Archives for 2014

Holiday Pay – is it such a big deal?

There has been lots in the press about the Employment Appeal Tribunal (EAT) decision on holiday pay.  The EAT decided that non-guaranteed overtime which the employee is contractually bound to perform if asked must be taken into account.

This is not a great surprise.  It is in accordance with the intention of the original EC Directive that the workers should not suffer any detriment by taking holiday.  Indeed the conclusion of the EAT can be reduced to the very simple proposition – “‘Normal pay’ is that which is normally received.”

This also applies to taxable travel time payments in excess of the actual expenses incurred.  Guaranteed overtime was already to be included.  Overtime which the worker requests but is not contractually obliged to do will not.

This only matters for holiday pay calculated for the 4 weeks holiday which is covered by the Working Time regulations.  The additional 1.6 weeks holiday which makes up the statutory holiday in Britain, or any additional contractual holiday are not covered.

On a procedural point the EAT decided that as claims to the Employment tribunal will be for “unlawful deduction from wages” a claim can only be brought if the employee has taken holiday within the last 3 months, and then only for previous holidays if there has not been a break of more than three months between them.  This limits the extent of claims via the ET.

It is highly unlikely that the EAT’s decision will be the last word on this issue.  Leave to Appeal to the Court of Appeal has been given, and after that there is still the Supreme Court.  The government intervened and sent a QC to argue against the propositions accepted by the EAT.  BIS has already set up a Task Force, containing only employers organisations, to “assess the possible impact”, though a tweet from BIS put the purpose rather differently – “limiting the impact”.

This one will run and run. Expect lots of anti EU rhetoric, and possibly unsolicited calls from claims companies.  If you are an employee who may have lost a substantial amount you should get advice and start a claim within 3 months of your last deduction, but expect that to be stayed until there is a final decision on this case, which could be another year.  If you are employer you may want to calculate the potential value of claims and make provision for them.  Employers may also want to review their contracts to see if they can be changed.

For advice on Employment Law contact:

Neil Howlett

Andy Hambleton

Fraud Risk Posed by Bogus Law Firms

A recent BBC television programme “Fake Britain” (aired on 12th August) highlighted the ease with which criminals can impersonate solicitors in order to steal from individuals engaged in property transactions.

The programme recounted the case of Nick Christofi who lost £735,000 to fraudsters who assumed the identity of a genuine firm of solicitors.  Mr Christofi had instructed a genuine solicitor to act on his behalf in the purchase transaction.  That genuine solicitor checked that the solicitor they were dealing with on the other side of the transaction was authentic by checking their details using the “find a solicitor” facility on the Law Society website.

It later transpired that the criminals had stolen the identity of a retired solicitor and managed to dupe the Solicitors Regulation Authority (‘SRA’) into listing that solicitor as practising from a fake office address under the name of an existing genuine firm of solicitors (the SRA is the official body responsible for regulating solicitors).

Mr Christofi’s claim for compensation from the SRA was rejected on the grounds that the SRA regulates solicitors, not criminals and therefore people with complaints should go to the police.

The SRA has warned that there has been a marked increase in criminals targeting firms of solicitors in order to steal their identity and thereby steal funds.  They have warned against relying solely upon the list of solicitors on the Law Society website.

In the Christofi case the fraud was only discovered after the transaction had completed, when it transpired that the property that had been purchased was in the process of being repossessed and the fraudsters had got away with the purchase funds.

As with other types of identity theft, it would seem the internet presents greater opportunities for criminals to impersonate others through the use of fake websites, email addresses and online profiles.  It is therefore important for solicitors and consumers to be aware of the possibilities and to be vigilant, especially when very large sums of money are involved.

The programme suggests that consumers should use a reputable solicitor for conveyancing transactions, ideally one that is recommended to them.  At Harris & Harris the vast majority of our conveyancing clients are returning clients or have been recommended to us.  Harris & Harris are members of the Law Society Conveyancing Quality Scheme.  This means that all our conveyancing staff undergo additional training and security checks to monitor the risks of fraud.

