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Posts for April 2010
Volcanic eruptions over pay?
April 28, 2010
So many people have been caught out and found themselves stranded as airlines are grounded. Who gets paid? Who doesn’t? What happens when staff can’t get to work through no fault of their own?
Who is entitled to be paid and for what?
The UK has a remarkably flexible labour market, and the answer depends on what type of contract you have got with your staff. There is no general right for employees who don’t turn up for work to be paid, and if they are stranded and can’t get to work, you may not be obliged to pay them. Many employers do pay more than they are required to, but it is important to know when you are choosing to pay more, and when you have to pay.
Hourly paid workers
People who are paid by the hour are not automatically entitled to be paid for their absence.
Employees can ask you to allow them to take the day(s) as paid leave. You are not obliged to authorise paid leave retrospectively, but if you do so, make sure the holiday records are kept properly up to date. You cannot decide retrospectively to make this a day’s leave without the employee’s consent.
Salaried staff
There is an historic tradition in the UK (fading fast) that distinguishes between staff on annual or monthly salaries, and those on an hourly rate – the old “white collar-blue collar” divide. Traditionally salaried staff are not paid by the hour, do not receive overtime when they work more hours, nor receive a deduction when they work less.
These staff are viewed as being paid for service, rather than for the particular work performed. This group of individuals is generally entitled to pay unless the contract provides otherwise. You should check your contracts carefully. This applies even if no work is actually performed or where the employee is prevented from working due to factors beyond their control, as long as the employee remains ready and willing to serve the employer. Ready and willing would normally mean making an effort to get to work where it is safe to do so. Local staff who could have made it in would not be automatically entitled to pay if they did not turn up.
Many organisations no longer feel comfortable about having a two-tier contract system, and increasingly have one single-status contract that applies to all. So it’s possible your hourly paid staff may be in the same contractual position as salaried staff. A lot depends on what your contracts say.
Annual hours and flexi-hours contracts
Check the terms of your contracts – it may be that time not worked does not count for payment, and missed work will have to be performed at another time.
How long can this go on for?
No-one knows how long the delays will last. In employment law, this situation is known as “temporary frustration of contract” – when through no fault of employer or employee the contract cannot be performed.
During this period the contract is ‘on ice’ with no work being performed and no money being paid (unless the contract is set up in a particular way – see above).
Employers with time-sensitive work to be performed may find themselves needing to get in other staff or contractors to do the work. Call us if you are not sure if you need to pay your existing staff as well.
Are people going to be dismissed for absence?
Most employers are not going to dismiss people for a problem that is not their fault. However, some employers may feel they have no alternative but to “accept the frustration” of contract if this goes on too long. “Accepting the frustration” means that the employer accepts that the contract has come to an end.
The law of “frustration” says that if the underlying basis of the contract no longer exists, the contract comes to an end. This is not technically a dismissal, though it has a similar effect. Staff with less than a year’s service will find there is not a lot they can do about this, unless their dismissal is related to some form of unlawful discrimination.
Employers will think long and hard before doing this, but for some organisations with deadlines there may be little choice but to find replacements.
Those who were wise enough to set up contracts that did not commit them to pay when no work is done will not have to consider accepting frustration at this point, but those with different contracts may, if this goes on, find themselves with little choice.
If you don’t know if you have to pay people who are stranded – send your contracts to us for a quick free review. – email to advice@irenicon.co.uk or fax them to us.
Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy. Tel: 08452 303050 Fax: 08452 303060 Website : www.irenicon.co.uk. You can follow Annabel on twitter – http://twitter.com/AnnabelKaye
Employee promoting your business on networking sites – who owns his contacts when he leaves…?
April 22, 2010
An employee whose job is to promote his employer’s business on Twitter has handed in his notice to go to a competitor. Most of his followers on Twitter are clients or suppliers of the business, or good prospects. Do their details belong to the employee, so he can take them to his new job, or do they belong to the employer, so he can’t?
