13 minute read
SBT Legal
from SBT issue 452
SBT
LEGAL
BY MAYO WYNNE BAXTER
IN MAYFAIR, LONDON
EMPLOYMENT LAW: WHAT WILL THE TOP ISSUES BE IN 2022?
BY ALEX JONES, MANAGING DIRECTOR, 365 EMPLOYMENT LAW
SBT LEGAL SPONSORED BY:
By James O’Connell, Partner, Mayo Wynne Baxter Solicitors
Shareholder agreements (‘SAs’) are one of those legal documents, like NDAs, that most businesspeople have heard of - and take for granted that they should be using. However, as ever with the law, each case must be treated as unique. If I had a Bitcoin for every business owner whom I’ve talked out of self-harming with an SA, I’d be writing this article from the Caribbean. Sadly, as I’ve only ever received the proverbial penny, I’m writing from Brighton. Firstly though, a quick reprise. Companies are mostly run by their directors acting collectively - the board. However, the law says that ultimate control of a company lies with the owners: the shareholders. The key word here is “ultimate”, since the law gives directors a lot of strategic advantages over shareholders, such that shareholders can often have the devil’s own time in trying to assert their authority. But because of that ultimate control, SAs are perennially popular. SAs in their purest form are agreements between shareholders on how to wield
their authority. SAs usually require collective shareholder agreement before Legal decisions can be taken on important things like voting rights; pre-emption rights (who gets first dibs when a shareholder wants to sell, or where new shares are to be issued); seats on the board, senior salaries; taking/making loans over a certain size; etc., etc. Often the topics covered stray into matters that are really for the board to decide, or which should be governed by the company’s Articles of Association. But as the major shareholders usually constitute the board, it still works - and
getting the company to sign the SA too ties the board’s hands anyway.
I often advise business owners to avoid an SA because of shareholder expectations. SAs to many have the primary purpose of emasculating the power of the majority shareholder - Gulliver voluntarily agreeing to be tied down by the Lilliputians.
Doing this is often a mistake from the majority owner’s perspective. SAs, especially those requiring unanimous shareholder consent before things can be done, can effectively give minor shareholders the same right of veto as the majority owner - a level of power which is usually not justifiable, and which is hostage to shareholders’ differing goals, priorities, and levels of commitment. Too often companies start as egalitarian kibbutz: shoulder to shoulder to build something exciting – it’s when the money finally appears that the cracks usually begin to show!
So, majority owners really do need to ask whether it’s a good idea to voluntarily give a right of veto over their business to perhaps a huddle of semiengaged shareholders each owning single digit percentages.
I’ve referred to “pure form” SAs because frequently SAs become more: a dumping ground for other matters which need to be recorded in writing: employment terms in particular. This is usually a bad idea. The employment provisions tend to be half-baked, and may corrosively blur the distinction between shareholder, employee and director (the latter being an office as well as potentially an employment role). Also, an individual’s employment terms will forever be on view to other shareholders - and changing those terms can become a nightmare, possibly requiring the involvement of shareholders who should have no input at all.
SAs are also often home for terms that should be in a share purchase agreement (‘SPA’). SPAs set out the terms under which somebody purchases new or existing shares. As with employment terms, the parties usually have a strong desire to lump everything into a single agreement - partly out of convenience, but also to save money (since drafting one longer agreement is usually cheaper than drafting various stand-alone agreements - well, cheaper in the short term anyway...).
The main disadvantage of folding an SPA into an SA is again the risk that it is half-baked. Too often lawyers are instructed to draft an agreement which is comprehensive, whilst at the same time being not too long, detailed, offputting, legalistic or too complex.
This is a circle that can only be squared in fantasyland. In practice, almost invariably optimism wins out and clients opt for ‘quick and dirty’ over ‘belt and braces’ (thus ensuring a steady stream of work in later years for dispute resolution lawyers).
Another reason it can be a bad idea to mix in employment provisions, share purchase terms, etc. is that SAs are meant to be standard – each shareholder signs the same document, with future shareholders also agreeing to be bound by it. That can be most tricky if your SAs have been personalised.
