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A recent poll by Direct Line suggested that 24% of UK residents would contest a loved-one’s will, if they were unhappy with the division of assets. Claimants made over 8,100 applications to halt probate in 2017. That figure increased by 6% last year.

The idea of freedom of testation has deep roots in English law. In the 1990 case of Re Coventry, Mr Justice Oliver famously restated the position, saying “an Englishman still remains at liberty at his death to dispose of his own property in whatever way he pleases”.

In more modern parlance, the European Convention of Human Rights, at Protocol 1, Article 1, asserts that “Every natural or legal person is entitled to the peaceful enjoyment of his possessions”. A corollary of this fundamental right is the ability to dispose of those possessions as you wish.

When disputes about wills do arise, the deceased cannot clarify their intentions, for understandable reasons. Consequently, the legal grounds for challenging wills are narrow. They include a lack of testamentary capacity, lack of valid execution, undue influence, lack of approval and fraud.

Rectification and construction claims can be made where a clerical error or a failure to understand the wishes of the testator is alleged. The Inheritance (Provision for Family and Dependants) Act, 1975 also enables a spouse, former spouse, civil partner, child or dependent of the deceased to challenge a will, if they believe they have not received reasonable provision.

Clients often say that money has little to do with their desire to challenge a will. They say it is a matter of principle. The death of a loved one is a fraught time. If someone feels slighted by the provisions of a will, they often feel emotionally driven to see it altered.

Unresolved relationship issues between the claimant and the deceased can play a role. Long-festering disputes between siblings can come to a head during the execution of a will. At root, the dispute is often fundamentally emotional, rather than legal or financial. Yet the crude machinery of the law is brought into play.

There is little to disincentivise the initial challenge of a will, since the cost of issuing a caveat is only £20. If a negotiated settlement cannot be reached after a caveat is issued, the only option is to issue a claim in the Chancery Division. At this point claimants become more cautious. Not least because the court fees to bring such claims are 5% of the claim amount for claims between £10,000 and £200,000. For claims over £200,000, the court fee is £10,000. That is before legal fees are even considered. Legal costs may be awarded against an unsuccessful claimant. Clearly, an emotive “point of principle” could prove very costly for a claimant – and for the estate of the deceased.

A few pertinent questions by lawyers when drafting wills could help avoid many such disputes. Parents often name all their children as executors in their will, even knowing that they do not get along. The key question is perhaps, “Will they get along well, even they are upset and grieving?”

Lawyers should always check with clients whether the individuals they are naming as executors get on with each other, whether they are relatives or not. This is vital since decisions by executors must be unanimous.

It is also important to know whether proposed executors get on with a client’s family members and beneficiaries. If not, this can cause significant loss and delays in the administration of the estate when disputes emerge. These may occur if, for example, personal effects are being distributed at the discretion of executors, and they give little or nothing to a person they dislike. Even if an executor acts impartially, the mere perception of bias increases the likelihood of a dispute.

Lawyers should carry out some due diligence on the proposed executors. A few probing questions may help reveal whether they are appropriate and of good character. It is surprising how often lawyers do not consider this point, even though improper actions by an executor can expose an estate to litigation.

To help clients avoid disputes over their estate, non-contest clauses in wills are a useful tactic. These state that a beneficiary will forfeit their interest in the estate if they challenge the will. They are not bulletproof, but they help dissuade challenges. Trusts can also be used to ease the variation of a will. Such clauses are particularly advisable where a testator believes a family member or cohabitee is likely to challenge a will.

As lawyers, we have an ethical duty to act in our client’s best interests. This obliges us to help protect client’s estates from later challenge. This protects client’s assets and prevents them from leaving a bitter legacy of litigation and family discord behind them.

Published in Lawyer Monthly – 8.4.19

The post 24% would contest a will: the avoidable & costly route to resolution appeared first on ExcelloLaw.co.uk.

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Last year, the legal media devoted considerable coverage to Kirkland & Ellis as it overtook Latham & Watkins to become the world’s highest billing law firm with gross revenues of $3.165 billion – a 19 percent increase in its top line over the previous year. Meanwhile Kirkland also saw its profits per equity partner rise by nearly 15 percent to $4.7 million. The American Lawyer commented: “The Chicago-based legal giant has been on a nearly unparalleled trajectory over the past five years.”

Sometimes, the enormous competitive pressure to grow revenues year after year can have unfortunate consequences. A former partner at Kirkland recently admitted to overcharging clients during his professional career, blaming increased pressure to hit or exceed billings targets in order to hold on to his star lawyer status.

