing-consuming and costly. Finding the resources to produce a strong case against your opponent is a laborious process and can result in significant wasted time. There is a chance that there are terms in your contract with the other party that clearly state whether such costs may be recovered. However, it is more than likely that parties will have not made provisions for circumstances such as these.

When looking at the costs and hours spent working towards a case, doing preparation such as finding evidence, preparing submissions or collecting witness statements… etc forms part of the costs of bringing the claim. Generally, you cannot recover the costs and time it has taken to prepare for a case unless you are acting as your own solicitor or if your own expert staff were employed for the purposes of the case. In one case, the court decided that because the freelancers a company had hired were doing things like drafting witness statements this needed to be claimed as part of the costs of litigation, therefore their claim for damages failed.

On the other hand, in cases that involve a breach of contract, for example, wasted management costs (employee time) are seen as legitimate damages which can be claimed. It can be a fine line trying to differentiate between work carried out remedying the breach of contract and work relating to the claim.

To succeed in a claim for recovery of wasted management costs the claimant must demonstrate the defendant’s breach caused significant disruption to the business. Disruption to the business can involve things like diverting staff away from their normal tasks to assist with the consequences of the defendant’s breach. There is case law that tells us that employees need not have been otherwise involved in profit-making activities for a wasted management claim to be successful.

The tricky part is calculating the loss suffered from diverting employees. Generally speaking it will be based on their annual income as a member of staff and how much time was spent on remedying the defendant’s breach.

Practical steps to improving the chance of a successful recovery of management time:

Work out what time is being spent on dealing with the breach (i.e. remedying defects… etc) and what time is being spent on claim preparation. Generally, only time spent dealing with the breach will be recoverable, so it makes sense to focus on that.

A good level of recovery is only likely to be achieved if detailed and accurate records are kept of the time engaged dealing with the breach. If no records are kept, the court will either allow no recovery or only a limited (discounted level of) recovery.

Ensure that all employees involved in dealing with the breach are instructed to maintain daily time sheets that record:

The extent to which they have been diverted from their routine work to deal with the issue
The duration worked (length of time, date, time, place)
A description of the work undertaken at those times (meeting, telephone call to x, preparing letters/emails…etc).
For more information, email blogs@gateleyuk.com.

Posted on 05/09/2014

It’s a well-known fact that if you win your case at court you can claim from the other side in order to get your legal costs paid for. But what about all the man hours wasted beyond that – the hours preparing for court or hours spent dealing with problems caused by the other side’s breach? Is there any way that, as a litigant, you can claim that back?

Legal costs aside, the court procedure can be timing-consuming and costly. Finding the resources to produce a strong case against your opponent is a laborious process and can result in significant wasted time. There is a chance that there are terms in your contract with the other party that clearly state whether such costs may be recovered. However, it is more than likely that parties will have not made provisions for circumstances such as these.

When looking at the costs and hours spent working towards a case, doing preparation such as finding evidence, preparing submissions or collecting witness statements… etc forms part of the costs of bringing the claim. Generally, you cannot recover the costs and time it has taken to prepare for a case unless you are acting as your own solicitor or if your own expert staff were employed for the purposes of the case. In one case, the court decided that because the freelancers a company had hired were doing things like drafting witness statements this needed to be claimed as part of the costs of litigation, therefore their claim for damages failed.

On the other hand, in cases that involve a breach of contract, for example, wasted management costs (employee time) are seen as legitimate damages which can be claimed. It can be a fine line trying to differentiate between work carried out remedying the breach of contract and work relating to the claim.

To succeed in a claim for recovery of wasted management costs the claimant must demonstrate the defendant’s breach caused significant disruption to the business. Disruption to the business can involve things like diverting staff away from their normal tasks to assist with the consequences of the defendant’s breach. There is case law that tells us that employees need not have been otherwise involved in profit-making activities for a wasted management claim to be successful.

The tricky part is calculating the loss suffered from diverting employees. Generally speaking it will be based on their annual income as a member of staff and how much time was spent on remedying the defendant’s breach.

Practical steps to improving the chance of a successful recovery of management time:

Work out what time is being spent on dealing with the breach (i.e. remedying defects… etc) and what time is being spent on claim preparation. Generally, only time spent dealing with the breach will be recoverable, so it makes sense to focus on that.

A good level of recovery is only likely to be achieved if detailed and accurate records are kept of the time engaged dealing with the breach. If no records are kept, the court will either allow no recovery or only a limited (discounted level of) recovery.

Ensure that all employees involved in dealing with the breach are instructed to maintain daily time sheets that record:

The extent to which they have been diverted from their routine work to deal with the issue
The duration worked (length of time, date, time, place)
A description of the work undertaken at those times (meeting, telephone call to x, preparing letters/emails…etc).
For more information, email blogs@gateleyuk.com.

Five tips to stop the roof from crashing down!

Five tips to stop the roof from crashing down!
Posted on 04/09/2014

As a tenant, should you be concerned with building works carried out by a landlord before you enter a lease with them?

Let’s consider a typical scenario. You want to take a lease of two adjoining units, but you want to remove the dividing wall to give you a single open-plan premises. The landlord says, “no problem – I’ll remove the wall for you before you sign the lease”.

“Great” – you’re thinking. “I’ll just move in when the work’s done and that’s that”.

But are you missing something?

Well, yes.

Keep in mind that if you have a typical ‘full repairing’ lease, the onus is firmly on you to keep the premises in good repair and condition. So, if the landlord did a poor job when removing the wall and a few months down the line the ceiling collapses – it falls on you (literally!) to fix the damage.

