Recruitment and rehabilitation

Recruitment and rehabilitation
Posted on 24/10/2014

This last week has seen a number of press stories regarding the issue of whether it would be right or wrong for a certain football club to re-employ one of their players who has now been released from prison.

Some have expressed the opinion that they would find it difficult to support a club that had a convicted rapist in the team whilst others have been keen to point out that he has served his time and should be entitled to continue his career. Whichever viewpoint you take the debate has provoked some strong emotions and has even led to threats of violence.

Whilst the involvement of a professional footballer might have sparked the media’s attention to this particular case it is certainly not a unique problem. Many employers have been faced with difficult decisions regarding employees who have been charged or convicted of criminal offences.

First of all it would be a mistake to just assume that there will automatically be fair grounds to dismiss the employee.

Acas guidance* states, “An employee should not be dismissed or otherwise disciplined solely because he or she has been charged with or convicted of a criminal offence. The question to be asked in such cases is whether the employee’s conduct or conviction merits action because of its employment implications.”

Even if the employee is in prison, it may not be as straightforward as you might think. Looking again at the Acas guidance it is suggested that where the employee is not “available for work because he or she is in custody or on remand ….employers should decide whether, in the light of the needs of the organisation, the employee’s job can be held open.”

Of course, with a long sentence it might be that the contract of employment will be regarded as frustrated meaning that there will be no dismissal, it will simply come to an end. Then there is also the nature of the criminal offence to take into account as it may make the employee completely unsuitable for the particular role, take for example someone with financial responsibilities who has been charged with theft.

When the employee is dismissed, one of the most common reasons cited by the employer is that the employee has brought the employer’s name into disrepute. Damaging the good name of the business could cause problems with customers, which leads us onto the other reason for dismissal that is commonly relied upon, ‘third party pressure’. Now this may be a reference to a particularly important customer who threatens to take their business away if the employee is not dismissed or it could be that work colleagues will refuse to work with a person convicted of this type of offence. Either scenario can be relied upon as a potentially fair reason for dismissal by the employer.

When considering job applicants the employer does not have to be concerned about unfair dismissal rights and employment protection. Subject to the employer not discriminating against any applicant they are generally free to choose which candidate is the best for the particular role. They can even ask the applicant whether they have ever been convicted of a criminal offence and if they answer ‘yes’ then the employer will be perfectly entitled to decide that they do not want to employ them.

However, the law** recognises that there may be a point in time when the applicant should be regarded as ‘rehabilitated’ and so should not have to declare their previous conviction even if directly asked by the prospective employer. The key issue will be whether the criminal offence is ‘spent’ and that will depend on the severity of the sentence. So for example a two year custodial sentence given to an adult may become spent after six years. The rehabilitation period being the period of the sentence plus a further ‘buffer period’ of four years, giving a total of six years. The less serious the offence, the shorter the rehabilitation period. So, where a conviction results in just a fine, a job applicant will not have to declare this if it was over a year before.

There is nevertheless, an important exception in relation to very serious offences. If a person is convicted of an offence and given a custodial sentence of four years or more then it will never be regarded as spent. Recognition perhaps that some offences are so serious that an employer should be able to make a decision as to whether they want to employ someone who has committed that offence, no matter when it happened.

This post was edited by Chris Davies. For more information, email blogs@gateleyuk.com.

*The Acas Guide: Discipline and grievances at work

**Rehabilitation of Offenders Act 1974

An end to the insolvency exemption

An end to the insolvency exemption
Posted on 23/10/2014

In April 2013 as part of the Jackson reforms, the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) brought an end to the recoverability of success fees and after-the-event insurance premiums from the losing party. The Government granted limited reprieves for certain cases, including those run by insolvency office holders. This LASPO exemption for insolvency cases is due to come to an end in April 2015.

Will the exemption end really make much difference?

R3 states that success fees and after-the-event insurance premiums are rarely recovered in practice. However, in a report commissioned by R3 to assess the impact of the reforms**, it is argued that if the insolvency exemption ends, fewer claims are likely to be pursued as there will be a reduced return for creditors who will have to pay the fees if the case is successful. Similarly, of the claims that are brought, fewer are likely to settle at an early stage as the losing party is no longer faced with the imminent threat of hefty legal fees that include their opponent’s success fees and insurance premiums.

In addition, the report goes on to state that the number of specialist insolvency counsel willing to take on cases is dwindling as the end of the exemption approaches. They are simply not prepared to take on cases where the return in fees is uncertain. Over time, it is thought that this lack of experienced counsel will lead to less insolvency actions being pursued. The report argues that this will encourage malpractice and dishonesty among potentially insolvent businesses.

The Government has recently announced that they do not intend to renew the existing insolvency exemption. In response to MPs’ questions the Justice Minister, Shailesh Vara, confirmed that the Government would rely on ‘existing impact assessments’ carried out. The original impact assessments did not mention insolvency litigation at all and simply dealt with more run of the mill court claims.

