NO SEX PLEASE, WE’RE WORKING

The news John Prescott is being investigated as he may have broken the law by having sex with his secretary in his office illustrates the potential dangers of workplace relationships. Employment law specialist Sally Laughton examines the pitfalls of office romance for both workers and employers.

John Prescott is not the first politician to get caught out having an affair and will probably not be the last.

If the humiliating publicity wasn’t bad enough he now faces an investigation into allegations that he had sex with his secretary in his ministerial office when he was supposed to be working.

Mr Prescott’s predicament is a high-profile example of the kind of issues that can arise from an office relationship.

In extreme cases the initiation of a sexual relationship by someone who holds a position of power or responsibility can become a matter for the criminal courts. A policeman who had sex with a woman he’d been sent to help lost his job and was given 200 hours community service for misconduct in a public office.

Most of us don’t hold public office and so aren’t under such strict restraints. But even so there are huge dangers for inappropriate behaviour at work.

From an employee’s point of view, although there is no law as such against having sex at work, it could be seen as gross misconduct and grounds for dismissal or at least a warning, particularly if the employer has written policies in place about office relationships.

Even if there is no policy on Workplace Relationships, the employee might be in breach of the implied term of good faith that says staff should conduct themselves to suit the best interests of their company. This term is implied into all contracts of employment.

Whether or not it would justify instant dismissal would depend on the circumstances. For example, holding hands or briefly kissing might be inappropriate behaviour but may not justify dismissal whereas more explicit behaviour may well do so.

Employers would have to assess each case individually. Over reacting to a relatively minor indiscretion could be seen as unfair dismissal and so prove costly.

The employer may also face problems if a senior manager has a relationship with a junior colleague and the relationship then breaks down. It’s quite possible that the woman could then claim her boss took advantage of her. There could even be claims of sexual harassment, bullying or even a criminal matter.

The woman often in such scenarios resigns, claims constructive dismissal and sex discrimination and sues.

American firms tend to counter these dangers by introducing written policies banning relationships at work. This is largely in response to the high level of damages often awarded in the U.S. so the same approach might appear heavy handed in Britain.

Never the less around a fifth of British companies have policies on workplace relationships but very few go so far as to try to impose an outright ban.

Most offer guidelines about how couples should behave if they start a relationship. The important point is to make it clear that such relationships should not encroach on work, either in the couple’s behaviour towards each other or in the way it affects their duties and their relationships with other staff.

Some firms shy away from introducing such policies for fear of intruding into people’s personal lives. But when more and more relationships start through meeting at work the boundaries can become blurred.

One way round this is to introduce the policies at the same time as other changes, such as a new policy on age or new arrangements for smokers. This way it won’t appear quite so intrusive.

Employers are right to be sensitive to these issues but with employees becoming ever more ready to take legal action, it pays to take preventive measures.

Sally Laughton is a Employmetn Law expert at Andersons Solicitors in Nottingham and can be contacted on 0115 947 0641 or email: info@andersonssolicitors.co.uk

We produce FREE monthly electronic newsletters including; Private Individual, Business and Employment Law. You can register for your copy online from our website
www.andersonssolicitors.co.uk or e-mail Carly Williams at cwilliams@andersonssolicitors.co.uk.

Successful succession needs careful planning

It can be difficult to hand over control of a company you’ve spent most of your life building and nurturing.

While business executives may dream about a retirement spent perfecting the golf swing or relaxing on a sun drenched beach, they’re just as likely to wake in a panic about how the firm will cope without them, or whether their children will squabble about who’s in charge and then squander it all away.

And there’s the other side of it. What if the business isn’t earning enough to allow you to retire? These thoughts trouble many people so it’s not surprising that they push them to the back of their minds as something to deal with later.

Unfortunately, that can be a big mistake. It is possible to ensure a smooth and fair succession to the next generation but it takes time.

It’s no good waiting until three months before the retirement date and then suddenly deciding you want to take all your money out of the business and sail off into the sunset. That could be disastrous for you and those left to carry on the business.

It’s vital to start planning early, preferably several years ahead of your target retirement date. This is particularly important for small to medium size firms where the departure of one key person can have a major impact.

