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Whilst it is relatively common knowledge that the Transfer of Undertaking (Protection of Employment) Regulations (“TUPE”) apply to the sale of a business as a going concern, TUPE also applies to service provision changes. TUPE will transfer employees “wholly or mainly engaged” in the provision of the services and preserves their terms and conditions of employment.

In relation to property management this can present unique challenges for those practicing and working in this area which we will summarise below.

Change of managing agent

When there is a change in the managing agent of a property, the employment terms and benefits which had been provided to the staff by the incumbent managing agent will often be at odds with those typically provided by the incoming agent to their existing workforce. This can mean that the managing agent is engaging staff working under a variety of different terms. This can be commercially unattractive and administratively burdensome.

Furthermore, the incoming managing agent may be unable to replicate certain benefits that it is required to (for example if it is a different type of corporate body), even though these benefits are in theory preserved by virtue of TUPE.

For example, the employee may have the benefit of an employee share scheme but the incoming agent is not a company, and therefore does not have shares to offer. To replicate this benefit, it may need to look at “buying out” the right from the affected employees. The value of any right may be very difficult to quantify, require specialist advice, and may not have been anticipated when the tender was submitted at the outset.

Change of client with change of property manager

The cases of McCarrick v Hunter [2012 EWCA Civ 1399] and Taurus v Crofts [UKEAT/0024/12] established the principle that where there is a simultaneous change of ‘client’ and incoming service provider/managing agent, then TUPE will not apply. In relation to property transactions this means that if a property is sold and the new owner simultaneously changes managing agents, then the site-based staff who work at the property will not necessarily transfer under TUPE. It is important to note that this does not affect circumstances where a property is owned by a corporate body and there is a sale of shares in that body. In such circumstances the owner or client remains the same, albeit with a change in shareholders, and TUPE would not be applicable.

Furthermore, who is the client is a question of fact, as opposed to law and it is important to look to see who is the ‘ultimate’ client. In your typical property management scenario, the ‘client’ would be the owner of the property who would employ a management company or managing agent to manage the same. However, difficulties arise where there are sub-contractors involved, for example, where the managing agent employs cleaners or security staff for the property. These would be deemed as ‘sub-contractors’ and the managing agent would be their ‘client’, with the property owner being the managing agent’s ‘client’ (Jinks v London Borough of Havering [UKEAT/0157/14]).

So, which ‘client’ needs to remain the same for TUPE to apply? Each situation will need to be looked at on its facts but, when considering if TUPE should apply on a property sale, it is important to look beyond the initial client and identify the end client for whom the services provided ultimately benefit.

Who bears the employee risks in a property management agreements?

Whilst certain management costs are usually recoverable through service charges, one of the key issues is which party (the owner, or the managing agent) should bear the risk of claims or disputes, especially any claims which could arise on termination if TUPE does not apply. The provision of appropriate indemnity protection (whatever side you are working for) is therefore crucial.

It is important to note that if TUPE does not apply when there is a change in managing agent, if the outgoing managing agent cannot relocate its staff to other properties it manages, the default position is that is required to cover the costs of redundancy of these staff members (some of whom may have been inherited from an outgoing agent and never have worked elsewhere).

The managing agent can therefore be reluctant to take on such risk if the staff have been inherited from a previous managing agent if appropriate indemnities cannot be obtained, and further, if the fee negotiated does not cover the potential risks. The owner can be reluctant to assume the risk given that they have little control over the managing agent or its staff and feel that staff should not be their responsibility or cost.

An additional  challenge can arise given that management agreements can often provide that the client can compel the agent to remove a member of staff from the property. The agent, as the employer, must be mindful of the employment rights of its employees, particularly if the agent considers that the request could result in an unfair or discriminatory dismissal. This results in a tricky challenge of balancing its contractual requirements and the wishes of its client, together with the employment rights of the individuals engaged by it.

Negotiation of Agreements

The above are all factors that come into consideration when negotiating property management agreements. Underwood Solicitors LLP have extensive experience in all aspects of property management agreements, from both the managing agent’s and the landlord’s perspective, and in respect of both residential and commercial properties and portfolios. Please contact Michael McDonnell, William Gubbins, or your usual contact at the firm, if you would like assistance with this.

This article is for general purpose and guidance only and does not constitute legal advice. It should not replace legal advice tailored to your specific circumstances.