A report of the case can be read here:-

http://www.dailymail.co.uk/property/article-1305436/How-bogus-solicitors-robbed-735-000-Family-lose-fortune-dream-home-scam.html

Wells Moat Boat Race Halted by Too Much Water

Although this year’s Wells Moat Boat Race (on bank holiday Monday, 25th August) had to be brought to a slightly premature end due to persistent rain, we are pleased to report that the Harris & Harris team won both races in which they took part at this year’s event and that they also won second place in the Fancy Dress competition, for their Crocodile Dundee themed raft and costumes.

The charity event takes place each year on the August bank holiday Monday on the Bishop’s Palace Moat. Entrants must build their own raft and paddles. The funds raised are split equally between the Wells Lions Club good causes, and participant’s chosen charities. Harris & Harris’ chosen charity is St Margaret’s Somerset Hospice.

Our team this year: Solicitors Joshua Eva and Andy Hambleton, trainee solicitor Chris Mullett, legal secretary Emma Wiltshire, office clerk Tom Hampson, and local farmer Joe Stradling.

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Below is a video of one of the races:-

 

Is a verbal contract worth the paper on which it is written?

We regularly see clients who say “I haven’t got a contract”. What they mean is “I haven’t got a bit of paper”. Under English law almost any contract (except for buying land or a guarantee) can be made by word of mouth (or email). The main difference is that there is much more room for disputing the terms of a contract if it isn’t recorded – that’s more business for lawyers. Even for those areas where writing and signature are required the courts may find those in an exchange of emails.

A contract comes into existence once the parties have agreed the terms. It isn’t necessary for them to have agreed all the terms. The test is objective – the court looks at what the parties have said and whether the essential terms have been agreed. That is now commonly working through a set of emails.

Even for substantial commercial contracts there no requirement for greater formality. It is possible to create a legally binding contract before a document is drawn up and signed by the parties, even where they both expect to move on to that. As one judge put it – “Even if certain terms of economic or other significance have not been finalised, an objective appraisal of their words and conduct may lead to the conclusion that they did not intend agreement of such terms to be a precondition to a concluded and legally binding agreement.”

Even where there is an agreed intention for further condition to be fulfilled or terms to be agreed that may not prevent the contract coming into existence, if a reasonable person experienced in the business sector would think it had. A statement that a ‘formal contract will then follow in due course’ did not necessarily indicate that acceptance of a signed quotation was not legally binding.

If the parties can’t agree such further terms the existing contract is not invalid. If the parties can’t agree the court will, if necessary, enforce terms that are standard in the sector or give business efficacy to the terms agreed. What the court is very unlikely to do is to write in for you the terms that are often the most important, such as limitations on liability or practical protections for your assets and intellectual property.

The lesson is that when negotiating contracts all written communications relating to negotiations and contractual terms should be marked “Subject to Contract” unless and until you are to enter into a binding agreement on the basis of the terms agreed. As you approach that point be ready to instruct a solicitor to prepare a formal contract. Help us do that for you by letting us have clear “Heads of Agreement” setting out the essential commercial terms, and marked “Subject to Contract”. Help us save you money and protect your business.

 

Wills Litigation on the Increase

 

An article published in the Law Society Gazette this week has highlighted a substantial increase in the number of claims lodged at Court involving alleged breach of duties by Executors. The article suggests that this could be attributed to “the increased use of acquaintances or family members as DIY executors and trustees, rather than instructing solicitors”.

At Harris & Harris we have many years of experience in acting for and advising Executors. We are able to ensure that the administration of a deceased person’s estate is conducted properly and in accordance with the law. In appropriate cases we offer our clients the option of appointing the partners in the firm as professional Executors. Appointing an independent professional to act as Executor can lift the burden of estate administration from family and provide peace of mind that your estate will be in safe hands.