The first step is to hold meetings with those who will be left running the company so you can agree an exit strategy.

If you own a large share of the business, the remaining partners or directors may need to raise money to buy you out. Or if the firm is very successful, some of its profits could be used to raise part of the necessary finance. This approach would need Inland Revenue clearance but is worth exploring.

It may be that you agree to sell your shares back over several years so the firm’s finances aren’t put under too much pressure all at once. In that case, you may need to change your will so the arrangement can continue should you die before the sales are completed. There could be tax implications whichever system you choose for withdrawing capital from the firm so professional advice should be sought.

If you own the business premises, you will need to decide whether to sell or lease them back to the firm. This could be influenced by how much you capital you need to raise or whether you would be content with a monthly rent.

It’s also important that those who remain in the business consider how they’ll get by without you. It may be that your expertise can be passed on to the remaining directors, or they may have to replace you. In that case, a successor should be chosen before you leave to ensure a smooth transition.

If you have built up a close relationship with key customers then you should arrange for them to meet the other directors so trust can be developed and continuity assured.

Some entrepreneurs find it difficult emotionally to leave a business they have built up from scratch. It can also be hard to go from being at the centre of a buzzing workplace to suddenly being out of it completely. If you feel that way then you might consider staying on as a part time consultant. This would provide stability for the firm and reassurance for its customers.

Throughout the succession planning it’s important to get advice from your accountant, lawyer and possibly your bank manager. They will have helpful suggestions and can ensure that the agreement is fair to everyone.

This is particularly important if you are passing the business on to family members because emotions can easily get in the way. Sons and daughters may feel guilty that they are demanding too good a deal from their parents, while parents may feel they are taking too much out of the business making it difficult for their children to succeed in the future.

Independent opinions from lawyers and accountants can help guide and reassure both sides. They can also knock heads together where necessary because with families there can be a tendency to let things drift and that is potentially bad for both sides in the long run.

Once an agreement has been reached then it’s important to get it all written down properly so it’s legal and everyone knows where they stand.

Then and only then will you really be able to relax properly and look forward to the retirement you always promised yourself.


For further information contact Peter Sutherland on 0115 947 0641 or email psutherland@andersonssolicitors.co.uk

LOCAL EMPLOYERS ‘UNPREPARED’ FOR AGE DISCRIMINATION LAWS

On Wednesday 3rd May local HR Managers and business men and women met at the Holiday Inn, Castle Marina, to hear Malcolm Davies, senior partner at Andersons Solicitors discuss the new Age Discrimination Regulations that come into force from 1st October 2006.

The figures taken from the survey completed by Human Resource Managers and business owners from across the East Midlands show just how unprepared employers are for the new Age Discriminations Regulations.

A staggering 82% of attendees said that the new regulations would have either a large or huge impact on their business, with 88% of attendees saying they have little knowledge or no knowledge on the new regulations. No one claimed to be "very familiar" with the regulations. These are worrying statistics given that we are less than 6 months away from the new regulations being introduced. Commenting on the feedback the head of Employment Team at Andersons, Paul Brill, said:

"The survey shows that although most businesses are generally aware that these Age Discrimination Regulations are becoming law from 1st October this year, and that they will have a huge impact on every aspect of the employment process from recruitment to retirement, very few are properly prepared. This is especially so for small to medium sized business. All our experience tells us that auditing existing contracts and implementing new policies now is far more cost-effective than trying to salvage a situation that has gone wrong later".

Paul Brill is Head of Employment Law at Andersons Solicitors in Nottingham. If you require further information on this article please contact Paul Brill on 0115 9886721 or email pbrill@andersonssolicitors.co.uk

We produce FREE monthly electronic newsletters including; Private Individual, Business and Employment Law. You can register for your copy online from our website
www.andersonssolicitors.co.uk or e-mail Carly Williams at cwilliams@andersonssolicitors.co.uk.

Dubious compensation claims plague harassed bosses

Cracking down on rogue employers is the main focus of the Government’s employment relations policy for this Parliament. Employment law specialist Paul Brill argues that the move should be balanced by a crack down on rogue employees who plague bosses with frivolous compensation claims.