 

 

According to the Ministry of Justice, the number of inheritance challenges is rising. Legal rows over inheritances have risen 34% in five years, with court cases involving contested wills increasing by 140% over the past decade.

Cohabiting couples, second marriages, and blended families can make inheritance tricky. But, with a properly drafted will, most disputes can be avoided, or at least easily resolved. Nevertheless, life can change quickly, and factors such as shifting relationships, families, and finances could mean that your carefully drafted will no longer reflects your situation and wishes.

Estate planning is not a one-time task. You should review your will at least every five years or, after a significant change in your personal or financial circumstances, such as those outlined here.

On marriage

Most people do not know that getting married (or entering into a civil partnership) automatically invalidates a will. Unless your will makes specific reference to your intended marriage, it will be revoked after your marriage or civil partnership, and intestacy rules will apply. This means that:

• If you are married and your estate is worth up to £322,000, your spouse will inherit everything, even if you have children;
• If you are married with children (not including stepchildren), and your estate is worth more than £322,000, your spouse will inherit the first £322,000 plus personal belongings. Anything remaining will be split 50/50 between your spouse and your children*. Your children will all inherit an equal share of the remaining 50%.

*Your grandchildren and great-grandchildren will inherit in their place if any of your children die before you.

On divorce

Divorce does not automatically revoke your will. If you end a marriage or civil partnership, your will treats your spouse as if they have died. This means that anything you have left to them will no longer take effect.

Of course, the divorce process can take a long time. It is therefore often a sensible precaution to review your will at the earliest stage, to mitigate the risk of your spouse inheriting should you die before the divorce is finalised.

When cohabiting with a partner

Contrary to popular belief, there is no such thing as ‘common law’ marriage. If you establish a household with your partner, you should consider what ought to happen if one of you were to die. Should financial provision be made for each other? Should a partner have rights over your share of any property?

A cohabiting partner will have no rights or inheritance under English succession law.  Naturally, if you have provided for a cohabiting partner, you should review your will if that relationship ends.

When welcoming new children to the family

You should review your will once you have children, to consider when they might inherit, who should manage funds for them during their youth, and who should act as their guardian(s) if you die whilst they are young.

You should also consider updating your will if a new partner has their own children. You will, between you, need to consider the possibly competing interests of all family members.

If you become a grandparent

It is common for grandparents to add their grandchildren to their wills so they inherit directly. As such, the birth of grandchildren may require a will review.

On a change of financial circumstances

Significant changes in the value and makeup of your estate may impact the planning your current will implements. There can also be tax consequences to factor in. You should consider updating your will if:

• You purchase/ sell property, or your property changes in value significantly;
• You inherit or are gifted assets;
• Your business interests change in value, or your business changes in nature.

If your health or personal circumstances change (or that of a loved one)

Deteriorating health is often a distressing event, and reviewing your will may not be the priority it should be.  If you or a dependant needs care, you may want to use your will to help you do this and protect your estate from care fees.

You will also want to update your will if the executors you have named are in poor health, so that new people are appointed to administer your estate.

Should a beneficiary die

If a beneficiary should die, you should review your will to ensure that the assets you planned to leave them are redistributed according to your wishes. The death of potential beneficiaries will often have been provided for in a solicitor-drafted will, but it is always sensible to check.

Unfortunately, most people are unaware of the impact life changes can have on the distribution of their estate. According to recent research, only 56% of people have updated their will within the last five years, meaning around half of UK wills are out of date.

At Underwoods, we help ensure your loved ones are taken care of when you pass on. In addition to drafting, reviewing, and amending your last will and testament, we can also advise you on several other key areas of law that may impact your estate planning. For further advice, please contact James McLean, Alex Shah or Shirin Wright in our private client team.

 

This article is for general purpose and guidance only and does not constitute legal advice. It should not replace legal advice tailored to your specific circumstances.

As our society ages, there are growing incidences of individuals making significant changes to their Wills later in life. English succession laws have a proud tradition of testamentary freedom, but it is important to recognise that late-in-life amendments can have consequences.

The recent case of Rea v Rea (2023) EQHC 1901 (Ch) highlights the difficulties with challenging a Will, and the importance of regularly reviewing your Will.

What happened?

Mrs Rea (deceased) had one daughter and three sons. She made a Will with a solicitor in 1986 appointing one son as sole executor and left her estate in four equal shares to her four children. She made no subsequent Will or Codicil since 1986 – for almost thirty years.

