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Questions and Answers

aka…

 

 

At Paladin, one of our key drivers is to use our skills to make the world a slightly better, (nicer) and well-informed place. To that end, we “share the love” by publishing free legal advice whenever we can.

Below you will find common or interesting legal questions and their answers, organised broadly according to their subject area. The Q&A will emerge from points which we think are of use to people, or from specific questions asked of us via our homepage Ask Paladin feature.

This page is a work in progress and will grow weekly so please check back regularly. And if the answer you are looking for isn’t here, ask us!

Corporate / Boardroom

  • We cover the full range of corporate services including incorporation, sales and purchases of businesses, management buy-outs and buy-ins, share transactions, business reorganisations, shareholder agreements and articles of association, share schemes and employee incentives, shareholder and boardroom disputes, directors’ duties and corporate governance, Register of Companies matters, striking-off and dissolutions to name but a few. Contact us to discuss your requirements on a free and no-obligation basis.

  • A shareholders’ agreement (“SHA”) is a contract between a company’s shareholders and sometimes the company itself. An SHA specifies shareholders’ rights and obligations, regulates the management of the company, ownership of shares, privileges, voting and various protective provisions for shareholders. As with all contracts, this is done to ensure clarity over issues which could otherwise become contentious in the future.

    Whilst Articles of Association are the essential (and legally-required) constitutional document for all companies, they are often standardised and quite basic. This is especially the case if the company has been set up inexpensively via an incorporation company. Articles of Association bind a company and its shareholders in their capacity as shareholders and articulate the responsibilities of the directors, the kind of business to be undertaken and the means by which the shareholders exert control over the board of directors.

    An SHA may contain terms found in Articles of Association. However, an SHA is typically more extensive and provides more protection to shareholders over a diverse range of issues. There is no standard form, which makes SHAs flexible to fit the specific needs of shareholders, including departing from the standard or ‘model’ provisions prescribed by the Companies Acts.

    Additionally, an SHA is private, between the parties to the SHA while Articles of Association are public and filed at Companies House for anyone to view. This makes them inappropriate for addressing matters such as director remuneration and the provision of private contact details or other sensitive or confidential internal matters.

    SHAs should ideally be entered into at the inception of a company between the parties who intend to form it whom will be its initial shareholders, though SHAs can be entered into after a company is formed and operating. Specific transactions or the needs of different stage investors often require different terms and will likely be subject to negotiation and possible later amendment.

Intellectual property

  • We can assist with a range of Intellectual Property matters including UK and EU trademark advice and applications; trademark and passing off disputes; copyright advice and disputes; IP licensing and assignments; confidentiality, privacy and injunctions; commercial IP advice and much more. If you would like to discuss your intellectual property requirements on a free, no-obligation basis, then please do Contact Us.

  • Many people/businesses will have chosen a EU Trademark (EUTM) over a UK-only Trademark, on the basis that this would give protection in all EU Member States. Now that the UK has left the EU, what happens to this EUTM? Is the Trademark still protected in the UK?

    The short answer is yes, but only for the next 11 months. The long answer is, unsurprisingly, longer.

    For the next year, until 1st January 2021, things pretty much remain as they were. We are in a transition period. On 1st January 2021 however, your EUTM will no longer give you trademark protection in the UK.

    Fear not, however, the UK government has a plan. Under the Withdrawal Agreement Act, on 1st January 2021 all holders of an existing EUTM will have created, by the UK Intellectual Property Office, a comparable UK trademark. Your trademark will be recorded on the UK trademark register as if you had applied for a UK trademark initially, including the initial EUTM filing date. It is not yet clear what the process for obtaining this will be, but we do know that there will be no need to pay for the trademark application as you usually would, and the aim is to have as little administration as possible (whatever that means!).

    If your EUTM application is still pending as at 1st January 2021 then the process is a little different, and you will need to apply for the UK comparable trademark in the 9 months post-1st January 2021. The usual UK Trademark application fees will apply in this case.

    If you are considering registering a trademark and you are not sure whether to go for EU, UK or both then talk to us to discuss the best option for you.

  • This is a common question for us and, actually, has a far more straightforward answer than people anticipate.

    When you have a business (or charity/not-for-profit etc.) website then usually you have spent a great deal of time and energy coming up with just the right content to attract people to your online space and engage them. You do not want someone else coming along and stealing all of your hard work.

    The good news is that everything you have written, and the design, constitutes an original piece of work and therefore is protected by copyright. Copyright protection is automatic, you don’t need to apply for it – it just happens thanks to the provisions of the Copyright, Designs and Patents Act 1988.