Whilst such examples have been rare in the press, the risks are well known to lawyers given the relentless drive for more billable hours at high rates: they help to develop a culture where, at best, there is of a lack of transparency over client fees, and at worst, they potentially encourage dishonesty by causing fee earners to feel unduly pressured. In their push to reach or retain partnership status, this leads them to stray far from the professional ethic of always acting in the best interests of each client.

Nearly a decade ago, the then chief executive of the Solicitors Regulation Authority (SRA) found that clients were too often left ignorant of the progress in their case and the costs that were being run up before being hit with a very large bill at the end of the matter.

Since then, the culture within the legal sector has become ever more competitive making the problem even more acute. The law firm model of incentivising lawyers to bill high in order to reach partnership is flawed. Invariably, it leads to some ambitious lawyers taking short-cuts, such as overcharging, to the detriment of their client. Although the holy grail of partnership is supposedly achieved on merit based on several criteria, the level of billings frequently forms a critical part in the decision-making process.

Law firms need to take stock before the principle of putting the client first is sacrificed on the altar of revenue. It is imperative that clients know that when they engage a lawyer (not a fee earner!) that they can trust the integrity of the bill they will receive.

To achieve this, firms need to invest their efforts in creating systems and structures that encourage greater transparency and ownership between lawyer and client. This will give lawyers greater control over the client relationship and billing, moving the legal profession forward to new ways of working.

By doing so, firms can foster an environment where lawyers work openly with their clients and have an honest conversation about fees at the outset, and in particular value, without the dreaded pressure from above about rates, fees and client fit.

Published in The Times – 17 and 21.3.19

The post Partner pressure and promotion promises can foster dishonesty to meet billings targets appeared first on ExcelloLaw.co.uk.

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Structural economic change can be painful. The demise of Britain’s industrial base in the 1980s saw the domestic coal industry unable to compete with cheaper international rivals because it was uneconomic. The National Coal Board closure programme started with a hit list of 100 pits. The end result was that all the mines eventually closed leading to hundreds of thousands of workers losing their jobs. For the current generation, the impact of technology in the shape of online shopping is arguably having a comparable impact on Britain’s high streets.

When so many goods are cheaper online than in store, some retailers are finding that they too are becoming uneconomic and uncompetitive. Stores are closing at a record rate.  According to the Centre for Retail Research, nearly 150,000 jobs were lost last year as almost 20,000 retailers and restaurants were forced to shut up shop. The trend continues unabated this year. The latest annual report from real estate adviser Altus Group anticipates that 175,000 jobs will be lost from Britain’s high street by the end of 2019 as shopping online grows inexorably.

With faltering sales, Tesco announced as many as 9,000 job cuts in January. The combination of aggressive online competition and high fixed costs has created a perfect storm as supermarket executives struggle to embrace the internet challenge.

One of the most prominent recent announcements has come from Marks & Spencer (M&S), once the blue riband of Britain’s high streets. To survive and thrive, M&S has devised its own hit list. More than 100 stores will now close by 2022 as part of a five-year plan, described by the retailer as “vital” for its future.

To date, 21 stores from the list have closed. Under the revised plan, M&S states that it wants a third of its sales to migrate online, accompanied by fewer of the big clothing and homeware stores which will be preserved in better, i.e. more affluent, locations. In addition to the cuts already made public, the updated plan requires a further 17 stores to be closed accelerating a reorganisation in which 30 store closures have already been announced, putting 1,045 jobs in jeopardy.

Retail discounters mount a serious challenge

The factors behind the M&S recovery plan are complex. Beyond the online threat, the pincer movement of Aldi and Lidl has seen the retail discounters mounting a serious challenge for consumer spending. Both are in continued expansion mode. To increase their market share, they too have announced plans – for expansion – opening hundreds more stores, upgrading existing ones, and rolling out multiple new product lines.

So can M&S thrive once again and will its current strategy guarantee long term survival?

Through a series of initiatives, the past twenty years have seen M&S make repeated attempts try to regain the retail dominance and recover the deft touch that it enjoyed in the previous twenty. The retailer’s latest attempt to get their stores back on track follows a sharp decline in annual profits from £1 billion to £580 million. The thinking behind its new strategy is existential: a clear intent to make M&S as relevant for today’s shoppers as it was for the previous generation. In practice, that means reacting to the myriad changes in consumer spending habits, as evidenced by the wider trend of large high street stores unable to compete through an unwieldy – and costly – bricks and mortar model.