In 2015 Mrs Rea had a solicitor prepare a new Will. She wanted to ensure her home went to her daughter, feeling that her sons did not care for her and had abandoned her. At the time Mrs Rhea had several physical health issues.

The solicitor arranged a capacity assessment – a sensible precaution, given Mrs Rea’s age and health, and the departure in her instructions – with Mrs Rea’s GP who confirmed capacity. They made no suggestion of undue influence.

The Will was witnessed by the solicitor and GP.

After Mrs Rea’s death in 2019, her sons challenged the validity of the 2015 Will on grounds including lack of testamentary capacity and undue influence. The Court concluded the Will was valid.

After several attempts the sons appealed in 2022, and were successful due to a procedural error the judge had made when conducting the trial.  A re-trial was heard in July 2023.

The judge ruled that Mrs Rea did have capacity to make her 2015 Will. However, the judge decided after reviewing the evidence that despite having a solicitor draft the Will and the GP conducting a capacity assessment, there was undue influence by her daughter. The judge determined that due to Mrs Rea’s age and vulnerability, dependence on her daughter, the fact that her daughter had made the arrangements for her mother to make the 2015 Will and that the new Will was unbeknownst to the sons until after their mother had died, Mrs Rea had been coerced to make the new Will.

Mrs Rea’s daughter appealed the decision with the Court of Appeal, and on 23 February 2024, Lord Justices Moylan, Newey and Arnold unanimously ruled in her favour.  They determined that the ruling in 2023 had been wrong; the dependency Mrs Rea had on her daughter should not determine that there was undue influence.

What does this mean?

This case illustrates several important lessons:

• When considering making major changes to a Will, there may be greater scrutiny placed on the circumstances of the new Will if a long period of time has elapsed.
• Although testamentary freedom forms the basis of English succession law, we know that people often have an expectation of inheritance. Where changes are being made that show preference to a family member (which is not unusual where significant care is being provided), it is important to try and explain the reasoning to all family members in a non-confrontational manner. We wonder whether the shock discovery of the new Will by Mrs Rea’s sons contributed to their determination to have it disregarded.
• Where a Will is amended to benefit a person on whom the testator depends, that dependency should not give rise to a presumption of undue influence. It has long been a principle of the Court that undue influence must be proved by the persons alleging it.

The full case judgement can be found here.

For further advice, please contact James McLean, Alex Shah or Shirin Wright in our private client team.

This article is for general purpose and guidance only and does not constitute legal advice.  It should not replace legal advice tailored to your specific circumstances.

The expansion of AI raises some important questions particularly in relation to intellectual property; can a computer generated work be protected by copyright? Who benefits from the copyright protection the computer or the human being who set the parameters of the enquiry? And, in terms of the end product, how can you be certain that the AI output has not infringed someone else’s rights?

Somewhat surprisingly,  the Copyright, Designs and Patents Act 1988 (“CDPA”) does offer some guidance here. S.178 of the CDPA offers a definition of ‘computer-generated’ – “in relation to work, means that the work is generated by computer in circumstances such that there is no human author of the work”. Does this therefore mean that the computer itself can have the copyright? The answer can be located in s.9(3) of the CDPA where “in the case of literary, dramatic, musical or artistic work which is computer-generated, the author shall be taken to be the person by whom the arrangements necessary for the creation of the work are undertaken”.

It would seem that where a computer has generated a piece of work it is the person who made the ‘necessary arrangements’ that retains the rights associated with authorship. For example, if you ask a computer programme to generate an image, or a document, it should be the person setting the parameters or writing the ‘prompt’ that holds the copyright. That being said this is not explicitly set out in legislation. Conceptually whilst the most appealing answer is as suggested, that the user is the copyright holder, it could also be the case that ‘necessary arrangements’ could refer to the creator of the software itself. Therefore the company that created the software owns the copyright in its outputs.

One of the most significant issues concerning AI and copyright relates to the basis of the ‘knowledge’ the AI tool relies upon. Consider the most popular or recognisable forms of AI, ChatGPT, Microsoft’s Cockpit and similar.  These forms of AI are based upon what is known as a ‘large language model’, which means that these tools have been ‘taught’ by presenting them examples of human authored text, for example by data mining through thousands of pages of information available on the internet. Through a process known as ‘deep learning’ their algorithms can learn to recognise patterns, classify data and make predictions based on analysis of large quantities of data. These algorithms also calibrate and ‘learn’ to provide more specific answers based on user inputs. So the more they are used, the more they learn how to provide an accurate response.