    If someone steals the entire content of your website, or even just a “substantial part”, then they have infringed your copyright and you could bring a claim for damages. We usually start with a letter warning off the infringing party and asking for the infringing material to be removed immediately.

    Another point to consider is if you are using on your website, or other marketing material, a particular logo or phrase. If so then you should also consider applying for an EU and/or UK trademark (see our trademark Q&A to check if eligibility).

    If you require further information on this or any other Intellectual Property issue, please do Contact Us.

  • A trademark can be a number of things, including a sign, logo, words, colours, sound etc., or a combination of these. It must be capable of distinguishing your brand from another and so not too common.

    A trademark should differentiate your product from anyone else’s and be the way in which you are identified. If you get it right, then a trademark can be a valuable part of your intellectual property armour.

    In order to have a trademark then an application for registration needs to be made. How this is done depends on where you want to achieve trademark protection. There are possibilities for trademark protection in countries all over the world and internationally, but this answer will focus on EU and UK trademarks.

    An EU trademark (EUTM) will give protection in all EU Member States. A UK trademark (UKTM) will provide protection just in the UK. The basic steps for both are as follows:

    • Conduct a search to see if your trademark is available. There are online search facilities for both EU and UK trademarks;
    • Identify the goods and/or services you want to be covered by the trademark. The Nice Classification system applies here, and there are 45 categories within this. Choose carefully the categories you want your mark to be protected in respect of. This will need careful thought, including considering if you want the mark to be used for any future goods and services (to save a further application at a later date);
    • Identify what the fee payable to the Intellectual Property Office in question will be. This varies depending on whether it is a EUTM or UKTM and depending on other things, such as number of categories/classes and whether a series of trademarks is being registered;
    • Do the application itself, which can be done online;
    • After the application has been made then there will be an examination period. If the application is in order it will be published and there is a period of time for third parties to oppose the application.

    At the end of the opposition period then the registered trademark is published. It usually takes 4 to 9 months to register a straightforward trademark, with the EU registration process generally taking longer than the UK process. If you want to make the whole process much easier for yourself, though, why not instruct us to manage it for you?

Employment law

  • At the last count there were over 150 different employment law claims which could be brought, and we cover them all! But we specialise in unfair dismissal, constructive dismissal, whistleblowing, bullying and harassment, discrimination under the Equality Act 2010, victimisation, equal pay, redundancies, TUPE, detriment, bonuses, unpaid wages, restrictive covenants and restraint of trade, and settlement agreements. Feel free to Contact Us for a free no-obligation chat about your situation,.

  • A great question, received from AL via the Ask Paladin link!

    Constructive dismissal is a term we hear bandied around a lot, and often in the wrong context. Whether you are an employee who believes they have been constructively dismissed, or an employer whose employee has made an allegation of the same, this will help you understand the concept.

    If an employer dismisses an employee this is not, and cannot be, constructive dismissal. Constructive dismissal occurs when an employee resigns her or his employment because their employer has acted in such a way as to fundamentally breach the contract of employment, leaving little choice but to resign. There is always a choice of course, but in reality this will usually happen where the employer has behaved so unreasonably that the relationship is effectively at an end.

    The most basic example might be a failure to pay wages. A more common example, however, would be an allegation by the employee that the employer has breached the implied term of trust and confidence that is within every employment contract. This could cover any number of alleged misdemeanours by the employer against the employee, from bullying to failure to deal with a grievance properly.

    Often, the final thing causing resignation might not seem like a major incident, but it can be the last in a series of incidents, with the final one being the “last straw”. Be warned though, it is not just a matter of the employee disagreeing with the employer and feeling that they have been unreasonable in some way. The employer’s actions must be sufficiently serious, and it is down to the employee to prove that they have been constructively dismissed by showing that their resignation was justified as being in response to a serious breach of their contract and that they resigned promptly. The employee (usually) also needs to have 2 years’ service to bring such a claim.

    Resigning to claim constructive dismissal is not something that should be undertaken lightly. All else being equal, it is a more difficult claim to bring than one based upon a ‘bog-standard’ dismissal. However, in some circumstances it is the right and a powerful course of action, and in others the only course of action available.

    If you think that you might be in a situation whereby a constructive dismissal is imminent or has recently happened, act fast and Contact Us for further advice.

  • If you have been offered a settlement agreement by your employer, it means that there is one or more potential legal claim which they want you to agree to give up or ‘waive’. Usually they will offer you something in return for this: generally money, but it could be things of value other than money.

    Settlement agreements are usually offered as part of a termination/dismissal process but this is not always the case. You might be remaining employed but your employer wishes to draw a line under a particular issue, for example a past pay inequality.