In summary, if you are not the majority shareholder then almost invariably an SA is to your advantage. It may still be worthwhile even if you are the majority shareholder – but just don’t assume that voluntarily “doing a Sampson” is automatically going to be a good thing for you personally.
James O’Connell
Our friends at the award-winning multi-legal law firm Britton and Time have announced the opening of a new London office this quarter.
This daring move marks their second anniversary and responds to a growing demand for solicitors in the Big Smoke. The firm, founded in Brighton and Hove, has enjoyed rapid expansion since opening in 2020. Director Paul Britton, whose legal career started in London, is thrilled to be increasing the firm’s reach and into one of his favourite cities: “Opening an office in London is particularly special to me. I first moved to Marylebone in 2002. It’s where I spent every free moment. Being in and around the city was always exciting, the people, the ideas, the hustle, and the bustle. I want our growing team to have that experience too.” As any solicitor knows, real evidence is key. The fact is Paul has paid close attention to the London market during the pandemic, he told us, “With BBC News, The Financial Times, Law Gazette, and many more recently reporting on the lack of candidates available for roles, we’re excited to be bringing our team to London. The need is there. Mayfair will become the firm’s second home. It represents the strategic expansion of Britton and Time.”
The new office officially opens on 7th February 2022. Just moments from Hyde Legal Park and London’s prestigious Mayfair, Britton and Time’s London office is on a tree-lined street in a picturesque classic Edwardian building, boasting elegant meeting rooms for client consultations and a relaxed members lounge perfect for visiting guests. If you’ve had the pleasure of visiting their Brighton and Hove headquarters. In that case, you’ll know they favour chic surroundings and appreciate the lengths they go to ensure a 360-service experience for clients; it’s how they became an ‘in demand
firm’ during the pandemic, going from strength to strength.
By staying open whilst others chose to continue working from home and upholding the administration of justice, Paul and his team safely welcomed clients old and new with their awardwinning can-do approach and face to face consultations.
Britton and Time recognise complex legal cases require relationship building, comfort and connection. Elisabeth Squires, Head of Private Client, said, “Seeing someone in person makes our service personal. We like to read clients, and we like to connect with them.”
“Clients feel valued when they hear that we remained open and were offering permitted legal services in line with COVID-19 guidelines as set by The Law Society, unlike many of our competitors. This ensured that our level of service and commitment to clients did not falter. Despite life seemingly stopping for many, we saw a large increase in people looking for legal services. Many people found we were one of the only firms in the area willing and able to accommodate them. We’re taking that same level of service, resilience and determination to London.”
Head of Communications Ellie Talebian added, “What we’ve found during the pandemic is that whilst Zoom has been a brilliant tool for businesses to stay connected, clients want to come in and meet the team for their consultations. Every client is offered an in-person face to face consultation or Zoom call. Less than 10% take up the latter. Zoom cannot replace what it means to sit with someone assessing important documents or offering comfort in times of distress. We’re dealing with some of the most crucial moments in people’s lives that require a connection. Opening in London is a direct response to the needs of the market and our clients, and it allows Britton and Time to do what we do best and provide clients with an award-winning and essential service that best represents their wishes.”
The firm’s growth allows its Director Paul Britton to hand the responsibility of the Brighton and Hove offices to his entrusted senior team. Paul said, “this is as much about doing what’s best for our clients as it is about allowing my colleagues to showcase their talents, challenge themselves and grow their professional skill set in a leading global legal market.”
2022 will be yet another year of development for the firm, with exciting new hires, partnerships, and a real commitment to accelerate and modernise the perception of solicitors. “This year, our people matter most. Strengthening our client and community relationships will take priority. We’re a service led firm, and that service is afforded to everyone, be it employee or client.”
As the latest paralegal for the firm Leonardo Bosco said, “Our firm is ambitious, determined to grow, and has consistently demonstrated to be capable of doing so. Our London office will be the latest in a series of incredible achievements.”