As Solicitors, we are regulated by the Solicitors Regulation Authority (SRA) and legally obliged to maintain a high level of Professional Indemnity Insurance. This means that, should anything go wrong in a case where we have acted as Executors, the beneficiaries of the estate are protected. However in cases where a non-solicitor Executor has failed to deal with things properly, or perhaps even stolen from the estate, the beneficiaries may have no such protection and could lose their inheritance.

We were also one of the first 100 firms in the country to join the Law Society’s new voluntary Wills & Inheritance Quality Scheme (WIQS). In achieving accreditation, the firm underwent a rigorous application and assessment process to demonstrate our adoption of best practice procedures in delivering wills and probate advice.

Should any of our clients have concerns over the way in which an Executor is dealing with an estate where they are a beneficiary, or perhaps where they feel they ought to be, we also have specialist solicitors in our Litigation team who can advise upon the rights of such individuals, and upon the role and duties of the Executor. When things have gone wrong, we can advise you on the available options and help you to achieve a fair result.

The full Law Gazette article can be accessed via the following link:-

Law Gazette Article

If you would like to speak to one of our specialist lawyers, please click to visit:-

Wills, Probate and Trusts

Dispute Resolution / Litigation

 

 

Will your Estate Pay Inheritance Tax?

The Institute for Fiscal Studies says the number of estates which will be liable to pay Inheritance Tax (“IHT”) will increase by nearly 400% so that in four years time one in ten estates will pay it.

Currently IHT brings the Chancellor of the Exchequer c.£3.5 billion a year. However, according to the Office for Budget Responsibility, the amount of IHT paid will increase in four year’s time to £5.8 billion.

The Inheritance Tax threshold or “Nil Rate Band” is the value of an estate before IHT becomes payable. The current Nil Rate Band is £325,000 which was set in 2009 – that’s about the average price of a detached house in Wells or Frome.

If the value of an estate (including any assets held in trust and gifts made within seven years of death) is more than the Nil Rate Band then IHT will be payable. This is currently set at a rate of 40%.

With the introduction of the “Transferable Nil Rate Band” between married couples and civil partners in 2007 the number of estates paying IHT fell. As property prices also decreased many estates avoided IHT. However, as house prices are set to continue to rise and the Nil Rate Band has been frozen at its 2009 level for the next four years, many more families are now more likely to be caught by the IHT net.

Planning your estate allows you to consider whether IHT is likely to be payable and if there are reliefs and exemptions which may be available to reduce the IHT liability. Having a Will and reviewing it regularly can ensure that your estate is tax efficient. In addition, it will also ensure that your loved ones know how you would like your estate administered.

At Harris + Harris we aim to help you make the right decisions, at the right time. We have experienced solicitors in both our Wells and Frome offices who can make sure your Will has the effect you intend, and that Inheritance Tax is minimised.

For more analysis of the anticipated increase of estates paying IHT see: Middle class families braced for inheritance tax time bomb

Contact Joshua Eva in Wells or Caroline Fletcher in Frome.

“15 Minute Wonders” 27 November 2014

On 27 November Neil Howlett of Harris is one of the experts providing “15 Minute Wonders” from 3-5.30pm at Frome Rugby Club. This is a brilliant concept started by South West FD which brings together five speakers (including three from Frome) on a range of topics relevant to business owners, directors and entrepreneurs. The trick is that they each have only 15 very focused minutes to give you all the relevant information you need without any the waffle! Come along and learn something valuable for free.

      • Neil Howlett will talk on Intellectual property – what you need to do  This will probably include Albert Einstein, the Rolling Stones or a sweater (possibly two) – if you don’t know why they are important you need to come.
      • Online Security Basics: conducting banking and accounting online safely from Adam Harling at Netitude;
      • Jenna Yhearm from Gumption Social Media on A guide to using LinkedIn for you and your business; and
      • Future Business with Jerry Davison;
      • Using alternative finance to increase working capital from Tim Jones at Start Point Finance;

This is a free event. There is more information, event timetable and booking link on the South West FD website.

