WH In-House: In Brief Tuesday 20 th February 2018 Wi-Fi: Ward - - PowerPoint PPT Presentation

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WH In-House: In Brief

Tuesday 20th February 2018

Newcastle | Leeds | Manchester

Housekeeping

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Agenda

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Damien Charlton – Brexit Update Gillian Burns – Immigration Law Jamie Gamble – Employment Law Dean Murray – Competition Law Update Nathan Bilton – IT update Alex Wright – Property Update

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Brexit Update

Damien Charlton, Partner

Newcastle | Leeds | Manchester

European Union (withdrawal) Bill - Background » Direct Effect » EU Directives » Supremacy of EU Law » European Communities Act 1972

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Retaining EU Law » Section 1 – Repeal of European Communities Act 1972 » "Exit Day" » Need for "saving provisions" » Section 2 – Saving provision for EU derived domestic legislation » Section 3 – Incorporation of "direct EU legislation" » e.g. EU Regulations » Subsection (4) – English language version » Section 4 – saving provision for Treaty Rights

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Interpreting and Amending EU Law » Section 5 – Supremacy of EU Law » Enactments/rules of law passed or made after exit day » Enactments/rules of law passed or made before exit day » Section 6 – Interpretation of EU Law » Decisions of European Court post exit day » Retained and unamended EU law – role of European Court » Supreme Court not bound » Section 7 – Henry VIII powers? » Why needed » Time limited » Role of Parliament

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Any questions? Damien Charlton Partner | Company and Commercial E: damien.charlton@wardhadaway.com T: 0191 204 4265

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Immigration, HR and Brexit

Gillian Burns, Solicitor

Newcastle | Leeds | Manchester

Introduction » EEA and non EEA citizens » Key HR considerations when employing EEA and non EEA citizens » Focus on current right to work checks » Brexit – where are we now » Implications of Brexit on EEA citizens and the UK labour market » Practical tips

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The right to work: EEA and non EEA Citizens » EU countries (Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the UK) plus Iceland, Liechtenstein and Norway make up the EEA » EEA Citizens PLUS Swiss citizens (as part of the single market) have the right to live and work in the UK without permission » Non EEA Citizens require permission to live and work in the UK

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Key HR considerations when employing EEA and non EEA citizens

Pre-employment During employment On termination Duty to prevent illegal working Right to work checks Identify when immigration permission expire Usual rules apply The recruitment process Right to work follow up checks Termination if permission to work has expired Considering immigration

• ptions

Notification of relevant changes to UKVI Offer Business restructuring / TUPE Employment contract

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Focus on current right to work checks » Right to work checks » Why do them? » civil penalties » the statutory excuse » criminal penalties

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List A and List B » List A – documents which provide a continuous statutory excuse » List B group 1 – documents where a time limited statutory excuse lasts until the expiry date of leave » List B group 2 – documents where a time limited statutory excuse lasts for 6 months

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Brexit: Where are we now (1) » 23.06.2016 Referendum – public votes "leave" » 29.03.2017 - May triggered Article 50 of the Lisbon Treaty » 19.06.2017 – Brexit negotiations officially start in respect of 3 "separation issues" including rights of EU citizens in the UK and UK citizens in the EU » 29.03.2019 – UK is scheduled to leave the EU » "Implementation Period", but for how long?

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Brexit: Where are we now (2) » Withdrawal agreement (subject to change) provides: » For EU citizens who arrive in the UK after 29.03.2019 it is intended that there will be a "registration system" during the implementation period » Details of immigration during the implementation period and beyond are not agreed

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Implications of Brexit on EEA citizens and the UK labour market » Will EEA citizens leave and UK citizens return to the UK? » Will there be a labour shortage or will unemployment increase? » Will Brexit have a greater impact on certain sectors when compared to

• thers?

» How will the right to work checks be affected? What, if any, new documents will be added to List A and List B? » Will the current PBS system (or something similar) be replicated for EEA citizens wanting to work in the UK after the implementation period?

