DEFAULT RETIREMENT AGE TO BE ABOLISHED

August 2010

On 21 July 2010, the Government announced its intention to scrap the default retirement age (DRA) on 1 October 2011. The proposals are subject to consultation which will run until 21 October 2010.

Currently employers can force staff to retire at the age of 65 regardless of their circumstances, as long as they follow the correct DRA procedure.

However, the intention is that 6 April 2011 will be the last date on which this procedure may be implemented, as long as the retirement date will fall before 1 October 2011. Once 6 April 2011 has passed, then for the majority of employers, it will no longer be possible to compel employees to retire at 65. Even retirements notified before 6 April 2011 but to take effect after 1 October 2011 will not be valid, (unless the retirement can be objectively justified).

After 1 October 2011, a policy of compulsory retirement at a particular age will have to justified objectively by the employer. Obvious examples could include air traffic controllers and police officers, but in most cases, employers are going to have to think very carefully about the reasons for choosing a particular retirement age.

This is intended to be a general statement of expected changes in the law only. If you have any questions about how this may affect your business, please contact Jane Laidler, telephone +44 (0) 20 7242 0631, j.laidler@grm.co.uk for advice from our Employment and Immigration team tailored to your specific circumstances.

CAP ON NUMBERS OF NON-EU WORKERS IN THE UK

August 2010

On 19 July 2010 the government introduced a temporary cap on the number of non EU workers granted permission to enter the UK, to be maintained until the start of the permanent cap in April 2011.

The number of workers from outside the EU/EEA will be limited to 24,100 between now and April 2011 which represents a 5% reduction in the number of migrant workers. The intention with the temporary cap is to prevent a rush of applicants before the April 2011 permanent immigration cap.

The Tier 2 visa scheme (the general category) is most likely to be affected by the immigration cap as this is the main method that employers use to bring in skilled workers.

If, as an employer, you wish to recruit from outside the EU, it is advisable to get the application in as early as possible during this period in order to mitigate the risk of refusal due to excessive numbers.

For queries about how this may affect your business, please contact Jane Laidler, telephone +44 (0) 20 7242 0631, j.laidler@grm.co.uk or Helena Ross, telephone +44 (0) 20 7242 0631, h.ross@grm.co.uk from our Employment and Immigration team.

GRM - RESPONSE TO THE EMERGENCY BUDGET 22ND JUNE 2010

June 2010

There are a number of changes highlighted in the Emergency Budget which will be of importance to our clients and which we have set out in our Budget Round-up. However, please note that this is merely a summary of the main points of the Budget and therefore proper legal advice should be sought before relying on any of the measures outlined.

Corporate

Corporation Tax standard rate to be reduced from 28% to 27% from 1st April 2007 with further decreases annually of 1% to reach 24% by the financial year 2014.

Small companies rates for Corporation Tax will be reduced to 20% from 1st April 2011 instead of the proposed increase to 22% made by the former Government.

Consortium Relief is amended so the link company no longer needs to be resident in the UK but can be resident anywhere in the European Economic Area (EEA).

A detailed programme of reform on Corporation Tax is due to be published in the Autumn 2010.

VAT to rise from 17½% to 20% with effect from 4th January 2011. Anti-forestalling measures will be introduced designed to prevent large-scale exploitation of the lower rate in the run-up to the rate change.

Private Client/Personal Tax

Basic rate tax payers will enjoy an increase of £1,000 in the personal allowance for those aged under 65 from 6th April 2011 meaning that the personal allowance increases from £6,475 to £7,475.

Higher rate tax payers however will not benefit from the increase as the basic rate limit will be reduced. The exact amount of deduction is not yet known, however, it is anticipated that it will be approximately £2,500.

Capital Gains Tax will now be charged at two different rates -18% for those on standard income tax rates and 28% for those on the higher income tax rate.

Please note however that where the addition of the capital gain to your annual personal income pushes you into the higher rate tax band then Capital Gains Tax will be paid at the higher rate of 28%.

Entrepreneurs’ Relief on Capital Gains Tax will be raised from £2m to £5m effective from 23rd June 2010.

With regard to pensions the high income excess relief charge which was introduced by the last Government will be repealed and the current Government will look for a better solution to tackling this problem.

From the financial year 2011/2012 individuals with a Money Purchase Pension Scheme reaching the age of 75 will not be obliged to use their Pension Fund to buy an annuity.

Property

The new Government has reversed the former Government’s decision to abolish Furnished Holiday Lettings (FHLs), instead now FHLs in the UK and elsewhere in the European Economic Area (EEA) will continue to attract special tax treatment for the tax year 2010/2011 with a review of their taxation taking place over the Summer ready for implementation from 6th April 2011.

