Welcome to Cormac Glynn

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Reading Time: 2 minutes Cormac Glynn has joined Band Hatton Button solicitors as a Senior Associate from Cocks Lloyd Solicitors where he was previously Head of Commercial Property.

Band Hatton Button backs Coventry Cyrenians

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Reading Time: 2 minutes Band Hatton Button solicitors has pledged a year’s worth of fundraising to Coventry Cyrenians.

A rocky road to freedom of expression

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Two recent tribunal claims highlight the challenge for employers in safely navigating personal expression by employees in the workplace.

A hospital nurse who discussed her Christian views with patients, offering a bible to one and advising another that his survival prospects would be improved if he prayed to God, was fairly dismissed for improper proselytising, a court has ruled.  But another, where a quality control manager was asked to keep her sexual orientation under wraps, has seen a compensation award of £8,000 for direct discrimination.  

Nurse Sarah Kuteh was responsible for assessing patients about to undergo surgery, part of which involved asking them about their religion, but patients complained that she initiated unwanted religious discussion. When the issue was raised with Mrs Kuteh, she assured management at the Darent Valley Hospital that she would not discuss religion again unless she was directly asked by a patient.

When further incidents followed, she was dismissed on the grounds that she had breached the Nursing and Midwifery Council’s code of conduct.  She later issued an unfair dismissal claim, alleging a breach of a European Convention right to freedom of thought, conscience and religion.

When the case of Kuteh v Dartford and Gravesham NHS Trust [2019] EWCA Civ 818 reached the Court of Appeal, the court recognised the importance of the right to freedom of religion, but said improper proselytising was not covered under Article 9 of the European Convention on Human Rights, which defends the qualified right to practice religion.  As a result, the court ruled it was not unfair for the NHS Trust to have dismissed the nurse for proselytising to patients after being asked not to do so.  

But in Mrs A McMahon v Redwood TTM Ltd and Mr Darren Pilling: 2405368/2018 the company found itself in hot water for stopping an employee speaking out. 

When Ashleigh McMahon joined textile firm Redwood TTM, she disclosed that she was gay to her immediate boss during the first week of her new job, but he told her to avoid mentioning this to anyone else, saying the owner of the company was ‘old school’ and wouldn’t like it.  

After being made redundant some months later, she made a number of tribunal claims against her former employer, including unfair dismissal and making a protected disclosure, as well as direct and indirect discrimination.  Although the other claims were rejected, the tribunal agreed that the request by her manager amounted to direct discrimination on the grounds of sexual orientation, as the same request would not have been made to one of the company’s heterosexual employees.

Said employment law expert Mark Ridley of Coventry based Band Hatton Button solicitors: “These two cases highlight the need for businesses to keep their recruitment and working practices under constant review, as there is growing pressure to keep pace with both the law and changing attitudes across society.  There is no special escape clause for those who are ‘old school’ and everyone must make sure they refresh their mind-set.  Employees cannot be treated differently on the basis of their sexual orientation or any other protected characteristic.”  

The Equality Act 2010 prevents direct and indirect discrimination based on protected characteristics, which include gender, age, disability, race, sexual orientation, personal relationship status, and religion or belief.  The protection of the Act extends to consumers, the workplace, education, public services, private clubs or associations and when buying or renting property.   

Questions can be asked about health or disability only in certain circumstances, such as whether someone may need help to take part in an interview, and disability covers both mental or physical impairments and an employer should make ‘reasonable’ adjustments to accommodate disabled applicants and employees.   

In addition, the Act makes it unlawful to discriminate, or treat employees unfavourably because of their pregnancy, or because they have given birth recently, are breastfeeding or on maternity leave.  

Employees should not be required to share personal information if they are not comfortable doing so, but equally they should not be precluded from discussing aspects of their private life if others who do not share their protected characteristic can freely discuss those aspects.

Employers should have up to date equal opportunities policies detailing their approach to equal opportunities and setting out what is and what is not acceptable.

Band Hatton Button extends Coventry Rugby partnership

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Reading Time: 2 minutes Coventry Rugby has today announced that Band Hatton Button has extended its partnership with the club. Our logo will be seen on their shirts for the 2019/20 season.