Ironically, M&S intends to pull out of some of Britain’s most challenged towns, including places which were once heavily dependent on coal mines as major local employers. Their imminent departure from local high streets in these parts of forgotten Britain may lead to more of their high streets becoming ghost towns. An inevitable question arises: if M&S cannot survive in such places, how will anyone else?

Of course, M&S is not alone in its elusive quest for high street survival. Last year, House of Fraser, Evans Cycles, Maplin and Poundworld were among those multiple retailers which closed many hundreds of stores between them.

A white knight may have arrived in the form of Mike Ashley who has already ridden to the rescue more than once. Most recently, he put in a bid for the ever-troubled music chain, HMV. As a man who already owns Sports Direct, House of Fraser and Evans Cycles, it is not impossible that at the rate he is going, Britain’s diminished local high streets may soon become populated solely by Ashley owned stores.

More seriously, Marks & Spencer is right to be taking a proactive approach to the challenges facing it. Although not genuinely innovative, rationalising its retail network is nevertheless pragmatic. In adjusting to a changing economic environment when old methods are clearly no longer appropriate, we will have to wait and see whether the new M&S business model will work for the next generation.

Published in Financial Director – 28.2.19

The post The elusive quest for High Street survival appeared first on ExcelloLaw.co.uk.

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Carillion’s 2016 annual accounts carried the now-ironic tagline: “Making tomorrow a better place”.  By mid-2017, the company was issuing profit warnings. By January 2018 it collapsed completely, leaving debts of £7 billion in its wake. MPs squarely blamed the “recklessness, hubris and greed” of Carillion’s directors for the debacle.

Carillion’s collapse wreaked financial havoc on public services across the UK. Thousands of workers saw their jobs vanish overnight. Yet Carillion’s directors walked away relatively unscathed.

In 2016, Carillion was the UK’s second largest construction company with annual revenue over £5 billion and 43,000 staff globally. Yet the company was clearly not too big to fail. As the media trawled through the wreckage left by Carillion’s collapse, many commentators asked, “Where were the regulators?”

A joint report by two House of Commons select committees found that directors had prioritised executive bonuses and shareholder dividends over pension payments for staff – even as the company veered towards bankruptcy.

The report stated that “The chronic lack of accountability and professionalism now evident in Carillion’s governance were failures years in the making. The board was either negligently ignorant of the rotten culture at Carillion or complicit in it.”

Carillion’s auditors, KMPG, also came in for criticism, with one MP saying he would not trust the firm to audit the contents of his fridge. MPs found that Carillion’s finance director thought that making adequate pension payments for staff was “a waste of money”.

The joint committee recommended a wide-ranging overhaul of the UK’s systems of corporate accountability. The Financial Reporting Council’s Code of Corporate Governance, issued in July 2018, is perhaps a modest first step in the right direction. Yet a year after the Carillion fiasco, the question still being asked is: how can effective corporate accountability be imposed on public services firms?

At the point of its demise, Carillion held live public contracts to build Crossrail, HS2, hospitals, schools, roads and other critical infrastructure. It was also responsible for maintaining railways, 50,000 military houses and half of the country’s prisons. When profit-making companies become crucial to building and maintaining essential public infrastructure, the ordinary public interest in good corporate governance becomes a national interest.

The anniversary of Carillion’s collapse saw plans to exert tighter controls on public service contractors being backed by 65% of 750 directors. These plans would involve the creation of a new Public Service Corporation and enhanced legal obligations for companies to balance their responsibilities to shareholders and other stakeholders, including employees, creditors, pensioners and local communities.

Section 172 of the Companies Act, 2006 already sets out a general director’s duty to promote the success of the Company and in doing so “have regard” to the interests of the company’s employees, the community and the environment, for example, when running a company. Having such notional general duties on the statute books is well and good. However, the crucial thing is how such duties are defined, monitored and enforced.

Meaningful reform?

While paying increased lip service to ideals of corporate responsibility is a positive step, the real question is how meaningful reform will be brought to fruition through specific regulation and law. A key question is how to monitor the impact a company has on local communities.

Whole towns and cities can come to rely for their economic survival on a single large corporation. The government’s £60 million incentive for Nissan to build new lines of cars in Sunderland springs to mind. Yet companies providing key public services clearly must have a particular duty to consider the public good.

The way that oversight of public services companies is exercised will be critical to securing successful change. The precise extent of directorial accountability should be specified in practical and comprehensible terms.  What criteria will guide a board of directors facing such broad responsibilities?  What is the balancing exercise when directors’ duties to employees and shareholders, for example, stand in stark opposition? Should community, government, taxpayer or employee representatives have a seat on the boards of companies performing public services?