The Future

This was an emergency Budget with an aim to tackle the burgeoning deficit and give industry a boost. Much of the financial review however will take place over the Summer months and we expect further announcements with regard to taxation to occur in the Autumn of 2010.

With regard to reviews of taxation those that are currently under way are the reviews of Corporation Tax, review of how resident non-domiciled persons are taxed in the UK and anti-avoidance measures.

At GRM we will do our best to keep our clients abreast of any relevant changes. Please however seek full legal advice before relying on anything outlined in the summary.

Please contact Olivia Cooper with any enquiries you may have : o.cooper@grm.co.uk

GRM in Italy as client wins prestigious UKTI award

February 2010

London may be stimulating, charming, cosmopolitan… but ultimately when it comes to sheer style there’s nowhere quite like Milan. This view was reinforced recently for Jane Laidler and Caterina Iodice who were delighted to be invited to attend the third annual UK-Italy Business Awards in Italy’s most fashionable city. The glittering ceremony took place at the magnificent Mezzanotte Palace in Milan, the home of Borsa Italiana (the Milan Stock Exchange) on 20 January, 2010. The illustrious guest list featured many interesting and successful individuals from business and enterprise including GRM’s own client company Cont. Sal. UK Company LImited, the highly deserving winners of the award in the Entrepreneurship category.

Earlier, in October 2009, Caterina had also very successfully presented to a UKTI seminar in Naples to an audience largely representing the engineering and aerospace industries, a sector where there is great interest in UK investment. For further details about inward investment and location into the UK, please contact Jane Laidler: j.laidler@grm.co.uk

LANDLORDS AND ADMINISTRATORS

Feburary 2010

The case of Goldacre (Offices) Ltd v Nortel Networks UK Ltd [2010] has sounded a warning bell and is a suitable shot of vitamins for commercial landlords. If an administrator continues to occupy a rented property or even part of it for a period after his appointment, the administrator will be liable for the rent as part of the costs of the administration. He will no longer be able to put the landlord as an unsecured creditor in the administration but will have to pay the landlord along with other suppliers to the administrator before any creditor.

Landlords will welcome this but administrators will no doubt try and surrender leases at an earlier opportunity. They will be careful not to use premises under existing leases if the premises are not wanted but rather decamp to alternative premises. If they do occupy then landlords should claim and sue for the rent as an administrator’s expense.

Please contact Neil Spurrier with any enquiries to property matters : n.spurrier@grm.co.uk

LORD JUSTICE JACKSON CIVIL COSTS REVIEW

February 2010

December 2009 saw the publication of the final report of Lord Justice Jackson on the costs of Civil Litigation.

Jackson has made some notable suggestions which may well find their way into the rules such as restricting some parties’ ability to recover costs from the opposing party, disallowing the current uplift in contingency fee cases and restricting costs claims in defamation cases.  Supporters of change are equally represented by howls of indignation from other sectors of Society.  Overall the feeling is likely to be that something had to be done about the lawlessness of various parts of civil litigation and Jackson has at least made an attempt at tackling problems which had to be tackled.

Jackson has not addressed the collapse of the Legal Aid system nor other deficiencies within the Court Service. Civil Litigation was altered radically in 1998 following the report of Lord Woolf. Lord Justice Jackson could have rectified some of the defects created then; say 5 out of 10.

ASKING IMMIGRATION QUESTIONS DURING RECRUITMENT

February 2010

An employer is obliged to ascertain an employee’s right to work BEFORE employment commences, but employers should be aware of the risk of potential race discrimination claims if this process is carried out incorrectly.

The Race Relations Act, 1976 prevents direct discrimination (ie less favourable treatment) on the basis of a person’s race. Therefore the rejection of an applicant on the basis of his or her immigration status could potentially give rise to a direct racial discrimination claim. It may also be relatively easy for a job applicant to show that they have been subject to indirect discrimination which would mean that the employer would have to be able to establish objective justification for their recruitment process to a tribunal. Arguments in respect of the cost of supporting a visa application will usually not be sufficient to justify rejecting applicants on the basis that they did not have the right permits.

One option is to only start to investigate a candidate’s eligibility to work in the UK at the later stages of the recruitment process, including making any offer conditional on obtaining the correct permissions. This could assist in making sure that appointments are seen to be merit based and not influenced by other factors. However, this could also have the unintended consequence of putting applicants who require a visa at a disadvantage, given the length of time that it takes to process such applications.  However, if the issue is raised too early in the recruitment process, then employers risk potential challenges from unsuccessful applicants on the basis of race discrimination.