It’s all in the planning when it comes to selling privately-owned companies

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It’s all in the planning when it comes to selling privately-owned companies
By Marta Fisher, Commercial law specialist with Band Hatton Button

For the shareholding directors of many privately-owned companies, the end-game is focused on selling up before moving on to new ventures or sometimes retirement. But many owners under-estimate the time involved in making a business market-ready, or do not seek advice on the different options before they start, nor the route-map to follow to secure a successful sale.

Ideally, an advisory team should be put together, involving a lawyer and an accountant specialising in company transactions, to guide the company on the preparation for sale, before any moves are made to seek out buyers.  Calling in advisors after a deal has been struck may mean financial or legal pitfalls that can cause a deal to fail in later stages and the role of the advisory team in this preparatory stage is as important as any work they will undertake in finalising the deal.  Taking your time to get it right and make the business market-ready means that timescales of 12 to 24 months for preparation are not uncommon.

In putting together a detailed exit plan for a limited company, the first question you are likely to be asked is whether you are looking for a share sale or an asset sale, also known as a business sale.   The answer may be influenced by personal, financial or legal reasons which can be explored with the specialists, but the final decision will determine the process to be followed and the resulting tax implications for both buyer and seller.

It’s worth mentioning before exploring this further, that choosing between these two options will apply only for limited companies, where the company is an entity in its own right.

SHARE SALE

The shareholders sell their shares in the company that owns the trade and assets of the business.

    A share sale is effectively the clean-break option for the shareholders. The buyer is purchasing the whole company, its assets, liabilities and the business as a going concern.   There is no need for new contractual arrangements with employees, suppliers, customers, landlords or others, as the corporate entity that is the company will continue in its present form; it is simply that the shareholding has been transferred.

ASSET SALE

The company sells some or all of the assets which comprise the business.

    Here the seller is the company itself, rather than the individual shareholders. Only those assets and liabilities identified and agreed to be transferred are involved in the sale.  This can cover both tangible assets, such as property, stock or machinery, and intangible assets, such as intellectual property and goodwill.   An asset sale may take place because a seller wants to retain parts of the business that will continue to operate, or be sold elsewhere, or because the buyer wants to cherry-pick and avoid certain company liabilities.  As the business is being transferred to a different corporate entity, third-party contracts with customers and suppliers need to be redrawn; commercially-rented property requires negotiation with the landlord to agree an assignment of the lease and there would have to be employee consultation.  A Transfer of Undertakings (Protection of Employment) Regulations situation is likely to arise, commonly known as TUPE, where employment rights are protected and transferred to the new owner of the business assets.

A key factor in the decision making between these two routes is the tax position.  This is complex and specific to each situation, but generally individual shareholders will be better off in a share sale, with a single tax charge on any capital gains arising, and which is likely to be reduced to 10% if entrepreneurs’ relief applies.  In an asset sale, there is a potential double tax charge, firstly on the company, with corporation tax on the profit made on the sale of assets, and then on the shareholders when they withdraw the sale proceeds from the company.

Whichever of these two routes is finally decided upon, the management team need to be sure that contracts and policies are all in order, and that any disputes or other issues have been resolved. Once the company is ready to go on the market, a non-disclosure agreement (NDA) for potential buyers should be in place and confidential information must be withheld from any interested parties until the NDA has been signed.

Once a deal has been agreed, buyers should be credit checked and their source of funds validated.  If those pass the test, then set out the terms at an early stage of negotiation.  The sale price is important, but it’s not the only thing that matters.  Getting a clear document setting out the heads of agreement can influence the way the transaction progresses and means everyone knows what is expected of them.

This is likely to include a timetable covering aspects such as when contracts will be sent, how long the buyer has to complete due diligence, through to when exchange of contracts and completion will take place.  It should clearly set out what is being sold and what may be specifically excluded.   And while a non-refundable deposit is usual on exchange of contracts, it is worth considering a deposit on the signing of the heads of terms, as this can protect against a buyer withdrawing without good reason or failing to meet the timetable.

At each stage, the most important thing is that all members of your advisory team are working with each other in a seamless way throughout the process, as well as directly with you. Where the ground shifts, as it inevitably will, it’s important they remain focused on the vision you have for the company sale, and work with you to achieve the best possible outcome in changing situations.

Web site content note: This is not legal advice; it is intended to provide information of general interest about current legal issues.

