13 minute read
SBT Legal
from SBT issue 447
SBT
LEGAL
BY MAYO WYNNE BAXTER
THE FUTURE OF FLEXIBLE WORKING
BY MAYO WYNNE BAXTER
EMPLOYMENT LAW: REDUNDANCIES AS WE EXIT THE PANDEMIC
BY 365 EMPLOYMENT LAW
SBT LEGAL SPONSORED BY:
By Jonathan Clays, Associate Solicitor – Commercial Law
Now that you have found a commercial property to rent it is time for the key terms of the proposed lease to be agreed with the landlord, or their agent, and set out in a document known as the Heads of Terms (“HoTs”). The following are some points that should be considered when agreeing these Heads of Terms: 1. Subject to Contract – whilst the HoTs are intended to set out the key terms they are not intended to be binding on the parties. The HoTs and any correspondence in relation to the proposed letting should be clearly headed ‘Subject to Contract’. 2. Sufficient Detail – whilst neither the landlord nor you will want to spend significant time negotiating the HoTs, the key terms of the proposed letting should be clearly set out in the HoTs; 3. Key Terms – the following are terms that are often included in HoTs: a. Property – the exact extent of the property to be let, and any parking rights, should be agreed at an early stage (preferably shown on a plan). b. Break Right(s) – without a formal break right you cannot bring the lease to an end early without the agreement of the landlord (which
they may not agree to or may require payment of a sum of money Legal for). Break rights can either be on fixed dates or on a “rolling” basis throughout the term with a set period of notice to be given in each case. c. Rent – what is the annual rent and how often is this to be paid (usually quarterly or monthly in advance). Such rent will be exclusive of VAT and whether VAT is payable should be checked. d. Rent-Free Period – are you to have the benefit of a rent-free period (for example to allow fitting-out of the Property before you can open for trade).
e. Rent Review –the landlord may require the ability for the rent to be reviewed at set periods (but usually only where the lease is for more than five years). Whilst this is usually by way of an upwardsonly review to the level of the market rent on an agreed date (or dates) there are alternatives. For example, it could be agreed that any increase be linked to an index (e.g., the Retail Prices
Index (RPI)) with the advantage that the increase is easily determined and could save professional costs establishing the market rent;
f. Repair – often HoTs will refer to the tenant having a full repairing liability.
In this case you would be obliged to put the property into repair (even if not in repair when you take the lease). If the property is in disrepair (and you should instruct a surveyor at an early stage to determine this) you should strongly consider having your repairing obligation limited to keeping the property in the same state as when you entered into the lease. This is usually evidenced by a Photographic
Schedule of Condition.
g. Service Charge – if the property forms part of a larger building it is usual for the landlord to recover a percentage of costs they incur for maintaining, repairing, cleaning, etc, the building through a service charge. Details of any service charge (including any recent service charge accounts) should be obtained. In addition, to avoid having to contribute towards costly repairs you should consider whether there is to be a cap on the service charge in any year.
h. Security – the landlord may require you to provide either a guarantor and/ or rent deposit. You should consider if this request is reasonable. If it is, then each have their advantages and disadvantages (with a guarantor being personally liable for all liabilities of the tenant and a rent deposit possibly impacting cashflow with a sum being tied up for some or all of the term of the lease).
i. Permitted Use – the permitted use of the property and the ability to change this (subject to being permitted under planning laws) should be clearly set out.
j. Assignment and Underletting – are you to be allowed to assign (transfer) the lease or underlet (grant a lease for a shorter term)? If you are this will usually be with the landlord’s consent (not to be unreasonably withheld or delayed).
k. Security of tenure – is the lease to have security of tenure (often referred to as being ‘inside the 1954 Act’ and so that you are entitled to a new lease at the end of the term) or not? If not, then it would be entirely up to the landlord if they wish to offer you a new lease at the end of the term and they would have full discretion as to the terms of any such lease. l. Landlord’s Works – are there any works the landlord is required to carry out?