To negotiate this grey area, it would be wise to bear in mind the following:

• It is acceptable to make clear on an application form that applicants must have a right to work and must be able to give evidence of this before they start working;
• However any specific questions requiring details of immigration status should be put to ALL applicants, regardless of their nationality;
• The questions should be limited to ascertain immigration status only, not nationality;
• Employers should be able to demonstrate that the information will only be used in a way that does not disadvantage the applicant, eg by ascertaining what immigration related support they would need from the employer to accept and carry out the role, if they are considered suitable on merit.

For advice on Immigration issues, please contact Helena Ross by telephone +44 (0)20 7242 0631 or email : h.ross@grm.co.uk.

FORWARD PLANNING

January 2010

FORWARD PLANNING is a way of life in the business community.  Can you imagine the chaos in a business world which had no budgets, no targets, no insurance and no disaster contingency plans?  So why are so many of us in our private lives content to drift into partnerships, just hoping for the best?

At GRM our Family Team sees at first hand the debilitating and sometimes financially catastrophic consequences attendant upon the breakdown of a relationship, whether a marriage or a long term partnership.

Yet there are ways in which we can protect ourselves to a degree against these uncertainties.  The Court of Appeal decision in the case of Radmacher and Granatino (2 July 2009) suggests that, whilst not yet bound by statute to uphold Pre-marital agreements, the Courts are now highly likely so to do.  In this case the Court of Appeal upheld a Pre-Marital Agreement notwithstanding that the husband had not taken independent legal advice.  Nor had the Wife given full disclosure of her financial circumstances.  Importantly the birth of two children subsequent to the execution of the Agreement was held not to invalidate it.  In the circumstances of this particular case  the Court upheld the Agreement largely because (1) the husband was given the opportunity to take legal advice and did not do so (2) because he was in general terms aware of the wife’s financial position and (3) it was always expected that the couple would start a family.

Nevertheless it remains important that anyone entering into a  Pre-Marital Agreement should give full financial disclosure and that each party should have independent legal advices.  A less sophisticated spouse than Mr. Granatino would probably be held by the Court to need such protection.  In any event the Law Commission currently considering a platform of reform including the validity of Pre-Marital Agreements is thought likely to recommend that such safeguards should be obligatory.

Anyone seeking a greater degree of control over their personal circumstances should contact Lesley Pendlebury Cox, of GRM’s Family Team : l.pendleburycox@grm.co.uk

UK RETIREMENT AGE OF 65 IS NOT UNLAWFUL

March 2009

The European Court of Justice has decided that the UK default retirement age of 65 is not fundamentally unlawful, provided that it can be justified as having a legitimate aim linked to social and employment policy. It will now be for the British Courts to decide whether the aims of the UK Government were "legitimate" in this context and whether therefore the default retirement age of 65 can be justified.

Although employees do have the right formally to request to carry on working beyond 65, there is no right to continue working and an employer does not have to give a reason for refusing a request.

Whether or not the preservation of the retirement age of 65 remains justified in the present economic climate will be a real issue and even though it was always the Government's intention to review the default retirement age of 65 in 2011, it will now be for the Courts to decide whether the preservation of a threshold at age 65 can be justified.

If you have concerns about this announcement, please contact Jane Laidler : j.laidler@grm.co.uk

NEW ACAS CODE ON DISCIPLINE AND GRIEVANCE

November 2008

The long awaited new ACAS Code of Practice on discipline and grievance has been approved by BERR and, subject to final approval by Parliament, will come into force on 6th April 2009. Under the new Code, an employer's failure to follow prescribed procedures will not result in an  automatic finding of unfair dismissal, although Tribunals will still be able to adjust any award (by up to 25%) for unreasonable failure (by either the employer or the employee) to comply with any of the Code's provisions. Employers and employees are required to act consistently and deal with issues promptly and without unreasonable delay. Otherwise, in a lot of respects the procedural requirements remain similar to those operated under the current statutory procedures, although the Code will not apply to redundancy dismissals or the expiry (and non-renewal) of fixed term contracts. The current statutory procedures will be abolished when the new Code comes into force, but they will continue to apply in the meantime.

If you have concerns about this announcement, please contact Jane Laidler : j.laidler@grm.co.uk

WHEN IS A PROMISE NOT A PROMISE?

19th September 2008

When it relates to land as the recent House of Lords decision in Cobbe v Yeoman’s Way Management Limited [2008] has shown. 

One person went back on their word after promising to sell land to the other.  The other sued and the House of Lords found that notwithstanding the reprehensible conduct of the first party, the other did not have valid grounds to make a claim.  This is because any contract for the sale of land has to be in writing and have all its terms contained in one document. 

