Wage slip-ups: employers beware

When I look back at my time as a Saturday girl at Reiss during University, I remember with fondness the substantial discount I got from their latest ranges. In return, I had to wear their clothes to work, but that was no hardship; I was now the best dressed student on campus.

It was the same for most of my friends who spent their weekends and Thursday nights working in retail – half price clothes so long as you wore them to work. And as we would collect our monthly wage slip showing a measly sum, we would give no thought about the accuracy of how that figure was reached.

"But it turns out that some of us should have paid a bit more attention to that slip." 

HM Revenue and Customs (HMRC) have recently published a report listing 115 companies in the UK who have been caught unintentionally failing to pay the national minimum wage (NMW) to their staff. 

Top of that list was the fashion retailer, Monsoon. Their policy of offering staff discounted clothes to wear for work meant that the cost was taken from their wages, taking employees below the legal threshold. From 1 October 2015 the NMW rose to £6.70 an hour for workers aged 21 and over; because wages to Monsoon staff dipped below this, the company now owes £104,508 to 1,438 workers.

"While this appears to be a genuine mistake, it is incidents like these that will not only leave the employer with a whooping bill to pay but can also cause some serious reputational damage." 

No-one wants to work for a company that doesn’t pay their staff properly, and people may not want to shop at a store that appears to be exploiting their lowly paid employees, regardless of whether it was intentional or not.

And it isn’t just fashion retailers that need to be aware. Unintentional deductions were found from other expenditure associated to the job, such as safety equipment and tools, and for meals or transport provided by the employer. As such, hair dressers, car repair shops and even a riding centre for disabled people were caught up in HMRC’s latest swoop.

To avoid mistakes like this in the future, employers should carry out a review of their staff uniform policies and benefit packages to make sure that staff are paid at least the minimum wage after these deductions. Employees also need to be aware of the new NMW for over 25s - the so-called “national living wage” - due to be implemented in April, which will see the lowest wages rise to £7.20 an hour.

It’s also advisable for employees to look at their wage slip each month and give real consideration to the breakdown of monies going into their account. 

"The Trades Union Congress estimates that at least 250,000 workers are being underpaid but that only a quarter of offenders are being caught." 

What may appear to be a perk of the job might actually be a breach of the law and employees on the lowest wages need to make sure this is not happening to them.

Posted by Elizabeth Maxwell, trainee in the employment practice group.

Elizabeth graduated from Royal Holloway, University of London in 2008 with a degree in History and Politics. She went on to study the GDL at BPP London (Waterloo) and the LPC at the University of Law (Bloomsbury), before joining B P Collins in August 2014.

The case for and against an online dispute revolution

The internet, the modern means for doing almost anything, but what about solving disputes?

Online Dispute Resolution (‘ODR’) already exists (in relation to starting a claim only) in some forms e.g. money claim online. However, this year, an advisory group set up by the Civil Justice Council are going to explore the possibility of expanding ODR for disputes under £25,000.

Canada and the Netherlands currently offer systems of ODR and many have been using the popular auction website eBay's ODR system successfully for a number of years, resulting in over 60 million resolved disputes. So, is it time for us to jump on the bandwagon too?

It is easy to see the benefits of ODR, which aims to make the civil justice system more accessible, cost-effective and quick through e-negotiation and e-mediation.

Convenience is a substantial benefit of ODR, as disputes can be resolved from the comfort of one’s home where communication between both sides and mediators can occur at a flexible pace. This gives parties time to think carefully about what they want to say, eliminating the risk of things being said in the heat of the moment.

A further benefit from the extension of ODR will be to the courts that continually struggle with an increasing caseload. ODR will remove minor disputes and free up valuable Court resources.

Despite the benefits, ODR will also have disadvantages. One of the main benefits of mediation is face to face communication, allowing parties to show emotions connected with disputes and gauge each other's reactions. This element of human interaction often helps bring disputes to an end, which may mean that ODR may become harder to resolve.

