Archives for 2015

Zero Hours Contracts

The Department for Business, Innovation and Skills has produced a guide for employers on zero-hour contracts. There is also guidance from ACAS.

The BIS guide explains how zero-hour contracts work, the difference between appropriate and inappropriate use of such arrangements, and gives guidance on best practice and alternatives to zero-hour contracts.

BIS says:

Zero hours contracts allow flexibility for both employers and individuals. However, they should not be considered as an alternative to proper business planning and should not be used as a permanent arrangement if it is not justifiable.”

Having contractors available for call–in is not a zero hours contract, if the contractor remains genuinely self-employed.

In contrast someone who is not self-employed will acquire employment rights as a ‘worker’, including the National Minimum Wage, protection from discrimination, rest breaks, annual leave, sick pay and pensions auto-enrollment.

If the arrangement is one under which they work regularly but do not work regular hours, they are likely to be an ‘employee’, with additional rights to a written statement of terms & conditions, holidays, holiday pay and in time protection against unfair dismissal or the right to a redundancy payment. This will apply where there is not a full week without work from Sunday to Saturday between the times they do work, but leaving that break will not necessarily be enough to prevent a ‘worker’  becoming an ’employee’.

Because ‘zero-hours contract’ is used to cover a wide range of situations, it is important for employers to ensure that written contracts contain provisions setting out the status, rights and obligations of their zero-hours staff. Having done that they must keep to those contracts, as otherwise they may find that a ‘worker’ has become an ’employee’. A court or employment tribunal will look at the reality of what happens not just what is written down.

It is important that employers and employees understand what they are doing. Not being clear can lead to disputes, disgruntlement and litigation. Employers may feel that claims from zero-hours staff will be deterred by the costs of paying the high fees to make a claim to an Employment Tribunal, but many claims can also be brought in the Small Claims Court, which is much cheaper.

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Consumer Rights – 5 Alternative Dispute Resolution (ADR) Schemes

This is the last in our series of brief summaries of the changes in consumer protection law, highlighting their significance, and with links to further advice.   This is not intended to be legal advice upon which you should act, but awareness of issues which you need to consider. For legal advice please contact Neil Howlett or Andy Hambleton

Another change to consumer rights effective from 1st October 2015 simultaneously with the Consumer Rights Act is the requirement for all traders dealing with consumers to provide details of available ADR schemes.

Good Alternative Dispute Resolution (ADR) schemes can be very helpful, and many sectors and trade organisations offer them.  However, they tend to blur the distinction between consumers legal rights in contract law and their right to moan if their (unreasonable) expectations are not met.

ADR has been the flavour of the month with governments for many years.  Currently, the governments thinks that the eBay scheme is excellent (which may not be the experience everyone who has used it).

To comply with the EU directive on ADR which is intended to make online ADR available to all consumers traders will now be required to advise consumers about relevant ADR schemes if they cannot resolve their complaints.  Confusingly, the traders will not be required to participate in such ADR schemes unless there is an existing regulatory obligation to refer complaints to an ADR scheme or ombudsman, e.g., the Financial Conduct Authority for the financial services sector or the Legal Ombudsman for solicitors. If that applies your professional or trade body should have informed you.

See Business Companion – Alternative Dispute Resolution

Consumer Rights Act 2015 – 4 Off-Premises and Distance Sales, Variations, and Timing

From 1st October 2015 there are fundamental changes to consumer rights introduced under the Consumer Rights Act 2015.   This Act replaces almost all existing consumer protection legislation.   It introduces significant new concepts and protections for consumers.   All businesses should be reviewing their Terms of Business for consumers, their procedures and staff training.

We are posting a series of brief summaries of the changes, highlighting their significance, and with links to further advice.   This is not intended to be legal advice upon which you should act, but awareness of issues which you need to consider.

See the guidance issued by Business Companion – the sale and supply of goods from 1 October 2015.

For legal advice please contact Neil Howlett or Andy Hambleton

Variation of Terms

It will be much more important for traders to obtain the agreement of the customer before delivery to any changes in the goods to be supplied.  There is draft CMA guidance allowing minor technical adjustments or changes required by law or necessity which can be or not real significance to the consumer.  However, traders may have still an obligation to inform consumers of such changes.

If there is the likelihood of a need to make changes between the date of the contract and delivery it may be possible to do so fairly if the possible variation is clearly described, there is a valid reason for it, and the consumer will be given notice in advance and the right to cancel.

