What SMEs need to learn from Netflix’s latest advancements

Not so long ago, the idea of the provision of online content in a legitimate manner good enough to impact online piracy in any way seemed a pipe dream. However, Netflix’s latest moves to expand its services to a global offering marks great strides towards a viable alternative. Legal jurisdictional problems loom large for them in terms of further progress, but steps taken to date suggest they will find a way.

Read more in Alison Marshall’s article in The Scotsman: Netflix is fast-forwarding to further expansion

Do you have a problem with employees accessing social media and porn in the workplace?

A Freedom of Information Request made by BBC Radio 5 Live has revealed that 51 council workers in the UK last year were suspended for allegedly breaking social media rules. This included 11 council workers who were suspended for viewing online porn. However, only a minority were later dismissed or resigned.

I don’t know about you, but my first reaction to this news was ‘only 51 people in the whole of the UK?’. Let me describe my own anecdotal experience of social media in the workplace: employees make an excessive amount of use of the internet, not just social media, for personal purposes. On-line banking, online grocery shopping, shopping for that perfect new outfit for the impending big night out, emails, streaming music, facebook, to name but a few time wasting activities. The constant distractions that come from the internet inevitably means that the problem is much bigger than UK Councils, and most employers, would dare to imagine.

I’m not against personal use; I’ve been known to look for last minute holiday deals in my lunch hour. However, unfettered access not only has an impact on productivity, it exposes us to other problems including the risk of computer viruses, identity theft and other cyber crime and claims of bullying and harassment and, in the case of on-line porn, discrimination in the workplace. Sadly, I have had to help far too many employers deal with the fall out from cyber bullying.

Having an email and internet use policy written in clear, non-technical language which explains what is allowed and what is not is vital. For example, personal use is permitted but should be kept to a minimum and only during specific times of the day, accessing pornographic, violent or abusive sites are not permitted and email and social media should not be used to bully or harass anyone. The consequences of any breach should be clearly set out. And always reserve the right to monitor emails and internet use and act promptly to deal with any misconduct discovered. There may be a short sharp spike in the number of disciplinary cases to deal with but that’s nothing compared to the problems you could be storing up if you don’t act.

Is the National Living Wage a Living Nightmare for Businesses?

At the risk of being melodramatic, if you do not yet have a plan in place to address the effects of the imminent increase to your business’ wage bill, brought kindly to you by the National Living Wage (NLW), there’s no time to lose.

The ‘good’ news is the National Minimum Wage (NMW) we’re all familiar with is not going anywhere; the NLW is a new “premium” on top of the minimum wage. For all workers aged 25 years and over, the premium will be 50p taking the hourly rate to £7.20. The Government aims to increase the NLW to £9 per hour by 2020. While it has been widely reported that the care, hospitality and retail sectors will be the hardest hit, any business employing staff will inevitably be affected; so, what can you do to minimise the impact?

Firstly, you must ensure you are currently complying with NMW requirements, or from the get go you could fail to comply with the NLW. For those workers with a fixed place of work, working contracted hours and paid overtime for any extra hours worked, checking their average hourly rate is at least as much as the NMW simply involves dividing the number of hours worked between pay days by the amount paid for the same period.  However, where a worker is paid a premium rate (for example night shift allowance) it must be discounted before the average hourly rate is calculated and compared with NMW.  For those workers who work extra hours but are not paid overtime you also need to ensure that their average hourly rate is at least the NMW by taking into account all hours worked. Time spent travelling during the working day is counted in NMW calculations as is any time spent at work-related functions.

The next step is to ensure you are calculating holiday pay correctly as this too will have an impact on your staffing budget. A contentious issue that will rear its ugly head again this year, holiday pay is worthy of an article (or two) in its own right but, for the sake of brevity, workers who receive regular amounts of overtime may be entitled to have this included in the calculation of their holiday pay.  If in doubt, seek advice.

Finally, although this may sound obvious, you should then make a list of all workers who are eligible for NLW together with their current rate of pay. Consider how pay rates will differ between first line managers and their direct reports, and whether steps should be taken to maintain differentials or remove them. Does this cause any problems higher up the organisational structure? Armed with this information you will now know the true extra cost of NLW to your business; will your business be able to meet its wage bill or will cost cutting be necessary?

I haven’t met a business owner yet who wants to either change terms and conditions of employment to, say, remove staff benefits or reduce working hours or make redundancies in order to balance the books but, sadly, for many businesses they are legitimate – and difficult – decisions that must be taken when closing its doors is the only other viable option. If you feel that you are in this position please seek advice on how to implement these measures correctly to avoid costly employment tribunal claims. Do not be tempted to build a workforce of under 25’s. The cost of employing those who qualify for NLW alone is very unlikely to amount to what would be deemed justifiable for either selecting workers for redundancy or refusing employment in terms of age discrimination.

Non payment of the NLW not only attracts hefty financial penalties and disqualification as a director for up to 15 years, it is potentially a criminal offence. Do not be caught out. Plan for it now.