Opponents of ODR argue that it creates a two tier system for solving disputes: one cheap and cheerful and the other expensive and exclusive. But this may not be a bad thing?

For substantial matters solicitor involvement and traditional court services are vital. However, for smaller disputes, solicitors’ involvement and court fees can often become disproportionate. Some argue that ODR is a technique to edge out lawyers but already many people with smaller disputes represent themselves as litigants in person. The expansion of ODR could implement a simple system to help those in these circumstances, not taking work away from solicitors but improving the system for those who would have never paid solicitors fees anyway.

ODR’s most substantial problem is that it assumes all parties will have internet access. An Office for National Statistics report in 2013 stated that 73% of adults in Great Britain accessed the internet every day, but what about the rest?  How many adults never have any access to the internet?  In addition, access to the internet is very different to having the ability to utilise any online system set up by the Civil Justice Council.   

As use of the internet expands, it seems logical to create efficient mechanisms of dispute resolution through this entity. Certainly for substantial or complex disputes, the traditional systems are required but an alternative ODR system for minor disputes will undoubtedly extend access to justice for parties involved in smaller disputes.

The litigation and dispute resolution practice group at B P Collins LLP is well equipped to deal with a dispute of any size. For further information and advice please contact a member of the team by calling 01753 279039 or emailing disputes@bpcollins.co.uk. 

Posted by Lucy Newman, trainee in the litigation and dispute resolution practice group.

Lucy graduated from the University of Nottingham in 2011 with a degree in Politics and American Studies (International Study). She went on to complete the Graduate Diploma in Law and Legal Practice Course at the University of Law (Bloomsbury).

After working as a paralegal in the Real Estate team for a large city law firm, Lucy joined B P Collins LLP in September 2014.

Obsession with Concession (Agreements)

Legal update seminars aside, airports are probably the most exciting places in the world! And what's the number one thing to do in that exciting place? It's got to be duty free shopping. Nothing is more thrilling than purchasing your seventh pair of overpriced sunglasses for that long-awaited stag weekend in Tallinn. You know you don't need them, but it's duty free! You have to spend to save! Well, millions of other poor souls think just like us, which is why it's big business for retailers. So big, in fact, that a retailer will enter into a particularly onerous agreement with an airport just to have a concession there.

You will often find that when a retailer enters into a concession agreement with an airport, or a huge shopping centre, it pretty much has to agree to their standard terms and the retailer will have very little bargaining power. Although this can be frustrating for the lawyer trying to negotiate on their behalf, there is often very little that can be done, the retailer has to either take it or leave it.

A concession agreement is essentially a licence, rather than a lease, there is no landlord and tenant relationship (and so any statute that is designed to protect a tenant will probably not apply) and the 'concessionaire' has no right on the land. You are simply given the right to trade on someone else's property.

I was recently asked to interpret some clauses in a three-year concession agreement that our client had entered into with an airport. The client is a very well-known clothing brand. Whilst the clauses mainly related to VAT (I can sense you're dangerously close to the edge of your seat!) the agreement as a whole was really interesting.

I was amazed to see how onerous it was. For example, not only was the client obliged to pay an initial fee for entering into the agreement, but the airport also takes approximately 25% from their sales revenue. This percentage remains the same for all three years, but the minimum amount that the airport was guaranteed would increase, from £229,000 in year 1 to £270,000 in year 3.

On top of the prescribed trading week and minimum trading hours; the client was required to keep very detailed sales and footfall data which the airport had the right to inspect on demand. They are  obliged to show the duty free price of its merchandise and compare it to the high street price, clearly stating the amount that customers save; at its own cost and they had to operate the 'Shop and Drop' scheme (where your shopping mysteriously and beautifully appears at your departure gate waiting for you to collect it).

It doesn't stop there, as the client has to implement any of the airport's points-based loyalty schemes, then should the airport ever create a Facebook page, they are contractually obliged to 'like' it moreover if the airport ever create a Twitter account, they had to 'follow' it (the latter two are real, by the way). I could go on, but you get the gist.

