A monthly checklist of new and pending laws, regulations and codes of practice that could have an impact on your business.
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A number of employment law changes are in force from April 2012. Businesses should review their procedures and precedents to take account of the new rates and rules and, where relevant, consider applying to become a sponsor.
From 6 April 2012:
Operative date
6 April 2012
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The hourly National Minimum Wage rates will rise for adults and apprentices this autumn, but remain static for younger workers. Employers should review their personnel planning, recruitment, promotion and budgets to take account of the new rates. From October:
1 October 2012
A reminder for small businesses in England, that the temporary doubling of small-business rates relief (already extended once, from September 2011 to March 2012) will now continue to apply until 31 March 2013.
For businesses liable for rates on one property which has a rateable value of £18,000 a year or less (outside Greater London) or £25,500 or less (in Greater London), small-business rates relief applies, so you pay lower business rates.
For businesses with one property which has a rateable value of less than £6,000, the property is usually eligible for 50% relief. For single properties with a rateable value of between £6,001 and £11,999, the relief tapers by 1.2 %for every £100 of rateable value.
So for businesses with a single property of £6,000 or under, the doubling of relief means they pay no business rates at all. For properties above that value the effect of doubling the relief is less, but there can still be significant savings.
Businesses with more than one property can still be eligible for relief on their main property if they meet additional criteria.
Generally, business rates are increasing by 5.6%, but businesses with higher value properties can defer payment of 60% of that increase, paying it in equal instalments in 2014-15 and 2015-16.
Similar rules apply in Wales, Scotland and Northern Ireland.
Until 31 March 2013
A charity that allowed employees to take home unencrypted memory sticks containing personal details of individuals was guilty of Data Protection Act breaches, the Information Commissioner’s Office (ICO) ruled recently. Following this case, all organisations should ensure they have policies for keeping data secure, including deleting it when no longer required, and when it is kept at home by employees.
The details on the memory sticks — names, addresses, birthdays and some health information — had already been transferred from the memory sticks to the charity’s server so there was no need for them to remain on the memory sticks at all.
The ICO said that:
The issue came to light when the memory sticks were stolen from an employee’s home. The charity immediately self-reported to the ICO, and notified the individuals whose details had been compromised.
As the numbers affected were limited, and there was no evidence that the thieves had actually accessed the personal data, the ICO did not fine the charity, but required the chief executive to sign an undertaking that it would improve its policies and procedures to ensure compliance with the Act.
Now
The proposed Patent Box scheme, a preferential tax regime for income arising from qualifying patents, means companies should identify income from their qualifying patents now, with a view to significantly reducing the corporation tax they pay on income from them when the scheme is introduced. Businesses are recommended to:
Under the scheme, due to be introduced on 1 April 2013, companies with income attributable to qualifying patents which they either own or have an exclusive licence to commercialise, will only pay 10% corporation tax on that income, rather than the much higher standard rates.
Qualifying patents must be registered (or registration must be pending) at the UK’s Intellectual Property Office or the European Patent Office.
The scheme categorises income from patents as either Relevant IP Income or IP Derived Income. The 10% rate applies to all Relevant IP Income, but only to a fractional part of any IP Derived Income. So the reduction in tax on IP Derived Income is smaller compared to the reduction in tax on Relevant IP Income.
Relevant IP Income includes income from:
IP Derived Income is income “arising from things done by the company that involve the exploitation by the company” of its relevant patents, that is not Relevant IP Income. Examples given in the Treasury’s guide to the draft laws include:
It is not clear how income from non-patented products made using a patented process will be treated.
1 April 2013
A new Health & Safety Executive (HSE) scheme which would mean more businesses must pay for HSE inspections or investigations that uncover a material breach of health and safety law, has been deferred from April 2012 to later in the year.
The new rules do not give local authorities the same powers so shops, offices and other activities regulated by local authorities are not affected.
When it is introduced — the HSE is suggesting October 2012 —, the HSE’s Fee for Intervention scheme will mean businesses receiving a formal written intervention such as an enforcement letter, email or notice from the HSE about an alleged breach of health and safety law must pay £124 per hour to cover the HSE’s costs of the intervention up to court proceedings. This hourly rate will be reviewed annually. The aim is to shift the costs of interventions from the taxpayer to the offender.Estimates are that the usual costs of an intervention will range from £750 to £1500.
Businesses caught by the new rules should consider carrying out a health and safety review as the October introduction date approaches, to reduce the risk of a written intervention by the HSE.
To be advised in Legal Alert
In this recent case, an employer has won a costs award in the Employment Tribunal (ET) after warning an employee pursuing an unreasonable unfair dismissal claim that it would ask for one.Employers faced with a similar claim they consider unreasonable should take specialist advice on whether to warn the employee that they will apply for a costs award if he or she refuses.