No responsible company will dispute that employees should be protected but there’s a growing tendency for some workers to play the system which is costing firms time, money and heartache.

A good example is the man who started 80 claims to employment tribunals over a period of 10 years. They were mainly to do with discrimination on the grounds of sex or disability relating to failed job applications.

He is either extremely unlucky to have come up against 80 bigoted bosses or there was something flawed in his definition of discrimination. The fact that he only won two of his cases suggests the latter may be true.

It could be argued that if he lost the other 78 cases then justice was done and employers have nothing to worry about. Unfortunately, that doesn’t tell the whole story. Every time an employee makes a claim his employer has to investigate.

That means taking senior managers away from their day jobs of actually running the company. Members of staff may have to be interviewed to establish the facts of the case. This can be disruptive and affect morale.

It adds up to a significant investment in time and money, and it leaves firms vulnerable to opportunist employees. There are even serial complainants who move from firm to firm seeking rich pickings from compensation.

Now the situation has got so bad that many firms simply cave in when faced with a claim. According to a survey by the employers’ organisation the CBI, businesses believe the tribunal system is ineffective and skewed against them.

The survey of 450 businesses revealed that many firms settle cases they have a strong chance of winning because they fear the cost of going to tribunals.

It’s easy to see a firm’s dilemma if they feel the tribunal system is more trouble than it’s worth, but if everyone simply gives in then it encourages more people to proceed with weak cases and the problem snowballs.

It’s vital that firms stand their ground and fight. It can be cheaper in the long run.

A good example of this is the case of the deputy head teacher who sought £1m compensation for bullying and intimidation after claiming she’d been forced to use a chair that made embarrassing noises every time she sat down.

Only those people who attended the hearings can have a full appreciation of the merit of the case but the rest of us can get an idea from the decision of the tribunal.

It ruled that she was neither unfairly dismissed nor discriminated against. It even blamed her for failing to get herself a new chair. Ironically, it may be the fact that she was claiming so much that led to her defeat. Had her demands been more modest her employers might have decided that it was cheaper to settle out of court.

If they had taken that decision then clearly an injustice would have been done and taxpayers’ money would have been wasted on undeserved compensation.

It need not take much to discourage people bringing unjustified claims. Five years ago the government considered introducing fees for taking cases to tribunals but backed down following pressure from unions even though the figures suggested were less than £100.

The time has come to look at this scheme again. No one wants to stop genuine claimants but time wasters must be rooted out. It would also help to see costs awarded against people bringing obviously frivolous cases. Tribunals have the power to do this but very rarely use it.

The Department of Trade and Industry says it‘s reviewing the system. Hopefully it will do so quickly. The man who made 80 claims in 10 years has now had a restriction order placed on him to stop him making any more tribunal applications.

It’s a step in the right direction but unfortunately there are many more serial complainants ready to take his place.

Paul Brill is Head of Employment Law at Andersons Solicitors in Nottingham. If you require further information on this article please contact Paul Brill on 0115 9886721 or email pbrill@andersonssolicitors.co.uk

Making a success of succession

After a lifetime building up a business, many people worry about how to retire successfully while ensuring that the firm continues to thrive. Peter Sutherland, a partner at Andersons Solicitors in Nottingham, explains how to get a fair deal for everyone when handing over to the next generation.

To ensure a smooth succession it’s vital to start planning several years ahead of your target retirement date. The first step is to hold meetings with those who will run the business when you leave so you can agree an exit strategy.

If you own a large share of the business, the remaining partners or directors may need to raise money to buy you out. Or if the firm is very successful, some of its profits could be used to raise part of the necessary finance. This approach would need Inland Revenue clearance but is worth exploring.

It may be that you agree to sell your shares back over several years so the firm’s finances aren’t put under too much pressure all at once. In that case, you may need to change your will so the arrangement can continue should you die before the sales are completed. There could be tax implications whichever system you choose for withdrawing capital from the firm so professional advice should be sought.

If you own the business premises, you will need to decide whether to sell or lease them back to the firm.