    You must obtain proper advice when considering a settlement agreement. First, you need to obtain a lawyer’s advice (or advice from an accredited trade union representative) before a settlement agreement can become legally binding on you anyway, so your employer will be encouraging this. Secondly, by entering into one you will potentially be giving up some very important legal rights – so it is essential that you understand exactly what you are doing before you sign one. We recently wrote a blog about settlement agreements which you can read here – Settlement Agreements

    If you have any questions at all about a settlement agreement give us a call today and we will be happy to help. Just click here.

  • Yes it is. But no it isn’t. But that doesn’t matter, ‘cos really it is. Sort of.

    In order for a payment to qualify as holiday pay, it must be identified as such. The vexed question of how to deal with holiday pay in employments with intermittent or varying hours is not new. Almost as soon as the Working Time Regulations 1998 were enacted, employers began trying to address the problem by “rolling-up” holiday pay.

    The basic premise is that for every hour of work there would be a basic payment (the wages for the work done) plus a supplement (the holiday pay element on that basic payment). The two would be paid at the same time, hence the holiday pay was “rolled-up”. In some instances, employers would show this separately and in other instances the payslips would simply show one payment, albeit if called to do so the employer could then demonstrate that that one payment comprised both a basic pay element and holiday pay.

    After much conflicting case law, this practice was eventually ruled unlawful by the European Court of Justice as being in breach of the Working Time Directive – Robinson-Steele v R D Retail Services Ltd: C-131/04, [2006] IRLR 386, [2006] ICR 932. In simple terms, the ECJ disliked the practice because whether done openly or not, it had the effect of discouraging workers from taking leave. Given that annual leave and holiday pay are, first and foremost, a health and safety measure, this was incompatible with the purpose of the WTD.

    There was, however, a significant further ruling in the same case. The ECJ went on to hold that the WTD did not preclude the setting off of sums actually paid under “transparent and comprehensible arrangements” for rolled-up pay, from being set off against any liability to pay in respect of any specific period of leave taken by a relevant worker. That, in effect, at least potentially re-legalised that which the first part of the ruling forbade.

    Following the ECJ ruling in Robinson-Steele there was some debate as to whether this approach was legal under the WTR. However, the EAT in Lyddon v Englefield Brickwork Ltd [2008] IRLR 198, EAT applied a common sense approach and agreed that payments on account of holiday pay could be set off against holiday entitlement. The EAT endorsed the test that payments must be additional to remuneration for work done, and must be paid transparently and comprehensibly as holiday pay.

    Further guidance on this issue was given in a case expressly approved of by the EAT in Lyddon – Smith v J Morrisroes Ltd [2005] ICR 596. In that case a different division of the EAT gave guidance as to the best way of ensuring that payments can be set off against liabilities in the event of a legal challenge. It was recommended in that case that:

    a. the provision for rolled-up holiday pay should be clearly incorporated into the contract of employment;

    b. the percentage or amount allocated to holiday pay, or particulars sufficient to enable it to be calculated (which, of course, is also a legal requirement under s.1 of the Employment Rights Act 1996 on the giving of particulars of employment) should be identified in the contract and preferably also on the pay slip; and

    c. records should be kept of holidays taken and for reasonably practicable steps to be taken to ensure that workers took their holidays before the end of the relevant holiday year.

    As noted above, Smith was decided before Lyddon and indeed before Robinson-Steele. The recommendations in Smith and not, therefore, legally-binding. Indeed, Lyddon emphasised that the only legally-binding test was whether the amount in question was “paid transparently and comprehensibly as holiday pay.”

    Nevertheless, what Smith does do is make clear the sort of belt-and-braces approach with which an employer can feel secure that their payments will be offset against any liabilities claimed. The further one gets from the Smith position, therefore, the less likely that the offset will be permitted.

    It should also be noted that the EAT in Smith additionally observed that where there was a variation of an existing contract – in that case, where holiday pay was originally not paid and then began to be paid – it would be all the more important to show that there was not just an adjustment of figures but a true addition to the contractual rate of pay for time worked so as to amount to a genuine payment for holiday. Presumably, the same must apply where there is a material change in the amount of holiday pay i.e. holiday pay was originally not properly and entirely paid, and then it was.

    So, yes employers can use rolled-up holiday pay as a workaround. It is unlawful, but as long as your practices are transparent and comprehensible, employers can have credit for the sums paid.

    Holiday pay is – sadly – a complex issue these days, especially for employments with irregular hours or emoluments other than basic pay. Please feel free to contact us for guidance on dealing with such complexities without risk.