In principle a trader may be able to change any terms provided that the consumer is given the right to terminate without being left worse off, although traders will need to be wary of anything that may give rise to a claim for breach of contract and civil damages.

Timing and Delivery

Goods must be delivered without undue delay and in any event not more than 30 calendar days after the date of the contract, unless that period is varied by agreement.

Services must be performed within a reasonable time, which is a question of fact in each case, unless the time or a method for fixing the time is set out in the contract.

On-premises and Off-premises contracts.

One element of the current law not brought into the Consumer Rights Act is the requirement for giving Notice of Cancellation Rights for Off-premises contracts.  These remain the same as before.

See Business Companion – Consumer contracts – off-premises sales

Distance Selling

The Consumer Rights Act has not changed the law of Distance Selling – the sales of goods, services and digital content without face-to-face contact with the customer. This includes sales online, by mail order or by telephone. In our experience many websites are not compliant with this law.

See Business Companion – Distance Selling

Consumer Rights Act 2015 – 3 Consumer Notices & Unfair Terms

From 1st October 2015 there are fundamental changes to consumer rights introduced under the Consumer Rights Act 2015.  This Act replaces almost all existing consumer protection legislation.   It introduces significant new concepts and protections for consumers.  All businesses should be reviewing their Terms of Business for consumers, their procedures and staff training.

We are posting a series of brief summaries of the changes, highlighting their significance, and with links to further advice.   This is not intended to be legal advice upon which you should act, but awareness of issues which you need to consider.

See Consumer Rights Act 2015 – 1 All Change? and 2 Services & Digital Content

For legal advice please contact Neil Howlett or Andy Hambleton

The Consumer Rights Act will apply to all forms of contract.  Previously, obligations of fairness were restricted to contracts which were not individually negotiated.  The Consumer Rights Act’s test of fairness will apply to all contracts, including oral contracts.   It will be much more important for a trader to be able to prove on the balance of probabilities what they agreed to provide or do, and on what terms.  That will be a great deal easier if the terms are in writing and there is a copy signed by the consumer.

Consumer Notices & Pre-contractual statements

The Consumer Rights Act introduces a new concept of a Consumer Notice.  That is anything which sets out the rights or obligations of the trader and consumer or restricts the trader’s liability.   Anything in these will be subject to the same test of fairness as if they were set out in a trader’s Terms & Conditions.

This will apply to marketing communications, brochures, and signs at premises, all of which will be treated in the same way as if they were contract terms.

Anything said or written to a consumer about a service or trader, whether by or on behalf of the trader, will be treated as a term of the contract if the consumer takes it into account when deciding whether to enter into the contract, and when making any decision about the services after the contract is entered into.

This will make it a great deal easier for consumers to bring claims which would previously have had to be pursued under the complex law of Misrepresentation.

Unfair Terms

The Consumer Rights Act 2015 replaces the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999 (though UCTA remains for B2B contracts).

All written terms of a consumer contract must be “transparent”, i.e. in plain and intelligible language, not using jargon the average consumer must be able to understand them. One ECJ decision said that it must enable the consumer “to evaluate, on the basis of clear, intelligible criteria, the economic consequences for him which derive from it”. Any ambiguity will be interpreted in favour of the consumer. In addition terms must be:-

  • Legible, if in writing, which means that they cannot be hidden away in small print
  • Prominent, which is a new definition, requiring that they are brought to the consumer’s attention in a way that an average consumer would become aware of them.  The average consumer is assumed to be reasonably well informed, observant and circumspect.  The more significant the term, or the closer to the boundary of fairness, the greater the obligation to make it prominent.

Although a term which is not “transparent” may still be enforceable it is more likely to fail the test of “fairness”.

The CRA does not apply to unwritten terms.  Although Sam Goldwyn was not precisely correct any trader seeking to rely upon verbal terms which are advantageous to them as against a consumer is going to be climbing Mount Everest.

A term is unfair if “contrary to the requirement of good faith it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer”.  Any attempt to limit or exclude liability is subject to review. In particular for:-

  • Breach of contract
  • Liability for injury or death not caused by negligence
  • Damage to property

There is a ‘black list’ of items that cannot be excluded.  Any attempt to exclude them will be ineffective.  They are:

  • Excluding liability for death or personal injury resulting from negligence
  • Excluding the statutory tests for conformity
  • Excluding liability for incorrect installation of goods
  • Excluding the obligation to provide services with reasonable skill and care.