The suggested solutions have ranged from the reform of directors’ limited liability to breaking up the Big Four accountancy firms, who were roundly criticised for their lenient handling of Carillion’s books. Others suggest that if directors were largely paid in shares – which they could not sell for a number of years – then it would be in their personal financial interest to ensure the long-term viability of companies.

On the other hand, if the UK’s corporate governance regime becomes too draconian, do we risk scaring away foreign investors and the jobs they bring? Would such a move be wise when many investors are already concerned by the uncertainty surrounding the actual political climate of indecision when we exit the EU and how?

Whatever solutions the government eventually alights upon, the way that any new corporate governance regime is defined and implemented will require a great deal of fine-tuning in order to strike the delicate balance between free enterprise and good corporate citizenship. I think the times are moving towards a sensible compromise that will certainly benefit civic attitudes and society overall.

Published in Financial Director – 8.2.19

The post After Carillion – where now for corporate accountability? appeared first on ExcelloLaw.co.uk.

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The challenge Morrisons is facing over equal pay at the employment tribunal comes mostly from women who argue their pay is unfair because it is less than their male counterparts employed in distribution centres. Male workers there are paid £1 to £4 an hour more than their female colleagues who work in supermarkets, they claim.

In what could be a landmark legal ruling affecting thousands of British businesses, a test claim has been brought by eight Morrisons shop floor workers who argue that the practice is discriminatory because the work is of the same value. A Morrisons spokesperson stated: “We believe we pay our colleagues fairly and equally for the job that they do, irrespective of their gender, and we will be defending this claim.”

The claim against Morrisons follows similar actions against Asda, Sainsbury’s and Tesco, all of which are already subject to the employment tribunal process and face similar claims of pay discrepancies between male-staffed distribution centres and female-staffed stores.

If it succeeds, the compensation paid could then apply to another 80,000 Morrisons employees. Collectively, that would add in excess of £1 billion to the supermarket’s salary bill since the claim would apply retrospectively over several years. Meanwhile, the claim against Tesco could result in its staff receiving up to £4 billion in back pay, making it the largest equal pay challenge in British legal history.

What is the legal framework in relation to such claims, and what should employers do to avoid being subject to such claims in future, and to prevent the widening of any gender pay gap already in place?

The eight claimants seeking damages against Morrisons do so on the basis that while the different jobs are of equal value, under the test set out in section 65 of the Equality Act 2010 – which refers to equal “in terms of the demands made” on the role – the Morrisons shop workers have been underpaid for the same value of work as that which is undertaken by the predominantly male workers in distribution centres.

In short, although the work done in stores and distribution centres is not the same, it is argued to be work of equal value, so those working on the shop floor should therefore be paid the same as those in distribution centres.

According to Morrisons’ gender pay gap reporting data for 2017, the average hourly pay rate for female staff was 14.3 per cent lower than for male staff. However, this figure rose to 47.8 per cent when based exclusively on the bonuses that were paid. The argument put forward by Morrisons is that an improvement in their gender pay gap figures would be best achieved by increasing the number of women employed in senior positions rather than by rebalancing existing pay in lower-paid positions.

For companies which are anxious to avoid finding themselves in this position, perhaps the best practical step is to undertake a job evaluation study of every job role within their business.

While the cost involved might be prohibitive for many smaller businesses, if the gender pay gap is to be properly addressed by every employer, action is needed. For every business that wants not only to create a level playing field in employment, but also to protect themselves as much as they can from such claims, it can be argued that evaluation studies should become mandatory in future.

Published in People Management – 19.12.18

The post Equal pay test claim in the retail sector could affect many businesses appeared first on ExcelloLaw.co.uk.

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In a dramatic wake-up call for the legal profession to examine its culture and working practices, the preliminary findings of a recent International Bar Association (IBA) survey, revealed in October 2018, found that bullying and sexual harassment are rife.

According to more than 5,000 lawyers in 120 jurisdictions, one-third of male lawyers and half of female lawyers have been bullied at work, while 25% of all lawyers, predominantly female, have been sexually harassed, and 36% of them have experienced this in the last year.

Such misbehaviour needs to be addressed urgently, rather than being swept under the carpet, particularly in the wake of the magnificent #MeToo movement, which has given victims, previously silent or fearful of raising a complaint, the courage to speak out.

Despite what has already been achieved, alternative methods of resolving these issues are still prevalent, conveniently avoiding any confrontation or potential damage to the miscreant’s career.

