Legal updates
The Working Time Regulations 1998 (WTR) implement the European Working Time Directive (“the Directive”) into UK law. However, there have been a number of recent cases which have held that the wording of the WTR does not properly implement the wording of the Directive in a number of respects – particularly in relation to sickness absence and annual leave. To circumvent the issue, the tribunal in the case of Shah v First West Yorkshire Limited (2010) read additional wording into the WTR to enable an employee who fell ill during a period of annual leave to carry forward the “missed” annual leave to the next leave year.
Mr Shah, a part-time employee, booked annual leave from 22 February to 21 March 2009. His employer’s holiday year ran from 1 April to 31 March. In January 2009, Mr Shah broke his ankle and was off sick until 18 April 2009, meaning that he spent his entire annual leave period on sick leave. His employer refused his request on 4 April 2009 to reclaim his holiday on the basis that he had lost his entitlement when the new leave year began on 1 April. The WTR provides that employees are entitled to paid annual leave so long as the leave is only “taken in the leave year in respect of which it is due” (regulation 19(3)). Mr Shah brought a claim for loss of holiday under the WTR.
The tribunal, following the European Court of Justice (ECJ) decision in Pereda (2009), held that if an employee does not agree to take his/her holiday leave during his/her sickness absence (which is permissible under the previous ECJ decision in Stringer and others v HM Revenue and Customs; Schultz-Hoff v Deutsche Rentenversicherung Bund (2009)), the employer must allow the employee to take their annual leave at a different time, even if this means that the annual leave is rolled over into another leave year.
In giving their judgment, the tribunal confirmed that the purpose behind regulation 19(3) WTR was to prevent employees from accruing and taking long periods of annual leave for health and safety purposes. Enabling an employee to take their annual leave after a period of sickness was not incompatible with this aim. Therefore, the tribunal read additional wording into regulation 19(3) to enable Mr Shah to carry forward his annual leave.
Whilst the tribunal’s decision is not binding on other tribunals, it reflects the recent trend that judges will interpret UK legislation in order to give effect to EU law (see, for example, the decision in Coleman v Attridge Law (2009)).
Contact James Simpson, employment team, for employment advice on 01865 781193.
Under the Control of Asbestos Regulations 2006, all occupiers of commercial premises have a duty to assess and manage the risks from the presence of asbestos in buildings for which they are responsible. This means they must carry out an asbestos survey and have a plan to manage any asbestos that is present. A recent publication from the Health and Safety Executive is useful guidance for those responsible for managing the risks from asbestos. The guide is entitled Asbestos: The survey guide and it is free to download from the Health and Safety Executive website. Follow this link.
Alternatively a hard copy can be ordered from the website at £10.95
For general advice on property matters contact Lesley Pollock in the commercial property team 01865 781159.
The property outgoings of your business may be costs that have been overlooked where savings are achievable and of benefit to your cash flow.
Whether you are a business that owns the freehold of its building, or you occupy your premises as a tenant under a commercial lease, a first step is to consider whether you require the space that you operate from, or could downsize to achieve obvious cost benefits?
If you are an owner/occupier you enjoy greater flexibility. You have the option to sell, lease, or grant a licence of the whole or any part of your premises to generate income. You may also wish to take advice on whether your property would be likely to be able to change its use eg to residential, and whether this may increase its value.
As a tenant the options available to downsize/achieve savings will be governed by the terms of your lease. Many leases contain break clauses, but to exercise these you have to adhere strictly to the terms of the clause eg some leases will only allow a break to be exercised if the property is in good repair and the rent is up to date. Since a failure to comply with the conditions of a break clause can mean the opportunity to break the lease is lost then advice should be taken at an early stage when seeking to exercise a break clause.
If there is no break clause you may be able to assign, sub-let or share occupation of your premises. In all cases you need to check for any restrictions and conditions in the lease. Most leases that allow assignments/sub-letting will set out a procedure that needs to be followed to seek your Landlord’s prior written approval. Be warned that any breach of this procedure will be a breach of your covenants and may enable your landlord to forfeit the lease. A landlord is usually obliged to provide written consent to an assignment/sub-letting within a reasonable time limit, unless there are reasonable grounds for a refusal. A landlord’s initial refusal may be subject to challenge. If faced with this scenario, it is beneficial to seek specialist advice concerning the options available to you.
If it is not appropriate to reduce the size of your premises for commercial purposes, or not possible because of the terms of your lease, savings may still be achievable by looking at other outgoings. Areas to consider include:
- Rent – does this remain at a market rate, or is there scope to negotiate a reduction? It may be possible to negotiate a rent holiday or an early rent review. Consider proposing an extension of the length of your lease as a negotiating tactic for a rent reduction or requesting the payment of rent on a monthly basis instead of the traditional quarterly payments to benefit your cash flow.
- Service charge provisions - are the sums sought reasonable? It is often useful to compare with the preceding years’ figures. An unreasonable charge may be challengeable or planned works might be able to be delayed.
- Rates – consider if there is potential for a reduction on any grounds eg neighbouring building works.
In this climate landlords do not want their tenants' business to fail, so if you are experiencing difficulties it should help to talk through your options with your landlord.