There is an extended ‘grey list’ of terms which will be assumed to be unfair and therefore ineffective.  These include:-

  • Disproportionate charges if the consumer ends the contract.
  • Terms which allow the trader to change the characteristics of the Goods (or Services) after the consumer has become bound by the contract.
  • Terms which allow the trader to change the characteristics of the goods or services after the consumer has become bound by the contract.  There is an exception where there is a contract which is “indefinite” and where the trader gives reasonable notice and the consumer has the right to terminate the contract.
  • Terms where the trader can set the price after the consumer has become bound by the contract and has not agreed the price or method of determining the price.  The explanatory notes to the Act gives as an example of lack of prominence a low headline price with hidden extras in separate terms and conditions.

The grey list is not exclusive.  A Court could determine that any term is unfair against the statutory test.

Provisions excluding common law rights are possible but are likely to be subject to assessment against the grey list and the test of fairness.

Terms can be excluded from assessment against fairness if:-

  • They are the main subject matter of the contract, or
  • Terms that set the price; although price may be excluded, terms such as time and method of payment may still be subject to assessment against fairness.

Courts considering consumer contracts must consider the issue of fairness if there is sufficient legal and factual material available, even if it is not raised as an issue by the parties.  The introduction of an obligation of good faith is also a novel concept under English law.  Courts continue to be reluctant to apply it in commercial contracts.

Given the present pressures on the Court Service it seems unlikely that there will be legions of campaigning Judges going through the small print of every consumer contract which comes before them.  The danger is of Judges looking for ways to find in favour of consumers and that these issues will arise at a hearing without prior notice to a trader who is attempting to defend their position.

Useful guidance

Rules for the supply of goods: BIS’s Consumer Rights Act: Goods Guidance for Business 

Rules for the supply of services: BIS’s Consumer Rights Act: Services Guidance for Business

Rules for the supply of digital content: BIS’s Consumer Rights Act: Digital Content Guidance for Business

Unfair terms: The current guidance on unfair terms is CMA Unfair contract terms guidance: CMA37 This guidance makes reference to Annex A, which contains examples of terms which the CMA’s predecessor body, the Office of Fair Trading (OFT), required be withdrawn and substitutes which were accepted under the UTCCRs.  The CMA has not updated Annex A but has stated that it remains of substantial illustrative value.

Consumer Rights Act 2015 – 2 Services & Digital Content

From 1st October 2015 there are fundamental changes to consumer rights introduced under the Consumer Rights Act 2015.  This Act replaces almost all existing consumer protection legislation.   It introduces significant new concepts and protections for consumers.  All businesses should be reviewing their Terms of Business for consumers, their procedures and staff training.

We are posting a series of brief summaries of the changes, highlighting their significance, and with links to further advice.  This is not intended to be legal advice upon which you should act, but awareness of issues which you need to consider.

For legal advice please contact Neil Howlett or Andy Hambleton

The legal standards and remedies for Services

As with goods, there is no fundamental change in the test for the quality of services, which must be provided with “reasonable care and skill”.

However, there are new specific remedies for services

  • Not performed with reasonable care and skill
  • Not performed in line with information given about the service.
  • Not performed within a fixed time given by the trader or within a reasonable time.

If services are not performed within the fixed time or a reasonable time, the consumer can demand a price reduction but cannot demand performance.

Where services are not performed with reasonable care or skill or in line with information given about the service the consumer can require repeat performance at the trader’s expense.  This must be within a reasonable time and without significant inconvenience to the consumer.  The trader can only refuse if it is impossible to re-perform the service.

The consumer can claim a price reduction at the consumer’s option.  There is no guidance on how to calculate the price reduction, but the Act does state that it may be the full price.

Consumers still retain a residual right to claim damages at Common Law (and also but less likely for Specific Performance).  The consumer also has the right to terminate a contract if there is a fundamental breach at any time.

Traders will also have to take into account the rights of Consumers to use ADR schemes.

See Business Companion – Services

Digital Content

In addition to goods and services the Consumer Rights Act introduces new rights for consumers purchasing digital content (including where no payment is made by the consumer).

Traders are obliged to use a reasonable skill and care, i.e. not to allow an App to be released unless it has been fully tested.

Where digital content is non-conforming, applying the test for Goods, the Consumer has a right to repair, replacement, a price reduction or refund.  The Consumer cannot reject digital content because it cannot be returned.  Traders are entitled to more than one attempt at repair or replacement.