It’s also important that those who remain in the business consider how they’ll get by without you. It may be that your expertise can be passed on to the remaining directors, or they may have to replace you. In that case, a successor should be chosen before you leave.

If you have built up a close relationship with key customers then you should arrange for them to meet the other directors so trust can be developed and continuity assured.

Some entrepreneurs find it difficult emotionally to leave a business they have built up from scratch. If you feel that way then you might consider staying on as a part time consultant. This would provide stability for the firm and reassurance for its customers.

Throughout the succession planning it’s important to get advice from your accountant, lawyer and possibly your bank manager. They will have helpful suggestions and can ensure that the agreement is fair to everyone.
Contact Peter Sutherland for more information

Plan ahead to stay out of court

It’s been a busy few months in the courts both at home and in Europe with judges producing several rulings that could have a huge impact on the way employers run their businesses.

The House of Lords sent shock waves through many firms in a landmark case that means thousands of part-time workers may soon be able to claim the same pension and sick pay rights as their full-time colleagues.

The case was brought on behalf of 16,000 retained firefighters who work part time. Their union argued that they were being subjected to discrimination because they were not allowed to join the pension scheme and enjoyed less favourable sick pay arrangements than full time firefighters.

The argument was rejected by an employment tribunal and so the union took it all the way to the House of Lords. The case hinged on whether the retained firefighters performed tasks that were the same or broadly similar to those who worked full time.

The Lords decided that they did and ruled that the original tribunal was wrong in assessing otherwise. The case was referred back to a tribunal for a rehearing taking into account the comments of the Lords.

If the new tribunal decides in favour of the firefighters there will then be a second hearing to see how their complaints can be remedied. The union has already argued that the retained staff should be allowed to join the pension scheme with full backdating.

The guidance from the House of Lords now gives the go-ahead to part-time workers in other sectors to try to claim the same benefits as full time staff.

Not to be outdone by Britain’s House of Lords, the European Court of Justice produced a ruling that will shake-up the way many firms pay their staff. The court ruled that the system of rolled up holiday pay breached the working time directive.

Under the system, holiday pay is paid as part of an hourly rate rather than for a specific period of leave. It’s administratively convenient for many firms but is often criticised because it encourages people not to take their holiday entitlement. Holiday pay must now relate to a specific time when an employee takes leave.

Some commentators have described it as an administrative nightmare which is perhaps a little alarmist but nevertheless, firms who use the system would be well advised to switch to a method of linking holiday pay to actual periods of leave.

The case of a waitress who won £124,000 compensation after being bullied at work for 15 months by a chef didn’t qualify as a landmark ruling but it was still a warning shot for any firm that doesn’t have anti-bullying strategies in place.

The 26 year old woman was working at a leading London restaurant as a way of supporting herself while she took a university course. She told a tribunal that the chef was extremely frightening and intimidating. He referred to her in sexually crude terms and sometimes walked around the kitchen dressed only in his underpants.

The waitress, who suffered depression and anxiety as a result of his actions, won her claim for sex discrimination and unfair dismissal.
The tribunal chairman described the chef as a bully with a greatly inflated view of his own importance.

That may well be true, but what often happens in these cases is that
an unruly employee causes all the trouble and then it’s the employer who has to pick up the bill for the compensation.

In this sense, the employer can be seen as the bully’s second victim. The answer, or course, is to be pro-active and put anti-bullying policies in place. Not only will they help prevent bullying by nipping it in the bud, it will also help an employer defend a case should it go to a tribunal.

This is particularly important given that a recent survey by the CBI revealed that many firms prefer to settle cases they have a strong chance of winning because they fear that tribunals are skewed against them.

It would be a shame if firms persisted with that approach because sometimes it is actually better and cheaper to stand your ground and fight the case.

But good though it is to win, it’s better not to have fight at all, whether it’s to do with bullying, working conditions, methods of payment or whatever. Prevention is always better than cure and that means getting the right policies and structures firmly woven into the fabric of your business right at the start.

For further information contact Paul Brill, tel 0115 947 0641, e-mail pbrill@andersonssolicitors.co.uk.