What should you do?

An obvious point, but make sure you have a robust agreement in place which protects your position.
Insist on warranties from the landlord’s contractors. The landlord should ensure that these are handed over to you before you enter the lease.
Agree on a ‘rectification period’ with the landlord. Typically, this will be a period of 12 months from completion of the work. If anything goes wrong during this period, the landlord and/or their contractors should fix the problem.
Exclude your liability for damage caused as a result of the landlord’s work.
In some cases it may be better to get the work done yourself, using your own contractors, but with a financial contribution from the landlord (if they agree to this).
This post was edited by Shazan Miah. For more information, email blogs@gateleyuk.com.

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Leeds office helps to raise thousands for cancer charity

Leeds office helps to raise thousands for cancer charity
3rd September 2014

In another year of fundraising activities, the Leeds office of top 50 law firm, Gateley, has contributed to raising £3,650 for The Christie charity, part of The Christie NHS Foundation Trust and one of the largest hospital charities in the UK.

Every financial year, each of the firm’s regional offices nominates a local charity to benefit from its fundraising efforts. Last financial year, the Leeds office joined forces with the Manchester operation and took part in a number of fundraising events. In addition to dress down days, bake sales and raffles, the offices raised money via a number of one-off events. In July last year, a Man-V-Pizza food eating challenge was held, raising £200. Other initiatives included the Great Manchester Run and the Lake District Six Peaks Challenge.

The charity raises vital funds for The Christie NHS Foundation Trust, one of the largest cancer treatment centres in Europe and an international leader in research. Money raised by the firm will help fund a range of services including care and treatment, cancer research and extra support such as complementary therapies.

Amy Hinks, Corporate Fundraising Officer at The Christie, commented: “We are delighted with Gateley’s fundraising efforts over the past 12 months. As a leading cancer centre, treating more than 40,000 patients a year, support from charitable partners such as Gateley allows the trust to be at the forefront of cancer research and support services.”

William Ballmann, Corporate Recovery Partner and Head of the Leeds office, added: “As a firm, we have raised more than £1.5 million in the last decade for charitable causes. Supporting local charities within the communities in which we operate is important to the firm and our staff.

“We approached the fundraising with great enthusiasm and are delighted that money raised will help to continue The Christie’s efforts in supporting those affected by cancer.”

Staff from the Leeds office have chosen to raise money for Groundwork this financial year. Groundwork is an environmental regeneration charity which helps neglected communities to improve their lives and neighbourhoods. A number of charitable activities by the Leeds office partners and staff are under way.

Five top tips for reducing the impact of claims

Five top tips for reducing the impact of claims
Posted on September 3, 2014

Commercial claims are an unfortunate fact of life for most businesses. They can be stressful and expensive to deal with. Do what you can in your contracts and business dealings generally to minimise the risk and reduce exposure to claims. In a previous blog post we gave you some tips on how to avoid claims against your company. Here we look at what you can do to reduce the impact of any claims.

Make sure you have a written contract, that your terms apply and:

Agree the amount of damages you will pay for any breach of contract in advance. But be careful not to agree an amount much higher than you are really due because this could be unenforceable.
Make sure things will be dealt with how and where you want, not in another country under a different legal system.
Make sure everything you do is properly documented. Make it company policy to keep documents, including electronic documents.
Review your contracts regularly – apply the ‘what if’ test – in the event of a particular scenario arising would your contracts do what you want them to?
Make sure you have the right controls in place and carry out regular reviews. If you are involved in design, manufacture and sale of goods have a product recall plan ready just in case you ever need it. This can greatly reduce the financial impact of any claim.
We are not saying that if you do all of these things you will avoid claims completely but you will reduce the threat and impact of claims. So check your contracts, formulate the right policies and procedures and make sure you’re in the driving seat if anything does go wrong.

For more information, email blogs@gateleyuk.com.

The September shake-up: all change

The September shake-up: all change
Posted on 03/09/2014

September is a time of transition for the junior members of the firm. A new intake of trainees will be joining, the current first year trainees will be moving into the second year of their Training Contract and final seat trainees will take up their new roles as newly qualified solicitors.

For the new trainees, years of academic training will finally be put to practical use. It is a daunting time, not only because you realise that learning the theory of law is only half the battle (at best!) but because even simple tasks can be tricky.

I remember the first time someone asked me to paginate a document – I headed straight to Google.

It is also a thoroughly exciting time for a first seat trainee as everything is new. Client meetings, new colleagues, running smaller matters and getting to know the rest of the trainees and team members were all highlights for me. I encourage new trainees to throw themselves into every opportunity that is presented to them, be it a social event or a piece of work that initially appears beyond their ability.

The transition to a second year trainee brings new challenges. As a second year, you might be expected to manage a first year trainee or paralegal, which means organising your own workload and that of a colleague. It is also thoroughly rewarding when you look back over your first year and realise the progress that you have made and the further progress that can be made in the year to come. Thoughts inevitably turn to qualification and where the best fit may be for you within the Gateley family.

Arguably the step up to a newly qualified solicitor is the biggest jump of all. Although still supervised, the loss of the ‘trainee’ title increases the expectations of others, and yourself, in respect of your abilities.

Overall, September is an exciting time for the firm. New matters start to come in after summer, trainees bring a new dynamic to the teams which they are placed in and socials take place around the firm to welcome new recruits. Whilst everything may be ‘all change’, it is certainly for the better.

This post was edited by Emma Clarke. For more information, email blogs@gateleyuk.com.