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Practical tips » Don't panic and maintain the status quo » Carry out right to work checks » Reassure EU / EEA / Swiss employees and UK employees based in the EU / EEA / Switzerland » Keep up to date

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Any questions? Gillian Burns Solicitor | Employment E: gillian.burns@wardhadaway.com T: 0191 204 4481

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Employment Law Update

Jamie Gamble, Partner

Newcastle | Leeds | Manchester

Content » Background and "employment test" » Why employment status matters more than ever now » Taylor Review » King v Sash Windows » IR35 changes

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Gig economy / self-employment

» 4.77 million self-employed people in January 2018 (14.8% of all people in work) compared to in 3.8 million in 2008. » Approximately 1.3 million people (4% of all in employment) working in the gig economy » Gig economy will cost Treasury an estimated £3.5bn in 2020/21 » Notable cases: » Uber » Citysprint » Deliveroo » Addison Lee » Highlights the potential consequences of getting it wrong

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Determining employment status

Mutuality of obligation

Provide work Accept work

Control

How to do it When to do it Where to do it What to do

Personal Service

Right of substitution

"Other Factors"

Provision of equipment Degree of integration Financial risk Opportunity to profit 23 23

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Why does it matter

Employee Worker Self employed

Same rights as workers National Minimum Wage Protection for health and safety on clients premises Statutory maternity/paternity/ adoption/shared parental leave Paid annual leave Protected against discrimination in some cases Protection against unfair dismissal Statutory maternity / paternity / adoption pay Statutory redundancy Protection against unlawful discrimination Written statement of employment, itemised pay slip & minimum notice of dismissal Right not to be treated less favourably if they work part- time. Right to request flexible working 24 24

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Why it matters – The Taylor Review » Independent review of modern working practices which made number of recommendations to improve the working conditions of atypical workers. » Suggestions made by the report include: » rename "workers" who are not employees as "dependent contractors" » make the definition of "dependent contractors" clearer, as well as giving additional rights » more emphasis on the control test for workers » treat workers as employed for tax purposes

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Why it matters - The Taylor Review » Government published their response earlier this month: » No concrete proposals on amending the law on employment status at present » Seeking to increase transparency in the employment relationship » Launched 4 consultations: »Employment status »Agency workers »Enforcement of employment rights »Measures to increase transparency in the UK labour market

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Why it matters - The Taylor Review

» Consultation on employment status: » Would changes to employment status law achieve greater clarity? » Should the tests be aligned to those in tax sphere? » Should case law be codified into legislation? » Should tests should be modified in any respect , e.g. place less emphasis on personal service or an alternative model adapted? » Should individuals who are deemed employees for tax purposes enjoy the same rights? » Views on the definition of working time for the purposes of the NMW (specifically aimed at gig economy businesses)

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Why it matters - King v Sash Windows » Mr King worked for Sash Windows as a commission only salesman for 13 years. » He received no salary. » He took between 1 and 4 weeks holiday each year but was not paid for it. » He was offered an employment contract after 9 years service which meant he would be entitled to paid leave but he refused it. » Following termination of his contract when he reached 65 he brought an unpaid holiday pay claim arguing that he had not taken his full annual leave entitlement each year as it would have been unpaid.

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Why it matters - King v Sash Windows » Mr King was found to be a worker » Court of Justice for the European Union: » Workers are entitled to be paid on termination for any periods of annual leave that have accrued during employment, where they have been been discouraged from taking it because it would have been unpaid » Did not matter that Sash Windows had believed Mr King was not a worker » Offer of employment contract was irrelevant » Significant implications for workers who have been misclassified as independent contractors

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Why it matters - Tax » Potential significant tax liabilities for getting status wrong » Does IR35 apply? » If not have they actually paid tax & NIC? » Tax (4-5 years), NIC (6 years) plus interest and penalties » HMRC aggressively targeting employment status » Changes to IR35 for PSCs

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IR35 » Introduced to tackle perceived tax avoidance » Individuals seek to reduce income tax and national insurance contributions by supplying their services through an intermediary » Personal Service Company (PSC) » Anecdotal evidence of widespread non-compliance » UK government estimates only one in ten PSCs are genuinely self-employed » Would they be an employee if there was no intermediary? » Look at reality of situation not the label given

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IR35

» Private sector – the owner of the PSC must make the assessment » Since April 2017 public sector body is responsible for: » deciding if the rules apply; and » calculating, reporting and paying the relevant taxes if they do » Where the engagement is through a third party (employment agencies,

• utsourcing companies and consultancy firm) the third party will be

responsible for deducting tax » Expansion in to the private sector in 2019? » https://www.tax.service.gov.uk/check-employment-status-for-tax/setup