Whether you're a Paralegal, Trainee, Solicitor or Partner acting on behalf of a business, it's essential to understand the commercial realities that clients face. Our client knew it had very little bargaining power but it relied on its own calculations and projected sales to decide whether such a restrictive agreement would be cost-effective.

It was only when I was asked to work on this concession agreement that I fully realised how this was one of the less obvious examples of a really interesting legal relationship coupled with sound commercial judgement. From a lawyer's point of view, it also shows how important it is not to lose sight of the client's commercial objectives.

When every part of your legal brain wants to shout "NO! Don't sign, it's a terrible contract" you have to respect that ultimately, it is the client's decision. Our role is to highlight the terms of the contract and ensure the client is fully informed before deciding whether to enter into it.

So the next time you're in the departure lounge coating yourself with perfume testers, it may be worth considering what's happening in the background. There's usually a legal and commercial reason for everything.   

Posted by Rajiv Malhotra, trainee in the property practice.

      

Rajiv graduated with LLB (Hons) from the University of Birmingham in 2007, before completing the Legal Practice Certificate at BPP Law School in London. After acting as a Legal Assistant with a large Watford firm, Rajiv joined B P Collins in April 2012 as a paralegal before beginning his training contract in September 2013.

A day in the life of a corporate and commercial trainee

Having selected the Corporate and Commercial practice group as my final training seat it has been a rewarding experience to begin honing the skills I will now need throughout my career. My days as a trainee in CoCom vary between corporate transactional work designed to test the sharpest mind, to researching caselaw for three of the six partners within the practice group. And before you ask, CoCom is short for Corporate and Commercial in the B P Collins dictionary.

After my regular morning catch up with partner Vicky Holland, my trainee supervisor, I begin my day by checking my emails. From the emails, I identify action points and prioritise tasks in relation to the matters I am assisting with.

 My first task is to review due diligence information provided by our client on a business sale. As an integral part of the transaction, I will present my findings to and discuss my thoughts with both the partner and associate working on the transaction later today. These transactions are particularly document heavy so those three little words that you heard so often at law school, “attention to detail”, play an important role in the due diligence process.

The practice group is always actively searching for new opportunities and tomorrow, in partnership with NatWest Bank, CoCom partners Diane Yarrow and Simon Deans will host an important pharmaceutical and healthcare sector lunch with key companies in the local area. Lunches like these require a lot of planning and research. Both partners will need to be briefed on who they will be meeting, which areas of the sector each business deals with and how we could potentially assist.

Maintaining and cultivating key contacts within corporate circles is one of the most important parts of any commercial law practice and the firm prides itself on adding value to our client’s businesses at every stage of a businesses growth cycle. The industry analysis is a nice break from the lengthy documents I had been reading and the timing (before lunch) is fortuitous.

One of the many perks of training here is that we are given a good amount of responsibility and client contact. The telephone rings regularly with urgent requests from fee earners in the practice group and across the firm. These requests often mean that I get to speak directly with clients and this morning is no exception as a senior associate asks me to make an application to restore a company that has been struck off. The matter is time sensitive so I will need to draft the application and supporting witness statement for approval this afternoon. I will have to send the documents to court today. My colleague informs me that, in relation to distinct parts of the matter, I am the client’s point of contact.

I spend the rest of the afternoon discussing my progress with several fee earners who have assigned me tasks to complete throughout the day, before I begin to draft a tripartite investment agreement and ancillary documents for one of the partners.

As everyone slowly starts to slip out of the office, to complete my day I usually file appropriate forms with Companies House and update some company books. Before I can head off home, I check returned dictations for accuracy and finalise any letters before filing emails and correspondence.

Posted by Araba Amissah-Arthur, trainee in the corporate and commercial practice group

Araba joined the firm as a trainee in September 2011. She graduated from the University of Warwick with a BA (Hons) in Politics and International Studies and completed the Postgraduate Diploma in Law and the Legal Practice Course at BPP Law School in London. She then worked as a consultant in a national Employment Tribunal representation service for three years.