The problem is that most small businesses either can’t afford solicitors fees, have other priorities or don’t think they need to spend money on lawyers or don’t think the fees are money well spent. This may well be very short sighted thinking, storing up all sorts of trouble, this mindset is somewhat understandable. The perception tends to be that instructing solicitors on almost anything involves costs of over a thousand pounds and the other option, historically, has been to buy legal documents as templates.

That in itself has it’s attractions in the sense of costs, with it being perfectly possible to buy a shareholder agreement for £50.00 or less, but these agreements are not entirely standard, with one size fitting all, and there are a number of important options and considerations to bear in mind. Frankly, what point is there in having a set of terms of conditions for your business if you don’t even understand what most of the legal jargon means ?

A customer phones you up and asks you about a clause in your business terms – how embarrassing, and potentially bad for your business, if you don’t know what the clause means or why it’s in your own contract !

So, the advent of a middle ground, making legal documents and contracts affordable but also flexible, with guidance, is very welcome, and with the use of advanced technology and a team of in-house lawyers. The Epoq Group, specialist legal technology suppliers, have created a large number of interactive legal documents which are both affordable and highly usable, and which are now available direct to business via their my lawyer website. Well worth checking out.

As many small businesses will know, there’s an old adage, that if you owe a bank or a big institution £5,000.00 you’re in trouble, but if you owe £5 million, you’re in a decent negotiating position.

This seems to be borne out by some heated debate in the House of Commons recently during which it was suggested that HMRC has failed to collect the staggering figure of £25 billion from some of the UK’s biggest companies. If true this is frankly scandalous. The figure of £25 billion seems to be HMRC’s own estimate and to put this into context it equates to £1,000.00 for each UK household or 6p reduction in the basic rate of income tax.

The issue was recently raised in the House of Commons and has not exactly made headline news, which we find somewhat surprising. Other interesting aspects of this potential scandal are :-

• The figure of £25 billion relates to possible unclaimed taxes from 2,700 of the biggest UK companies.
• When it comes to these big tax discrepancies the same senior officials at HMRC have been negotiating and approving any settlements with the taxpayers, which is not exactly great corporate governance process.

The above will be even more galling to small businesses at a time when the HMRC is getting ever tougher on small business tax collection and where it has been acknowledged that a huge 6 million individual taxpayers have apparently been overcharged by an average £400.00 each.

Is it any wonder that the British public and small businesses are stepping out of the usual apathy towards politics and Government and that there is genuine anger out there towards the excesses of big business cozy capitalism ?

What are your thought and/or experiences on this issue ?

The excellent small business website, simplybusiness.co.uk has published a survey of small business which makes for optimistic reading, which is welcome in the current gloom and doom atmosphere. However, when reading this, we couldn’t help but ask ourselves “was this survey undertaken a few months ago ?”. This of course is not the fault of the company doing the survey and is perhaps simply indicative of how fast things are changing, and unfortunately deteriorating in the UK and world financial system.

So, we would take the following findings with a large pinch of salt, but who knows, things may improve. Certainly, a glass half full approach, tempered with some realism, is often better than the half empty way of thinking. After all, as the saying goes “when the going gets tough, the tough get going”.

Anyway, here are the headline findings of the survey of over 350 small businesses :-

• 62% of Small businesses expected their turnover to rise in 2012
• 27% plan to create new employment in the next year
• 65% consider that getting new business is the key for their business in the next year
• Nearly 75% said they do not believe the economy will improve in the next year
• 79% reported stable or increased revenue increased in the last year

Does the above represent irrational optimism or does it instead point to the Great British resilience and fighting spirit. Only time will tell, but what do you think ?

The laws relating to the protection against unfair dismissal are contained in the Employment Rights Act 1996 which provide that an employer that dismisses a qualifying employee will be liable to a claim for unfair dismissal in the employment tribunal unless:

It can show a potentially fair reason for the dismissal and the employer must have acted reasonably in treating that reason as sufficient to justify dismissing the employee.

It is for the employer to prove that the potentially fair reason is the real reason for the dismissal.

