Corporate Services Blog

Case Report on Human Rights / Employment Law Issues:  Eweida and Others v the United Kingdom (judgment 15 January 2013)

We live in an age in which the principles of diversity and equality are supposedly held sacred.  The European Convention on Human Rights requires the UK to uphold basic human rights and at the same time prevent certain classes of people (e.g. religious groups) suffering discrimination.  Domestic legislation also promotes equality in the workplace.  Difficulties arise when certain members of religious groups claim exemptions from rules imposed upon them by their employment on the basis that those rules offend their religious beliefs.  Often the right to express those religious beliefs will need to be balanced against competing considerations.

In Eweida and Others -v- the UK the European Court of Human Rights had to decide whether domestic UK law had failed to protect the applicants’ right to religious freedom.  There were four applicants in this case and their complaints arose out of their employment:

1.         Ms Eweida had, for a period, remained away from work whilst her employer, British    Airways PLC, prevented her from displaying a cross on her necklace whilst performing a customer facing role.  Following media pressure, British Airways PLC soon reversed this policy, but Ms Eweida was not paid salary for her time off.  The UK courts had declined to uphold Ms Eweida’s claim for indirect discrimination.

2.         Ms Chaplin’s complaint also related to her employer’s refusal to permit her to display a cross whilst performing nursing duties.  Ms Chaplin’s was employed by a    health authority, which had argued its defence successfully on the basis that its decision was justified by health and safety considerations.

3.         Ms Ladele was employed by the London Borough of Islington as a Register of Births, Marriages and Deaths.  This applicant was demoted after refusing to officiate at ceremonies involving two people of the same sex when the law was changed to allow civil partnerships.  Ms Ladele’s objection to doing so was influenced by her religious belief that same-sex civil partnerships were contrary to God’s law.  Her claim for indirect discrimination had been unsuccessful in the UK courts because her right to religious freedom could not override the local authority’s duty to its homosexual community.

4.         Mr McFarlane was dismissed from his job with a counselling service provider due to    concerns he had expressed in relation to providing psycho-sexual therapy to same sex couples (on religious grounds).  Again the UK courts had found for the employer, which had been entitled to refuse to accommodate Mr McFarlane’s religious views where they had contradicted its Equal Opportunities Policy.

It is clear from its judgment that the European Court of Human Rights had to weigh up various considerations in deciding this case.  In the second complaint above, one of the principle issues was whether it was right that health and safety considerations had taken priority over the applicant’s right to display a cross (which the Court decided had been a valid manifestation of Ms Chaplin’s faith).  In the third and fourth complaints above, the competing considerations were rights enshrined within the Convention itself: the right for certain classes of people (here homosexual people) to be treated fairly and equally.

In all but the first complaint, the European Court of Human Rights dismissed the applicants’ claims for violation of their human rights.  It is submitted that Ms Eweida’s complaint may have had better prospects of success, because here the competing consideration had been the preservation of British Airway’s corporate image, which the Court might have viewed as rather less important than principles of health and safety / sexual orientation rights.  The Court decided that when balancing “competing rights” national authorities should be permitted a margin of appreciation.  That margin had not been exceeded in the remaining three complaints.

The outcome of this case might be viewed as a victory for employers concerned about staff members flouting the rules on the basis of religious freedom.  Nevertheless, employers need to tread carefully around issues of religious sensibility.  In some cases an employer will be able to justify discriminatory treatment by showing that its actions were “a proportionate means of achieving a legitimate aim”.  Otherwise, religious groups are going to be keen to capitalise on the Eweida decision to crack down on religious intolerance by employers.

For further information please contact James Woodhouse on 01635 521212 or james.woodhouse@clmlaw.co.uk.

The dental industry treats Associates as self-employed freeing the employer dentists from much employment legislation and responsibility for tax and pay as you earn. The position also seems to have been accepted by HMRC. That is not a problem where the Associate is working for more than one dentist. Such Associate is self-employed.

But what if and there is always a “what if” the Associate is working only for one dentist either full time or on a part time basis? That scenario has always seemed to me to mean that the Associate is employed. That is whether or not the Associate is working under a BDA Contract. If the Associate is an employee, then the employer dentist becomes caught by employment legislation including such things as unfair dismissal or redundancy and has liability for the payment of the tax on the earnings of the Associate and the payment of NI contributions.

There is also a hidden problem when the dentist sells his business. The warranties which are incorporated in any Sale and Purchase Agreement refer to employees from which Associates are excluded. “So what?” you may ask, to which I answer “the warranties are placed in a Sale and Purchase Agreement so that if they are inaccurate the purchaser can claim damages against the selling dentist”. Even if the selling dentist’s solicitors knows his job and limits such liability under warranties, claims can arise. The selling dentist does not want to find that he thought his sale proceeds would enable him to sail into the sunset but because of a warranty claim resulting in damages instead of sailing into the sunset he can only afford a small rowboat and has to row into the sunset.