4. Professional Valuation Advice – you should strongly consider obtaining professional advice from a surveyor or property agent on the terms to be agreed (including the Key Terms set out above).
5. (And finally, but not least) Instruct a solicitor – serious consideration should be given to instructing a solicitor at an early stage not only to advise on the draft HoTs but also to avoid any delays once HoTs are agreed. A solicitor can also assist by confirming whether Stamp
Duty Land Tax is payable (and the amount) as well confirming other likely costs such a Land Registry
Registration Fees and other costs payable to third parties.
Jonathan Clays
www.mayowynnebaxter.co.uk
The future of flexible working
By Marika Monaghan, Associate Solicitor
Prior to the pandemic 68% of British workers
Legal had never worked from home. However, according to a recent YouGov survey, 81% of employees who worked at least some of the time from home following the outbreak want to be able to continue to do so after the pandemic has come to an end. From June 2014 an employee who has at least 26 weeks’ continuous service has the right to make a statutory request in writing for flexible working, although they can only make one such request in any 12-month period. The employer has a duty to deal with the request in a reasonable manner and to notify the employee of the outcome within a 3-month period unless the deadline has been extended by mutual agreement. The employer can only refuse the request on one of the following grounds: • the burden of additional costs; • detrimental effect on ability to meet customer demand; • inability to reorganise work among existing staff; • inability to recruit additional staff; • detrimental impact on quality; • detrimental impact on performance; • insufficiency of work during the periods the employee proposes to work; or • planned structural changes.
Although flexible working has existed as a legal concept since 2003, prior to COVID-19 the uptake of flexible working had been a lot slower than anticipated. To address this, in December 2019, the Government announced its intention to introduce changes to flexible working legislation to bring in what is often referred to as ‘flexible by default’, where jobs would be deemed to be flexible unless the employer can justify otherwise. Although this change has not been formally implemented, for many businesses the pandemic has, in any event, led to the adoption of flexible working patterns by default at least for the time being.
Although from March 2020 the upsurge in employees working from home may have been borne out of necessity, it has given employers the opportunity to explore the various potential advantages and disadvantages of a working model that they may have previously discounted.
From an employer’s perspective there are several potential advantages of remote working such as • Savings to office space and cost • Access to a wider pool of workers (due to geographic location or employees who need to fit work around other responsibilities such as childcare)
• Better employee retention due to employees’ achieving a better work/ life balance and higher job satisfaction • Reduced stress and sickness levels • Possible increased productivity • Savings in costs and time for reduced commuting and the associated environmental benefits
Some of the potential disadvantages of remote working include • Difficulty in managing remote workers and monitoring performance • Loss of team cohesion • Increased risk of sense of isolation • Increased telecommunications costs and higher data security risks
Given that that there are advantages and disadvantages to working remotely, it is not surprising that a significant proportion of companies, (two thirds of those surveyed according to CIPD, the professional group for Human Resources staff), are now developing hybrid working models that will allow employees to work some of their time from home and the remainder of their time in the office.
A number of large companies, including Google, Virgin Media, Aon, John Lewis, HSBC and Natwest Bank have publicly announced their commitment to a hybrid working model.
Given the emerging trend towards flexible working models, it is more important than ever that employers can deal appropriately with flexible working requests. Introducing a regime of flexible hours and/or organising a phased return of their employees may also assist the employer in complying with social distancing regulations which remain in the workplace.
However, the employer will need to ensure that it deals with requests for flexible working sensitively and fairly. It should consider its employees’ personal circumstances to avoid discriminating against a particular employee or group of employees. Sometimes an employer may encounter challenges in balancing the competing needs of its employees and may wish to seek legal advice regarding the best way to deal with these thorny issues.
Any changes to an employee’s working hours or place of work should be confirmed in writing to avoid ambiguity or misunderstanding. If the employer does not feel able to grant a request for flexible working, it should ensure that its reasons for refusing falls within one or more of the 8 permitted grounds listed above and that this is confirmed in writing.
