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How do I set up a bare trust? It does what it says on the tin

June 20, 2016 by Fanny Marshall

How do I set up a bare trust? It does what it says on the tin{{}}First things first, a bare trust has nothing to do with bears. That was my first thought when I was Googling bare trusts after I discovered I, as executor, needed to set one up to fulfil the wishes set out in my Dad's will. How do you even spell 'bare trust'? (I guess I could have checked the will!)

If you are in the position of having to set up a trust, it's easy to imagine weighty rolls of parchment and a hoary old solicitor sitting at a desk, quill in hand. In fact, as I discovered, setting up a bare trust is almost ridiculously simple. So simple, in fact, that after a brief consultation with a solicitor, I was told that they very rarely do them any more - she was surprised to even be asked about it.

In reality bare trusts really are, well… bare. There is very little to them - technically you don't even need anything written on paper, although it is advisable to make a dated note of any actions you take in your role of executor. In my Dad's will, he stated that he wanted to leave set sums of money to each of his grandchildren, to be kept in a bare trust until they reached the age of 18.

What this meant I had to do, once probate was granted and all the assets had been gathered together, was open a bank account (in the grandchild's name) for the trust and deposit the stated amount, to be left there until the child reaches the age of 18 at which point they are free to inherit. I could write a document saying that was what I had done and date and sign it, but that's not essential.

In this situation the two most important documents are the deceased's will and the grant of probate. The will states that the trusts are to be set up, the amount to be placed in trust and the name, date of birth and address of the beneficiary and the grant of probate places the legal responsibility to enact the will on the executor.

In my situation the bare trusts I was setting up were for the benefit of my children and therefore both myself and the other executor of the will know about them. If you were setting up a trust for someone unrelated to you it would, of course, be advisable to write a letter to the parents/guardians of the child with details of the trust, together with a copy of the will and the grant of probate. But, as I discovered, far from being a complicated and costly legal process, setting up the bare trust was one of the most straightforward tasks I had to do as an executor.

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What does the high heels row mean for your business?

June 07, 2016 by Guest contributor

What does the high heels row mean for your business?{{}}The media storm over the agency worker who was sent home for refusing to wear high heels has highlighted issues with the current discrimination laws.

Nicola Thorp, a 27 year-old receptionist, hit the news headlines recently when she was sent home from work for refusing to wear high heels. But is this legal?

Thorp was employed by PricewaterhouseCoopers' outsourced reception firm Portico. Upon arriving at work, wearing smart flat shoes, her supervisor informed her that she would need to go and buy heels that were between two and four inches high or else she would be sent home without pay. When she refused, Portico sent her home.

Thorp had signed up to Portico's appearance guidelines before accepting the role but employers need to be mindful that workers can bring cases if the dress code falls foul of sexual discrimination legislation.

Portico has since changed its uniform guidelines with immediate effect. The new dress code policy for the company allows all women to "wear plain flat shoes or plain court shoes as they prefer". However, this does not change the fact that the law in relation to dress codes, as it currently stands, is open to question and potential abuse by employers.

Thorp has set up a petition asking the Government to make it illegal for a company to require women to wear high heels at work. It has attracted more than 141,000 signatures. As a result, Parliament will consider this for debate.

What is the current legal position?

The Employment Appeals Tribunal (EAT) has made it clear that dress codes are lawful, provided they are not discriminatory.

In Thorp's case, the issue is that it is still legal for a company to require female members of staff to wear high heels at work against their will. In addition, employers can also send staff home if they fail to live up to "reasonable dress code" requirements, as long as they have been given enough time to buy the right shoes and clothes.

It can be argued therefore that dress code laws as currently drafted are potentially sexist and may therefore need to be changed so that women have the option to wear flat formal shoes at work, if they so wish. Wearing flat shoes at work would enable a woman to carry out her job more efficiently, particularly, as in Thorp's case, if a nine-hour shift is expected, requiring her to be on her feet all day.

Gender equality

Gender-specific dress codes are lawful in the UK, as long as they do not treat one or other of the sexes less favourably and there is an "equivalent level of smartness".

If it can be established that members of one sex are being treated less favourably than members of the opposite sex, the "but for" test comes into play (Smith v Safeway). But for the fact that Ms Thorp was a woman, would she have been required to wear high heels?

The Tribunal said no to a similar question posed in the case of Safeway. The case concerned a male staff member who was required to wear a collar and tie. The EAT found that the Tribunal's decision was flawed and that the Tribunal had misapplied the "but for" test. The test only becomes relevant once it has been established that members of one sex have been treated less favourably than members of the other sex. In the case of Safeway, the Tribunal had only asked itself whether “but for the fact that T was a man, would he have been required to wear a collar and tie?”. The first limb of the test had not been satisfied.