Why am I raising this now? Because I have heard that HMRC are about to start investigations into dentists in Northern Ireland as to whether Associates are Associates or employees. It is amazing what the Government will do to find cash. If Northern Ireland is to go under the microscope then the rest of the UK is sure to follow.

You can contact Hugh Ellins on 01793 511055 or hugh.ellins@clmlaw.co.uk

Charles Lucas & Marshall – Legal Services for Dentists.

Thames Valley lawyers, Charles Lucas & Marshall say small businesses are spending too much time on administration and feel swamped by the volume of regulations they have to comply with.

Rupert Wright

Rupert Wright, a corporate lawyer at Charles Lucas & Marshall, says the over-riding and consistent message from small to medium sized business clients, is that they feel overwhelmed by a ‘compliance-led’ environment which consumes too much of their time.

“More businesses feel under pressure to appoint compliance officers or add to their administrative capacity – and yet these are not productive roles,” says Rupert Wright. “There are so many hoops businesses have to jump through which are a distraction from their main business.”

In recent years, businesses have had to accommodate legislation in areas such as employment, the environment and health and safety. This has created growing pressure with businesses often feeling they do not have the resources to deal with the quantity of regulation.

“Appointing people to deal with responsibilities in these areas is expensive,” added Rupert Wright. “Often they are appointments at a senior level and remuneration has to reflect this.

“As lawyers we can hold our clients’ hands to some extent and yes, there will be fees involved, but it is invariably more cost effective than appointing full-time personnel.”

For further information contact Rupert Wright on 01635 521212 or rupert.wright@clmlaw.co.uk

Boundary disputes can prove emotive and difficult to resolve where both parties are entrenched in their views as to where the boundary should be.

James Woodhouse

A recent Court case (Acco Properties Limited -v- Mr and Mrs Severn) has provided a useful reminder as to the principles which apply to disputes of this nature.   The judge in this case provided the following guidance:

In cases of registered land, filed plans show the general position only and are not determinative as to the exact boundary line.

The starting point in determining the matter is the original Conveyance (or equivalent document) and any plans which might be attached.

Topographical features which existed when the boundary was first established may be of relevance (in this case, regard was had to a raised bank).

The conduct of the ‘original’ landowners may be of probative value in establishing their intentions as to where the boundary fell.  Likewise, the conduct of later proprietors of the land might have resulted in a binding boundary agreement (whether express or implied).

Where there is evidence of the boundary features having moved over time, title to the land appropriated may now vest in the neighbouring owner by virtue of the doctrine of adverse possession.

The Court should consider what a ‘reasonable layman’ would have thought he was buying when purchasing one or the other of the properties involved.

In this particular case, the Court found that the boundary line fell midway between where the Claimant and Defendant said the boundary should be.  The judge based this decision on the existence of an informal boundary agreement, which arose out of the Defendants having felled two trees on their side of the boundary.  The Court held that in discussions which took place between the Defendants and the Claimant’s predecessors-in-title at the time, both parties acknowledged that the trees were on the Defendant’s land.

For further information please contact James Woodhouse, who has experience of acting for parties in boundary disputes, on 01635 521212 or james.woodhouse@clmlaw.co.uk.

The usual summer season of corporate hospitality sporting events is in full swing. Rupert Wright, a corporate services lawyer with Charles Lucas & Marshall, explains why legislation may be prompting some companies to think twice about accepting an invitation.

Rupert Wright

As well as Ascot, Wimbledon and Henley, the season of corporate entertainment has a major addition this year with the London Olympics. For companies looking to build relations with clients and suppliers in an effort to retain or secure new business, these events can present useful opportunities.

However, the introduction of the Bribery Act 2010 (the ‘Act’) in July last year has meant that companies which offer corporate entertainment to their clients now have additional factors to consider.

The Act contains an offence which is relevant to provision of corporate hospitality by companies, namely that of offering a bribe to an individual in the private sector, or to a UK public official.

The bribery offence applies in two cases: first, where a person intends the advantage to bring about improper performance by another or to reward such improper performance. Second, where a person knows or believes that the acceptance of the advantage offered or promised, itself, constitutes the improper performance of a relevant function or activity.

The law refers to the provision of a ‘financial or other advantage’; a gift or an invitation to a sporting event could, potentially, be caught by both of these categories.

The Ministry of Justice has provided a guidance note on the Act. It recognises the important role that hospitality plays in business and states that there is no wish to criminalise such behaviour.