There are five potentially fair reasons:

1) Conduct- It is potentially fair to dismiss an employee for misconduct, which may be either a single act of serious misconduct or a series of acts that are less serious. This could include misconduct such as:

• Theft or dishonesty
• Disobeying reasonable orders
• Alcohol or drug abuse
• Repeated poor attendance
• Disclosure of confidential information
• Violence at work
• Unauthorised absence from work
• Breach of certain terms of contract such as breach of the duties of good faith and mutual trust and confidence

Most employers will include unacceptable misconduct in their employment contracts and make it clear that this is not an exhaustive list. In order to take protection on the grounds of conduct, the employer must establish that he believed the employer to be guilty of misconduct, that he had reasonable grounds for having such belief and he formed these beliefs on the back of a reasonable investigation into the matter.

b) Capability or Qualifications

Employers can fairly dismiss employee for his poor performance or attitude. Employee may also be dismissed fairly for their ill health. This may be a result of a frequent short-term absences or single long- term absence. Examples include:

• Dismissing employee for ill health capability
• Repeated poor attendance which may have resulted in a conduct or capability dismissal.

A dismissal will relate to qualification if the employees dismissal relates to any “diploma, degree or any other academic or professional qualification”. Qualification dismissals include:

• Where the employee loses its qualification during employment
• Where the employee is employed on the understanding that they will obtain certain qualifications and they fail to do so.
• Where the employer’s requirement changes
• Soon after recruitment, the employer realises that the employee does not have necessary qualification.

c) Redundancy

A dismissal on the ground of redundancy is a potentially fair dismissal. The employer must show that either:

• The Dismissal of the employee was as a result of the business not carrying on the trade to which the employee was hired (business closure).
• Dismissal of the employee was due to ceasing to carry on that business in the place where the employee was so employed (workplace closure).

d) Statutory restriction

A dismissal is potentially fair if the employee’s continued employment would contravene any restriction or duty imposed by or under any enactment. It is necessary for employer to show that the employee’s continued employment would actually contravene statutory restriction. Mere reasonable belief will not be enough. Examples include:

• Dismissal because the employee has lost their driving license and they need to drive to do the job.
• Dismissal because continued employment will breach the immigration rules.

e) Some other substantial reason

The final potentially fair reason for dismissal is for “some other substantial reason”. This category is designed to cover those potentially fair dismissals which do not fall within one of the above categories. Examples include: dismissals because of age.

Once the employer established a potentially fair reason for the dismissal, the Employment tribunal must then decide if the employer acted reasonably in dismissing the employee for that reason. The tribunal will look into whether the employer acted reasonably in treating it as a sufficient reason for dismissing the employee and also in accordance with equity and the substantial merits of the case.

Who can claim unfair dismissal?

For an employee to be able to bring a claim for unfair dismissal, an individual must be an employee and have at least one year’s service. However there are a few limited exceptions to both these requirements and a qualifying employee may not be able to bring a claim in some circumstances.

Procedure

Employees who wish to make a claim can do so in the employment tribunal by filing a claim for unfair dismissal and submitting a form ET1.

Time limits

The employee must bring the claim for unfair dismissal within three months of the effective date of termination. However the tribunal may extent the time period in exceptional circumstances.

Burden of Proof

Employee’s burden- An employee must demonstrate:

• He had an employment contract
• He had been employer for at least one year
• He had been dismissed either actually or constructively

Employer’s burden- They must show that:

• The reason for the dismissal
• That the reason for dismissal falls within one of the potentially fair reasons

With unfair dismissal claims or prospective claims, it is quite common for employers to consider offering the employee a compromise agreement.

For further advice on employment law, we recommend either Darlingtons Solicitors or Waring & Co.

The case reported below shows that race discrimination can equally occur based on national origin as on the colour of a person’s skin. It also clearly shows that discrimination liability is based on perception of the treatment by the employee, not the employer. What the employer may allege is a harmless joke may well not be deemed as such in law.

In this case a worker of Polish origin was given the nickname “Borat”, the character ridiculed in the well known movie of the same name starring Sacha Baron Cohen. The name, and the character have certain negative stereotypes associated in relation to eastern Europeans.

The employment tribunal decided that persistent use of this nickname amounted to direct race discrimination and constituted harassment, was degrading and a humiliating working environment.

In summary, as an employer, to be on the safe side and in compliance with good management, stamp out these kind of nicknames, ensure you have something in your policies and procedures. On a tongue in cheek basis (not serious) if you won’t stamp it out, make sure everyone has a nickname !

Quick legal tips when starting a business

These tips do not only apply to business start ups, some of whom may not have the need or resources to deal with all items on the list at the outset. In reality, these issues apply generally for small business and should be views as an ongoing aide memoire. One of the most important things about lists such as this, in our view, is that they create good habits – it is very important to keep legal issues under regular review, to minimize the need to use solicitors when things go wrong !

Avoid or minimise personal liability

The easiest and commonest way of avoiding personal liabilities is to set up a limited company, which is a separate legal entity. However, if your company is early stage and it needs to borrow money, you may still be required to provide a personal guarantee for any loan or overdraft. Think very carefully about this.