Flexible Working – Does it work?

All employees who have worked for an organisation for more than 26 weeks now have the right to request flexible working arrangements. This includes part-time working, flexitime, job sharing, shift working or homeworking.

This is a much wider right than was available previously. It remains only a right to request and only once every 12 months. The old prescriptive rules on how to deal with such requests are gone; requests have to be considered in a reasonable manner and within a reasonable time. ACAS has produced a Code of Practice and Guidance for employers to help them understand the changes and how to handle requests in a reasonable manner.

Employers can refuse requests if granting the request would have an adverse impact on the business based on one of the business reasons set out in the legislation. These are: the burden of additional costs, an inability to reorganise work amongst existing staff, an inability to recruit additional staff, a detrimental impact on quality, a detrimental impact on performance, detrimental effect on ability to meet customer demand, insufficient work for the periods the employee proposes to work or a planned structural change to your business.

Although this system is fairly simple employers will need to be very careful about the overlap between a request for flexible working and direct or indirect discrimination. An employee seeking flexible working is supposed to specify the change which is being requested, when it is to come into effect, what effect they think the change would have and how they think any such effect might be dealt with. Employers are only required by this new law to consider requests that do that, and to respond to that specific request, but a failure to consider a request that doesn’t meet those criteria or a refusal of one that does may still result in a claim of Discrimination under the Equality Act 2010. Compensation for breach of the Flexible Working Regulations is capped at £4,000; compensation for Discrimination is unlimited. Remember that protected characteristics are wide: race, disability, age, sexual orientation or religion or belief, and part-timers should be treated equally with full timers.

There will also be challenges where several employees request flexible working; ACAS recognises that may require an employer to choose between them, though not many employers are likely to take up the suggestion of drawing names out of a hat! Remember too that health & safety obligations continue for employees who work at home.

Flexible working can work for both employers and employees. Here at Harris & Harris we have many years’ experience of partners and staff at all levels working part-time and job sharing – more than 40% of us work “flexible hours”, including many who by choice work less than 5 days a week. It requires flexibility on both sides, but it enables us to recruit and retain good people so it’s worth the effort.

For advice please contact Neil Howlett or Andy Hambleton.

New Consumer Contracts Regulations

On 13th June 2014 the law changes on consumer contracts and distance selling. The Distance Selling Regulations and the Doorstep Selling Regulations are replaced by The Consumer Contracts Regulations 2013. The concepts remain broadly the same, but the difference is now between “on-premises”, “distance” and “off-premises” contracts. This doesn’t apply to commercial contracts or to normal over the counter shops sales where the customer takes the product away, and there are a series of exemptions.

There are new obligations which apply to all consumer contracts. These include:

  • Traders must, unless the consumer agrees otherwise, deliver any goods purchased within 30 calendar days.
  • Traders must not make the consumer use a premium rate telephone line to contact the trader about an existing contract.
  • Traders must not impose excessive payment surcharges when consumers pay by certain means, such as credit or debit cards.

There is a set of basic information that has to be given to all consumers for all contracts, plus enhanced information that has to be given for “distance” and “off premises” contracts. The definition of “distance” is complex, requiring “an organised distance sales or service-provision scheme . . . with the exclusive use of one or more means of distance communication up to and including the time at which the contract is concluded”. A trader selling via a scheme offered by a third party, such as an online platform is selling via an organised distance sales or service provision scheme. “Off premise” contracts may include contracts concluded at business premises if that followed an offer made at or is immediately after an “off premises” meeting. For these the Regulations:-