Employment Bulletin – May 2019

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Directors liable for company’s failures over employment rights

Two company directors have been held personally liable for their company’s failures over minimum wage rates, holiday pay and overtime.

The case involved Lithuanian nationals who had come to the UK to work as chicken catchers on farms.

Their employment was subject to the regulatory regime of the Gangmasters (Licensing) Act 2004. They alleged that they were employed by a company in an exploitative manner, commonly working extremely long hours and being paid less than the statutory minimum prescribed by the Agricultural Wages Act 1948 and the Agricultural Wages (England and Wales) Order 2012.

They contended that they were frequently not paid the sums recorded as being due to them on their pay slips, which had in any event been calculated on a fictional basis; payments were often withheld as a form of punishment; they were not paid holiday pay or overtime; deductions were unlawfully made for employment fees and rent; and one of the workers had not been permitted to take bereavement leave.

The court found in their favour. It held that the workers were all telling the truth. A gruelling and exploitative work regime had been imposed on them. It considered that two directors of the company were both thoroughly unsatisfactory witnesses.

The evidence was overwhelming that they were operating the company in a deliberate and systemic manner, whereby chicken catchers were working massively more than the hours recorded on the payslips.

They operated a system of withholding wages for entirely invalid reasons and trapped workers had little option but to remain.

The general principle in law was that directors would be liable for the wrongdoings of a company committed at their direction.

In this case, both directors “actually realised” that what they were doing involved causing the company to breach its contractual obligations to the workers. They were therefore jointly liable with the company for the breaches of contract with the workers.

Compensation will be assessed at a separate hearing.


Female administrator paid 15% less than her male replacement

The Employment Tribunal has ruled that a female finance administrator was discriminated against when her male replacement was paid £3,500 more than her.

The case involved a female employee, who had been employed in various roles by her employer for nearly two years.

At the time she resigned from the company, she was a finance administrator with a salary of £18,000.

The role was filled by a male employee, whose partner was the daughter of the company director.

His official employment documentation stated that his role was finance administrator and his salary was £21,500.

The female employee trained the male employee to replace her and was also put in charge of payroll during the transition period. She noticed that the male employee was being paid £3,500 more than she had been, which she described as a “kick in the teeth”.

She took the case to the Employment Tribunal and produced an itemised list of her duties, which the male employee said broadly corresponded to the duties that he now performed.

The employer argued that the male employee was on a higher salary as he was in a more senior role and the company’s intention was for him to eventually take over from director, thereby keeping the business in the family.

The pay increase was necessary as tale employee would not have joined for the existing salary.

The tribunal ruled that this was not an acceptable reason to pay him more than female employee for performing the same task during the training period.

The documentation from when he was appointed stated his job title would be ‘finance administrator’ – indicating that he was to be a direct replacement.

Company documents only started to refer to the male employee as a ‘finance manager’ or ‘trainee financial director’ after the female employee had filed a formal grievance.

The female employee was awarded compensation for the notice period she worked alongside the male employee.

Headmaster told disabled teaching assistant: ‘I can do what I like’

A teaching assistant was discriminated against by her employer, who did not take the necessary steps to allow her to work in comfort with her disability.

That was the decision of the Employment Tribunal in a case involving an assistant who worked at a primary school from February 2006.

The employee suffered with fibromyalgia and chronic fatigue syndrome. In 2015, her health began to decline. She would leave work “exhausted and required a couple of hours sleep to recuperate”.

She asked the headmaster if she could be moved from the reception class, where the “cacophony of noise and constant grabbing” was causing her to struggle.

An occupational health report recommended she be given duties that could be performed both sitting or standing, that her shifts should be concentrated to mornings and at the early stages of the week to allow her good time to recover physically.

After a period off work with stress, the employee was told by the headmaster that she would have to return to the reception class. When she challenged the decision, the headmaster allegedly told her: “I can do whatever I like.”

Another dispute over the employee’s duties led to the headmaster telling her: “We are all under pressure and working hard” and that if she did not like it: “There’s the door.”

The employee took more time off work sick, and when she phoned to arrange her return date, she was told not to come back until her condition had subsided. She explained that she was disabled, and her condition would not subside. She said the headmaster then told her he “did not ever want her back”.

The employee raised a formal grievance and was dismissed in the following months.

She took legal action and the judge ruled in her favour. The tribunal was satisfied that the headmaster’s conduct towards the employee meant she was subjected to various acts of unlawful discriminatory conduct that breached the Equality Act 2010.