Considering that AI based on large language models relies entirely on existing material to form the basis of its responses can the end user be certain that the answer that an AI tool has provided is not in reality infringing someone else’s copyright. After all copying without consent of the right holder is an infringement of the rights of the right holder even if you as the end user were unaware of the source of the material that AI generated or learned from.

Another significant issue that should be considered is the specific subset of intellectual property relating to the protection for database rights, both in the form of ‘sui generis database rights’ and in copyright. In the United Kingdom the Copyright and Rights in Databases Regulations 1997 amended the CDPA so that a ‘database’ means “a collection of independent works, data or materials which (a) are arranged in a systematic or methodical way; and (b) are individually accessible by electronic or other means.” The systematic ‘scraping’ of data from a website, even if it is easily accessible, in order to train an AI bot or algorithm could be an infringement of the database owner’s rights both in terms of the database right and in copyright.

There are some exceptions that would allow the use of the data, but currently these allow data mining and computer based analysis of materials for non-commercial research. If there is a commercial use and prior permission from the rights holder has not been obtained then commercial exploitation could amount to infringement, it is essential for users that clarity is sought on how the AI tool has been ‘taught’ prior to making use of its products so as not to become embroiled in intellectual property disputes.

In conclusion, the fundamental issue with AI and intellectual property is that the pace of the technological advance is greater than the law’s ability to react. The governmental response in the United Kingdom has been an attempt to be permissive, which has drawn a negative response from the creative industries as they stand the most to lose from de-regulation of copyright. We await with interest the publication of the Intellectual Property Office’s forthcoming code of practice on Copyright and AI in the hope that it gives clarity to a rapidly evolving area of law.

If you require further information about anything covered in this briefing, please contact Oliver Whitehead or your usual contact at the firm on +44 (0)20 7526 6000.

What is a leasehold?

A leasehold is a type of property ownership where an individual owns the right to use and occupy a property for a specified period of time, but does not own the land on which the building was erected. Instead, the land is typically owned by a separate entity known as the freeholder (or landlord).  A lease agreement outlines the rights and responsibilities of both the leaseholder and the freeholder, including any ground rent and maintenance charges the leaseholder may be required to pay. When the lease term expires, ownership of the property reverts to the freeholder, unless the lease is extended or renewed.

The system of leasehold property ownership in England dates back to 11^th Century. It was created to ensure someone (the freeholder) takes responsibility for the maintenance of common structures and areas thus relieving homeowners from the burden of directly managing and funding significant repairs. Professional management can also help ensure that properties meet certain standards, and help avoid potential neighbour disputes.

Nevertheless, there is general agreement that the system requires reform, and the new Bill should make it easier for leaseholders to:

• Extend their leases
• Buy their freeholds
• Take over management of their buildings.

What is changing?

The Leasehold and Freehold Reform Bill proposes to:

• Increase the standard lease extension to 990 years (up from 90 years in flats and 50 years in houses) with ground rent at zero.
• Remove the so-called ‘marriage value’, which makes it more expensive to extend leases when they’re close to expiry.
• Remove the requirement for a new leaseholder to have owned their house or flat for two years before they can benefit from these changes.
• Allow leaseholders in buildings with up to 50% non-residential floorspace to buy their freehold or take over its management (up from 25%).
• Set a maximum time and fee for the provision of information required to make a sale to a leaseholder by their freeholder.
• Require transparency over leaseholders’ service charges.
• Replace building insurance commissions for managing agents, landlords and freeholders with transparent administration fees.
• Require freeholders who manage their properties to belong to a redress scheme so leaseholders can challenge them if needed.
• Grant freehold homeowners on private and mixed tenure estates the same rights of redress as leaseholders.
• Build on the legislation brought forward by the Building Safety Act 2022.

The Response

Most of the proposed reforms constitute a mere expansion of the leaseholders’ protections which are already in place but theoretically will make it simpler and less expensive to own and maintain a flat. At the same time, the concept of leasehold as a contract between the Landlord and the Tenant in principle remains in situ and there will still be service charges and management charges, Landlord’s control on alterations and underletting and premium payable for lease term extension or purchase of a share of the freehold. Last but not the least, the most controversial issue of leasehold houses has not been resolved as the latest draft does not include the long-awaited ban.