The equitable claims of “promissory estoppel” and “constructive trusts” should have strict rules and not be used simply at the discretion of the Judge.  In this case the complaining party had a genuine expectation that the land would be sold to him but the law would have allowed him to withdraw because there was no written contract.  He therefore could not rely upon a non existent contract.

The lesson is, do not spend money on a property that you hope to buy until you have contracted to buy it.

Please contact Neil Spurrier with any enquiries to property matters : n.spurrier@grm.co.uk

2008 EMPLOYMENT LAW RATES AND LIMITS

27th February 2008

With effect from 6th April 2008 SSP will increase from £72.55 to £75.40 and the prescribed rates of statutory maternity pay, statutory paternity pay and statutory adoption pay will increase from £112.75 to £117.18.

With effect from 1st February 2008, the limit on awards by an Employment Tribunal were increased to £63,000 for compensation for unfair dismissal and the limit on a week's pay for certain statutory purposes increased to £330. This means that the maximum basic award in an unfair dismissal claim and the maximum redundancy payment is now £9,500.

The jurisdiction of Tribunals for breach of contract cases remains at £25,000.

The new limits apply where the relevant date (in most cases the effective date of termination of employment) falls on or after 1st February 2008.

There is no limit on compensation in successful claims for discrimination on the grounds of sex, race, disability, sexual orientation, religion or belief or age, or where the employee is dismissed unfairly or selected for redundancy for reasons connected with health and safety matters or public interest disclosure.

If you have concerns about this announcement, please contact Jane Laidler : j.laidler@grm.co.uk

A NEW WAY TO OBTAIN SHAREHOLDER DESCISIONS QUICKLY

26th February 2008

Have you often wondered how you can get your shareholders involved in voting on resolutions without attending a formal meeting but where their number is too great to facilitate signature of the resolutions ‘round the table’ by all of them  (a procedure still available) and getting them back within your set timetable? A useful provision is included amongst the 1,100 sections of the Companies Act 2006.

You can now send out what, in effect, is a round robin to all the shareholders, requiring an approval signature to the resolution and its return within 28. If  the requisite majority is obtained in this period the company can proceed to implement it without waiting for the remaining signatures to be returned otherwise the resolution lapses. If you want shareholder decisions in in a shorter time then a formal EGM on 14 clear days’ notice should be adopted.

We would like to build up some statistical information from clients and others about the take up of this procedure  - please contact Adrian Mezzetti : a.mezzetti@grm.co.uk

INHERITANCE TAX : The unused Nil-rate band is now to be transferable to a surviving spouse/ civil partner.

31st October 2007

This change will affect all survivors of a marriage or of a civil partnership who die on or after 9 October 2007, regardless of the date on which the first spouse or partner died.

As from 9th October 2007, if a surviving spouse dies and his (or her) spouse had not used all of his (or her) Nil Rate Band then the proportion of the unused Nil Rate Band, multiplied by the amount Nil Rate Band in being at the date of the second death, will be be added to the Nil Rate Band of the spouse to die last.

For example,

a) Spouse A dies in 2007 not having used any of his Nil Rate Band (£300,000) and Spouse B dies in 2010 (Nil Rate Band £350,000), the total exemption on the second death will be £700,000

and

b) Spouse A dies in 2007 having used £60,000 of his Nil Rate Band (= one fifth of the 2007 Nil Rate Band) and Spouse B dies in 2010. The 2010 Nil Rate Band on her death will be £350,000 and the total exemption applicable will be:-

Spouse B’s Nil Rate Band £350,000

Plus

Four Fifths of the Nil Rate Band at the date of her death £300,000

Total £650,000

The same rules apply to Civil Partners.

This change to the Inheritance Tax rules was announced on October 8th and the Revenue has issued a statement confirming that these new rules will be applied as from October 9th. The legislation governing this change will not, however, be passed until circa June/July 2008. Whilst it is possible that this legislation may never be passed it would be unconscienable and politically unsafe for the government not to do so. This nevertheless remains an, albeit remote, possibility.

We consider that it will be best practice for those who already have Nil Rate Band Discretionary Settlements in their Wills, to leave their Wills unamended until legislation has been passed on the basis that, in most cases, it is easy to disarm them so that the new rules may apply. Nil Rate Band Discretionary Settlements may, in any event, still be desirable in certain circumstances.