The major new risk for suppliers of digital content is that if a consumers device or other digital content is damaged as a result of the traders digital product being non-conforming the consumer will be entitled to the repair of the damaged caused or compensation.  As that may be difficult to calculate and may be substantial traders should consider the availability of insurance against this risk.

See Business Companion- Digital

Consumer Rights Act 2015 – 1 All Change?

From 1st October 2015 there are fundamental changes to consumer rights introduced under the Consumer Rights Act 2015.  This Act replaces almost all existing consumer protection legislation.   It introduces significant new concepts and protections for consumers.  All businesses should be reviewing their Terms of Business for consumers, their procedures and staff training.

We are posting a series of brief summaries of the changes, highlighting their significance, and with links to further advice.  This is not intended to be legal advice upon which you should act, but awareness of issues which you need to consider.

See the guidance issued by Business Companion – the sale and supply of goods from 1 October 2015.

For legal advice please contact Neil Howlett or Andy Hambleton

Goods & Services

Although there remains a distinction between Goods and Services any installation provided by the same trader will be treated as part of the provision of the goods, not as a separate service.   Whether the goods are compliant with the law will be assessed based upon their qualities once installed.

What is a Consumer?

Consumers must be individuals acting for purposes which are wholly or mainly outside their trade business craft or profession. This definition is wider in the UK than is required by the EU Directive or applies in most of the rest of the EU.

A Company, Partnership or LLP cannot be a consumer.  However, someone who works from home may be.  Where a trader is selling Goods or Services that may be used by individuals and for trade they will need to consider how much they ask to establish the status of the buyer or may want to assume that the other party is going to be a Consumer.  If a claim is made the trader might reasonably ask whether the “Consumer” has put the costs through their business accounts.

The legal standards for Goods?

The Consumer Rights Act broadly reproduces the existing implied terms from the Sale of Goods Act under which Goods must:-

  • be of satisfactory quality
  • be fit for purpose
  • match their description
  • match any sample

In addition, Goods must match any model seen or examined by the consumer (e.g. in a showroom).  The onus is on the trader to bring to the Consumer’s attention any differences between those and the Goods to be supplied.  General disclaimers are unlikely to be enough.  Traders will need to consider being able to prove exactly what was drawn to the consumer’s attention and that this was before the consumer entered into the contract.

 Consumer remedies for Goods not up to the standards

There is a new structured hierarchy of rights where goods are up to standard.  These are a great deal clearer than the previous law, which should make it more difficult for traders to fob off consumers and sit back hoping that they will not take matters further.

For many traders the new law will represent good commercial practice and for low value goods there may be no need to change practices other than making staff aware of the new deadlines.

Consumers still retain a residual right to claim damages at Common Law (and also but less likely for Specific Performance).  The consumer also has the right to terminate a contract if there is a fundamental breach at any time.

1. Short term right to reject.

If the goods are non-conforming the consumer can reject the goods within 30 days of transfer of ownership, delivery or installation the consumer will be entitled to a full refund without any deduction for usage.  Where goods are installed the short term right to reject does not apply.

The consumer has an option to agree to a repair or replacement.  If the consumer agrees either of these the period for rejection is paused for 7 days (or longer if that is required for repair or replacement).

2. Right to repair or replacement

After 30 days the consumer still has the right to require a repair or replacement (unless this would be impossible or the cost disproportionate to the value of the goods).  Traders cannot refuse a repair or replacement on the grounds that they are more expensive than the price reduction or refund that the consumer could claim.

Traders get one go at repair or replacement.  If the trader does not carry out the consumer’s chosen remedy the consumer can reject the goods.

There may be disputes where consumers want repairs but traders will want to replace goods (and seek compensation from their suppliers).  The burden is on the trader to demonstrate that the cost of repair is disproportionate.  For traders selling high value goods which may not immediately show defects, or where they have been used to trying tiered repair strategies will need to be aware of the right to reject if the first repair is unsuccessful.

3. Final right to reject or price reduction

If after repair or replacement the goods are still non-conforming, or cannot be repaired or replaced within a reasonable time, the consumer has a final right to reject the goods, return them to the trader and claim a refund.  If this is done within six months the trader cannot reduce the refund to reflect the use of the rejected goods (other than motor vehicles).  After that period the trader can make a reduction.  The alternative remedy is for the consumer to keep the goods and claim a price reduction, which could be the full price.

The amount of a price reduction will depend upon the circumstances and should reflect the difference between what the consumer paid for and what they received, considering the benefit that the consumer has rejected.