Advice to employers

The correct approach is to consider whether the level of smartness required could only be achieved for women by requiring them to wear high heels. If it could be achieved by other means then the lack of flexibility shown in the approach taken towards women may suggest less favourable treatment. Whilst dress codes are lawful, employers with similar dress codes therefore may wish to consider whether the requirement for women to wear high heels is actually necessary to achieve the level of smartness required.

Provided that you, as the employer, adopt an even-handed approach, the fact that members of one sex are required to wear clothing of a particular kind, but members of the other are not, will not necessarily mean that members of one sex are treated less favourably than members of the other. It will depend on the overall context of the relevant dress code.

Acas guidance

Acas provides assistance to both employers and employees. The key points made by Acas are:

  • employers must avoid unlawful discrimination in any dress code policy;
  • employers may have health and safety reasons for having certain standards;
  • dress codes must apply to both men and women equally, although they may have different requirements;
  • reasonable adjustments must be made for disabled people when dress codes are in place.

Companies have a large measure of discretion in controlling their company's image, including the appearance of staff, especially those who have contact with customers. Now's the time to review your dress code policy and ensure that it does not fall foul of discrimination or other employment laws.

Copyright © 2016 Jennifer Spain, iLaw.

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Planning what happens after you die - not just a task for old people!

May 25, 2016 by Fanny Marshall

Planning what happens after you die - not just a task for old people!{{}}Until you've been in the situation of losing a parent or spouse, you probably haven't given much thought to what happens after someone you are very close to has died. But once the initial shock and grief has subsided, there's a huge amount of clearing up and clearing out that has to be done.

Managing the affairs of someone who has passed away, whether you are their executor or not, can be made easier or harder depending on how things were left by the person who has died. Having been through this experience very recently, I have found out the hard way that this is something I don't want to have to put my own children through.

Organising your affairs and making preparations for what you want to happen after you die might feel like a morbid, grisly job but it is the kindest thing you can do to save loved ones from having to do it for you when they are least capable of making such decisions.

Make a will

This is the first and most obvious thing to do. If you are married or in a civil partnership and don't have children, the law states that if you don't have a will your other half will inherit all your assets (if they are worth £250,000 or less). If you are not married but are in a relationship with someone and die intestate (without a will), your partner will receive nothing, although any children you have together will stand to inherit with your estate being divided equally between them.

If there are items that you wish to bequeath to particular people, writing this down in a will can avoid squabbles and potential family break-ups. Better still, discuss it with your family while you can or leave letters to be opened in the event of your death explaining why you have made the decisions that you have.

A law firm can draw up a basic will from around £150 although if you have complicated financial affairs or requests, it can cost more. When you make a will it is also a good time to think about inheritance tax planning if your estate is likely to be worth more than the inheritance tax threshold (currently £325,000).

Plan your funeral

It may sound depressing but this is the hardest bit for grieving relatives to have to do if you haven't left any instructions. The pressure to pick the right piece of music, the most moving poem, the coffin made of wood/willow/cardboard, the plastic casket for the ashes or the expensive wooden one, all knowing that you only get one chance to get it right and if you get it wrong, it will be a lasting memory in everybody's mind.

Search online for companies that offer pre-paid funeral packages. This might not be for everyone but they can alleviate the financial burden of putting on a funeral which can now cost as a minimum, around £4,000. At the very least use the examples of funeral packages that they offer to make a list of what you would like to happen when the time comes.

Put your affairs in order

Different people have different understanding about what "putting your affairs in order" actually means. One person's filing cabinet with house deeds, share certificates and pension details neatly filed in alphabetical and date order is another person's plastic bags stuffed with bank statements going back 50 years. However, it is useful to put everything in one place including your most important documents such as your house deeds, share certificates, pension details, tax and bank account information, mortgage provider, passport, marriage/birth certificates and so on.

These days, when so much is done online, it is also sensible to keep a record of your most important online accounts. Even if you don't want to write down the passwords, just having a list of your online presence – Facebook, online email account, Twitter, Instagram etc. – can make it easier to tidy things up and let people know that you have passed away.

Most importantly, don't be afraid to talk to those close to you about what you're doing. It's no good writing detailed instructions about what you want if, when the time comes, they can't be found. Your will can be stored with the solicitor who drew it up (usually for a small fee) but additional information that you haven't included in the will - for example, about your funeral service - should be kept somewhere safe with at least one, but preferably more, people knowing exactly where that is.