Of course, the problem extends well beyond law firms; bullying and sexual harassment are ubiquitous in society at large. Turning the tables: Ending sexual harassment at work, published by the Equality and Human Rights Commission (EHRC) in March 2018, found that three-quarters of respondents had experienced some form of sexual harassment in the workplace.

It is in every employer’s best interests to undertake appropriate proactive steps to tackle these issues forcefully. Under the Equality Act 2010, vicarious liability provisions mean that an employer can be liable for anything done by an employee during the course of their employment, even if the employer had no knowledge of it. The result of a successful claim for liability can lead to an award of potentially unlimited compensation.

I would urge organisations to deal with sexual harassment and bullying head on. Failure to act not only creates a toxic environment with the risk of provoking a costly claim, but is certain to affect the profitability and success of the business.

Published in Employee Benefits  – 17.12.18

The post Harrassment & bullying – employers are letting themselves down appeared first on ExcelloLaw.co.uk.

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In April 2017, the government abandoned its controversial plan to hike probate fees. The Ministry of Justice (MoJ) had been projected to raise an additional £300m a year to fund the courts and tribunals service (HMCTS). A new sliding scale schedule was planned with fees starting at £300, while for estates worth more than £2m the fee was set to be £20,000. However, widespread opposition caused the plan to be shelved.

But probate fee plans are back – with revisions: less than last year’s plan, but still a huge increase nonetheless. A sliding scale based on the value of the estate will replace the current flat rates: £215 for individuals making an application in person to the probate registry and £155 when applying through a solicitor.

Estates valued at £5000 or more currently have to pay the cost of an application for a grant of representation. The new proposals increase the no fee threshold from £5,000 to £50,000, relieving the smallest estates. Under these proposals, the existing fee scale will be replaced by another new sliding scale which rises in line with the estate’s value, ranging from £250 up to a maximum of £6,000, rather than the £20,000 originally planned.

So will it work? In reality, the revised plan may do more harm than good.

The proposed system will band fees according to the estate value from April 2019: estates over £2m will pay £6,000; between £1.6m and £2m the fee will be £5,000; and between £1m and £1.6m, £4,000. For estates between £500,000 and £1m, the figure will rise to £2,500, while those in the £50,000 to £300,000 bracket will pay £250. Estates of less than £50,000 will pay nothing.

These amendments may cause real difficulty for estates valued between £500,000 and £1m. In most estates, residential property is the principal asset and in some parts of the UK, house prices in excess of £500,000 are commonplace. With few or no liquid assets in the estate, £2,500 is a sizeable amount to find in addition to funeral expenses, and sometimes, Inheritance Tax (IHT) as well.

When the probate registry issues a grant of representation to an estate, whether it is £50,000 or £500,000, the probate process is very similar. The fee increases are, arguably, an indirect tax raid on high-value homes.

The new figures may be different, but the proposed charges still bear no relation to probate cost: they remain a form of taxation, with charities among those affected since the estate value to which they are entitled will be reduced. Charitable exemption applies for IHT, but not for probate fees. The Institute of Legacy Management (ILM) suggests that the proposals could cause the charity sector to lose more than £10m per year in legacy income, and is lobbying for a rebate or fee exemption for charitable estates.

Iniially, it might seem that most beneficiaries of higher value estates have less to worry about from the revised fee schedule. The Justice Minister Lucy Frazer rejected suggestions that higher fees would make the probate process unaffordable for some executors, such as the deceased’s children, who are frequently the direct beneficiaries of an estate.

What remains unclear is how executors will pay the new fees and, because assets are frozen until the executors receive the Grant of Probate, how money will then be recovered from the estate. They already have to borrow quite often to pay IHT in advance; now they will have to borrow more to pay for the additional cost of a Grant of Probate.

Since beneficiaries of the estate are not always the ones appointed as Executors, there is also concern for non-beneficiary executors who face multiple issues as a result of the proposed fee increases. Little sympathy may exist for professional executors who find themselves facing an increased cost outlay prior to recovery, but this is likely to have a knock-on effect: professional executors will raise their fees to recover interest on their increased borrowings.

In a written statement to Parliament outlining the proposed schedule revision for probate fees, Lucy Frazer MP said: “This new banded fee model represents a fair and more progressive way to pay for probate services compared to the current flat fee. We are also confident these fees will never be unaffordable.” Many will disagree.