If you have concerns about this announcement, please contact Michael Parnell-King : m.parnell-king@grm.co.uk

Increase to minimum annual leave entitlement from 1 October 2007

18th September 2007

A worker’s minimum paid annual leave entitlement is currently 4 weeks in each year (normally pro-rated for part-time workers) and an employer may include the public and bank holidays in this leave entitlement. However, following consultation, the Department for Business, Enterprise & Regulatory Reform (DBERR formerly DTI) has announced that from 1 October 2007, a worker will be entitled to 4.8 weeks (i.e. 24 days if they work a 5 day week) and to 5.6 weeks (28 days) from 1 April 2009.

Many businesses already offer their workers at least 20 days per annum plus the usual 8 UK bank holidays .However, according to the DBERR, there are up to 6 million workers who are currently only entitled to the 20 days holiday including the bank holidays who will therefore benefit from these changes. It will also bring the UK more into line with the other EU member states whose annual public holidays range from 8 to 16.

The DBERR considers that the groups that will benefit most from these changes will include women, part-time workers, low-paid workers and those from ethnic minority communities, but whatever the composition of the workforce, employers will need to review their existing policies and terms and conditions to ensure that existing provisions meet the requirements and that in future workers are engaged on terms which reflect the changes.

Businesses should also be aware that there are sanctions for failing to comply with these Regulations; Improvement Notices can be issued and any further failure to comply can result in fines and even imprisonment. Employment Tribunals also have the power to order compensation payments.

For further information please contact Jane Laidler: j.laidler@grm.co.uk

LASTING BUT NOT ENDURING - New Powers of Attorney under the Mental Capacity Act 2005

18th September 2007

It will no longer be possible to create Enduring Powers of Attorney (“EPA’s”) as from 1 October 2007. They will be replaced by Lasting Powers of Attorney (“LPA’s’”)

Although LPA’s are similar to EPA’s in some respects, they do differ in many ways.

The purpose of an EPA is to enable an attorney to look after the donor’s financial affairs. An LPA additionally grants an attorney the power to make decisions concerning the donor’s welfare and health. These powers are, however, tempered by the Mental Capacity Act 2005 which places a duty on an attorney to act in the donor's best interests. The Act contains a checklist of the factors that an attorney must take into account when deciding what is in the donor's best interests. A donor may enter restrictions, conditions and guidance notes for his attorney(s) in the LPA document.

An unregistered EPA may be used prior to the onset of mental incapacity. Registration is only necessary if the donor becomes mentally incapable. Indeed, EPA's are used to care for the financial affairs persons of all ages and for diverse reasons i.e. long absence abroad. An LPA will not, however, be valid until it has been registered. The registration procedure will be sufficiently expensive to deserve careful consideration and it will, in most cases, be advisable to delay registration until it proves necessary for an attorney to use the powers that he has been granted. For this reason, it is possible that we may see a increase in the use of general powers of attorney, especially by younger donors.

An LPA requires the inclusion of the names of persons to be notified on application for registration of the LPA.

An LPA requires a suitably qualified person to certify that the donor has not been induced to create the LPA by fraud or undue influence and that there is no other cause for preventing the creation of the LPA. The list of those persons who may certify an LPA is similar to the list of those persons who may certify photographs for passport applications. The person certifying will be obliged to interview the donor. Many of those who may certify may, in practice, refuse to do so because of the professional indemnity issues involved.

Even it will be possible to grant attorneys wider authority, it nevertheless appears that LPA’s will be less flexible and more costly than EPAs.

Any EPA made prior to October 2007 will remain valid. It will not be possible to create new EPA’s after that date. Anyone who may need attorneys to act on their behalf in the near future, should seriously consider completing an EPA before 1 October 2007.

Please contact Michael Parnell-King, head of the Private Client team, if you require any additional information or if you are in need of assistance : m.parnell-king@grm.co.uk

Employment Simplification Bill

6th September 2007

Gordon Brown's draft legislative programme for the coming year includes an Employment Simplification Bill, the stated purpose of which is to "simplify, clarify and build a stronger enforcement regime for key aspects of employment law".

The main elements of the Bill are likely to be:

the repeal of the statutory dispute resolution procedures and implementation of a package of replacement measures to encourage informal resolution of disputes and further changes to the Employment Tribunal system;

The Government envisages that the main benefits of the Bill will be cost, time and administrative savings for business and greater clarity for employers, trade unions, employees and public sector bodies.

The proposals have received support from the Chartered Institute of Personnel and Development whose own research has revealed that some 29% of employers believe disputes are less likely to be resolved informally after the introduction of statutory dispute resolution procedures in October 2004. The CBI and the TUC were also united in agreeing that the statutory procedures were not effective.

Consultation on the proposals is now at an end and the Bill is expected in the Autumn.

For further information please contact Jane Laidler: j.laidler@grm.co.uk