Fanny Marshall, Law Donut manager

Copyright 2016 

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Posted in Personal law | Tagged Will, Probate, funeral | 0 comments

Settlement agreements part 2: the practicalities

May 10, 2016 by Guest contributor

Settlement agreements{{}}

How much should an employer offer to pay an employee under a settlement agreement?

There is no set formula in terms of what an employer ought to offer an employee by way of a severance payment under a settlement agreement. It will very much depend on:

  • The surrounding circumstances of the case;
  • The terms in the employee's contract; and
  • Any potential claims that the employee may have against the employer.

In terms of guiding principles, employers need to bear in mind that they are effectively compensating the employee for their forbearance in not filing a claim with the Employment Tribunal, arising out of their employment and the termination thereof and therefore the likely value of any such claim(s). Any ex gratia sum offered should reflect this.

The tax position

The employer ought to take specialist tax advice in relation to the taxable status of the payments being made under the settlement agreement. An ex gratia payment, genuinely representing compensation for loss of employment, can be made of up to £30,000 without deductions for PAYE.

Contractual payments

Depending on what is contained in the employee's contract of employment, the settlement agreement will also make provision for the following categories of contractual payment:

  • Notice (or payment in lieu thereof);
  • Bonus;
  • Private medical care insurance;
  • Life assurance;
  • Pension; and
  • Consideration for the employee reaffirming their confidentiality and post-termination restrictions.

The importance of obtaining legal advice

We recommend obtaining professional legal advice first before putting forward a settlement offer, given the potential pitfalls involved.

Further, we recommend the settlement agreement itself is drafted by a specialist employment lawyer in order to get the terms right.

The amount your legal advisor will charge to draft a settlement agreement varies and depends on the precise circumstances and the terms being sought under the agreement itself, including for example dealing with issues such as confidentiality, intellectual property rights and post-termination restrictions.

When should the employee expect to receive the settlement monies under the agreement?

The settlement agreement typically provides that any ex gratia amount is to be paid between 14 to 28 days of the agreement itself being signed.

In terms of contractual payments such as salary, accrued untaken holiday, contractual bonuses or commission, the agreement tends to provide that such payments will be made in the next payroll run on the usual payroll date.

Who pays for the legal advice an employee has to take on a settlement agreement?

An employee needs to obtain independent legal advice on a settlement agreement if it is to be legally binding.

Since it is in the employer's interests for the employee to sign the settlement agreement, in the overwhelming majority of cases, employers agree to make a contribution of between £250 to £500 plus VAT towards the employee's legal fees in needing to obtain independent advice as to the terms and effect of the settlement agreement.

It is not recommended to offer a higher cost contribution than this since, by doing so, the employer may effectively be paying the employee's additional legal fees for their independent advisor to negotiate an improved settlement on their behalf.

What if an employee is not prepared to sign the settlement agreement?

An employee may decide to turn down a settlement agreement if they consider the amount on offer insufficient, based on the advice they have been provided and based on the fact that the employer is not prepared to increase this.

An employee may also elect not to sign a settlement agreement, based on the advice of their adviser, as to its terms and effect, for example if they consider its terms to be too onerous.

As explained in Settlement Agreements Part 1, if an employee refuses to sign the settlement agreement then there is a risk that they may rely on it and the conversations surrounding it as evidence in bringing a grievance, resigning and claiming constructive dismissal, discrimination and bringing any employment proceedings.

Advantages and disadvantages of offering a settlement agreement

The ACAS guidance sets out a number of key advantages and disadvantages for employers that are considering offering an employee a settlement agreement.

Advantages

A settlement agreement can:

  • Provide a swift and dignified end to an employment relationship that is not working; and
  • Avoid the time and cost involved in dealing with a grievance and/or defending a tribunal claim.

Disadvantages

A settlement agreement can:

  • Involve substantial financial cost to the business in having to pay an agreed financial sum to an employee;
  • Expose the employer to potential risk in terms of any on-going employment relationship with the employee, if a mutually agreed settlement cannot be reached, with the potential that they may rely on the settlement agreement offered and any conversations or documents relating to it as grounds for resignation and making a claim in the employment tribunal; and
  • The potential risk to employment relations in the wider workforce if used inappropriately or as a substitute for good management practices.