The difference between legitimate corporate hospitality which is lawful and an unlawful attempt to bribe someone lies in the intention of the provider/giver to influence and secure a business advantage. The intention of a person is judged by what a reasonable person in the UK thought.

The guidance note states that the ‘more lavish the hospitality or the higher the expenditure…the greater the inference that is intended to influence a business advantage in return’. In its view, an invitation to foreign clients to attend a Six Nations fixture at Twickenham as part of a company’s PR programme and targeting its clients would be extremely unlikely to constitute an offence under the Act. This is because there is unlikely to be the required evidence of an intention to induce ‘improper performance’.

So, hospitality which is reasonable and proportionate to what is generally accepted as normal by an industry sector and achieves a ‘legitimate business purpose’ is therefore unlikely to fall foul of the Act.

New laws often bring uncertainty for those affected by them – notwithstanding the comforting words of the Ministry’s guidance note. It might therefore not surprise you to hear that some companies have erred on the side of caution by trimming hospitality packages – and have found some clients who are now reluctant to accept offers of hospitality they would previously have taken up without further thought.

For further information contact Rupert Wright on 01635 521212 or rupert.wright@clmlaw.co.uk

Charles Lucas & Marshall was established in 1870 and now has offices in Newbury, Hungerford, Swindon and Wantage. 

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Charles Lucas & Marshall put client care first and are committed to delivering an excellent service – providing timely, informed and effective advice which always has our clients’ best interests at heart.

The firm’s Corporate Services Team has particular expertise in working with owner managed businesses, both large and small, and recognises the particular challenges that such businesses face. 

The team’s experienced solicitors adopt a holistic approach to business and provide a breadth of legal services to all legal aspects of business under one roof by being able to deal with both non-contentious and contentious issues, and offer practical, cost effective advice on a wide range of issues.

The following are examples of the areas of work undertaken by the Corporate Services Team: 

Company & Corporate Work

General Company Matters
Companies Act 2006
Company Formations
Shareholder Agreements
Amendments to Memorandum and Articles of Association
Partnership Agreements
Share Buy Backs
Option Agreements
Company Restructuring

Corporate Transactions
Share and Asset Sales and Purchases
Management Buy-Outs and Buy-Ins
Investment Agreements
Joint Venture Agreements
Incorporation of partnerships

Commercial Documentation
Terms and Conditions
Agency and Distribution Agreements
Intellectual Property Assignments and Licenses
Data Protection Act advice
Software Development Agreements
Website Terms and conditions, Privacy Policies, Terms of Use
Franchise Agreements
Manufacturing agreements

Employment Law

Contracts of Employment
Disciplinary Matters
Internal Grievance Procedures
Compromise Agreements
Redundancy Claims
Unfair/Constructive Dismissal Claims
Employment Tribunal Claims

Company Disputes & Mediation

Supplier disputes
Shareholder disputes
Directors/Shareholder disputes
Partnership disputes
Mediation of disputes

 For more information on how your business could benefit from our services, contact the Corporate Services Team on 01635 521212

or email:  ask@clmlaw.co.uk

Business owners and potential acquirers are currently finding better prospects for growth in the Thames Valley where recent surveys show greater confidence. With bank lending still difficult though, Rupert Wright, a corporate services lawyer with Charles Lucas & Marshall, says buyers and sellers need to consider creative and pro-active methods to reach a suitable deal.

Rupert Wright

The general rule is that buyers tend to favour an asset sale while sellers prefer a share sale.  The main advantage for the buyer of an asset sale is flexibility since the buyer can specify the assets it wishes to purchase and also lower the risk since the buyer does not acquire any liabilities it does not specifically agree to.

For sellers, the main advantage is that the buyer acquires the whole company and therefore they are able to dispose of all potential liability. A recent case involving Dragon’s Den star, Theo Paphitis, emphasised how important it is to minute all matters as he was able to show that he had the interests of the seller company in mind when he had to defend an action for fraudulent breach of his fiduciary duties.

With the current difficulty in obtaining bank finance, deferred consideration will be an important element for disposals.  Acting for the seller, one of the key factors is security, since the buyer will resist personal guarantees.  However, debentures can be considered both for the company being acquired and also for the buyer company.

Another element that must be considered in the current climate is earn-outs.  This can be particularly important when a major part of the revenue is dependent upon one or two major corporate clients or where there is concern from the buyer that the departure of a key member of staff may have a detrimental effect on future trading performance.

Earn-outs should also be considered where there are declining sales, perhaps caused by an owner being unwell or absent from the business due to family or personal reasons. Earn-outs can be a factor where a high price is being sought by the seller and the earn-out protects buyers in order to ensure that they only pay for real tangible profits rather than potential profits that fail to materialise.