Sometimes an employer may wish to make changes to some or all its employees’ hours and place of work and the need to do so may become more acute following the pandemic. Generally, to make such changes unilaterally would amount to a breach of contract. It is therefore recommended that an employer seeks their employees’ agreement and that they seek legal advice if they experience any resistance from their workforce before implementing any fundamental changes to their employees’ working patterns.
Marika Monaghan
Employment Law: Redundancies as we exit the pandemic
As we start to see an exit out of the covid 19 pandemic, the issue of staff redundancies will be in the news. The reasons for this are obvious.
Since March 2020, businesses who otherwise would have made staff redundant, have, in many cases, avoided the need to do so because of the Coronavirus Job Retention Scheme (CJRS). This is the mechanism through which employers are able to place staff on furlough, and recover a percentage of their salary (at times up to 80%), through the scheme. I have had lots of conversations with clients and other professionals such as accountants about this, and the consensus is that once furlough ends, those redundancies that were put on hold, will start to happen quickly. Employers that have held off on redundancies would be wise to consider the next steps they might want to take, when the financial support ends. The focus on this article, is to break down how redundancy occurs in law, something that many employers assume is more complicated than it actually is. If the number of affected staff is over
20, then collective rules apply. I do not focus on those for the purpose of Legal this article, but on the smaller number redundancies, that affect SME’s on a more regular basis, and that will have to be faced when furlough ends, currently in September 2021. The legal position relating to redundancy of staff sets out that it can happen in one of three situations, business closure, workplace closure, and the most commonly used, a reduction in the need for staff to do work of a particular kind:
1) Business Closure
This is as simple as it suggests. If a business ceases trading, the staff will be redundant.
2) Workplace Closure
This situation is where a particular premises that the employer runs closes but the wider business remains open. This is also a redundancy situation. Many employers do not understand the basis of how this works. Eg, if an employer runs two factories, one in Brighton, and one in Worthing, and closes the Worthing one, the staff there are all redundant. The employer cannot cite the Brighton factory as being nearby, and the staff not redundant as a result, unless they have an active mobility clause in the staff contracts i.e. that allows them to be moved to other premises, and has been used in the past. Without both of those points applying, the staff will be redundant. A passive mobility clause i.e. one that is in the contract but has not been used, will not avoid a redundancy situation.
3) A reduction in the need for staff to do work of a particular kind.
This is the most common route to staff redundancies. The staff are redundant if the employer no longer has the requirement for staff to do work of a particular kind. The test is not whether the work still exists, but whether or not the role is needed to do the work. This means that redundancy can be because of specific work reduction, for costs saving purposes, or for reorganisation purposes. As an example, in hospitality, a widely affected area, a bar owner may have two bar managers, both of whom share shifts, so both are needed. The employer may decide to make one of those redundant to save costs, despite the work need being there, and do some of the shifts themself. That would be a genuine redundancy, as the requirement for a bar manager has ceased. They would of course have to have a fair selection process to decide which employee goes, but one of those roles is redundant.
A redundancy situation does not occur under this heading if an employee is made “redundant” and someone else is hired into exactly the same role. Using the above example, if another bar manager is immediately hired, a redundancy situation would not exist.
An employee made redundant under any of the above scenarios will be entitled to statutory redundancy pay. The right to qualify for that pay is conditional on two years continuous employment with the employer.
The reason why it is important for employers to get this process right, is that if an employee is not redundant, or they are unfairly selected, or a fair procedure is not followed, the employee will have an Unfair Dismissal claim, and could receive much higher amounts of compensation.
Please always take advice on any staff related issues.
Alex Jones
By Alex Jones, Managing Director, 365 Employment Law
Alex Jones
365 Employment Law Solicitors Tel: 01903 863284 ajones@365employmentlaw.co.uk
www.365employmentlaw.co.uk
Selling, buying or starting a business?