Copyright © 2016 Julian Cox, head of employment at iLaw

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Settlement agreements part 1: what employers need to know

April 26, 2016 by Guest contributor

Settlement agreementsSettlement agreements can be an effective way to manage the termination of an employment contract but they have to be handled with care, says Julian Cox, head of employment at iLaw. In the first of his two blogs, Julian sets out what you need to know about settlement agreements

Spring coincides with the start of the new financial year for many businesses. It is often a time when employers review the performance of their business over the previous year and plan for the future. Depending on how the business has performed, some tough decisions may be required surrounding staffing levels, leaving some employees finding themselves in the unfortunate position of having to look for employment elsewhere.

Employees benefit from a raft of legal protection under the statutory framework of UK employment law. As a result, employers are often required to go through prescriptive disciplinary, capability or redundancy procedures if they are to avoid unwanted claims in the Employment Tribunal and legal costs associated with defending these proceedings. This takes up valuable management time. It is worth bearing in mind that a single case of unfair dismissal could cost your business up to £94,000 and there is no cap on compensation in discrimination cases.

Set against the landscape of current UK employment law, a settlement agreement is a useful instrument offering employers a quick and clean method of terminating an employee's employment without having to undertake potentially protracted disciplinary, capability or redundancy procedures.

However, for the unwary employer there are still some pitfalls that need to be avoided. Here's what's involved:

What is a settlement agreement?

A settlement agreement, or compromise agreement as they were previously known, is a legally binding, confidential agreement between an employer and an employee. The employer offers the employee a sum of money (a severance payment) and, in return, the employee agrees to waive any legal claim he or she may have against his/her employer, whether arising out of the period of employment or the termination thereof.

What is advantage of using a settlement agreement for employers?

In addition to the employee waiving any legal claim he or she may have against the employer, a settlement agreement can also provide additional protection for employers including the introduction or reaffirmation of:

  • Post-termination restrictions;
  • Duties of confidentiality; and
  • Non bad mouthing provisions.

Settlement agreements also give employers the additional comfort of knowing that the terms offered, and in particular the precise value of the financial settlement reached, will remain entirely confidential. This is particularly important where employers have other employees with grievances or employees that are looking to make a potential claim.

Under what circumstances might an employer use a settlement agreement?

Settlement agreements are used by employers in various situations; for example when they are faced with a group of employees that they want to make redundant and:

  • The employer is concerned about the grounds being relied upon for making them redundant; or
  • The length of time it will take to go through due and proper process, involving warning and collective and individual consultation before notice can be given.

Settlement agreements are also used when employers are faced with an underperforming employee and a performance improvement programme would otherwise need to be put in place and the employee given a proper opportunity to improve (which could take up to four to five months) before notice of termination can be given.

What are the risks of offering a settlement agreement?

A settlement agreement is not simply a magic wand that employers can wave to make a problem that involves an employee disappear. Indeed there are certain employment situations where offering an employee a settlement agreement can be dangerous, exposing the unwary employer to unanticipated liability.

Where an employer offers an employee a settlement agreement out of the blue, without previously raising concerns regarding their conduct or performance, there is a risk that employers may try to claim that such discussions and any supporting documents supplied are "off the record" or "without prejudice".

However, they are not entitled to treat them as having such legally protected status. Such documents would include both paper and electronic written correspondence, attendance notes of meetings and the settlement agreement itself.

Consequently, if the employee refuses to accept the settlement agreement, the employee may argue that, as a result of it being offered, the underlying relationship of mutual trust and confidence between employer and employee has irretrievably broken down.

The employee may therefore seek to rely on the settlement agreement, surrounding discussions and correspondence as supporting evidence as part of a formal grievance against the employer.

Further, if the grievance is ultimately not resolved to their satisfaction, they may use this evidence as part of a claim for constructive dismissal and/or discrimination in the Employment Tribunal.

It is also important to be aware that settlement agreements only guarantee conversations are legally "protected" in narrowly defined circumstances; where, arising out of the facts of the situation, the employee may have a claim of unfair dismissal claim against the employer.

If the employee has a "protected characteristic" (e.g. sex, pregnancy, race, disability or age) and is complaining of less favourable treatment or harassment, there is the risk of them bringing a claim of discrimination. In such circumstances, the settlement agreement and the correspondence and conversations surrounding it will not be afforded such legal protection. So, for example, if you offered a settlement agreement to a pregnant employee, then the agreement and surrounding negotiations are unlikely to enjoy legal protection.

Similarly, where an employee is a whistle-blower, they may have an automatic unfair dismissal claim and then the settlement agreement and any correspondence and conversations surrounding it, will not be afforded the veil of protection and may be used in evidence as part of a tribunal claim, should the employee decide to reject the settlement on offer.

ACAS guidance on settlement agreements

ACAS has published its own guidance on settlement agreements. It sets out examples of "inappropriate behaviour" on the part of employers that would result in the settlement agreement and any correspondence and conversations surrounding it not being legally protected.