Context will be important and traders may have to take a pragmatic approach to the time and cost involved in precise calculation.

Point of sale information using very simple wording has been agreed by business and consumer groups. This is available on the Business Companion website with more guidance.

New Regulations for Landlords – Smoke and Carbon Monoxide Alarms

The Smoke and Carbon Monoxide Alarm (England) Regulations 2015 will come into force in England on 1 October 2015 even though they have only just been approved by Parliament. They impose significant new duties on private landlords for new tenancies starting after that date. The aim of the regulations is to reduce the number of injuries or deaths from smoke or carbon monoxide poisoning in the private rented sector.

From 1 October 2015, a landlord of a private sector tenancy must ensure that a smoke alarm is fitted on each storey of the premises on which there is a room used wholly or partly as living accommodation. Also, a carbon monoxide alarm must be installed in any room which is used wholly or partly as living accommodation and contains a solid fuel appliance.

At the start of a new tenancy, the landlord or the landlord’s agent must carry out checks to ensure that each smoke and carbon monoxide alarm is in proper working order on the day the tenancy begins.  This does not include renewals or statutory periodic tenancies arising from fixed term tenancies that commenced prior to this date.

The Department for Communities and Local Government (DCLG) has published a booklet containing guidance for landlords and tenants.

DCLG: The Smoke and Carbon Monoxide Alarm (England) Regulations 2015: Q&A Booklet for the Private Rented Sector – landlords and tenants (September 2015).

Significant concerns were raised in the House of Lords that not enough has been done to inform landlords of the changes and that the legislation is badly drafted. Landlord who do not act quickly risk a £5,000 fine. See Hansard, House of Lords debates, 14 September 2015, at column 1720.

New EU Inheritance Law – Should you review your Will?

New EU rules aim to ease succession across the EU by giving an individual the ability to opt for either the law of the country of their nationality or their last habitual residence to apply to their estate.

Whilst the UK has opted out of the new rules, the changes will still have an impact on UK citizens who have assets in other EU countries.

The new rules allow an individual to opt out of forced heirship rules that apply in a number of EU countries and instead choose to apply UK law to their assets outside the UK.  For example, a woman in the UK with property in France would previously have been obliged to leave it to her husband and children under French forced heirship rules.  However, under the new rules, she can choose to apply UK law to the property and leave it to different beneficiaries.

If an individual does not opt out of the new rules then the default position is that the law of the country where someone is a habitual resident when they die will govern the succession of their estate.

Furthermore, the new rules will also mean that the Inheritance (Provision for Family & Dependants) Act 1975 (recently highlighted by a high profile case in the Court of Appeal) will apply in other EU countries.

For citizens who were not born in the UK, it could mean that English laws will now be applied to their overseas assets without them realising.

Those who do not want English law to apply to assets which are held in a country that has opted in to the new rules will need to alter their Will to make it clear which country’s law is to apply.

For more information regarding the new EU rules and whether your Will needs review, please see:

http://www.lawgazette.co.uk/law/new-eu-inheritance-law-should-prompt-wills-reviews-say-experts/5050595.article

For more information or to review your Will, contact Annemarie Swainson or Joshua Eva in Wells or Caroline Fletcher in Frome.

Specialist Solicitor Gains STEP Qualification

Harris & Harris are delighted to announce that Joshua Eva, Partner at our Wells office who specialises in private client matters, has been admitted as a full member of the Society of Trust and Estate Practitioners (“STEP”).  Joshua studied for the STEP Diploma in Trusts and Estates (England and Wales) and, having passed all his exams and exceeded the STEP requirements for minimum relevant experience, was admitted as a full member on 28th July 2015.

The Diploma qualification focused on four key areas of private client practice: Administration of Estates, Administration of Trusts, Taxation of Trusts and Estates, and Trust and Estate Accounting.  Joshua commented “Studying for the diploma has been both challenging and rewarding. The best thing about it has been the immediate positive impact on my expertise, as the content covered by the qualification is highly relevant to my day to day work”.

STEP is the worldwide professional association for those advising families across generations.  STEP members can advise from drafting a will, to protecting elderly or vulnerable relatives, to advising family businesses, to helping those with interests spread across the world.  The organisation promotes best practice, professional integrity and education of its members.

Annemarie Swainson, partner and head of Wills & Probate said “Joshua has worked very hard to gain this qualification, and we are all extremely proud of his achievement”.

Joshua’s profile can be found here:-

Joshua Eva

To find out more about STEP, click here:-

STEP

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