Changes to company law and filing requirements

Summer is not usually a popular time for legislative changes, but the first of the changes to corporate law made by the Small Business, Enterprise and Employment Act 2015 have now come into force.

This new Act has not had much press, but it does make some fairly significant changes that all companies should be aware of. They are coming into force in phases, and a summary of the main changes is set out below.

26 May 2015 – Shadow Directors

Shadow directors are now formally subject to the directors duties set out in the Companies Act. (section 170, Companies Act 2006)

October 2015 – Corporate Directors

A company will no longer be able to appoint a corporate director. Companies which currently have a company as a director (which is quite common and can be very useful in certain circumstances) will have such appointments terminated automatically in October 2016, so have a year to make other arrangements. (section 156A, Companies Act 2006)

January 2016 – Beneficial Ownership

Companies will be required to keep a register of all “persons with significant control” (PSCs) over the company. There are lengthy definitions of what “significant control” means, but for most the main criteria are that the person holds 25% or more of the shares or votes, or has the power to appoint or remove the majority of the board of directors. This provides more transparency in situations where ownership is complex. (part 21A, Companies Act 2006)

April 2016 – Companies House filings

  • The PSC register (required to be kept by the company since January 2016) will also be required to be filed at Companies House.
  • The annual return will be replaced by a simplified confirmation statement.
  • The troublesome statement of capital required in certain Companies House returns will be simplified, including removal of the requirement to give the amount of premiums paid on shares.
  • Companies may opt to file their registers with Companies House only and dispense with their own maintenance of such registers.

Summer may mean a quieter period for many businesses, and it would be prudent for companies to spend some time over the summer months preparing for the changes brought in with this new Act.

Alison Marshall is an experienced lawyer and business adviser offering business law and Intellectual Property advice to SMEs in Fife, Edinburgh and across Scotland

Summer help is no picnic for employers

It’s that time of year when many businesses are looking to fill temporary posts as they gear up for their busiest months of the year. Taking on casual workers gives employers in the hospitality, tourism and retail trades in particular, the flexibility they need to cope with what they hope will be a roaring trade but almost certainly a fluctuating one nonetheless. However, these employers should not assume – and indeed, neither should any employer who engage seasonal, bank, zero hour or fixed-term staff at any time of the year –that the casual or temporary nature of the work means they don’t have employment rights.

There is no legal definition for the term “casual worker” although zero hour contracts, one example of how a causal worker may be engaged by an “employer”, did receive unprecedented attention during the election campaign. And caution should be exercised when labelling the party that provides work to the casual worker as “employer”; while it’s likely that there will be an employment relationship between the parties, it’s not always the case. The term causal worker covers a multitude of scenarios. The main issue of engaging casual workers is therefore preciously that: What is the relationship between the parties?

The commonality of most casual workers is they have no set hours and are paid only in relation to hours worked. The “employer” who asserts he is also not obliged to provide any work will argue that mutuality of obligation does not exist and so denying the casual worker employee status and valuable employment rights including continuity of service and the right to claim unfair dismissal. However, the difficulty is the Tribunals will look not only look at the labels the parties attach to the relationship and the written contract (if one exists) but what happens in practice. For instance, if the casual worker is given regular work over a period of time a Tribunal may find him or her to be an employee. Any business engaging casual workers should therefore consider how it arranges work with the casual worker and examine whether there are any obvious patterns in practice that need to be addressed both in the contract and in practice.

Of course, casual workers who are not employees may be workers. Workers may enjoy lesser employment rights but they still include, amongst others, the right to holiday leave and pay. The issue of calculating holiday entitlement and pay for both casual employees and workers can be a tricky one because it is not always known how long they will be engaged for and how many hours they will work during that time. There can be big variations over the period of engagement and it may require quite complicated administrative systems to ensure the calculations are correct. However the basic premise is simple; full-time workers are entitled to 28 days’ (5.6 weeks’) paid holiday year a year and part-timers are entitled to a pro-rata amount of paid holiday. When a worker leaves employment they are entitled to payment for holidays accrued but untaken. Rolled-up holiday pay together with salary is not allowed.

A weeks’ pay can be calculated relatively easily as it is the average of all amounts paid (including over time and bonuses) over the previous 12 weeks. Any weeks where no pay is received must not be counted in the 12 weeks. The entitlement accrues at the rate of 12.07% of the hours worked but because full time workers are only entitled to 28 days a casual workers entitlement will be capped at 28 days regardless of how many days or hours a week they work.

If this were not enough, employers must now consider the issue of auto-enrolment of “eligible job holders”. Employers must carry out an individual assessment of each member of its workforce – including its casual workers – on the first day of each pay reference period to identify which category of worker they fall. This is crucially important because the fines for failing to comply with auto-enrolment are costly.

To avoid your busiest months of the year becoming a wash-out because of employment problems and claims get in touch for expert help with your recruitment of casual workers.

Donna Reynolds is an experienced Employment Lawyer and HR Adviser providing Employment Law and HR advice and assistance to SMEs across Fife, Edinburgh and across Scotland.

Five things every business should know about solar energy

The amount of electricity produced from solar panels is on the rise. On a sunny day in 2020 it has been estimated that up to 40% of the UK’s electricity demand will be met by solar panels and that one third of all UK homes will have solar panels on their roofs.

  1. Solar panels can generate substantial profits – particularly for commercial premises with unused space either on a roof or within ground space. Even if businesses have previously looked at the viability of installing solar panels, they should look again – the costs of panel installation are falling with growing economies of scale and technical improvements in the efficiency of panels.
  2. Whilst income to owners from feed in tariffs available for solar panels has come down from when they were first introduced in April 2010, the potential income remains considerable – the government feed-in tariff offers an index linked 8-13% return on investment over 20 years whilst the panels themselves should last for about 50 years. If you don’t want to finance the installation costs up front, it is relatively straightforward to find an intermediary company willing to subsidise installation costs in exchange for a share of the feed-in-tariffs for electricity being generated.
  3. Every commercial building sold or leased since 2009 has required an energy performance certificate (an ‘EPC’). There has been a tendency for businesses to regard EPCs as a paper cost and of marginal relevance – but this view is likely to change over the next year.  The Scottish Government is about to publish proposals to force owners to carry out energy efficiency improvements on energy inefficient buildings if and when owners sell or lease.  Details are expected within the next few months of exactly how this should work.  Solar panels are relevant to EPCs in two ways.  First, a solar panel system counts towards your EPC rating – often enough to take you into the next band up. Second, in order to install a solar panel system (with a few exceptions), your property must have at least a level D Energy Performance Rating (which the Government thinks is achievable for the majority of commercial buildings).
  4. Before installing a solar panel or signing up to any agreement with a supplier, you do need to do your legal homework. If you have a security over your building, the chances are that you will need your lender’s consent.  You need to make sure that solar panels are installed on land you own – empty land neighbouring a building could be disputed or common ground.  You should consider the impact of a solar panel installation when you sell or rent out a property – in the case of a lease, who gets to keep the income from the panels and how do solar panels impact on repair and maintenance liabilities?

Michael is an experienced and talented solicitor who specialises in commercial property transactions and property dispute resolution.