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Any questions? Jamie Gamble Partner | Employment E: jamie.gamble@wardhadaway.com T: 0191 204 4456

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Competition Law Update

Dean Murray, Partner

Newcastle | Leeds | Manchester

General » Rule Against Restrictive Agreements » Article 101 TFE, Chapter I Competition Act 1998 » Cartels/Resale Price Maintenance » "Normal" agreements » Rule Against Abuse of a Dominant Position » Article 102 TFEU, Chapter II Competition Act 1998 » Dominance » Abuse » Why Care? » Fines of up to 10% of Group Worldwide turnover » Imprisonment

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Estate Agents Cartel » Estate agents in Burnham on Sea agree commission rates between Feb 2014 and Feb 2015 » Email exchange leads to meeting to "chat about fees" » Email sent following the meeting stating: "Further to our meeting yesterday, I am as promised emailing everyone to confirm the agreement we reached with regards to minimum fees that we will be charging, which I outline below" » Rotating "policeman" system » Breaks down after a year – attempt to restart "I just cannot see, why on earth, any one of us would think it is a good idea to give ourselves a 25% - 30% pay cut for doing exactly the same job that we were doing last year??? (sic) We all know from recent experience that with a bit of talking and co-operation between us, we all win!!!"

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Estate Agents (Cont) » Fined and average of £73,000

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Ping Golf Clubs » Absolute ban on online sales » Justification – promotion of "custom fitting" » CMA holds the ban was not necessary to achieve this » Could have required promotion of custom fitting online » Could have required provision of custom fit options online » Could have required interactive advice features on websites » Could have required retailer to get customer's confirmation that they understood importance of custom fitting » CMA fines Ping £1.45 million

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Newcastle | Leeds | Manchester

Online Reseller Problems – What Can You Do? » Require a bricks and mortar outlet » Implement a selective distribution policy » Require standards in relation to websites » Require after sales care » Stop trading with a reseller: » Are you dominant? » Be careful not to inadvertently create an anti-competitive agreement » Theoretically can ban online selling if: » If the ban pursues a "legitimate aim" » If the ban achieves that aim » If the ban is the least restrictive option for achieving that aim » If the ban is a proportionate way to achieve the aim » Very high stakes if you impose a ban and get it wrong

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Light Fittings » National Lighting Company imposes minimum resale price on online retailers » No written agreement – image licensing agreement with understanding this would be withdrawn if maximum discount from RRP if » Had previously been warned by CMA » Fined £2.7 million » Fine included a 25% uplift for ignoring previous warning » CMA issues open letter with "tips" for suppliers » Don't engage in resale price maintenance » Minimum advertised prices can be RPM » Don't use threats or incentives to "encourage" resellers not to discount » You cannot hide RPM agreements

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Any questions? Dean Murray Partner | Commercial E: dean.murray@wardhadaway.com T: 0191 204 4201

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The Digital Charter

Nathan Bilton, Associate

Newcastle | Leeds | Manchester

Introduction » Tech environment in 2018 and beyond » What regulation / legislation can we expect? » Digital Charter » Impact upon: » IT services and supplier attitudes » HR » Marketing activities » Data Protection » Liability from online activities

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Background » The Government has long wanted to tackle the risks of technology in the form of terrorism, harm to children and crime. » Conservative Party election manifesto 2017 » Queen Speech 2017 » Government's Internet Safety Strategy – Green Paper – October 2017 » Digital Charter – 25 January 2018

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Background » ". . . regulation that will make the UK the best place to start and grow a digital business – but also the safest place to be online." » Theresa May, World Economic Forum, Davos, 26 January 2018 » "We want to make the UK both the safest place to be online and the best place to start and grow a digital business. We are determined that the UK should lead the world in innovation-friendly regulation that encourages the tech sector and provides stability for businesses." » HM Government Digital Charter

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Digital Charter » Aims to make the internet work for citizens, business and society as a whole. » Sets out ". . . a rolling programme of work to agree norms and rules for the

• nline world and put them into practice".