It remains to be seen how the government will respond to the 810 organisations that have already disagreed with the proposals, labelling them “excessive”, “discriminatory”, and “unjustified”. In the wake of last year’s proposals, the House of Lords secondary legislation committee said: “Different groups of customers should not be charged different amounts for a service costing the same” adding that the proposed probate fees could arguably amount to a “misuse of the fee-levying power”. So what has changed this time?

Published in Professional Advisor – 20/11/18

The post Probate fee hike proposed yet again – more harm than good? appeared first on ExcelloLaw.co.uk.

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Readers will be aware of the Government’s stated intention to introduce measures intended to make it more “straightforward” for operators to reach agreement with landowners and occupiers of land “in order to improve coverage capability and capacity” (ECC Code of Practice) – the result was the Digital Economy Act 2017 (“DEA”), and more specifically Schedule 1, which sets out the Electronic Communications Code (“ECC”).

During the consultation process leading up to the passing of the DEA in April 2017, many representations were received from both industry and landowning interests, in attempts to influence the drafting of the ECC to each party’s benefit – the result is not necessarily as either side would ideally have liked.

The measures brought in by the ECC are wide-ranging and include, for example, significant changes to the way land is valued, and an automatic right for operators to upgrade and share their telecommunications apparatus.

It is not the intention of this article to examine in detail the statutory process available to operators to apply for and obtain “Code Rights” – suffice to say that such a process exists, and Virgin Media has decided to exercise its right to take advantage of the process.

The ECC is intended to make it simple for operators, landowners and occupiers to come to an agreement over a range of issues relating to the occupation of a site. This assumes responsibility on both parties to act in a manner consistent with the ECC, and the Code of Practice (“COP”) issued under it.

However, the COP does not have the force of law – its purpose is to “set out expectations for the conduct of the parties to any agreement made under the Code. It is not a guide to the Code or the Code regulations, but it is intended to complement them” (COP).

Having said that, it is almost inconceivable that the Courts will ignore the COP in any proceedings, but any award of ECC rights will have to follow the ECC first and foremost, and the parties’ conduct may go some way towards determining whether the basis for a compulsory rights application has been made out e.g. “that the public benefit likely to result from the making of the order outweighs the prejudiced to the relevant person” (paragraph 21(3) of the ECC).

In December 2017, when the ECC came into effect, many negotiations were stalled whilst operators reconsidered their positions, especially with regard to valuation issues. The writer is still involved in one case where, despite repeated requests, the operator has singularly failed to progress the matter notwithstanding that the lease concerned was all agreed, save for one issue regarding a “lift and shift” provision.

Experience therefore would suggest that operators have, at times, been using the ECC in a way that is inconsistent with the COP, and there must be a question for Virgin Media to answer,  as to whether they too have been guilty of an abuse of the ECC’s and COP’s provisions.

The COP states that one of its principal purposes is to establish a voluntary process which avoids  recourse to the courts and ensures “every effort” is made to reach a voluntary agreement.

The COP also says that the parties to any negotiation “should treat each other professionally and with respect” and that  operators “ought to be responsible for the behaviour and conduct of any contractors that they instruct to carry out work on their behalf” – a requirement that has clearly come back to haunt Virgin Media.

One of the allegations made against Virgin is that their contractors have obstructed driveways and caused damage to property. This clearly violates the ECC  in that an operator is instructed to not interfere with any means of access to or from any other land. Virgin have rebuffed this allegation claiming that they have fired the culpable contractors.

It would appear that Virgin Media have suffered at the hands of their (now ex) contractors, but have been unwilling to continue their negotiations with the Council in the face of the Council’s demand for payments which Virgin Media consider unjustified.

There is no guidance available as to what constitutes “every effort”, so we can but speculate as to whether Virgin Media complied with the requirement.

The provisions in the ECC relating to the payment of appropriate consideration are complex, and surveyors and valuers on both sides of the fence are still picking their way through them. There has been a feeling that mast rents (and consequently rents for other necessary infrastructure, such as equipment cabinets) would tumble following the introduction of the ECC, but whilst there has undoubtedly been some downward pressure, it remains to be seen how this will play out in the long run, e.g. at rent reviews.

In dealing with the issue of consideration, paragraph 23(5) the ECC says that the terms of any ECC  agreement “must include the terms the court thinks appropriate for ensuring that the least possible loss and damage is caused by the exercise of the code right to” landowners and occupiers. It is interesting to note that the force of the emphasised words is not lessened by the addition of “reasonable” or some other watering down.

The predominant issue for the Court to consider in this case is whether the Council’s payment demand is indeed holding the fibre rollout to ransom, or is merely a reasonable exercise of its rights as landowner to receive the proper consideration for cable laying.