New Year Resolutions

The beginning of January is usually the time when people full of New Year optimism, resolve to make changes to their lives – for example, by stopping smoking, going to the gym or starting a diet.  Most people, though, are not particularly good at keeping to these promises. A major reason for this is that whilst we are good at identifying what we want to change in our lives, we are less good at focusing on how to achieve this.

One way to help improve the chances of achieve their aims is to make use of so-called “nudge” techniques to create incentives, as the following table shows.

 

resolution nudge
Erecting signs saying ‘no littering’ and warning of fines. Improving the availability and visibility of litter bins.
Joining a gym. Using the stairs.
Counting calories. Smaller plate.
Weekly food shop budgeting. Use a basket instead of a trolley.

Nudge techniques can be used in many different ways, some quite novel.  For example, it has been suggested that a person wanting to give up smoking should open a bank account. For six months she deposits the amount of money she would otherwise spend on cigarettes into the account. After six months she takes a test that determines whether she has been smoking. If she hasn’t, she gets to keep the money in the account; if she has, the account is closed and the money is donated to charity. There is evidence that participating in this bank program increases the chance of quitting smoking by over 50% over many other cessation efforts.

Why, you might think, is CCW explaining all of this? Well, in our experience, many business managers are only too human and, likewise, fail to live up to their resolutions.  It is often only after businesses have experienced a serious legal problem that they realise they could have, without too much effort, done something to avoid the problem in the first place – e.g. by having a robust set of business terms and conditions or by having in place a proper lease with their landlords or a shareholder agreement with other company members. Sadly, despite promises to perform such tasks, many will remain undone.

We would like to help our clients help to resolve long-running but neglected issues.  Below, for each of our major client service areas, we have listed ways in which we think we can help incentivise you into fixing any such issues.

From all at CCW we wish you a very happy and prosperous New Year.

resolution nudge
We need to make the time to speak to our solicitor about legal matters that concern us. We aim to make ourselves accessible to speak to. You can contact us not just by e-mail or phone but also by text messages or by video-call (e.g. Skype or FaceTime).

 

We are used to meeting or speaking to clients outside normal business hours.

We need to put in place proper terms and conditions for business for orders. CCW is experienced in dealing with a wide variety of commercial agreements. If you can give us a good outline of what you want, we can often produce good first drafts of documents. You can then check these at your leisure.
We now have more shareholders in our company and need to have more categories of rights We can tailor your shareholder requirements by drafting a shareholders’ agreement or amending your company’s articles of association
We need to bring our company books up to date. Our Company Secretarial services provided by CCW cost £170+VAT per year and give the peace of mind of knowing that all of those things and more are dealt with.
The title deeds to our properties are in a complete mess and need sorting Often we can obtain copies of any missing title deeds ourselves, so long as we have either a plan and/or property address.

 

It is now possible to simplify older title deeds by registering a new title in the Land Register

We must renew our lease If you give us a copy of your lease, we can advise you of the end date of the lease. If you wish, we can speak direct to your landlords or their agents to negotiate a lease extension.
As landlords we need to replace word-of-mouth leases with written leases. We can draft leases for you. It is realistic to expect to have written leases in place within twelve months from the date when you instruct us.

 

The Pantomime Guide to Employment Law

The Panto season may now be behind us, but the fairy tales upon which they are loosely based can, as allegories, teach employers a thing or two.

For example, Goldilocks typifies that old superstition many of us have about things coming in threes. In the workplace, the Employment Rights Act 1996 requires, firstly, that an employer  establish a potentially fair reason for dismissal; secondly, that that the employer act reasonably in treating that reason as sufficient to justify dismissal; and thirdly, that the employer demonstrate that “acting reasonably” when dismissing. Expanding upon the requirement of a fair procedure gives us another threesome since, before dismissing for misconduct or poor performance, the ACAS Code of Practice on Disciplinary and Grievance requires an employer to: investigate and inform of the issues in writing; conduct a disciplinary hearing and inform of the decision in writing; and give the employee the right of appeal. Thus a Goldilocks compliant employer understands that, in much the same way as a Princess will not find her Prince by kissing only one frog, effecting a dismissal involves a sequence of stepping stones with any one of them potentially involving rethinking the wisdom of dismissal, or other significant disciplinary sanctions, and looking for a different, but ultimately less expensive, way forward.

Cinderella, of course, illustrates that one size does not fit all. The Prince’s decision to try the lost slipper on every woman in the Kingdom is a shining example of consistency, ensuring that he wasn’t being discriminatory in applying his policy. However, had the slipper not fitted Cinderella because her foot had swollen to twice its size after having tripped whilst running away at the stroke of midnight, he would have failed to consider that the same action in relation to all does not work in every situation. Employers often make this mistake when making changes to terms and conditions of employment. The contract of employment may authorize the change the employer wants to make but indirect discrimination claims could arise if the proposed change unfairly impacts on a particular employee or group of employees by reason of their sex, race, disability, religion or belief, sexual orientation or age. For instance, changing shift patterns is potentially indirectly discriminatory against women because a higher proportion of women have childcare responsibilities. In such a case, employers should consider ways the discriminatory impact could be reduced or avoided and, if not, ensure the change can be justified as being a proportionate means of achieving a legitimate aim.