Don’t attempt to bury problems under the carpet

We would always suggest taking advice to prevent problems, but if a problem arises, deal with it before it gets worse. Ignoring it will not help.

Seek to trade on your terms

Every business is different. You should give adequate thought to getting your business terms and conditions right and to making sure that your clients, customers or suppliers sign up to your terms, not teirs. This is one area where it definitely pays to invest in good legal advice.

Get it in writing

This is simply commonsense, but ensure you have procedures and that these are communicated to all staff and compliance monitored. Much of successful business is getting into the right habits and being consistent.  A good paper trail  helps to avoid disputes in the future.

Get the right forms of business insurance

There are many options for business insurance, and it’s vital to do your homework and also to check the small print, what’s covered and what’s not covered and to shop around.

Protect intellectual property (‘IP’)

Ip is becoming more and more important to all businesses. It’s not only inventions and patents that it applies to. A database can be very valuable. In addition to protecting IP, be aware of the risks and potential liabilities under the Data Protection Act and of the growing issue of staff using social media and protecting confidential information such as customer lists, bank details and such like.

Review your IP, check if anyone is breaching it, check your security on a regular basis.

Get your contracts of employment right and regularly review

Not only is it important to ensure you have employment contracts for your staff, you will probably also need policies and procedures and critically to stick to your contracts, policies and procedures and be objective and consistent. Employment contracts should be reviewed annually as employment law constantly changes. Don’t be caught on a technicality, employment tribunal claims are very costly and time consuming !

On the one hand, small businesses tend to welcome, for obvious reasons, any reduction in bureaucracy and “red tape”. On the other hand, the Government’s proposal for exempting businesses with turnover annually of less than £880,000 may reduce the prospects, already difficult, for those same small businesses to raise finance from having to file accounts at Companies House are bound to backfire, suggests research.

A recent survey by Graydon Uk, who are a credit reference company, found that when asking some 400 senior finance staff in small businesses whether the proposal for exemption would assist business a whopping 91% stated that the likely impact would be to make it more difficult to obtain trade credit.

• Decline in reputation and market perception
• Falling gross profit
• Relaunches and rebranding
• New projects
• Warning signs of financial distress
• A fall in staff morale
• Changes to a company’s performance of its contractual obligations
• The company takes a more contentious approach
• Changing management structures
• Refinancing or new funding

An immense volume of personal data continues to proliferate and flow daily around the UK and between the UK and other countries. Typical examples of this include e-mail traffic and streams of personal data relating to employees. Some of this personal data needs to be accessible beyond UK borders.

Lawyers’ can not only draft policies and procedures, but also:

• Advise on best practice.
• Assist with good governance on information security regulations and reputation management.
• Updating employee handbooks and practices.
• Drafting employment and commercial contracts.
• Drafting website terms of use incorporating privacy rules.
• Provide guidance to data controllers
• Deal with employment law related issues if and when problems arise

Retention and destruction of data – some legal requirements

The law concerning retention of personal data is both general and specific. If personal data is retained:

• The data controller is obliged to keep it accurate and up to date.
• It must be kept securely.
• It should be kept for no longer than is necessary.

There are also specific laws sometimes applicable. For example:

• The Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995 (RIDOR) require records of injuries, diseases and dangerous occurrences to be kept for a minimum of three years from the date when the records were made.
• The Limitation Act 1980 sets down various timescales within which proceedings may be brought for breach of contract, negligence and personal injury. These time scales are likely to impact how long personal data is held for legal claim prosecution and defence purposes.

New internet privacy laws are came into law this week, and few known how the “cookie will crumble”.

Cookies are the way in which internet data is collected by way of tracking code, and are highly important for collecting data for targeted online marketing which is an increasingly lucrative business. Consequently, any online business will need to comply.  Subject to compliance, it will be illegal under the new European Union rules to collect cookies without express permission, and there will be fines of up to £500,000 ($813,000) for non-compliance. That is all well and good, but intellectual property lawyers are pointing out that there is sparse guidance on how this should be done.

Suggested ways in which compliance may be achieved include:-

? Pop ups – although it is believed this will significantly clog the web and slow it down with endless pop ups, which are considered an irritant by visitors to websites.

? Tracking icons –  an icon is displayed on any adverts that use tracking technology with an opt-out

Other implications of the new laws

Because of the current chaos on the new law, the Information Commissioner’s Office (ICO) has indicated, although not confirmed, that up to 1 year may be allowed for compliance.

Insurers have indicated premiums for some business with a significant online presence may rise due to increased risk.

Online privacy is already a huge issue and unlikely to settle down even with the new privacy laws.