This is an issue facing an employer friend of mine. There is nothing specific in his employee’s contract of employment stopping the employee (let’s call him Alan) from using or disclosing his employer’s information, but my friend is arguing that the details are his ‘trade secrets’ – confidential information that would be likely to cause real or significant damage to him if they became publicly known. If he is right, Alan cannot use them because ex-employees are under an automatic and implied legal duty to keep their former employer’s trade secrets confidential, whatever their contract says.
Three issues
But Alan is arguing three points. First, he is saying that the Twitter profile – and everything on it – is his personal profile, not his employer’s profile, so my friend has no right to the details on it.
Second, he is saying that the details aren’t trade secrets, they are just ‘confidential information’ – information that my friend would not want rivals to find out. ‘Confidential information’ is wider than ‘trade secrets’. Current employees are under an automatic, implied duty not to use or disclose confidential information. But ex-employees can use or disclose confidential information unless it is also a trade secret, or unless they have a contract of employment that specifically says they must.
Third, Alan is saying my friend authorised him to build up his followers on Twitter – where anyone signed up to Twitter (including competitors) can see them – so my friend has authorised their disclosure. This means they are no longer trade secrets or confidential information.
My friend disagrees on all three counts. Who wins?
Confidential information – court backs employer
A recent court case helps my friend. An employer encouraged employee X to invite business contacts to join X’s network on a business networking website. X then left to set up a competing business, and started using those contact details. X’s former employer objected on grounds that the details were the employer’s confidential information, and there was an employment contract between them that prevented X from using confidential information after he left. X argued that the contact details stopped being ‘confidential information’ when they became available on the site. They were not therefore covered by the terms in his contract of employment.
X lost the case. One reason was that the judge found that the employer’s authority to Y to use such sites had been limited to using them in the performance of his duties as an employee.
As a result, X was ordered to disclose the contacts’ details to his former employer, and also all documents showing his use of the contacts, and business obtained from them since he had left.
However, if the employer had not put a limit on X’s use of such sites (for example, had allowed the employee to use the site for non-work purposes too), or there had not been a specific contract clause protecting confidential information, the decision may have gone the other way.
What’s important
So it’s important that there are contract terms and/or staff policies that:
- Specify which employees are authorised to use networking sites for work purposes.
- Specify the sites, and the profiles (or accounts) to be used for those purposes.
- Set restrictions on what those employees can and can’t do and say using those profiles or accounts.
- Particularly, make it clear that employees are only allowed to post work-related information, and that they are only being allowed to do so for the purposes of their employment – so that they cannot use or disclose that information either when they leave.
- Above all, make it clear that the information – about customers, suppliers, referral sources – or anything else work-related – posted to such sites is, and remains, the employer’s ‘trade secrets’ and ‘confidential information’, no matter who can see it on the site.
Confidential information v trade secrets
This leaves my friend with two problems. First, Alan’s employment contract does not specifically stop him from using or disclosing ‘confidential information. So if my friend cannot show the details on the Twitter profile are ‘trade secrets’, he may find they are not protected.
Worse, it turns out that Alan was, quite innocently, also using the Twitter profile to post personal, non-work items on it too. So, given the court case we looked at earlier, it looks like my friend has two problems … hmm, time for legal advice.
Birthday news from Rory MccGwire, founder, BHP
April 20, 2010
Why I started the Donut
I’ve always found small businesses compelling – what makes them work and the challenge of going it alone are to me the most interesting questions in business. And after 19 years of running my company, BHP, I admire SMEs more than ever.
Running your own show is tremendous fun, especially if you know what you’re doing and can manage the 101 challenges that come your way every month. Which is where BHP content comes in.
We’ve been producing our expert how-to guides, sponsored by blue chips and government organisations, for nearly two decades. But, of course, as an entrepreneur, I wanted something new to do. In a (rare) idle moment online, I scouted about for a really good marketing website for small businesses. There wasn’t one.
So we decided to do it, launching on 20 April 2009. We built small and medium-sized enterprises (SMEs) their own site with everything they needed to make their marketing thrive. Founding partners Google and Royal Mail backed us all the way, as have our ever-growing list of sponsors such as Vodafone and Yell.