Examples include:

  • Bullying, harassment and intimidation (e.g. pressurising a black employee, who has raised a complaint of race discrimination, into signing the settlement agreement or risk dismissal);
  • Victimisation;
  • An employer informing an employee, prior to the instigation of disciplinary proceedings, that if they do not accept a settlement agreement then they will be dismissed; and
  • Not providing your employee with a reasonable amount of time to consider the settlement agreement on offer. The ACAS guidance recommends a period of ten calendar days to consider a settlement agreement.

Because of the potential pitfalls involved in offering a settlement agreement, we recommend that appropriate legal advice is obtained before doing so.

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12 laws of rugby every spectator should know

February 05, 2016 by Rory MccGwire

12 laws of rugby every spectator should know{{}}With the Six Nations championship due to start tomorrow, Law Donut has been asked to explain the laws of rugby in the same clear way that we explain legal minefields such as shareholder disputes and divorce settlements. We are happy to oblige. Rory MccGwire, founder of Atom Content Marketing and the Donut sites, is a rugby coach and a (very) amateur ref:

Whenever I watch rugby on TV, and whenever I referee a match, there are screams of "Referee!?!" from all sides. So here are 12 laws to explain why, sometimes, referees blow their whistles, and why other times they let play carry on. Let's start with the more simple rules:

  1. Obstruction: You cannot obstruct an opponent. You can only tackle the person with the ball. (Penalty)
  2. Tackle: You cannot tackle early, late, or above the shoulders/armpits. You must wrap with your arms, and not simply collide. (Penalty)
  3. Dangerous play: In rugby you cannot do anything that is unfair or dangerous. (Penalty)
  4. Offside: Make sure the ball and the player in your team playing the ball are ahead of you; otherwise, you may be offside. But scrums, lineouts, rucks, mauls and kicks all have their own offside rules. (Penalty)
  5. Advantage: When a law is broken, the ref plays 'advantage' if there is a chance that the offended-against team may gain an advantage. If no advantage is quickly gained, the ref will blow their whistle for the original offence.
  6. Forward pass: A forward pass is not permitted. This is simple to judge if the passing player is standing still, but is not if he is sprinting. Here's why. Imagine a player running at 20mph and passing backwards over his head at 5mph: this totally legal (ie backwards) pass actually went forwards at 15mph. This explains why some referees allow some passes that, to the spectators, look forward. The direction of the passer's hands is usually key. (Scrum)
  7. Knock on: You are allowed to fumble the ball and regain control. But if the ball hits the ground or another player before you regain control, it is a knock on. (Scrum)
  8. Roll away: When a player is tackled to the ground, he may immediately pass or place the ball. He cannot play the ball again until he is on his feet. Meanwhile the tackler must release the tackled player and get to his feet before he can play the ball. The tackler cannot just lie there and get in the way, so you hear refs shouting "Tackler roll away". (Penalty)
  9. Ruck: A ruck happens when at least one player from each team are in contact with each other over a ball that is on the ground. Once a ruck is formed, you cannot handle the ball until it emerges from the ruck - either from heeling the ball back, or driving the opponent off the ball. (Penalty)
  10. Hands away: The first defender who arrives after the tackle has a golden opportunity to win the ball, because he is allowed to keep his hands on the ball even after a ruck has formed. Whereas other players can only use their feet in the ruck. You often hear a ref shouting "Ruck formed, hands away". (Penalty)
  11. Maul: A maul forms when an attacker is held up by a defender, and a second attacker binds onto the ball carrier. You often hear a ref shouting "Maul formed". The attackers need to get the ball out quickly, otherwise the ref will award a scrum to the defenders. (Scrum)
  12. Materiality: We play rugby for fun. So to help the game flow, referees use a concept called materiality - particularly in more junior rugby, where the players are still learning the rules and are frequently a little offside (etc). If these minor offences do not materially affect the balance of the game, the ref can allow the game to continue and give warnings rather than stopping the game every 10 seconds. But the whistle still goes for errors such as knock-ons and any deliberate foul play. (Unfortunately few parent-spectators know about this concept, which leads to a lot of frustration on the sidelines.)

With thanks to Andy Nelson, Chris Groves and Tony "Specsavers" Rigg (all from St Brendans RFC in Bristol), and Chris Smith and Emma Jones, all of whom can share the blame for anything contentious. And for those of you who want to remind me that women also watch, and play, rugby (and, in the case of the England team, with much more success than the men), the male pronoun is just for ease of writing. Honest.

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