Where are we up to?

The Bill is expected to become law before the next general election.

Affected freeholders should seek legal advice to prepare for the new legislation. For example, things to consider include:

• Whether the proposed cap on ground rent in existing residential leases will affect income.
• What might happen if more leaseholders decide to take over the management of their buildings and freeholders lose control.
• Whether less-experienced individuals managing buildings will lead to increased risks, higher insurance premiums, and devalued properties.

If you would like to know more about how the Leasehold and Freehold Reform Bill will impact you, please do not hesitate to contact Anna Severtoka or Mark Smith in our real estate team.

This article is for general purpose and guidance only and does not constitute legal advice.  It should not replace legal advice tailored to your specific circumstances.

 

More often than not, a landlord of a House in Multiple Occupation (HMO) will know that it is being used as one where residential premises are concerned. However, the use of property guardians to occupy vacant commercial properties to offer security to their owners may also require licensing oversight from local authorities.

The recent case of Global 100 Ltd v Jimenez and others (2023) EWCA Civ 1243 highlights that an HMO licence pursuant to Part 2 of the Housing Act 2004 (HA 2004) may still be required where a vacant commercial property is occupied as living accommodation by so called “property guardians”. We discuss the key takeaways from the judgement.

What is an HMO?

Section 254 of the HA 2004 generally defines that an HMO is a building (or part of it) that consists of living accommodation occupied by tenants who do not form part of the same household; at least one of the tenants pay rent; such accommodation is used as their main or only residence; and the tenants share facilities in the premises, such as toilets, showers and kitchen facilities. HMO licences are normally required where the property is occupied by at least five people and the above criteria apply.

HMO licences cannot be assigned. If a purchaser acquires a property that is already used as an HMO and continues to be used as one at the time of their purchase, they will need to obtain their own licence or a temporary exemption.

Property Guardians

In brief, these are private individuals who occupy vacant properties that are not intended for residential use. Examples of these include warehouses or office space and the intention of such occupation is to provide a degree of security to the property owner and mitigate the risk of squatters.

Background to The Global 100 case

This was a Court of Appeal case following on from the Upper Tribunal’s decision to uphold Rent Repayment Orders against the landlord and guardian firms’, Global Guardians Management Ltd (GGM) and Global 100’s, failure to hold a valid HMO licence (Global Guardians Management Ltd & Ors v London Borough of Hounslow & Ors (UKUT 259 (LC)).

On 31 March 2016, the owner of the property, a vacant commercial building, contracted with GGM to provide guardianship services at the property at a monthly licence fee of £600 and a minimum term of four months (determinable at four weeks’ notice). GGM then contracted with Global 100, a sister company, who would identify occupants to act as “guardians”, paying a monthly licence fee. GGM converted the building to create 30 bedrooms, 4 kitchens, and 4 lavatories. The rooms (and the provision of keys to access these rooms) were then licenced to guardians who paid varying licence fees depending on the size of their rooms. The local authority inspected the property and satisfied itself that it was occupied as an HMO. At least 29 of the 30 rooms were occupied at the time of the inspection. The issues in dispute concerned the ‘sole’ purpose of occupation and whether this purpose was as living accommodation. The tenants argued that this threshold was met. However, Global 100 and GGM had advanced the following arguments:

• that the property was not solely occupied for residential use for the purposes of s.254(2)(d) HA 2004;
• that GGM had not been granted a tenancy of the property; and
• neither GGM nor Global 100 were persons having control or management of the property.

The FTT rejected the above arguments and the FTT’s decision had been upheld on appeal before the Upper Tribunal. Global 100 and GGM subsequently appealed to the Court of Appeal.

At appeal, Global 100 and GGM argued:

• That residential occupation by the guardians did not constitute the only use of their living accommodation.
• That the Upper Tribunal had erred in finding that GGM had a tenancy of the property and that GGM was a person in control of that property (in that they would receive the rack-rent if let at a rack-rent); and
• The Upper Tribunal erred in its finding that Global 100 was a person in control because of its receipt of the rack rent.

Global 100’s appeal was ultimately dismissed for the following reasons:

On (1), the Court of Appeal kept their dismissal of Global 100’s argument brief. The Court held that the tenants ‘had no responsibilities as property guardians save to live in the accommodation. The presence of the property guardians in their living accommodation and the property may have deterred persons from entering the property, but it did not convert the use made of the living accommodation. In these circumstances…the Upper Tribunal was right in both appeals to find that the occupation of the property guardians of the living accommodation constituted the sole use of that living accommodation’ [1].