What we’ve achieved in a year
As well as Marketing Donut, we launched two more Donut websites to cover starting up and law. We’ve just announced that the fourth site to launch will be IT Donut, scheduled for the week commencing 23 August.
We use 300 top people to provide the expert advice on the Donuts, but, for me, the real experts are also the users. Before we started work, we asked people running small businesses what they wanted from a site. They told us they needed fast, practical and accurate answers to their questions. The Donuts give SME managers that, free. Tools, templates, checklists, the lot: plus the news their business needs to know.
All the Donuts report live on major small-business happenings – we were the first business advice site to break news of the rise in minimum wage on Budget Day. MyDonut, the e-newsletter, now goes out to tens of thousands of people a month – next year numbers should top 100,000. (This is in addition to the 300,000 subscribers to the SME newsletters that we publish for our clients. Life at BHP is one big deadline.)
Since the launch a year ago, the Donut sites have fast become a key player in the UK small-business scene. Our Twitter accounts have over 40,000 followers and our Twitter team picked up two national awards last year.
Local versions of marketingdonut.co.uk, startupdonut.co.uk and lawdonut.co.uk are syndicated to our partners, both nationally and in the regions. Thirty-five organisations already have their own Donut websites and more are coming on stream every month.
The Donut is a strong business model, because it is a win-win for everyone involved. Crucially, BHP had already invested several years building up the strategic relationships and the content before launching the first website. As with most successful SMEs, we always knew that the Donut project would not be a sprint to success, it would be a marathon.
2010-2011: what’s in it for you?
As we expand the core “answers to your questions” pages of the Donuts, we will continue to cover news and key topical issues for you. For instance, this month the Law Donut explains how to cope with recruitment and redundancy as the economy remains fragile, as well as what to do when all your staff want time off for June’s World Cup.
We’re currently building the IT Donut, which will be a comprehensive resource for demystifying IT, troubleshooting and trading online. It will become the first place any small business turns to when they have a tech problem that needs sorting fast. We’re currently recruiting experts who will rid us all of pesky IT stress forever, I hope.
We’ll also be providing a local service for users, thanks to our partners. Law firms, chambers of commerce and enterprise agencies are all getting involved. This is really exciting, as it gives users the best of all worlds – a huge library of constantly updated advice from experts throughout the UK, combined with local content.
An SME owner’s work is never done, so I’m signing off to tackle the above. Before I go – thanks to you, our users, and all our partners and experts, for a great year.
Worldwide trade mark registration
April 14, 2010
A friend has come up with a brilliant brand name and has asked me to “protect it worldwide” by registering trade marks. At the moment he only sells his goods in the UK, although he has aspirations to launch in the rest of Europe and the USA next. Then the world! Can we do it?
He’s out of luck if he thinks there is one central registry where you can get worldwide protection. As it stands, every country has its own trade marks registry – and systems are territorial so that, for example, registration of your UK trade mark only protects it in the UK. One way to protect the name worldwide is to register it in every country – but that costs tens of thousands of pounds. So my friend needs to be selective about which countries he wants to register in.
For European trade marks, there is a way to reduce costs. Rather than register in every country in the European Union individually, he can use the European Community trade mark system. Registering once as a Community trade mark (at the Office for Harmonisation in the Internal Market, or ‘OHIM’, in Alicante in Spain protects the brand in all 27 EU countries. This is easier and far cheaper than 27 separate registrations.
But if he has already applied to register a UK trade mark, all is not lost. He can apply to extend it so it becomes a Community trade mark. If the EU application is made within six months of his UK application, and succeeds, protection for the Community mark is backdated to the date of the UK application.
However, applicants need to be sure their marks meet the registration criteria set by each EU member state. If one of them refuses a trade mark, the whole application fails. If that happens, you have to decide whether to convert your application into separate national applications – but it costs more and, usually, you need legal advice in each country. One registered, the mark needs to be used in at least one member state within five years or it can be challenged for non-use.