Overall, apart from trying to ensure consistency across the board in line with the Jackson reforms, the Government has not offered any persuasive arguments in favour of the removal of the exemption. One thing for sure is that the substantial revenue currently recovered in insolvency proceedings by HMRC for the benefit of the taxpayer will be significantly reduced should the exemption come to an end. An independent report** has estimated that creditors on the whole will be £160m a year worse off through lack of litigation recoveries. The fight is not yet over – R3 and the other industry bodies continue to campaign*.

Even if the exemption is lost next April, that will only be for new cases. IPs will still be able to recover insurance premiums and success fees after that date, provided they enter the Conditional Fee Agreement before April next year – so don’t leave it to the last minute!

This post was edited by Jenna King. For more information, email blogs@gateleyuk.com.

*https://www.r3.org.uk/media/documents/policy/Jackson_Campaign/Letter_to_the_Prime_Minister_-_business_concerns_around_LASPO.pdf

** Walton P, The Likely Effect of the Jackson Reforms on Insolvency Litigation –an Empirical Investigation, (April 2014)

Let’s stay together

Posted on October 23, 2014

So, you have fallen out with the other party to a contract.

Next stop Court, right? Not necessarily.

Lots of contracts include a clause which requires the parties to go through a form of informal dispute resolution before having to bother the Court with their arguments. For example, they might agree that they negotiate or mediate before proceedings can be issued.

So why would they do that? If they have fallen out, shouldn’t they just ask a Judge to decide who is ‘right’?

There are practical and commercial benefits to these types of clauses. They mean the parties would have to try to resolve the dispute themselves before involving the Court. Their commercial and trading relationship may be saved if the problem can be sorted through a frank exchange of views and a commercial solution everyone can live with. It also means they save the time and cost of litigation.

The Courts are coming around to making sure that parties stick to what they have agreed in these clauses too, provided it is clear what the parties approved.

Sounds too good to be true. Are there any downsides?

Yes, possibly. The party in the wrong may not want to play ball and would rather to drag out the process by going through the motions of trying to sort out the problems commercially. This may cause a problem if you have limited time to bring a claim in the Court.

To minimise this you should think about this sort of clause carefully. They are a good idea, but can be open to abuse. Agreeing a clear process and time limits within which the steps should be taken is essential if you want to try to ‘stay together’ without limiting your other options.

For more information, email blogs@gateleyuk.com.

Tick tock the biological clock…

Tick tock the biological clock…
Posted on 22/10/2014

In June 2014, the press reported that Kirsty Allsopp, TV presenter, had claimed girls should overlook university ambitions and instead focus on having children. Last week, the press reported that companies in America, such as Facebook, major US banks and law firms, are offering to fund egg freezing and fertility treatments for women who agree to delay starting a family.

The worldwide debate on family friendly rights is still going strong! In the last 20 years, the UK has seen the development of said rights with their focus now moving away from the idea of the mother being the main carer for a child. Some of these employment rights took effect in the UK as recently as this month. From 1 October 2014, the right to attend antenatal appointments has been extended for employees to accompany expectant mothers to their scans or other antenatal appointments instead of having this time as annual leave. From April 2015, the introduction of shared parental leave will allow mothers to transfer all but two weeks of their leave and pay entitlement to their partners, recognising that many mothers these days will be the bread winners in the modern family.

Is the UK government doing enough to recognise the greater role of women in the modern workplace or will we see UK companies follow the US example of offering employees the opportunity to freeze their eggs for career progression purposes? There are arguments both for and against. However, there is another argument that does not appear to have been considered. Would these new potential options for working women have the unintended effect of suggesting to employers that those who refuse them are putting their families before their career and so risk future promotion prospects…

This post was edited by Elizabeth Ebrahimi. For more information, email blogs@gateleyuk.com.

UK employers unprepared for the impact of shared parental leave

UK employers unprepared for the impact of shared parental leave
21st October 2014

Evidence suggests take-up of shared maternity leave could rise sharply. Employers need to prepare for a rapid increase in the number of couples using new Shared Parental Leave legislation, according to employment law experts at HBJ Gateley. New laws come into effect across Britain in December which give new rights for working couples to share maternity leave and allow for more flexible working practices.

Currently, mothers are entitled to 52 weeks of maternity leave and 39 weeks of statutory maternity pay. Fathers are entitled to two weeks paternity leave at the time of birth and up to a further 26 weeks parental leave once the child is 20 weeks old, if the mother has chosen to return to work.

The new shared parental leave (SPL) regime will come into force on 1 December 2014 and will apply to babies born on or after 5 April 2015. It allows working couples to share maternity leave and pay, following the first two weeks recovery period which mothers must take off immediately after birth, meaning up to 50 weeks leave and 37 weeks of pay can be shared.