Paul has been described by his colleagues as a tactical genius, and his relentless, no-nonsense approach and passion for growth make him unstoppable.
With offices in London, Brighton and Hove, and an enviable entrepreneurial spirit, Paul Britton once again makes himself one to watch in 2022.
Whether you require legal services in Brighton or London, Britton and Time are available to work on your matter. Call 020 3007 5500 or email info@ brittontime.com with a few details of your matter, and the team will provide a same day response. Visit www. brittontime.com for more information.
Employment Law: What will the top issues be in 2022?
Whilst a number of ongoing COVID-19 issues are lessening as we start 2022, employers will need to have in mind how we transition back to a normal and hybrid workplace as the year progresses.
Employers who accept that the workplace is transitioning, and who focus on the challenges and opportunities, will be much better placed than those that immediately insist on a pre-pandemic return to a fully office-based workforce. In this and next month’s article for SBT, I focus on the top 10 issues that I see will most affect employers in the coming year, this month and next month:
1. Covid and a return to the workplace
The government has indicated that it is no longer requesting people work from home. This has not been a legal requirement in the past few months, and the return to the office is not a legal requirement either. Employers should be very careful about a wholesale return to the workplace. Covid is still an issue. Employers should be mindful of collective and individual employment issues including, but not limited to, contractual variations moving people from home, staff who might be
at risk from covid, how they will assess the risk, and whether or not they are Legal in a position to replace staff who leave because of stringent requirements to come back to the workplace. On that last point, in many industries, the balance between vacancies and applicants has shifted dramatically, and employees routinely demand flexible and hybrid working as a matter of course.
2. Working from home
After nearly two years of on and off
home working, many employees will now be home-based either in whole or part. If an employee is working from home for any part of their employment, employers need to be aware of the differences with office work, the obligations they owe, how they can deal with the employee who is not close, and keep on top of issues. The simple position is that they should act like the employee is in the workplace, which includes a safe working set up, relevant rest breaks, only monitoring where reasonable, a separation on personal and work devices, and communications on any office issues. The last point is particularly important for employees who do not ever work in the office. They are often left out of communications, social events etc, and all employers need to adapt to the hybrid working model.
3. Flexible working and discrimination
As recently as 3 or 4 years ago, flexible working requests were almost always associated with working parents, or connected with an employee having a disability. Whilst the right to request flexible working is theoretically open to all after a short period, it was difficult for most employees to argue it was necessary. This combined with most employers failure to understand the right to make the request (which is a process rather than a right for it to be granted), and how it overlaps with other discrimination rights, often led to employers routinely refusing flexible working requests, and exposing themselves to a discrimination claim. A compliance with the process can still lead to a claim in other areas. That is more pronounced with hybrid working and staff wanting to be homebased.
4. Monitoring and Consent
Employers should treat the issue of employee monitoring no differently with hybrid and home based staff. Employees have an expectation of privacy that their activities will not be routinely monitored eg internet usage, private e-mails etc. If employers want to monitor their employee productivity in that regard, they should always inform staff they will do so (usually via a relevant policy), and keep the monitoring proportionate and reasonable. Employees expectation of privacy will be even higher when they are home based in whole or part. It also goes without saying that employees should be allocated appropriate devices for home working, and should not use their own computer or mobile phone. If they do, it becomes much harder for any monitoring to occur reasonably.
5. Safety and Prevention
There is often an assumption that employees working from home will enjoy a safe working environment. This may not be the case. Employers who have staff working at home, should be mindful of any personal issues in an employee’s life that may affect them, and also may lead to the employer being criticised. Employers should have confidential avenues available for all employees to discuss any such difficulties, but also be alert to the warning signs for problems such as domestic abuse.
Employers should always be alert to any issues involving staff outside the traditional workplace, and always take proactive advice in how to deal with these issues.
Alex Jones
By Alex Jones, Managing Director, 365 Employment Law Tel: 01903 863284
ajones@365employmentlaw.co.uk www.365employmentlaw.co.uk