  • Extend the list of pre-contract information that a trader must give to a consumer (there are some differences between distance and off-premises contracts).
  • Introduce new rules on the cancellation of contracts for the supply of digital content not on a tangible medium.
  • Extend the statutory cancellation period (sometimes known as the cooling-off period) to 14 calendar days.
  • Where a consumer has a right to cancel a contract, require the trader to provide the consumer with a model cancellation form.
  • Extend the cancellation period to, broadly, one year if the trader fails to provide certain pre-contract information.
  • Require online traders to make it clear (for example by labelling the payment button with “Order with obligation to pay”), where proceeding with the transaction will trigger a payment.
  • Require a consumer to return goods within 14 calendar days of cancelling the contract.
  • Allow the trader to withhold a refund until the goods are returned (or evidence of their return is provided).
  • Allow the trader to deduct an amount for the diminished value of the goods when refunding payments.
  • Extend the list of ancillary contracts which will be automatically terminated on termination of a distance or off-premises contract.

This is a good time to check your contracts and processes comply. BIS has published Implementing Guidance which is worth reading to see if and how this will apply to you. However, we can’t understand how BIS can claim their horribly drafted Cancellation Notice complies with the Unfair Terms in Consumer Contracts Regulations 1994, which say that terms in consumer contracts must be in “plain and intelligible language”. Traders will have to make a decision whether to go for safety and use the BIS version or redraft it so that their customers might actually understand it. If you need it we can help.

Contact: Neil Howlett

The Legal Ombudsman and Stamp Duty Land Tax

The Legal Ombudsman (LeO) is one of the routes for redress for client of regulated legal services providers. He has recently been in the press expressing concerns about Stamp Duty Land Tax (SDLT) which is payable in many conveyancing transactions. The LeO hasn’t issued any figures so the extent of the problem isn’t clear. It seems from his examples that it mainly arises from firms which have received money to pay SDLT but have not paid it out, and have become insolvent. That’s wrong, and in some of the instances appears to have been dishonest. The LeO doesn’t deal with disciplining lawyers so we can’t link his examples with disciplinary action taken by the SRA.

The LeO has issued tips for consumers which are sensible:

1. Try and avoid any nasty surprises. Make sure you know from the start how much stamp duty you will have to pay.

H&H will tell you what you should expect to pay when you first contact us.

2. Consider getting like for like quotes.

The LeO warns against firms who charge extra for submitting the SDLT Return, he says typically £75 to £100 on top of their fees. Beware “headline” figures which have extras added.

H&H will give you an estimate for the whole job at the start.

3. Seek confirmation that your lawyer has met the 30 day deadline.

Stamp duty has to be paid within 30 days of completion; we will do that, it is part of our job. If you want us to confirm we have done it please ask and we will. Unless we have submitted the SDLT Return we cannot apply to HM Land Registry to record the transaction so if we tell you we have done that you can be sure we’ve done both.

4. Know your options if the lawyer ceases trading.

This should really be the first – put this way it is like shutting the stable door after the horse has bolted. The first principle should be “Don’t instruct someone you don’t know and trust”. Are you confident they have a good record and are secure? In case you are wondering, H&H does and is

5. Be wary of fraudulent activity.

There are a lot of new entities in the legal market, some of whom may be good, but some have new adventurous and risky business models. Are they more than just a website? We’re sticking with what we know works, looking after our clients so they come back again.

6. Avoid the temptation to cut corners.

The LeO says “be wary of any scheme offering to reduce your stamp duty liability – if it seems too good to be true it usually is.” We sometimes have to tell clients that “cunning plans” put to them by third parties will not work and may be illegal. The same advice applies to very cheap quotes for work – conveyancing factories may be able to cut their costs but at what price to you?

7. Be clear about lender or builder promotions and what they mean.

Some mortgage lenders will offer to “pay your stamp duty”. Usually, this means the lender will lend you an extra amount equivalent to the stamp duty, so you are still paying it. Similarly, a builder may offer an “allowance” against the house sale price. That’s just marketing; sadly builders don’t yet offer Buy One Get One Free!

If you want to deal with someone you can trust contact the Harris & Harris Conveyancing Department.