On (2), the Court of Appeal also dismissed GGM’s argument regarding whether they had a tenancy of the property as the FTT had originally found that GGM was, in fact, being granted the exclusive right to exploit the whole of the property[2], and had therefore been granted exclusive possession of it. As to whether GGM was a person in control of that property (in that they would receive the rack-rent if let at a rack-rent), a decision on this was not made as they were liable as the person managing the property.

On (3), the Court of Appeal dismissed Global 100’s argument in that together, GGM and Global 100 arranged for the modification of the property for habitation and subsequently licensed property guardians to live in it, generating £15,000 per month from licence fees. Global 100 was in the business of making money and not acting as a charity. The property guardians were also willing licensees of living accommodation, Global 100 was a willing licensor, and there was nothing to suggest that anything more could be obtained from letting or licensing the property in terms of obtaining a rack-rent. In any event, Global 100 was the only person who could charge the guardians for living in the property, if let at a rack-rent for the purposes of section 263(1) of the Housing Act 2004.[3]

Commentary:

The decision in Global 100 Ltd v Jimenez & Orz reaffirms the court’s position on the occupation of commercial premises by property guardians and where this can fall foul of the HA 2004’s licensing requirements. Where properties are occupied by property guardians, they may unintentionally be subject to HA 2004 licensing requirements which, if breached, can result in the landlord and/or the guardian firm being subject to rent repayment order applications and possible criminal prosecution.

It is important to seek legal advice before putting any such arrangements in place due to the material financial and criminal consequences landlords or guardian firms may be subject to for failing to obtain an HMO licence where one is required.

If you have any queries regarding any of the real estate issues covered in this blog, please do not hesitate to contact Sharado Watson or Deepak Ohri in our real estate team.

This article is for general purpose and guidance only and does not constitute legal advice.  It should not replace legal advice tailored to your specific circumstances.

 

[1] Global 100 Ltd v Jimenez & Ors [2023] EWCA Civ 1243 (27 October 2023), para. 51

[2] Ibid, para.57

[3] Ibid, para. 63

From the broad spectrum of Gary Lineker, a public figure, tweeting political views from his personal X (formerly known as Twitter) account, or an employee posting support for political movements or viewpoints on Facebook, Instagram, or their platform of choice  – similar rights and issues are at play. Namely, to what extent do employees have freedom of speech on social media, where their posts could either (a) reflect poorly on their employer, or (b) negatively associate their employer with controversial messages, particularly where the employer would not wish to adopt a particular stance.

In this article we will briefly explore the balance of these issues, noting their importance in the current economic and political climate.

Employer’s Rights

The first consideration would be whether a private social media post could amount to misconduct, or gross misconduct. Gross misconduct is naturally the more serious breach by an employee.. Both can, however, be grounds for dismissal dependent on the situation.

Gross misconduct are acts which ‘are so serious in themselves or have such serious consequences that they may call for dismissal without notice for a first offence’ (ACAS Code of Practice 1, paragraph 23). Dismissal for misconduct, however, requires notice and would typically follow warnings prior to dismissal.

In actions such as social media use, if the post is incredibly damaging (or has the potential to be incredibly damaging) to the employer’s business, then the employer may wish to terminate the employee’s contract immediately in order to protect its reputation. As such, they would need to establish that the post amounted to ‘gross misconduct’.

The case of Walters v Asda Stores Ltd explores the difference between ordinary misconduct and gross misconduct stating, among other things, the need for a clear social media or internet use policy to be in place. By having such a policy in place, an employer can reasonably specify those actions on social media usage which would conduct misconduct or gross misconduct in relation to the employee’s position in the workplace. As such, it is important to firstly, implement a policy, and secondly, make all employees aware of this.

On the other hand, if such a post did not amount to misconduct or gross misconduct but that the employee’s actions were sufficiently serious that continued employment would damage the employer’s reputation, the employer may decide that their dismissal is justified for ‘some other substantial reason’. However, in practice dismissing for reputational risk under this potentially fair reason for dismissal is difficult to establish, and in any event if sufficiently serious would likely be a conduct matter.