This does not mean employers should look for an apparently easier route to achieving a desired result by dressing a situation up as something it’s not for example,  using the description “redundancy” under the mistaken belief that there is less scope for challenge. The wolf in Little Red Riding Hood discovered to his peril that using a disguise is asking for trouble.

Then there is Peter Pan.  Can you imagine if the Lost Boys told Peter Pan he is being retired because they felt he could no longer protect and rejuvenate them the way he once had? In Never Never Land Tinkerbell would doubtless sort it out but, for the rest of us, this would be an unfair dismissal  and a settlement agreement may be the magic wand that is required.

`Donna Reynolds is an experienced Employment Lawyer and HR Adviser who advises SMEs in Fife, Edinburgh and throughout Scotland.

Putting handshakes in writing

Shareholders’ agreements and Partnership agreements are a good way to establish the boundaries between you and your business partners and to make clear to each other the terms on which you conduct your business on a daily basis.  During times of good relations between business partners and when business is booming, it may seem unnecessary and even insulting to put into writing what is obvious and accepted by everyone tacitly within the Company or Partnership.

Nevertheless, while relations between business partners are established and maintained in good times, it is the perfect time to commit the relationship to writing. It is when relations crumble that it can be advantageous to have a document that you can point to in order to establish your rights (and obligations) vis-a-vis your fellow members or Partners in the Company or Partnership.  A simple agreement is often all that is needed, but such an agreement can provide peace of mind and potentially save a lot of money in terms of court fees if relations between Partners or Shareholders break down. So often it gets to the point where every little thing becomes a dispute.

At CCW we take pride in the years of collective experience that we have in this field, which allows us to understand the potential pitfalls and problems that can besiege small businesses and to ensure that any agreement deals thoroughly with those issues. If this is something your business does not have (or if your agreements are from a number of years ago), now is the time to get in touch to put it right.

Get your company books in order

All Companies must keep books of certain matters relating to their affairs.  These include:

  • a register of the company’s members;
  • a register of the directors of the Company and their residential addresses;
  • a register of any secretaries that the Company may have;
  • a copy of the Company’s articles of association;
  • a register of any charges that may have been created over the Company’s assets;
  • a copy of all the minutes passed by the Company at its board meetings; and
  • copies of any shareholder resolutions that may have been passed at such meetings.

Additionally, it is also necessary for Companies to keep records of any share transfers that may have occurred in the capital of the Company and a note of the Company’s current share capital.  In particular for smaller companies keeping track of the things that need to be filed and properly documenting all of the things that need to be documented can be costly and challenging.  On top of all that, Companies must be aware of what needs to be filed at Companies House and that also needs to be updated on a regular basis.  For example, it is a requirement to let Companies House know when a director or secretary resigns or a new director or secretary is appointed, whenever the Company’s registered office changes or when/if the Company creates a charge over its assets.  These are just a few of the things that Companies House requires notification of and keeping a track of them all is a challenge for any Company.

The Company Secretarial services provided by CCW cost £170+VAT per year and give the peace of mind of knowing that all of those things and more are dealt with.

Spotlight on Slavery and Human Trafficking

Section 54 of the Modern Slavery Act 2015 came into force on the 29th October 2015.  From that date larger businesses are required to publish an annual “slavery and human trafficking statement”.

This new obligation will apply to Companies with an annual turnover of £36 million or greater for financial years ending on or after 31 March 2016. The statement must include: “(a) a statement of the steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place– (i) in any of its supply chains, and (ii) in any part of its own business, or (b) a statement that the organisation has taken no such steps”.

The obligation merely relates to the statement itself; there is no requirement for Companies to actually take steps to ensure human trafficking or slavery are taking place in their supply chains or in their businesses.  You might therefore be tempted to conclude that this Act will have no practical effect whatsoever.  Such a conclusion, however, would be to underestimate the value of good publicity to Companies, particularly large and well known ones.  The intention of the Act, therefore, seems to be to name and shame Companies that are not putting appropriate measures in place.  But what are appropriate measures?  This question is largely left to the discretion of the Companies themselves.  Some measures that have already been put in place by organisations include: introducing policies and training, specific clauses in contracts with suppliers, due diligence questionnaires prior to engagement, obligations on suppliers to use the same process/policies for their suppliers, and stricter controls on subcontracting.

It remains to be seen whether the majority of Companies will be sufficiently incentivised to take steps by the potential negative publicity associated with reporting that no steps have been taken, but there is no doubt that the spotlight is on the issue of slavery and human trafficking and that this Act and similar pieces of legislation are growing in popularity.

Kieran Reilly is a trainee solicitor working in the corporate team in Fife and Edinburgh.