Paragraph 24 of the ECC sets out that the consideration is to be “an amount or amounts representing the market value of the relevant person’s agreement to confer or be bound by” the particular code right or rights sought. In pre-ECC representations, the Country Landowners’ Association said that “the scale and effect is not likely to be as significant as originally thought as it is now clear that the basis for a site payment will remain that of open market value.”

The valuation is to be on the basis of a “willing seller and willing buyer”, and that the right being valued does not relate to the provision or use of an electronic communications network. The intention appears to be to try to set out the basis for a true “market value”, whilst avoiding any “special purchaser” element in favour of operators. If that is the case, one has to ask why the Council might not be perfectly entitled to demand terms which it considers as being “market value”.

The allegation that the Council are holding the rollout process to ransom is clearly down to Virgin Media’s frustration with the Council, but we have yet to see the Council’s response to the claim, which I suspect will be based on considerations of the operator’s compliance with the COP, and a close examination of the valuation principles enshrined in the ECC.

We can wager with confidence that if the matter is not settled without a full court hearing, the unsuccessful side will look to appeal any decision, and therefore this case should be watched closely for any further developments. It may be the first, but it probably wont be the last, case to be fought on this point!

The post Virgin Media the first to test Electronic Communications Code – ECC appeared first on ExcelloLaw.co.uk.

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There is a hive of mergers happening in the world today. Currently, two prominent mergers are taking place in Europe. One is the Siemens-Alstom merger with combined revenues of €15.3 billion[1]. The other is the ThyssenKrupp-TATA steel merger with combined revenues of €15 billion and expected to produce annual synergies of up to €600 million[2].

In any merger, there are several key points which procurement and supply chain professionals would need to consider. The following equation adheres to the simple logic that Commercial considerations should be determined by Financial, Legal, Operational, Accounting, and Taxation aspects. In short: C = f {FLOAT}.

Commercial Considerations

Two entities coming together could bring value in the arrangements with your suppliers and you could get values and benefits that as a smaller organization could not. Create a plan (or even a GANTT chart) to manage the impact of the merger on your business after looking at the FLOAT factors below.

Financial

All your current procurement and supply chain matters have to be reviewed and looked at. Pricing, quantities, qualities and margins can be relooked based on possibly increased demands and orders being placed. There could be some savings in procurement for the benefit of the business as you could benefit from a higher bulk discount or better hedging for your forward contracts. Get finance in to work on helping you crunch numbers to see your savings.

Legal

Get the legal team in to look at all the existing contracts and arrangements. The risk is early termination due to mergers and there could be a need to get pre-approvals from suppliers to transfer (novate or assign) the contracts to the merged entity or new operating companies.

Operational

This is probably the biggest point. Operationally, there will be significant challenges on your end-to-end processes and procedures. You will have to merge 2 different business practices, 2 different work ethos, 2 different sets of experienced people and coordinating all of them to work together. This is a massive task. You may need to modify internal arrangements, reporting lines, logistics systems and your IT systems. There will be changes you need to manage and you need to manage changes well. The most common problem is due to the 2 different work ethos, the team that works together will conflict in dealing with matters. They need a way to resolve it. Don’t expect overnight changes. It’s a process and will take time.

Accounting

Accounting wise, there could be some changes due to different accounting practices and standards being used. Check with accounts to get your business in line so that your accounting is straight and you do not take an accounting hit.

Taxation

The taxation issues would not be the same anymore. You have certain issues that would remain – like customs duties but some others could change. Work with your tax team to make sure that your arrangements are tax efficient and that you get the full benefit of taxation treaties and laws.

Conclusion

A merger no matter how large or small is a drastic change in a business. Remember that to survive a merger, you need to stay FLOAT.

[1] https://www.dw.com/en/siemens-and-alstom-sign-rail-merger-deal-to-compete-with-china/a-43113411

[2] https://www.ft.com/content/4504f0b4-9dc6-11e7-9a86-4d5a475ba4c5

Abridged version published in Supply Management – 7 September

The post To survive a merger you need to stay FLOAT appeared first on ExcelloLaw.co.uk.

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The summer of 2018 set many records. But as holidaymakers enjoyed the soaring temperatures, some of them were not just relaxing by their hotel pools, they were also reading through office memos and responding to emails from work colleagues.

Thanks to the impact of technology ‘always being on call’ has become the new normal in many workplaces and beyond: continuous remote access inevitably creates pressure for employees to be constantly accessible. As a consequence, the obligation to be available at almost any time for online or mobile conversations has become a real challenge that is potentially hazardous to health.