A remedy hearing will be scheduled to decide the level of compensation that should be awarded.

The case highlights the importance of having effective harassment reporting procedures in place, particularly when the head of the organisation is the person being accused of wrongdoing.

Latest figures show slight reduction in gender pay gap

The latest figures on the gender pay gap in large businesses show a slight reduction on last year.

Legislation introduced in 2017 means that every employer with 250 or more employees has to publish the differences between what they pay their male and female staff in average salaries and bonuses.

This is the second year that employers have been required to report their data. The new figures show:

• 8,424 private sector employers reported their data
• 3,736 employers saw their pay gap improve
• 3,387 employers saw their pay gap worsen
• 645 employers reported no change in their pay gap.

Latest statistics from the ONS show that, across all employers, the median gender pay gap is at a record low of 17.9%, down from 18.4% the previous year.

The Government Equalities Office (GEO) estimates that around 50% of relevant employers have put in place an action plan to tackle their pay gap. Ministers want to see that number increase and the GEO have published guidance to encourage employers to identify why they have a gender pay gap and how they can work to resolve it.

The Minister for Women and Equalities, Penny Mordaunt, said: “Actions to tackle the gender pay gap are good for business. That’s why we have produced support to help employers close their gaps.

“We recognise that in order to close the gap entirely we still need a much wider cultural change, that is why we have introduced a range of initiatives to tackle the drivers of the gap, including shared parental leave and spending around £6billion on childcare support.”

Over the past year, the Government Equalities Office (GEO) has been working with employers in several sectors to encourage them to put in place detailed and effective action plans to reduce their pay gap.

One of these is the retail sector which has a large number of female employees working in customer facing roles. The British Retail Council are working with their members, supported by GEO, to increase the opportunities for women to progress to more senior roles while retaining the flexibility that attracted them to the sector in the first place.

Companies that are taking positive action against their pay gaps, may still see their gap widen this year. This is because companies that are taking effective action to close their gender pay gap may be taking steps to hire more women, if these are in junior positions then it could see the average wage for women drop within that organisation. Likewise, a senior female leader could move on to another opportunity and that may cause a short term widening of the gap within that organisation.

Employment Bulletin – April 2019

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Government commits to protecting worker rights after Brexit

The government says it’s committed to maintaining workers’ rights after the UK leaves the European Union.

It says it will not reduce the standards of protection in EU laws retained in UK law and will ensure that new legislation changing those laws will be assessed as to whether they uphold this commitment.

It says parliament, trade unions and businesses will all be given an enhanced role in shaping employment law. This will be achieved in various ways:

  • parliament to be given a vote on adopting future EU rules on workers’ rights
  • government will consult with trade unions and businesses on future workers’ rights proposals
  • new proposals including a single enforcement body to protect vulnerable and agency workers
  • new parliamentary power to build on the Good Work Plan, announced last year.

Parliament will be given the right through the Withdrawal Agreement Bill to consider any future changes in EU law that strengthen workers’ rights or workplace health and safety standards, and vote on whether they too should be adopted into UK law.

The measures will require Parliament to be given regular updates on changes to EU legislation in this area and give MPs a say on the action government should take in response, including whether the UK should remain aligned with the EU. In preparing those updates, it will consult with trade unions, businesses and the relevant select committees of Parliament.

This new process will start with two EU Directives that come into force after we have left and following the Implementation Period – the Work Life Balance Directive and the Transparent and Predictable Working Conditions Directive.

The government has voted in favour of both directives in the European Council and intends to ask Parliament if it wants to adopt them into UK law.

The Work Life Balance Directive introduces new rights for parents and carers, such as 2 months’ paid leave for each parent up until the child is 8, and 5 days of leave for those caring for sick relatives.

The Transparent and Predictable Working Conditions Directive will set the terms of employment for workers by their first working day. The government is already committed to many of these measures.

A government spokesman said: “After Brexit it should be for Parliament to decide what rules are most appropriate, rather than automatically accepting EU changes. When it comes to workers’ rights this Parliament has set world-leading standards and will continue to do so in the future, taking its own decisions working closely with trade unions and businesses.”

 

Female economist denied promotion wins sex discrimination case

A female economist has been awarded £19,000 after she was overlooked for promotion by her employer who instead gave the job to a less qualified male colleague.