The UK Government estimates that only 4% of men (around 10,000 people) will take up the SPL option in 2015-16. However official research suggests the numbers are likely to rise rapidly in the next few years. Similar moves abroad saw slow initial take-up rates in countries including Sweden, Norway, Iceland and Denmark but with the numbers having subsequently soared (in Sweden the rate sits at around the 90% mark).

Sarah Gilzean from HBJ Gateley said the experience from abroad suggested the policy would grow in popularity, sooner rather than later:

“While initial forecasts for take-up are low I expect to see a marked rise in numbers as more couples see the benefits of sharing the care of their new baby and balancing work commitments .

“Single continuous periods of leave will have to be accommodated by employers, but managers will have the right to refuse split periods of leave which would require an individual’s workload to be covered over several distinct periods.

“Ultimately, from April 2015 more organisations will be asked by male workers to take extended periods of time off to look after their children. For employers the challenge will be to prepare for an increasing level of demand while still retaining business continuity.

“Employers who currently pay enhanced maternity pay will also have to decide whether to pay those on shared parental leave the same enhanced rate or stick with the statutory minimum. Failing to pay an enhanced rate could bring the risk of a sex discrimination claim from fathers on shared parental leave comparing themselves to mothers on maternity leave.

To be eligible for SPL, parents and adopters must have 26 weeks’ service and have caring responsibility for a child. Parents can take leave at the same time or separately, and it may be taken in blocks (up to a maximum of three blocks each) as long as no more than 50 weeks is taken between parents. Requests will be made to the employer with a view to agreeing suitable arrangements for leave periods, which must be agreed with at least eight weeks’ notice.

Sarah Gilzean continued: “While maternity leave is considered commonplace, and more men are taking time off through paternity leave, the new system looks likely to usher in a new era of expectation from both men and women in the workplace.

“To adequately deal with this companies need to consider drawing up staff policies in advance of the introduction of the new legislation and be prepared for dealing with requests.

“ACAS suggest a four stage process of discussing options; gauging intention; assessing the practical implications and decision making. In order to cater for increasing demand this is a process which will need to be continuously monitored to assess the impact it has on the workforce to ensure that working rights are upheld.”

Don’t give VAT the silent treatment

Don’t give VAT the silent treatment
Posted on 21/10/2014

A recent case* has highlighted the risks of not expressly dealing with VAT in a commercial property transaction.

The seller had opted to tax a commercial property but upon completion of the sale VAT had not been accounted for and had not been discussed by the parties before completion. A year after the sale, HMRC indicated to the seller that VAT should have been paid and tried to reclaim the VAT from the seller. The seller, in turn, tried to reclaim the VAT from the buyer.

The Court decided that the seller was liable for the VAT. As a result, the seller had to pay VAT of around £23,000 on the sale of the £130,000 property. If VAT is not properly taken into account in the sale contract, the seller could find itself liable for 20% of the purchase price to HMRC on a property sale. That’s £200,000 out of a property sale of £1.2 million – not a prospect that anyone would want to face!

So what did the contract say about VAT?

The Standard Conditions of Sale (which were incorporated into the sale even though the sale was of commercial property) generally protect the seller and allow them to reclaim the VAT from the Buyer because they state that:

“all sums made payable under the contract are exclusive of VAT”; and
“any obligation to pay money includes an obligation to pay any VAT chargeable”.
In this case the purchase price was not defined as being either ‘exclusive’ or ‘inclusive’ of VAT. In the absence of an express provision regarding the treatment of VAT, it could be presumed that the standard condition would deem the price to be ‘exclusive of VAT’ and allow the seller to reclaim the VAT from the buyer.

So, why did the standard conditions not protect the seller in this case?

The Court decided that the purchase price was deemed to include VAT because:

The contract was silent on the issue and because the parties did not intend VAT to be charged. The Court formed this view because the parties did not discuss VAT in the lead up to the completion;
The seller was not expecting VAT to be paid and communicated, on completion, that ‘all of the sale monies of £130,000′ had been received; and
The seller took 18 months before it requested the additional VAT from the buyer.
The Court therefore interpreted the contract as silent and the parties’ intention as to not charge VAT as a special condition of the contract. As with the majority of sale contracts, the special conditions prevailed over the standard conditions. The question is: was the contract’s silence (and the parties’ actions) sufficient to be considered a special condition, or should the default position of the standard conditions be relied upon in the absence of any express exclusion of VAT?

What could be learnt from this case?

To avoid this situation arising, all parties in a property transaction where VAT may be payable (i.e. not in a transaction involving residential property or a charity) should ensure that:

They openly discuss VAT arrangements at an early stage and check whether the property is subject to a VAT election;
State the purchase price as being “inclusive” or “exclusive” of VAT; and
Include in the contract an express obligation to pay the VAT where payable.
This post was edited by Louise Baker. For more information, email blogs@gateleyuk.com.

*CLP Holding Company Limited v Singh [2014] EWCA Civ 1103