Do not dismiss your property outgoings as a fixed cost that is necessarily difficult to change. Although this may be the case in the immediate short term, by analysing your property outgoings and seeking specialist help, significant savings are achievable which will benefit profitable businesses and those facing challenges in the current economic climate.
For advice on property disputes, contact Katherine Gregory in the dispute resolution team 01865 781 056.
In Boegli Gravures SA v (1) Darsail and (2) Andrei Pyzhov, the High Court has considered the personal liability of a director for the infringement of intellectual property by that director’s company.
Darsail and Boegli were competitors in the marketplace of packaged foil embossing. Darsail advertised one of its competing products on its website. It was invented by Mr Pyzhov, who was also a director at Darsail. Boegli suspected that this product infringed its patent. The suspicions were confirmed when, under an alias, it purchased the product directly from Darsail. Boegli commenced infringement proceedings against both Darsail and Mr Pyzhov. It claimed the latter was personally liable for the infringement because he had “invented” the product in dispute.
Decision
The Court held that Darsail (the Company) had committed patent infringement.
When dealing with the director’s personal liability, the Court gave useful pointers towards when personal liability is likely be incurred by a director. Liability will not generally be found only where:
- the director has done no more than to carry out their constitutional role (e.g. by voting to use the infringing product);
- the director enjoyed a high degree of personal control and knowledge regarding the day-to-day management of the company, including control of its website; because the company in question was particularly small; or
- the director invented the infringing product;
However, in the present case, Mr Pyzhov was held liable. The reasons for this were:
- he had gone beyond merely exercising his constitutional duty in that he played a pivotal role in selling the infringing product directly to, and concluding the contract on behalf of the company with, the alias (working for Boegli); and
- the decision to supply the infringing product to the alias was made directly by Mr Pyzhov (and two other directors) and they gave direct instructions to the company’s staff relating to the sale.
Analysis
This decision also applies to other forms of IP infringement. It is a useful warning to directors as to the risk that exists in certain situations when their company commits IP infringement. A director in this situation must be sure to have acted only within his constitutional role if he is to escape personal and potentially costly liability. Any evidence, as set out in this case, of more direct and pivotal involvement in the actual contract to provide the infringing article will point to the court holding him personally liable.
For IP-related matters, contact Stephen Brett, corporate/IP team on 01865 781208.
Introduction
The Bribery Bill has now been introduced into Parliament. It has taken some 14 years and is a major step forward in anti-corruption legislation. It brings together and clarifies the disparate and outdated laws on bribery. The Government intends to enact the legislation before the general election this year. Bribery by a British company anywhere in the world will be a criminal offence in the UK. British companies will no longer be able to turn a blind eye to bribery on their behalf in overseas markets.
What are the offences?
The Bill introduces an offence of bribery to seek an advantage in the conduct of business. It also introduces an offence of bribing foreign public officials. Both are punishable by up to 10 years’ imprisonment. However, it is the corporate offence which is of particular interest to commercial entities. The new offence is a failure by a company to prevent bribery which is committed by persons who represent its business. It is a strict liability offence, which means there is no need to prove any negligence on behalf of the business organisation – it will automatically be criminality liable where a bribe is paid on its behalf. The penalty is an unlimited fine.
Is there a defence?
There is only one defence available to the suggested crime, which is “adequate procedures”. To successfully raise the defence, an organisation must show on the balance of probabilities that it had in place procedures that safeguard against its representatives giving bribes. Although guidance on this is due to be published soon, it is likely that the adequacy of such procedures will be a question of fact in each instance, taking into account such factors as the size of the organisation, the forseeabillty of risks it faces and the jurisdiction(s) in which it operates. In other words, the organisation did all it reasonably could do to in the relevant circumstances to safeguard against a bribe being given.
What should you do in preparation?
A risk assessment is advisable, particularly for those large companies working in particularly vulnerable market sectors and/or locations. An anti-bribery policy should be developed or updated, and in the higher risk sectors this should be accompanied by the roll-out of practical, shop floor auditing and training in anti-corruption procedures.
Contact Chris Robinson, corporate team, for further information on 01865 781209.
Forthcoming Henmans events
Tuesday 2 March: Henmans LLP is hosting Critchley’s PLaN meeting where Shree Hindocha from Henmans property department will be talking about break options and there will be two other speakers. PLaN is a free breakfast club attended by those with an interest in property matters and starts at 7.30 am. To register your attendance, please contact seminars@henmansllp.co.uk.
Thursday 4 March: the spring series of the Henmans BSG seminars continues with a free employment seminar on compromise agreements and settling claims. This will be held at 1pm at our offices, with a light lunch beforehand at 12.30. To register your attendance, please contact seminars@henmansllp.co.uk.
Thursday 18 March: Chris Robinson will be talking about Employee Share Schemes before the election at the first corporate seminar of the spring series of the free Henmans BSG seminars. This will be held at 1pm at our offices, with a light lunch beforehand at 12.30. To register your attendance, please contact seminars@henmansllp.co.uk.
The past month at Henmans
- On 4 February the spring series of the Henmans BSG seminars kicked off with an employment seminar on engaging workers and employing employees. This focused on immigration and vetting requirements.
- On 24 February Henmans LLP held a joint seminar with Smith & Williamson on charity trustee duties and responsibilities.