Employee’s Rights

The right to freedom of expression is a qualified right, meaning that it is subject to, among other things ‘the protection of the reputation or rights of others’ (European Convention of Human Rights, Article 10(2)). Consequently, if an employer wishes to dismiss an employee over a social media post which could bring the company into disrepute, it must have reasonable grounds to believe that the specific post would do so.

In the European Court of Human Rights case Herbai v Hungary (Application no. 11608/15), the Court considered the following points needed to be addressed by an employer where they are restricting an employee’s freedom of expression:

• The nature of the speech
• The motives of the author
• The damage caused by the speech to the employer
• The severity of the sanction imposed

So, how can this be established? The answer is subjective and will turn on the facts of each case. For instance, posts of an offensive nature. In the case of Webb v London Underground Ltd, an employee was dismissed due to posting offensive remarks on her private Facebook page. The dismissal was deemed fair as the interference with the employee’s freedom of expression was justified to protect the employer’s reputation. Despite only having 200 ‘Facebook friends’, the post was widely circulated and had offended other members of staff of the employer, as well as the employer’s standing as a public body.

Consequently, as an employer it is important to consider the balance of your employee’s rights as well as the importance of the reputation of your business if you decide to dismiss an employee based on their conduct on the internet. In these times where social media use amongst many staff is constant the temptation can be for employees to offer their personal views on a range of world affairs instantaneously adopting the approach of “type first, think about it later”, getting the balance right can be more and more challenging for employers.

If you need assistance with matters of a similar nature to this article, please contact Michael McDonnell, William Gubbins, Darcy Still or your usual contact at the firm who would be happy to assist.

This article is for general purpose and guidance only and does not constitute legal advice.  It should not replace legal advice tailored to your specific circumstances.

With the aim of providing more clarity and fairness in the legal process, the changes to the FRC regime affect a wide range of claims.

 

What are fixed recoverable costs (FRC)?

 

Fixed recoverable costs represent the predetermined legal costs the winning party can recover from the losing party.

The main benefit of FRC is that they provide certainty over how much legal costs will have to be paid. FRC are also structured to maintain a sense of proportionality with the amounts being claimed. However, as costs are fixed, the amount recovered by the winning party may fall short of covering the full expense of their case.

Traditionally applied in low-value personal injury cases, from October 2023, FRC have been extended to cover most civil litigation claims. This extension includes all fast track cases and those within the new intermediate track (with certain exceptions such as relevant housing claims).

FRC and civil litigation tracks

Your case will be allocated to a particular ‘track’ when making a civil litigation claim. The track assigned will depend on the amount being claimed and the complexity of your case.

Small Claims Track. Cases with claims up to £10,000 fall into this category. Here, both the claimant and defendant are typically responsible for their respective legal costs.

Fast Track. Covering cases valued between £10,000 and £25,000, the fast track deals with uncomplicated matters expected to conclude in a one-day trial. FRC have been extended to this track.

Intermediate Track. This newly introduced track deals with cases valued between £25,000 and £100,000 with moderate complexity. FRC will be applicable in the majority of cases. The intermediate track is further divided into four complexity bands, each with an associated grid of costs.

Multi-track. More complex/higher value cases will continue to be allocated to the multi-track, and FRC will not apply.

The recent changes have significantly increased the number of cases where FRC apply.

How might these changes affect those bringing civil litigation claims?

The extension of the FRC does mean an increased certainty as to costs exposure and recoverability for parties, a significant advantage to the extended regime.   There may perhaps be process and efficiency savings in litigation for parties because of the streamlined procedure in FRC cases on the fast track and intermediate track.

However, these rules go to costs recoverability, they do not dictate what costs parties incur.  Parties could find themselves facing significant legal costs which they have no longer have a prospect of recovering, irrespective of success.  With those facing significant risk of irrecoverable costs there is even more reason now to seriously consider mediation and other forms of ADR.  Already heavily endorsed by the Courts, use of mediation and ADR by parties subject to the FRC is likely to increase, which is no bad thing; a well-managed mediation can be highly effective.

It is important to note that further revisions to the FRC regime are anticipated, and we are closely monitoring these developments.

For anyone now bringing a claim in either the fast or intermediate track, understanding the recoverable costs is vital.  Please contact Aoife Reid or Paul Twomey in our dispute resolution team if you would like to discuss the impact of these changes for you or your business.

This article is for general purpose and guidance only and does not constitute legal advice.  It should not replace legal advice tailored to your specific circumstances.