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Priorities of the Work Programme

» Digital economy – building a thriving ecosystem where technology companies can start and grow. » Online harms – protecting people from harmful content and behaviour, including building understanding and resilience, and working with industry to encourage the development of technological solutions. » Liability – looking at the legal liability that online platforms have for the content shared on their sites, including considering how we could get more effective action through better use of the existing legal frameworks and definitions. » Data and artificial intelligence (AI) ethics and innovation – ensuring data is used in safe and ethical way, and when decisions are made based on data, these are fair and appropriately transparent. » Digital markets – ensuring digital markets are working well, including through supporting data portability and the better use, control and sharing of data. » Disinformation – limiting the spread and impact of disinformation intended to mislead for political, personal and/or financial gain. » Cyber security – supporting businesses and other organisations to take the steps necessary to keep themselves and individuals safe from malicious cyber activity, including by reducing the burden of responsibility on end-users

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The Impact » The Tech Talent Charter, which aims to tackle gender imbalance in the tech sector workforce. » Data Protection Bill – along side GDPR » "The internet should be free, open and accessible" – net neutrality? » "The social and economic benefits brought by new technologies should be fairly shared "

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The Next Steps » Along with GDPR compliance . . . » Digital Charter = "living document". » The Government wants the tech sector to answer challenges and produce solutions. » Solutions will include legal changes.

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Any questions? Nathan Bilton Associate | Commercial E: nathan.bilton@wardhadaway.com T: 0113 205 6604

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Property law update

Alex Wright, Partner

Newcastle | Leeds | Manchester

Property law update » Incoming Minimum Energy efficiency Standards » SDLT on leasehold property » Minimising Dilapidations » Break clause reminder

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Minimum Energy Efficiency Standards "MEES" » MEES regulations come into force after April 2018 pursuant to the provisions of the Energy Act 2011 » Purpose of the MEES regulations is to improve energy efficiency of domestic and non-domestic private rented sector in England and Wales » From April 2018 Regulations will make it unlawful to for a landlord to let out buildings that do not comply with a minimum rated energy efficiency standard which the regulations will set at an E rating on a valid EPC. » From April 2023 it will unlawful to continue to let out non-compliant buildings

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Minimum Energy Efficiency Standards "MEES" » Leases will not be invalid, but landlords who are in breach of the regulations will be liable to a civil penalty » Financial penalties of up to £150,000 or 20% of the rateable value of the property if greater » 18% of non-domestic properties currently have an EPC rating of F or G whilst 65% have a rating of D or below » Certain properties will be exempted from the requirement to comply » Non domestic property let on a lease of a term of 99 years or more or 6 months or less (provided there is no right to renew) will be excluded

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Minimum Energy Efficiency Standards "MEES » Practical considerations: » Landlords – may need to carry out works in order to bring property up to standard » Does the landlord need to register an exemption? » Is there a valid EPC already or does it need to be renewed? » NB - EPCs are valid for 10 years

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Minimum Energy Efficiency Standards "MEES » Tenants – can a tactical advantage be gained in a dilapidations dispute be gained » Can a Tenant be obliged under the lease to comply? » "Repair" does not extend to improvement » Compliance with statute provision in lease will not oblige a tenant to

• comply. Regulations work negatively, and act as a restriction on letting

» Express provisions in a lease can positively oblige a tenant to comply with regulations » Service charge provisions in a lease of part of a multi let building may allow a landlord to recover costs of upgrade to common parts

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Dilapidations refresher » Don’t forget about dilapidations in lease agreements » Tenants should always push for a schedule of condition particularly on full structural demises » Consider whether schedules should cover decoration as well as repair » Remember to account for dilapidations. Particularly important when it comes to corporate disposal/acquisitions

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SDLT on leasehold property » SDLT is payable by Tenants in respect of leasehold property » How is it calculated?

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SDLT on leasehold property

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SDLT on leasehold property » SDLT calculated by reference to rent and premium payable under the lease over the term » Calculation is inclusive of VAT so a tax on a tax » Broadly speaking the longer the lease and the higher the rent, the higher the SDLT that will be payable » Additional SDLT may be payable on rent review if rent increases » Relevant when giving tax warranties on corporate disposal

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Tenant break clauses in leases » Tenants should avoid conditions when applied to break clauses where possible » Tenant should never accept a condition to comply with lease covenants » Always instruct a solicitor to serve a break notice

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Any questions? Alex Wright Partner | Property E: alex.wright@wardhadaway.com T: 0191 204 4139

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