Another option is the Madrid Protocol. Choose the countries where you need protection – 100-plus have signed up to the scheme, including the UK and the USA – and a single registration protects the trade mark in those countries. Initially, applications go to the Intellectual Property Office and are then administered by the World Intellectual Property Organisation (WIPO).
Madrid registrations can take up to three years – much slower than registering in individual countries – but, for anyone who wants protection in more than five states, they are much cheaper. My mate would also have a year to assess whether the countries where he wants to protect his trade mark are good enough markets before he has to pay the rest of the fees. If they are not, he does not need to proceed.
The downside to Madrid is that, if any of his chosen countries refuse the application, he only gets three months to decide whether to carry on in the others. The risk of failure can be particularly high if the USA is one of the countries in the application, because its registration criteria are stricter than many other countries.
If he wants to, his application is converted into individual country applications. Finally, if the application succeeds, he must actually use the mark in each country.
Existing registrations of UK trade marks at the Intellectual Property Office can also be extended using the Madrid Protocol, so they are protected in signatory countries the trade mark owner chooses. Apply within six months of the UK application and the Madrid protection will be backdated.
So it’s back to him now. He has the tricky job of choosing which countries he wants to go for, and which systems to apply under given the costs, timescales and consequences of failure when applying under each system.
Online customer confidence
April 07, 2010
UK shoppers spent £38 billion over the Internet last year, almost 10 per cent of their total retail spend for the year. That’s double the European average, according to a recent report by the Centre for Retail Research.
But if you think that suggests the nation’s consumers are a savvy, confident bunch you might be wrong. Earlier in March, a government survey also revealed that:
- 77 per cent of customers aren’t aware of the differences between their online and high-street rights
- 60 per cent are less likely to return goods bought online than goods purchased on the high street.
What are we to make of these findings? First, let’s clear up the key difference between distance-selling and bricks-and-mortar customer rights – the cooling-off period – because it’s one that vexes retailers as well as customers. Then we can look at how businesses should deal with customer confusion – and the benefits that can bring to sales.
Clearing up the cooling-off provision
When a customer buys online, they get a seven working-day window during which they can cancel the contract for any reason, including just changing their mind. Broadly speaking, this cooling-off period starts on the day the customer receives their goods, or, for services, the day the contract is concluded.
The rules aren’t quite that simple, though. Various admin details and types of goods can affect, or end, the customer’s rights to a full cancellation and refund. For example:
- a customer wishing to cancel must tell you so in writing (fax or email count) – a phone call isn’t enough
- you must give customers certain written information about their online contract – any delays can extend their cooling-off period by up to three months
- various goods don’t qualify – these include items you’ve personalised for a customer, perishable goods (eg food) and audio-visual products that have been opened
- if the customer agrees that performance of a service should begin before the end of the cooling-off period that would normally apply, then the right to cancel ends when the service starts.
Building trust out of confusion
Many retailers’ response to customers’ lack of knowledge about their cooling-off rights will be something along the lines of “Thank God for small mercies”.
It’s tough times out there and if customers aren’t cancelling orders, then so much the better. At the end of the day, online retailers are required to comply with distance-selling rules, not to provide educational bulletins for customers on them.
True enough. But there’s a bigger picture here.
Surveys show that customers are still wary about shopping online. Trust remains at a premium. So there’s competitive advantage to be found by businesses that outperform their peers at generating it.
Being upfront and accommodating about your rules and procedures about cancellations are an important part of building online trust. Customers want to know you’re not going to suck them into a black hole of non-existent customer service if it turns out they change their mind about a purchase.
Look at Amazon, the self-styled “world’s most customer-centric company”. They bend over backwards to inform customers of their rights and to make cancellation as easy as possible. In doing so, they’ve achieved something close to profit alchemy – turning customers’ lack of knowledge into a way of generating the trust that online businesses crave.
Not for Amazon the dubious benefit of having confused customers hang on to a few items that might otherwise have been returned as cancellations. Instead, they’ve bet on trust and are selling products by the shedload that might otherwise never have been ordered.
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