Alongside the European heat wave, the ‘right to disconnect’ was also making summer headlines – in particular, two cases were heard which decided that once they had left work for the day, or for their holiday, employees have a right to turn off their mobile devices.

The first decision came in July when the French arm of Rentokil Initial was ordered by France’s Supreme Court, the Court de Cassation, to compensate a former employee to the tune of €60,000. This payment was awarded because the company had failed to respect his ‘right to disconnect’ from his computer and phone outside normal office hours. Having been dismissed in 2011, the former employee had initially sought compensation for the extra hours he had worked ‘on call’ by taking Rentokil to a tribunal.

The Court’s ruling on the right to switch off electronic devices out of the office was the first of its kind under the so-called El Khomri law, named after a former French labour minister. This affords the right to disconnect to every employee who uses digital telecoms devices as part of their work, and requires every French organisation with 50 or more workers to implement measures that regulate the use of electronic communication devices to safeguard their employees’ work/life balance.

Following the French decision, the Labour Court in Ireland awarded €7,500 to a female employee who regularly had to reply to work-related emails outside normal office hours. The Court ruled that by sending and receiving emails in this way, she had surpassed her statutory maximum working hours. Her employer had therefore ‘permitted’ her to work excessively in failing both to monitor her pattern of work and to keep proper records of her long working hours.

This was judged to be in breach of Irish law, specifically the Organisation of Working Time Act 1997 (OWT), which requires that employers must not permit an employee to work beyond an average of 48 hours a week. It also mandates employers to keep records which comply with the Act for at least three years after the date that the record was created. OWT derives from the EU Working Time Directive 2003/88/EC in the same way as our own Working Time Regulations.

So how might these two decisions potentially affect the UK legal position?  Unfortunately, it is increasingly common for employers to expect their employees to be continuously available and able to provide professional digital communications at any time. Often this is in return for flexibility in other areas of the working day.  The impact of the new French law following the Rentokil decision means that English law may well follow suit. The only question is when UK legislators eventually decide to emulate their French counterparts.

A right to disconnect is now being proposed as a human right by the EU. This would guarantee employees’ ability to disconnect from work and not to engage in work-related electronic communications outside normal working hours. Beyond France, some European countries including Italy have already adopted elements of the right to disconnect in their domestic legislation with more EU member states set to follow the French example.

No equivalent law to El Khomri law exists in the UK yet: passing fresh legislation to deal with the issue will undoubtedly prove challenging. To avoid adverse unintended consequences, lawmakers will need to ensure that the ‘right to disconnect’ does not oblige employees to work at given times out-of-hours, for example. Nor must such a law be misused as a device by employers to create unnecessary pressure on employees to finish their work by a specific time. Lawmakers will also need to take into account that a legal ‘right to disconnect’ may create a situation in which employers might feel obliged to penalise employees who login to a system when they are supposed to be disconnected from it or the benefits of working flexibly could be erroded.

The new French law requires organisations to negotiate with their employees, or their representatives, and reach an agreement on their rights to switch off and the practical steps to ensure that this happens. A comparable law in the UK, requiring employers to introduce policies that limit out of work messaging, would reduce employee stress and create clear lines between work and home life. Alternatively, some UK firms may opt for self-regulation – as is the case with companies such as VW in Germany. Nevertheless, without legislation, relying exclusively on a voluntary code could produce a patchy response across different sectors.

A substantial body of research shows that, assisted by new technology, the inability to escape from work can have a damaging impact on people’s health. For example, a Bupa survey in 2017 revealed that more than half of workers were kept awake at night because of occupational stress. Likewise, the Australian government has discovered a direct link between increased working hours and poor mental health: levels of anxiety or depression increase proportionately with the number of hours worked.

The positive benefits of a ‘right to disconnect’ are self-evident. The introduction of a UK law which guarantees it would help to improve employees’ mental health, and according to research, improve productivity. At a personal level, it would allow more time for parents to spend with their children and other family members, and for every employee to enjoy a healthier work life balance. The difficulty is that the ability to work remotely often also benefits the employee giving them flexibility.

Irrespective of when the UK might enact legislation that safeguards employees from the excessive demands of work and constantly being on call, every employer should remember that they already have the responsibility to act immediately in order to protect the health and wellbeing of their employees.

Published in HR Director – 4 September 2018

The post Should there be a ‘right to disconnect’ for UK employees? appeared first on ExcelloLaw.co.uk.

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