The employee joined her employer in August 2016 as a grade 7 economist.

In February 2017, she applied for an advertised grade 6 economist role.

However, she was not given an interview because she fell below the minimum requirement in the “application of economics” competency test.

The employer later announced that the role had been given to a male employee, who had less experience and qualifications than the female employee.

She raised a grievance with her employer and an investigation was launched. It found that several female employees “detailed bad practices that led to them feeling undervalued and demoralised”. Despite this, there was no discrimination proven.

The employee unsuccessfully appealed the decision, and later resigned.

She brought the case to the Employment Tribunal, which found in her favour.

The tribunal heard that gender balance among economists working for the employer was “out of kilter”. Court documents showed women made up 37% of the total grade 7 employees, compared to just 20% of the higher grade 6.The Judge said their “approach to gender balance on the selection panels… pointed towards a general culture where discrimination and, in particular, sex discrimination, is not properly understood by those who are required to ensure its elimination”.

The employer was ordered to pay £19,000 to the employee in compensation for injury to feelings.

 

New National Minimum and Living Wage rates come into effect

The new National Minimum and Living Wage rates came into effect on 1 April. The new rates are:

  • £8.21 per hour for ages 25 and over
  • £7.70 per hour for ages 21 to 24
  • £6.15 per hour for ages 18 to 20
  • £4.35 per hour for school leaving age to 17
  • £3.90 per hour for apprentices.

The new rates apply to the next pay reference period that begins on or after the date a rate increase begins or when an employee reaches a new age bracket.

For example, this means that an employee paid on the 20th of each month will start to receive the new rate of minimum wage from 21 April onwards.

If a worker receives above NMW there is no legal obligation on an employer to increase their pay when the NMW rate increases.

There are several people who are not entitled to the NMW or NLW. These include:

  • self-employed people
  • volunteers or voluntary workers
  • company directors
  • members of the armed forces
  • family members, or people who live in the family home of the employer who undertake household tasks
  • work experience students, depending on the length of their placement.

All other workers including pieceworkers, home workers, agency workers, commission workers, part-time workers and casual workers must receive at least the NMW or NLW.

The apprenticeship rate only applies to apprentices aged under 19, and those who are 19 or over who are in the first year of their apprenticeship.

Apprentices aged 19 or over in their second year of apprenticeship must receive the national minimum wage or national living wage rate to which their age entitles them.

 

Court clarifies law on compensatory rest periods for workers

An employer must provide workers with a “compensatory” rest period when it’s not possible to offer the standard breaks as required by law.

However, the compensatory period doesn’t have be identical to the standard break; it just has to be of equal value in contributing to the worker’s well-being.

That was the decision of the Court of Appeal in a case involving Network Rail and one of its employees who worked alone as a signalman on eight-hour shifts. He had no rostered breaks but was expected to take breaks during quiet periods.

None of the individual breaks lasted the minimum 20 minutes required under the Working Time Directive, but in aggregate they lasted substantially more than 20 minutes.

He brought a claim to the Employment Tribunal on the basis that he was entitled to at least 20 minutes’ uninterrupted compensatory rest.

The case went all the way to the Court of Appeal, which ruled in favour of Network Rail. It held that compensatory rest did not have to be identical to the standard break entitlement as long as it provided equivalent value.

There was no reason why a single uninterrupted break of 20 minutes would always be better than, for example, two uninterrupted breaks of 15 minutes, one-third and two-thirds through a shift.

Brexit: maddening but not frustrating when it comes to contracts

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Reading Time: 2 minutes Brexit may be maddening for business, communities and even the politicians in the thick of it, but in all the uncertainty, one thing seems certain, the UK’s exit from the European Union is no easy argument for ending a contract.

Band Hatton Button wins 2019 Coventry & Warwickshire FirstPro Award

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Reading Time: 2 minutes Band Hatton Button scooped silverware for Communication Campaign of the Year at the 2019 Coventry & Warwickshire FirstPro Awards, which were held at Coombe Abbey Hotel in Coventry.

No-fault divorce will not increase divorce rate

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Reading Time: 1 minute Tracy Cross, family lawyer and mediator at Band Hatton Button, has rejected the idea that no-fault divorces will see a spike in divorce rates, despite the law change making the process less stressful.