A management buyout is often a suitable way of a seller disposing of a subsidiary or certain key assets to its management.  One unusual way of dealing with the management buyout is for the seller to make a payment to its management team to assist it with the purchase.  This will assist the seller with closure and other possible redundancy costs and might well be a suitable way of disposing of its assets.

In summary, in the current economic climate where business prospects are improving, creative and proactive solutions are available which can work to the interests of both buyer and seller.  However, legal advice should be sought at all times at an early stage.

For further information contact Rupert Wright on 01635 521212 or rupert.wright@clmlaw.co.uk

In a case decided at the end of last year, the Court of Appeal decided that the charge levied by companies such as Denplan for collecting payment from patients is not exempt for payment of VAT.

I am no accountant but this seems to me to mean that the charge for collecting such payments will go up by 20%.  That is about 14p.  I do not know whether Denplan has decided to swallow the increase but taking into account the size of the charge, I doubt this.  I would be interested to hear of your experiences.

That means that dentists will have to pay the additional sum as they are unable to recover the VAT.  Whether there are ways that a dental practice can be structured so that this vatable item is taken into a body which can reclaim the VAT, will need to be discussed with the accountants.

For more information please contact Hugh Ellins on 01793 511055 or hugh.ellins@clmlaw.co.uk

There is increasing evidence that courts and employment tribunals now expect litigants to seriously consider some form of mediation before legal action reaches the courtroom. Paul Trincas and Andrew Egan, corporate lawyers with Wantage solicitors, Charles Lucas & Marshall explain why businesses may soon have very little option but to mediate.

Business disputes can be expensive both from a time and cost perspective. Although the courts and tribunals cannot compel anyone to attempt to resolve their business or employment dispute, they expect the parties involved to at least have considered some form of alternative dispute resolution.

The recent Court of Appeal case, Rolf v De Guerin considered various issues – including the defendant’s refusal to mediate.

Although the defendant won at trial the claimant appealed on a number of grounds including the cost order which the trial judge had made in favour of the defendant. The claimant argued that the defendant’s refusal to take part in mediation amounted to unreasonable behaviour.

On appeal, when asked by the court why he had been unwilling to mediate, the defendant stated that if he had participated in mediation he felt he would have had to accept ‘his guilt’ and that he wanted his ‘day in court.’

Whilst the judge acknowledged that mediation might not have provided a solution, he felt that it was unreasonable on the defendant’s part to spurn offers to enter mediation.

The lesson to be drawn from this is that the courts now expect litigants to seriously consider and enter into some form of mediation. You may succeed in your claim but if you fail to engage in mediation without a legitimate excuse, you are likely to have costs ordered against you.

Employment Tribunal reforms: will employers feel forced to compromise?

The government proposes reforms to Employment Tribunals this year with the aim of reducing the number of claims.

It has been argued this may adversely affect small to medium sized businesses because  a form of compulsory early mediation through ACAS will force more cases to be settled out of court on a financial basis, through compromise or settlement agreements.

The concern is that employers may be more tempted to settle this way because of the potential level of costs the government is proposing for employers who might otherwise lose a tribunal case.

Many employers, however, already use compromise agreements to settle actual or potential employee claims anyway. Average settlement figures tend to be less than the full cost to employers of defending a case in the tribunal and will be cheaper than a potential fine of £5,000, plus the cost of reimbursing the employee’s claim fees and having an award of compensation against the employer.

Obviously settlement by way of mediation saves time and money and the inconvenience and hassle of having to attend the tribunal and give evidence rather than being at work and being productive.

What are the advantages of mediation?

Mediation will bring a certainty of outcome. It will avoid either the costs of proceeding to court, or, alternatively, if court proceedings have started, it will avoid having to proceed to trial with all the costs and uncertainties involved.

It is also independent of the court process and is a relatively informal procedure. Although the mediator facilitates settlement, it is actually the parties themselves who come to their own agreement and model the terms of any agreement.

What costs are involved?

These can vary, depending upon the nature of the dispute, the amount involved, the time required and the mediator appointed. The parties will have to share the mediator’s costs equally.

If the parties have a legal representative and wish to have their representative present, then the parties will have to pay their respective legal advisors. It is normally only in more complex or larger claims that parties wish their legal representatives to be present.

If the outcome of mediation is successful, then it may well be time and money well spent.

For further information contact Paul Trincas on paul.trincas@clmlaw.co.uk or for employment related issues, contact Andrew Egan on andrew.egan@clmlaw.co.uk or call 01235 771234.