An employee made a claim for unfair dismissal after she was dismissed for gross misconduct for swearing at a major client. The employer said her claim did not have a reasonable chance of succeeding and emailed her to tell her it would ask for a costs award to be made against her if she pursued the claim.
She lost and the ET made a costs order against her. On appeal, the Employment Appeal Tribunal upheld the order, saying that the ET was entitled to find she had acted unreasonably by continuing her claim.
From April 2012 the amount the tribunal can award as costs increased from £10,000 to £20,000.
An employer has successfully won a springboard injunction to stop a new rival business using its confidential information, gained after its former employees resigned en masse in a secret, planned operation to set up the new rival. Employers faced with mass defections to a breakaway competitor should take advice on the availability of springboard relief to reduce the damage done to their businesses and win compensation.
Three senior managers employed by a specialist marine insurer resigned. Whilst on gardening leave (and therefore still employed), they secretly took books, clients and data from their employer, and started soliciting the employer’s clients to transfer to a new, competing business they planned to set up. They also used the information they had taken to help them get funding for the new business. A number of other employees then also resigned and ended up working for the new business too.
Their former employer claimed they must have all been acting in concert, as part of a secret, planned operation, and had misused its confidential information. It applied to the court for springboard relief.
Springboard relief usually takes the form of an injunction to stop a new business, set up by former employees in such circumstances, from using confidential information gained from the employees’ former employer — even if the information is no longer confidential. The relief is most often sought where the ex-employees did not sign any specific covenants stopping them from taking confidential information, soliciting clients, competing with their former employer, etc in their contracts of employment.
The court granted the injunction sought, saying that this was a clear case in which springboard relief should be granted. It made an order stopping the new business from trading for 12 months after the employees’ resignations from their former employer, and for damages of £314,000 for the costs incurred in retaining existing staff and recruiting new ones.
Employers will welcome clarification from the Court of Appeal that their health and safety responsibilities to employees and non-employees under health and safety law are based on the same concepts, despite differences in the wording used in the relevant parts of the law.
For employees, the law says “It shall be the duty of every employer to ensure, so far as is reasonably practicable, the health, safety and welfare at work of all his employees”. For non-employees (for example, agency workers, visitors to business premises and members of the public generally) on the other hand, the law says “It shall be the duty of every employer to conduct his undertaking in such a way as to ensure, so far as reasonably practicable, that persons not in his employment who may be affected thereby are not thereby exposed to risks to their health and safety.”
Both require employers to assess the potential exposure to risk — of employees on the one hand and non-employees on the other — so they can then assess the reasonably practicable steps they need to take to reduce or get rid of the risk.
In past legal decisions the courts had decided that there were two different standards for employers. They only had to prevent exposure of non-employees to material risks, but had to ensure employees’ health and safety against all risks — in each case, so far as reasonably practicable. A risk was material if any reasonable person would appreciate it, and take steps to safeguard against.
However, in two recent cases the Court of Appeal has clarified that an employer’s approach to risk should be the same for both employees and non-employees.
In one an employee died after becoming trapped in the moving parts of a machine at his workplace. In the other, an employee was walking along the edge of a dual carriageway picking up litter while his colleague followed him in a van at walking pace, to protect him. When the van was hit in the rear by a lorry it lurched forward and killed the man walking. The driver was also injured. One was a direct employee and the other an agency worker.
The Court of Appeal confirmed in these cases that employers must safeguard both employees and non-employees against real risks materially related to their activities. The test for both was the same. The court also made important rulings about causation and foreseeability.
Following this case, employers carrying out risk assessments must consider risks materially related to their work activities that could affect both employees and non-employees, including risks which are not obvious. For example, the possibility of:
A managing director’s comments about his age affecting an employee’s ability to perform, and whether training him would be effective, were clearly discriminatory, the Employment Appeal Tribunal (EAT) has ruled.
At a performance review meeting a managing director asked an employee if it was his age that prevented him from meeting expectation, and commented that it might be possible to train a younger employee. The employee resigned and raised a grievance. Similar comments were made at a grievance meeting.
The Employment Tribunal decided the comments had been taken out of context, so there had been no age discrimination although they still held that he had been unfairly dismissed because the managing director’s words amounted to a breach of trust and confidence.
On appeal on the issue of whether there had been age discrimination, the EAT decided that the managing director’s question and comments were clearly evidence of age discrimination.
Employers should ensure that their policies and procedures outlaw potentially discriminatory actions or omissions based on age, and that staff are properly trained.
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